UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 3028, ~~2023~~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)			(IRS 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(g) of the Act: None

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common shares, par value $0.001 per share	INFN	The Nasdaq Global Select Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s common stock, $0.001 par value per share, held by non-affiliates of the registrant on ~~July~~June 129, ~~2023~~2024, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $~~687~~901,~~781~~214,~~925~~832 (based on the closing sales price of the registrant’s common stock on that date). Shares of the registrant’s common stock held by each officer and director and each person who owns more than 10% or more of the outstanding common stock of the registrant have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of ~~May~~February 1021, ~~2024~~2025, ~~234~~237,~~108~~991,~~176~~137 shares of the registrant’s common stock, $0.001 par value per share, were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement relating to its 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2024 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

INFINERA CORPORATION

ANNUAL REPORT ON FORM 10-K

For the Fiscal Year Ended December 3028, ~~2023~~2024

Table of Contents

		Page
	Part I
Item 1.	Business	1
Item 1A.	Risk Factors	1718
Item 1B.	Unresolved Staff Comments	4956
Item 2.	Properties	50
Item 1C.	Cybersecurity	56
Item 3.	Legal Proceedings	50
Item 2.	Properties	57
Item 4.	Mine Safety Disclosures	50
Item 3.	Legal Proceedings	57
Item 4.	Mine Safety Disclosures	57
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5158
Item 6.	[RESERVED]	5259
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5360
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	6977
Item 8.	Financial Statements and Supplementary Data	7078
	CONSOLIDATED BALANCE SHEETS	76
	Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)	79
	CONSOLIDATED STATEMENTS OF OPERATIONS	77
	CONSOLIDATED BALANCE SHEETS	84
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	78
	CONSOLIDATED STATEMENTS OF OPERATIONS	85
	CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY	79
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	86
	CONSOLIDATED STATEMENTS OF CASH FLOWS	80
	CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY	87
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	82
	CONSOLIDATED STATEMENTS OF CASH FLOWS	88
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	125
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	90
Item 9A.	Controls and Procedures	125
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	137
Item 9B.	Other Information	127
Item 9A.	Controls and Procedures	137
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	127
Item 9B.	Other Information	139
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	139
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	~~128~~140
Item 11.	Executive Compensation	~~134~~146
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~168~~183
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~170~~186
Item 14.	Principal Accounting Fees and Services	~~171~~186
	Part IV
Item 15.	Exhibits, Financial Statement Schedules	~~173~~188
Item 16.	Form 10-K Summary	~~173~~188
	Signatures	178
	Index to Exhibits	189
	Appendix A - Unaudited Reconciliations From GAAP To NON-GAAP	180
	Signatures	192
	Appendix A - Unaudited Reconciliations From GAAP To NON-GAAP	194

Part I

ITEM 1. BUSINESS

Overview

Infinera Corporation (“we,” “us,” “our”, “Infinera” or the "Company") is a semiconductor manufacturer and global supplier of networking solutions comprised of networking equipment, optical semiconductors, software and services. Our portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, compact modular platforms, optical line systems, coherent optical engines and subsystems, a suite of automation software offerings, and support and professional services. Leveraging our U.S.-based compound semiconductor fabrication plant ("fab") and in-house test and packaging capabilities, we design, develop and manufacture industry-leading indium phosphide-based photonic integrated circuits ("PICs") for use in our vertically integrated, high-capacity optical communications products.

Our customers include operators of fixed line and mobile networks, including telecommunications service providers, internet content providers (“ICPs”), cable providers, wholesale carriers, research and education institutions, large enterprises, utilities and government entities. Our networking solutions enable our customers to build infrastructure networks that support and deliver high-bandwidth business and consumer communications services. Our edge-to-core portfolio of networking solutions also enables our customers to scale their transport networks as consumer and business services and applications continue to drive growth in demand for network bandwidth. These consumer and business services and applications include, but are not limited to, high-speed internet access, 4G/5G mobile broadband, cloud-based services, high-definition video streaming services, virtual and augmented reality, the Internet of Things (“IoT”), artificial intelligence ("AI"), machine learning ("ML"), business Ethernet services and data center interconnect ("DCI").

As an optical semiconductor manufacturer, we specialize in the manufacturing of optical compound semiconductors using indium phosphide ("InP"). This technology is used in infrastructure networks to transmit massive amounts of data and support delivery of consumer and business communications services. We have made significant investments in our unique research, development, fabrication and packaging facilities, including our optical compound semiconductor fab in Silicon Valley and advanced test and packaging center in Allentown, Pennsylvania. We optimize the manufacturing process by using InP to build our PICs, which enables the integration of hundreds of optical functions onto a single, monolithic optical semiconductor chip. The unique capabilities of our optical semiconductor fab, which has provided our customers with a critical and secure source of U.S.-produced optical semiconductors and strengthened the supply chain, have enabled us to consistently pioneer critical technology advancements. For example, our latest generation of technology has made it possible to transmit information at a rate of ~~800~~1.2 ~~gigabits~~terabits per second (“GbTb/s”) using a single laser. Our ongoing research and development initiatives continue to create a path to higher speed transmission and lower cost per bit performance for our customers. These initiatives include a new line of high-speed intra-data center optics based on monolithic InP PIC technology designed to dramatically lower cost and power per bit while providing intra-data center connectivity at speeds of 1.6 Tb/s and greater.

We support U.S. government efforts to advance and increase the domestic manufacturing base for semiconductors as a matter of economic and national security. Compound semiconductors – including those based in InP – are an important part of the domestic semiconductor industry and will enable the next-generation of leading-edge technologies. Domestic manufacturing is critical ~~in order~~ to reduce our reliance on foreign sources of compound semiconductor materials and components, which is essential to economic growth and to the security of our domestic communications infrastructure.

The large-scale integration of our PICs and advanced digital signal processors (“DSPs”) enables us to develop and manufacture high-performance optical engines that are used in our coherent optical networking system and subsystem solutions. These optical engine solutions, branded as Infinite Capacity Engine ("ICE"), include features that customers care about the most, including lowest cost per bit, lowest power per bit, reduced footprint and increased flexibility, reliability and security. Coherent optical solutions are becoming increasingly important across the network as our customers transition to 1.2 Tb/s and 800 gigabits per second ("Gb/s") per wavelength transmission speeds and beyond in the network core, 400 Gb/s in metro networks and 100 Gb/s in the access market segment. We believe our vertical integration strategy provides a competitive advantage by enabling leading optical performance at higher optical speeds with increased spectral efficiency, greater control over our supply chain and an overall lower cost structure.

We have grown our solutions portfolio through internal development as well as acquisitions, including the acquisition of Telecom Holding Parent LLC (“Coriant”), a privately held global supplier of open network solutions for the largest global network operators (the “Acquisition”). These developments positioned us to be one of the leading providers of vertically integrated optical networking solutions in the world with the ability to serve a broader global customer base with accelerated delivery of the innovative solutions our customers demand. In 2021, we announced an expansion of our portfolio with the introduction of a suite of coherent optical pluggable. Pluggable optics are optical transmission solutions packaged in smaller and more versatile form factors. They are designed to seamlessly address the rapidly growing market for point-to-point optical transport solutions as well as create a new category of point-to-multipoint solutions that can enable a dramatically more cost-efficient network architecture. Based on our vertically integrated optical semiconductor technology and supporting a range of high-speed transport rates that include 1.2 Tb/s, 800 Gb/s, 400 Gb/s and 100 Gb/s, this suite of coherent optical pluggables builds on our history of delivering innovative, vertically integrated optical engine technology that powers our differentiated optical networking solutions.

Our products are designed to be managed by a suite of software solutions that enable simplified network management, increased service agility and automated operations. We also provide software-enabled programmability that offers differentiated capabilities such as Instant Bandwidth. Combined with our differentiated hardware solutions, Instant Bandwidth enables our customers to purchase and activate bandwidth as needed through our unique software licensing feature set. This, in turn, allows our customers to accomplish two key objectives: (1) limit their initial network startup costs and investments; and (2) instantly activate new bandwidth as their customers’ and their own network capacity needs evolve.

We believe our systems and subsystems solutions benefit our customers by providing a unique combination of highly scalable capacity and advanced networking features that address edge-to-core transport network applications and ultimately simplify and automate network operations. Our high-performance optical transport solutions leverage the industry shift to open optical network architectures and enable our customers to efficiently and cost-effectively keep pace with bandwidth demands, which continue to grow 30% or more year-over-year.

We were incorporated in December 2000 and originally operated under the name “Zepton Networks.” We are incorporated in the State of Delaware. Our principal executive offices are located at 6373 San Ignacio Avenue, San Jose, CA 95119. Our telephone number is (408) 572-5200. “Infinera,” “FlexCoherent,” and the Infinera logo, are trademarks or service marks of Infinera Corporation in the United States, certain other countries and/or the European Union. Any other trademarks or trade names mentioned are the property of their respective owners.

Announcement of Merger with Nokia Corporation

On June 27, 2024, we, 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 us (the “Merger”), with us 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 (such consideration, 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 (such consideration, 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 satisfaction of certain domestic and foreign regulatory approvals, filings and authorizations; 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.

On February 18, 2025, the Company issued a press release announcing that the Merger is anticipated to be completed on or about February 28, 2025, which date remains subject to receipt of remaining outstanding regulatory approvals and the satisfaction of other remaining customary closing conditions.

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 2.2 of this Annual Report on Form 10-K.

Industry Background

Optical transport networking equipment carries digital information using light waves over fiber optic cables. With the advent of dense wavelength division multiplexing (“DWDM”) systems, data is transmitted by using multiple wavelengths of light using different frequencies or colors over a single optical fiber. Customers deploy DWDM systems to carry information between continents, across countries, between cities and within metropolitan areas, and in some cases all the way to the ultimate consumer or business user. Fiber optic networks are generally capable of carrying most types of communications traffic. Coherent optical technology is the latest innovation in DWDM transmission that dramatically increases the amount of information a single laser can transmit.

We believe that a number of trends in the communications industry are driving demand for large amounts of network bandwidth and ultimately will increase demand for advanced optical transport networking solutions. These trends include:

•growth of cloud services and ~~DCI~~inter- and intra-data center interconnect connectivity capacities;

•growth of over-the-top services and high-definition video streaming;

•growth of mobile broadband services, such as 5G;

•growth of edge computing resources closer to ultimate consumer or business users;

•increasing use of connected virtual and augmented reality devices;

•the IoT, which continues to drive massive growth in the number of network-connected devices; and

•emerging network capacity and power consumption demands of AI and ML workloads.

2As network traffic grows, network operators will need to continue to add transmission capacity to existing optical networks or deploy new systems and/or subsystems to address bandwidth demand and offer new consumer and business services. Further, inter- and intra-data center bandwidth is growing at an unprecedented rate as AI workloads and applications transform connectivity demands between processing devices. This trend requires network operators and ICPs to cost-effectively scale capacity while reducing power consumption to enable economic service delivery.

As network traffic grows, network operators will need to continue to add transmission capacity to existing optical networks or deploy new systems and/or subsystems to address bandwidth demand and offer new consumer and business services.

We believe we are in the midst of an important shift in transport network architectures that impact the markets we serve. The shift to open and disaggregated networks is increasingly being embraced by the communications industry. Examples of this trend include separation of compute, storage and networking in data centers, the separation of hardware, operating system and applications in smart phones, hardware/software separation in network function virtualization and hardware and software routing stack routers, and open radio access network initiatives for 5G. Industry evolution is now enabling optical networking to leverage these same principles of openness and disaggregation.

Optical networking technology has evolved to enable open networks at the physical and management layer. These technologies allow network operators to move from a traditional vendor locked-in model to a more flexible model where they can choose from a collection of modular, best-of-breed solutions from different suppliers for each network function. Open and standards-based interfaces ease the integration into a unified network architecture. 3

Optical networking technology has evolved to enable open networks at the physical and management layer. These technologies allow traditional network operators to move from a traditional vendor locked-in model to a more flexible model where they can choose from a collection of modular, best-of-breed solutions from different suppliers for each network function. Open and standards-based interfaces ease the integration into a unified network architecture.

The shift to open optical networking provides network operators with key benefits that include:

•Accelerated innovation cycles: By leveraging the full innovation capabilities of the optical ecosystem, network operators are able to select best-in-class technologies and vendors independently throughout the network lifecycle. Solution providers can also develop innovative technologies for specific network functions without having to supply end-to-end networking solutions, significantly broadening the innovation ecosystem.

•Optimized network architectures: By selecting the ideal products and technologies for each layer and domain of the network independently, network operators are able to optimize their optical network for specific applications and services and avoid the constraints of a single-vendor for one-size-fits-all solutions.

•Improved network economics: Open optical networks enable the introduction of lower cost per bit and lower power per bit innovations to be quickly deployed throughout the network lifecycle, with customized multi-vendor network designs providing additional scope for cost-optimization as capacity and service demands evolve.

A second shift is happening at the edge of the network, where capacity is growing beyond the ability of traditional, non-coherent optical transmission solutions to address. This increasing capacity demand is driving the need for innovative edge- and access-optimized coherent optical transport solutions. These include more compact, efficient and cost-effective solutions as well as innovative coherent optical pluggable solutions such as ICE-X optics point-to-point and point-to-multipoint technology that can enable significant cost savings by dramatically simplifying network architectures.

Strategy

Our goal is to be the preeminent provider of high-performance optical transport technologies and solutions that enable our customers to cost-efficiently scale network capacity, reduce power consumption, and simplify network operations in response to increasing bandwidth demand. ~~Key~~Our ~~aspects~~strategy ofenables ~~our~~us ~~strategy~~to ~~include:~~deliver superior value across the optical transport markets and applications we serve, including access, aggregation, metro, long-haul, subsea, DCI and intra-data center market segments.

~~•Leveraging~~Key ~~our~~aspects ~~U.S.-based~~of ~~optical semiconductor fab and packaging capabilities and vertically integrated solutions to deliver lowest total cost network solutions. We will continue to provide~~ our ~~customers with differentiated value by leveraging our vertically integrated capabilities. Our~~ strategy is to continue to evolve our unique optical technology with higher speed and lower cost and power per bit efficiencies, integrating our vertically integrated optical engines across a broad range of our open optical networking systems and expanding our addressable market with a suite of with vertically integrated subsystem and coherent optical pluggable products.include:

•~~Driving~~Leveraging ~~cost~~our ~~structure~~U.S.-based ~~optimization~~optical semiconductor fab and ~~achieving~~packaging ~~cost~~capabilities ~~advantages~~and ofvertically ~~scale~~integrated solutions to deliver lowest total cost network solutions. ~~Leveraging~~We ~~scale~~will ascontinue ~~part~~to ofprovide our ~~vertical~~customers ~~integration~~with differentiated value by leveraging our vertically integrated capabilities. Our strategy, ~~which~~is ~~includes~~to ~~integration~~continue ofto evolve our unique optical ~~engine~~technology ~~across~~with ~~our~~higher ~~broad~~speed ~~portfolio~~and oflower ~~systems~~cost and ~~subsystems~~power per bit efficiencies, ~~enables~~integrating usour tovertically ~~achieve~~integrated ~~cost~~optical ~~advantages~~engines ~~and~~across ~~cost~~a ~~structure~~broad ~~efficiencies~~range ~~that~~of ~~enhance~~our open optical networking systems and expanding our ~~ability~~addressable tomarket ~~continue~~with toa ~~invest~~suite inof ~~research~~with ~~and~~vertically ~~development~~integrated insubsystem ~~our~~and coherent optical ~~engine~~pluggable ~~and~~products. ~~edge-to-core~~As ~~portfolio,~~AI asworkloads ~~well~~and asapplications drive ~~profitability.~~increased Incapacity ~~particular~~demands, weour ~~believe~~unique ~~our~~monolithic ~~vertically~~InP ~~integrated,~~PIC intechnology enables us to develop innovative technologies to provide cost-~~house~~ ~~optical~~and ~~semiconductor~~power-efficient, ~~manufacturing~~high-capacity ~~capabilities~~inter- ~~serve~~and asintra-data acenter connectivity solutions.

3•Driving cost structure optimization and achieving cost advantages of scale. Leveraging scale as part of our vertical integration strategy, which includes integration of our optical engine across our broad portfolio of systems and subsystems, enables us to achieve cost advantages and cost structure efficiencies that enhance our ability to continue to invest in research and development in our optical engine and edge-to-core portfolio, as well as drive profitability. In particular, we believe our vertically integrated, in-house optical semiconductor manufacturing capabilities serve as a competitive advantage from a technology and supply chain perspective and enable a lower cost structure and higher profitability.

~~competitive advantage from a technology and supply chain perspective and enable a lower cost structure and higher profitability.~~4

•Building open optical networking solutions. Our strategy is focused on leveraging open optical networking principles, including disaggregated networking solutions and industry-leading optical technology with open application programming interfaces (“APIs”) and standardized data models to offer our customers best-in-class solutions and create insertion opportunities to gain market share. Open optical networking provides benefits for both network operators and innovative solution providers. These benefits include accelerating innovation cycles, enabling optimized and differentiated networking solutions, and the ability to transform network economics.

•Delivering a superior customer experience. Our success will continue to be driven by our commitment to providing a superior experience to all customers. In addition to product delivery capability that efficiently and predictably delivers innovative technology and high-quality products to market, we bring value to our customers by providing differentiated capabilities that include usage-based bandwidth provisioning, service agility and ease-of-use that accelerates time-to-revenue. Additionally, our global customer services team is committed to making our customers successful by providing the highest quality support services that help our customers deploy, operate and maintain their networks. We believe our technology leadership combined with our ability to provide the most reliable products and a differentiated customer experience contribute to customer success and represent major differentiators.

•Utilizing software-driven automation to deliver differentiated solutions. We believe we lead the industry in ease-of-use and automation, both integrated into our system and subsystem product designs and facilitated by our software capabilities. We continue to invest in our differentiated technologies, including enhancing capabilities of Instant Bandwidth offerings and introducing advanced automation and programmability capabilities. Additionally, based on our customers’ desire for open networking solutions, we have introduced new cloud-based software capabilities designed to streamline and simplify operations of multi-vendor optical networks. This includes the addition of open APIs in our networking platforms and intelligent coherent optical pluggable management capabilities, as well as the use of AI to enhance our customer support offerings.

Customers, Products and Services

The customer verticals we serve include:

•Tier 1 carriers with domestic and international infrastructure networks;

•Tier 2 and Tier 3 communications service providers;

•ICPs, web-scale providers (also referred to as hyper-scalers) ~~and cloud providers~~;

•cloud and data center operators;

•cable providers and Multiple System Operators ("MSOs");

•wholesale carriers;

•submarine network operators;

•utilities;

•large enterprise customers spanning diverse vertical industries;

•research and education institutions;

•government and public sector entities; and

•third-party network equipment manufacturers.

In the markets we serve, we believe our customers seek the following solutions to meet growing bandwidth needs, increase their revenue, expand their service offerings and lower the total cost of their network operations:

•high-bandwidth solutions that scale optical transmission capacity to meet increasing bandwidth demand while providing efficiency through service granularity;

•flexible, efficient and easy to deploy core-to-edge coherent optical solutions that optimize performance and increase reliability while reducing physical space and power consumption, leading to lower operational and capital expenses;

•easy-to-use solutions that are highly programmable, open and automated, which help reduce the time and complexity of deploying and managing transmission bandwidth;

•sustainable products and solutions that deliver meaningful reduction in power and associated emissions; and

•strong encryption at the transport layer to ensure maximum security for data transport.

We sell our products via a direct sales force and through indirect channel partners. One end-customer accounted for 1012% of our revenue in fiscal year ~~2023~~2024. One end-customer accounted for 1110% of our revenue in fiscal year ~~2022~~2023 and noone end-customer accounted for 1011% ~~or more~~ of our revenue in fiscal year ~~2021~~2022. For the years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, our top ten end-customers accounted for approximately 5253%, 4852% and 4248% of our total revenue, respectively.

We have focused our efforts and capital investments on developing high-performance, vertically integrated transport technologies and solutions that enable customers to cost-efficiently scale network capacity, reduce cost and power per bit, increase flexibility, and launch new services in response to increasing bandwidth demand. Our products feature industry-leading optical performance for capacity and reach, high service port density, a low power profile and open automation software that allows fast and simple provisioning of network services.

We believe one of our key differentiating capabilities is our deep vertical integration of high-end optical technology, including optical semiconductors. We have a world-class team of scientists and engineers that is responsible for driving the opto-electronic innovations that are integrated into our coherent systems and subsystems solutions. Core engineering disciplines include coherent application-specific integrated circuit ("ASIC")/DSP design, PIC design and manufacture, analog ASIC design, advanced packaging design and manufacture, and holistic co-design, including the RF interconnect. Our experts have achieved many industry firsts, including the first large-scale PIC, the first coherent PIC, the first commercial super-channels, the first digital subcarriers, and the first point-to-multipoint coherent technology. Additional innovation highlights include soft-decision forward error correction gain sharing techniques and long-codeword probabilistic constellation shaping. These innovations are the foundation for the superior reach performance of our 1.6 ~~Terabit per second ("~~Tb/s")-capable ICE6 optical engine and our industry-first point-to-multipoint technology. They have resulted in Infinera setting numerous industry records for optical transmission.

Financially, we believe our in-house developed technology approach coupled with our unique monolithic InP semiconductor technology enables improved manufacturing economics for optical networking, allowing future optical transport cost and power per bit reductions to be viably sustained on a cost curve defined by volume manufacturing efficiencies and greater functional integration. These advantages also allow us to develop new technologies and solutions that offer our customers innovative ways to solve their business needs.

Product Portfolio

Our hardware product portfolio consists of compact modular platforms, packet-optical platforms, optical line systems, and optical subsystems. Software products include the Infinera Transcend Software Suite, which includes automation and network management software. These products address multiple market segments in the end-to-end transport infrastructure, including metro, long-haul and subsea. DCI is a subset of these markets. We also provide customer support services, including professional service offerings designed to help customers optimize their network assets and migrate legacy services.

Compact Modular Platforms

Infinera GX Series Compact Modular Platform

The Infinera GX Series of highly compact, modular and sled-based platforms includes integrated muxponder and optical line system capabilities optimized to support a variety of transport network applications. With a compact and flexible architectural design, the GX Series supports up to 800 Gb/s per wavelength (via our embedded ICE6 optical engine) and ~~provides~~up ~~an evolution path~~ to 1.2 Tb/s per wavelength transmission ~~with~~(via ~~its~~our ~~next-generation~~embedded ICE7 optical engine), providing customers with a seamless path to future growth and cost-optimized reach in metro and long-haul applications. The GX muxponder solution supports deployment over virtually any optical line system, enabling network operators to easily introduce our best-of-breed, high-performance transmission capabilities over existing network infrastructure.

Infinera Cloud Xpress Family

The Infinera Cloud Xpress Family is designed to meet the varying needs of ICPs, communication service providers, internet exchange service providers, enterprises and other large-scale data center operators. The first generation of the Cloud Xpress has a 500 Gb/s DWDM super-channel output in 2 rack unit ("RU") form factor. Our second generation, the Cloud Xpress 2, released in June 2017, leverages the ICE4 optical engine, and has a 1.2 Tb/s super-channel output in 1RU. These platforms are designed with a rack-and-stack form factor and utilize a software approach that enables them to easily plug into existing cloud provisioning systems using open software defined networking ("SDN") APIs, an approach similar to the server and storage infrastructure deployed in the cloud.

Infinera XT Series

The Infinera XT Series of compact, open and disaggregated platforms, powered by our ICE4 optical engine, delivers up to 2.4 Tb/s of line-side capacity for metro, DCI, regional and long-haul networks in compact 1RU and 4RU form factors, with ultra-long-haul and submarine reach. These platforms are designed to power cloud scale network services over metro, DCI, long-haul and subsea networks.

Optical Line Systems

Infinera GX Series Optical Line System

In addition to muxponder functionality, the Infinera GX Series Compact Modular Platform also supports a variety of multi-haul optical line system capabilities. From compact plug-and-play optical function to comprehensive multi-degree reconfigurable optical add-drop multiplexer (“ROADM”) capabilities, the GX Series provides a single configurable system to address virtually any optical networking application. With natively open interfaces, the GX Series supports seamless integration into a variety of networks and open optical applications.

Infinera 7300 Series

The Infinera 7300 Series is an SDN-ready coherent optical transport system. Supporting the latest optical technology, the 7300 Series addresses the needs of regional, long-haul, and ultra-long-haul optical networking, including long, unrepeatered single-span and festoon subsea networks. The 7300 enables network operators to achieve the highest network resiliency with fast optical protection switching and the use of autonomous and SDN-controlled restoration capabilities.

Infinera FlexILS Open Optical Line System

The Infinera FlexILS open optical line system connects various Infinera and third-party terminal equipment platforms over long-distance fiber optic cable while providing switching, multiplexing, amplification and management channels. The FlexILS solution is designed to support over 50 Tb/s of fiber capacity when used with the Infinera platforms over extended C-band and L-band. The FlexILS supports ROADM functionality with a flexible grid architecture and provides unconstrained optical switching by eliminating the restrictions of fixed wavelengths by port or direction. This platform is designed to provide open APIs interfacing with SDN control for multi-layer switching when combined with other platforms featuring DWDM, optical transport network ("OTN") and packet switching.

Packet-Optical Platforms

Infinera XTM Series

The Infinera XTM Series packet-optical transport platform enables high-performance metro connectivity solutions with service-aware capabilities optimized for 5G, Fiber Deep, business services and other metro transport applications. The XTM Series offers superior density, lower power consumption and higher scalability for multi-service metro access and aggregation networks, including integrated Layer 1 and Layer 2 support and Time Sensitive Networking features required for 5G mobile x-haul applications. The platform is designed for application-rich packet-optical metro networks providing cable, mobile, broadband and business services that require 10 Gb/s, 100 Gb/s or 200 Gb/s wavelengths with differentiated performance. This offering includes Auto-Lambda, a feature that provides a unique solution for deploying access and aggregation networks. Auto-Lambda enables network operators to simply plug DWDM optics into aggregation and access nodes, which allows the packet-optical network element to automatically tune each of the optical signals to the appropriate wavelength.

Infinera 7100 Series

Infinera 7100 Series of packet-optical transport platforms are right-sized and support a flexible mix of transponders, muxponders, packet switching, OTN switching, SONET/SDH switching, and ROADM-based optical line systems, providing compact and flexible transport for metro networks. The 7100 Series includes the 7100 Nano, a 5RU platform optimized for metro transport and the 7100 Pico, a 2RU platform that extends services to the metro edge and enables metro access applications. The 7100 Series also includes the PSX-3S, a 1RU 376 Gb/s packet switch optimized for aggregation and access applications.

Infinera mTera Series

The Infinera mTera Universal Transport Platform is a flexible and efficient network transport solution supporting scalable grooming and an innovative protocol-agnostic switch fabric in which each and every port on virtually every card can be software-configured between OTN and Ethernet. The mTera Series includes a compact 8-slot, 4 Tb/s shelf and a higher capacity 14-slot, 7 Tb/s shelf, with paired 14-slot shelves able to deliver 12 Tb/s of electrical switching. The mTera Series combines SDN-ready, advanced ROADM capabilities and support for the universal switching of OTN, packet and SONET/SDH traffic at the electrical layer.

Infinera XTC Series

The Infinera XTC Series includes multi-terabit packet optical transport platforms that integrate digital OTN switching and optical DWDM transmission. The XTC Series delivers converged packet, OTN, and DWDM for metro core, regional, long-haul, and subsea applications. The XTC Series features ICE4, Instant Bandwidth, and massively simple operations to drive cost reduction and speed time to revenue. These platforms also support a broad range of Ethernet and OTN client interfaces for flexibility and are designed for metro, long-haul and subsea networks.

Infinera 7090 Series

The Infinera 7090 Packet Transport Platforms provide both Multiprotocol Label Switching Transport Profile ("MPLS-TP") and Carrier Ethernet-based options, addressing applications including business Ethernet services, migration from TDM to packet, and residential and mobile backhaul. The 7090 Series includes MPLS-TP platforms with capacities ranging from 5 Gb/s to 960 Gb/s and Carrier Ethernet-based platforms that provide a range of compact gigabit Ethernet (“GbE”) and 10 GbE access devices.

Coherent Optical Subsystems

ICE-X Coherent Pluggable Optics

ICE-X is a suite of coherent pluggable optics designed to seamlessly address point-to-point (including ZR+) and point-to-multipoint transport applications from the network edge to the core. The suite of vertically integrated ICE-X coherent optical pluggables will offer network operators the performance, scale, efficiency, and manageability critical to infrastructure support for the delivery of differentiated 5G, enhanced broadband, and next-generation cloud and business services. ICE-X coherent optical pluggables support a range of transport rates, including 800 Gb/s, 400 Gb/s and 100 Gb/s, and utilize industry-standard form factors to enable ease of deployment in a wide variety of networking elements. These networking elements include optical transport platforms, compact modular platforms, routers, switches, servers and mobile radio units. Customers for Infinera’s suite of ICE-X coherent optical pluggables include communications service providers, ICPs, enterprises and third-party network equipment manufacturers.

Our subsystems solutions include a line of high-performance transmit-receive optical sub-assemblies, innovative programmable DSPs and a line of high-performance, intelligent pluggable optical transceivers. These solutions leverage an innovative building block approach whereby subsystems can be mixed and matched flexibly, maximizing the value of each element, providing more solution options for customers, and simplifying integration into in-house and third-party optical engines.

Software

Transcend Software Suite

Leveraging cloud-native technologies and SDN principles, the Infinera Transcend Software Suite is a comprehensive software platform that provides automation capabilities designed to help network operators reduce operational costs, optimize network assets, speed time to revenue, and maximize network and service availability. Our programmable Transcend Network Management System ("NMS") provides full end-to-end network and service management across multiple technologies and equipment vendors, while the Transcend Controller enables new, efficient, and innovative applications for network control and automation, extracting the most value out edge-to-core transmission networks and open optical architectures.

Open Optical Networking Software

The Transcend Software Suite also includes software tools and applications that enable network operators to simplify the management of multi-vendor optical networks and leverage best-in-class technology from any number of suppliers in an open network environment. As part of this toolkit, Transcend Open Wave Manager makes it operationally simple to deploy, operate, and troubleshoot open wavelengths and our Intelligent Pluggables Manager brings the holistic, edge-to-core optical networking operational capabilities of DWDM transponders to intelligent pluggable optics in any network platform.

System Software

Our networking platforms and ICE-X coherent optical pluggable solutions include system software designed to maximize reliability and streamline automation. This software controls all aspects of system operations, including command processing, system security, policy management, fault monitoring, and alarm reporting. Our system software is designed to be field upgradable, with minimal impact on customer traffic.

Services

In connection with our product offerings, we provide a comprehensive range of professional, support and training services for all Infinera hardware and software products. These services cover all phases of network ownership, from the initial installation through ongoing operations and maintenance activities. Professional services extend to network optimization, expansion and modernization including migration of legacy transport services. Our global services organization is experienced and prepared to efficiently manage complex projects and assist with customer network operations in the face of today's ever-increasing demands for lower operational costs and minimized downtime.

We continue to expand and enhance our services portfolio, organization and capabilities to meet the evolving needs of our customers.

Competition

Our current technologies and solutions support the access, aggregation, metro, DCI, long-haul and subsea markets. The optical networking equipment market is highly competitive and competition in the markets we serve is based on any one or a combination of the following factors:

•the ability of products and services to meet customers’ immediate and future network requirements;

•price and other commercial terms;

•optical reach and capacity performance;

•features and functionality;

•the availability of components required to manufacture key products;

•existing business and customer relationships;

•power consumption, heat dissipation, form factor and density;

•installation and operational simplicity;

•network and service manageability;

•quality and reliability;

•service and support;

•security and encryption requirements;

•scalability and investment protection; and

•product availability and lead times.

Competition in the optical transport systems market is intense, with consolidation and geopolitical market shifts creating new competitive dynamics. In the long-haul market, our main competitors include DWDM systems suppliers such as Ciena and Nokia, as well as China-based suppliers Huawei and ZTE. In the metro market, we face the same competitors as in long-haul, in addition to Cisco, ADTRAN, Ribbon Communications, and Fujitsu, among others. Competition in the optical subsystems and pluggable optics market includes, but is not limited to, Cisco (via their acquisition of Acacia), Lumentum, Marvell and Coherent, as well as a wide range of China-based suppliers. We also encountered competitor consolidation in the markets in which we compete and may continue to do so, which could lead to a changing competitive landscape, capabilities and market share, and could impact our results of operations.

Some of our competitors have substantially greater name recognition, technical, financial, sales and marketing resources and may be perceived by our customers and suppliers to have greater financial stability, and better-established relationships with potential customers than we have. Many of our competitors have more resources and more experience in developing or acquiring new products and technologies, as well as in creating greater market awareness for those products and technologies. In addition, many of our competitors have the financial resources to offer competitive products at aggressive pricing levels that could prevent us from competing effectively. Some of our competitors offer optical products at a substantial discount or for free when bundled together with broader technology purchases, such as router or wireless equipment purchases. Further, many of our competitors have built long-standing relationships with some of our prospective and existing customers and have the ability to provide financing to customers and could, therefore, have an inherent advantage in selling products to those customers.

Sales and Marketing

We market and sell our products and related support services primarily through our direct sales force, supported by marketing and product management personnel. We also use channel distribution or support partners to enter new markets or when requested by a potential customer. Our sales team has significant experience with the buying process and sales cycles typical of high-value telecommunications systems and subsystems products.

The sales process for our products entails discussions with prospective customers, analyzing their networks and identifying how they can utilize our solutions capabilities within their networks. This process requires developing strong customer relationships and leveraging our sales force, technical experts and customer support team and associated capabilities.

Over the course of the sales cycle, potential customers often test our products before buying. Prior to commercial deployment, the customer will generally perform a field trial of our products. Upon successful completion, the customer generally accepts the products installed in its network and may continue with commercial deployment of additional products. We anticipate that our sales cycle, from initial contact with a prospective customer through the signing of a purchase agreement may, in some cases, take several quarters.

Direct Sales Force. Our sales team sells directly to service providers worldwide and is organized geographically around the following markets: (i) United States and Canada (“North America”); (ii) Latin America and South America (“LATAM”); (iii) Europe, Middle East and Africa (“EMEA”); and (iv) Asia Pacific and Japan (“APAC”). Within each geographic area, we maintain specific teams or personnel that focus on a particular region, country, customer or market vertical. We believe that we will need to further invest in the growth of our direct sales force to compete effectively against our competitors that have built long-standing relationships with some of our prospective and existing customers.

Indirect Sales Force. We employ business consultants and resale and logistics partners to assist in our sales efforts. These partners have deep knowledge of regional business practices and strong relationships with key local operators. We expect to work with business partners to assist our customers in the sale, deployment and maintenance of our systems and have entered into distribution and resale agreements to facilitate the sale and support of our products.

Marketing and Product Management. Our product management team is responsible for defining the product features and go-to-market plan required to maximize our success in the marketplace. Product management supports our sales efforts with product and application expertise. Our corporate marketing team works to create demand for our products by communicating our value proposition and differentiation through a 10

9Marketing and Product Management. Our product management team is responsible for defining the product features and go-to-market plan required to maximize our success in the marketplace. Product management supports our sales efforts with product and application expertise. Our corporate marketing team works to create demand for our products by communicating our value proposition and differentiation through a variety of marketing and customer engagement programs, including public relations, industry analyst relations, event and trade show marketing, web-based promotions, social media, email marketing, and advertising, among other marketing vehicles.

variety of marketing and customer engagement programs, including public relations, industry analyst relations, event and trade show marketing, web-based promotions, social media, email marketing, and advertising, among other marketing vehicles.

Research and Development

Continued investment in research and development is critical to our business. To this end, we have a team of engineers with expertise in various fields, including photonic integrated circuits, components, systems, sub-systems and software. Our research and development efforts are currently focused in San Jose, California; Allentown, Pennsylvania; Annapolis, Maryland; Bangalore and Ahmedabad, India; Kanata, Canada; Stockholm, Sweden; Munich, Germany; Lisbon, Portugal; and Shanghai, PRC. We utilize a mix of internal resources and supplement our staffing with development personnel provided by third parties on a contract basis. We have invested significant time and financial resources into the enhancement of existing products and the development of new products. We will continue to expand our product offerings and the capabilities of existing products in the future and plan to dedicate significant resources to these continued research and development efforts. We are continually increasing the scalability and software features of our current platforms. We are investing in leveraging our vertical integration capabilities across a broader portion of our platforms. We are also working to develop new generations of optical engines at a faster cadence than we have historically in order to bring new products to market more rapidly and meet evolving customer demands. We believe these efforts will enhance our competitiveness in the markets we currently serve and also allow us to address adjacent markets to fuel our future growth.

Human Capital

Integrity, trust, mutual commitment and respect for diversity are core Infinera values – values brought to life by our talented, diverse, and dedicated global workforce. Employee health and safety are also cornerstones of our human capital management. Our goal is to ~~continuously~~continue ~~improve~~improving ~~employee~~our engagement with our global employees as we strive to build and maintain a culture of human connection, individual responsibility and mutual integrity. As of December 28, 2024, we had 3,418 employees, with 2,190 of those employees located outside of the United States. Our U.S. employees are not subject to a collective bargaining agreement. Employees in certain foreign jurisdictions are represented by local workers’ councils or collective bargaining agreements, as required by local laws or customs. We did not experience any work stoppages in fiscal 2024. We consider the relationships with our employees to be positive and productive.

As of December 30, 2023, we had 3,389 employees, with 2,119 of those employees located outside of the United States. Our U.S. employees are not subject to a collective bargaining agreement. Employees in certain foreign jurisdictions are represented by local workers’ councils or collective bargaining agreements, as required by local laws or customs. We have not experienced any work stoppages to date. We consider the relationships with our employees to be positive.

Organizational Culture

We believe that developing and fostering a global ~~organizational~~ culture, while also supporting local initiatives, is a key component of our human capital management practice and critical to our long-term success. InOur ~~2023,~~culture weis ~~strengthened~~underpinned ~~our~~by three core ~~culture~~principles tothat ~~drive~~unite ~~the~~our ~~evolution~~workforce: of(1) innovation that matters (empowering our ~~business~~people); (2) better together (workforce unified in mission and ~~human~~purpose) ~~capital~~and ~~strategy~~(3) we care (engaging people to reach their potential, fostering integrity and empathy, standing with employees and respecting individuality). WeIn 2024, we have ~~intensified~~continued to fortify efforts to ~~involve~~support and engage leaders at all levels in cultural initiatives and decision-making processes. ~~For~~In ~~example~~2024, ~~in 2023,~~ we continued our cross-functional leadership ~~program~~initiatives, including continuing our Second Circle program, which is a global initiative to accelerate the leadership development of our talent. ~~Through regular feedback sessions and leadership forums, Second Circle aims to ensure that our culture reflects the diverse perspectives and experiences within our Company.~~ Our executives are ~~also~~ evaluated and held accountable for upholding our cultural values and leading by example. Our culture is underpinned by three core principles that unite our workforce: (1) innovation that matters (empowering our people); (2) better together (workforce unified in mission and purpose) and (3) we care (engaging people to reach their potential, fostering integrity and empathy, standing with employees and respecting individuality).

Diversity, Equity and Inclusion

At Infinera, we strive to create an inclusive culture for a workforce that is unified in mission and purpose. This is reflected in the way we treat each other, the way we respect our differences across our global workforce, and how we conduct business with our customers and partners around the world. We believe that our culture of inclusion and belonging enables us to leverage the strengths of our people to exceed customer expectations and growth objectives.

In 2020, we launched Infinera ALL-In ("ALL-In"), an employee-led, executive-sponsored, company-wide effort to promote, facilitate and support sustainable diversity, equity and inclusion ("DEI") efforts. ALL-In is sponsored by our Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), and Chief Human Resources Officer ("CHRO"), and is led by other executives and employee leaders from each region in which we have employees and do business. In the last three years, ALL-In has contributed to our inclusive culture, raised awareness and fostered meaningful dialogue, and helped guide the overall development of our DEI initiatives.

In 2023, we have continued our partnerships with non-profits and historically black colleges and universities to increase our pipeline of diverse talent. Through our partnership with the United Negro College Fund (“UNCF”), Infinera sponsors internships with a focus on providing job opportunities to candidates within the historically black colleges and universities network that may have never worked in technology before or that may be the first person in their family to attend a university. By positioning Infinera as an accessible avenue into a technical career working on the frontier of optical networking technology, we hope to further expand our candidate pool and access the best talent across the nation. Our apprenticeships also provide a direct avenue to a technical career to candidates that might not have completed a university degree. Leveraging the candidates’ passion and potential, we offer the opportunity for candidates with high school diplomas or equivalency certificates to learn and earn within our Registered Apprentice Program. In our larger sites globally, we also post roles on platforms and job boards targeted at diverse talent pools enabling greater access to diverse talent. In our larger sites globally, we post roles on platforms and job boards targeted at diverse talent pools enabling greater access to diverse talent.

In 2023, we continued to provide DEI training for our global employee base. Training topics are focused on global diversity, employees' roles in workplace diversity and related matters. We offer recruiters and managers training on topics such as leveraging inclusive hiring practices.

As of December 30, 2023, women represented 20% of our global employees, based on those who identify, and 19% based on total population. In the U.S., minorities represented approximately 45% of our U.S. population, based on those who identify, and approximately 38% of our total U.S. population.

