SOURCE: Infinera

April 22, 2008 16:10 ET

Infinera Corporation Reports First Quarter Financial Results

Record Invoiced Shipments of $95.5 Million Demonstrate Strong Year Over Year Growth and Sustained Demand for Unique PIC-Based Digital Optical Networks

SUNNYVALE, CA--(Marketwire - April 22, 2008) - Infinera Corporation (NASDAQ: INFN), a leading provider of digital optical communications systems, today released financial results for the first quarter ended March 29, 2008.

GAAP Results:

--  GAAP revenues for the first quarter of 2008 were $138.3 million
    compared to $76.1 million in the fourth quarter of 2007 and $49.2 million
    in the first quarter of 2007.
--  GAAP gross margins were 45% in the first quarter of 2008 compared to
    36% in the fourth quarter of 2007 and 24% in the first quarter of 2007.
--  Including non-cash stock-based compensation and warrant valuation
    expenses, GAAP net income was $27.6 million, or $0.29 per diluted share, in
    the first quarter of 2008 compared to a GAAP net loss of $3.9 million, or
    $0.04 per share, in the fourth quarter of 2007 and a GAAP net loss of $19.8
    million, or $2.62 per share, in the first quarter of 2007.
    

Invoiced Shipment Results:

--  Invoiced shipments for the first quarter of 2008 were $95.5 million
    compared to $93.4 million in the fourth quarter of 2007 and $66.7 million
    in the first quarter of 2007, representing growth of 2% from the prior
    quarter and 43% from the first quarter of 2007.
--  Gross margins on a non-GAAP invoiced shipments basis, excluding non-
    cash stock-based compensation, were 45% in the first quarter of 2008
    compared to 47% in the fourth quarter of 2007 and 35% in the first quarter
    of 2007.
--  Excluding non-cash stock-based compensation and warrant valuation
    expenses, the net income on a non-GAAP invoiced shipments basis was $12.6
    million, or $0.13 per diluted share, for the first quarter of 2008 compared
    to $15.9 million, or $0.17 per diluted share, in the fourth quarter of 2007
    and a net loss of $5.4 million, or $0.71 per share, in the first quarter of
    2007.
    

Management Commentary

"Our first quarter results represent another strong performance for Infinera and continued validation of our unique approach to optical networks," said Jagdeep Singh, president and chief executive officer of Infinera. "Our business model continued to perform well in the March quarter with expanded new customer footprint, global penetration, sustained profitability and strong cash flow generation. We believe that the tangible economic advantages we deliver to carriers continue to resonate in each of the growing markets that we address."

Singh noted several first quarter performance highlights:

 -- For the second consecutive quarter, four customers accounted for 10% or
    greater of Q1 invoiced shipments. Shipments to Level 3 increased from
    Q4 levels to 31% of Q1 invoiced shipments, while Cox Communications,
    Interoute and XO Communications rounded out the list of largest
    customers in Q1.  One year ago, the company had two 10% or greater
    customers, with our largest customer accounting for 57% of invoiced
    shipments.

 -- Two new customers were added in the first quarter, bringing the
    customer base to 42 (taking into account the merger of two pre-existing
    customers in the first quarter).

 -- Infinera's rapid emergence as a leader in the optical networking market
    was affirmed by two recently released independent reports:
    -- Ovum RHK indicated that  Infinera took first place for the full year
       2007 in the  North American multi-reach DWDM market with a 28
       percent share and fourth place worldwide in that segment with a 13
       percent share.
    -- Independent analyst firm Heavy Reading's report "Photonic
       Integration & The Future of Optical Networking" named Photonic
       Integration the "best hope" for network scalability and cited
       Infinera as the "undisputed leader" in photonic integration
       technology.

 -- Infinera  announced several  important advances in photonic
    integration, including:
    -- The first roadmap for the Infinera photonic integrated circuit,
       indicating that the company believes it is feasible to achieve a
       doubling of capacity per chip approximately every three years.
    -- A PIC demonstration that integrated ten wavelengths of data at 40
       Gigabits/second (Gb/s) per wavelength for an aggregate data rate of
       400 Gb/s.
    -- Demonstration of a ten-channel PIC with integrated SOAs that
       transmitted error-free data in the 1490 nanometer range of the
       S-band without external dispersion compensation.

Conference Call Information:

Infinera will host a conference call for analysts and investors to discuss its first quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the "Investor Relations" section of the company's website at www.infinera.com. Following the webcast, an archived version will be available on the website for 30 days. To hear the replay, parties in the United States and Canada should call 1-800-945-9394. International parties can access the replay at +1-203-369-3550.

