Company: CALX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001406666-25-000008
Chunk: 148

Company: CALIX, INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 8
Chunk 148
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 failure is first identified or a new product is introduced, the Company may initially have limited information and limited historical failure and claim rates upon which to base its estimates, and such estimates may require revision in future periods. The recorded amount is adjusted from time to time for specifically identified warranty and retrofit exposure. Actual warranty and retrofit expenses are charged against the Company’s estimated warranty and retrofit liability when incurred. Factors that affect the Company’s warranty and retrofit liability include the number of active installed units and historical and anticipated rates of warranty and retrofit claims and cost per claim.Stock-Based CompensationStock-based compensation expense associated with stock options and purchase rights under the Amended and Restated Employee Stock Purchase Plan (the “ESPP”) and the Amended and Restated 2017 Nonqualified Employee Stock Purchase Plan (the “NQ ESPP”) is measured at the grant date based on the fair value of the award and is recognized, net of forfeitures, as expense over the remaining requisite service period (generally the vesting period) on a straight-line basis.The fair value of stock option and employee stock purchase right under the ESPP is estimated at the grant date using the Black-Scholes option valuation model. The fair value of the employee stock purchase right under the NQ ESPP is based on closing market price of the Company’s common stock on the date of grant.Stock-based compensation expense associated with performance stock options (“PSOs”) with graded vesting features and which contain both a performance and a service condition is measured based on fair value of stock options estimated at the grant date using the Black-Scholes option valuation model, and is recognized, net of forfeitures, as expense over the requisite service period using the graded vesting attribution method.Compensation expense is only recognized if the Company has determined that it is probable that the performance condition will be met. The Company reassesses the probability of vesting at each reporting period and adjusts compensation expense based on its probability assessment.Loss ContingenciesThe Company occasionally faces legal proceedings from business activities. It evaluates the likelihood of an unfavorable outcome and records a loss contingency when the loss is probable and reasonably estimable. This assessment involves significant judgment and uncertainty, influenced by factors beyond the Company’s control. The Company estimates potential losses based on available information and reassesses these estimates quarterly. Changes in estimates could impact the Company’s business, operating results, or financial condition. Actual outcomes may differ from these estimates, potentially affecting the Company materially.Credit Risk and Inventory Supplier ConcentrationsFinancial instruments that potentially subject the Company to significant