Employee engagement

Employee engagement is critical to building a unified and global culture that values local needs and perspectives. We create an engaging workplace culture by consistently listening to and acting on employee feedback. This employee engagement has directly led to the evolution of our culture as referenced above. We continuously evolve our approach to employee communications, from a company-wide platform, to function or departmental communications, to one-on-one discussions to better understand employee expectations and assess the effectiveness of our people practices. From our employee engagement survey feedback, we created a new program where managers can invite executives from other functions to attend their internal staff meetings. This program has fostered candid, thoughtful and cross-functional collaboration. We also encourage our employees to share direct feedback about working for our company through other feedback channels, including employee surveys and on public forums such as Glassdoor.com. This helps us determine how connected employees are to their roles, each other, customers, and other stakeholders and helps us continuously improve our employee experience.

To further foster inclusion and promote our culture and values throughout our diverse workforce, we support several employee resource groups (“ERGs”) including African Descent/Black at Infinera, Infinera Veterans Employee Resource Group and Women at Infinera ("WIN"). As an example of ERG evolution and effectiveness, WIN works to provide our female employees with access to conferences, networking events and other prominent engagements in the technology industry, as well as to support greater opportunities for career growth, internships, and leadership. In 2023, we continued our WIN mentoring program, participation in local and regional women’s conferences and a speakers series including industry and thought leaders addressing topics such as development, recruitment, and retention of women. In various locations, employees have also partnered with local nonprofits and schools to encourage female students to pursue science, technology, engineering, and mathematics, or STEM, careers.

We also continue to design strategic initiatives with the intent to reduce barriers and enhance collaboration. For example, in 2023, the Company hosted three events where multiple levels of management, technologists and individual contributors engaged directly with our Board of Directors. These initiatives allowed the Board of Directors to interact with the Company’s leadership and talent, while also providing leadership direct access and visibility to the Board of Directors.

In 2020, we launched Infinera ALL-In ("ALL-In"), an employee-led, executive-sponsored, company-wide effort to promote, facilitate and support sustainable diversity, equity and inclusion ("DEI") efforts. ALL-In is sponsored by our Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), and Chief Human Resources Officer ("CHRO"), and is led by other executives and employee leaders from each region in which we have employees and do business. ALL-In has contributed to our inclusive culture, raised awareness and fostered meaningful dialogue, and helped guide the overall development of our DEI initiatives. ALL-In also provides an excellent platform for developing leaders to operate in a global, cross-functional environment who can develop and contribute to new and critical company initiatives.

In 2024, we have continued our partnerships with non-profits such as the United Negro College Fund (“UNCF”) and historically black colleges and universities to increase our pipeline of diverse talent. By positioning Infinera as an accessible avenue into a technical career working on the frontier of optical networking technology, we hope to further expand our candidate pool and access the best talent across the nation. Our apprenticeships also provide a direct avenue to a technical career to candidates that might not have completed a university degree. Leveraging the candidates’ passion and potential, we offer the opportunity for candidates with high school diplomas or equivalency certificates to learn and earn within our Registered Apprentice Program. In our larger sites, we also post roles on platforms and job boards targeted at diverse talent pools enabling greater access to diverse talent. In 2024, we also launched a successful initiative to support internships for students at underserved high schools.

In 2024, we continued to provide training for our global employee base. Training topics are focused on recruiting, global diversity, employees' roles in workplace diversity and related matters. We offer recruiters and managers training to support our DEI initiatives.

As of December 28, 2024, women represented 20% of our global employees, based on those who identify, and 19% based on total population. In the U.S., minorities represented approximately 47% of our U.S. population, based on those who identify, and approximately 40% of our total U.S. population.

Employee engagement

Employee engagement is critical to building a unified and global culture that values local needs and perspectives. We create an engaging workplace culture by consistently listening to and acting on employee feedback. This employee engagement has directly led to the evolution of our culture as referenced above. We continuously evolve our approach to employee communications, from a company-wide platform, to pulse surveys, to function or departmental communications, to one-on-one discussions to better understand employee expectations and assess the effectiveness of our people practices. Our employee communications and engagement efforts also include our executive leadership team traveling to different employee sites to host all hands meetings and roundtable engagement sessions. We encourage our employees to share direct feedback about working for our company through other feedback channels, including pulse surveys and on public forums such as Glassdoor.com. This helps us determine how connected employees are to their roles, each other, customers, the Company’s DEI initiatives and other stakeholders and helps us continuously improve our employee experience.

To further foster inclusion and promote our culture and values throughout our diverse workforce, we support several employee resource groups (“ERGs”). As an example of ERG evolution and effectiveness, Women at Infinera (“WIN”) works to provide our female employees with access to conferences, networking events and other prominent engagements in the technology industry, as well as to support greater opportunities for career growth, internships, and leadership. This community provides great value in enabling global and local collaboration. In 2024, we continued our WIN mentoring program, participation in local and regional women’s conferences and a speakers series including industry and thought leaders addressing topics such as development, recruitment, and retention of women. In various locations, employees have support to partner with local nonprofits and schools to encourage female students to pursue science, technology, engineering, and mathematics, or STEM, careers.

We also continue to design strategic initiatives with the intent to reduce barriers and enhance collaboration. This includes leveraging an in-person leadership conference along with opportunities to engage directly with our Board of Directors.

Compensation, Benefits and Well-being

Our goal is to incentivize our talented employees with a total compensation package that is market-competitive as validated through independent data sources. Our total compensation for eligible employees includes base salary, bonuses and equity awards. We intend to maintain ongoing competitiveness for attracting, engaging, retaining, and developing the best talent. We continuously improve our human resources information systems for workforce data collection, monitoring, and reporting, and expect that this will allow us to improve our understanding of compensation equity around the globe to ensure fair pay. We also seek to provide market-competitive benefits as part of our total reward structure for all employees around the globe and their dependents.

We have also invested in creating safe work environments for our workforce, which is important given our status as a critical infrastructure business with manufacturing facilities in the U.S. and research and development sites in several countries. To advance these efforts, we have a global leadership team comprised of local site leaders that meets regularly to support compliance with all local and international guidelines and establishes best practices at every site. We are committed to providing employees with a healthy and safe work environment by striving to prevent accidents and improve workplace conditions, and continuously working to improve our processes and performance. Our health and safety programs emphasize personal accountability, professional conduct, and regulatory compliance, while our culture fosters a sense of proactivity, caution, empathy, and communication.

We have also continued to emphasize employee well-being. ~~For~~We ~~example,~~offer ina ~~the~~global ~~U.S.,~~Company ~~the~~sponsored Employee Assistance Program benefit that includes mental health counseling for help with personal issues, childcare and eldercare referrals, financial coaching, legal consultation and wellness tools. Employees are provided medical, dental, vision, long-term and short-term disability, and life insurance, and employees covered under our health insurance have access to various wellness programs. Employees are provided paid parental leave as new parents (birth or adoption). Eligible employees are also qualified to receive unlimited flexible time off.

Growth and Development

Consistent with our commitment to innovation that matters, our employee growth and development initiatives are designed to provide opportunities for employees to learn, innovate and enhance their ~~skillsets~~skill sets at every stage of their role and long-term career. To ensure business continuity and employee development, the executive leadership team regularly reviews the talent pipeline, identifies, and develops succession candidates, and builds succession plans for leadership positions. The Board and its Nominating and Governance Committee provide oversight of CEO and succession planning of key executive roles.

Part of a healthy culture is also ensuring the Company attracts and develops new talent. In ~~2023~~2024, the Company ~~provided~~continued to provide internships to candidates in high school, community colleges and universities ~~globally~~. Internships enable the Company to access talent who can join the Company’s workforce as an employee, while also providing such interns with opportunities to work for an innovative technology company.

Experiential learning is powerful in career development, which is why we also provide global job-based learning opportunities including cross-functional transfers and expanded roles. Education also enables the advancement of our DEI initiatives, which is one of our core values and a continued area of focus for us. Our learning and development initiatives include a scalable, multi-language e-learning platform that enables the proliferation of global, diverse, and professional education. We also provide ~~education~~educational opportunities on topics that include, but are not limited to, technical sessions, managerial training, ~~effective~~importance ~~time~~of ~~management,~~DEI ~~unlocking executive presence, working in a multigenerational workplace, next level delegation~~ and ~~breaking~~soft-skills ~~down barriers~~development.

We also have a global mentorship program to empower ~~all~~ employees, ~~within~~while ~~Infinera~~growing ~~to advance~~ their ~~careers~~capabilities and ~~realize~~advancing their ~~full potential~~careers. By facilitating mentor-mentee relationships, this program provides a unique opportunity for reflection, self-examination, and the development of practical skills for mentees while simultaneously providing mentors with fresh perspectives, insights, opinions, and an opportunity to have a direct hand in the development of future leaders.

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Manufacturing

We have invested significant time and capital to develop and improve the manufacturing processes we use to produce and package our products. This includes significant investments in personnel, equipment and the facilities needed to manufacture and package our products in California and Pennsylvania. We also have invested in automating our manufacturing process and in training and maintaining the quality of our manufacturing workforce. As a leader in the development of photonic integration, our manufacturing processes have been developed over many years and are protected through a combination of patents, trade secrets and contractual protections. We believe that the investments we have made towards the manufacturing and packaging of our products provide us with a significant competitive advantage. We also believe that our current manufacturing facilities, including our fabrication facility for our PICs in California and our module manufacturing facility in Pennsylvania, can accommodate an increase in production capacity as our business continues to grow.

We also use contract manufacturers to assemble portions of our products. Each contract manufacturer procures components necessary to assemble products according to our specifications and bills of material. For elements of our business where we outsource, we perform rigorous in-house quality control testing to ensure the reliability of our products. Our supply chain risk mitigation strategies are continuous and institutionalized in our supply chain design for external manufacturing and for procurement of components. We currently use three contract manufacturers in several different countries, including Thailand, Malaysia, and China, and we maintain the capability to transfer select manufacturing activities to U.S. qualified factories of three electronic manufacturing services partners.

We expect all suppliers to comply with our Supplier Code of Conduct, which addresses the rights of workers to safe and healthy working conditions, environmental responsibility, and compliance with applicable laws.

Backlog

Our backlog represents purchase orders received from customers for future product shipments and services to be provided in future periods. Our backlog is subject to future events that could cause the amount or timing of the related revenue to change, and, in certain cases, purchase orders may be canceled without penalty. Orders in backlog may be fulfilled several quarters following order receipt and may relate to multi-year support service obligations. As a result, we believe that backlog should not be viewed as an accurate indicator of future operating results for any particular period. A backlogged purchase order may not result in revenue in a particular period, and the actual revenue may not be equal to our backlog amounts. Our presentation of backlog may not be comparable with that of other companies in our industry.

Intellectual Property

Our innovative software and optical engine technologies, including our PIC, DSP, module and related technologies, are foundational to our products and we believe they are highly valued by our customers and provide us with a competitive advantage.

We believe our success depends upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks, as well as customary contractual protections. However, there can be no assurances that these protections will be sufficient to provide us with a competitive advantage or that others have not or will not reverse engineer our designs or discover, develop or disclose the same or similar designs and manufacturing processes.

As of December 3028, ~~2023~~2024, we held over 1,~~019~~000 U.S. patents and ~~470~~over 400 international patents expiring between ~~2024~~2025 and ~~2042~~2043, and held ~~177~~over 100 U.S. and 98over ~~foreign~~80 international pending patent applications. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims.

We may not receive any competitive advantages from the rights granted under our patents and other intellectual property. Any patents granted to us may be contested, circumvented or invalidated over the course of our business, and we may not be able to prevent third parties from infringing these patents. Therefore, the impact of these patents cannot be predicted with certainty.

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We believe that the frequency of assertions of patent infringement is increasing as patent holders, including entities that are not in our industry and who purchase patents as an investment or to monetize such rights by obtaining royalties, use such actions as a competitive tactic as well as a source of additional revenue. For example, we are currently involved in litigation for alleged patent infringement. See the information set forth under the heading “Legal Matters” in Note 12, Commitments and Contingencies, in Part II, Item 8 for additional information regarding such litigation. Any claim of infringement from a third party, even those without merit, could cause us to incur substantial costs defending against such claims, and could distract our management from running our business. Furthermore, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages or could include an injunction or other court order that could prevent us from offering our products. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially reasonable terms or at all. Alternatively, we may be required to develop non-infringing technology, which would require significant effort and expense and may ultimately not be successful.

In addition to trade secret and patent protections, we generally control access to and the use of our proprietary software and other confidential information. This protection is accomplished through a combination of internal and external controls, including contractual protections with employees, contractors, customers and partners, and through a combination of U.S. and international copyright laws.

We license some of our software pursuant to agreements that impose restrictions on our customers’ ability to use such software, such as prohibiting reverse engineering and limiting the use of copies. We also seek to avoid disclosure of our intellectual property by relying on non-disclosure and assignment of intellectual property agreements with our employees and consultants that acknowledge our exclusive ownership of all intellectual property developed by the individual within the scope of and during the course of his or her work with us. The agreements also require that each person maintain the confidentiality of all proprietary information disclosed to them. Other parties may not comply with the terms of their agreements with us, and we may not be able to enforce our rights adequately against these parties. We also rely on contractual rights to establish and protect our proprietary rights in our products.

We incorporate free and open source licensed software into our products. Although we monitor our use of such open source software closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products. In addition, non-compliance with open source software license terms and conditions could subject us to potential liability, including intellectual property infringement and/or contractual claims. In such event, we could be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products or to discontinue the sale of our products in the event re-engineering cannot be accomplished in a timely manner, any of which could adversely affect our business, operating results and financial condition.

Governmental Regulations

Environmental Laws and Regulations. We are committed to maintaining compliance with all environmental laws and regulations applicable to our operations, products and services. Our business and operations are subject to various federal, state, local and foreign laws and regulations that have been adopted with respect to the environment, including the Waste Electrical and Electronic Equipment Directive ("WEEE"), Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment ("RoHS"), and Registration, Evaluation, Authorization, and Restriction of Chemicals ("REACH") regulations adopted by the European Union. Environmental regulation is increasing, and we expect that our operations will be subject to additional environmental compliance requirements, which may expose us to additional costs. We are also subject to disclosure requirements related to the presence of “conflict minerals” in our products. To date, our compliance costs relating to environmental regulations have not resulted in a material adverse effect on our business, results of operations or financial condition.

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Other Laws and Regulations. We are subject to U.S. and foreign laws and regulations across the jurisdictions in which we operate. In addition to the environmental laws and regulations discussed above, we are subject to laws and regulations addressing the telecommunications industry, cybersecurity, privacy and data protection, export and import control, trade sanctions, and anti-bribery and anti-corruption. To date, our compliance costs relating to these laws and regulations have not resulted in a material adverse effect on our business, operating results or financial condition.

For further discussion of risks associated with these governmental laws and regulations, see Part I, Item 1A, “Risk Factors – Legal and Regulatory Risk Factors.”

Information about our Executive Officers

Our executive officers and their ages and positions as of December 3028, ~~2023~~2024, are set forth below:

Name	Age	Position
David W. Heard	5556	Chief Executive Officer and Director
Nancy L. Erba	5758	Chief Financial Officer
David L. Teichmann	67	Chief Legal Officer and Corporate Secretary
Regan MacPherson	61	Chief Legal Officer and Corporate Secretary
Nicholas R. Walden	5253	Senior Vice President, Worldwide Sales

David W. Heard has served as our ~~Chief~~CEO ~~Executive Officer~~ and has been a member of our Board of Directors since November 2020. Mr. Heard joined Infinera in June 2017 and served as our Chief Operating Officer from October 2018 to November 2020. During his time as COO, Mr. Heard ~~previously~~was ~~served~~responsible asfor ~~our~~leading ~~General~~the ~~Manager,~~innovation ~~Products~~of new solutions and ~~Solutions~~the overall operational excellence of the company, ~~from~~overseeing ~~June~~functions ~~2017~~including tocorporate ~~October~~development, ~~2018.~~facilities, ~~Prior~~human toresources, ~~joining~~information ustechnology, marketing, operations, product lifecycle management, quality, research and development and services. Mr. Heard ~~served~~brings as a ~~private~~proven ~~consultant~~track ~~from~~record ~~2015~~of totechnology ~~June~~industry ~~2017.~~leadership, ~~From~~with ~~2010~~more than 25 years of success in the industry. Prior to ~~2015~~Infinera, Mr. Heard served as President of Network and Service Enablement at JDS Uniphase. ~~From~~from ~~2007~~2010 to ~~2010~~2015, ~~Mr.~~and ~~Heard served~~ as ~~Chief~~COO ~~Operating Officer~~ at BigBand Networks (now ~~part of~~ Arris). ~~From~~from ~~2004~~2007 to ~~2006, Mr~~2010. ~~Heard~~Earlier ~~served~~roles asincluded President and Chief Executive Officer (CEO) at Somera (now ~~part of~~ Jabil)~~. From 2003 to 2004~~, ~~Mr. Heard served as~~ President and General Manager, Switching Division, at Tekelec (now ~~part of~~ Oracle)~~. From 1995 to 2003~~, ~~Mr.~~President ~~Heard~~and ~~served~~CEO ~~in a number of leadership roles~~ at Santera Systems, ~~Spatial~~and ~~Networks~~various ~~and~~positions at Lucent Technologies (both now part of Nokia) and AT&T. Mr. Heard holds ana M.B.A. in Production and Operations Management from Ohio State University, an MBA from the University of Dayton, and an M.S. in ~~management~~Management from Stanford Graduate School of Business, where he was a Sloan Fellow~~, and a B~~.~~A. in production and operations management from Ohio State University.~~

Nancy L. Erba has served as our Chief Financial Officer since August 2019 after joining us as Senior Vice President, Strategic Finance earlier in the same month. Prior to joining us, from September 2016 to March 2019, Ms. Erba served as Chief Financial Officer of Immersion Corporation, a leader in touch feedback technology. From February 2015 to October 2015, Ms. Erba was Vice President, Financial Planning and Analysis of Seagate Technology plc, a data storage company. Prior executive roles at Seagate Technology include Division CFO and Vice President of Finance for Strategic Growth Initiatives from 2013 to 2015; Vice President, Business Operations and Planning from 2009 to 2013; Division CFO and Vice President of Finance of the Consumer Solutions Division from 2008 to 2009; and Vice President, Corporate Development from 2006 to 2008. Ms. Erba currently serves on the board of directors of PDF Solutions, Inc., a software and engineering services company. Ms. Erba holds an M.B.A. from Baylor University and a B.A. in mathematics from Smith College.

~~David~~Regan L.MacPherson ~~Teichmann~~ has served as ~~our~~Infinera’s Chief Legal Officer and Corporate Secretary since ~~April~~May ~~2019~~2024. ~~Prior~~She tois ~~joining~~responsible ~~us,~~for ~~Mr.~~Infinera’s ~~Teichmann~~global ~~served~~legal asand ~~Executive~~corporate ~~Vice~~governance ~~President,~~matters ~~General Counsel~~ and ~~Corporate~~policies. ~~Secretary of Oclaro, Inc~~Ms., aMacPherson ~~maker~~brings ofto ~~optical~~Infinera ~~components~~over ~~and~~20 ~~modules~~years ~~for~~of ~~the~~corporate ~~long-haul,~~legal ~~metro and data center markets~~experience, ~~from~~including ~~January~~expertise ~~2014 until its acquisition by Lumentum~~ in ~~December~~corporate ~~2018.~~law ~~From~~and ~~2007 to 2012~~governance, heregulatory ~~served as the Executive Vice President~~affairs, ~~General~~commercial ~~Counsel~~ and ~~Corporate~~strategic ~~Secretary of Trident Microsystems~~transactions, ~~Inc., a public fabless semiconductor company that sold television~~ and ~~set~~risk ~~top box integrated circuits~~management. ~~From~~Prior ~~August 1998~~ to ~~February 2006~~Infinera, heMs. MacPherson served as ~~the~~Executive ~~Senior~~ Vice President, ~~General~~and ~~Counsel~~Chief ~~and~~Legal ~~Secretary~~Officer of ~~GoRemote~~SunPower ~~Internet Communications~~Corporation, ~~Inc.,~~ a ~~secure~~residential ~~managed~~solar ~~global~~technology ~~remote~~and ~~access~~energy ~~solutions~~services provider,. ~~guiding~~Prior ~~the~~to ~~company~~SunPower ~~through~~Corporation, ~~its~~she ~~initial~~was ~~public~~Chief ~~offering~~Legal ~~in 1999~~ and ~~its~~Compliance ~~acquisition~~Officer byof ~~iPass,~~Quantum ~~Inc~~Corporation. ~~in 2006~~Ms. ~~Mr.~~MacPherson ~~Teichmann~~also ~~held~~previously ~~various~~served ~~senior~~as ~~legal~~Vice ~~counsel~~President ~~positions~~and ~~from~~Chief ~~1989~~Compliance toOfficer ~~1998~~at ~~handling~~Marvell ~~legal matters in Europe~~Semiconductor, ~~Asia~~Inc. ~~Pacific,~~and ~~Latin~~Senior ~~America~~Vice ~~and~~President ~~Canada~~ and ~~began~~General ~~his~~Counsel ~~career~~of ~~with~~Seagate ~~the Fenwick & West law firm~~Technology. ~~Mr.~~Her ~~Teichmann~~career ~~holds~~spans a ~~J.D.~~variety ~~from the William S. Richardson School~~ of ~~Law~~legal atand ~~the~~executive ~~University~~leadership ofpositions ~~Hawaii,~~since an1999. MMs.A. inMacPherson ~~law~~earned ~~and~~her ~~diplomacy~~Juris ~~from~~Doctor ~~the~~degree ~~Fletcher~~from ~~School~~Southwestern of Law School and ~~Diplomacy,~~her ~~and~~Bachelor aof ~~B.A.~~Arts in ~~political~~Political ~~science~~Science from ~~Trinity~~San ~~College.~~Francisco State University.

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Nicholas R. Walden has served as our Senior Vice President, Worldwide Sales since January 2020. He oversees global sales, business development, sales engineering and operations, and strategic partnerships. Mr. Walden’s responsibilities include revenue growth, new customer and strategic partner acquisition, and go-to-market strategy. Mr. Walden served as Senior Vice President, Strategic Accounts from January 2019 to January 2020. He served as Senior Vice President, EMEA Sales from September 2015 to January 2019. Prior to joining us, Mr. Walden served in a variety of senior sales roles at Ciena Corporation from 1999 to 2015, most recently as its Vice President and Managing Director, Regional Carrier Business, EMEA. Mr. Walden studied HVAC Mechanical Engineering at the College of Technology at Reading, Berkshire, United Kingdom.

Available Information

We may use our website (http://www.infinera.com), press releases, public conference calls and public webcasts as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Information contained on our website or any website referred to in this Form 10-K is not incorporated by reference unless expressly noted. We file reports with the Securities and Exchange Commission (“SEC”), which we make available on our website free of charge. These reports include Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to such reports, each of which is provided on our website as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC. The SEC also maintains a website that contains our SEC filings. The address of the SEC website is https://www.sec.gov.

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ITEM 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. A description of the risks and uncertainties associated with our business is set forth below. These risks, together with many other factors described in this report and in our other public filings, and additional risks and uncertainties not currently known to us or that we currently deem to be immaterial, could adversely affect our operations, performance and financial condition. Our actual results could differ materially from our forward-looking statements.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations and financial results.

Merger-Related Risk Factors

•Because the exchange ratios provided in the Merger Agreement are fixed and will not be adjusted, our stockholders cannot be certain of the precise value of the consideration in the form of Nokia American Depositary Shares ("ADSs") that they may receive in the Merger.

•The Merger may not be completed and the Merger Agreement may be terminated in accordance with its terms.

•Failure to complete the Merger could negatively impact our future business and financial results and the trading prices of our common stock.

•Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated.

•The Merger and related uncertainty may cause customers and other partners to delay or defer commercial decisions.

•Failure to attract, motivate and retain executives and other key employees could harm the business.

•Our directors and executive officers have interests and arrangements in the Merger that may be different from, or in addition to, the interests of our stockholders generally.

•Lawsuits have been filed in connection with the Merger and further litigation may arise, which could be costly, prevent the consummation of the Merger, divert management’s attention and otherwise harm our business.

•The Nokia Shares to be received in the form of Nokia ADSs by electing stockholders as a result of the Merger will have rights different from our common stock.

Business and Operational Risk Factors

•Our quarterly results may vary significantly from period to period.

•Our ability to increase our revenue will depend upon continued demand growth for additional network capacity and on the level and timing of customer capital spending.

•Any delays in the development, introduction or acceptance of our new products or in releasing enhancements to our existing products may harm our business.

•Aggressive business tactics by our competitors and new entrants may harm our business.

•The markets in which we compete are highly competitive and we may be unable to compete effectively.

•~~Supply~~If ~~chain~~we ~~and~~lose ~~logistics~~key ~~issues,~~personnel ~~including~~or ~~delays,~~fail ~~shortages,~~to ~~longer~~attract ~~lead~~qualified ~~times~~personnel, ~~unfavorable contractual terms, components that have been discontinued and increased costs, and~~ our ~~dependency on sole source, limited source or high-cost suppliers, could harm our~~ business ~~and~~may ~~operating~~be ~~results~~harmed.

•We are dependent on a small number of key customers for a significant portion of our revenue.

•Supply chain and logistics issues could harm our business and operating results.

•Product performance problems, deployment delays and product security vulnerabilities could harm our business and reputation.

•The manufacturing process for our optical engine and the assembly of our products are very complex.

•If we lose key personnel or fail to attract qualified personnel, our business may be harmed.

•If our contract manufacturers do not perform as we expect, our business may be harmed.

•Increased consolidation among our customers and suppliers in the communications networking industry has had, and could continue to have, an adverse effect on our business and results of operations.

•We rely on various third-party service partners to help complement our global operations.

•We must respond to rapid technological change for our products to be successful.

•Failure to accurately forecast manufacturing requirements or customer demand could ~~incur~~raise ~~additional~~ costs.

•Actions that we are taking or may in the future take to restructure or streamline our business may not be as effective as anticipated and may have negative consequences.

•Our large customers have substantial negotiating leverage, which may harm our results of operations.

•Our sales cycle can be long and unpredictable, which could result in unexpected revenue shortfalls.

•~~The~~If ~~effects~~we ofare ~~public~~not ~~health~~successful ~~emergencies~~in ~~could~~securing the funding contemplated by grants we have areceived ~~material~~or ~~adverse~~may ~~effect~~receive onfrom ~~our~~governments, ~~business~~agencies or research organizations, ~~manufacturing~~or ~~operations~~if ~~and~~we ~~results~~are unable to comply with the terms of ~~operations.~~those grants, then our business might be harmed.

•Any acquisitions or strategic transactions that we undertake could disrupt our business and harm our financial condition and operations.

Financial and Macroeconomic Risk Factors

•We may be unable to generate the cash flow necessary to make anticipated capital expenditures, service our debt or grow our business.

•Unfavorable macroeconomic and market conditions may adversely affect our financial results.

•Inflation may increase our costs beyond what we can recover through price increases.

•If we need additional capital in the future, it may not be available to us on favorable terms, or at all.

•Our Loan Agreement (as defined below) and any other ~~credit~~debt ~~or similar~~ agreements into which we may enter ~~in the future~~ may restrict our operations.

•Our debt obligations may adversely affect our ability to raise additional capital and ~~will~~strain ~~be a burden on our future~~ cash ~~resources~~flow.

•Our international sales and operations subject us to additional risks.

•We may be adversely affected by fluctuations in currency exchange rates.

•Our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income.

•We may issue additional shares of our common stock in connection with conversions of the ~~2024 Notes, the~~ 2027 Notes and the 2028 Notes (as defined below).

•The fundamental change provisions of the ~~2024 Notes, the~~ 2027 Notes and the 2028 Notes may delay or prevent an otherwise beneficial takeover attempt of us.

•The Capped Calls (as defined below) may affect the value of the 2024 Notes and our common stock.

•We are subject to counterparty risk with respect to the Capped Calls.

Legal and Regulatory Risk Factors

•We are subject to various governmental export control, trade sanctions and import laws and regulations that could impair our ability to compete in international markets or subject us to liability.

•If we fail to protect our intellectual property rights, our competitive position could be harmed, or we could incur significant expense to enforce our rights.

•Claims by others that we infringe their intellectual property rights could harm our business.

•Security incidents, such as data breaches and cyber-attacks, could cause significant damage to our business and reputation.

•If we fail to remediate our material weaknesses or discover additional weaknesses or otherwise fail to maintain an effective system of internal controls, the accuracy and timing of our financial reporting may be adversely affected.

•We are subject to various governmental export control, trade sanctions and import laws and regulations that could impair our ability to compete in international markets or subject us to liability.

•We are subject to environmental regulations that could adversely affect our business.

•Regulations relating to environmental, social and governance matters, as well as customer, supplier, investor or other stakeholder demands, may add operational complexity for us.

•We are subject to global data privacy and data protection laws and regulations that could adversely affect our business or subject us to liability.

•A portion of our revenue is generated by sales to government entities, which are subject to a number of uncertainties, challenges and risks.

•Our business could be adversely affected if we cannot obtain and maintain required security clearances, or we do not comply with obligations regarding the safeguarding of classified information.

•Failure to comply with anti-bribery and similar laws could subject us to adverse consequences.

General Risk Factors

•~~The~~Events ~~trading~~that ~~price~~are outside of our ~~common~~control ~~stock~~could ~~has~~harm ~~been~~our ~~volatile and is likely to be volatile in the future~~operations.

•Future sales of our common stock could cause our stock price to fall.

•Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

•Exclusive forum provisions in our bylaws will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.

•Events that are outside of our control, such as natural disasters, terrorist attacks, wars and armed conflicts, such as between Russia and Ukraine and Israel and Hamas, or other catastrophic events, could harm our operations.

For a more complete discussion of the material risks facing our business, see below.

Risks Related to the Merger

Because the exchange ratios provided in the Merger Agreement are fixed and will not be adjusted, our stockholders cannot be certain of the precise amount or value of the consideration in the form of Nokia ADSs that they may receive in the Merger.

Subject to the terms of the Merger Agreement, at the Effective Time each share of our 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: (1) the Cash Consideration; (2) the Share Consideration or (3) the Mixed Consideration.

The Nokia Shares will be delivered in the form of Nokia ADSs, with each Nokia ADS representing the right to one Nokia Share. The election right for holders of our 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 and described further in the definitive proxy statement/prospectus filed with the SEC on August 21, 2024 (the “Proxy Statement/Prospectus”), such that the maximum number of Nokia ADSs that may be delivered as Merger Consideration is equal to (i) 0.5355 multiplied by (ii) the aggregate number of shares of our common stock issued and outstanding as of the date that is ten (10) business days prior to the closing date of the Merger (subject to certain exclusions as set forth in the Merger Agreement). In the Merger: (1) no more than 30 percent of the aggregate Merger Consideration will be paid in the form of Nokia Shares and (2) at least 70 percent of the aggregate Merger Consideration will be paid in cash. Accordingly, some of the Merger Consideration that one of our stockholders receives may differ from the type of consideration selected and such difference may be significant, and there is no assurance that one of our stockholders that has made a valid election will receive the form of consideration elected with respect to the shares of our common stock held by such stockholder.

The exchange ratios with respect to the Mixed Consideration and the Share Consideration are each fixed and will not be adjusted for changes in the market price of either Nokia ADSs or shares of our common stock. Because the exchange ratios are fixed, the market value of the Nokia ADSs issued to our stockholders will fluctuate and, as a result, could be greater than, less than or the same as the value of the Nokia ADSs on the date of this Annual Report on Form 10-K.

It is impossible to accurately predict the market price of Nokia ADSs at the completion of the Merger and, therefore, impossible to accurately predict the market value of Nokia ADSs that our stockholders will receive as a portion of the Merger Consideration in the Merger. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Nokia’s or our respective businesses, operations or prospects; legislative and regulatory developments in the industries in which Nokia and we operate; general market, industry and economic conditions; potential shareholder litigation relating to the Merger or otherwise relating to Nokia or to us; market assessments of the likelihood that the Merger will be completed; interest rates and other factors generally affecting the respective prices of Nokia ADSs and shares of our common stock; and the timing of the Merger and receipt of required regulatory approvals.

Many of these factors are beyond our control, and we are not permitted to terminate the Merger Agreement solely due to a decline in the market price of our common stock or Nokia ADSs.

The market price of Nokia ADSs will continue to fluctuate after the Merger.

Upon completion of the Merger, our stockholders who elect to receive the Share Consideration or elect to receive the Mixed Consideration will become holders of Nokia ADSs. Each Nokia ADS represents the right to one Nokia Share. The market price of the Nokia ADSs and the Nokia Shares underlying the Nokia ADSs will continue to fluctuate, potentially significantly, following the completion of the Merger, including for the reasons described above. As a result, our former stockholders could lose some or all of the value of their investment in our common stock. In addition, any significant price or volume fluctuations in the stock market generally could have a material adverse effect on the market for, or the liquidity of, the Nokia ADSs (or the Nokia Shares) received in the Merger, regardless of the combined company’s actual operating performance.

The Merger may not be completed and the Merger Agreement may be terminated in accordance with its terms.

The Merger is subject to a number of conditions that must be satisfied or waived prior to the completion of the Merger, as specified in the Merger Agreement. These conditions to the completion of the Merger, some of which are beyond our control, may not be satisfied or waived in a timely manner or at all, and, accordingly, the Merger may be delayed or not completed.

Additionally, either we or Nokia may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the parties fail to secure the regulatory approvals required to consummate the Merger. If the Merger Agreement is terminated under certain circumstances, we may be required to pay Nokia a termination fee of $65.0 million, or Nokia may be required to pay us a termination fee of $130.0 million.

Failure to complete the Merger could negatively impact our future business and financial results of and the trading prices of our common stock.

If the Merger is not completed for any reason, our ongoing business may be adversely affected and, without realizing any of the expected benefits of having completed the Merger, we would be subject to a number of risks, including the following:

•we may experience negative reactions from the financial markets, including negative impacts on our stock price;

•we may experience negative reactions from our customers, partners, suppliers, other business partners and employees;

•we will be required to pay our costs relating to the Merger, such as legal, accounting and financial advisory costs, and associated fees and expenses;

•there may be disruptions to our business resulting from the announcement and pendency of the Merger, and any adverse changes in our relationships with our customers, partners, suppliers, other business partners or employees may continue or intensify; and

•we will have committed substantial time and resources to matters relating to the Merger (including integration planning) which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to us as an independent company.

Our stockholders who elect to receive Nokia ADSs in the Merger will have rights as Nokia shareholders that differ from their current rights as our stockholders.

Upon completion of the Merger, our stockholders who receive Nokia ADSs will no longer be our stockholders and will instead become holders of Nokia ADSs (each Nokia ADS representing the right to one Nokia Share), and such Nokia Shares will be governed by Nokia’s Articles of Association. Holders of Nokia ADSs are not direct shareholders of Nokia, and their rights and obligations are governed by the deposit agreement for the Nokia ADSs. There are differences in the rights of Nokia shareholders under Nokia’s Articles of Association and the deposit agreement for the Nokia ADSs as compared to the rights of our stockholders under our charter or bylaws.

Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, we are prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to us and our stockholders.

From and after the date of the Merger Agreement and prior to the effective time of the Merger, the Merger Agreement restricts us from taking specified actions without the consent of Nokia and requires that our business and the business of our subsidiaries be conducted in the ordinary course. These restrictions may prevent us from taking actions during the pendency of the Merger that would have been beneficial. Adverse effects arising from these restrictions during the pendency of the Merger could be exacerbated by any delays in consummation of the Merger or termination of the Merger Agreement.

Delays in obtaining required regulatory approvals and satisfying closing conditions may cause Nokia, as enlarged by the completion of the Merger (the “Enlarged Company”), to not realize all of the benefits of the Merger.

The Merger is subject to a number of conditions to closing as specified in the Merger Agreement. There can be no assurance as to when these conditions will be satisfied or waived, if at all, or that other events will not intervene to delay or result in the failure to complete the transaction. Any delay in completing the Merger could cause the Enlarged Company not to realize, or to be delayed in realizing, some or all of the benefits that Nokia expects to achieve if the Merger is successfully completed within its expected time frame.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on us following the Merger.

Before the Merger may be completed, various approvals, consents and non-actions must be obtained, including approvals under applicable antitrust and foreign investment laws in certain jurisdictions. We are required to make certain additional regulatory filings and obtain approvals or authorizations in connection with certain foreign investment laws or other laws in the U.S. and other specified locations, including, but not limited to, filings with the Defense Counterintelligence and Security Agency of the United States Department of Defense and foreign investment authorities in certain non-U.S. jurisdictions and other applicable regulatory authorities. In determining whether to grant these approvals, regulators consider a variety of factors, including the regulatory standing of each party. On September 13, 2024, the applicable waiting period for U.S. antitrust purposes applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. On October 7, 2024, the parties received approval from CFIUS with respect to the Merger. On October 22, 2024, relevant authorities indicated that a filing would not be required under antitrust laws in the United Kingdom at this time. Other approvals could be delayed or not obtained at all, including due to any or all of the following: an adverse development in either party’s regulatory standing, or any other factors considered by regulators in granting such approvals; governmental, political or community group inquiries, investigations or opposition; changes in legislation; or adverse developments in the political environment.

Even if those approvals are granted, they may impose terms and conditions, limitations, obligations or costs, or require changes to the terms of the transactions contemplated by the Merger Agreement. Any such terms and conditions, limitations, obligations or restrictions could delay the completion of the transactions contemplated by the Merger Agreement or otherwise reduce the anticipated benefits of the Merger or even result in the abandonment of the Merger. Additionally, the completion of the Merger is conditioned on the absence of certain orders, injunctions or decrees by any governmental entity of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the Merger Agreement.

The Merger, and uncertainty regarding the Merger, may cause customers, partners, suppliers or other business partners to delay or defer decisions concerning us, which could adversely affect our ability to effectively manage our business.

The Merger will happen only if the conditions to closing are met. Many of the conditions are outside of our control, and both parties also have certain rights to terminate the Merger Agreement. Accordingly, there may be uncertainty regarding the completion of the Merger. This uncertainty is causing, and may continue to cause, customers, partners, suppliers or other business partners to delay or defer entering into contracts with us or making other decisions concerning us or seek to change or cancel existing business relationships with us, any of which could negatively affect our business. Any delay or deferral of those decisions or changes in existing agreements could have a material adverse effect on our business regardless of whether the Merger is ultimately completed.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Merger.

The success of the Merger will depend in part on the retention of personnel critical to the business and operations of the Enlarged Company due to, for example, their technical skills or management expertise. Competition for qualified personnel can be intense.

Current and prospective employees of each company may experience uncertainty about their future role with the Enlarged Company until strategies with regard to these employees are announced or executed, and this may impair our and Nokia’s ability to attract, retain and motivate key management, technical, business development, operational and customer-facing employees and other personnel prior to and following the Merger. If we and Nokia are unable to retain personnel, we and Nokia could face disruptions in our operations, loss of existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Merger.

If key employees of either company depart, the integration of the companies may be more difficult and the Enlarged Company’s business following the Merger may be harmed. Furthermore, the Enlarged Company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to our business or the business of Nokia, and the Enlarged Company’s ability to realize the anticipated benefits of the Merger may be adversely affected. In addition, there could be disruptions to or distractions for the workforce and management associated with activities of labor unions or integrating employees into the Enlarged Company. Accordingly, no assurance can be given that the Enlarged Company will be able to attract or retain key employees of ours and Nokia to the same extent that our companies have been able to attract or retain our own employees in the past.

Our directors and executive officers have interests and arrangements that may be different from, or in addition to, the interests of our stockholders generally.

Our stockholders should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, those of our stockholders. In (1) evaluating and negotiating the Merger Agreement; (2) approving the Merger Agreement and Merger; and (3) recommending that the Merger be adopted by our stockholders, the Board of Directors of the Company (the "Board") was aware of and considered these interests to the extent they existed at the time, among other matters. These interests include: (a) for our executive officers, the treatment of their outstanding Infinera equity awards in the Merger as described in more detail in the Proxy Statement/Prospectus; (b) for our non-employee directors, the accelerated vesting, as of immediately prior to the Effective Time, of their RSUs, and other treatment of such awards in the Merger, as described in more detail in the Proxy Statement/Prospectus; (c) for our executive officers, their rights to deemed satisfaction of certain performance criteria for our PSUs in connection with the Merger; (d) for certain of our executive officers, their continued employment by Nokia following the Merger; (e) for our executive officers, their rights to severance payments and benefits in the event of a qualifying termination of employment within a period of 3 months before to 18 months after the Effective Time of the Merger; and the continued indemnification and insurance coverage for our directors and executive officers from Infinera and Nokia under the terms of the Merger Agreement. The interests of our directors and executive officers are described in more detail in the Proxy Statement/Prospectus.

We may waive one or more of the closing conditions without re-soliciting stockholder approval.

We may determine to waive, in whole or part, one or more of the conditions of our obligations to consummate the Merger. We currently expect to evaluate the materiality of any waiver and its effect on our stockholders in light of the facts and circumstances at the time to determine whether any amendment of the Proxy Statement/Prospectus or any re-solicitation of stockholder approval of the Merger Agreement, as so amended, for adoption by our stockholders is required in light of such waiver. Any determination whether to waive any condition to the Merger or to amend the Proxy Statement/Prospectus or re-solicit stockholder approval as a result of a waiver will be made by us at the time of such waiver based on the facts and circumstances as they exist at that time.

The Merger has involved and will continue to involve substantial costs.

We have incurred and expect to continue to incur a number of non-recurring costs associated with the Merger. These costs and expenses include fees paid to financial, legal, and accounting advisors; systems consolidation costs, severance and other potential employment-related costs, including payments that may be made to certain of our executives; and filing fees, printing expenses and other related charges. These costs are payable by us regardless of whether the Merger is completed.