About Infinera

Infinera provides Digital Optical Networking systems to telecommunications carriers worldwide. Infinera's systems are unique in their use of a breakthrough semiconductor technology: the Photonic Integrated Circuit (PIC). Infinera's systems and PIC technology are designed to provide optical networks with simpler and more flexible engineering and operations, faster time-to-service, and the ability to rapidly deliver differentiated services without reengineering their optical infrastructure. For more information, please visit www.infinera.com.

Forward-Looking Statements --

This press release contains forward-looking statements, including statements relating to Infinera's ability to change the economics of optical communications networks and design products that are flexible and economical for our customers, including our belief that our results demonstrate strong year over year growth, sustained demand for our unique PIC-based digital optical networks and continued validation of our unique approach to optical networks, our belief that customers are purchasing our products for the unique benefits they provide, our belief that our business model continues to perform well with expanded new customer footprint, global penetration, sustained profitability and strong cash flow generation, our belief that the economic advantages we deliver to customers continues to resonate in each of the growing markets that we address, and our belief that it is feasible to achieve a doubling of capacity per chip approximately every three years. These forward-looking statements involve risks and uncertainties, as well as assumptions that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs and develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our customers; our ability to reduce customer concentration; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission (SEC). More information about these and other risks that may impact Infinera's business are set forth in our annual report on Form 10-K, which was filed with the SEC on February 19, 2008, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

Non-GAAP and other Financial Measures

In addition to disclosing financial measures prepared in accordance with United States Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP and other financial measures that reflect invoiced shipments and exclude non-GAAP non- cash stock-based compensation and warrant valuation expenses. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "GAAP to Non-GAAP Invoiced Shipment Reconciliation" as well as the accompanying notes on the use of certain non-GAAP measures. We anticipate disclosing forward-looking non-GAAP and other financial information in our conference call to discuss our first quarter of 2008 results, including an estimate of adjusted GAAP earnings for the second quarter of 2008 that excludes revenues and costs previously recognized on an invoiced shipments basis and non-GAAP non-cash stock-based compensation expenses related to our equity awards and the right to purchase common stock under our Employee Stock Purchase Plan in the period.

A copy of this press release can be found on the investor relations page of Infinera's website at www.infinera.com.

Infinera Corporation and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.

Infinera Corporation
GAAP Condensed Consolidated Statements of Operations
(In thousands, except share amounts)
(Unaudited)

                                                       Three Months Ended
                                                      --------------------
                                                      March 29,  March 31,
                                                        2008       2007
                                                      ---------  ---------
Revenue:
  Ratable product and related support and services    $  72,386  $  45,947
  Product                                                64,128      3,245
  Services                                                1,739          -
                                                      ---------  ---------
    Total revenue                                       138,253     49,192

Cost of revenue (1):
  Cost of ratable product and related support
   and services                                          35,831     35,910
  Cost of product                                        39,665      1,363
  Cost of services                                        1,190          -
                                                      ---------  ---------
    Total cost of revenue                                76,686     37,273

Gross profit                                             61,567     11,919

Operating expenses (1):
  Sales and marketing                                    10,246      7,636
  Research and development                               18,293     16,058
  General and administrative                              8,417      5,557
  Amortization of intangible assets                          37         37
                                                      ---------  ---------
    Total operating expenses                             36,993     29,288

Income (loss) from operations                            24,574    (17,369)

Other income (expense), net:
  Interest income                                         3,303        185
  Interest expense                                           (3)    (1,063)
  Other gain (loss), net (2):                               880     (1,537)
                                                      ---------  ---------
    Total other income (expense), net                     4,180     (2,415)

Income (loss) before provision of income taxes           28,754    (19,784)
Provision for income taxes                                1,160         29
                                                      ---------  ---------
Net income (loss)                                     $  27,594  $ (19,813)
                                                      =========  =========

Net income (loss) per common share
  Basic                                               $    0.30  $   (2.62)
                                                      =========  =========
  Diluted                                             $    0.29  $   (2.62)
                                                      =========  =========

Weighted average shares used in computing net
 income (loss) per common share
  Basic                                                  91,250      7,560
                                                      =========  =========
  Diluted                                                96,692      7,560
                                                      =========  =========

(1) The following table summarizes the effects of stock-based compensation
related to employees, non-recourse notes and non-employees for the three
months ended March 29, 2008 and March 31, 2007:
                                                       Three Months Ended
                                                      --------------------
                                                       March 29,  March 31,
                                                         2008       2007
                                                      ---------  ---------
  Cost of revenue                                     $     208 $       17
  Research and development                                1,223        309
  Sales and marketing                                       850         87
  General and administration                              1,502        218
                                                      ---------  ---------
                                                          3,783        631
  Cost of revenue - amortization from balance sheet*      1,150         13
                                                      ---------  ---------
  Total stock-based compensation expense              $   4,933 $      644
                                                      =========  =========

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

(2) The following table summarizes the remeasurement of our freestanding
preferred stock warrants under FAS 150:

