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Infinera Understates Lease Liability by $11.3 Million

Optical transport parts producer is understating its future operating lease liabilities by an estimated 10.67%.

November 4, 2021

In its latest 10-Q, Infinera Corp. (INFN) revealed it discounts operating leases by 9.21%. This rate is significantly higher than Infinera’s optical transport networking peers which report the following discount rates in recent filings:

-Ciena (CIEN): 2.75%
-Cisco (CSCO): 1.7%
-Ribbon Communications (RBBN): 5.64%

Using an inflated discount rate hide’s a firm’s true liabilities from investors.

Infinera has $105.9 million in future operating lease obligations. The present value of those obligations, according to Infinera, is $81.7 million. If we use the blended average discount rate for Infinera’s peer group— 3.36%— we calculate a lease liability of $93 million. It means Infinera is understating the present value of its lease liabilities by approximately $11.3 million, or 10.67% of its future operating lease obligations.


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