The Enlarged Company will also incur integration costs in connection with the Merger. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Merger and the integration of the two companies’ businesses. While both Nokia and we have assumed that a certain level of expenses would be incurred in connection with the Merger and the other transactions contemplated by the Merger Agreement, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs in connection with the Merger that the Enlarged Company may not recoup. These costs and expenses could reduce the realization of efficiencies, strategic benefits and additional income Nokia and we expect to achieve from the Merger. Although we and Nokia expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

The opinion rendered to us by Centerview will not reflect changes in circumstances between the date of such opinion and the completion of the Merger.

We have received an opinion from Centerview Partners, LLC (“Centerview”), our financial advisor, in connection with the signing of the Merger Agreement but have not obtained, nor will we obtain, an updated opinion regarding the fairness, from a financial point of view, of the Merger Consideration as of any date other than that specified in Centerview’s opinion. Centerview’s opinion does not address any other term or aspect of the Merger Agreement or the transaction, including, without limitation, the allocation of the Merger Consideration as among holders of our common stock who receive the Cash Consideration, the Share Consideration or the Mixed Consideration, or the relative fairness of the Cash Consideration, the Share Consideration or the Mixed Consideration, and does not constitute a recommendation to any of our stockholders or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the transaction or any other matter, including, without limitation, whether such stockholder or person should elect to receive the Cash Consideration, the Share Consideration or the Mixed Consideration, or make no election, in the transaction. Changes in our operations and prospects, general market and economic conditions and other factors that may be beyond our control, and on which Centerview’s opinion was based, may significantly alter our value or the prices of the shares of our common stock or the prices of the Nokia ADSs by the time the Merger is completed. Centerview’s opinion does not speak as of any date other than the date of such opinion. Because we do not currently anticipate asking Centerview to update its opinion, the opinion will not address the fairness of the Merger Consideration or the applicable exchange ratio, as applicable, from a financial point of view at the time the Merger is completed.

Lawsuits filed against us, and members of our Board, challenging the Merger, and an adverse ruling in any such lawsuit may prevent the Merger from becoming effective or from becoming effective within the expected time frame.

Lawsuits have been filed in connection with the Merger and further litigation or other legal proceedings may arise in the future, including actions alleging that our Board breached its fiduciary duties to its stockholders by entering into the Merger Agreement, by failing to obtain a greater value in the transaction for its stockholders or otherwise. We, our management and members of our Board, have been and may be subject, along with others (including Nokia), to various claims and litigation related to the Merger. We will defend against the lawsuits filed, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operation or financial position, including through the possible diversion of our resources or distraction of key personnel.

Third parties may terminate or alter existing contracts with us in connection with the Merger.

We have contracts with customers, suppliers, vendors, landlords, licensors and other business partners which may require us to obtain consent or waivers from such counterparties in connection with the Merger, including under change of control provisions. If these consents or waivers cannot be obtained, the Enlarged Company may suffer a loss of potential future revenue and may lose rights that are material to its business and the business of the Enlarged Company. In addition, third parties with whom we currently have relationships may terminate or otherwise reduce the scope of their relationship with us in anticipation of consummation of the Merger. Any such disruptions could limit the Enlarged Company’s ability to achieve the anticipated benefits of the Merger. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the Merger or the termination of the Merger Agreement.

The Nokia Shares to be received by our stockholders as a result of the Merger will have rights different from our common stock.

Upon consummation of the Merger, the rights of our stockholders, who will become shareholders of Nokia, will be governed by the Nokia Articles of Association. The rights associated with our common stock are different from the rights associated with Nokia Shares. In addition, the Nokia Shares to be received as Merger Consideration will be delivered in the form of Nokia ADSs. Holders of Nokia ADSs are not direct shareholders of Nokia, and their rights and obligations are governed by the deposit agreement for the Nokia ADSs.

Our financial projections may not prove to be reflective of actual future results.

In connection with the Merger, our management prepared and considered, among other things, internal financial projections for us. These forecasts speak only as of the date made and will not be updated. These financial projections were not prepared with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected timeframes.

Holders of our common stock who elect to receive some or all of their Merger Consideration in the form of Nokia ADSs may not receive sufficient cash consideration with which to pay their potential tax liabilities resulting from the Merger.

The exchange of our common stock by our stockholders for Cash Consideration, Share Consideration or Mixed Consideration in the Merger will be a taxable transaction for U.S. federal income tax purposes. The amount of gain or loss recognized by a holder of our common stock in the Merger generally will depend on the amount of any cash and the fair market value of any Nokia ADSs received by such holder in the Merger and the adjusted tax basis of our common stock exchanged by such holder in the Merger. To the extent that one of our stockholders elects to receive some or all of his or her or its Merger Consideration in the form of Nokia ADSs, it is possible that such stockholder may not receive sufficient cash consideration with which to pay its potential tax liabilities resulting from the Merger.

Business and Operational Risk Factors

Our quarterly results may vary significantly from period to period, which could make our future results difficult to predict and could cause our operating results to fall below investor, analyst or our expectations.

Our quarterly results and, in particular, our revenue, gross margins, operating expenses, operating margins, ~~and~~ net income (loss) and cash flow, have historically varied significantly from period to period and may continue to do so in the future. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Our budgeted expense levels are based, in large part, on our expectations of future revenue and the development efforts associated with that future revenue. Consequently, if our revenue does not meet projected levels in the short term, our inventory levels, cost of goods sold and operating expenses would be high relative to revenue, resulting in potential operating losses. If our revenue or operating results do not meet the expectations of investors or securities analysts or fall below any guidance we provide to the market, the price of our common stock may decline substantially.

Factors that may contribute to fluctuations in our quarterly results, many of which are outside our control and may be difficult to predict, include:

•fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures or to secure long-term customer relationships, as well as the timing of purchases by our key customers;

•changes in customers’ budgets for optical transport network purchases and changes or variability in their purchasing cycles;

•the timing, market acceptance and rate of adoption of our new product releases and our competitors' new product releases;

•the price, quality, lead times, timing of delivery and availability of key components from suppliers, including any price or shipping cost increases or delays in the supply of components that may result from supply disruptions as well as impacts due to consolidations amongst our suppliers;

•fluctuations in our customer, product or geographic mix, including the impact of new customer deployments, which typically carry lower gross margins, customer consolidation, which may affect our ability to grow revenue, and products powered by our next-generation technologies, which initially tend to be lower margin due to higher per unit production costs and may have greater variability in production yields;

•our ability to manage manufacturing costs, maintain or improve quality, and increase volumes and yields on products manufactured in our internal manufacturing facilities;

•our ability to manage inventory while timely meeting customer demand and avoiding charges for excess or obsolete inventory;

•our ability to control costs, including our operating expenses, the costs and availability of components and materials we purchase for our products and our capital expenditures;

•our ability to successfully restructure or transform our operations within our anticipated time frame and realize our anticipated savings;

•order cancellations or reductions or delays in delivery schedules by our customers;

•any significant changes in the competitive dynamics of the markets we serve, including any new entrants, new technologies, or customer or competitor consolidation, as well as aggressive pricing and bundling tactics by our competitors;

•any delay in collecting or failure to collect accounts receivable;

•readiness of customers for installation of our products, which has been impacted by the ~~budget~~resource ~~constraints~~ and personnel ~~availability~~constraints of our customers;

•the timing of revenue recognition and revenue deferrals;

•any future changes in ~~U.S.~~ GAAP or new interpretations of existing accounting rules;

•the impact of a significant natural disaster or public health emergency, as well as interruptions or shortages in the supply of utilities such as water and electricity, in a key location such as our Northern California facilities, which are located near major earthquake fault lines, in areas of high fire risk and in a designated flood zone; and

•general economic, market and political conditions in domestic and international markets, including those related to any policy changes by the federal government or by the presidential administration in the U.S., and other factors beyond our control, including the ongoing effects of continuing inflation, ~~and~~ high interest rates and tariffs.

Our ability to increase our revenue will depend upon continued growth of demand by consumers and businesses for additional network capacity, on the level and timing of capital spending by our customers, and on the continued demand for our services support.

Our future success depends on factors that increase the amount of data transmitted over communications networks and the growth of optical transport networks to meet the increased demand for optical capacity. These factors include the growth of mobile, video and cloud-based services, increased broadband connectivity and the continuing adoption of high-capacity, revenue-generating services. If demand for such bandwidth does not continue, or slows down, the market for optical transport networking equipment may not continue to grow and our product sales would be negatively impacted.

In addition, demand for our products depends on the level and timing of capital spending in optical networks by service providers as they construct, expand and upgrade the capacity of their optical networks. Capital spending is cyclical in our industry and spending by customers can change on short notice. Customer demand is dependent in part on the level of inventory held by customers and, to the extent that such inventory levels have been or will be built up by customers to address global supply issues or otherwise, overall customer demand may be dampened in subsequent periods until the level of inventory held by such customers returns to more normalized levels. Any future decisions by our customers to reduce capital spending, whether caused by lower customer demand, weakening economic conditions, high borrowing costs, inflation, customer-specific supply chain issues, changes in government regulations relating to telecommunications and data networks, or other reasons, could have a material adverse effect on our business, financial condition and results of operations.

Revenue we receive for our services offerings is highly dependent on product sales and the implementation processes of our customers. If our customers have internal services teams or if our products such as our pluggables do not otherwise require our services support, our revenue related to services and our related gross margins may be impacted and our results of operations may be harmed.

Any delays in the development, introduction or acceptance of our new products or in releasing enhancements to our existing products may harm our business.

Our products are based on complex technologies, including, in many cases, the development of next-generation PICs, DSPs and specialized application-specific integrated circuits (“ASICs"), each of which are key components of our optical engines. In addition, we may also depend on technologies from outside suppliers, all of which may cause us to experience unanticipated delays in developing, improving, manufacturing or deploying our products. The development process for our optical engines is lengthy, and any modifications entail significant development cost and risks.

At any given time, various new product introductions and enhancements to our existing products are in the development phase and are not yet ready for commercial manufacturing or deployment. We rely on third parties, some of which are relatively early-stage companies, to develop, manufacture and deliver components for our next-generation products, which can often require custom development. The development process from laboratory prototype to customer trials, and subsequently to general availability, involves a significant number of simultaneous efforts. These efforts often must be completed in a timely and coordinated manner so that they may be incorporated into the product development cycle for our systems, and include:

•completion of product development, including the development and completion of our next-generation optical engines, and the completion of associated module development;

•the qualification and multiple sourcing of critical components;

•validation of manufacturing methods and processes;

•extensive quality assurance and reliability testing and staffing of testing infrastructure;

•validation of software; and

•establishment of systems integration and systems test validation requirements.

Each of these steps, in turn, presents risks of failure, rework or delay, any one of which could decrease the speed and scope of product introduction, ~~and~~the conversion of design wins into purchase orders, or marketplace acceptance of our products. New generations of our optical engines as well as intensive software testing are important to the timely introduction of new products and enhancements to our existing products, which are subject to these development risks. In addition, unexpected intellectual property disputes, inability to obtain licenses to utilize third party development tools or other intellectual property on commercially acceptable terms, failure of critical design elements, limited or constrained engineering resources, changes in product designs and a host of other development execution risks may delay, or even prevent, the introduction of new products or enhancements to our existing products. If we have longer development lead times than our competitors for comparable products, or if we do not develop and successfully introduce or enhance products ahead of our competitors or in a timely manner, including the successful development of our next generation optical engine, our competitive position will suffer.

As we transition customers to new products and technologies, we face significant risk that our new products or technologies may not be accepted by our current or new customers. To the extent that we fail to introduce new and innovative products and technologies that are adopted by customers, we could fail to obtain an adequate return on these investments and could lose market share to our competitors, which could be difficult or impossible to regain. Similarly, we may face decreased revenue, gross margins and profitability due to a rapid decline in sales of current products as customers hold spending to focus purchases on new product platforms. In addition, the sale of new products and technologies may result in the cannibalization of sales for existing products, which may harm our results of operations. We could also incur significant costs in completing the transition, including costs of inventory write-downs of the current product as customers transition to new product platforms. In addition, products or technologies developed by others may render our products noncompetitive or obsolete and result in significant reduction in orders from our customers and the loss of existing and prospective customers. Any delays in the introduction of new components that we are developing for use in our other products as part of our vertical integration strategy may also prevent us from realizing the anticipated cost savings of such development. This may negatively impact our gross margins and harm our business and operating results.

Aggressive business tactics by our competitors and new entrants may harm our business.

The markets that we compete in are extremely competitive, which often results in aggressive business tactics by our competitors and new entrants, including:

•aggressively pricing their optical transport products and other portfolio products, including offering significant one-time discounts and guaranteed future price decreases;

•offering optical products at a substantial discount or for free when bundled together with broader technology purchases, such as router or wireless equipment purchases;

•marketing product availability on aggressive timelines to influence customer purchasing decisions;

•providing financing, marketing and advertising assistance to customers; and

•influencing customer requirements to emphasize different product capabilities, which better suit their products.

The level of competition and pricing pressure tend to increase when competing for large or high-profile opportunities or during periods of economic weakness when there are fewer network build-out projects. If we fail to compete successfully against our current and future competitors, or if our current or future competitors continue or expand their aggressive business tactics, including those described above, demand for our products could decline, we could experience delays or cancellations of customer orders or we could be required to reduce our prices to compete in the market.

The markets in which we compete are highly competitive and we may not be able to compete effectively.

The optical networking equipment market is competitive. Our main competitors in the optical transport systems market include dense wavelength division multiplexing system suppliers, such as ADTRAN, Ciena Corporation, Cisco Systems, Fujitsu, Huawei, Nokia, Ribbon Communications and ZTE. Competition in the optical subsystems and pluggable optics market includes, but is not limited to, Cisco (via their acquisition of Acacia), Lumentum, Marvell and Coherent, as well as a wide range of China-based suppliers. Moreover, other companies have developed, or may in the future develop, products that are or could be competitive with our products. We also could encounter competitor consolidation in the markets in which we compete, which could lead to a changing competitive landscape, capabilities and market share, and could impact our results of operations.

Competition in the markets we serve is based on any one or a combination of the following factors:

•the ability of products and services to meet customers’ immediate and future network requirements;

•price and other commercial terms;

•optical reach and capacity performance;

•features and functionality;

•the availability of components required to manufacture key products;

•existing business and customer relationships;

•power consumption, heat dissipation, form factor and density;

•installation and operational simplicity;

•network and service manageability;

•quality and reliability;

•service and support;

•security and encryption requirements;

•scalability and investment protection; and

•product availability and lead times.

Some of our competitors have substantially greater name recognition and technical, financial, sales and marketing resources. Many of our competitors have more resources and more experience in developing or acquiring new products and technologies, customizing product features specific to certain geographic requirements and in creating market awareness for those products and technologies. In addition, many of our competitors have the financial resources to offer competitive products at aggressive pricing levels or have the ability to provide financing to customers, which could prevent us from competing effectively. Further, many of our competitors have built long-standing relationships with some of our prospective and existing customers and could, therefore, have an inherent advantage in selling products to those customers.

We also compete with low-cost producers that may increase pricing pressure on us and with a number of smaller companies that provide competition for a specific product, customer segment or geographic market. In addition, we may also face increased competition from system and component companies that develop products based on off-the-shelf hardware that offers the latest commercially available technologies. Due to the narrower focus of their efforts, these competitors may achieve commercial availability of their products more quickly than we can and may provide attractive alternatives to our customers.

~~Supply~~If ~~chain~~we ~~and~~lose ~~logistics~~key ~~issues,~~personnel ~~including~~or ~~delays,~~fail ~~shortages,~~to ~~longer than normal lead times~~attract, ~~unfavorable~~upskill ~~contractual terms, components that have been discontinued~~ and ~~increased~~retain ~~costs,~~qualified ~~and~~personnel ~~our~~when ~~dependency on sole source~~needed, ~~limited source or high-cost suppliers, could harm~~ our business ~~and~~may ~~operating~~be ~~results~~harmed.

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We currently purchase several key components for our products from sole or limited sources. In particular, we rely on our own production of certain components of our products, such as PICs, and on third parties, including sole source and limited source suppliers, for certain of the components of our products, including ASICs, field-programmable gate arrays, processors, and other semiconductor and optical components. We have increased our reliance on third parties to develop and manufacture components for certain products, some of which require custom development. We purchase most of these components on a purchase order basis and generally only have long-term contracts with these sole source or limited source suppliers. If any of our sole source or limited source suppliers suffer from capacity constraints, materials shortages, lower than expected yields, deployment delays, geopolitical-related disruptions, work stoppages or any other reduction or disruption in output, they may be unable to meet our delivery schedule, which could result in lost revenue, additional product costs and deployment delays that could harm our business and customer relationships. In addition, these same suppliers may decide to no longer manufacture or support specific components necessary for some of our legacy products, which could lead to our inability to fulfill demand without increased engineering and material costs necessary to replace such components or cause us to transition such products to end-of-life status sooner than planned. Further, our suppliers could enter into exclusive arrangements with our competitors, refuse to sell their products or components to us at commercially reasonable prices or at all, go out of business or discontinue their relationships with us. If any of these developments were to occur, we may be unable to develop alternative sources for these components within a suitable time frame to be able to operate our business, or at all.

The loss of a source of supply, or lack of sufficient availability of key components, could require us to redesign products that use such components, which could result in lost revenue, additional product and engineering costs and deployment delays that could harm our business and customer relationships. Due to cross dependencies, any supply chain disruptions could negatively impact the demand for our products in the short term. In addition, if our contract manufacturers do not receive critical components in a timely manner to build our products, then we would not be able to ship certain products in a timely manner and would, therefore, be unable to meet our prospective customers’ product delivery requirements. In the past, we have experienced delivery delays because of lack of availability of components or reliability issues with components that we were purchasing. In addition, some of our suppliers have gone out of business, merged with other suppliers, or limited their supply of components to us, which may cause us to experience longer than normal lead times, supply delays and increased prices. We may in the future experience a shortage of certain components as a result of our own manufacturing issues, manufacturing issues at our suppliers or contract manufacturers, capacity problems experienced by our suppliers or contract manufacturers, strong demand in the industry for such components, or other disruptions in our supply chain. For example, during 2022, several of our materials suppliers with manufacturing facilities near Shanghai, China were affected by COVID-19-related quarantines, which have since been lifted. At certain times, these quarantines led to delayed shipments to certain of our contract manufacturers, which subsequently constrained the ability of these contract manufacturers to supply certain components to us on a timely basis. Disruptions to global macroeconomic conditions may also make it more difficult for us and our suppliers to accurately project overall component demand and manufacturing capacity. These supplier disruptions may continue to occur in the future, which could limit our ability to produce our products and cause us to fail to meet a customer’s delivery requirements. Any failure to meet our customers’ product delivery requirements could harm our reputation and our customer relationships, either of which would harm our business and operating results.

We are dependent on a small number of key customers for a significant portion of our revenue from period to period and the loss of, or a significant reduction in, orders from one or more of our key customers would reduce our revenue and harm our operating results.

A relatively small number of customers accounts for a large percentage of our revenue from period to period. For example, for the year ended December 3028, ~~2023~~2024, our top ten end-customers accounted for approximately 5253% of our total revenue and one end-customer accounted for 1012% of our total revenue. For ~~2022~~2023, our top ten end-customers accounted for approximately 4852% of our total revenue and one end-customer accounted for 1110% of our total revenue. For ~~2021~~2022, our top ten end-customers accounted for approximately 4248% of our total revenue and noone end-customer accounted for 1011% or more of our revenue.

Our business will likely be harmed if any of our key customers, for whatever reason, substantially reduce, delay or stop their orders from us. In addition, our business will be harmed if we fail to maintain our competitive advantage with our key customers or do not add new large and medium customers over time. We continue to expect a relatively small number of customers to continue to account for a large percentage of revenue from period to period. However, customer consolidation could reduce the number of key customers that generate a significant percentage of our revenue and may increase the risks relating to dependence on a small number of customers.

Our ability to continue to generate revenue from our key customers will depend on our ability to maintain strong relationships with these customers and to introduce competitive new products at competitive prices ahead of or on a similar timeline as our competitors. In most cases, our sales are made to these customers pursuant to standard purchase agreements, which may be canceled or reduced readily, rather than long-term purchase commitments that would require these customers to purchase any minimum or guaranteed volumes orders. In the event of a cancellation or reduction of an order, we may not have enough time to reduce operating expenses to minimize the effect of the lost revenue on our business. Our operating results will continue to depend on our ability to sell our products to our key customers. In addition, we must regularly compete for and win business with existing and new customers across all of our customer segments.

In addition, global economic conditions may affect the network spending, procurement strategies, or business practices of our key customers. If any of our key customers experience a loss in revenue due to weakening economic conditions, their corporate borrowing costs being materially impacted by high interest rates, or other adverse occurrences, they may reduce or delay capital spending generally or with respect to our products, which could materially adversely affect our business and results of operations.

24Supply chain and logistics issues could harm our business and operating results.

~~Product~~We ~~performance~~are ~~problems~~reliant on our global supply chain for the production of components for our products. Disruptions to the global supply chain have negatively impacted our revenue and our results of operations. For example, ~~including~~the ~~undetected~~global ~~errors~~supply chain experienced disruptions beginning in ~~our~~2020 ~~hardware~~as ora ~~software~~result of the COVID-19 pandemic, orwhich ~~deployment~~led to delays, shortages, longer than normal lead times, unfavorable contractual terms relating to refundability and ~~product~~cancellation, ~~security~~discontinued ~~vulnerabilities~~components and increased costs. As a result, ~~could~~shortages ~~harm~~of and longer lead times for certain key components adversely affected our ~~business~~ability to deliver products to customers in a timely manner. Additionally, price increases within our supply chain have continued to negatively affect our gross margin. Any efforts that we make to mitigate supply chain issues, such as making additional or long-term purchase commitments with our suppliers or holding higher levels of inventory, could negatively impact our cash flow and financial results if we do not accurately forecast customer demand, or if our customers change their purchasing patterns in response to the evolving supply chain environment. While the overall availability of ~~operations~~components in the supply chain has continued to improve, we continue to monitor supply chain categories and ~~reputation~~key suppliers to manage our risks.

Product performance problems, including undetected errors in our hardware or software, or deployment delays, and product security vulnerabilities could harm our business, results of operations and reputation.

The development and production of products with high technology content is complicated and often involves problems with hardware, software, components and manufacturing methods. Complex hardware and software systems that are built with and include increasingly sophisticated technology, such as our products, can often contain undetected errors or bugs when first introduced or as new versions are released. In addition, errors associated with components we purchase from third parties, including customized components, may be difficult to resolve. We have experienced issues in the past in connection with our products, including failures due to the receipt of components from our suppliers that are either faulty or do not meet our product specifications, and performance issues related to software updates. From time to time, we have had to replace certain components or provide software remedies or other remediation in response to errors or bugs, and we may have to do so again in the future. In addition, performance issues can be heightened during periods where we are developing and introducing multiple new products to the market, as any performance issues we encounter in one technology or product could impact the performance or timing of delivery of other products. Our products may also suffer degradation of performance and reliability over time.

If reliability, quality, security or network monitoring problems develop, a number of negative effects on our business could result, including:

•reduced orders from existing customers;

•declining interest from potential customers;

•delays in our ability to recognize revenue or in collecting accounts receivables;

•increased costs associated with fixing hardware or software defects or replacing products;

•high service and warranty expenses;

•delays in shipments;

•high inventory excess and obsolescence expense;

•high levels of product returns;

•diversion of our engineering personnel from our product development efforts; and

•payment of liquidated damages, performance guarantees or similar penalties.

Because we outsource the manufacturing of certain components of our products, we may also be subject to product performance problems as a result of the acts or omissions of third parties, and we may not have adequate compensating remedies against such third parties or otherwise implement effective measures to mitigate such problems.

From time to time, we encounter interruptions or delays in the activation of our products at a customer’s site. These interruptions or delays may result from product performance problems or from issues with installation and activation, some of which are outside our control, such as supply chain disruptions affecting our customers or us. ~~For~~We ~~example,~~may inalso ~~2022,~~experience ~~we experienced~~ project delays due to incomplete customer readiness and the unavailability of certain customer resources and customer furnished prerequisites required for project implementation. If we experience significant interruptions or delays that we cannot promptly resolve, the associated revenue for these installations may be delayed.

In addition, our products are subject to security vulnerabilities and attempts by third parties to identify additional vulnerabilities. Such vulnerabilities are not always mitigated before they become known by us, our customers or the users of our products. Mitigation techniques designed to address security vulnerabilities in our products, including software and firmware updates or other preventative measures, are not always available on a timely basis - or at all - and at times do not operate as intended or effectively resolve vulnerabilities. Security vulnerabilities and any limitations or adverse effects of mitigation techniques may result in warranty or other claims, litigation, or regulatory actions, and may adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material.

The manufacturing process for our optical engine and the assembly of our finished products are complex. The partial or complete loss of any of our manufacturing facilities, a reduction in yields of our PICs or an inability to scale capacity to meet customer demands could harm our business.

The manufacturing process for our optical engine, including the PICs, DSPs and specialized ASICs, and the assembly of our finished products are complex. In the event that any of our manufacturing facilities utilized to build these components and assemble our finished products was fully or partially destroyed, or shut down, as a result of a natural disaster, work stoppage or otherwise, it could severely limit our ability to deliver and sell our products or support new product development. Because of the complex nature of our manufacturing facilities, such loss would take a considerable amount of time to repair or replace. The partial or complete loss of any of our manufacturing facilities, or an event causing the interruption in our use of any such facilities, whether as a result of a natural disaster, a public health crisis, work stoppage or otherwise, for any extended period of time, could cause our business, financial condition and results of operations to be harmed.

Minor deviations in the PIC manufacturing process can cause substantial decreases in yields and, in some cases, cause production to be suspended. In the past, we have had significant variances in our PIC yields, including production interruptions and suspensions, and may in the future have continued yield variances, including additional interruptions or suspensions. Lower than expected yields from our PIC manufacturing process or defects, integration issues or other performance problems in our products could limit our ability to satisfy customer demand requirements and could damage customer relations and harm our business, reputation and operating results.

Our inability to obtain sufficient manufacturing capacity to meet demand, either in our own facilities or through foundry or similar arrangements with third parties, could also harm our relationships with our customers, our business and our results of operations. Additionally, if we are unable to fully utilize our own manufacturing facilities, this may also reduce our efficiency and lower our gross margins.

If we lose key personnel or fail to attract, upskill and retain qualified personnel when needed, our business may be harmed.

Our success depends to a significant degree upon the continued contributions of our key management, engineering, sales and marketing, and finance personnel, many of whom will be approaching retirement age in the next decade and many of whom would be difficult to replace. For example, senior members of our engineering team have unique technical experience that would be difficult to replace. Because our products are complex, we must also hire and retain highly trained customer service and support personnel to ensure that the deployment of our products does not result in network disruption for our customers. We believe our future success will depend in large part upon our ability to identify, attract, upskill and retain highly skilled and diverse personnel, and competition for these individuals is intense in our industry, especially in the San Francisco Bay Area where we are headquartered and, increasingly, in certain cities and regions where we have operations outside the U.S. as well. The loss of the services of any of our key personnel, the inability to identify, attract or retain qualified personnel in the future or delays in hiring qualified personnel, particularly engineers and sales personnel, could make it difficult for us to manage our business and meet key objectives, such as timely product introductions. These risks may be exacerbated due to a strong labor market with a competitive wage environment and attrition or a decline in the pool of available talent. In addition, we do not have long-term employment contracts or key person life insurance covering any of our key personnel. If we are unable to identify, attract and retain qualified personnel, we may be unable to manage our business effectively, and our results of operations could suffer.

If our contract manufacturers do not perform as we expect, our business may be harmed.

We rely on third-party contract manufacturers to perform a portion of the manufacturing of our products, and our future success will depend on our ability to have sufficient volumes of our products manufactured in a cost-effective and quality-controlled manner. We have engaged third parties to manufacture certain elements of our products at multiple contract manufacturing sites located around the world but do not have long-term agreements in place with some of our manufacturers and suppliers that would guarantee product availability, or the continuation of particular pricing or payment terms. We face a number of risks due to our dependence on contract manufacturers, including:

•reduced control over delivery schedules, particularly for international contract manufacturing sites;

•risks related to dependency on certain contract manufacturers;

•reliance on the quality assurance procedures of third parties;

•potential uncertainty regarding manufacturing yields and costs;

•potential lack of adequate capacity during periods of high demand or inability to fulfill manufacturing orders due to supply issues;

•potential variability of pricing or payment terms due to agreement length;

•risks and uncertainties associated with the locations or countries where our products are manufactured or otherwise operate, including potential disruptions caused by geopolitical events, military actions, work stoppages or other social factors, natural disasters, environmental factors, or public health emergencies;

•counterparty risk, particularly if our contract manufacturers are sensitive to inflation and interest-rate risk;

•limited warranties on components; and

•potential misappropriation of our intellectual property.

Any of these risks could impair our ability to fulfill orders. Our products are built with and incorporate increasingly sophisticated technology and any delays by our contract manufacturers or their inability to meet our product specifications or quality standards may cause us to be unable to meet the delivery requirements of our customers, which could decrease customer satisfaction and harm our product sales. In addition, if our contract manufacturers are unable or unwilling to continue manufacturing our products or components of our products in required volumes or our relationship with any of our contract manufacturers is discontinued for any reason, we would be required to identify and qualify alternative manufacturers, which could cause us to be unable to meet our supply requirements to our customers and result in the breach of our customer agreements. Qualifying a new contract manufacturer and commencing volume production is expensive and time-consuming. If we are required to change or qualify a new contract manufacturer, we could lose revenue and damage our customer relationships.

Increased consolidation among our customers and suppliers in the communications networking industry has had, and could continue to have, an adverse effect on our business and results of operations.

We have seen increased consolidation in the communications networking industry over the past few years, which has adversely affected our business and results of operations. Customer consolidation in the past has led to changes in buying patterns, slowdowns in spending, redeployment of existing equipment and re-architecture of parts of existing networks or future networks, as the combined companies evaluate the needs of the combined business. Moreover, the significant purchasing power of these large companies can increase pricing and competitive pressures for us, including the potential for decreases in our average selling prices. If one of our customers is acquired by another company that does not rely on us to provide it with products or relies on another provider of similar products, we may lose that customer’s business. Such consolidation may further reduce the number of customers that generate a significant percentage of our revenue and may exacerbate the risks relating to dependence on a small number of customers. Any of the foregoing results will adversely affect our business, financial condition and results of operations.

In addition, our suppliers in the communications networking industry have ~~recently~~ continued to consolidate. ~~For example, II-VI acquired Coherent~~ in ~~2022~~recent years. Supplier consolidation may lead to increased prices of components for our products, deployment delays or a disruption in output. In addition, such consolidation may exacerbate the risks relating to our dependence on a small number of suppliers for certain components and materials that are required to manufacture our products.

We rely on various third-party service partners to help complement our global operations, and failure to adequately manage these relationships could adversely impact our financial results and relationships with customers.

We rely on a number of third-party service partners, both domestic and international, to complement our global operations. We rely upon these partners for certain installation, maintenance, logistics and support functions. Services provided by these partners typically relate to the design, construction and operation of customer networks. ~~Over time, the scope of work performed by our service partners is likely to increasingly include areas where we have less experience providing or managing such services.~~ We must successfully identify, assess, train and certify qualified service partners in order to ensure the proper installation, deployment and maintenance of our products. The vetting and certification of these partners, particularly outside the U.S., can be costly and time-consuming, and certain partners may not have the same operational history, financial resources and scale as we have. Additionally, certain service partners may provide similar services for other companies, including our competitors. We may not be able to manage our relationships with our service partners effectively, and we cannot be certain that they will be able to deliver services in the manner or time required, that we will be able to maintain the continuity of their services, or that they will adhere to our approach to ethical business practices. We may also be exposed to a number of risks or challenges relating to the performance of our service partners, including:

•delays in recognizing revenue;

•liability for injuries to persons, damage to property or other claims relating to the actions or omissions of our service partners;

•our services revenue and gross margin may be adversely affected; and

•our relationships with customers could suffer.

If we do not effectively manage our relationships with third-party service partners, or if they fail to perform the services we request in the manner or time required, our financial results and relationships with our customers could be adversely affected.

We must respond to rapid technological change and comply with evolving industry standards and requirements for our products to be successful.

The optical transport networking equipment market is characterized by rapid technological change, changes in customer requirements and evolving industry standards. We continually invest in research and development to sustain or enhance our existing products, but the introduction of new communications technologies and the emergence of new industry standards or requirements could render our products obsolete. Further, in developing our products, we have made, and will continue to make, assumptions with respect to which standards or requirements will be adopted by our customers and competitors. If the standards or requirements adopted by our prospective customers are different from those on which we have focused our efforts, market acceptance of our products would be reduced or delayed, and our business would be harmed. We are continuing to invest a significant portion of our research and development efforts in the development of our next-generation products. We expect our competitors will continue to improve the performance of their existing products and introduce new products and technologies and to influence customers’ buying criteria so as to emphasize product capabilities that we do not, or may not, possess. To be competitive, we must increase our understanding of competitive dynamics in our markets, better anticipate future customer requirements and continue to invest significant resources in research and development, sales and marketing, and customer support. The demand for investment resources may also increase as the technologies we develop and utilize become more complex and the skills required to undertake such development become more scarce and expensive to obtain. If we do not anticipate or meet these future customer requirements, including with respect to the energy efficiency of our products, and invest in the technologies, including artificial intelligence and machine learning, necessary to enable us to create, manufacture and sell the appropriate solutions on a timely basis, our competitive position and future sales may be limited, which would have an adverse effect on our business and financial condition. We may not have sufficient resources to undertake these investments, and we may not be able to make the technological advances necessary to be competitive and successful in the markets we serve.

28Failure to accurately forecast our manufacturing requirements or customer demand could increase our costs, including inventory write-downs or equipment write-offs, or lose customers or orders to competitors, which would adversely affect our business and results of operations.

If we fail to accurately forecast our manufacturing requirements or customer demand, we could incur additional costs, including inventory write-downs or equipment write-offs, which would adversely affect our business and results of operations.

We generate forecasts of future demand for our products several months prior to the scheduled delivery to our prospective customers. This requires us to make significant investments before we know if corresponding revenue will be recognized. Lead times vary significantly for materials and components, including ASICs, that we need to order for the manufacture of our products and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. In the past, we have experienced lengthened lead times for certain components, which makes forecasting more challenging. We may be required to purchase increased levels of such components to satisfy our delivery commitments to our customers as a result of longer lead times for components. In addition, we must manage our inventory to ensure we continue to meet our commitments as we introduce new products or make enhancements to our existing products.

If we overestimate market demand for our products, including as a result of customers changing the timing or volume of their purchases in response to the evolving supply chain environment or broader macroeconomic conditions, and, as a result, increase our inventory in anticipation of customer orders that do not materialize, we will have excess inventory. This could result in increased risk of obsolescence and significant inventory write-downs. If we underestimate demand for our products, we will have inadequate inventory, which could slow down or interrupt the manufacturing of our products, cause delays in shipments and our ability to recognize revenue, and result in potential loss of customers or orders to competitors. In addition, we may be unable to meet our supply commitments to customers, which could result in a loss of certain customer opportunities or a breach of our customer agreements.

Actions that we may in the future take to restructure or streamline our business to cut costs and align our operating structure with current or future opportunities may not be as effective as anticipated and may have negative consequences.

We have incurred, and may in the future incur, substantial costs in connection with restructuring plans. Although such restructuring initiatives may be taken to improve our operating efficiency and to reallocate resources to align more closely with our evolving business model and current and future opportunities, they may not result in the benefits we anticipate. We incur substantial costs to implement restructuring plans, and our restructuring activities, if any, may subject us to reputational and litigation risks. Our past restructuring plans do not provide any assurance that we will realize anticipated cost savings or other benefits from any restructuring plans we may implement. In addition, restructuring plans may have other consequences, such as attrition beyond any planned reductions in workforce or a negative effect on employee morale and productivity or our ability to attract highly skilled employees. Restructuring presents other potential significant risks such as the actual or perceived disruption of service or reduction in service standards to customers, loss of sales, the failure to preserve supplier relationships and diversion of management attention. In addition, as a result of any restructuring actions we may take, our ability to execute on product development, address key market opportunities or meet customer demand could be materially and adversely affected. Further, any anticipated benefits from any restructuring initiatives we may take may be realized later than expected or not at all, and the ongoing costs of implementing these measures, if any, may be greater than anticipated. As a result, current or future restructuring plans may affect our revenue and other operating results.

Our large customers have substantial negotiating leverage, which may cause us to agree to terms and conditions that result in lower average selling prices and potentially increased cost of sales leading to lower gross margin, each of which would harm our results of operations.

Many of our customers are large service providers and ICPs that have substantial purchasing power and leverage in negotiating contractual arrangements with us. In addition, customer consolidation in the past few years has created combined companies that are even larger and have greater negotiating leverage. Our customers have sought and may continue to seek advantageous pricing, payment and other commercial terms. This may further impact our profitability if we are unable to recover through price increases passed along to these customers any additional costs we have incurred from inflationary pressures to the supply chain or shipping and freight. We have also occasionally agreed and may continue to agree to unfavorable commercial terms with these customers, including the potential of reducing the average selling price of our products, increasing cost of sales or agreeing to extended payment terms in response to these commercial requirements or competitive pricing pressures. Continued inflation could decrease the profitability of customer contracts, particularly those with extended payment terms, that are not indexed to inflation. If we are compelled to agree to disadvantageous terms and conditions, unable to comply with such terms and conditions, or unable to adapt our business model and operations to such terms and conditions, then our operating results will be negatively impacted.

Our sales cycle can be long and unpredictable, which could result in an unexpected revenue shortfall in any given quarter.

Our products can have a lengthy sales cycle, which can extend from six to twelve months and may take even longer for larger prospective customers. Our prospective customers conduct significant evaluation, testing, implementation and acceptance procedures before they purchase our products. We incur substantial sales and marketing expenses and expend significant management effort during this time, regardless of whether we make a sale. Supply chain disruptions have also at times lengthened, and may in the future lengthen, our sales cycle due to delays in the customer certification process for our products.

Because our sales cycle is long, we are likely to recognize higher inflation-related costs before recognizing the benefits of any price increases that we implement for our products. Moreover, the costs associated with our sales cycle may increase faster than our ability to increase prices. In addition, changes in regulatory requirements or uncertainty associated with the regulatory environment could delay or impede investment in network infrastructures and adversely affect our business, financial condition and results of operations.

Because the purchase of our equipment involves substantial cost, most of our customers wait to purchase our equipment until they are ready to deploy it in their network. As a result, it is difficult for us to accurately predict the timing of future purchases by our customers. In addition, product purchases are often subject to budget constraints, multiple approvals and unplanned administrative processing and other delays, including the need for the customer to obtain external financing. If sales expected from customers for a particular quarter are not realized in that quarter or at all, our revenue will be negatively impacted.

~~The~~We ~~effects~~have ofreceived ~~public~~and ~~health~~may ~~emergencies~~receive ~~could~~additional ~~have~~grants afrom ~~material~~governments, ~~adverse~~agencies ~~effect~~or onresearch ~~our~~organizations. ~~business~~If we are not successful in securing the funding contemplated by those grants, ~~manufacturing~~or ~~operations~~if ~~and~~we ~~results~~are unable to comply with the terms of ~~operations.~~those grants, then our business might be harmed.