                                                       Three Months Ended
                                                      --------------------
                                                      March 29,  March 31,
                                                        2008       2007
                                                      ---------  ---------
  Other gain (loss)                                   $       -  $  (2,500)




Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment Reconciliation
(In thousands, except per share amounts)
(Unaudited)


                                Three Months Ended March 29, 2008
                       ===================================================
                                                                 Non-GAAP
                                                                 Invoiced
                                                        Non-     Shipments
                                                        GAAP     Excluding
                                 Deferral     Invoiced  Stock      Stock
                         GAAP   Adjustments   Shipments Comp        Comp
                       --------  --------      ------- ------      -------
Revenue
  Product and
   ratable revenue     $136,514  $(42,747) (a) $93,767 $    -      $93,767
  Services revenue        1,739                  1,739      -        1,739
                       --------  --------      ------- ------      -------
Total revenue           138,253   (42,747)      95,506      -       95,506
Cost of revenue          76,686   (23,022) (b)  53,664 (1,141) (c)  52,523
                       --------  --------      ------- ------      -------
Gross profit             61,567   (19,725)      41,842  1,141       42,983
Gross margin                 45%                                        45%
Operating expenses       36,993         -       36,993 (3,575) (c)  33,418
                       --------  --------      ------- ------      -------
Income (loss) from
 operations              24,574   (19,725)       4,849  4,716        9,565
Other income
 (expense), net           4,180         -        4,180      -        4,180
                       --------  --------      ------- ------      -------
Income (loss) before
 provision for income
 taxes                   28,754   (19,725)       9,029  4,716       13,745
Provision for income
 taxes                    1,160         -        1,160      -        1,160
                       --------  --------      ------- ------      -------
Net income (loss)      $ 27,594  $(19,725)     $ 7,869 $4,716      $12,585
                       ========  ========      ======= ======      =======
Net income (loss) per
 common share:
  Basic                $   0.30                                    $  0.14
                       ========                                    =======
  Diluted              $   0.29                                    $  0.13
                       ========                                    =======
Weighted average
 shares used in
 computing net income
 (loss) per common
 share:
  Basic                  91,250                                     91,250
                       ========                                    =======
  Diluted                96,692                                     96,692
                       ========                                    =======

                              Three Months Ended December 29, 2007
                       ===================================================
                                                                  Non-GAAP
                                                                  Invoiced
                                                        Non-      Shipments
                                                        GAAP      Excluding
                                 Deferral     Invoiced  Stock       Stock
                         GAAP   Adjustments   Shipments Comp        Comp
                       --------  --------      ------- ------      -------


Revenue                $ 76,089  $ 17,287  (a) $93,376 $    -      $93,376
Cost of revenue          48,932     1,735  (b)  50,667   (965) (c)  49,702
                       --------  --------      ------- ------      -------
Gross profit             27,157    15,552       42,709    965       43,674
Gross margin                 36%                                        47%
Operating expenses       34,800         -       34,800 (3,329) (c)  31,471
                       --------  --------      ------- ------      -------
Income (loss) from
 operations              (7,643)   15,552        7,909  4,294       12,203
Other income
 (expense), net           3,880         -        3,880      -        3,880
                       --------  --------      ------- ------      -------
Income (loss) before
 provision for income
 taxes                   (3,763)   15,552       11,789  4,294       16,083
Provision for income
 taxes                      144         -          144      -          144
                       --------  --------      ------- ------      -------
Net income (loss)      $ (3,907) $ 15,552      $11,645 $4,294      $15,939
                       ========  ========      ======= ======      =======
Net income (loss) per
 common share:
  Basic                $  (0.04)                                   $  0.18
                       ========                                    =======
  Diluted              $  (0.04)                                   $  0.17
                       ========                                    =======
Weighted average
 shares used in
 computing net income
 (loss) per common
  share:
   Basic                 87,672                                     87,672
                       ========                                    =======
   Diluted               87,672                                     95,317
                       ========                                    =======



Infinera Corporation
GAAP to Non-GAAP Invoiced Shipment Reconciliation
(In thousands, except per share amounts)
(Unaudited)


                              Three Months Ended March 31, 2007
                    ======================================================
                                                                  Non-GAAP
                                                                  Invoiced
                                                                  Shipments
                                                                  Excluding
                                                     Stock          Stock
                                           Non-GAAP  Comp/          Comp/
                               Deferral    Invoiced  Warrant       Warrant
                      GAAP    Adjustments  Shipments Valuation    Valuation
                    ---------  --------     -------  -------      --------

