Stockholders' Equity (Tables)

9 Months Ended

Sep. 27, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Company's Equity Award Activity - Options

The following tables summarize the Company’s equity award activity and related information (in thousands, except per share data):

	Number of Stock Options		Weighted-Average Exercise Price   Per Share		Aggregate   Intrinsic Value
Outstanding at December 28, 2013	6,367		$	7.26	$	17,452
Stock options granted	25		$	9.02
Stock options exercised	(1,280	)	$	6.99	$	3,210
Stock options canceled	(92	)	$	12.39
Outstanding at September 27, 2014	5,020		$	7.24	$	17,631
Vested and expected to vest as of September 27, 2014	5,017				$	17,622
Exercisable at September 27, 2014	4,921		$	7.24	$	17,329

Summary of Company's Equity Award Activity - RSUs

	Number of Restricted Stock Units		Weighted- Average  Grant Date  Fair Value Per Share		Aggregate   Intrinsic Value
Outstanding at December 28, 2013	6,583		$	7.72	$	64,443
RSUs granted	2,415		$	8.37
RSUs released	(2,625	)	$	7.74	$	22,477
RSUs canceled	(424	)	$	7.88
Outstanding at September 27, 2014	5,949		$	7.97	$	63,122
Expected to vest at September 27, 2014	5,751				$	61,021

Summary of Company's Equity Award Activity - PSUs

	Number of Performance Stock Units		Weighted- Average  Grant Date  Fair Value Per Share		Aggregate   Intrinsic Value
Outstanding at December 28, 2013	721		$	7.04	$	7,054
PSUs granted	508		$	7.53
PSUs released	(255	)	$	6.36	$	2,097
PSUs canceled	(97	)	$	7.18
Outstanding at September 27, 2014	877		$	7.49	$	9,298
Expected to vest at September 27, 2014	659				$	6,994

Total Stock Based Compensation Cost for Instruments Granted but Not Yet Amortized

The following table presents total stock-based compensation cost for instruments granted but not yet amortized, net of estimated forfeitures, of the Company’s equity compensation plans as of September 27, 2014. These costs are expected to be amortized on a straight-line basis over the following weighted-average periods (in thousands, except for weighted-average period):

	Unrecognized Compensation Expense, Net	Weighted- Average Period (in years)
Stock options	317	1.5
RSUs	30,599	2.3
PSUs	2,704	1.6

Ranges of Estimated Values of Stock Options and Performance-Based Stock Options Granted

The estimated values of stock options, as well as assumptions used in calculating these values were based on estimates as follows (expense amounts in thousands):

	Three Months Ended		Nine Months Ended
Employee and Director Stock Options	September 27, 2014	September 28, 2013	September 27, 2014	September 28, 2013
Volatility	N/A	N/A	52%	N/A
Risk-free interest rate	N/A	N/A	1.3%	N/A
Expected life	N/A	N/A	4.3 years	N/A
Estimated fair value	N/A	N/A	$3.85	N/A
Total stock-based compensation expense	$108	$665	$623	$2,190

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N/A Not applicable because the Company did not grant any stock options to employees for the periods presented.

Estimated Fair Value of ESPP Shares

The fair value of the ESPP shares was estimated at the date of grant using the following assumptions (expense amounts in thousands):

	Three Months Ended		Nine Months Ended
Employee Stock Purchase Plan	September 27, 2014	September 28, 2013	September 27, 2014	September 28, 2013
Volatility	46%	49%	46% - 51%	46% - 49%
Risk-free interest rate	0.06%	0.10%	0.02% - 0.11%	0.10% - 0.14%
Expected life	0.5 years	0.5 years	0.25 - 0.5 years	0.5 years
Estimated fair value	$2.54	$3.00	$2.05 - $2.57	$1.87 - $3.00
Total stock-based compensation expense	$1,092	$777	$2,726	$2,050

Schedule of Share-based Payment Award, Valuation Assumptions

The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:

	Year Ended
	December 28, 2013
Infinera Volatility	55%
NASDAQ Telecom Composite Index Volatility	23%
Risk-free interest rate	0.42%
Correlation with NASDAQ Telecom Composite Index	0.56
Estimated fair value	$6.27 - $7.06

Schedule of Additional Share-based Payment Award, Valuation Assumptions

The ranges of estimated values of the PSUs granted, as well as assumptions used in calculating these values were based on estimates as follows:

	Nine Months Ended
	September 27, 2014
Infinera Volatility	49% - 50%
IGN Index Volatility	25%
Risk-free interest rate	0.66% - 0.71%
Correlation with IGN Index	0.60
Estimated fair value	$6.59 - $7.60

Summary of Effects of Stock-Based Compensation on Company's Balance Sheets and Statements of Operations

The following tables summarize the effects of stock-based compensation on the Company’s condensed consolidated balance sheets and statements of operations for the periods presented (in thousands):

	September 27, 2014		December 28, 2013
Stock-based compensation effects in inventory	$	3,160	$	3,189
Stock-based compensation effects in deferred inventory cost	$	13	$	15
Stock-based compensation effects in fixed assets	$	126	$	145

	Three Months Ended				Nine Months Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Stock-based compensation effects included in net income (loss) before income taxes
Cost of revenue	$	492	$	422	$	1,421	$	1,382
Research and development	2,270		2,434		6,488		8,175
Sales and marketing	1,982		1,853		5,517		5,659
General and administration	1,628		1,807		4,707		4,167
	6,372		6,516		18,133		19,383
Cost of revenue – amortization from balance sheet (1)	999		1,127		2,714		4,419
Total stock-based compensation expense	$	7,371	$	7,643	$	20,847	$	23,802

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⁽¹⁾  Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.