~~The~~From ~~impact~~time ofto ~~public~~time, ~~health~~we ~~emergencies~~may onreceive ~~our~~grants ~~business~~from national, state and ~~results~~local ofgovernments, ~~operations~~agencies, inor ~~the~~research ~~future~~organizations. ~~remains~~For ~~uncertain~~example, ~~and~~we isentered ~~dependent~~into ina ~~part~~Direct onFunding ~~infection,~~Agreement ~~morbidity~~(the ~~and~~“DFA”) ~~disability~~with ~~rates,~~the U.S. Department of Commerce (the ~~emergence~~“Department of ~~new~~Commerce”) ~~viruses~~on January 16, ~~the~~2025, ~~continued~~to ~~effectiveness~~receive ~~and~~grants ~~availability~~under ofthe ~~vaccinations,~~CHIPS and ~~broader~~Science ~~global~~Act ~~macroeconomic~~(“CHIPS ~~developments.~~Act”) ~~During~~for ~~the~~expansion ~~COVID-19~~and ~~pandemic,~~modernization weof atour ~~times~~semiconductor ~~temporarily~~facilities ~~closed~~in orboth ~~substantially~~Silicon ~~limited~~Valley, ~~the~~California ~~presence~~and ofLehigh ~~personnel~~Valley, inPennsylvania. ~~some~~Our receipt of ~~our~~these ~~offices,~~grants ~~implemented~~remains ~~travel~~subject ~~restrictions~~to the terms and ~~modified~~conditions ~~our~~of ~~participation~~the inDFA. ~~various~~It ~~industry~~is ~~events.~~possible ~~The~~that ~~COVID-19~~we ~~pandemic~~will ~~also~~not atreceive ~~times~~any ~~contributed~~money pursuant to ~~delays~~the CHIPS Act grants contemplated in ~~certain~~the ~~operational~~DFA ~~processes~~and, ~~and~~even itif ~~led~~we toreceive ~~disruption~~such ~~and~~CHIPS ~~delays~~Act ingrants, ~~our~~we ~~global~~may ~~supply~~not ~~chain~~pursue ~~and~~the ~~manufacturing~~full ~~operations~~amount of the available grants. Furthermore, ~~logistics~~noncompliance ~~operations~~with ~~and~~the ~~customer~~terms ~~support~~of ~~operations,~~the ~~including~~DFA ~~shipping~~or ~~delays,~~other ~~higher~~grants ~~transport~~that ~~costs,~~we ~~and~~may ~~certain~~receive ~~limitations~~could onresult in our ~~ability~~forfeiture toof ~~access~~all ~~customer~~or ~~fulfillment~~a ~~and~~portion ~~service~~of ~~sites.~~any Itfuture ~~also~~amounts ~~led~~ to ~~capacity~~be ~~issues~~received, ~~longer~~as ~~lead~~well ~~times,~~as ~~increased~~obligate ~~costs~~us ~~and~~to ~~shortages~~repay ~~with~~all ~~certain~~or ~~component~~a ~~suppliers,~~portion ~~including~~of ~~for~~amounts ~~semiconductors,~~already ~~impacting~~received ~~our~~pursuant ~~operational~~to ~~processes~~the ~~and~~grants. ~~results~~Failure ofto ~~operations.~~obtain Ifgrants that we ~~experience~~seek, ~~pronounced~~to ~~disruptions~~fully inutilize ~~our~~available ~~operations~~grants, or into ~~our~~comply ~~ability~~with tothe ~~service~~terms ~~our~~of ~~customers~~grants, including ~~due~~pursuant to ~~impacts~~the ~~from~~CHIPS ~~public~~Act, ~~health~~could ~~emergencies,~~impact orour ifability weto ~~face~~achieve ~~continued~~our ~~supply~~goals ~~chain~~for ~~disruption~~the orprojects ~~curtailed~~that ~~customer~~would ~~demand,~~otherwise ~~these~~benefit ~~factors~~from ~~may~~grant ~~materially~~funding ~~adversely~~and ~~impact~~could have an adverse effect on our business, ~~and~~ results of operations. Weor ~~could~~financial ~~also~~or ~~face~~tax ~~negative~~position ~~impacts~~(including onthe ~~our~~loss ~~liquidity~~of ~~and~~any ~~capital~~investment ~~resources~~tax incredits ~~the~~that ~~future~~might ~~due~~have otherwise been available under the CHIPS Act).

30Compliance with the terms of the DFA and any other grant that we might receive could add complexity to our operations and increase our costs. For example, the DFA restricts our ability to pay dividends and make share repurchases, restricts our ability to expand semiconductor manufacturing capacity in certain foreign countries, places restrictions on joint research and technology licensing with certain foreign entities, restricts our use or installation of prohibited equipment that is manufactured or assembled by certain foreign entities, requires our compliance with various federal regulations and requirements, and limits our disposition of the projects that receive DFA awards.

to the effects of public health emergencies, and their impacts on our customers, suppliers, third-party service providers and capital markets.

Any acquisitions or strategic transactions that we undertake could disrupt our business and harm our financial condition and results of operations.

We have made strategic acquisitions of businesses, technologies and other assets in the past, including most recently the Coriant Acquisition. We may engage in acquisitions, divestitures or other strategic transactions in the future. In order to undertake certain of these transactions, we may use cash, issue equity that could dilute our current stockholders, or incur debt or assume indebtedness. If we are unable to achieve the anticipated efficiencies and strategic benefits of such transactions, it could adversely affect our business, financial condition and results of operations. In addition, the market price of our common stock could be adversely affected if investors and securities analysts react unfavorably to a strategic transaction or if the integration or the anticipated financial and strategic benefits of such transactions are not realized as rapidly as or to the extent anticipated by investors and securities analysts.

Acquisitions, divestitures or other strategic transactions can also result in adverse tax consequences, warranty or product liability exposure related to acquired assets, additional stock-based compensation expense, and write-up of acquired inventory to fair value. Divestitures can also result in contractual, employment or intellectual property liability related to divested assets. In addition, we may record goodwill and other purchased intangible assets in connection with an acquisition and incur impairment charges in the future. If our actual results, or the plans and estimates used in future impairment analyses, are less favorable than the original estimates used to assess the recoverability of these assets, we could incur additional impairment charges.

Acquisitions, divestitures or other strategic transactions also involve numerous risks that could disrupt our ongoing business and distract our management team, including:

•problems integrating the acquired operations, technologies or products with our own;

•challenges in divesting assets and intellectual property without negatively affecting our retained business;

•diversion of management’s attention from our core business;

•adverse effects on existing business relationships with suppliers and customers;

•risks associated with entering new markets or exiting existing markets; and

•loss of key employees.

Our failure to adequately manage the risks associated with an acquisition, divestment or strategic transaction could have an adverse effect on our business, financial condition and results of operations.

Financial and Macroeconomic Risk Factors

We may be unable to generate the cash flow necessary to make anticipated capital expenditures, service our debt or grow our business.

We may not be able to generate sufficient cash flow from operations to make anticipated capital expenditures, service our debt or grow our business. Our ability to pay our expenses, service our debt and fund planned capital expenditures will depend on our future performance, which will be affected by general economic, competitive, legislative, political, regulatory and other factors beyond our control, and our ability to continue to realize synergies and anticipated cost savings. If we are unable to generate sufficient cash flow from operations to service our debt or to make anticipated capital expenditures, we may be required to sell assets, reduce capital expenditures, borrow additional funds or evaluate alternatives for efficiently funding our capital expenditures and ongoing operations, including the issuance of equity, equity-linked and debt securities.

Unfavorable macroeconomic and market conditions may adversely affect our industry, business and financial results.

In the past, unfavorable macroeconomic and market conditions, including recessionary environments, have resulted in sustained periods of decreased demand for optical communications products and slowdowns in the telecommunications industry in which we operate. Such slowdowns may result in:

•reduced or delayed demand for our products as a result of constraints on capital spending by our customers or excess inventory held by our customers;

•increased price competition for our products, not only from our competitors, but also as a result of the utilization of inventoried or underutilized products by our customers or potential customers, which could put additional downward pressure on our near-term gross profits;

•risk of excess or obsolete inventories;

•our customers facing financial difficulties, including bankruptcy;

•delayed collections of accounts receivable amounts or payment defaults;

•excess internal manufacturing capacity and higher associated overhead costs as a percentage of revenue; and

•more limited ability to accurately forecast our business, operating capital needs and future financial performance.

~~High inflation~~Inflation, high interest rates, ~~the recent collapse of several financial institutions,~~ and other signs of economic disruption or recession, have also contributed to adverse global macroeconomic conditions. ~~These conditions may also result in the tightening of credit markets, which could limit or delay our customers’ ability to obtain necessary financing for their purchases of our products.~~

Our customers may delay or cancel their purchases or increase the time they take to pay or default on their payment obligations due to a lack of liquidity in the capital markets, the continued uncertainty in the global economic environment or inflationary concerns, which could result in a higher level of bad debt expense and would negatively affect our business and operating results. In addition, currency fluctuations could negatively affect our international customers’ ability or desire to purchase our products.

A lack of liquidity and economic uncertainty may also adversely affect our suppliers or the terms on which we purchase products from these suppliers. These impacts could limit our ability to obtain components for our products from these suppliers and could adversely impact our supply chain or the delivery schedule to our customers. Suppliers could also require us to purchase more expensive components, or re-design our products, which could cause increases in the cost of our products and delays in the manufacturing and delivery of our products. Such events could harm our gross margin and harm our reputation and our customer relationships, either of which could harm our business and operating results.

Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.

Inflation, which has continued in the U.S. and globally, can adversely affect us by increasing the costs of labor, supplies and other costs of doing business, and price increases within our supply chain have negatively affected our gross margin. In an inflationary environment, our ability to raise prices or add additional cost-recovery surcharges of a magnitude sufficient to match the rate of inflation, on a timely basis, may be constrained by customer resistance and competitive concerns, as well as industry-specific and other economic conditions, which would reduce our profit margins. Moreover, even if we seek to implement price increases in response to inflationary pressures, because of our long sales cycle, we may recognize increased costs as a result of inflation before we are able to recognize the benefits of any such price increases. We have experienced increases in the prices of labor, supplies and other costs of doing business and continued inflationary pressures could continue to adversely impact our profitability.

If we need additional capital in the future, it may not be available to us on favorable terms, or at all.

Our business requires significant capital. We have historically relied on outside debt or equity financing as well as cash flow from operations to fund our operations, capital expenditures and expansion. For example, in September 2018, we issued our 2.125% Convertible Senior Notes due 2024 (the "2024 Notes") to pay the cost of the Capped Calls, to fund the cash portion of the purchase price of the Acquisition, and for general corporate purposes. In August 2019 and as amended thereafter, we entered into the Prior Credit Agreement to provide additional working capital flexibility to manage our business. In addition, in March 2020, we issued our 2.5% Convertible Senior Notes due 2027 (the “2027 Notes") to raise additional funds for general corporate purposes, including working capital to fund growth and potential strategic projects. On August 12, 2020, we entered into an Open Market Sales Agreement with Jefferies LLC ("Jefferies") under which we issued and sold through Jefferies, acting as agent or principal, shares of our common stock having an aggregate offering price of $96.3 million, to raise funds for general corporate purposes, including working capital and capital expenditures. In June 2022, we terminated the Prior Credit Agreement and entered into the Loan Agreement to repay existing debt (including amounts outstanding under the Prior Credit Agreement) and for working capital and general corporate purposes, including to fund growth. In August 2022, we issued our 3.75% Convertible Senior Notes due 2028 (the "Existing 2028 Notes") to repurchase aexisting ~~portion~~convertible ~~of the 2024 Notes~~notes, for general corporate purposes, including working capital and to fund growth and potential strategic projects. In June 2023, we issued additional 3.75% Convertible Senior Notes due 2028 (the "Additional 2028 Notes," together with the Existing 2028 Notes, the "2028 Notes," and the 2028 Notes, together with the ~~2024 Notes and the~~ 2027 Notes, the “convertible senior notes”) to repurchase aexisting ~~portion~~convertible ~~of the 2024 Notes~~notes, for general corporate purposes, including working capital and to fund growth and potential strategic projects.

We may require additional capital from equity or equity-linked financing, debt financing or other financings in the future to fund our operations, respond to competitive pressures or strategic opportunities or to refinance our existing debt obligations. In the event that we require additional capital, we may not be able to secure timely additional financing, or restructure existing debt, on favorable terms, or at all, and may be affected by the impacts on capital markets of global economic uncertainty, uncertainty in the financial and banking industry and inflationary pressures. The terms of any additional financings or restructurings may place limits on our financial and operating flexibility and we may not be able to obtain terms as favorable as the terms of our existing debt, including any debt being refinanced. If we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer dilution in their percentage ownership of our company, and any new securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be limited and our business will be harmed.

33Our Loan Agreement, the DFA and any other debt agreements into which we may enter in the future may restrict our operations, particularly our ability to respond to changes or to take certain actions regarding our business.

Our Loan, Guaranty and Security Agreement, dated as of June 24, 2022, by and ~~any~~among us and other ~~credit~~obligators orparty ~~similar~~thereto, ~~agreements~~the ~~into~~lenders ~~which~~party wethereto, ~~may~~and ~~enter~~Bank inof America, N.A., as agent (the ~~future~~"Loan Agreement") and the DFA each contain a number of restrictive covenants that impose operating and financial restrictions on us and limit our ability to engage in acts that may ~~restrict~~be in our ~~operations~~long-term interest, ~~particularly~~including restrictions on our ability to ~~respond~~incur debt, restrictions on our ability to pay dividends and make share repurchases, create liens and encumbrances, engage in certain fundamental changes, dispose of assets, prepay certain indebtedness, make restricted payments, make investments, and engage in transactions with affiliates and certain foreign entities, in each case, subject to limitations and exceptions set forth in the Loan Agreement or the DFA, as applicable. The Loan Agreement also contains a financial covenant that requires the Company to ~~take~~maintain ~~certain~~a ~~actions~~minimum ~~regarding~~fixed ~~our~~charge ~~business~~coverage ratio.

Our Loan Agreement contains a number of restrictive covenants that impose operating and financial restrictions on us and limit our ability to engage in acts that may be in our long-term interest, including restrictions on our ability to incur debt, create liens and encumbrances, engage in certain fundamental changes, dispose of assets, prepay certain indebtedness, make restricted payments, make investments, and engage in transactions with affiliates, in each case subject to limitations and exceptions set forth in the Loan Agreement. The Loan Agreement also contains a financial covenant that requires the Company to maintain a minimum fixed charge coverage ratio.

The Loan Agreement also contains customary events of default, such as the failure to pay obligations when due, a material breach of representations and warranties or covenants, the entry of material judgments against certain of our subsidiaries, the initiation of bankruptcy or insolvency proceedings of certain of our subsidiaries, defaults on certain other indebtedness, a change of control, the failure of the guaranty of certain of our subsidiaries to be in effect or the failure of the security documents to create valid and perfected liens or the loan documents to be valid and enforceable, which could have a material adverse effect on our business, operations, and financial results. Upon an event of default, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding and foreclose on collateral, which could force us into bankruptcy or liquidation. In the event that our lenders accelerated the repayment of the borrowings, we may not have sufficient assets to repay that indebtedness. Any acceleration of amounts due under the Loan Agreement would likely have a material adverse effect on us and may constitute a default under our convertible debt securities. As a result of these restrictions, we may be limited in how we conduct business, unable to raise additional debt or equity financing to operate during general economic or business downturns, or unable to compete effectively or to take advantage of new business opportunities.

The DFA provides that in the event of certain significant breaches by us, such as violating the CHIPS Act program requirements, the completion of a Change of Control (as defined in the DFA), or project abandonment, among other things, the U.S. Department of Commerce may have termination rights and other remedies. Such rights and remedies vary depending on the nature of such breach, but can include: (i) requiring the repayment of some of all of the awards made to us under the DFA (“Awards”); (ii) imposing additional conditions on the Awards; (iii) suspending or terminating all or any portion of the Awards; (iv) withholding or suspending a disbursement of the Awards; (v) terminating the DFA and the Awards; and (vi) taking other actions available to the U.S. Department of Commerce.

In addition, we may enter into other credit agreements or other debt arrangements from time to time which contain similar or more extensive restrictive covenants and events of default, in which case we may face similar or additional limitations as a result of the terms of those credit agreements or other debt arrangements.

Our debt obligations may adversely affect our ability to raise additional capital and ~~will~~strain ~~be a burden on our future~~ cash ~~resources~~flow, particularly if we elect to settle these obligations in cash upon conversion or upon maturity or required repurchase.

As of December 3028, ~~2023~~2024, the outstanding aggregate principal amount of the ~~2024 Notes, the~~ 2027 Notes and the 2028 Notes was $~~18.7 million, $~~200.0 million and $473.8 million, respectively. The degree to which we are leveraged could have important consequences, including, but not limited to, the following:

•our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, litigation, general corporate or other purposes may be limited; and

•a substantial portion of our future cash balance may be dedicated to the payment of the principal of our indebtedness as we have stated the intention to pay the principal amount of each series of convertible senior notes in cash upon conversion or when otherwise due, such that we would not have those funds available for use in our business.

Our ability to meet our payment obligations under our debt instruments, including the convertible senior notes, depends on our future cash flow performance. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors, as well as other factors that may be beyond our control. There can be no assurance that our business will generate positive cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations. As a result, we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions.

Our international sales and operations subject us to additional risks that may harm our operating results.

Sales of our products into international markets continue to be an important part of our business. During ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022, we derived approximately 3841%, 4538% and 5345%, respectively, of our revenue from end-customers outside of the U.S. We expect that significant management attention and financial resources will be required for our international activities over the foreseeable future as we continue to operate in international markets. In some countries, our success in selling our products and growing revenue will depend in part on our ability to form relationships with local partners. Our inability to identify appropriate partners or reach mutually satisfactory arrangements for international sales of our products could impact our ability to maintain or increase international market demand for our products. In addition, many of the companies we compete against internationally have greater name recognition and a more substantial sales and marketing presence.

We have sales and support personnel in the Americas, EMEA (with offices in the Middle East) and APAC (including China). In addition, we have established development centers in Canada, China, Finland, Germany, India, Portugal and Sweden. There is no assurance that our reliance upon development resources in international locations will enable us to achieve meaningful cost reductions or greater resource efficiency. We are also aggressively pursuing opportunities with customers in additional geographies, including EMEA, APAC and Latin America. Our efforts to increase our sales and capture market share in international markets may ultimately be unsuccessful and may limit our growth and adversely impact our business, financial condition and results of operations.

New or continuing disruptions of the global supply chain or the manufacture of our customer’s components caused by events outside of our control could impact our results of operations by impairing our ability to timely and efficiently deliver our products or provide installation and maintenance services to our customers.

In addition, our operations in Russia have been impacted by sanctions and other trade controls imposed by the U.S. and other governments in response to Russia's military operations in Ukraine which started in February 2022. The imposition of these sanctions and controls have prevented us from performing existing contracts. For the year ended December 3028, ~~2023~~2024, less than 1% of our revenue was derived from customers in Russia. A de minimis percentage of our revenue is derived from Russian customers including channel partners and customers in other countries whose contracts with us may involve Russian entities.

~~The~~Geopolitical ~~ongoing~~tension ~~armed conflict between Israel and Hamas~~ in the ~~Gaza~~Middle ~~Strip~~East may ~~also~~ broaden into a regional conflict that could impact our ability to maintain and expand our customer base in the Middle East. For example, the recent armed conflict in the Middle East has impacted our sales and operations in the Middle East and caused us to implement travel restrictions there.

Our international operations are subject to inherent risks, and our future results could be adversely affected by a variety of factors, many of which are outside of our control, including:

•greater difficulty in collecting accounts receivable and longer collection periods;

•difficulties of managing and staffing international offices, and the increased travel, infrastructure and legal compliance costs associated with such international locations;

•political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions;

•tariff and trade barriers and other regulatory requirements, contractual limitations, or customer specifications impacting our ability to sell or develop our products in certain foreign markets;

•less effective protection of intellectual property than is afforded to us in the U.S. or other developed countries;

•potentially adverse tax consequences;

•natural disasters, acts of war or terrorism, and public health crises;

•changes to free trade agreements, trade protection measures, tariffs, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements, including changes related to policy and other changes made by the federal government in the U.S., other national governments or multinational bodies; and

•effects of changes in currency exchange rates, particularly relative increases in the exchange rate of the U.S. dollar compared to other currencies that could negatively affect our financial results and cash flows.

The concentration of the storage and distribution of our inventory primarily in one location in southeastern Asia also increases the risks of our global operations. As a result, our operations are susceptible to local and regional risks there, including accidents, system failures and weather conditions, natural disasters (including floods and earthquakes and related fires), acts of war and other unforeseen events and circumstances. Any significant interruption in the operations or availability of the storage and distribution facilities in which our inventory is held could lead to logistical and fulfillment issues or increased costs, which could have a material adverse effect on our results of operations, financial condition and cash flows.

International customers may also require that we comply with certain testing or customization of our products to conform to local standards. The product development costs to test or customize our products could be extensive and a material expense for us.

Our international operations are also subject to increasingly complex foreign and U.S. laws and regulations, including, but not limited to, anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), and the United Kingdom Bribery Act 2010, as amended (the “UK Bribery Act”), antitrust or competition laws, anti-money laundering laws, various trade controls, national security related regulations, and data privacy laws, among others. Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries, and could also materially affect our reputation, our international expansion efforts, our ability to attract and retain employees, our business, and our operating results. Although we have implemented policies, procedures and training designed to ensure compliance with these laws and regulations, there can be no complete assurance that any individual employee, contractor or agent will not violate our policies. Additionally, the costs of complying with these laws (including the costs of investigations, auditing and monitoring) could also adversely affect our current or future business.

As we continue to expand our business globally, our success will depend, in large part, on our ability to effectively anticipate and manage these and other risks and expenses associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, financial condition and results of operations.

We may be adversely affected by fluctuations in currency exchange rates.

A portion of our sales and expenses stem from countries outside of the U.S., and are in currencies other than U.S. dollars, and therefore subject to foreign currency fluctuation. Accordingly, fluctuations in foreign currency rates could have a material impact on our financial results in future periods. We have from time to time entered into foreign currency exchange forward contracts to reduce the impact of foreign currency fluctuations on certain non-functional currency account balances. Even if we have forward contracts in place, while they may reduce some of the impact of currency exchange rate movements on certain transactions, they would not cover all foreign-denominated transactions and therefore may not entirely eliminate the impact of fluctuations in exchange rates on our results of operations and financial condition.

Our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income.

Our effective tax rate can be adversely affected by several factors, many of which are outside of our control, including:

•changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;

•changes in the relative proportions of revenue and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;

•changing tax laws, regulations, rates and interpretations in multiple jurisdictions in which we operate;

•changes to the financial accounting rules for income taxes;

•the tax effects of acquisitions; and

•the resolution of issues arising from tax audits.

In August 2022, the U.S. enacted the Inflation Reduction Act, which, among other changes, implements a 1% excise tax on certain stock buybacks, that applies to repurchases of stock by U.S. corporations~~, and which could include certain transactions that we may undertake with respect to our Capped Calls~~.

36Many countries and organizations, such as the Organization for Economic Cooperation and Development ("OECD"), are actively considering changes to existing tax laws or have proposed or enacted new laws, including an agreement to implement a 15% global minimum corporate tax, that could increase our tax obligations in countries where we do business or cause us to change the way we operate our business. While it is uncertain if the U.S. will adopt the minimum tax directive, several countries in which we operate have adopted the minimum tax directive, and other countries are in the process of introducing legislation to implement the minimum tax directive. Although we currently do not anticipate any materially adverse impacts on our business or results of operations, we cannot provide any assurances that these provisions will not have a materially adverse impact on our effective tax rate in the future years. We continue monitoring developments and evaluating the impacts these new rules may have on our tax rate. Any additional changes in U.S. federal or state or international tax laws or tax rulings could adversely affect our effective tax rate and our results of operations.

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We may issue additional shares of our common stock in connection with conversions of the 2024 Notes, the 2027 Notes or the 2028 Notes, and thereby dilute our existing stockholders and potentially adversely affect the market price of our common stock.

In the event that some or all of each series of convertible senior notes are converted and we elect to deliver shares of common stock to the extent permitted, the ownership interests of existing stockholders will be diluted, and any sales in the public market of any shares of our common stock issuable upon such conversion could adversely affect the prevailing market price of our common stock. In addition, the anticipated conversion of any series of convertible senior notes we have issued could depress the market price of our common stock.

The fundamental change provisions of the ~~2024 Notes, the~~ 2027 Notes and the 2028 Notes may delay or prevent an otherwise beneficial takeover attempt of us.

If a fundamental change (as defined in the applicable indenture governing our convertible senior notes), such as an acquisition of our company, occurs prior to the maturity of the ~~2024 Notes, the~~ 2027 Notes or the 2028 Notes, as applicable, holders of the applicable series of convertible senior notes will have the right, at their option, to require us to repurchase all or a portion of their convertible senior notes of such series. In addition, if such fundamental change also constitutes a make-whole fundamental change, the conversion rate for the applicable series of convertible senior notes may be increased upon conversion of the such series of convertible senior notes in connection with such make-whole fundamental change. Any increase in the conversion rate will be determined based on the date on which the make-whole fundamental change occurs or becomes effective and the price paid (or deemed paid) per share of our common stock in such transaction. Any such increase will be dilutive to our existing stockholders. Our obligation to repurchase any series of convertible senior notes or increase the conversion rate upon the occurrence of a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us that might otherwise be beneficial to our stockholders.

The Capped Calls may affect the value of the 2024 Notes and our common stock.

In connection with the issuance of the 2024 Notes, we entered into capped call transactions (the "Capped Calls") with certain financial institutions who are the option counterparties. The Capped Calls are expected generally to reduce or offset the potential dilution upon conversion of the 2024 Notes or offset any cash payments we are required to make in excess of the principal amount of converted 2024 Notes, as the case may be, with such reduction or offset subject to a cap.

From time to time, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2024 Notes. This activity could also cause an increase or a decrease in the market price of our common stock.

We are subject to counterparty risk with respect to the Capped Calls.

The option counterparties to the Capped Calls are financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the counterparties will not be secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under the Capped Calls with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of the option counterparties.

Legal and Regulatory Risk Factors

We are subject to various governmental export control, trade sanctions, and import laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

In some cases, our products are subject to U.S. and foreign export control laws and regulations that may limit where and to whom we are permitted to sell our products, including the Export Administration Regulations administered by the U.S. Department of Commerce, and our activities may be subject to trade and economic sanctions, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (collectively, “Trade Controls”). As such, a license may be required to export or re-export our products, or provide related services, to certain countries and end-users, and for certain end-uses. Further, our products incorporating encryption functionality may be subject to special controls applying to encryption items or certain reporting requirements.

We have procedures in place designed to ensure our compliance with Trade Controls, with respect to which failure to comply could subject us to both civil and criminal penalties, including substantial fines, possible incarceration of responsible individuals for willful violations, possible loss of our export or import privileges, or reputational harm. Further, the process for obtaining necessary licenses may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities. Trade Controls are complex and dynamic regimes, and monitoring and ensuring compliance can be challenging, particularly given that our products are widely distributed throughout the world. Although we have no knowledge that our activities have resulted in material violations of Trade Controls, any failure by us or our partners to comply with applicable laws and regulations would have negative consequences for us, including reputational harm, government investigations and penalties.

In addition, various countries regulate the import of certain technologies and have enacted laws that could limit our ability to distribute our products and certain product features or could limit our customers’ ability to implement our products in those countries. Changes in our products or changes in U.S. and foreign import and export regulations may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, prevent the import and export of our products to certain countries altogether. For example, the U.S. has imposed tariffs on a large variety of products originating from China, including some on components that are supplied to us from China. Additionally, the current U.S. presidential administration has announced, and in certain cases implemented, tariffs on products originating from a number of countries. Depending upon the duration and implementation of these and future tariffs, as well as our ability to mitigate their impact, these tariffs could materially affect our business, including in the form of increased cost of goods sold, increased pricing for customers and reduced sales. Additionally, the U.S. government has continued to expand controls affecting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing and supercomputing to China without an export license and adding additional entities to restricted party lists. It remains unclear what additional actions, if any, will be taken by the governments of the U.S. or China with respect to such trade and tariff matters in connection with the change in the U.S. presidential administration or otherwise. Any change in import and export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies impacted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations. Failure to comply with these and similar laws on a timely basis, or at all, or any limitation on our ability to develop, export or sell our products would adversely affect our business, financial condition and results of operations.

If we fail to protect our intellectual property rights, our competitive position could be harmed, or we could incur significant expense to enforce our rights.

We depend on our ability to protect our proprietary technology. We rely on a combination of methods to protect our intellectual property, including limiting access to certain information, and utilizing trade secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. The steps we have taken to protect our proprietary rights may be inadequate to preclude misappropriation or unauthorized disclosure of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation, unauthorized disclosure or infringement is uncertain, particularly in countries outside of the U.S. This is likely to become an increasingly important issue as we expand our operations, product offerings and product development into countries that provide a lower level of intellectual property protection. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims, and even if patents are issued, they may be contested, circumvented or invalidated. Moreover, the rights granted under any issued patents may not provide us with a competitive advantage, and, as with any technology, competitors may be able to develop similar or superior technologies to our own now or in the future.

Protecting against the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult, time consuming and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity or scope of the proprietary rights of others. Such litigation could result in substantial cost and diversion of management resources, either of which could harm our business, financial condition and results of operations. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.

Claims by others that we infringe on their intellectual property rights could harm our business.

Our industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent and other intellectual property rights. In particular, many leading companies in the optical transport networking industry, including our competitors, have extensive patent portfolios with respect to optical transport networking technology. In addition, non-practicing patent holding companies seek to monetize patents they have purchased or otherwise obtained. We expect that infringement claims may increase as the number of products and competitors in our market increases and overlaps in technology implementation occur. From time to time, third parties may assert exclusive patent, copyright, trademark and other intellectual property rights to technologies and related standards that are important to our business or seek to invalidate the proprietary rights that we hold. Competitors or other third parties have asserted, and may continue to assert, claims or initiate litigation or other proceedings against us or our manufacturers, suppliers or customers alleging infringement of their proprietary rights, or seeking to invalidate our proprietary rights, with respect to our products and technology. In addition, in the past we have had certain patent licenses with third parties that have not been renewed, and if we cannot successfully renew these licenses, we could face claims of infringement. In the event that we are unsuccessful in defending against any such claims, or any resulting lawsuits or proceedings, we could incur liability for damages or have valuable proprietary rights invalidated. For additional information regarding certain of the legal proceedings in which we are involved, see the information set forth under the heading “Legal Matters” in Note 12, Commitments and Contingencies, in Part II, Item 8. of this Annual Report on Form 10-K.

Any claim of infringement from a third party, even one without merit, could cause us to incur substantial costs defending against the claim, and could distract our management from running our business. Furthermore, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages or could include an injunction or other court order that could prevent us from offering our products. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially reasonable terms or at all. Alternatively, we may be required to develop non-infringing technology, which would require significant effort and expense and may ultimately not be successful. Any of these events could harm our business, financial condition and results of operations.

Competitors and other third parties have and may continue to assert infringement claims against our customers and sales partners. Any of these claims may require us to initiate or defend potentially protracted and costly litigation on their behalf, regardless of the merits of these claims, because we generally indemnify our customers and sales partners from claims of infringement of proprietary rights of third parties. If any of these claims succeed, we may be forced to pay damages on behalf of our customers or sales partners, which could have an adverse effect on our business, financial condition and results of operations.

We also incorporate free and open source licensed software into our products. Although we monitor our use of such open source software closely, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products. In addition, non-compliance with open source software license terms and conditions could subject us to potential liability, including intellectual property infringement or contract claims. In such events, we may be required to seek licenses from third parties in order to continue offering our products, to re-engineer our products or to discontinue the sale of our products in the event re-engineering cannot be accomplished in a timely manner, any of which could adversely affect our business, financial condition and results of operations.

Security incidents, such as data breaches and cyber-attacks, could compromise our intellectual property and proprietary or confidential information and cause significant damage to our business and reputation.

In the ordinary course of our business, we maintain sensitive data on our networks and systems, including data related to our intellectual property and data related to our business, customers and business partners, which may be considered proprietary or confidential information. This sensitive data includes certain personal information and other data relating to our employees and others. We also utilize third-party service providers to host, transmit, or otherwise process data in connection with our business activities, including our supply chain processes, operations, and communications. Companies, especially in the technology industry, have been increasingly subject to a wide variety of security incidents, cyber-attacks, malicious activity, including ransomware, malware and viruses, and other attempts to gain unauthorized access and disrupt systems and the confidentiality, security, and integrity of information, and we and our third-party service providers and suppliers have faced and may continue to face security threats and attacks from a variety of sources. Geopolitical tensions or conflicts have in the past led to, and may in the future lead to, increased risk of cybersecurity attacks. Moreover, advancements in technology, such as artificial intelligence and machine learning, are changing and may continue to change the way companies are subjected to attempts to gain unauthorized access and disrupt systems, thereby increasing the risks of security threats and attacks. In accordance with our flexible approach to work arrangements, many of our employees are also working from home and accessing our corporate network via remote devices, which may be less secure than those used in our offices and thus could increase the potential for such events to occur.

While the secure maintenance of this information and the security of the systems used in our business are critical to our business and reputation, our network and storage applications, and those systems and other business applications maintained by our third-party providers, may be subject to unauthorized access by hackers or breached or otherwise compromised due to operator error, malfeasance or other system disruptions. It may be difficult to anticipate or immediately detect such security incidents or breaches and to prevent or mitigate damage caused as a result. Accordingly, a data breach, security incident, cyber-attack, attack using ransomware or other malware, or any other unauthorized access to systems used in our business or unauthorized acquisition, disclosure, or other processing of our information or other information that we or our third-party vendors maintain or otherwise process could compromise our intellectual property, disrupt our operations, or result in loss of or unauthorized access to or acquisition, disclosure, modification, misuse, corruption, unavailability, or destruction of proprietary or confidential information. While we work to safeguard our internal networks and systems and validate the security of our third-party suppliers and providers in order to mitigate these potential risks, including through information security policies and employee awareness and training, there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches or incidents, and we cannot guarantee that our systems and networks or our third-party service providers’ systems and networks have not been breached or that they or any components of our supply chain do not contain exploitable defects or bugs, including defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support our operations. We and third-party service providers also may face difficulties or delays in identifying or responding to security breaches and other security-related incidents. We have been subjected in the past to a range of immaterial incidents resulting from, for example, phishing, emails purporting to come from an executive or vendor seeking payment requests, malware and communications from look-alike corporate domains. While they have not had a material effect on our business or our network security to date, security breaches or incidents involving access to or improper use of our systems, networks or products, or those of third-party service providers, could compromise confidential or otherwise protected information, result in unauthorized acquisition, disclosure, modification, misuse, corruption, unavailability, destruction, or ~~destruction~~other processing of data, cause payments to be diverted to fraudulent accounts, or otherwise disrupt our operations. Security breaches or incidents, or any reports or perceptions that they have occurred, could cause us to incur significant costs and expenses to remediate and otherwise respond to any actual or suspected breach or incident, subject us to regulatory actions and investigations, disrupt key business operations, result in claims, demands, and liability, and divert attention of management and key information technology resources, any of which could cause significant harm to our business and reputation. Even the perception of inadequate security may damage our reputation and negatively impact our business. Further, we could be required to expend significant capital and other resources to address any security incident or breach and to attempt to prevent future security incidents and breaches.

Although we maintain insurance coverage that may cover certain liabilities in connection with some security breaches and other security incidents, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, including any consequential damages that may arise from such security incidents, that insurance will continue to be available to us on commercially reasonable terms (if at all) or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, or denials of coverage could have a material adverse effect on our business, including our financial condition, results of operations and reputation.

We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate the identified material weaknesses, or if we experience additional material weaknesses or deficiencies in the future or if we otherwise fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act") and the rules and regulations of The Nasdaq Stock Market LLC. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We continue to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

As described under the heading "Controls and Procedures" in Part II, Item 9A of this Annual Report on Form 10-K, we identified control deficiencies within the revenue portion of our quote to cash cycle (revenue cycle), ~~and~~ inventory cycle and financial statement close process, and with respect to these, our internal resources, expertise and policies required to maintain an effective control environment, that, individually or in the aggregate, constitute material weaknesses in our internal control over financial reporting, resulting in the determination that our disclosure controls and procedures were not effective as of December 30 28, ~~2023~~2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that ~~there is~~ a reasonable possibility exists that a material misstatement of a company's annual or interim financial statements ~~will~~would not be prevented or detected on a timely basis. In particular, we determined that (i) within the revenue cycle, controls over the ~~annual~~ establishment of the stand-alone selling prices (“SSPs”) for our performance obligations were not designed or operating effectively to include an adequate review ~~and evaluation~~ of ~~whether~~ the ~~methodology~~underlying data used to develop and establish SSPs, ~~including related financial statement disclosures, was~~ in conformity with ASC 606, Revenue from Contracts with Customers, (ii) within the inventory cycle, controls over judgements used in the estimation of reserves for excess and obsolete inventory were not ~~designed and~~ operating effectively to support such judgements, (iii) ~~controls~~as ~~over~~related ~~the~~to ~~application~~both of our ~~policy~~revenue ~~for~~and ~~capitalizing~~inventory ~~variances~~cycles, ~~from~~certain ~~standard~~key ~~costs~~controls aswere ~~part~~not ofoperating effectively to assess the ~~cost~~completeness and accuracy of ~~inventory,~~Information ~~did~~Produced ~~not~~by ~~operate~~the ~~effectively~~Entity ("IPE") and (iv) aswithin the design and operating effectiveness of controls related to our ~~revenue~~financial ~~and~~statement ~~inventory~~close ~~cycles~~process, ~~certain key~~ controls were not ~~sufficiently~~ designed to ~~assess~~ensure appropriate segregation of duties or to evaluate the completeness and accuracy of ~~Information~~manual ~~Produced~~journal byentry ~~the~~postings ~~Entity~~made ~~("IPE")~~to our general ledger system. These material weaknesses indicate that we had insufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with the complexity of our business and our financial accounting and reporting requirements, which impacted our ability to adequately design, implement and monitor financial reporting controls related to our ~~revenue~~financial ~~cycle~~statement ~~and~~close ~~inventory cycle that identify and mitigate risks of material misstatements in our financial statements~~process.

In response to the identified material weaknesses, management has implemented or plans to implement the remediation measures described under the heading "Controls and Procedures" in Part II, Item 9A of this Annual Report on Form 10-K. While management believes these remediation measures will remediate the identified material weaknesses and strengthen our overall internal control over financial reporting, the identified material weaknesses will not be considered remediated until the applicable remediated controls operate for a sufficient period of time and management ~~has~~and our external auditors have concluded, through testing, that these controls are operating effectively. As management continues to evaluate and work to enhance our internal control over financial reporting, management may take additional measures to address control deficiencies or we may modify some of the remediation measures. Despite these efforts, we may nevertheless be unsuccessful in remediating the identified material weaknesses. Further, additional weaknesses in our internal control over financial reporting or disclosure controls and procedures may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. For example, we were unable to file our Quarterly Report on Form 10-Q for the period ended March 30, 2024 by the initial deadline of May 9, 2024, due to the reasons described in the Notification of Late Filing on Form 12b-25, filed with the SEC on May 10, 2024. Our failure to file periodic and certain current reports with the SEC in a timely manner could impact our operations. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our securities and could adversely impact our business.

41In order to restore, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, we have expended and anticipate that we will continue to expend significant resources and undertake various actions, implementing a remediation plan, incurring accounting-related costs and implementing new internal controls and procedures, and providing significant management oversight. As part of our remediation plan, we are reviewing and enhancing our personnel with the appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with the complexity of our business and our financial accounting and reporting requirements, particularly in areas related to our revenue and inventory cycles. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business and could have a material and adverse effect on our operating results and could cause a decline in the price of our securities. In addition, if we are unable to continue to meet these requirements, we may not be able to maintain our listing on the Nasdaq Global Select Market.

identified material weaknesses. Further, additional weaknesses in our internal control over financial reporting or disclosure controls and procedures may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. For example, we were unable to file this Annual Report on Form 10-K by the initial deadline of February 28, 2024, due to the reasons described in the Notification of Late Filing on Form 12b-25, filed with the SEC on February 29, 2024. Our failure to file periodic and certain current reports with the SEC in a timely manner could impact our operations. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our securities and could adversely impact our business.

In order to restore, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, we have expended and anticipate that we will continue to expend significant resources and undertake various actions, implementing a remediation plan, incurring accounting-related costs and implementing new internal controls and procedures, and providing significant management oversight. As part of our remediation plan, we plan to review and enhance our personnel with the appropriate level of technical accounting knowledge, experience, and training in the application of GAAP commensurate with the complexity of our business and our financial accounting and reporting requirements, particularly in areas related to our revenue and inventory cycles. Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business and could have a material and adverse effect on our operating results and could cause a decline in the price of our securities. In addition, if we are unable to continue to meet these requirements, we may not be able to maintain our listing on the Nasdaq Global Select Market.

supplied to us from China. Depending upon the duration and implementation of these and future tariffs, as well as our ability to mitigate their impact, these tariffs could materially affect our business, including in the form of increased cost of goods sold, increased pricing for customers and reduced sales. Additionally, the U.S. government has continued to expand controls affecting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing and supercomputing to China without an export license and adding additional entities to restricted party lists. It remains unclear what additional actions, if any, will be taken by the governments of the U.S. or China with respect to such trade and tariff matters. Any change in import and export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies impacted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations. Failure to comply with these and similar laws on a timely basis, or at all, or any limitation on our ability to develop, export or sell our products would adversely affect our business, financial condition and results of operations.

We are subject to environmental regulations that could adversely affect our business.

We are subject to complex U.S. and foreign environmental rules and regulations or other social initiatives that impact how and where we manufacture our products. In particular, our manufacturing operations use substances that are regulated by various federal, state, local, foreign and international laws and regulations governing health, safety and the environment, including U.S. Environmental Protection Agency regulations and ~~WEEE~~the Waste Electrical and Electronic Equipment Directive, Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment ("RoHS") and ~~REACH~~Registration, Evaluation, Authorization, and Restriction of Chemicals regulations adopted by the E.U. From time to time, the E.U. restricts or considers restricting certain substances under these directives. For example, InP has been considered for restriction under RoHS. Any restriction of InP or any other substance integral to our systems could materially adversely affect our business, financial condition and operating results. In addition, if we experience a problem complying with these laws and regulations, it could cause an interruption or delay in our manufacturing operations or it could cause us to incur liabilities or costs related to health, safety or environmental remediation or compliance. We could also be subject to liability if we do not handle these substances in compliance with safety standards for handling, storage and transportation and applicable laws and regulations. If we experience a problem or fail to comply with such safety standards or laws and regulations, our business, financial condition and operating results may be harmed.

Regulations relating to environmental, social and governance matters, as well as customer, supplier, investor or other stakeholder demands, may add operational complexity for us.

There has been an increased focus on environmental, social and governance (“ESG”) matters that affect companies globally, including by the SEC, the E.U. and certain state governments. A number of customers have adopted, or may adopt, procurement policies that include ESG provisions or requirements that may impose additional burdens and costs on us as suppliers. AnMoreover, ~~increasing~~many ~~number of~~ investors ~~are~~now ~~also~~require ~~requiring~~ companies to disclose corporate ESG policies, practices, goals and metrics. In addition, various governmental authorities are developing ESG and disclosure-related laws or regulations that could cause us to incur significant compliance costs and other direct and indirect costs. Recent political changes, including but not limited to the change in U.S. Presidential administration, have generated uncertainty about government and investor policies related to ESG laws, regulations and initiatives. Any disclosed goals and aspirations related to ESG are subject to assumptions that could change over time, may evolve as the Company and global ESG practices change, and may not be achieved. In addition, ESG-related standards and regulations are continuing to evolve and may not be adequately harmonized. Our efforts to abide by these regulations, to report against these standards and to accomplish our ESG-related goals and aspirations present operational, reputational, financial, audit, legal and other risks. Our processes and controls may not always align with evolving standards, laws and regulations, our interpretation thereof may differ from governmental authorities and other parties and the regulations and standards may continue to evolve, any of which could result in significant revisions to our goals, reported progress toward those goals, or other ESG information we disclose. In addition, any failure or perceived failure to pursue or fulfill previously stated goals and aspirations may result in reputational damage and loss of business, and could expose us to government enforcement actions, private litigation or other adverse consequences, and may adversely affect our business and results of operations.

43We are subject to global laws and regulations governing privacy, data protection, cybersecurity and artificial intelligence that could adversely affect our business or subject us to liability.

WeData privacy, data protection, cybersecurity and artificial intelligence ("AI") are ~~subject~~areas toof ~~global~~increasing focus for our customers, governmental regulators and privacy advocates, and many jurisdictions, including the E.U., the U.S., China and other regions, are evaluating or have implemented laws and regulations ~~governing~~relating ~~privacy~~to cybersecurity, privacy and data protection, which can affect the market and ~~cybersecurity~~requirements ~~that~~for ~~could~~networking ~~adversely~~and ~~affect~~communications ~~our~~equipment. ~~business~~For example, the General Data Protection Regulation (“GDPR”) in effect in the E.U., regulatory standards similar to the GDPR in effect in the United Kingdom, the Personal Information Protection Law ("PIPL") in China, the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), other enacted or ~~subject~~proposed uslegislation in the U.S., including comprehensive privacy legislation similar to ~~liability~~the CCPA proposed, and in certain cases enacted, in numerous states, and enacted or proposed legislation in other jurisdictions, have created new compliance obligations with respect to data processing, privacy, data protection, and cybersecurity.

~~Data~~The laws, rules, regulations, standards, and other actual and asserted obligations relating to privacy, data protection, cybersecurity and ~~cybersecurity~~AI ~~are~~to ~~areas~~which ofwe ~~increasing~~may ~~focus~~be ~~for~~subject, or that otherwise apply to our ~~customers~~business, ~~governmental~~are ~~regulators~~constantly evolving, and ~~privacy~~we ~~advocates~~expect that there will continue to be new proposed laws, regulations, and ~~many~~industry ~~jurisdictions,~~standards ~~including~~concerning these matters in the E.U.S., the E.U.S., ~~China~~ and other ~~regions~~jurisdictions. We cannot fully predict the impact of the GDPR, ~~are~~the ~~evaluating~~PIPL, orthe ~~have~~CCPA, ~~implemented~~the CPRA, or other laws ~~and~~or regulations, including those that may be modified or enacted in the future, or new or evolving industry standards or actual or asserted obligations, relating to cybersecurity, privacy, ~~and~~or data protection, ~~which~~or ~~can~~processing ~~affect~~on ~~the~~our ~~market~~business or operations. These laws, regulations, and ~~requirements~~standards ~~for~~have ~~networking~~required us to modify our practices and ~~communications~~policies ~~equipment.~~relating ~~For~~to ~~example~~privacy, ~~the~~data ~~General~~protection, ~~Data~~cybersecurity, ~~Protection~~AI ~~Regulation~~and ~~(“GDPR”)~~data inprocessing, ~~effect~~and to incur substantial costs and expenses in ~~the~~an ~~E.U.~~effort to comply, and ~~similar~~we ~~regulatory~~expect ~~standards~~to incontinue ~~effect~~to inincur ~~the~~such ~~United~~costs ~~Kingdom~~and ~~("UK"),~~expenses in the ~~Personal~~future ~~Information~~and ~~Protection~~may ~~Law~~find ~~("PIPL")~~it innecessary ~~China,~~or ~~the~~appropriate ~~California~~to ~~Consumer~~further ~~Privacy~~modify ~~Act~~our ~~(“CCPA”)~~relevant practices and ~~the~~policies. ~~California~~Any ~~Privacy~~actual ~~Rights~~or ~~Act~~perceived ~~(“CPRA”)~~failure by us or our customers, partners, or vendors to comply with laws, regulations, or other ~~enacted~~actual or ~~proposed~~asserted ~~legislation~~obligations inrelating ~~the~~to ~~U.S.~~cybersecurity, ~~including~~AI, ~~comprehensive~~ privacy, ~~legislation~~or ~~similar~~data toprotection ~~the~~could ~~CCPA~~result ~~proposed~~in claims, litigation, and inregulatory ~~certain~~investigations ~~cases~~and ~~enacted~~other proceedings, as well as damage to our reputation. These could result in ~~numerous~~substantial ~~states~~costs, ~~and~~diversion ~~enacted~~of orresources, ~~proposed~~fines, ~~legislation~~penalties, inand other ~~jurisdictions~~damages, ~~have~~and ~~created~~harm ~~new~~to ~~compliance~~our ~~obligations~~customer ~~with~~relationships, ~~respect~~our market position, and our ability to ~~data~~attract ~~processing,~~new ~~privacy~~customers. Any of these could harm our business, ~~data~~financial ~~protection~~condition, and ~~cybersecurity~~results of operations.

~~The~~Integrating ~~laws,~~AI ~~rules, regulations, standards~~ and ~~other~~machine ~~actual~~learning ~~and~~presents ~~asserted~~risks ~~obligations relating~~ to ~~privacy, data protection and cybersecurity to which we may be subject, or that otherwise apply to~~ our business~~, are constantly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning these matters in the U~~.S., the E.U. and other jurisdictions. We cannot fully predict the impact of the GDPR, the PIPL, the CCPA, the CPRA or other laws or regulations, including those that may be modified or enacted in the future, or new or evolving industry standards or actual or asserted obligations, relating to cybersecurity, privacy, or data protection or processing on our business or operations. These laws, regulations, and standards have required us to modify our practices and policies relating to privacy, data protection, cybersecurity, and data processing, and to incur substantial costs and expenses in an effort to comply, and we expect to continue to incur such costs and expenses in the future and may find it necessary or appropriate to further modify our relevant practices and policies. Any actual or perceived failure by us or our customers, partners or vendors to comply with laws, regulations, or other actual or asserted obligations to which we are or are alleged to be subject relating to cybersecurity, privacy or data protection could result in claims, litigation, and regulatory investigations and other proceedings, as well as damage to our reputation. These could result in substantial costs, diversion of resources, fines, penalties, and other damages, and harm to our customer relationships, our market position, and our ability to attract new customers. Any of these could harm our business, financial condition and results of operations.

We leverage AI and machine learning technologies in our operations and continue to explore new opportunities for the responsible use of AI. However, the evolving nature of AI and the regulatory landscape present risks that could impact our business.

The incorporation of AI into our systems and those of our vendors (potentially without our knowledge) exposes us to the possibility that AI providers may not comply with current or rapidly changing regulatory and industry standards, particularly regarding privacy and data protection. This could result in the loss of intellectual property, exposure of confidential or proprietary information, security breaches, and diminished service quality.

Regulatory changes or reinterpretations may introduce new compliance challenges, including potential government enforcement actions or civil lawsuits. Additionally, failing to effectively deploy AI or integrate it into new products and services in a timely manner could hinder our competitiveness, especially in response to evolving consumer demands and industry trends. Our competitors' quicker or more effective adoption of AI could also place us at a disadvantage.

A portion of our revenue is generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks.

We currently sell many of our solutions to various government entities, and we may in the future increase sales to government entities. Sales to government entities are subject to a number of risks, including risks related to a highly competitive, expensive, and time-consuming sales process, which often requires significant upfront time and expense without any assurance that we will complete a sale. Additionally, the sales process may be delayed by a shutdown of the U.S. federal government. If we are successfully awarded a government contract, such award may be subject to appeals, disputes, or litigation, including, but not limited to, bid protests by unsuccessful bidders. Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Government entities may also have statutory, contractual, or other legal rights to terminate contracts for convenience or due to a default. For purchases by the U.S. federal government, the government may require certain products to be made in, or be products of, the U.S. or other high-cost manufacturing locations, and all of our products may not be made in or products of jurisdictions that meet government requirements, and as a result, our business and results of operations may suffer. Contracts with government entities may also include preferential pricing terms, including, but not limited to, “most favored customer” pricing.

Additionally, we may be required to obtain special certifications to sell some or all of our solutions to government or quasi-government entities. Such certification requirements for our solutions may change, thereby restricting our ability to sell into the ~~federal~~applicable government sector until we have attained the revised certification. If our products and subscriptions are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors achieve compliance with these certifications and standards before us, we may be disqualified from selling our products to such governmental entities, or be at a competitive disadvantage, which would harm our business, financial condition and results of operations. There are no assurances that we will find the terms for obtaining such certifications to be acceptable or that we will be successful in obtaining or maintaining the certifications.

44As a government contractor or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies. The laws, regulations, and other requirements with which we and our partners must comply can change, sometimes substantially. The current U.S. Presidential administration has and may continue to effectuate changes to policy that create uncertainty with respect to certain laws, regulations, and other requirements with which we and our partners must comply. As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling our products and services to our government customers. These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, downward contract price adjustments or refund obligations, civil or criminal penalties, termination of contracts or suspension or debarment from government contracting for a period of time with government agencies. Any such damages, penalties, disruption, or limitation in our ability to do business with a government would adversely impact, and could have a material adverse effect on, our business, financial condition, results of operations, reputation and growth prospects.

As a government contractor or subcontractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies. As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to non-ordinary course audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling our products and services to our government customers. These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, downward contract price adjustments or refund obligations, civil or criminal penalties, termination of contracts or suspension or debarment from government contracting for a period of time with government agencies. Any such damages, penalties, disruption, or limitation in our ability to do business with a government would adversely impact, and could have a material adverse effect on, our business, financial condition, results of operations, reputation and growth prospects.

Our business could be adversely affected if our employees cannot obtain and maintain required security clearances or we cannot maintain a required facility security clearance, or we do not comply with legal and regulatory obligations regarding the safeguarding of classified information.

Our U.S. government contract revenue includes income derived from contracts that require our employees to maintain various levels of security clearances and may require us to maintain a facility security clearance, to comply with Department of Defense (“DoD”) requirements. The DoD has strict security clearance requirements for personnel who perform work in support of classified programs. In general, access to classified information, technology, facilities, or programs are subject to additional contract oversight and potential liability. In the event of a security incident involving classified information, technology, facilities, programs, or personnel holding clearances, we may be subject to legal, financial, operational and reputational harm. We are limited in our ability to provide specific information about these classified programs, their risks, or any disputes or claims relating to such programs. As a result, investors have less insight into our classified programs than our other businesses and therefore less ability to fully evaluate the risks related to our classified business or our business overall. Obtaining and maintaining security clearances for employees involves a lengthy process, and it is difficult to identify, recruit, and retain employees who already hold security clearances. If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain their clearances or terminate employment with us, then a customer requiring classified work could terminate an existing contract or decide not to renew the contract upon its expiration. To the extent we are not able to obtain or maintain a facility security clearance, we may not be able to bid on or win new classified contracts, and existing contracts requiring a facility security clearance could be terminated.

Failure to comply with anti-bribery, anti-corruption, anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.

We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the UK Bribery Act, and possibly other anti-bribery and anti-money laundering laws in the U.S. and in countries outside of the U.S. in which we conduct our activities. Anti-corruption and anti-bribery laws have historically been enforced aggressively and ~~are~~ interpreted broadly to generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector. On February 10, 2025, the current U.S. Presidential administration issued an executive order directing the Attorney General of the U.S. to pause FCPA investigations and enforcement actions until the Attorney General issues updated FCPA enforcement guidance, which creates some uncertainty about FCPA enforcement, although we are still subject to the FCPA because it is still applicable law. In addition, because of our international operations and use of third parties to conduct our business internationally, we also remain subject to the anti-bribery laws of non-US jurisdictions.

We sometimes leverage third parties to sell our products and conduct our business abroad. We or our employees, agents, representatives, business partners or third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these employees, agents, representatives, business partners or third-party intermediaries even if we do not explicitly authorize such activities. We cannot assure you that all of our employees and agents will refrain from taking actions in violation of applicable law for which we may be ultimately held responsible. As we increase our international sales and business, our risks under these laws may increase.

These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While we have policies and procedures to address compliance with such laws, we cannot assure you that none of our employees, agents, representatives, business partners or third-party intermediaries will take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

Any allegations or violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws, could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, results of operations, and prospects. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

General Risk Factors

~~The~~Events ~~trading~~that ~~price~~are ofoutside our ~~common~~control ~~stock~~could ~~has~~harm ~~been~~our ~~volatile and may be volatile in the future~~operations.

Our headquarters and the majority of our infrastructure, including our PIC fabrication manufacturing facility, are located in Northern California, an area that is susceptible to earthquakes, fires, floods and other natural disasters. Further, attacks and violence aimed at Northern California or at the U.S. energy or telecommunications infrastructure could hinder or delay the development and sale of our products. In the event that an earthquake, targeted attack or other man-made or natural catastrophe were to destroy any part of our or our contract manufacturers’ or suppliers' facilities, destroy or disrupt vital infrastructure systems, or interrupt our operations or supply chain for any extended period of time, our business, financial condition and results of operations would be harmed. For related risks concerning the operations and availability of the storage facilities in which our inventory is held, see also the Risk Factor titled "Our international sales and operations subject us to additional risks that may harm our operating results."

The trading price of our common stock has been volatile in the past and may be volatile in the future.

The trading prices of our common stock and the securities of other technology companies have been and may continue to be highly volatile. Factors affecting the trading price of our common stock include:

•mergers and acquisitions by us, by our competitors or by our customers or suppliers;

•market conditions in our industry, the industries of our customers and the economy as a whole, including inventory adjustments, supply chain disruptions, global trade tariffs, and fluctuations in currency exchange rates, interest rates or inflation rates;

•variations in our operating results;

•announcements of technological innovations, new services, service or manufacturing enhancements or government funding opportunities, strategic alliances or agreements by us or by our competitors;

•the gain or loss of customers;

•recruitment or departure of key personnel;

•changes in the estimates of our future operating results or external outlook on those results or changes in recommendations or business expectations by any securities analysts that elect to follow our common stock;

•mergers and acquisitions by us, by our competitors or by our customers or suppliers;

•social, geopolitical, environmental or health factors, including pandemics or other public health emergencies where we operate; and

•adoption or modification of regulations, policies, procedures or programs applicable to our business.

An economic downturn, negative financial news, continued inflation, high interest rates, declines in income or asset values, market conditions, changes to fuel and other energy costs, and other economic factors, may lead to market volatility and associated uncertainty. In addition, if the market for technology stocks or the broader stock market experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. Each of these factors, among others, could harm the value of an investment in our common stock. Some companies that have had volatile market prices for their securities have had securities class action lawsuits filed against them. If a suit were filed against us, regardless of its merits or outcome, it could result in substantial costs and divert management’s attention and resources.

Future sales of our common stock could cause our stock price to fall.

We have sold, and may in the future sell, shares of our common stock in underwritten offerings and have established, and may in the future establish, “at-the-market” offering programs pursuant to which we may offer and sell shares of our common stock. Sales of securities have resulted and will continue to result in dilution of our existing stockholders, and such sales could cause our stock price to fall.

In addition, if our existing stockholders sell, or indicate an intent to sell, a large number of shares of our common stock in the public market, it could cause our stock price to fall. We may also issue shares of common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments or otherwise. Any such issuance would result in dilution to our existing stockholders and could cause our stock price to fall.

Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.

We are a Delaware corporation and the anti-takeover provisions of the General Corporation Law of the State of Delaware (the "DGCL"), which apply to us, may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our amended and restated certificate of incorporation and amended and restated bylaws:

•authorize the issuance of “blank check” convertible preferred stock that could be issued by our board of directors to thwart a takeover attempt;

•establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

•require that directors only be removed from office for cause;

•provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;

•prevent stockholders from calling special meetings; and

•prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.

Our amended and restated bylaws designate the Court of Chancery of the State of Delaware and the federal district courts of the U.S. as the exclusive forums for substantially all disputes between us and our stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware or, if such court lacks jurisdiction, any other state or federal court located in the State of Delaware, is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action arising pursuant to the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a claim governed by the internal affairs doctrine. However, such exclusive forum provisions would not apply to any such claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.

47amended and restated bylaws; or any action asserting a claim governed by the internal affairs doctrine. However, such exclusive forum provisions would not apply to any such claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.

These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. Furthermore, Section 22 of the Securities Act of 1933, as amended (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. Our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S. will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated bylaws. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.

These exclusive choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find such exclusive-forum provisions to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business.

Events that are outside our control, such as natural disasters, violence or other catastrophic events, could harm our operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

Infinera has comprehensive and integrated enterprise risk management and cybersecurity risk management programs ~~which~~that use structured, proactive, and continuous processes to identify, understand, assess, mitigate, and report on enterprise and cybersecurity risks in alignment with business objectives. Our risk management program is used to guide and strengthen our cybersecurity posture to engender trust with customers, employees, and stockholders ~~while~~and ~~protecting~~to help protect the confidentiality, integrity, and availability of our systems and data.

We have established a risk assessment methodology ~~which~~that includes requirements for treatment plans, risk acceptance thresholds, prioritization, and control analysis, as well as likelihood and impact analysis. A risk assessment is performed annually. Treatment plans are monitored and reported to management on a quarterly basis.

Governance

Cybersecurity and risk management isare a shared ~~responsibility~~responsibilities that ~~applies~~apply to the Infinera team across all levels of the organization.

•The Board of Directors conducts informed oversight of our risk management processes. The Audit Committee of the Board of Directors has primary responsibility for oversight of enterprise risk management and cybersecurity risk management. Reports on enterprise and cybersecurity risk, risk treatment plans, and key performance indicators of our cybersecurity program are provided to the Audit Committee by management, including our Chief Information Security Officer (CISO), on a quarterly basis and are provided to the Board of Directors as requested and as part of routine Audit Committee updates to the Board of Directors.

•The Executive Leadership Team (ELT), a cross-functional leadership group that includes our Senior Vice President, Information Systems, is responsible for assessing and managing enterprise risks, including cybersecurity risks. The ELT reviews enterprise and cybersecurity risks, risk treatment plans, and key performance indicators regarding the Company’s enterprise risk and cybersecurity risk management programs quarterly.

•The CISO is responsible for cybersecurity strategy and reporting on cybersecurity risks to the ELT, Audit Committee, and Board of Directors. The CISO collaborates with a cross-functional group of the Company’s business leaders to assess cybersecurity risk, establish and monitor cybersecurity processes, and report program effectiveness. Our CISO has over 25 years of cybersecurity and ~~Information~~information ~~Technology~~technology experience across multiple industries with expertise in governance, risk and compliance, cybersecurity operations and cybersecurity engineering.

•The Cybersecurity Advisory Committee supports cybersecurity risk assessment, advises on program enhancements, and acts as a cybersecurity advocate across the business. The committee is comprised of employees with extensive experience across a diverse range of disciplines.

•All employees are responsible for adherence to the Company’s cybersecurity processes and for remaining vigilant to potential cybersecurity threats. This responsibility is part of our employee commitment to operational excellence and is strengthened by ongoing cybersecurity education, training, and awareness programs.

Engaging Third Parties

Companies, especially in the technology industry, have been subject to an increasing number of complex cybersecurity risks. Infinera has engaged with a range of external service providers, including consultants, auditors, and cybersecurity service providers, to help Infinera understand, manage, and mitigate cybersecurity risks. These engagements help Infinera drive improvements in ~~our~~its processes, identify new and emerging threats, and respond rapidly to the ever-evolving cybersecurity risk landscape.

Third-Party Risk Management

Infinera has implemented a robust third-party risk management program to identify and manage risks to the confidentiality, availability, and integrity of ~~our~~its systems and data. This includes contractual requirements related to data privacy and confidentiality, contractual commitments of third parties to maintain comprehensive security programs, and code of conduct requirements designed to ensure such third parties act ethically, responsibly, and safely. Infinera has also implemented processes to assess the effectiveness of third-party security programs and adherence to Infinera’s standards ~~both~~ prior to engaging with a new service provider and to monitor performance on an ongoing basis.

Cybersecurity Incident Response

Infinera has implemented a cybersecurity incident response plan in line with industry standards. The plan defines roles and responsibilities regarding potential cybersecurity incidents, establishes processes regarding identification, containment, and eradication of, and recovery from, potential cybersecurity incidents and clarifies communication and notification policies regarding such potential cybersecurity incidents. The plan also captures lessons learned to drive continuous improvement. ~~Additionally,~~The ~~the~~ plan is evaluated, tested, and enhanced through training, table-top exercises, and by engaging with third-party service providers.

As of the date of this report, Infinera has not experienced aany ~~material~~ cybersecurity ~~incident~~incidents it has determined to be material. For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to the section titled “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K.

ITEM 2. PROPERTIES

Our headquarters are located in San Jose, California, which consist of approximately 82,000 square feet under lease. As of December 3028, ~~2023~~2024, we leased approximately 57,000 square feet for research and development and manufacturing in Sunnyvale, California.

In addition to the leased buildings in San Jose and Sunnyvale, California, we also lease approximately ~~443~~544,000 square feet of office spaces for research and development centers and for sales, service and support in various countries within (i) North America; (ii) LATAM; (iii) EMEA; and (iv) APAC.

All of these leases expire between ~~2024~~2025 and 2037. We also own a facility in Allentown, Pennsylvania. We intend to adjust our facility space to meet our requirements, and we believe that suitable additional or substitute space will be available as needed to accommodate our business needs for our operations. We believe that our existing facilities are adequate to meet our business needs through the next 12 months.

ITEM 3. LEGAL PROCEEDINGS

The information set forth under the heading “Legal Matters” in Note 12, Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the Nasdaq Global Select Market under the symbol “INFN.” As of ~~May~~February 1021, ~~2024~~2025, there were 6757 registered holders of record of our common stock. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.

We have not paid any cash dividends on our common stock and do not intend to pay any cash dividends on our common stock in the near future.

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative five-year total return provided stockholders on our common stock relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Telecommunications Index. An investment of $100 (with reinvestment of all dividends, if any) is assumed to have been made in our common stock and in each of the indexes on December 2928, ~~2018~~2019 and its relative performance is tracked through December 3028, ~~2023~~2024. The Nasdaq Telecommunications Index contains securities of Nasdaq-listed companies classified according to the Industry Classification Benchmark as Telecommunications and Telecommunications Equipment. They include providers of fixed-line and mobile telephone services, and makers and distributors of high-technology communication products. This graph is not deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the graph shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Exchange Act.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*

Among Infinera Corporation, the Nasdaq Composite Index, and the Nasdaq Telecommunications Index 1873

*Assumes $100 invested on December 2928, ~~2018~~2019 in our common stock, in the Nasdaq Composite Index and the Nasdaq Telecommunications Index, with reinvestment of all dividends, if any. Indexes calculated on month-end basis.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Annual Report on Form 10-K contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include, but are not limited to, statements related to the Merger, including statements related to the timing of completion of the Merger, or the receipt of necessary approvals to complete the Merger; the significance and timing of costs related to the Merger; the impact on us of litigation or other stockholder action related to the Merger; the effects on us and our stockholders if the Merger is not completed; our expectations regarding revenue, gross margin, operating expenses, cash flows and other financial items and the drivers related to these; the competitive advantages derived from sales of our vertically integrated products; demand growth for additional network capacity, the level and timing of customer capital spending and the impact on customer demand from customers holding excess inventory beyond normalized levels; the magnitude and duration of supply constraints, including delays, shortages and increased costs and our ability to mitigate such supply constraints, and the extent to which supply-related impacts could materially and adversely affect our business operations, financial performance, results of operations, financial position, and stock price; the adverse impact inflation and higher interest rates may have on us by increasing costs beyond what we can recover through price increases; achievement of strategic objectives, any statements regarding our plans, strategies and objectives; the impact of new customer network footprint on our gross margin; factors that may affect our operating results; anticipated customer acceptance of our solutions; statements concerning new products or services, including new product features; our beliefs about who we may compete with and how we are differentiated from those competitors; our ability to respond to technological changes; statements regarding our relationships with contract manufacturers and other third-party partners; statements regarding our production capacity and facilities requirements; statements related to capital expenditures; statements related to working capital and liquidity; the sufficiency of our cash to operate our business and our ability to raise capital; expectations regarding research and development investments and initiatives; our ability to realize deferred tax assets; statements related to future economic conditions, performance, market growth, competitor consolidation or our sales cycle; our ability to identify, attract, upskill and retain highly skilled personnel; the extent to which public health emergencies could materially and adversely affect our business operations, financial performance, results of operations, financial position, stock price and personnel; our ability to protect our technology and intellectual property, the frequency of claims related to our intellectual property and the value of our intellectual property; statements related to our convertible senior notes and our Credit Facility; our ability to prevent and respond to data breaches and cyber-attacks; statements related to the impact of tax regulations; statements related to our internal control over financial reporting and material weaknesses; statements related to our disclosure controls and procedures; statements related to the effects of trade sanctions and similar regulations; statements related to the proliferation and impact of environmental, social and governance regulation; statements related to the effects of litigation on our financial position, results of operations or cash flows; the impacts of any restructuring plans or other strategic efforts on our business; statements regarding governmental grants, our ability to obtain funding thereto or our ability to comply with such grants; statements related to factors beyond our control, such as natural disasters, acts of war or terrorism, epidemics, pandemics and armed conflicts, such as between Russia and Ukraine and ~~Israel~~recent ~~and~~conflict ~~Hamas~~in the Middle East; statements related to new accounting standards; expectations about the outcome of legal proceedings; statements as to industry trends and other matters that do not relate strictly to historical facts; and statements of assumptions underlying any of the foregoing. These statements are often identified using words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” "should," "will," or "would," and similar expressions or variations. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. Such forward-looking statements speak only as of the date of this report. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Overview

We are a semiconductor manufacturer and global supplier of networking solutions comprised of networking equipment, optical semiconductors, software and services. Our portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, compact modular platforms, optical line systems, coherent optical engines and subsystems, a suite of ~~networking and~~ automation software offerings, and support and professional services. Leveraging our U.S.-based compound semiconductor fabrication plant ("fab") and in-house test and packaging capabilities, we design, develop, and manufacture industry-leading ~~InP~~indium phosphide-based photonic integrated circuits ("PICs") for use in our vertically integrated, high-capacity optical communications products.

Our customers include operators of fixed line and mobile networks, including telecommunications service providers, internet content providers (“ICPs”), cable providers, wholesale carriers, research and ~~educational~~education institutions, large enterprises, utilities and government entities. Our networking solutions enable our customers to ~~deliver high-bandwidth business and consumer communications services. Our comprehensive portfolio of networking solutions also enables our customers to~~ build infrastructure networks that support and deliver high-bandwidth business and consumer communications services. Our edge-to-core portfolio of networking solutions also enables our customers to scale their transport networks as consumer and business services and applications continue to drive growth in demand for network bandwidth. These consumer and business services and applications include, but are not limited to, high-speed internet access, 4G/5G mobile broadband, cloud-based services, high-definition video streaming services, virtual and augmented reality, the Internet of Things (“IoT”), artificial intelligence ("AI"), machine learning ("ML"), business Ethernet services and data center interconnect ("DCI").

As an optical semiconductor manufacturer, we specialize in the manufacturing of optical compound semiconductors using indium phosphide ("InP"). This technology is used in infrastructure networks to transmit massive amounts of data and support delivery of ~~business~~consumer and business communications services. We have made significant investments in our unique research, development, fabrication, and packaging facilities, including our optical compound semiconductor fab in Silicon Valley and advanced test and packaging center in Allentown, Pennsylvania. We optimize the manufacturing process by using InP to build our PICs, which enables the integration of hundreds of optical functions onto a ~~onto a~~ single, monolithic optical semiconductor chip. The unique capabilities of our optical semiconductor fab, which has provided our customers with a critical and secure source of U.S.-produced optical semiconductors and strengthened the supply chain, have enabled us to consistently pioneer critical technology advancements. For example, our latest generation of technology has made it possible to transmit information at a rate of ~~800~~1.2 Gbterabits per second (“Tb/s”) using a single laser. Our ongoing research and development initiatives continue to create a path to higher speed transmission and lower cost per bit performance for our customers. These initiatives include a new line of high-speed intra-data center optics based on monolithic InP PIC technology designed to dramatically lower cost and power per bit while providing intra-data center connectivity at speeds of 1.6 Tb/s and greater.

The large-scale integration of our PICs and advanced DSPs enables us to develop and manufacture high-performance optical engines that are used in our coherent optical networking system and subsystem solutions. These solutions include features that customers care about the most, including lowest cost per bit, lowest power per bit, reduced footprint and increased flexibility, reliability and security. Coherent optical solutions are becoming increasingly important across the network as our customers transition to 1.2 Tb/s and 800 gigabits per second ("Gb/s") per wavelength transmission speeds and beyond in the network core, 400 Gb/s in the metro networks, and 100 Gb/s in the access market segment. We believe our vertical integration strategy provides a competitive advantage by enabling leading optical performance at higher optical speeds with increased spectral efficiency, greater control over our supply chain, and an overall lower cost structure.

We have grown our solutions portfolio through internal development as well as acquisitions, including the acquisition of Telecom Holding Parent LLC (“Coriant”), a privately held global supplier of open network solutions for the largest global network operators (the “Acquisition”). These developments positioned us to be one of the leading providers of vertically integrated optical networking solutions in the world with the ability to serve a broader global customer base with accelerated delivery of the innovative solutions our customers demand. In 2021, we announced an expansion of our portfolio with the introduction of a suite of coherent optical pluggables. Pluggable optics are optical transmission solutions packaged in smaller and more versatile form factors. They are designed to seamlessly address the rapidly growing market for point-to-point optical transport solutions as well as create a new category of point-to-multipoint solutions that can enable a dramatically more cost-efficient network architecture. Based on our vertically integrated optical semiconductor technology and supporting a range of high-speed transport rates that include 1.2 Tb/s, 800 Gb/s, 400 Gb/s and 100 Gb/s, this suite of coherent optical pluggables builds on our history of delivering innovative, vertically integrated optical engine technology that powers our differentiated optical networking solutions.

delivering innovative, vertically integrated coherent optical technology that powers our differentiated optical networking solutions.

We sell our products via a direct sales force and through indirect channel partners.

Merger with Nokia Corporation

On June 27, 2024, we, Nokia and Merger Sub entered into the Merger Agreement that provides for the Merger, with us surviving the Merger as a wholly owned subsidiary of Nokia.

Upon and subject to the terms of the Merger Agreement, at 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 Consideration;

•Share Consideration; or

•Mixed Consideration.

In each case, the Nokia Shares will be delivered in the form of 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.

Financial and Business Highlights

Total revenue was $1,~~614~~418.14 million in ~~2023~~2024 as compared to $1,~~573~~614.21 million in ~~2022~~2023, representing a 312% ~~increase~~decrease. The total year-over-year ~~increase~~decrease in revenue was ~~driven~~due byto ~~the~~a continued ~~ramp~~decline ~~and~~in ~~deployment of~~ our ~~products~~Tier ~~within~~1, ~~both our ICP and our~~ other service provider ~~verticals,~~and ~~which~~Cable ~~was~~verticals ~~modestly~~slightly offset by ~~lower~~an ~~revenue~~increase ~~from~~in ~~our~~the ~~Tier~~ICP ~~1 and Cable verticals~~vertical. In ~~2024~~2025, we anticipate benefiting from a more diversified customer base and see several prospective opportunities to grow revenue by driving adoption of new and existing vertically integrated solutions. Our results will depend on overall market conditions and, as is typical, quarter-over-quarter revenue could be volatile, affected by, among other factors, customer buying patterns, component availability within our supply chain and the timing of customer network deployments.

One end-customer accounted for 1012% of our revenue in fiscal year ~~2023~~2024. One end-customer accounted for 1110% of our revenue in ~~2022~~2023 and noone end-customer accounted for 1011% ~~or more~~ of our revenue in fiscal year ~~2021~~2022.

Gross margin ~~increased~~was torelatively ~~39%~~flat inat ~~2023 from 34~~38% in ~~2022.~~2024 ~~The~~and ~~year-over-year~~39% ~~increase~~ in ~~gross margin was driven by higher sales volume, favorable mix, lower component costs and improved absorption of fixed costs from higher sales volumes~~2023. In ~~2024~~2025, we intend to continue to expand our vertical integration capabilities into a broader range of our optical networking solutions utilizing our own internally developed optical engines. We remain focused on improving our gross margin over time through engineering design efforts to lower component costs in our supply chain as well as driving other efficiencies within our operations.

Operating expenses increased to $~~627~~628.82 million in2024 ~~2023~~ from $~~595~~627.98 million in ~~2022, representing a 5% increase~~2023. The increase was primarily attributable to integration expenses and higher outside professional fees slightly offset by lower employee-related costs and ~~higher~~lower depreciation expense. In ~~2024~~2025, we intend to continue to balance prudent cost management with strategic investments in technology innovation and in our go-to-market efforts globally to expand our customer reach and drive additional market share gains in the long term.

We primarily sell our products through our direct sales force, with the remainder sold through channel partners. We derived 6663% and 7666% of our revenue from direct sales to customers in ~~2023~~2024 and ~~2022~~2023, respectively. In the future, we expect to continue generating a majority of our revenue from direct sales.

We are headquartered in San Jose, California, with employees located throughout North America, LATAM, EMEA and APAC.

Results of Operations

A discussion regarding our financial condition and results of operations for the fiscal year ended December 3028, ~~2023~~2024 compared to our fiscal year ended December 3130, ~~2022~~2023 is presented below. A discussion regarding our financial condition and results of operations for our fiscal year ended December 3130, ~~2022~~2023 compared to our fiscal year ended December 2531, ~~2021~~2022 can be found under Item 7 of our ~~Amendment No. 1 to our~~ Annual Report on Form 10-K/A for the fiscal year ended December 3130, ~~2022~~2023, filed with the SEC on ~~February~~May 2917, 2024.

The following tables set forth, for the periods presented, certain consolidated statements of operations information (in thousands, except percentages):

	Years Ended
	December 30, 2023		% of totalrevenue		December 31,2022		% of totalrevenue		Change		% Change
	December 28, 2024		% of totalrevenue		December 30,2023		% of totalrevenue		Change		% Change
Revenue:
Product	$	1,~~304~~103,~~229~~131	8178	%	$	1,~~268~~304,~~624~~229	81	%	$	35(201,~~605~~098)	3(15)	%
Services	~~309~~315,~~899~~315		1922	%	~~304~~309,~~618~~899		19	%	5,~~281~~416		2	%
Total revenue	$	1,~~614~~418,~~128~~446	100	%	$	1,~~573~~614,~~242~~128	100	%	$	40(195,~~886~~682)	3(12)	%
Cost of revenue:
Product	$	~~810~~706,~~845~~498	50	%	$	~~852~~810,~~476~~845	5450	%	$	(41104,~~631~~347)	(513)	%
Services	~~167~~166,~~532~~792		1012	%	~~161~~167,~~630~~532		10	%	~~5,902~~(740)		4—	%
Amortization of intangible assets	~~10,621~~—		1—	%	2310,~~138~~621		1	%	(1210,~~517~~621)		(54100)	%
Restructuring and other related costs	~~2,218~~596		—	%	~~222~~2,218		—	%	(1,~~996~~622)		~~899~~(73)	%
Total cost of revenue	$	~~991~~873,~~216~~886	6162	%	$	1991,~~037,466~~216	6661	%	$	(46117,~~250~~330)	(412)	%
Gross profit	$	~~622~~544,~~912~~560	3938	%	$	~~535~~622,~~776~~912	3439	%	$	87(78,~~136~~352)	16(13)	%


	Years Ended
	December 30, 2023		% of total revenue		December 31, 2022		% of total revenue		Change		% Change
Revenue:
Product	$	1,304,229	81	%	$	1,268,624	81	%	$	35,605	3	%
Services	309,899		19	%	304,618		19	%	5,281		2	%
Total revenue	$	1,614,128	100	%	$	1,573,242	100	%	$	40,886	3	%
Cost of revenue:
Product	$	810,845	50	%	$	852,476	54	%	$	(41,631)	(5)	%
Services	167,532		10	%	161,630		10	%	5,902		4	%
Amortization of intangible assets	10,621		1	%	23,138		1	%	(12,517)		(54)	%

Restructuring and other related costs	2,218		—	%	222		—	%	1,996		899	%
Total cost of revenue	$	991,216	61	%	$	1,037,466	66	%	$	(46,250)	(4)	%
Gross profit	$	622,912	39	%	$	535,776	34	%	$	87,136	16	%

	Years Ended
	December 31,2022		% of totalrevenue		December 25, 2021		% of totalrevenue		Change		% Change
Revenue:
Product	$	1,268,624	81	%	$	1,099,376	77	%	$	169,248	15	%
Services	304,618		19	%	325,829		23	%	(21,211)		(7)	%
Total revenue	$	1,573,242	100	%	$	1,425,205	100	%	$	148,037	10	%
Cost of revenue:
Product	$	852,476	54	%	$	732,071	51	%	$	120,405	16	%
Services	161,630		10	%	174,008		12	%	(12,378)		(7)	%
Amortization of intangible assets	23,138		1	%	19,621		1	%	3,517		18	%
Restructuring and other related costs	222		—	%	1,531		—	%	(1,309)		(85)	%
Total cost of revenue	$	1,037,466	66	%	$	927,231	65	%	$	110,235	12	%
Gross profit	$	535,776	34	%	$	497,974	35	%	$	37,802	8	%

Revenue

~~2023~~2024 Compared to ~~2022~~2023. Product revenue ~~increased~~decreased by $35201.61 million, or 315%, in ~~2023~~2024 from ~~2022~~2023. This ~~increase~~decrease was primarily driven by ~~the~~continued ~~growth~~decline ofin ~~optical~~our ~~line~~Other ~~system~~Service ~~products~~Provider, asTier ~~well~~1 asand ~~deployments~~Cable ofverticals ~~our~~slightly ~~vertically~~offset ~~integrated~~by ~~optical~~an ~~products.~~increase in the ICP vertical, and mostly tied to lower deployments with domestic customers.

Services revenue increased by $5.34 million, or 2%, in ~~2023~~2024 from ~~2022~~2023. This increase was primarily attributable to higher ~~professional~~amortized services maintenance revenue ~~from~~mainly ~~new~~driven ~~and~~by growth of existing end-customer ~~deployment projects~~renewals.

Revenue will be lower in the first quarter of ~~2024~~2025 as compared to the fourth quarter of ~~2023~~2024 due to the seasonality of our business.

Revenue by geographic region is based on the shipping address of the end-customer. The following tables summarize our revenue by geography and sales channel for the periods presented (in thousands, except percentages):

	Years Ended
	December 30, 2023		% of totalrevenue		December 31,2022		% of total revenue		Change		% Change
	December 28, 2024		% of totalrevenue		December 30,2023		% of total revenue		Change		% Change
Total revenue by geography
Domestic	$	~~994~~834,~~311~~472	6259	%	$	~~870~~994,~~282~~311	5562	%	$	~~124~~(159,~~029~~839)	14(16)	%
International	~~619~~583,~~817~~974		3841	%	~~702~~619,~~960~~817		4538	%	(8335,~~143~~843)		(126)	%
	$	1,~~614~~418,~~128~~446	100	%	$	1,~~573~~614,~~242~~128	100	%	$	40(195,~~886~~682)	3(12)	%
Total revenue by sales channel
Direct	$	1900,~~067,570~~421	6663	%	$	1,~~191~~067,~~584~~570	7666	%	$	(~~124~~167,~~014~~149)	(1016)	%
Indirect	~~546~~518,~~558~~025		3437	%	~~381~~546,~~658~~558		2434	%	~~164~~(28,~~900~~533)		43(5)	%
	$	1,~~614~~418,~~128~~446	100	%	$	1,~~573~~614,~~242~~128	100	%	$	40(195,~~886~~682)	3(12)	%


	Years Ended
	December 30, 2023		% of total revenue		December 31, 2022		% of total revenue		Change		% Change
Total revenue by geography
Domestic	$	994,311	62	%	$	870,282	55	%	$	124,029	14	%
International	619,817		38	%	702,960		45	%	(83,143)		(12)	%
	$	1,614,128	100	%	$	1,573,242	100	%	$	40,886	3	%
Total revenue by sales channel
Direct	$	1,067,570	66	%	$	1,191,584	76	%	$	(124,014)	(10)	%
Indirect	546,558		34	%	381,658		24	%	164,900		43	%
	$	1,614,128	100	%	$	1,573,242	100	%	$	40,886	3	%

	Years Ended
	December 31,2022		% of total revenue		December 25, 2021		% of total revenue		Change		% Change
Total revenue by geography
Domestic	$	870,282	55	%	$	663,808	47	%	$	206,474	31	%
International	702,960		45	%	761,397		53	%	(58,437)		(8)	%
	$	1,573,242	100	%	$	1,425,205	100	%	$	148,037	10	%
Total revenue by sales channel
Direct	$	1,191,584	76	%	$	1,099,632	77	%	$	91,952	8	%
Indirect	381,658		24	%	325,573		23	%	56,085		17	%
	$	1,573,242	100	%	$	1,425,205	100	%	$	148,037	10	%

2024 Compared to 2023. Domestic revenue decreased by $159.8 million, or 16%, in 2024 compared to 2023, driven primarily by decreased revenue from each of our Other Service Provider and Tier 1 verticals.

~~2023~~International ~~Compared to 2022. Domestic~~ revenue ~~increased~~decreased by $~~124~~35.08 million, or 146%, in ~~2023~~2024 compared to ~~2022~~2023, ~~driven~~ primarily ~~by increased revenue~~ from ~~each~~declines ofin ~~our~~the ~~ICP and~~ other ~~service~~Americas ~~provider verticals, which was partially offset by decreased revenue from certain Tier 1 customers~~ and ~~our~~APAC ~~cable vertical~~regions.

~~International~~Direct revenue decreased by $83167.1 million, or 1216%, in ~~2023~~2024 compared to ~~2022~~2023, primarily from lower ~~other service provider~~ revenue infrom ~~EMEA~~Tier ~~and~~1, ~~lower~~Other ~~Tier~~Service 1Provider ~~revenue~~and inICP ~~APAC~~domestic customers.

~~Direct~~Indirect revenue decreased by $~~124~~28.05 million, or 105%, inrelated ~~2023~~to ~~compared~~a todecline ~~2022,~~in ~~primarily~~revenue ~~from~~within ~~lower~~the ~~revenue~~Other ~~from~~Service Provider and Tier 1 ~~customers~~verticals, which ~~vary~~was ~~period~~largely tooffset ~~period~~by ~~based~~higher ~~upon~~revenue ~~the~~from ~~timing~~ICP ~~of customer deployment projects~~customers.

~~Indirect~~2024 ~~revenue~~Compared ~~increased~~to 2023. Gross profit decreased by $~~164~~78.94 million, orwith 43gross margin relatively flat at 38% in 2024 and 39% in 2023. In 2025, ~~related~~we intend to ~~revenue~~continue ~~growth~~to ~~within~~expand ~~ICP~~our ~~and~~vertical ~~other~~integration ~~service~~capabilities, ~~provider~~drive ~~verticals,~~down ~~which~~direct ~~was~~material ~~modestly~~costs ~~offset~~through bycost ~~lower~~reduction ~~Tier~~initiatives 1coupled ~~revenue~~with improved product mix. We believe we will be able to improve our gross margin over time as our level of vertical integration and product volume increases.

2023 Compared to 2022. Gross profit increased by $87.1 million, with gross margin increasing to 39% in 2023 from 34% in 2022. The gross margin improvement was driven by favorable product mix, cost reductions, including relief from elevated supply chain costs, and increased vertical integration. In 2024, we intend to continue to expand our vertical integration capabilities, drive down direct material costs through further design efforts coupled with vendor negotiations. We believe we will be able to improve our gross margin over time by leveraging our existing infrastructure as volumes increase.

In any given quarter, gross margins can fluctuate based on a number of factors, including the mix of optical line system footprint versus capacity utilization, product mix, customer mix and overall volume.

Amortization of Intangible Assets

~~2023~~2024 Compared to ~~2022~~2023. Amortization of intangible assets decreased by $1210.56 million, or 54100%, in ~~2023~~2024 from ~~2022~~2023. The decrease was due to certain developed technology assets that were fully amortized in ~~2022~~2023.

Restructuring and Other Related Costs

~~2023~~2024 Compared to ~~2022~~2023. Restructuring and other related costs ~~increased~~decreased by $21.06 million in ~~2023~~2024 from ~~2022~~2023. The ~~increase~~decrease ~~was~~is ~~due~~primarily to the ~~2023~~result ~~Restructuring~~of ~~Plan~~the lower severance and ~~the~~related costs ~~incurred~~of ~~comprised~~the of2024 ~~severance~~Restructuring ~~and~~Plan ~~related~~compared ~~payroll~~to ~~charges~~the 2023 Restructuring Plan. See Note 8, “Restructuring and Other Related Costs” to the notes to consolidated financial statements for more information on our restructuring plans.

Operating Expenses

The following tables summarize our operating expenses for the periods presented (in thousands, except percentages):

	Years Ended
	December 30, 2023		% of totalrevenue		December 31, 2022		% of totalrevenue		Change		% Change
	December 28, 2024		% of totalrevenue		December 30, 2023		% of totalrevenue		Change		% Change
Research and development	$	~~316~~300,~~879~~437	2021	%	$	~~306~~316,~~188~~879	1920	%	$	10(16,~~691~~442)	3(5)	%
Sales and marketing	~~166~~158,~~938~~861		1011	%	~~146~~166,~~445~~938		910	%	20(8,~~493~~077)		14(5)	%
General and administrative	~~124~~132,~~874~~680		89	%	~~118~~124,~~602~~874		8	%	67,~~272~~806		56	%
Amortization of intangible assets	129,~~344~~025		1	%	1412,~~576~~344		1	%	(23,~~232~~319)		(1527)	%
Restructuring and other related costs	6,717		—	%	10,122		1	%	(3,405)		(34)	%
Merger-related charges	23,021		2	%	—		—	%	23,021		100	%
Total operating expenses	$	627,752	39	%	$	595,933	38	%	$	31,819	5	%
Restructuring and other related costs	4,186		—	%	6,717		—	%	(2,531)		(38)	%
Total operating expenses	$	628,210	44	%	$	627,752	39	%	$	458	—	%

	Years Ended
	December 31,2022		% of totalrevenue		December 25,2021		% of totalrevenue		Change		% Change
	December 30,2023		% of totalrevenue		December 31,2022		% of totalrevenue		Change		% Change
Research and development	$	~~306~~316,~~188~~879	1920	%	$	~~299~~306,~~894~~188	2119	%	$	610,~~294~~691	23	%
Sales and marketing	~~146~~166,~~445~~938		910	%	~~138~~146,~~829~~445		109	%	720,~~616~~493		514	%
General and administrative	~~118~~124,~~602~~874		8	%	~~115~~118,~~415~~602		8	%	36,~~187~~272		35	%
Amortization of intangible assets	1412,~~576~~344		1	%	1714,~~455~~576		1	%	(2,~~879~~232)		(1615)	%
Acquisition and integration costs	—		—	%	614		—	%	(614)		(100)	%
Restructuring and other related costs	6,717		—	%	10,122		1	%	(3,405)		(34)	%
Restructuring and other related costs	10,122		1	%	13,246		1	%	(3,124)		(24)	%
Total operating expenses	$	627,752	39	%	$	595,933	38	%	$	31,819	5	%
Total operating expenses	$	595,933	38	%	$	585,453	41	%	$	10,480	2	%

The following table summarizes the stock-based compensation expense included in our operating expenses for the periods presented (in thousands):

Years Ended

December 30, 2023

December 31, 2022

December 25,2021

December 28, 2024

December 30, 2023

December 31,2022

Research and development

2218,~~474~~779

2322,~~553~~474

1823,~~554~~553

Sales and marketing

1312,~~699~~175

13,~~311~~699

1213,~~345~~311

General and administration

1512,~~977~~346

1415,~~666~~977

1214,~~985~~666

Total

5243,~~150~~300

5152,~~530~~150

4351,~~884~~530

Research and Development Expenses

~~2023~~2024 Compared to ~~2022~~2023. Research and development expenses ~~increased~~decreased by $1016.74 million, or 35%, in ~~2023~~2024 from ~~2022~~2023. The ~~increase~~decrease was primarily attributable to ~~increases~~decreases in employee-related expenses,; and outside professional services, partially offset by slightly higher development costs and depreciation expense. In ~~2024~~2025, we expect to make additional targeted investments focused on product enhancements to both new and existing products. Our goal is to continue expanding the breadth and performance of our product portfolio while simultaneously driving down component costs through design innovation, which we believe will ultimately result in additional market share capture.

Sales and Marketing Expenses

~~2023~~2024 Compared to ~~2022~~2023. Sales and marketing expenses ~~increased~~decreased by $208.51 million, or 145%, in ~~2023~~2024 from ~~2022~~2023. This ~~increase~~decrease was driven by ~~higher~~lower employee-related expenses, ~~increased~~lower ~~travel, higher~~ trials and marketing-related costs slightly offset by increased travel expenses. In ~~2024~~2025, we plan to modestly grow this spend and strategically invest in our go-to-market programs in an effort to expand our customer reach to drive long-term market share gains.

General and Administrative Expenses

~~2023~~2024 Compared to ~~2022~~2023. General and administrative expenses increased by $67.38 million, or 56%, in ~~2023~~2024 from ~~2022~~2023. The increase was attributable to higher ~~employee-related~~outside ~~expenses,~~professional ~~higher~~fees ~~depreciation expense~~ and ~~increased~~facilities ~~indirect~~expenses ~~taxes, partially~~ offset by lower ~~litigation~~employee-related ~~spend~~expenses and lower ~~outside~~depreciation ~~professional fees~~expense. In ~~2024~~2025, we anticipate a ~~modest~~decrease ~~increase~~ in general and administrative expenses as we ~~invest~~benefit from investments in system automation initiatives, ~~personnel~~ and ~~other~~decreased outside professional services.

Amortization of Intangible Assets

~~2023~~2024 Compared to ~~2022~~2023. Amortization of intangible assets decreased by $23.23 million or 1527%, in ~~2023~~2024 from ~~2022~~2023. The decrease was largely due to lower amortization of certain customer relationships and backlog being fully amortized in the first quarter of 2023.

60Merger-related charges

Merger-related charges represent charges incurred in connection with the pending Merger with Nokia. We incurred $23.0 million in related charges in 2024, primarily related to outside professional services and employee-related expenses.

Restructuring and Other Related Costs

~~2023~~2024 Compared to ~~2022~~2023. Restructuring and other related costs decreased by $32.45 million, or 3438%, in ~~2023~~2024 compared to ~~2022~~2023. The decrease ~~was~~is primarily ~~due~~the result of the lower severance and related costs of the 2024 Restructuring Plan compared to the 2023 Restructuring Plan and lower lease-related impairment charges in ~~2023~~2024. See Note 8, “Restructuring and Other Related Costs” to the notes to consolidated financial statements for more information on our restructuring plans.

Other Income (Expense), Net

Years Ended

December 30, 2023

December 31, 2022

December 25,2021

December 28, 2024

December 30, 2023

December 31,2022

(In thousands)

Interest income

23,~~716~~383

~~893~~2,716

~~455~~893

Interest expense

(3032,~~609~~302)

(2630,~~015~~609)

(4926,~~099~~015)

Gain on extinguishment of debt

—

~~15,521~~—

—15,521

Other gain (loss), net

15(20,~~325~~457)

1415,~~247~~325

~~(22~~14,~~667)~~247

Total other income (expense), net

(1249,~~568~~376)

4(12,~~646~~568)

~~(71~~4,~~311)~~646

~~2023~~2024 Compared to ~~2022~~2023. Interest income increased by $10.87 million in ~~2023~~2024 compared to ~~2022~~2023 primarily due to increased interest from investments in money market funds.

Interest expense increased by $41.67 million in ~~2023~~2024 compared to ~~2022~~2023. The increase in interest expense was primarily due to ~~the~~interest ~~issuance~~paid ofon ~~the~~certain ~~$373.8~~trade ~~million and $100~~payables.0 million, aggregate principal amount of the Existing 2028 Notes and the Additional 2028 Notes in August 2022 and June 2023, respectively, partially offset by repurchase of the 2024 Notes. See Note 11, “Debt” to the notes to consolidated financial statements for more information.

~~Gain~~The onchange ~~extinguishment of debt was $15.5 million~~ in ~~2022~~other ~~due~~gain to(loss), ~~the~~net, ~~partial repurchase of our~~ 2024 ~~Notes~~compared atto a2023, ~~price that~~ was ~~below their par value~~$35.8 ~~The~~million ~~gain~~primarily ~~includes~~due ~~and~~to ~~was~~an ~~reduced~~increase byin ~~the~~foreign ~~write-off~~exchange oflosses ~~related~~driven ~~deferred~~by ~~issuance~~foreign ~~costs~~currency ofexchange $3rate changes.~~5 million.~~

The change in other gain (loss), net, 2023 compared to 2022, was $1.1 million primarily due to an increase in foreign exchange gains driven by foreign currency exchange rate changes.

Provision for Income Taxes

We recognized an income tax expense of $717.83 million on a loss before income taxes of $17133.40 million, and $207.58 million on a loss before income taxes of $5517.54 million, in ~~2023~~2024 and ~~2022~~2023, respectively. The resulting effective tax rates were (4413.80)% and (3744.18)% for ~~2023~~2024 and ~~2022~~2023, respectively. The ~~2023~~2024 and ~~2022~~2023 effective tax rates differ from the expected statutory rate of 21% based on state income taxes, tax credits, stock-based compensation expenses, foreign income taxed at different rates, impact due to foreign currency translation, foreign income inclusions in the U.S., foreign tax credit expiration, and losses in foreign jurisdictions that require a valuation allowance. The ~~decrease~~increase in ~~2023~~2024 income tax provision compared to ~~2022~~2023 is due to foreign currency unrealized gains(losses) and increase in withholding taxes and in 2023 there was a benefit received from material foreign discrete that was not present in 2024.

~~Because~~We ofhave ~~our~~not ~~U.S.~~been ~~operating~~subject ~~loss~~to inmaterial ~~2023,~~federal ~~significant~~or ~~loss~~state ~~carryforward~~income ~~position,~~taxes ~~and~~given ~~corresponding~~existing ~~valuation~~operating ~~allowance~~losses inand ~~all~~tax ~~years,~~credit carryforwards other than ~~separate~~in ~~filing~~the state ~~taxes,~~of aIllinois ~~few~~given ~~combined~~limitations ~~states and minimum taxes, we have not been subject to federal or state tax~~ on ~~our U.S. income because of~~ the ~~availability~~use of ~~loss~~net ~~carryforwards~~operating losses. If these losses and other tax attributes become fully utilized, our taxes will increase significantly to a more normalized, ~~expected~~ rate on U.S. earnings. The release of ~~transfer pricing~~ reserves in the future may have a beneficial impact to our tax expense, but the timing of the impact depends on factors such as expiration of the statute of limitations or settlements with ~~tax~~taxing authorities. No significant releases are expected inwithin the near future based on ~~information~~ available information at this time.

Liquidity and Capital Resources

Years Ended

December 30, 2023

December 31, 2022

December 25,2021

December 28, 2024

December 30, 2023

December 31,2022

(In thousands)

Net cash flow provided by (used in):

Operating activities

4980,~~510~~680

~~(37~~49,~~560)~~510

28(37,~~128~~560)

Investing activities

(6275,~~314~~013)

(4662,~~053~~314)

(4146,~~379~~053)

Financing activities

13(32,~~713~~220)

8213,~~346~~713

~~(101~~82,~~544)~~346

	Years Ended
	December 30, 2023		December 31, 2022
	December 28, 2024		December 30, 2023
	(In thousands)
Cash and cash equivalents	$	~~172~~145,~~505~~808	$	~~178~~172,~~657~~505
Restricted cash	~~1,354~~420		101,~~546~~354
	$	~~173~~146,~~859~~228	$	~~189~~173,~~203~~859

Our restricted cash balance amounts are primarily pledged as collateral for certain standby letters of credit related to customer performance guarantees, value added tax licenses and property leases.

Operating Activities

Net cash provided by operating activities was $4980.57 million for ~~2023~~2024, as compared to net cash ~~used~~provided inby operating activities of $3749.65 million for ~~2022~~2023 and net cash ~~provided~~used byin operating activities of $2837.16 million for ~~2021~~2022.

Net loss for ~~2023~~2024 was $25150.23 million, which included non-cash charges of $~~152~~126.62 million such as depreciation, stock-based compensation, amortization of intangibles assets, operating lease expense, restructuring charges and related costs, and amortization of debt issuance costs, compared to a net loss of $7625.0 2 million in ~~2022~~2023, which included non-cash charges of $152.16 million. Net cash ~~used~~provided inby working capital was $77104.9 million in ~~2023~~2024. Accounts receivable decreased by $3840.52 million due to timing of billings and collections. Inventory levels ~~increased~~decreased by $57121.98 million primarily due to ~~changes in customer order patterns that reduced the amount of inventory drawdown following~~ our efforts to ~~build~~reduce inventory ~~to manage previous lead time challenges~~. Prepaid and other assets ~~decreased~~increased by $949.72 million primarily due to ~~decrease~~increase in non-trade receivables, customer contract assets and long term contract manufacturing deposits. Accounts payable decreased by $228.93 million primarily due to timing of payments to suppliers. Accrued liabilities and other expenses ~~decreased~~increased by $4011.16 million primarily due to ~~lower~~increase ~~contract manufacturing accruals and decreases~~ in ~~accrued~~customer ~~taxes, partially offset by increases in restructuring and other compensation related expenses~~advances. Deferred revenue ~~decreased~~increased by $258.37 million ~~due~~primarily tofrom billing exceeding amortization of maintenance renewals during the period.

Net loss for ~~2022~~2023 was $7625.02 million, which included non-cash charges of $152.16 million such as depreciation, stock-based compensation, amortization of intangibles assets, operating lease expense, restructuring charges and related costs, and amortization of debt issuance costs, compared to a net loss of $~~170~~76.8 0 million in ~~2021~~2022, which included non-cash charges of $~~193~~152.81 million. Net cash used in working capital was $~~113~~77.79 million in ~~2022~~2023. Accounts receivable ~~increased~~decreased by $6938.05 million due to ~~higher~~timing of billings ~~to customers~~ and ~~timing of~~ collections. Inventory levels increased by $8957.59 million due to ~~our~~changes ~~efforts~~in tocustomer ~~purchase~~order ~~more~~patterns that reduced the amount of inventory todrawdown ~~manage~~following ~~lead~~our ~~time~~efforts ~~challenges~~to ~~resulting~~build ~~from~~inventory ~~the~~to ~~industry-wide~~manage ~~supply~~previous ~~chain~~lead ~~environment~~time challenges. Prepaid and other assets ~~increased~~decreased by $349.07 million primarily due to ~~increase~~decrease in ~~contract manufacturer deposits and increase in~~ customer contract assets. Accounts payable ~~increased~~decreased by $882.39 million primarily due to timing of payments to suppliers. Accrued liabilities and other expenses decreased by $2440.41 million primarily due to ~~timing~~lower ofcontract ~~payments~~manufacturing ofaccruals ~~other~~and ~~compensation~~decreases ~~related~~in ~~expenses~~accrued ~~and~~taxes, ~~decreased~~partially offset by increases in restructuring and ~~tax~~other ~~liabilities~~compensation related expenses. Deferred revenue decreased by $25.3 million due to amortization of maintenance renewals during the period.

increased by $15.1 million due to higher maintenance renewals during the period attributable to expanding our installed base. Maintenance contracts are typically contracted on an annual or multi-year basis.

Investing Activities

Net cash used in investing activities was for the purchase of property and equipment and amounted to $75.0 million and $62.3 million for 2024 and 2023, respectively. The increase was primarily due to capital expenditures related to laboratory and manufacturing equipment and leasehold improvements under construction.

Net cash used in investing activities was for the purchase of property and equipment and amounted to $62.3 million and $46.1 million for 2023 and 2022, respectively. The increase was primarily due to capital expenditures related to laboratory and manufacturing equipment.

Financing Activities

Net cash ~~provided~~used byin financing activities was $1332.72 million for ~~2023~~2024. Financing activities in ~~2023~~2024 primarily included ~~net~~principal ~~proceeds~~repayment of ~~$15~~our 2.3125% ~~million~~Convertible ~~from~~Senior ~~issuance of the 2028~~ Notes ~~and~~due ~~partial~~in ~~repurchase~~2024 of (the "2024 Notes,") ~~and~~of $1418.9 7 million, ~~from~~payment ~~the issuance~~ of ~~shares of our common stock under the ESPP. These proceeds were offset by~~ $10.43 million for term license purchases, ~~$2.1 million~~ payment of ~~debt issuance costs incurred in connection with the issuance of the 2028 Notes and entering into the asset-based revolving credit facility under the Loan Agreement,~~ $1.0.6 million ~~payments~~ on finance lease obligations, and tax withholdings in the amount of $2.51 million paid on behalf of certain employees for net share settlements of restricted stock units (“RSUs”).

Net cash provided by financing activities was $8213.37 million for ~~2022~~2023. Financing activities in ~~2022~~2023 primarily included net proceeds of $9215.93 million from issuance of the 2028 Notes and partial repurchase of the 2024 Notes, and $1514.29 million from the issuance of shares of our common stock under the ESPP. These proceeds were offset by $710.74 million term license purchases, $122.51 million payment of debt issuance costs incurred in connection with the issuance of the 2028 Notes and entering into the asset-based revolving credit facility under the Loan Agreement, $1.30 million payments on finance lease obligations, and tax withholdings in the amount of $32.75 million paid on behalf of certain employees for net share settlements of RSUs.

Liquidity

We believe that our current cash, along with the Credit Facility (as defined below) will be sufficient to meet our anticipated cash needs for working capital and capital expenditures, ~~the~~mortgage ~~repayment~~payments ~~of our 2024 Notes~~ and ~~the~~ interest payments on ~~the~~our ~~2027~~convertible ~~Notes,~~senior ~~the~~notes ~~2028~~(as ~~Notes~~defined ~~and~~below) ~~the Credit Facility~~ for at least 12 months. If the impact to our business and financial position from weakness in the global economy, banking sector and financial markets is more extensive or prolonged than expected and our existing sources of cash are insufficient to satisfy our liquidity requirements, we may require additional capital from equity or debt financings to fund our operations, to respond to competitive pressures or strategic opportunities, or otherwise. In addition, we are continuously evaluating alternatives and potential transactions for efficiently funding our capital expenditures, ~~and~~ ongoing operations and servicing our existing debt. We may, subject to market conditions and other considerations, from time to time engage in a variety of financing transactions for such purposes, including the issuance of securities or the incurrence of additional debt and the refinancing of existing debt. We may not be able to secure timely additional financing, or ~~restructure~~refinance existing debt, on favorable terms or at all. The terms of any additional financings or ~~restructurings~~refinancing may place limits on our financial and operating flexibility, and we may not be able to obtain terms as favorable as the terms of any debt being refinanced. If we raise additional funds through further issuances of equity or equity-linked securities, our existing stockholders could suffer dilution in their percentage ownership of us, and any new securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.

On August 8, 2022, and on June 16, 2023, we issued the Existing 2028 Notes, and the Additional 2028 Notes, respectively which will mature on August 1, 2028, unless earlier repurchased, redeemed or converted. Interest is payable semi-annually in arrears on February 1 and August 1 of each year, which commenced on February 1, 2023. In the event that all of the 2028 Notes are converted, we would be required to repay the principal amount in cash and the conversion premium in any combination of cash and shares of its common stock at our election.

The net proceeds from the issuance of the Additional 2028 Notes, after deducting the repurchase price for the 2024 Notes and offering expenses and fees, was approximately $12.5 million. We used the net proceeds from this offering for general corporate purposes, including working capital and to fund growth and potential strategic projects.

On March 9, 2020, we issued the 2027 Notes, which will mature on March 1, 2027, unless earlier repurchased, redeemed or converted. Interest is payable semi-annually in arrears on March 1 and September 1 of each year, which commenced on September 1, 2020. For the conversion obligation, we intend to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

On September 11, 2018, we issued the 2024 Notes, which ~~will~~matured ~~mature~~ on September 1, 2024~~, unless earlier repurchased, redeemed or converted~~. ~~Interest~~Upon ismaturity ~~payable semi-annually in arrears on March 1 and September 1~~ of ~~each~~the ~~year,~~2024 ~~which commenced on March 1~~Notes, ~~2019. For~~ the ~~conversion~~Company ~~obligation,~~repaid ~~we intend to pay or deliver, as~~ the ~~case~~then ~~may~~remaining ~~be,~~principal ~~cash,~~balance ~~shares~~ of ~~our~~$18.7 ~~common~~million ~~stock,~~along orwith aaccrued ~~combination~~interest of ~~cash and shares of our common stock, at our election~~$0.2 million.

For more information regarding the convertible senior notes, see Note 11, “Debt” to the notes to consolidated financial statements. Refer to the contractual obligations section below for future payment obligations.

On June 24, 2022, we entered into a Loan, Guaranty and Security Agreement (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 we may draw upon from time to time. We 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.

As of December 3028, ~~2023~~2024, we had no drawings on the Credit Facility and we had availability of $~~177~~118.79 million under the Credit Facility. For more information regarding the Credit Facility, see Note 11, “Debt” to the notes to consolidated financial statements.

As of December 3028, ~~2023~~2024, we had $~~173~~146.92 million of cash, cash equivalents and restricted cash including $4838.14 million of cash held by our foreign subsidiaries. Our policy with respect to undistributed foreign subsidiaries' earnings is to consider those earnings to be indefinitely reinvested. As a result of the enactment in the United States of the Tax Cuts and Jobs Act of 2017 (the "Jobs Act"), if and when funds are actually distributed in the form of dividends or otherwise, we expect minimal tax consequences, including foreign withholding taxes, which would be applicable in some jurisdictions.

We had standby letters of credit and bank guarantees as of the years ended December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023. See Note 13, “Guarantees” to the notes to consolidated financial statements for further information.

Contractual Obligations

The following is a summary of our contractual obligations as of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 (in thousands):

	December 30, 2023		December 31, 2022		Change		% Change
	December 28, 2024		December 30, 2023		Change		% Change
Operating leases(1)	$	~~111~~101,~~316~~466	$	71111,~~903~~316	$	39(9,~~413~~850)	55(9)	%
Finance lease obligations	54,~~220~~619		~~966~~5,220		~~4,254~~(601)		~~440~~(12)	%
Purchase obligations(2)	~~466~~376,~~346~~266		~~744~~466,~~777~~346		(~~278~~90,~~431~~080)		(3719)	%
2028 Notes, including interest(3)	~~562~~544,~~579~~813		~~457~~562,~~572~~579		~~105~~(17,~~007~~766)		23(3)	%
2027 Notes, including interest(3)	~~217~~212,500		~~222~~217,500		(5,000)		(2)	%
2024 Notes, including interest(3)	~~19,145~~—		~~107~~19,~~015~~145		(8719,~~870~~145)		(82100)	%
Mortgage payable, including interest	6,830		7,611		(781)		(10)	%
Mortgage payable, including interest (3)	8,105		6,830		1,275		19	%
Total contractual obligations(4)	$	1,~~388~~247,~~936~~769	$	1,~~612~~388,~~344~~936	$	(~~223~~141,~~408~~167)	(1410)	%

(1)We lease facilities under non-cancelable operating lease agreements. These leases have varying terms that range from one to 1424 years, and contain leasehold improvement incentives, rent holidays and escalation clauses. In addition, some of these leases have renewal options for up to ~~six~~ten years. We also have contractual commitments to remove leasehold improvements and return certain properties to a specified condition when the leases terminate. See Note 12, "Commitments and Contingencies" to the notes to consolidated financial statements for more information.

64(2)We have service agreements with certain production suppliers under which we are committed to purchase certain parts. The decrease in purchase obligations compared with the end of fiscal 2023 was primarily due to our efforts to reduce inventory and overall spend.

(23)WeSee ~~have~~Note ~~service~~11, ~~agreements~~“Debt” ~~with certain production suppliers under which we are committed~~ to ~~purchase certain parts. The decrease in purchase obligations compared with~~ the ~~end~~notes ~~of fiscal 2022 was primarily due~~ to ~~our~~consolidated ~~efforts~~financial tostatements ~~reduce~~for ~~inventory~~more ~~and overall spend~~information.

(34)~~For~~Certain ~~additional~~commitments ~~information~~and ~~regarding~~contingencies ~~our~~are ~~asset-based~~not ~~revolving~~included ~~credit~~in ~~facility~~the table because we cannot reliably estimate the timing and ~~2028~~amount of future payments, ~~2027~~if ~~and~~any. ~~2024~~For ~~Notes~~example, ~~see~~tax liabilities of $10.5 million related to uncertain tax positions and expected future payments to our pension and post-employment plans are excluded from the contractual obligation table because they do not represent contractual cash outflows as they are dependent on various factors. See Note 1117, ~~“Debt”~~"Employee Benefit and Pension Plans" to the notes to consolidated financial statements for more information relating to our pension and post-retirement benefit plans.

(4)Certain commitments and contingencies are not included in the table because we cannot reliably estimate the timing and amount of future payments, if any. For example, tax liabilities of $8.1 million related to uncertain tax positions and expected future payments to our pension and post-employment plans are excluded from the contractual obligation table because they do not represent contractual cash outflows as they are dependent on various factors. See Note 17, "Employee Benefit and Pension Plans" to the notes to consolidated financial statements for more information relating to our pension and post-retirement benefit plans.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make 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 consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. See Note 2, “Significant Accounting Policies” to the notes to consolidated financial statements, which is included in Part II, Item 8 of this Annual Report on Form 10-K. Financial Statements and Supplementary Data, which describes our significant accounting policies and methods used in preparation of our consolidated financial statements. Management believes that the estimates, assumptions and judgments upon which they rely are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected.

We believe our critical accounting policies and estimates are those related to revenue recognition, accounting for income taxes, and inventory valuation. Management considers these policies critical because they are both important to the portrayal of our financial condition and results of operations, and they require management to make judgments and estimates about inherently uncertain matters.

Revenue Recognition

We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition by applying the following five-step approach:

•identification of the contract, or contracts, with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue when, or as, we satisfy a performance obligation.

Many of our product sales are sold in combination with installation and deployment services along with initial hardware and software support. Our product sales are also sold at times with spares management, on-site hardware replacement services, network operations management, software subscription services, extended hardware warranty and training. Initial software and hardware support services are generally delivered over a one-year period in connection with the initial purchase. Software warranty provides customers with maintenance releases during the warranty support period and hardware warranty provides replacement or repair of equipment that fails to perform in line with specifications. Software subscription services include software warranty and additionally provides customers with rights to receive unspecified software product upgrades released during the support period.

Spares management and on-site hardware replacement services include the replacement of defective units at customer sites in accordance with specified service level agreements. Network operations management includes the day-to-day operation of a customer's network. These services are generally delivered on an annual basis. We evaluate each promised good and service in a contract to determine whether it represents a distinct performance obligation or should be accounted for as a combined performance obligation.

Services revenue includes software subscription services, installation and deployment services, spares management, on-site hardware replacement services, network operations management, extended hardware warranty and training. Revenue from software subscription services, spares management, on-site hardware replacement services, network operations management and extended hardware warranty contracts is deferred and is recognized ratably over the contractual support period, which is generally one year, as services are provided over the course of the entire period. Revenue related to training and installation and deployment services is recognized upon completion of the services.

Contracts and customer purchase orders are generally used to determine the existence of an arrangement. In addition, shipping documents and customer acceptances, when applicable, are used to verify delivery and transfer of title. We typically satisfy our performance obligations upon shipment or delivery of product depending on the contractual terms. Payment terms to customers generally range from net 30 to 120 days from invoice, which are considered to be standard payment terms. We assess our ability to collect from our customers based primarily on the creditworthiness and past payment history of the customer.

Customer product returns are generally approved on a case by case basis. Specific reserve provisions are made based upon a specific review of all the approved product returns where the customer has yet to return the products to generate the related sales return credit at the end of a period. Estimated sales returns are recorded as a reduction to revenue.

For sales to resellers, the same revenue recognition criteria apply. It is our practice to identify an end-customer prior to shipment to a reseller. We do not offer refund rights, of return rights or price protection to our resellers.

We report revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.

Customer Purchase Commitments

We sell software licenses that provide customers the ability to purchase incremental bandwidth capacity on an already-deployed ~~piece of~~ hardware. Instant Bandwidth-enabled systems generally include a specific initial capacity and incremental capacity can be added by the purchase of Instant Bandwidth licenses. Instant Bandwidth licenses are considered distinct performance obligations because customers can provision additional transmission capacity on demand without the deployment of any incremental equipment.

Some contracts commit the customer to purchase incremental Instant Bandwidth licenses within a specified time frame from the initial shipment of the Instant Bandwidth-enabled hardware. The time frame varies by customer and generally ranges between 12 to 24 months. If the customer does not purchase the additional capacity within the time frame as stated in the contract, we have the right to deliver and invoice such Instant Bandwidth licenses to the customer. Future committed licenses are considered to be additional performance obligations when a minimum purchase obligation is present, as evidenced by enforceable rights and obligations. As such, we are required to estimate the variable consideration for future Instant Bandwidth licenses as part of determining the contract transaction price.

Contract Termination Rights

The contract term is determined on the basis of the period over which the parties to the contract have present enforceable rights and obligations. Certain customer contracts include a termination for convenience clause that allows the customer to terminate services without penalty, upon advance notification. For such contracts, the service duration is limited to the non-cancelable portion of the contract.

Variable Consideration

The consideration associated with customer contracts is generally fixed. Variable consideration includes discounts, rebates, refunds, credits, incentives, penalties, or other similar items. The amount of consideration that can vary is not a substantial portion of total consideration.

Variable consideration estimates are re-assessed at each reporting period until a final outcome is determined. The changes to the original transaction price due to a change in estimated variable consideration will be applied on a retrospective basis, due to system constraints, with the adjustment recorded in the period in ~~which~~ the ~~change~~current ~~occurs~~period.

Stand-alone Selling Price

The transaction price for a contract is allocated among the performance obligations on a relative SSP basis. The SSP is the price at which an entity would sell a promised product or service separately to a customer.

While certain services we sell have readily observable SSPs, the majority of our products and services are generally not sold on a stand-alone basis and therefore SSPs for such products and services are not directly observable. If there is no observable SSP, it is estimated using judgment and considering all reasonably available information, including but not limited to, gross margin objectives, pricing practices in customer contracts with multiple goods and services, internal costs, historical profitability data, competitor pricing strategies, as well as other observable inputs. The determination of SSPs for performance obligation is ~~assessed~~reassessed on a ~~periodic~~quarterly basis and ~~estimates~~updated ~~are revised to reflect any significant changes to underlying assumptions, as needed~~accordingly.

Transaction Price Allocated to the Remaining Performance Obligation

Our remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially satisfied, as of period end, consisting of deferred revenue and non-cancellable backlog. Our backlog represents purchase orders received from customers for future product shipments and services that are unsatisfied or partially satisfied as of period end. Our backlog is subject to future events that could cause the amount or timing of the related revenue to change. Orders in backlog may be fulfilled several quarters following receipt or may relate to multi-year support service obligations.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate. WeThis ~~estimate~~involves ~~actual~~calculating current tax expense ~~together~~and ~~with~~recognizing ~~assessing temporary~~ differences ~~resulting~~in ~~from~~timing ~~different~~for ~~treatment~~deductible ~~of items~~transactions, ~~such~~leading asto ~~accruals and allowances not currently deductible for tax purposes. These differences result in~~ deferred tax assets and liabilities, ~~which~~on ~~are included in~~ our ~~consolidated~~ balance ~~sheets~~sheet. InDeferred ~~general, deferred~~ tax assets ~~represent~~are future tax benefits towe beexpect ~~received~~to receive when certain expenses ~~previously recognized in our consolidated statements of operations~~ become deductible ~~expenses~~or ~~under~~when ~~applicable income~~ tax ~~laws~~attributes ~~or loss, or credit carryforwards~~ are ~~utilized~~used. ~~Accordingly,~~The realization of ~~our~~these ~~deferred tax~~ assets isdepends ~~dependent~~ on future taxable income ~~within~~in the ~~respective~~relevant ~~jurisdictions~~areas ~~against~~where ~~which~~ these deductions, losses, and credits can be ~~utilized within the applicable future periods~~applied.

We must assess the likelihood that some portion or all of our deferred tax assets will be recovered from future taxable income within the respective jurisdictions. To the extent ~~the~~we ~~Company~~believe ~~believes~~ that recovery does not meet the “more-likely-than-not” standard, it must establish a valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management judgment is required in determining its provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In evaluating the need for a full or partial valuation allowance, all positive and negative evidence must be considered, including ~~the~~considering ~~Company's~~all ~~forecast~~sources of ~~taxable~~ income ~~over the applicable carryforward periods~~, its current financial performance, ~~its~~ market ~~environment~~conditions, and other factors. Based on the available objective evidence, at December 3028, ~~2023~~2024, management believes it is ~~not~~ more likely than not that the ~~domestic~~ net deferred tax assets in the U.S., state, and certain foreign jurisdictions will not be realizable in the foreseeable future. Accordingly, ~~the~~we ~~domestic~~have ~~net~~recorded a valuation allowance against these deferred tax assets. ~~are~~We ~~subject~~will continue to aassess ~~full~~our ~~valuation~~realizability ~~allowance~~of deferred tax assets on a quarterly basis. To the extent that ~~the~~we ~~Company~~determine ~~determines~~ that deferred tax assets are realizable on a more likely than not basis in the future, and an adjustment is needed, that adjustment will be recorded in the period that the determination is made.

Inventory Valuation

Inventories consist of raw materials, work-in-process and finished goods and are stated at ~~standard cost adjusted to approximate~~ the lower of actual cost or net realizable value. Costs are recognized utilizing the first-in, first-out method. Net realizable value is based upon an estimated selling price reduced by the estimated cost of disposal. The determination of market value involves numerous judgments including estimated average selling prices based upon recent sales volumes, industry trends, existing customer orders, current contract price, future demand and pricing and technological obsolescence of our products.

Inventory that is obsolete or in excess of our forecasted demand or is anticipated to be sold at a loss is written down to its estimated net realizable value based on historical usage and expected demand. In valuing our inventory costs and deferred inventory costs, we considered whether the net realizable value of inventory delivered or expected to be delivered at less than cost, primarily comprised of common equipment, had declined. We concluded that, in the instances where the net realizable value of inventory delivered or expected to be delivered was less than cost, it was appropriate to value the inventory costs and deferred inventory costs at cost or net realizable value, whichever is lower, thereby recognizing the cost of the reduction in net realizable value of inventory in the period in which the reduction occurred or can be reasonably estimated. We have, therefore, recognized inventory write-downs as necessary in each period in order to reflect inventory at the lower of actual cost or net realizable value.

We consider whether we should accrue losses on firm purchase commitments related to inventory items. Given that the net realizable value of common equipment is below contractual purchase price, we have also recorded losses on these firm purchase commitments in the period in which the commitment is made. When the inventory parts related to these firm purchase commitments are received, that inventory is recorded at the purchase price less the accrual for the loss on the purchase commitment.

Recent Accounting Pronouncements

See Note 2, “Significant Accounting Policies” to the notes to consolidated financial statements for a full description of recent accounting pronouncements including the respective expected dates of adoptions and effects on us.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We operate in international markets, which expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the euro. The majority of our revenue contracts are denominated in U.S. dollars, with the most significant exception being in Europe, where we invoice primarily in euros. Additionally, a portion of our expenses, primarily the cost of personnel for research and development and sales and sales support to deliver technical support on our products and professional services and the cost to manufacture, are denominated in foreign currencies, primarily the Indian rupee, the euro, the SEK and the British pound. Revenue resulting from selling in local currencies and costs incurred in local currencies are exposed to foreign currency exchange rate fluctuations that can affect our operating income. As exchange rates vary, operating income may differ from expectations.

We may enter into foreign currency exchange forward contracts to reduce the impact of currency exchange rate movements on certain transactions from time to time, but do not cover all foreign-denominated transactions and therefore do not entirely eliminate the impact of fluctuations in exchange rates that could negatively affect our results of operations and financial condition. We also may enter into foreign currency exchange forward contracts to reduce the impact of foreign currency fluctuations on certain non-functional currency denominated account balances primarily in euros and British pounds from time to time. As a result, we do not expect a significant impact to our results from a change in exchange rates on foreign denominated non-functional account balances in the near-term. Gains and losses on these contracts are intended to offset the impact of foreign exchange rate fluctuations on the underlying foreign currency denominated non-functional currency account balances. Accordingly, the effect of an immediate 10% adverse change in foreign exchange rates on these transactions during ~~2023~~2024 would not be material to our results of operations.

Interest Rate Risk

We had cash, cash equivalents and restricted cash totaling $~~173~~146.92 million and $~~189~~173.29 million as of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, respectively. The unrestricted cash is held for working capital purposes. We do not enter into investments for speculative purposes. The effect of an immediate 10% adverse change in interest rates would not be material to our results of operations.

The ~~2024 Notes,~~ 2027 Notes and 2028 Notes have a fixed annual interest rate of 2.~~125%, 2.~~50% and 3.75%, respectively, and, therefore, we do not have economic interest rate exposure on the convertible senior notes. However, the fair values of the convertible senior notes are subject to interest rate risk, credit risk and other factors due to the convertible feature. The fair value of the convertible senior notes will generally increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the convertible senior notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The fair value of the convertible senior notes will generally increase as our credit worthiness improves and decrease when our creditworthiness weakens. The interest and market value changes affect the fair value of the convertible senior notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we do not carry the convertible senior notes at fair value. We present the fair value for required disclosure purposes only. As of December 3028, ~~2023~~2024, the fair value of the ~~2024 Notes,~~ 2027 Notes and 2028 Notes was $18214.0 million, ~~$183.2 million~~ and $~~457~~551.40 million, respectively. The fair value was determined based on the estimated fair value or quoted bid price as applicable of the ~~2024 Notes,~~ 2027 Notes and 2028 Notes in an over-the-counter market on December 2927, ~~2023~~2024. The convertible senior notes are classified as Level 2 of the fair value hierarchy.

Holders may convert the convertible senior notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election (provided, however, that with respect to the 2028 Notes, we would be required to repay the principal amount in cash and the conversion premium in any combination of cash and shares of our common stock at our election). If our common stock price is above the initial conversion price of $~~9.87, $~~7.66 and $6.80 for the ~~2024 Notes,~~ 2027 Notes and 2028 Notes, respectively, upon conversion or at maturity, the amount of cash or shares of common stock required to pay the conversion premium is not fixed and would increase if our common stock price increases.

See Note 11, “Debt” to the notes to consolidated financial statements for further information.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			7179
Consolidated Balance Sheets			7684
Consolidated Statements of Operations			7785
Consolidated Statements of Comprehensive Loss			7886
Consolidated Statements of Stockholders’ Equity			7987
Consolidated Statements of Cash Flows			8088
Notes to Consolidated Financial Statements			8290
Note 1: Organization and Basis of Presentation			8290
Note 2: Significant Accounting Policies			8291
Note 3: Leases			92102
Note 4: Revenue Recognition			93103
Note 5: Fair Value Measurements			95105
Note 6: Goodwill and Intangibles			96106
Note 7: Balance Sheet Details			98107
Note 8: Restructuring and Other Related Costs			~~100~~109
Note 9: Accumulated Comprehensive Income (Loss)			~~101~~110
Note 10: Basic and Diluted Net Loss Per Common Share			~~102~~111
Note 11: Debt			~~103~~112
Note 12: Commitments and Contingencies			~~110~~117
Note 13: Guarantees			~~112~~119
Note 14: Stockholders' Equity			~~113~~121
Note 15: Income Taxes			~~117~~126
Note 16: Segment Information			~~120~~130
Note 17: Employee Benefit and Pension Plans			~~121~~131
Note 18: Subsequent Event			136

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Infinera Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Infinera Corporation (the Company) as of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, the related consolidated statements of operations, comprehensive ~~income (~~loss), stockholders’ equity and cash flows for each of the three years in the period ended December 3028, ~~2023~~2024, and the related notes and ~~the~~ financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, and the results of its operations and its cash flows for each of the three years in the period ended December 3028, ~~2023~~2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 3028, ~~2023~~2024, based on criteria established in Internal Control-—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated ~~May 17,~~February ~~2024~~27, 2025 expressed an adverse opinion thereon.

Adoption of ASU No. 2020-06

As discussed in Note 11 to the consolidated financial statements, the Company changed its method for accounting for convertible debt in the year ended December 31, 2022 due to the adoption of Accounting Standards Update ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Inventory Valuation

Description of the Matter

As discussed in Note 2 of the consolidated financial statements, the Company assesses the valuation of inventories, including raw materials, work-in-process, and finished goods, in each reporting period. Obsolete inventory or inventory in excess of management’s forecasted demand is written down to its estimated net realizable value if less than cost.

Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgement because the estimates rely on a number of factors that are affected by market and economic conditions outside the Company’s control. In particular, the excess and obsolete inventory calculations are sensitive to significant assumptions, including forecasted demand for the Company’s products. Additionally, auditing management’s judgments and estimates was complex as there were material weaknesses in internal controls over the information and judgements used in the estimation of reserves for excess and obsolete inventory.

How We Addressed the

Matter in Our Audit

After consideration of the material weaknesses, our audit procedures included, among others, evaluating the significant assumptions, including forecasted demand, and the accuracy and completeness of the underlying data management used to value excess and obsolete inventory by preparing a comparable analysis based on historical and subsequent period consumption and sales and compared the results to management’s forecasted demand. We obtained corroborative information about management’s estimated lifecycle of the Company’s products to support the quantities on hand. Where applicable we obtained evidence of contemporaneous communications with vendors, customers, or the Company’s Board of Directors to support the ability and intent to consume on hand inventory. We also tested the completeness and accuracy of underlying data used in management’s analysis, including historical and subsequent period consumption and sales. For certain assumptions or inputs, we performed sensitivity analyses to test the reasonableness of management’s judgements.

Revenue Recognition – Estimation of Stand-alone Selling Prices

Description of the Matter

As described in Note 2 to the consolidated financial statements, the Company’s contracts with customers generally contain promises to transfer products and services which are not sold separately. The Company allocates the transaction price for a contract among the performance obligations on a relative stand-alone selling price (SSP) basis.

Auditing management’s estimates of SSP of its various performance obligations was challenging and complex due to a lack of stand-alone sales transactions that provide observable evidence. Because of this lack of stand-alone sales transactions, the Company must apply judgment and consider all reasonably available information, including but not limited to gross margin objectives, pricing practices in customer contracts with multiple goods and services, internal costs, historical profitability data and other observable inputs when estimating SSP. Additionally, auditing management’s estimates of SSP was complex as there were material weaknesses in internal controls over the information and judgments used in the estimation of such prices.

How We Addressed the

Matter in Our Audit

After consideration of the material weaknesses, our audit procedures included, among others, evaluating the appropriateness of the Company’s estimates based on the Company’s gross margin objectives and pricing practices in customer contracts. We tested the completeness and accuracy of the data used in the SSP methodology, including cost data used in determining historical profitability and pricing practices. We evaluated the Company’s identification and consideration of available information, and the use of such information in estimating SSP. We tested the accuracy of the Company’s calculations of SSP. We also tested, for a sample of transactions, the Company’s allocation of the transaction price among performance obligations based on relative SSP.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2001.

~~San Jose~~Dallas, ~~California~~Texas

~~May~~February 1727, ~~2024~~2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Infinera Corporation

Opinion on Internal Control over Financial Reporting

We have audited Infinera Corporation’s internal control over financial reporting as of December 3028, ~~2023~~2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, Infinera Corporation (the Company) has not maintained effective internal control over financial reporting as of December 3028, ~~2023~~2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the ~~company~~Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management's assessment. Management has identified material weaknesses in controls related to the Company’s revenue cycle, inventory cycle, financial statement close process and with respect to these, their internal resources, expertise and policies required to maintain an effective control environment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the ~~Company’s~~ consolidated balance sheets of the Company as of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, the related consolidated statements of operations, comprehensive ~~income (~~loss), stockholders’ equity and cash flows for each of the three years in the period ended December 3028, ~~2023~~2024, and the related notes and ~~the~~ financial statement schedule listed in the Index at Item 15(a) (~~collectively referred to as the “consolidated financial statements”~~2). These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the ~~December~~2024 ~~30, 2023~~ consolidated financial statements, and this report does not affect our report dated ~~May 17~~February 27, ~~2024~~2025, which expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control ~~over~~Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A ~~company~~Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A ~~company~~Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the ~~company~~Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the ~~company~~Company are being made only in accordance with authorizations of management and directors of the ~~company~~Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company~~Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

~~San Jose~~Dallas, ~~California~~Texas

~~May~~February 1727, ~~2024~~2025

INFINERA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)

	December 30, 2023		December 31, 2022
	December 28, 2024		December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	~~172~~145,~~505~~808	$	~~178~~172,~~657~~505
Short-term restricted cash	~~517~~—		~~7,274~~517
Accounts receivable, net	~~381~~336,~~981~~552		~~419~~381,~~735~~981
Inventory	~~431~~308,~~163~~213		~~374~~431,~~855~~163
Prepaid expenses and other current assets	~~129~~155,~~218~~249		~~152~~129,~~451~~218
Total current assets	1945,~~115,384~~822		1,~~132~~115,~~972~~384
Property, plant and equipment, net	~~206~~249,~~997~~496		~~172~~206,~~929~~997
Operating lease right-of-use assets	3936,~~973~~348		3439,~~543~~973
Intangible assets, net	2415,~~819~~794		4724,~~787~~819
Goodwill	~~240~~224,~~566~~233		~~232~~240,~~663~~566
Long-term restricted cash	~~837~~420		~~3,272~~837
Other long-term assets	5061,~~662~~645		4450,~~972~~662
Total assets	$	1,~~679~~533,~~238~~758	$	1,~~669~~679,~~138~~238
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	~~299~~284,~~005~~992	$	~~304~~299,~~880~~005
Accrued expenses and other current liabilities	~~110~~143,~~758~~385		~~141~~110,~~450~~758
Accrued compensation and related benefits	8549,~~203~~942		7885,~~849~~203
Short-term debt, net	~~25,512~~482		~~510~~25,512
Accrued warranty	1713,~~266~~243		1917,~~747~~266
Deferred revenue	~~136~~134,~~248~~727		~~158~~136,~~501~~248
Total current liabilities	~~673~~626,~~992~~771		~~703~~673,~~937~~992
Long-term debt, net	~~658~~667,~~756~~930		~~667~~658,~~719~~756
Long-term accrued warranty	1512,~~934~~264		1615,~~874~~934
Long-term deferred revenue	2129,~~332~~290		2321,~~178~~332
Long-term deferred tax liability	13,~~805~~035		21,~~348~~805
Long-term operating lease liabilities	4741,~~464~~601		4547,~~862~~464
Other long-term liabilities	4336,~~364~~352		2943,~~573~~364
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.001 par valueAuthorized shares—25,000 and no shares issued and outstanding	—		—
Common stock, $0.001 par valueAuthorized shares—500,000 in 2023 and 500,000 in 2022Issued and outstanding shares—230,994 in 2023 and 220,408 in 2022	231		220
Common stock, $0.001 par valueAuthorized shares—500,000 in 2024 and 500,000 in 2023Issued and outstanding shares—237,396 in 2024 and 230,994 in 2023	237		231
Additional paid-in capital	12,~~976~~024,~~014~~810		1,~~901~~976,~~491~~014
Accumulated other comprehensive loss	(3433,~~848~~388)		(2234,~~471~~848)
Accumulated deficit	(1,~~724~~875,~~806~~144)		(1,~~699~~724,~~593~~806)
Total stockholders' equity	~~216~~116,~~591~~515		~~179~~216,~~647~~591
Total liabilities and stockholders’ equity	$	1,~~679~~533,~~238~~758	$	1,~~669~~679,~~138~~238

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

INFINERA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Revenue:

Product

1,~~304~~103,~~229~~131

1,~~268~~304,~~624~~229

1,~~099~~268,~~376~~624

Services

~~309~~315,~~899~~315

~~304~~309,~~618~~899

~~325~~304,~~829~~618

Total revenue

1,~~614~~418,~~128~~446

1,~~573~~614,~~242~~128

1,~~425~~573,~~205~~242

Cost of revenue:

Cost of product

~~810~~706,~~845~~498

~~852~~810,~~476~~845

~~732~~852,~~071~~476

Cost of services

~~167~~166,~~532~~792

~~161~~167,~~630~~532

~~174~~161,~~008~~630

Amortization of intangible assets

~~10,621~~—

2310,~~138~~621

1923,~~621~~138

Restructuring and other related costs

~~2,218~~596

~~222~~2,218

~~1,531~~222

Total cost of revenue

~~991~~873,~~216~~886

1991,~~037,466~~216

~~927~~1,~~231~~037,466

Gross profit

~~622~~544,~~912~~560

~~535~~622,~~776~~912

~~497~~535,~~974~~776

Operating expenses:

Research and development

~~316~~300,~~879~~437

~~306~~316,~~188~~879

~~299~~306,~~894~~188

Sales and marketing

~~166~~158,~~938~~861

~~146~~166,~~445~~938

~~138~~146,~~829~~445

General and administrative

~~124~~132,~~874~~680

~~118~~124,~~602~~874

~~115~~118,~~415~~602

Amortization of intangible assets

129,~~344~~025

1412,~~576~~344

1714,~~455~~576

Acquisition and integration costs

—

614

Merger-related charges

23,021

—

Restructuring and other related costs

64,~~717~~186

106,~~122~~717

1310,~~246~~122

Total operating expenses

~~627~~628,~~752~~210

~~595~~627,~~933~~752

~~585~~595,~~453~~933

Loss from operations

(483,~~840~~650)

(604,~~157~~840)

(8760,~~479~~157)

Other income (expense), net:

Interest income

23,~~716~~383

~~893~~2,716

~~455~~893

Interest expense

(3032,~~609~~302)

(2630,~~015~~609)

(4926,~~099~~015)

Gain on extinguishment of debt

—

~~15,521~~—

—15,521

Other gain (loss), net

15(20,~~325~~457)

1415,~~247~~325

~~(22~~14,~~667)~~247

Total other income (expense), net

(1249,~~568~~376)

4(12,~~646~~568)

~~(71~~4,~~311)~~646

Loss before income taxes

(17133,~~408~~026)

(5517,~~511~~408)

(~~158~~55,~~790~~511)

Provision for income taxes

717,~~805~~312

207,~~532~~805

1120,~~988~~532

Net loss

(25150,~~213~~338)

(7625,~~043~~213)

(~~170~~76,~~778~~043)

Net loss per common share:

Basic

(0.1164)

(0.3511)

(0.8235)

Diluted

(0.1164)

(0.3511)

(0.8235)

Weighted average shares used in computing net loss per common share:

Basic

~~226~~234,~~726~~672

~~216~~226,~~376~~726

~~207~~216,~~377~~376

Diluted

~~226~~234,~~726~~672

~~216~~226,~~376~~726

~~207~~216,~~377~~376

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

INFINERA CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Net loss

(25150,~~213~~338)

(7625,~~043~~213)

(~~170~~76,~~778~~043)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment and other

(95,~~962~~459)

(409,~~839~~962)

(840,~~561~~839)

Actuarial (loss) gain on pension liabilities

(27,~~002)~~358

22(2,~~538~~002)

1222,~~580~~538

Amortization of net actuarial (gain) loss

(~~413~~439)

~~326~~(413)

~~3,383~~326

Net change in accumulated other comprehensive income (loss)

~~(12~~1,~~377)~~460

(1712,~~975~~377)

7(17,~~402~~975)

Comprehensive loss

(37148,~~590~~878)

(9437,~~018~~590)

(~~163~~94,~~376~~018)

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

INFINERA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022

(In thousands)

	Common Stock			AdditionalPaid-inCapital		AccumulatedOtherComprehensiveIncome (Loss)		AccumulatedDeficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 26, 2020	201,397	$	201	$	1,965,245	$	(11,898)	$	(1,527,264)	$	426,284
Stock options exercised	46	—		332		—		—		332
ESPP shares issued	2,272	2		16,164		—		—		16,166
Shares withheld for tax obligations	(808)	—		(7,178)		—		—		(7,178)
Restricted stock units released	8,474	8		—		—		—		8
Stock-based compensation	—	—		51,535		—		—		51,535
Other comprehensive income	—	—		—		7,402		—		7,402
Net loss	—	—		—		—		(170,778)		(170,778)
Balance at December 25, 2021	211,381	$	211	$	2,026,098	$	(4,496)	$	(1,698,042)	$	323,771
ESPP shares issued	2,552	2		15,189		—		—		15,191
Shares withheld for tax obligations	(550)	—		(3,714)		—		—		(3,714)
Restricted stock units released	7,025	7		—		—		—		7
Stock-based compensation and other	—	—		60,411		—		—		60,411
Cumulative-effect adjustment from adoption of ASU 2020-06(1)	—	—		(196,493)		—		74,492		(122,001)
Other comprehensive loss	—	—		—		(17,975)		—		(17,975)
Net loss	—	—		—		—		(76,043)		(76,043)
Balance at December 31, 2022	220,408	$	220	$	1,901,491	$	(22,471)	$	(1,699,593)	$	179,647
ESPP shares issued	3,514	4		14,927		—		—		$14,931	~~14,931~~
Restricted stock units released	7,495	7		—		—		—		7
Shares withheld for tax obligations	(423)	—		(2,465)		—		—		(2,465)
Restricted stock units released	7,495	7		—		—		—		7
Stock-based compensation	—	—		62,061		—		—		62,061
Other comprehensive loss	—	—		—		(12,377)		—		(12,377)
Net loss	—	—		—		—		(25,213)		(25,213)
Balance at December 30, 2023	230,994	$	231	$	1,976,014	$	(34,848)	$	(1,724,806)	$	216,591
Restricted stock units released	6,783	6		—		—		—		6
Shares withheld for tax obligations	(381)	—		(2,129)		—		—		(2,129)
Stock-based compensation	—	—		50,925		—		—		50,925
Other comprehensive income	—	—		—		1,460		—		1,460
Net loss	—	—		—		—		(150,338)		(150,338)
Balance at December 28, 2024	237,396	$	237	$	2,024,810	$	(33,388)	$	(1,875,144)	$	116,515

(1) Effective December 26, 2021, the Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"). Accordingly, the Company recorded a $196.5 million reduction to additional paid in capital and a net reduction to accumulated deficit of $74.5 million due to the cumulative of adopting this new standard.

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

INFINERA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

			Years Ended
	December 30, 2023		December 31, 2022		December 25, 2021
	December 28, 2024		December 30, 2023		December 31, 2022
Cash Flows from Operating Activities:
Net loss	$	(25150,~~213~~338)	$	(7625,~~043~~213)	$	(~~170~~76,~~778~~043)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7862,~~784~~333		8378,~~830~~784		83,~~583~~830
Non-cash restructuring charges and other related costs	~~1,200~~40		61,~~066~~200		6,~~805~~066
Amortization of debt discount and issuance costs	3,~~862~~680		63,~~109~~862		326,~~455~~109
Operating lease expense	79,~~464~~252		97,~~421~~464		149,~~993~~421
Stock-based compensation expense	6250,~~150~~921		6162,~~015~~150		5161,~~812~~015
Gain on extinguishment of debt	—		~~(15,521)~~—		—(15,521)
Other, net	(~~823~~76)		~~1,218~~(823)		41,~~147~~218
Changes in assets and liabilities:
Accounts receivable	3840,~~511~~218		~~(69~~38,~~024)~~511		(4569,~~783~~024)
Inventory	~~(57~~121,~~864)~~772		(8957,~~527~~864)		(2889,~~022~~527)
Prepaid expenses and other current assets	9(49,~~683~~159)		~~(34~~9,~~046)~~683		(~~424~~34,046)
Accounts payable	(228,~~921~~258)		88(2,~~256~~921)		3288,~~304~~256
Accrued expenses and other current liabilities	~~(40~~11,~~063)~~568		(2440,~~443~~063)		39(24,~~283~~443)
Deferred revenue	~~(25~~8,~~260)~~727		15(25,~~129~~260)		715,~~753~~129
Net cash provided by (used in) operating activities	4980,~~510~~680		~~(37~~49,~~560)~~510		28(37,~~128~~560)
Cash Flows from Investing Activities:
Purchase of property and equipment	(6275,~~314~~013)		(4662,~~053~~314)		(4146,~~379~~053)
Net cash used in investing activities	(6275,~~314~~013)		(4662,~~053~~314)		(4146,~~379~~053)
Cash Flows from Financing Activities:
Proceeds from issuance of 2028 Notes	~~98,751~~—		~~373~~98,~~750~~751		—373,750
Repayment of 2024 Notes	(8318,~~446~~747)		(~~280~~83,~~842~~446)		—(280,842)
Payment of debt issuance cost	~~(2,108)~~—		(122,~~451~~108)		—(12,451)
Proceeds from asset-based revolving credit facility	50,000		8050,000		—80,000
Repayment of asset-based revolving credit facility	(50,000)		(8050,000)		(7780,000)
Repayment of third-party manufacturing funding	—		—		(24,610)
Repayment of mortgage payable	(470)		(510)		(533)
Repayment of mortgage payable	(510)		(533)		(350)
Principal payments on finance lease obligations	(562)		(1,023)		(1,314)
Principal payments on finance lease obligations	(1,023)		(1,314)		(1,631)
Payment of term license obligation	(10,318)		(10,417)		(7,739)
Payment of term license obligation	(10,417)		(7,739)		(7,272)
Proceeds from issuance of common stock	6		14,931		15,189
Proceeds from issuance of common stock	14,931		15,189		16,497
Tax withholding paid on behalf of employees for net share settlement	(2,129)		(2,465)		(3,714)
Tax withholding paid on behalf of employees for net share settlement	(2,465)		(3,714)		(7,178)
Net cash provided by (used in) financing activities	(32,220)		13,713		82,346
Net cash provided by (used in) financing activities	13,713		82,346		(101,544)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,078)		(16,253)		(12,051)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(16,253)		(12,051)		1,933
Net change in cash, cash equivalents, and restricted cash	(27,631)		(15,344)		(13,318)
Net change in cash, cash equivalents, and restricted cash	(15,344)		(13,318)		(112,862)
Cash, cash equivalents, and restricted cash at beginning of period	173,859		189,203		202,521
Cash, cash equivalents, and restricted cash at beginning of period	189,203		202,521		315,383
Cash, cash equivalents, and restricted cash at end of period(1)	$	146,228	$	173,859	$	189,203
Cash, cash equivalents, and restricted cash at end of period(1)	$	173,859	$	189,203	$	202,521


			Years Ended
	December 28, 2024		December 30, 2023		December 31, 2022
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	21,790	$	14,109	$	15,126
Cash paid for interest, net	$	27,359	$	22,394	$	14,787
Supplemental schedule of non-cash investing and financing activities:
Transfer of inventory to fixed assets	$	—	$	1,847	$	9,332



Property and equipment included in accounts payable and accrued liabilities	$	34,385	$	10,104	$	7,435
Unpaid term licenses (included in accounts payable, accrued liabilities and other long term liabilities)	$	14,196	$	23,326	$	9,178

			Years Ended
	December 30, 2023		December 31, 2022		December 25, 2021
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	14,109	$	15,126	$	18,703
Cash paid for interest	$	22,394	$	14,787	$	18,261
Supplemental schedule of non-cash investing and financing activities:
Transfer of inventory to fixed assets	$	1,847	$	9,332	$	2,279
Property and equipment included in accounts payable and accrued liabilities	$	10,104	$	7,435	$	9,011
Unpaid term licenses (included in accounts payable, accrued liabilities and other long term liabilities)	$	23,326	$	9,178	$	9,339

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

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

(In thousands)

Cash and cash equivalents

~~172~~145,~~505~~808

~~178~~172,~~657~~505

~~190~~178,~~611~~657

Short-term restricted cash

~~517~~—

~~7,274~~517

27,~~840~~274

Long-term restricted cash

~~837~~420

~~3,272~~837

93,~~070~~272

Total cash, cash equivalents and restricted cash

~~173~~146,~~859~~228

~~189~~173,~~203~~859

~~202~~189,~~521~~203

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

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

Infinera Corporation (“Infinera” or the “Company”), headquartered in San Jose, California, was founded in December 2000 and incorporated in the State of Delaware. Infinera is a global supplier of networking solutions comprised of networking equipment, optical semiconductors, software and services. Infinera’s portfolio of solutions includes optical transport platforms, converged packet-optical transport platforms, optical line systems, disaggregated router platforms, and a suite of networking and automation software offerings, and support and professional services. Infinera leverages its U.S.-based compound semiconductor fab and in-house packaging capabilities to design, develop, and manufacture industry-leading indium phosphide-based photonic integrated circuits for use in its high-capacity optical communications products.

The Company operates and reports financial results on a fiscal year of 52 or 53 weeks ending on the last Saturday of December in each year. Accordingly, fiscal year ~~2023~~2024 was a 52-week year that ended on December 3028, ~~2023~~2024. Fiscal year ~~2022~~2023 was a 5352-week year that ended on December 3130, ~~2022~~2023 and fiscal year ~~2021~~2022 was a 5253-week year that ended on December 2531, ~~2021~~2022. The next 53-week year will end on December 30, 2028.

The accompanying consolidated financial statements have been prepared 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”). The consolidated financial statements include all adjustments necessary for a fair presentation of the Company's annual results. All adjustments are of a normal recurring nature.

The consolidated financial statements include the accounts for the Company and its subsidiaries and affiliates in the Company which the Company has a controlling financial interest or is the primary beneficiary. All inter-company balances and transactions have been eliminated. ~~The Company reclassified certain amounts reported in previous periods to conform to the current presentation.~~

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.

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

•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").

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 The Committee on Foreign Investment in the United States ("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.

In connection with the Merger, the Company held a special meeting of stockholders on October 1, 2024 (the “Special Meeting”). At the Special Meeting, the Company's stockholders approved the proposal to adopt the Merger Agreement.

On September 13, 2024, the applicable waiting period for U.S. antitrust purposes applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. On October 7, 2024, the parties received approval from CFIUS with respect to the Merger. On October 22, 2024, relevant authorities indicated that a filing would not be required under antitrust laws in the United Kingdom at this time.

The Merger remains subject to the satisfaction of other customary closing conditions specified in the Merger Agreement. Infinera and Nokia expect the Merger to close in the first quarter of 2025.

Other than transaction expenses associated with the proposed Merger of $23.0 million recorded in operating expense in the accompanying consolidated statements of operations for the fiscal year ended December 28, 2024, the terms of the Merger Agreement did not impact the Company’s consolidated financial statements for the fiscal year ended December 28, 2024.

2. Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make 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 consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting periods. Estimates, assumptions and judgements 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. The Company bases its assumptions on historical experience and also on assumptions that it believes are reasonable. Actual results could differ materially from those estimates. These estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in the Company's consolidated financial statements.

Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company determines revenue recognition by applying the following five-step approach:

•identification of the contract, or contracts, with a customer;

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

•recognition of revenue when, or as, the Company satisfies a performance obligation.

Many of the Company's product sales are sold in combination with installation and deployment services along with initial hardware and software support. The Company's product sales are also sold at times with spares management, on-site hardware replacement services, network operations management, software subscription services, extended hardware warranty and training. Initial software and hardware support services are generally delivered over a one-year period in connection with the initial purchase. Software warranty provides customers with maintenance releases during the warranty support period and hardware warranty provides replacement or repair of equipment that fails to perform in line with specifications. Software subscription services include software warranty and additionally provides customers with rights to receive unspecified software product upgrades released during the support period.

Spares management and on-site hardware replacement services include the replacement of defective units at customer sites in accordance with specified service level agreements. Network operations management includes the day-to-day operation of a customer's network. These services are generally delivered on an annual basis. The Company evaluates each promised good and service in a contract to determine whether it represents a distinct performance obligation or should be accounted for as a combined performance obligation.

Services revenue includes software subscription services, installation and deployment services, spares management, on-site hardware replacement services, network operations management, extended hardware warranty and training. Revenue from software subscription services, spares management, on-site hardware replacement services, network operations management and extended hardware warranty contracts is recognized ratably over the contractual support period, which is generally one year, as services are provided over the course of the entire period. Revenue related to training and installation and deployment services is recognized upon completion of the services.

Contracts and customer purchase orders are generally used to determine the existence of an arrangement. In addition, shipping documents and customer acceptances, when applicable, are used to verify delivery and transfer of title. The Company typically satisfies its performance obligations upon shipment or delivery of product depending on the contractual terms. Payment terms to customers generally range from net 30 to 120 days from invoice, which are considered to be standard payment terms. The Company assesses its ability to collect from its customers based primarily on the creditworthiness and past payment history of the customer.

For sales to resellers, the same revenue recognition criteria apply. It is the Company’s practice to identify an end-customer prior to shipment to a reseller. The Company does not offer refund rights, of return rights, or price protection to its resellers.

The Company reports revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.

Customer Purchase Commitments

The Company sells software licenses that provide customers the ability to purchase incremental `bandwidth capacity on an already-deployed ~~piece of~~ hardware. Infinera Instant Bandwidth-enabled systems generally include a specific initial capacity and incremental capacity can be added by the purchase of Instant Bandwidth licenses. Instant Bandwidth licenses are considered distinct performance obligations because customers can provision additional transmission capacity on demand without the deployment of any incremental equipment.

Some contracts commit the customer to purchase incremental Instant Bandwidth licenses within a specified time frame from the initial shipment of the Instant Bandwidth-enabled hardware. The time frame varies by customer and generally ranges between 12 to 24 months. If the customer does not purchase the additional capacity within the time frame as stated in the contract, the Company has the right to deliver and invoice such Instant Bandwidth licenses to the customer. Future committed licenses are considered to be additional performance obligations when a minimum purchase obligation is present, as evidenced by enforceable rights and obligations. As such, the Company is required to estimate the variable consideration for future Instant Bandwidth licenses as part of determining the contract transaction price.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contract Termination Rights

Variable Consideration

Variable consideration estimates are re-assessed at each reporting period until a final outcome is determined. The changes to the original transaction price due to a change in estimated variable consideration will be applied on a retrospective basis, due to system constraints, with the adjustment recorded in the ~~period~~current ~~in which the change occurs~~period.

Stand-alone Selling Price

The Company allocates the transaction price for a contract among the performance obligations on a relative stand-alone selling price (SSP) basis. The SSP is the price at which an entity would sell a promised product or service separately to a customer.

While certain services sold by the Company have readily observable SSPs, the majority of the Company's products and services are generally not sold on a stand-alone basis and therefore SSPs for such products and services are not directly observable. If there is no observable SSP, it is estimated using judgment and considering all reasonably available information including but not limited to, gross margin objectives, pricing practices in customer contracts with multiple goods and services, internal costs, historical profitability data, competitor pricing strategies, as well as other observable inputs. The determination of ~~SSPs~~SSP for performance obligations is assessed on a periodic basis and estimates are revised to reflect any ~~significant~~ changes to underlying assumptions ~~as needed~~.

Shipping and Handling

The Company treats shipping and handling activities as costs to fulfill the Company's promise to transfer products. Shipping and handling fees billed to customers are recorded as a reduction to cost of product.

Capitalization of Costs to Obtain a Contract

The Company has assessed the treatment of costs to obtain or fulfill a contract with a customer. Under Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers" ("ASC 606"), the Company ~~capitalizes~~expenses sales commissions as incurred with the exception of sales commissions related to multi-year service contracts, which are paid for upfront, capitalized, and ~~amortizes~~amortized ~~the asset~~ over the ~~period of benefit, which is the~~ service period. Sales commissions paid on service contract renewals are commensurate with the sales commissions paid on the initial contracts. ~~Sales commissions are expensed as incurred.~~

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 as of period end, consisting of deferred revenue and non-cancellable backlog. The Company’s backlog represents purchase orders received from customers for future product shipments and services that are unsatisfied or partially satisfied as of period end. The Company’s backlog is subject to future events that could cause the amount or timing of the related revenue to change. Orders in backlog may be fulfilled several quarters following receipt or may relate to multi-year support service obligations.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period (generally the vesting period) under the straight-line amortization method. The Company accounts for forfeitures as they occur.

The Company estimates the fair value of the rights to acquire stock under its 2007 Employee Stock Purchase Plan (the “ESPP”) using the Black-Scholes option pricing formula. The ESPP, which was indefinitely suspended effective upon the expiration of the offering period that ended August 15, 2023, provides for consecutive six-month offering periods.

The Company accounts for the fair value of restricted stock units (“RSUs”) using the closing market price of the Company’s common stock on the date of grant. RSUs typically vest ratably over a service period ranging from one to four years.

Outstanding Performance Stock Units ("PSUs") granted to the Company's executive officers, senior management and certain other employees ~~during~~in ~~2020,~~2023 ~~2021,~~and ~~2022~~prior ~~and~~fiscal ~~2023~~years are based on performance criteria related to specific financial or operational targets over the span of a two or three-year performance period. These PSUs may become eligible for vesting to begin before the end of the applicable performance period, if the applicable financial target is met. The ~~number of shares to be issued upon vesting of these PSUs range from 0 to 1.5 times the target number of PSUs granted. The~~ Company assesses the achievement status of these PSUs on a quarterly basis and records the related stock-based compensation expenses based on the estimated achievement payout.

In ~~addition,~~PSUs granted to the Company's ~~granted~~executive ~~other~~officers ~~PSUs~~and tosenior ~~certain~~management ~~employees~~during ~~that~~2024 ~~only~~are ~~vest~~based ~~upon~~on the ~~achievement~~Company's oftotal ~~specific~~shareholder ~~operational~~return ~~performance~~("TSR") ~~criteria~~as compared to an index of peer companies. The Company ~~assesses~~estimates the ~~achievement~~fair ~~status~~value of ~~these~~performance ~~PSUs~~based onawards subject to TSR as compared to an index of peer companies using a ~~quarterly~~Monte ~~basis~~Carlo simulation valuation model on the date of grant and ~~records~~recognizes the related stock-based compensation ~~expenses~~expense over the performance period. The Company reverses stock-based compensation expense on performance based awards subject to TSR only when the ~~estimated~~requisite ~~achievement~~service ~~payout~~period is not reached.

The number of shares to be issued upon vesting of these PSUs range from 0 to 2.0 times the target number of PSUs granted.

Employee Benefit and Pension Plans

The Company operates a number of post-employment plans in Germany, as well as smaller post-employment plans in other countries, including both defined contribution and defined benefit plans. Benefit cost and obligations pertaining to these plans are based on assumptions for the discount rate, expected return on plan assets, mortality rates, expected salary increases, health care cost trend rates and attrition rates. The discount rate assumption is based on current investment yields of high-quality fixed-income securities with maturities similar to the expected benefits payment period. Mortality rates help predict the expected life of plan participants. The expected increase in the compensation levels assumption reflects the Company's actual experience and future expectations. The expected long-term return on plan assets is determined based on asset allocations, historical portfolio results, historical asset correlations and management’s expected returns for each asset class. The Company evaluates its expected return assumptions annually including reviewing current capital market assumptions to assess the reasonableness of the expected long-term return on plan assets. The Company updates the expected long-term return on assets when the Company observes a sufficient level of evidence that would suggest the long-term expected return has changed.

Research and Development

All costs to develop the Company’s hardware products are expensed as incurred. Software development costs are capitalized beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. Generally, the Company’s software products are released soon after technological feasibility has been established. As a result, costs subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Advertising

All advertising costs are expensed as incurred. Advertising expenses in ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022 were $1.5 3 million, $1.5 million, and $1.65 million, respectively.

Accounting for Income Taxes

As part of the process of preparing its consolidated financial statements, the Company is required to estimate its taxes in each of the jurisdictions in which it operates. ~~The~~This ~~Company~~involves ~~estimates~~calculating ~~actual~~ current tax expense ~~together~~and ~~with~~recognizing ~~assessing temporary~~ differences ~~resulting~~in ~~from~~timing ~~different~~for ~~treatment~~deductible ~~of items~~transactions, ~~such~~leading asto ~~accruals and allowances not currently deductible for tax purposes. These differences result in~~ deferred tax assets and liabilities, ~~which~~on ~~are~~its ~~included in consolidated~~ balance ~~sheets~~sheet. InDeferred ~~general, deferred~~ tax assets ~~represent~~are future tax benefits tothe beCompany ~~received~~expects to receive when certain expenses ~~previously recognized in consolidated statements of operations~~ become deductible ~~expenses~~or ~~under~~when ~~applicable income~~ tax ~~laws~~attributes ~~or loss, or credit carryforwards~~ are ~~utilized~~used. ~~Accordingly,~~The realization of ~~deferred~~these ~~tax~~ assets isdepends ~~dependent~~ on future taxable income ~~within~~in the ~~respective~~relevant ~~jurisdictions~~areas ~~against~~where ~~which~~ these deductions, losses, and credits can be ~~utilized within the applicable future periods~~applied.

The Company must assess the likelihood that some portion or all of its deferred tax assets will be recovered from future taxable income within the respective jurisdictions, and to the extent the Company believes that recovery does not meet the “more-likely-than-not” standard, it must establish a valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management judgment is required in determining its provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. In evaluating the need for a full or partial valuation allowance, all positive and negative evidence must be considered, including ~~the~~considering ~~Company's~~all ~~forecast~~sources of ~~taxable~~ income ~~over the applicable carryforward periods~~, its current financial performance, its market environment, and other factors. Based on the available objective evidence, at December 3028, ~~2023~~2024, management believes it is ~~not~~ more likely than not that the ~~domestic~~ net deferred tax assets in the U.S., state, and certain foreign jurisdictions will not be realizable in the foreseeable future. Accordingly, the ~~domestic~~Company ~~net~~has recorded a valuation allowance against these deferred tax assets. ~~are~~The ~~subject~~Company will continue to aassess ~~full~~its ~~valuation~~realizability ~~allowance~~of deferred tax assets on a quarterly basis. To the extent that the Company determines that deferred tax assets are realizable on a more likely than not basis in the future, and an adjustment is needed, that adjustment will be recorded in the period that the determination is made.

Foreign Currency Translation and Transactions

The Company considers the functional currencies of its foreign subsidiaries to be the local currency. Assets and liabilities recorded in foreign currencies are translated at the exchange rate as of the balance sheet date, revenue, costs and expenses are translated at average exchange rates in effect during the period. Equity transactions are translated using historical exchange rates. The effects of foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets and consolidated statements of comprehensive loss.

For all non-functional currency account balances, the re-measurement of such balances to the functional currency will result in either a foreign exchange transaction gain or loss, which is recorded to other income (loss), net, in the Company's consolidated statement of operations, in the same period that the re-measurement occurred. Aggregate foreign exchange transactions recorded ~~was~~resulted ~~gain~~in a loss of $1422.80 million in ~~2023~~2024, gain of $1214.8 million in ~~2022~~2023, and ~~loss~~gain of $1712.28 million ~~2021~~in 2022.

Cash and Cash Equivalents

Cash consists primarily of cash in bank deposit accounts which, at times, a portion may exceed federally insured limits. The Company has not experienced any losses in such accounts.

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value Measurement

Pursuant to the accounting guidance for fair value measurements and its subsequent updates, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Valuation techniques used by the Company are based upon observable and unobservable inputs. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about market participant assumptions based on the best information available. Observable inputs are the preferred source of values. These two types of inputs create the following fair value hierarchy:

Level 1

–

Quoted prices in active markets for identical assets or liabilities.

Level 2

–

Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3

–

Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.

The Company measures its cash equivalents and debt securities at fair value and classifies them in accordance with the fair value hierarchy on a recurring basis.

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. The impairment charges incurred for operating lease right-of-use assets are calculated at fair value based on the estimated future sublease rental receipts that the Company can reasonably obtain over the remaining lease term at the discount rate. These charges are classified as Level 3 measurement due to the significance of these unobservable inputs.

Accounts Receivable and Allowances for Credit Losses

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for estimated credit losses resulting from the inability of its customers to make required payments and reviewed the allowance quarterly. The Company determines expected credit losses by performing credit evaluations of its customers' financial condition, establishing both aan ~~general~~estimated reserve and a specific reserve for customers in adverse financial condition and adjusting for its expectations of changes in conditions that may impact the collectability of outstanding receivables. The Company considers a customer's receivable balance past due when the amount is due beyond the credit terms extended, The Company considers factors such as historical experience, credit quality, age of the accounts receivable balances, current economic trends, reasonable and supportable forecasts and geographic or country-specific risks. Amounts are written off when receivables are determined to be uncollectible.

Allowances for Sales Returns

Customer product returns are approved on a case -by -case basis. Specific reserve provisions are made based upon a specific review of all the approved product returns where the customer has yet to return the products to generate the related sales return credit at the end of a period. Estimated sales returns are provided for as a reduction to revenue. At December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, revenue was reduced for estimated sales returns by $0.36 million, $30.63 million, and $03.86 million, respectively.

Concentration of Risk

Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash and accounts receivable.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The risk with respect to accounts receivable is mitigated by ongoing credit evaluations that the Company performs on its customers. As the Company continues to expand its sales internationally, it may experience increased levels of customer credit risk associated with those regions. Collateral is generally not required for accounts receivable but may be used in the future to mitigate credit risk associated with customers located in certain geographical regions.

NoOne customer accounted for 1011% ~~or more~~ of the Company's accounts receivable balance, net on the consolidated balance sheets as of December 3028, ~~2023~~2024. ~~One~~No customer accounted for ~~over~~ 10% or more of the Company's accounts receivable balance, net on the consolidated balance sheets as of December 3130, ~~2022~~2023.

One end-customer accounted for 1012% of the Company's revenue in fiscal year ~~2023~~2024. One end-customer accounted for 1110% of the Company's revenue in fiscal year ~~2022~~2023 and noone end-customer accounted for 1011% ~~or more~~ of the Company's revenue in fiscal year ~~2021~~2022.

The Company depends on sole source or limited source suppliers for several key components and raw materials. The Company generally purchases these sole source or limited source components and raw materials through standard purchase orders and does not have long-term contracts with many of these limited-source suppliers. While the Company seeks to maintain sufficient reserve stock of such components and raw materials, the Company’s business and results of operations could be adversely affected if any of its sole source or limited source suppliers suffer from capacity constraints, lower than expected yields, deployment delays, work stoppages or any other reduction or disruption in output.

Derivative Instruments

From time to time, the Company has entered into factoring agreements to sell certain receivables to unrelated third-party financial institutions. These transactions are accounted for in accordance with ASC 860, Transfers and Servicing (“ASC 860”). ASC 860 and result in a reduction in accounts receivable because the agreements transfer effective control over and risk related to the receivables to the buyers. The Company's factoring agreements do not allow for recourse in the event of uncollectability, and the Company does not retain any interest in the underlying accounts receivable once sold.

Inventory Valuation

Inventories consist of raw materials, work-in-process and finished goods and are stated at standard cost adjusted to approximate the lower of actual cost or net realizable value. Costs are recognized utilizing the first-in, first-out method. Net realizable value is based upon an estimated selling price reduced by the estimated cost of disposal. The determination of market value involves numerous judgments including estimated average selling prices based upon recent sales volumes, industry trends, existing customer orders, current contract price, future demand and pricing and technological obsolescence of the Company’s products.

Inventory that is obsolete or in excess of the Company’s forecasted demand or is anticipated to be sold at a loss is written down to its estimated net realizable value based on historical usage and expected demand. In valuing its inventory costs and deferred inventory costs, the Company considered whether the net realizable value of inventory delivered or expected to be delivered at less than cost, primarily comprised of common equipment, had declined. The Company concluded that, in the instances where the net realizable value of inventory delivered or expected to be delivered was less than cost, it was appropriate to value the inventory costs and deferred inventory costs at cost or net realizable value, whichever is lower, thereby recognizing the cost of the reduction in net realizable value of inventory in the period in which the reduction occurred or can be reasonably estimated. The Company has, therefore, recognized inventory write-downs as necessary in each period in order to reflect inventory at the lower of actual cost or net realizable value.

The Company considers whether it should accrue losses on firm purchase commitments related to inventory items. Given that the net realizable value of common equipment is below contractual purchase price, the Company has also recorded losses on these firm purchase commitments in the period in which the commitment is made. When the inventory parts related to these firm purchase commitments are received, that inventory is recorded at the purchase price less the accrual for the loss on the purchase commitment.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. This includes enterprise-level business software that the Company customizes to meet its specific operational needs and certain software licenses. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. An assumption of lease renewal where a renewal option exists is used only when the renewal has been determined to be reasonably certain. Repair and maintenance costs are expensed as incurred. The estimated useful life for each asset category is as follows:

			Estimated Useful Lives
Building			20 years
Laboratory and manufacturing equipment			1.5 to 10 years
Furniture and fixtures			3 to 5 years
Computer hardware			3 to 5 years
Computer software			3 years
Leasehold and building improvements			1 to 1124 years

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable or that the useful life is shorter than originally estimated. If impairment indicators are present and the projected future undiscounted cash flows are less than the carrying value of the assets, the carrying values are reduced to the estimated fair value. If assets are determined to be recoverable, but the useful lives are shorter than originally estimated, the carrying value of the assets is depreciated over the newly determined remaining useful lives.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Warranty

In the Company's contracts with its customers, the Company warrants that its products will operate substantially in conformity with product specifications. Hardware warranties provide the purchaser with protection in the event that the product does not perform to product specifications. During the warranty period, the purchaser’s sole and exclusive remedy in the event of such defect or failure to perform is limited to the correction of the defect or failure by repair, refurbishment or replacement, at the Company’s sole option and expense. The Company's hardware warranty periods generally range from one to five years from date of acceptance for hardware and the Company's software warranty is 90 days. Upon delivery of the Company's products, the Company provides for the estimated cost to repair or replace products that may be returned under warranty. The hardware warranty accrual is based on actual historical returns and cost of repair experience and the application of those historical rates to the Company's in-warranty installed base. The provision for warranty claims fluctuates depending upon the installed base of products and the failure rates and costs of repair associated with these products under warranty. Furthermore, the Company's costs of repair vary based on repair volume and its ability to repair, rather than replace, defective units. In the event that actual product failure rates and costs to repair differ from the Company's estimates, revisions to the warranty provision are required. In addition, from time to time, specific hardware warranty accruals may be made if unforeseen technical problems arise with specific products. The Company regularly assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the identifiable assets acquired and liabilities assumed. The Company tests for impairment of goodwill on an annual basis in the fourth quarter and at any other time when events occur or circumstances indicate that the carrying amount of goodwill may not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If the Company determines that as a result of the qualitative assessment that it is more likely than not (i.e., greater than 50% likelihood) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required or it can directly perform the quantitative analysis. The Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized does not exceed the total amount of goodwill allocated to that reporting unit. The Company completed its annual qualitative impairment test of goodwill as of the first day of the fourth fiscal quarter of ~~2023~~2024, or ~~October~~September 129, ~~2023~~2024, and determined that it was not more likely than not that the fair value of the reporting unit is less than its carrying amount. As a result, it was determined that it was not necessary for the Company to perform a quantitative goodwill impairment test for the year ended December 30 28, ~~2023~~2024.

The Company evaluates events and changes in circumstances that could indicate carrying amounts of purchased intangible assets with finite lives may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of these assets by determining whether or not the carrying amount will be recovered through undiscounted expected future cash flows. If the total of the future undiscounted cash flows is less than the carrying amount of an asset, the Company records an impairment loss for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Intangible assets with finite lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.

Leases

The Company has operating leases primarily for real estate (facilities) and automobiles. The Company has finance leases primarily for computer hardware, laboratory and manufacturing equipment and leasehold and building improvements.

The Company leases facilities under non-cancelable operating lease agreements. These leases have varying terms that range from one to 1424 years and contain leasehold improvement incentives, rent holidays and escalation clauses. In addition, some of these leases have renewal options for up to ~~six~~ten years.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company determines if an arrangement contains a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses and other current liabilities and operating lease liabilities on the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Company's consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Operating lease ROU assets also include any lease payments made and exclude lease incentives and initial direct costs incurred. Variable lease payments are expensed as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company rents or subleases certain real estate under agreements that are classified as operating leases.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs).

Upon abandoning or committing to a plan to abandon a leased property in the short term before the lease term expires, the Company assesses the fair value of its remaining obligation under the lease and records an impairment of the ROU asset, if needed. The impairment loss is calculated as the present value of the amount by which the remaining lease obligation, adjusted for the effects of any one-time costs to sublease, exceeds the estimated sublease rentals that could be reasonably obtained. The estimated sublease rentals consider Company's ability and intent to sublease the space. The significant assumptions used in the Company's discounted cash flow model include the amount and timing of estimated sublease rental receipts and the discount rate which involve a number of risks and uncertainties, some of which are beyond control, including future real estate market conditions and the Company's ability to successfully enter into subleases or termination agreements with terms as favorable as those assumed when arriving at its estimates. The Company monitors these estimates and assumptions on at least a quarterly basis for changes in circumstances and any corresponding adjustments to the accrual are recorded in its statement of operations in the period when such changes are known.

The loss recorded or to be recorded may change significantly as a result of the re-measurement of the liability, if the timing or amount of estimated cash flows change.

Restructuring and Other Related Costs

The Company records costs associated with exit activities related to restructuring plans in accordance with ASC 420, Exit or Disposal Cost Obligations, or ASC 712, Compensation — Nonretirement Postemployment Benefits. Liabilities for costs associated with an exit or disposal activity are recognized in the period in which the liability is incurred. The timing of the associated cash payments is dependent upon the type of exit cost. The Company records restructuring cost liabilities in “accrued expenses and other current liabilities” and "other long-term liabilities" in the consolidated balance sheet.

Restructuring costs include employee and contract termination costs, facility consolidation and closure costs, lease related impairment charges, equipment write-downs and inventory write-downs. One-time termination benefits are recognized as a liability at estimated fair value when the approved plan of termination has been communicated to employees, unless employees must provide future service, in which case the benefits are recognized ratably over the future service period. Ongoing termination benefits arrangements are recognized as a liability at estimated fair value when the amount of such benefits becomes estimable and payment is probable.

Restructuring charges require significant estimates and assumptions, including estimates made for employee separation costs and other contract termination charges. Management estimates involve a number of risks and uncertainties, some of which are beyond control, including the Company's ability to successfully enter into termination agreements with employees and others with terms as favorable as those assumed when arriving at its estimates. The Company monitors these estimates and assumptions on at least a quarterly basis for ~~changes in circumstances and any corresponding adjustments to the accrual are recorded in its statement of operations in the period when such changes are known.~~

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

changes in circumstances and any corresponding adjustments to the accrual are recorded in its statement of operations in the period when such changes are known.

Recent Accounting Pronouncements

Accounting Pronouncements ~~Not~~Recently ~~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~~adopted ~~to adopt~~ the standard when it ~~becomes~~became effective beginning in fiscal year 2024 annual financial statements,. ~~and~~See isNote ~~currently~~16 ~~evaluating~~Segment ~~the~~Information ~~impact~~in ~~this guidance will have on~~ the ~~disclosures~~accompanying ~~included~~notes into the ~~Notes~~consolidated tofinancial ~~the~~statements ~~Consolidated~~for ~~Financial~~further ~~Statements~~detail.

Accounting Pronouncements Not Yet Adopted

Induced Conversions of Convertible Debt Instruments

In November 2024, the FASB issued ASU 2024-04, "Debt-Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments". This standard clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new guidance is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods. We are currently evaluating the potential impact of adopting ASU 2024-04.

Disaggregation of Income Statement Expense

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This standard requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The standard is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027; with early adoption permitted. ASU 2024-03 allows for adoption using either a prospective or retrospective method. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Codification Improvements

In March 2024, the FASB issued ASU 2024-02, "Codification Improvements - Amendments to Remove References to the Concepts Statements." This standard amends the FASB Accounting Standards Codification (the "Codification") that remove references to various FASB Concept Statements and impact a variety of topics in the Codification. For public business entities, the standard will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

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~~For public business entities, the standard will be effective for ~~fiscal~~annual ~~year~~periods ~~2024~~beginning ~~annual~~after ~~financial~~December ~~statements~~15, 2024 with early adoption permitted. The Company plans to adopt the standard when it becomes effective beginning in fiscal year ~~2024 annual financial statements~~2025, and expects the adoption of the standard will impact certain ~~of the~~ income tax disclosures in the annual financial statements.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

3. Leases

The Company has operating leases for real estate (facilities) and automobiles. For the fiscal years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, operating lease expense included in cost of revenue and operating expenses in the consolidated statements of operations was $1315.90 million, $2113.19 million and $2521.71 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 $31.03 million, $83.10 million and $68.51 million for the fiscal years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, respectively. Variable lease cost, short-term lease cost and sublease income were immaterial during the fiscal years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, respectively.

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

December 30, 2023

December 31, 2022

December 28, 2024

December 30, 2023

Accrued expenses and other current liabilities

11,~~888~~948

1011,~~948~~888

Long-term operating lease liabilities

4741,~~464~~601

4547,~~862~~464

Total operating lease liability

5953,~~352~~549

5659,~~810~~352

The Company also has finance leases. The current portion of finance lease liabilities is classified in accrued expenses and other current liabilities and the long-term portion is classified in other long-term liabilities in the consolidated balance sheet. The lease term for these arrangements range from three to five years with option to purchase at the end of the term.

As of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, finance leases included in property, plant, and equipment, net in the consolidated balance sheets were $43.53 million and $14.95 million, respectively. Finance lease expense includes amortization of the right-of-use assets and interest expense. Total finance lease expense during the fiscal years ended December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 was not material.

The following table presents maturity of lease liabilities under the Company's non-cancelable leases as of December 28, 2024 (in thousands):


	Operating Lease		Finance Lease

Total lease payments(1)	$	101,466	$	4,619
Less: interest(2)	47,917		387
Present value of lease liabilities	$	53,549	$	4,232

(1) Refer to Note 12, “Commitments and Contingencies" to the notes to consolidated financial statements for the future minimum lease payments as of December 28, 2024.

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

The following table presents supplemental information for the Company's non-cancelable leases for the fiscal year ended December 28, 2024 (in thousands, except for weighted average and percentage data):


	Operating Lease			Finance Lease
Weighted average remaining lease term	15.18 years			3.31 years
Weighted average discount rate	10.71		%	10.00		%
Cash paid for amounts included in the measurement of lease liabilities	$	16,889		$	562
Leased assets obtained in exchange for new lease liabilities	$	6,529		$	—

102

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Operating Lease		Finance Lease
Total lease payments	$	111,316	$	5,220
Less: interest(1)	51,964		692
Present value of lease liabilities	$	59,352	$	4,528

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

The following table presents supplemental information for the Company's non-cancelable leases for the fiscal year ended December 30, 2023 (in thousands, except for weighted average and percentage data):

	Operating Lease			Finance Lease
Weighted average remaining lease term	15.26 years			4.10 years
Weighted average discount rate	10.52		%	9.94		%
Cash paid for amounts included in the measurement of lease liabilities	$	16,386		$	1,023
Leased assets obtained in exchange for new lease liabilities	$	13,534		$	4,363

4. Revenue Recognition

Disaggregation of Revenue

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

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Product

1,~~304~~103,~~229~~131

1,~~268~~304,~~624~~229

1,~~099~~268,~~376~~624

Services

~~309~~315,~~899~~315

~~304~~309,~~618~~899

~~325~~304,~~829~~618

Total revenue

1,~~614~~418,~~128~~446

1,~~573~~614,~~242~~128

1,~~425~~573,~~205~~242

The Company sells its products directly to customers who are predominantly service providers and to channel partners that sell on its behalf. The following tables present the Company's revenue disaggregated by geography, based on the shipping address of the end-customer and by sales channel (in thousands):

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

United States

~~994~~834,~~311~~472

~~870~~994,~~282~~311

~~663~~870,~~808~~282

Other Americas

9980,~~920~~260

~~101~~99,~~600~~920

~~107~~101,~~963~~600

Europe, Middle East and Africa

~~359~~364,~~201~~581

~~405~~359,~~328~~201

~~477~~405,~~787~~328

Asia Pacific

~~160~~139,~~696~~133

~~196~~160,~~032~~696

~~175~~196,~~647~~032

Total revenue

1,~~614~~418,~~128~~446

1,~~573~~614,~~242~~128

1,~~425~~573,~~205~~242

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Direct

1900,~~067,570~~421

1,~~191~~067,~~584~~570

1,~~099~~191,~~632~~584

Indirect

~~546~~518,~~558~~025

~~381~~546,~~658~~558

~~325~~381,~~573~~658

Total revenue

1,~~614~~418,~~128~~446

1,~~573~~614,~~242~~128

1,~~425~~573,~~205~~242

93Contract Balances

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


Assets (Liabilities)	December 28, 2024		December 30, 2023
Accounts receivable, net	$	336,552	$	381,981
Contract assets(1)	$	60,039	$	46,738
Contract liabilities(2)	$	(25,350)	$	(3,313)
Deferred revenue(3)	$	(164,017)	$	(157,580)

(1) Contract assets are included in prepaid and other current assets line in the consolidated balance sheet.

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

(3) Included in this balance are amounts related to services that are subject to cancellation and pro-rated refund rights of $55.1 million and $85.9 million as of December 28, 2024 and December 30, 2023, respectively.

103

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Contract~~Revenue ~~Balances~~recognized for the fiscal year ended December 28, 2024 and December 30, 2023 that was included in the deferred revenue balance at the beginning of the reporting period was $120.8 million and $133.6 million, respectively. Changes in the contract asset and liability balances during the fiscal year ended December 28, 2024 and December 30, 2023 were not materially impacted by other factors.

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

Assets (Liabilities)	December 30, 2023		December 31, 2022
Accounts receivable, net	$	381,981	$	419,735
Contract assets	$	46,738	$	60,172
Deferred revenue(1)	$	(157,580)	$	(181,679)

(1) Included in this balance are amounts related to services that are subject to cancellation and pro-rated refund rights of $85.9 million and $82.5 million as of December 30, 2023 and December 31, 2022, respectively.

Revenue recognized for the fiscal year ended December 30, 2023 and December 31, 2022 that was included in the deferred revenue balance at the beginning of the reporting period was $133.6 million and $106.8 million, respectively. Changes in the contract asset and liability balances during the fiscal year ended December 30, 2023 and December 31, 2022 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. 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):

	2024		2025		2026		2027		2028		Thereafter		Total
	2025		2026		2027		2028		2029		Thereafter		Total
Revenue expected to be recognized in the future as of December 30, 2023	$	462,363	$	23,925	$	14,918	$	8,521	$	3,492	$	2,738	$	515,957
Revenue expected to be recognized in the future as of December 28, 2024	$	392,383	$	115,506	$	52,717	$	20,735	$	11,728	$	4,676	$	597,745

94104

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Fair Value Measurements

Disclosure of Fair Values

Financial instruments that are not re-measured at fair value include cash, 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" ~~below~~), approximate their fair values. The fair value of each series of convertible senior notes was determined based on the quoted bid price of the applicable series of convertible senior notes in an over-the-counter market on December 2927, ~~2023~~2024 (the last trading day of the fiscal quarter).

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

	As of December 30, 2023						As of December 31, 2022
	As of December 28, 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	$	—	$	658,609	$	658,609	$	—	$	785,364	$	785,364
Convertible senior notes (1)	$	—	$	764,971	$	764,971	$	—	$	658,609	$	658,609

(1)Consists of 2027 Notes and 2028 Notes as of December 28, 2024 as the Company repaid the remaining principal balance of the 2024 Notes during the quarter ended September 28, 2024. Refer to Note 11, “Debt” to the notes to consolidated financial statements for more information.

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 December 30, 2023						As of December 31, 2022
	As of December 28, 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	$	~~115~~65,000	$	—	$	~~115~~65,000	$	95115,000	$	—	$	95115,000

During ~~2023~~2024 and ~~2022~~2023, there were no transfers of assets or liabilities between Level 1 and Level 2 of the fair value hierarchy. As of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, none of the Company’s existing securities were classified as Level 3 securities.

The Company measures goodwill and intangible assets at fair value on a nonrecurring basis when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets. The Company performed an analysis of impairment indicators of these assets and noted no adverse impact to their fair values as of December 3028, ~~2023~~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. The fair values are classified as Level 3 measurements due to the significance of unobservable inputs. These analyses require management to make assumptions and estimates regarding industry and economic factors, future operating results and discount rates.

In connection with its Restructuring Plans (as defined in Note 8, “Restructuring and Other Related Costs” to the notes to consolidated financial statements), the Company incurred facilities related charges of $31.03 million, $83.10 million and $68.51 million for the years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, 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.

95105

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash and Cash Equivalents

As of December 3028, ~~2023~~2024, the Company had $~~173~~146.92 million of cash, cash equivalents and restricted cash, including $4838.14 million held by its foreign subsidiaries. As of December 3130, ~~2022~~2023, the Company had $~~189~~173.29 million of cash, cash equivalents and restricted cash including $6548.91 million held by its foreign subsidiaries. The Company's cash held by its foreign subsidiaries is used for operating and investing activities in those locations, and the Company does not currently have the need or the intent to repatriate those funds to the United States.

6. 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 for the fiscal year ended December 3028, ~~2023~~2024 (in thousands):

Balance as of December 31, 2022	$	232,663
Foreign currency translation adjustments	7,903
Balance as of December 30, 2023	$	240,566
Foreign currency translation adjustments	(16,333)
Balance as of December 28, 2024	$	224,233

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 zero accumulated impairment loss on goodwill.

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Intangible Assets

The following tables present details of the Company’s intangible assets with finite life as of December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 (in thousands, except for remaining useful life):

	December 30, 2023
	December 28, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		~~Weighted Average~~ Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships	72,200		(4756,~~381~~406)		2415,~~819~~794		21.8
Total intangible assets	$	72,200	$	(47,381)	$	24,819
Total intangible assets with finite lives	$	72,200	$	(56,406)	$	15,794

	December 31, 2022
	December 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		~~Weighted Average~~ Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships and backlog	~~151~~72,~~461~~200		(~~114~~47,~~294~~381)		3724,~~167~~819		32.58
Developed technology	170,467		(159,847)		10,620		0.7
Total intangible assets with finite lives	$	72,200	$	(47,381)	$	24,819
Total intangible assets	$	321,928	$	(274,141)	$	47,787

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 expense was $239.0 million, $3723.70 million and $37.17 million for the years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, respectively.

~~The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of December 30, 2023 (in thousands):~~106

			Total						2024						2025						2026						2027						2028						Thereafter
Total future amortization expense			$	24,819					$	9,025					$	9,025					$	6,769					$	—					$	—					$	—

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite life as of December 28, 2024 (in thousands):


	Total		2025		2026		2027		2028		2029		Thereafter
Total future amortization expense	$	15,794	$	9,025	$	6,769	$	—	$	—	$	—	$	—

7. Balance Sheet Details

Restricted Cash

The Company’s restricted cash balance is held in deposit accounts at various banks globally. These amounts primarily collateralize the Company’s issuances of standby letters of credit and bank guarantees.

Allowance for Credit Losses

The following table provides a rollforward of the allowance for credit losses for accounts receivable for the fiscal year ended December 3028, ~~2023~~2024 (in thousands):

Balance as of December 31, 2022	$	1,422
Additions(1)	521
Write offs(2)	(473)
Recoveries during the period	(594)
Balance as of December 30, 2023	$	876
Additions(1)	1,324
Write offs(2)	(1,398)
Balance as of December 28, 2024	$	802

(1)The new additions during the fiscal year ended December 3028, ~~2023~~2024 are primarily ~~due~~estimated ~~to specific~~ reserves.

(2)The write offs during the fiscal year ended December 3028, ~~2023~~2024 are primarily for amounts ~~fully~~that ~~reserved~~were previously reserved.

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 860. 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 consolidated balance sheets and cash received ~~are~~is reflected as ~~cash~~change ~~provided~~in byAccounts receivable within operating activities in the consolidated statements of cash flow. 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 consolidated statements of operations. For the years ended December 3028, ~~2023~~2024, December 3130, ~~2022~~2023 and December 2531, ~~2021~~2022, the Company's recognized factoring related interest expense was approximately $0.96 million, $0.9 million and $0.49 million, respectively. The gross amount of trade accounts receivables sold totaled approximately $6239.65 million and $~~101~~62.06 million for the fiscal years ended December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023, respectively.

98107

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Selected Balance Sheet Items

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

	December 30, 2023		December 31, 2022
	December 28, 2024		December 30, 2023
Inventory
Raw materials	$	~~133~~69,~~561~~687	$	48133,~~688~~561
Work in process	6867,~~407~~949		6668,~~591~~407
Finished goods	~~229~~170,~~195~~577		~~259~~229,~~576~~195
Total	$	~~431~~308,~~163~~213	$	~~374~~431,~~855~~163
Property, plant and equipment, net
Computer hardware	$	48,~~611~~459	$	4648,~~454~~611
Computer software(1)	7471,~~752~~954		6274,~~102~~752
Laboratory and manufacturing equipment	~~354~~380,~~103~~417		~~297~~354,~~261~~103
Land and building	12,372		12,~~369~~372
Furniture and fixtures	23,~~916~~177		2,~~828~~916
Leasehold and building improvements	46,~~652~~544		5046,~~360~~652
Construction in progress	4197,~~328~~075		4241,~~418~~328
Subtotal	$	~~580~~659,~~734~~998	$	~~513~~580,~~792~~734
Less accumulated depreciation and amortization(2)	(373,737)		(340,863)
Less accumulated depreciation(2)	(410,502)		(373,737)
Total	$	~~206~~249,~~997~~496	$	~~172~~206,~~929~~997
Accrued expenses and other current liabilities
Loss contingency related to non-cancelable purchase commitments	$	1728,~~909~~242	$	2817,~~796~~909
Taxes payable	2415,~~248~~292		4224,~~757~~248
Restructuring accrual	61,~~042~~237		~~941~~6,042
Short-term operating and finance lease liability	1213,~~905~~594		1112,~~701~~905
Other accrued expenses and other current liabilities	49,654		57,255
Customer contract liabilities(3)	25,350		3,313
Total accrued expenses and other current liabilities	$	110,758	$	141,450
Other accrued expenses and other current liabilities	59,670		46,341
Total accrued expenses and other current liabilities	$	143,385	$	110,758

(1)Included in computer software at December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 were $3433.85 million and $2934.38 million, respectively, related to enterprise resource planning (“ERP”) systems that the Company implemented in prior years. The unamortized ERP costs at December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 were $95.64 million and $9.06 million, respectively. Also included in computer software at December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 was $2927.62 million and $2429.26 million, respectively, related to term licenses. The unamortized term license costs at December 3028, ~~2023~~2024 and December 3130, ~~2022~~2023 was $2314.60 million and $923.16 million, respectively.

(2)Depreciation expense was $5552.89 million, $4655.18 million and $4746.1 million (which includes depreciation of capitalized ERP costs of $4.98 million, $34.59 million and $23.85 million) for ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022, respectively. Also included in depreciation expense for ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022 was $9.56 million and $79.65 million, and $6.7.6 million, respectively, related to term licenses.

99(3)See Note 4, “Revenue Recognition” to the notes to condensed consolidated financial statements for more information.

108

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Restructuring and Other Related Costs

In ~~2021~~2023, the Company ~~announced~~implemented a ~~plan~~restructuring initiative to ~~restructure~~reduce ~~certain~~costs ~~international research & development operations~~ (the "~~2021~~2023 Restructuring Plan"). ~~The 2021 Restructuring Plan is substantially completed.~~ In ~~2023,~~relation ~~the Company implemented a restructuring initiative~~ to ~~reduce costs (~~the "2023 Restructuring Plan~~"). In 2023~~, the Company incurred and recorded $56.94 million ofin ~~restructuring~~total ~~costs~~of ~~related~~which ~~to the 2023 Restructuring Plan~~$5.9 million ~~The~~was ~~2023~~recorded ~~Restructuring Plan is expected to be completed~~ in ~~2024~~2023 ~~with~~and ~~the~~$0.5 million ~~associated~~was ~~payments~~recorded ~~made~~ in 2024. ~~Additional~~Payments ~~restructuring~~related ~~activities~~to ~~may occur in~~ the ~~future~~2023 inRestructuring ~~connection~~Plan ~~with~~were ~~the~~completed ~~Company’s~~in ~~ongoing transformation initiatives~~2024.

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 $2.9 million of restructuring costs related to the 2024 Restructuring Plan. The 2024 Restructuring Plan was substantially 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.

For the years ended December 28, 2024 and December 30, 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 and is unrelated to the charges disclosed above.

The following table presents restructuring and other related costs included in cost of revenue and operating expenses in the accompanying consolidated statements of operations under the restructuring plans (in thousands):

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Cost of Revenue

Operating Expenses

Cost of Revenue

Operating Expenses

Cost of Revenue

Operating Expenses

Severance and related expenses

~~2,218~~596

32,~~665~~867

~~203~~2,218

13,~~834~~665

~~335~~203

41,~~615~~834

Lease related impairment charges

—

21,~~996~~319

—

82,~~059~~996

—

68,~~534~~059

Asset impairment and others

—

56—

19—

~~229~~56

~~1,196~~19

~~2,097~~229

Total

~~2,218~~596

64,~~717~~186

~~222~~2,218

106,~~122~~717

~~1,531~~222

1310,~~246~~122

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

	Severance and related expenses		Lease related impairment charges		Asset impairment and others		Total
Balance as of December 25, 2021	$	7,536	$	—	$	1,346	$	8,882
Charges	2,033		8,059		239		10,331
Cash payments	(8,503)		(2,267)		(1,436)		(12,206)
Non-cash Settlements and Other	(274)		(5,792)		—		(6,066)
Balance as of December 31, 2022	$	792	$	—	$	149	$	941
Charges	5,883		2,996		56		8,935
Cash payments	(801)		(1,773)		(60)		(2,634)
Non-cash Settlements and Other	13		(1,223)		10		(1,200)
Balance as of December 30, 2023	$	5,887	$	—	$	155	$	6,042
Charges	3,463		1,319		—		4,782
Cash payments	(8,245)		(1,302)		—		(9,547)
Non-cash Settlements and Other	(14)		(17)		(9)		(40)
Balance as of December 28, 2024	$	1,091	$	—	$	146	$	1,237

As of December 3028, ~~2023~~2024, the Company's restructuring liability was primarily related to the ~~2023~~2024 Restructuring Plan.

~~100~~109

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes certain changes in equity that are excluded from net income (loss). The following table sets forth the changes by component for the periods presented (in thousands):

	Foreign Currency Translation		Actuarial Gain (Loss) on Pension		Accumulated Tax Effect		Total
Balance at December 26, 2020	$	732	$	(11,666)	$	(964)	$	(11,898)
Other comprehensive income (loss) before reclassifications	(8,561)		12,580		—		4,019
Amounts reclassified from accumulated other comprehensive loss	—		3,383		—		3,383
Net current-period other comprehensive income (loss)	(8,561)		15,963		—		7,402
Balance at December 25, 2021	$	(7,829)	$	4,297	$	(964)	$	(4,496)
Other comprehensive income (loss) before reclassifications	(41,803)		22,538		—		(19,265)
Amounts reclassified from accumulated other comprehensive loss	—		326		964		1,290
Net current-period other comprehensive income (loss)	(41,803)		22,864		964		(17,975)
Balance at December 31, 2022	$	(49,632)	$	27,161	$	—	$	(22,471)
Other comprehensive income (loss) before reclassifications	(9,962)		(2,002)		—		(11,964)
Other comprehensive loss before reclassifications	(9,962)		(2,002)		—		(11,964)
Amounts reclassified from accumulated other comprehensive loss	—		(413)		—		(413)
Net current-period other comprehensive income (loss)	(9,962)		(2,415)		—		(12,377)
Net current-period other comprehensive loss	(9,962)		(2,415)		—		(12,377)
Balance at December 30, 2023	$	(59,594)	$	24,746	$	—	$	(34,848)
Other comprehensive income (loss) before reclassifications	(5,459)		7,358		—		1,899
Amounts reclassified from accumulated other comprehensive loss	—		(439)		—		(439)
Net current-period other comprehensive income (loss)	(5,459)		6,919		—		1,460
Balance at December 28, 2024	$	(65,053)	$	31,665	$	—	$	(33,388)

~~101~~110

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

10. 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 exercise of outstanding in-the-money stock options, assumed release of outstanding RSUs and PSUs, and assumed issuance of common stock under the ESPP using the treasury stock method. Potentially dilutive common shares also include the shares of common stock issuable upon conversion of the convertible senior notes using the if-converted method, as further discussed in Note 11, “Debt” to the notes to consolidated financial statements. The Company includes the common shares underlying PSUs in the calculation of diluted net income per common share only when they become contingently issuable.

The following table sets forth the computation of net loss per common share (in thousands, except per share amounts):

Years Ended

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Net loss

(25150,~~213~~338)

(7625,~~043~~213)

(~~170~~76,~~778~~043)

Weighted average common shares outstanding - basic and diluted

~~226~~234,~~726~~672

~~216~~226,~~376~~726

~~207~~216,~~377~~376

Net loss per common share - basic and diluted

(0.1164)

(0.3511)

(0.8235)

The Company incurred net losses during ~~2023~~2024, ~~2022~~2023 and ~~2021~~2022, and as a result, potential common shares from stock options, RSUs, PSUs and the assumed release of outstanding shares under the ESPP were not included in the diluted shares used to calculate net loss per share, as their inclusion would have been anti-dilutive. Additionally, due to the net loss position during these periods, the Company excluded the potential shares issuable upon conversion of the 2028 Notes, the 2027 Notes and the 2024 Notes in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

The following table 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):

As of

December 30, 2023

December 31, 2022

December 25, 2021

December 28, 2024

December 30, 2023

December 31, 2022

Convertible senior notes(1)

32,814

55,800

4,448

Convertible senior notes

27,414

32,814

55,800

Restricted stock units

1314,~~619~~695

1413,~~836~~619

1214,~~860~~836

Performance stock units

3,~~668~~955

23,~~685~~668

2,~~751~~685

Employee stock purchase plan shares

53—

~~360~~53

~~1,157~~360

Total

5046,~~154~~064

7350,~~681~~154

2173,~~216~~681

~~(1)~~ The Company used the if-converted method for calculating any potential dilutive effect of the convertible senior notes, ~~were~~assuming ~~calculated~~that ~~under~~all of the ~~if-~~convertible senior notes permitted to be share settled were converted ~~method~~solely ~~for~~into ~~2022~~shares ~~due~~of tocommon stock at the ~~adoption~~beginning of ~~ASU~~the ~~2020-06~~reporting ~~and~~period. ~~under~~The potential impact upon the ~~treasury~~conversion ~~stock~~of ~~method~~the convertible senior notes was excluded from the calculation of diluted net loss per share for ~~2021~~the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022 because the effect would have been anti-dilutive.

Prior to the adoption of ASU 2020-06, the Company used the treasury stock method for calculating any potential dilutive effect of the conversion spread of its convertible senior notes. The conversion spread had a dilutive impact for the 2027 Notes during the fiscal year ended December 25, 2021 since the average market price of the Company’s common stock during the periods exceeded the initial conversion price of $7.66 per share. However, the potential shares of common stock issuable upon the conversion of the convertible senior notes were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive.111

102

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

After the adoption of ASU 2020-06, the Company used the if-converted method for calculating any potential dilutive effect of the convertible senior notes for fiscal years ended December 30, 2023 and December 31, 2022. 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 fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021 because the effect would have been anti-dilutive.

11. Debt

The following is a summary of the Company's debt as of December 28, 2024 (in thousands):


	Net Carrying Value				Unpaid Principal Balance		Contractual Maturity Date
	Current		Long-Term

2027 Notes	$	—	$	197,807	$	200,000	March 2027
2028 Notes	—		464,310		473,750		August 2028


Mortgage	482		5,813		6,295		August 2029
Total Debt	$	482	$	667,930	$	680,045

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

~~The following is a summary of the Company's debt as of December 31, 2022 (in thousands):~~112

	Net Carrying Value				Unpaid Principal Balance		Contractual Maturity Date
	Current		Long-Term
2024 Notes	$	—	$	101,726	$	102,652	September 2024
2027 Notes	—		195,879		200,000		March 2027
2028 Notes	—		363,349		373,750		August 2028
Mortgage	510		6,765		7,275		March 2024
Total Debt	$	510	$	667,719	$	683,677

103

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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"), which matured and were repaid in full on September 1, 2024. 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 million, respectively, aggregate principal amount of 3.75% Convertible Senior Notes due 2028 (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. Each series of the convertible senior notes is governed by an indenture between the Company, as the issuer, and U.S. Bank Trust Company, National Association, as Trustee (individually, each an “Indenture,” and together, the “Indentures”). The convertible senior notes of each series are unsecured and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the convertible senior notes; equal in right of payment to any of the Company's existing and future liabilities that are not so subordinated, effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s current or future subsidiaries. The applicable Indenture governing each series of the convertible senior notes does not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of the Company's other securities by the Company.

The net proceeds to the Company from the issuance of 2024 Notes were approximately $391.4 million, of which approximately $48.9 million was used to pay the cost of the capped call transactions with certain financial institutions (“Capped Calls”). The Company also used a portion of the remaining net proceeds to fund the cash portion of the purchase price of the Acquisition, including fees and expenses relating thereto, and used the remaining net proceeds for general corporate purposes.

The Capped Calls have an initial strike price of $9.87 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2024 Notes. The Capped Calls have initial cap prices of $15.19 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, 40.8 million shares of common stock. The Capped Calls transactions are expected generally to reduce or offset potential dilution to the Company's common stock upon any conversion of the 2024 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2024 Notes, as the case may be, with such reduction and/or offset subject to a cap. The Capped Calls expire on various dates between July 5, 2024 and August 29, 2024. The Capped Calls were recorded as a reduction of the Company’s stockholders’ equity in the accompanying consolidated balance sheets.

The net proceeds to the Company from the issuance of 2027 Notes were approximately $193.3 million after deducting initial purchasers' fee and other debt issuance costs. The Company used the remaining net proceeds for general corporate purposes, including working capital to fund growth and potential strategic projects.

The net proceeds to the Company from the issuance of Existing 2028 Notes (as defined below) were approximately $362.4 million after deducting the initial purchasers' fee and other debt issuance costs. The Company used approximately $283.6 million, which included accrued and unpaid interest, of the net proceeds from this issuance to repurchase approximately $299.8 million in aggregate principal amount of its 2024 Notes concurrently with the issuance. This transaction involved a contemporaneous exchange of cash between the Company and holders of the 2024 Notes participating in the issuance of the Existing 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 Existing 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 with an immaterial gain. The Company recorded a $15.5 million gain on extinguishment of debt on its consolidated statements of operations during the fiscal year ended December 31, 2022, which includes the write-off of related deferred issuance costs of $3.5 million.

~~104~~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 the 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.

113

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The net proceeds to the Company ~~recorded~~from athis issuance of Additional 2028 Notes were approximately $1596.5 million ~~gain~~after ondeducting ~~extinguishment~~the ofplacement agent's fee, other debt onissuance 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 ~~consolidated~~2024 ~~statements~~Notes concurrently with the issuance. This transaction involved a contemporaneous exchange of ~~operations~~cash ~~during~~between the ~~fiscal~~Company ~~year~~and ~~ended~~holders ~~December~~of 31the 2024 Notes participating in the issuance of the Additional 2028 Notes. Accordingly, ~~2022~~the transaction was evaluated for modification or extinguishment accounting in accordance with ASC 470-50, ~~which~~Debt ~~includes~~– ~~the~~Modifications ~~write~~and Extinguishments on a creditor-~~off~~by-creditor basis depending on whether the exchange was determined to have substantially different terms. The repurchase of ~~related~~the ~~deferred~~2024 Notes and issuance ~~costs~~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. Upon maturity of the 2024 Notes on September 1, 2024, the Company repaid the then remaining principal balance of $318.57 million along with accrued interest of $0.2 million.

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" and together with the Additional 2028 Notes, the “2028 Notes”). The Additional 2028 Notes were issued under the 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 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 consolidated statements of operations during the fiscal year ended December 30, 2023, which includes the write-off of the related deferred issuance costs. After giving effect to the repurchase, the total remaining principal amount outstanding under the 2024 Notes as of December 30, 2023 was $18.7 million.

The Company used the remaining net proceeds from the issuance of 2028 Notes for general corporate purposes, including working capital and to fund growth and potential strategic projects.

The ~~2024 Notes, the~~ 2027 Notes and the 2028 Notes mature on ~~September 1, 2024,~~ March 1, 2027 and August 1, 2028, respectively. The Company did not have the right to redeem the ~~2024~~2027 Notes prior to ~~September~~March 5, ~~2021,~~2024 and may not redeem the ~~2027 Notes prior to March 5, 2024 or the~~ 2028 Notes prior to August 5, 2025. The Company may redeem for cash all or any portion of the ~~2024 Notes at its option, on or after September 5, 2021, the~~ 2027 Notes, at its option, on or after March 5, 2024, and the 2028 Notes, at its option, on or after August 5, 2025, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the convertible senior notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the convertible senior notes.

Conversion Rate and Initial Conversion Price for each series of convertible senior notes are presented in the following table:

	Conversion Rate per $1,000 Principal	Initial Conversion Price
2024 Notes	101.2812	$	9.87
2027 Notes	130.5995	$	7.66
2028 Notes	147.1183	$	6.80

~~105~~Throughout the term of the convertible senior notes, the conversion rate may be adjusted upon the occurrence of certain events, including for any cash dividends. Holders of the convertible senior notes will not receive any cash payment representing accrued and unpaid interest upon conversion. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than canceled, extinguished or forfeited. Prior to the close of business on the business day immediately preceding December 1, 2026 for the 2027 Notes and May 1, 2028 for the 2028 Notes (the convertible dates), holders may convert their convertible senior notes under the following circumstances:

•during any fiscal quarter commencing after the fiscal quarters ended on June 27, 2020 for the 2027 Notes and September 24, 2022 for the 2028 Notes (and only during such fiscal quarter) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the convertible senior notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

114

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Throughout~~•if the ~~term~~Company ofcalls ~~the~~any ~~convertible~~or ~~senior~~all ~~notes,~~of the ~~conversion~~2027 ~~rate~~Notes, ~~may~~or be2028 ~~adjusted~~Notes ~~upon~~for ~~the~~redemption, ~~occurrence~~holders of ~~certain~~such ~~events,~~series ~~including~~may ~~for~~convert ~~any~~their ~~cash dividends. Holders of the convertible senior~~ notes ~~will~~at ~~not receive~~ any ~~cash~~time ~~payment~~prior ~~representing accrued and unpaid interest upon conversion. Accrued but unpaid interest will be deemed~~ to ~~be paid in full upon conversion rather than canceled, extinguished or forfeited. Prior to~~ the close of business on the ~~business~~scheduled trading day immediately preceding ~~June 1, 2024 for~~ the ~~2024~~redemption ~~Notes,~~date ~~December~~of 1,such ~~2026~~series ~~for~~called ~~the 2027 Notes and May 1, 2028~~ for ~~the 2028 Notes (the convertible dates), holders may convert their convertible senior notes under the following circumstances:~~redemption;

•during any fiscal quarter commencing after the fiscal quarters ended on December 29, 2018 for the 2024 Notes, June 27, 2020 for the 2027 Notes and September 24, 2022 for the 2028 Notes (and only during such fiscal quarter) if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•if the Company calls any or all of the 2024 Notes, 2027 Notes, or 2028 Notes for redemption, holders of such series may convert their notes at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date of such series called for redemption;

•upon the occurrence of specified corporate events described under the Indentures, such as a consolidation, merger or binding share exchange;

•or at any time on or after respective convertible dates, until the close of business on the second scheduled trading day immediately preceding the maturity date for such series, holders may convert their respective convertible senior notes at any time, regardless of the foregoing circumstances.

Upon the receipt of conversion requests, the settlement of the convertible senior notes will be paid pursuant to the terms of the respective governing Indentures. In the event that any of the ~~2024 Notes and~~ 2027 Notes are converted, the Company would be required to repay the principal amount and any conversion premium in any combination of cash and shares of its common stock at the Company’s option. In the event that any of the 2028 Notes are converted, the Company would be required to repay the principal amount in cash and the conversion premium in any combination of cash and shares of its common stock at the Company’s option.

If the Company undergoes a fundamental change as defined in the Indentures, holders may require the Company to repurchase for cash all or any portion of their convertible senior notes at a repurchase price equal to 100% of the principal amount of the convertible senior notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, upon the occurrence of a “make-whole fundamental change” (as defined in each of the Indentures), the Company may, in certain circumstances, be required to increase the conversion rate by a number of additional shares for a holder that elects to convert its convertible senior notes in connection with such make-whole fundamental change.

There have been no changes to the initial conversion price of the convertible senior notes since issuance. 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 ~~2023~~2024.

106

INFINERA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest Expense

The following table presents the interest expense ~~related~~and to the ~~contractual interest coupon, the~~ amortization of debt issuance costs, ~~and~~related to the ~~amortization~~convertible ofsenior ~~debt~~notes ~~discounts~~included onin

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