Revenue             $  49,192  $ 17,467 (a) $66,659  $     -      $ 66,659
Cost of revenue        37,273     6,205 (b)  43,478      (57) (c)   43,421
                    ---------  --------     -------  -------      --------
Gross profit           11,919    11,262      23,181       57        23,238
Gross margin               24%                                          35%
Operating expenses     29,288         -      29,288     (614) (c)   28,674
                    ---------  --------     -------  -------      --------
Income (Loss) from
 operations           (17,369)   11,262      (6,107)     671        (5,436)
Other income
 (expense), net        (2,415)        -      (2,415)   2,500  (d)       85
                    ---------  --------     -------  -------      --------
Income (Loss)
 before provision
 for income taxes     (19,784)   11,262      (8,522)   3,171        (5,351)
Provision for
 income taxes              29         -          29        -            29
                    ---------  --------     -------  -------      --------
Net income (loss)   $ (19,813) $ 11,262     $(8,551) $ 3,171      $ (5,380)
                    =========  ========     =======  =======      ========
Net income (loss)
 per common share:
  Basic             $   (2.62)                                    $  (0.71)
                    =========                                     ========
  Diluted           $   (2.62)                                    $  (0.71)
                    =========                                     ========
Shares used in
 computing net
 income (loss)
 per common share:
  Basic                 7,560                                        7,560
                    =========                                     ========
  Diluted               7,560                                        7,560
                    =========                                     ========


Use of Non-GAAP Invoiced Shipments Information:

To supplement our condensed consolidated financial statements presented on
a GAAP basis, Infinera uses invoiced shipment measures of operating results
and net income, which include changes in our deferred revenue and deferred
cost of inventory balances from the prior period.  We also present non-GAAP
measures of operating results, net income and net income per share, which
are adjusted to include invoiced shipments and exclude non-GAAP stock-based
compensation expense and warrant valuation expense. We believe these
adjustments are appropriate to enhance an overall understanding of our past
financial performance and also our prospects for the future. These
adjustments to our current period GAAP results are made with the intent of
providing both management and investors a more complete understanding of
Infinera's underlying operating results and trends and our marketplace
performance. The non-GAAP results are an indication of our baseline
performance and are considered by management for the purpose of making
operational decisions. In addition, these results are the primary
indicators management uses as a basis for our planning and forecasting
of future periods.

The presentation of this additional information is not meant to be
considered in isolation or as a substitute for net income or basic and
diluted net income per share prepared in accordance with GAAP.  Non-GAAP
financial measures are not based on a comprehensive set of accounting rules
or principles and are subject to limitations.

(a) Included amount represents the change in the ratable and product
deferred revenue balance for the period as reported on our balance sheet.
No adjustment has been made for changes in services deferred revenue as
these amounts relate to future service deliverables and are appropriately
deferred on an invoiced shipment basis.  We believe investors want to see
the income statement with the change in the ratable and product deferred
revenue balances included in order to understand the gross margin profile
of the underlying invoiced shipments.

The deferred revenue adjustments recorded above are reconciled to the
deferred revenue balance on our balance sheet in the table below:

                                        Three Months Ended March 29, 2008
                                      -------------------------------------
                                        Ratable and
                                        Product        Services
Deferred Revenue                        Revenue        Revenue     Total
------------------------------------  --------------  ---------  ---------
(In thousands)
Beginning balance                     $      174,437  $       -  $ 174,437
Additions to deferred revenue                 29,639      4,561     34,200
Amortization to revenue                      (72,386)      (756)   (73,142)
                                      --------------  ---------  ---------
Ending balance                        $      131,690  $   3,805  $ 135,495
                                      ==============  =========  =========
                                      --------------  ---------  ---------
Change in deferred revenue balance    $      (42,747) $   3,805  $ (38,942)
                                      ==============  =========  =========

                                       Three Months Ended 2007
                                      -------------------------
Deferred Revenue                          Dec. 29      Mar. 31
------------------------------------  --------------  ---------
(In thousands)
Beginning balance                     $      157,150  $ 110,953
Additions to deferred revenue                 92,544     63,414
Amortized to revenue                         (75,257)   (45,947)
                                      --------------  ---------
Ending balance                        $      174,437  $ 128,420
                                      ==============  =========
                                      --------------  ---------
Change in deferred revenue balance    $       17,287  $  17,467
                                      ==============  =========

(b) Included amount represents the change in the deferred cost of inventory
balance for the period as reported on our balance sheet.  We believe
investors want to see the income statement with the change in the deferral
balance included in order to understand the gross margin profile of the
underlying invoiced shipments and in order to compare our financial
performance with that of other companies and between periods.

The deferred cost of inventory adjustments recorded above are reconciled to
the deferred cost of inventory balance on our balance sheet in the table
below:

                                                 Three Months Ended
                                           -------------------------------
                                             Mar.29    Dec. 29    Mar. 31
Deferred Cost of Inventory                   2008       2007       2007
                                           ---------  ---------  ---------
(In thousands)
Beginning balance                          $  81,622  $  79,887  $  67,253
Additions to deferred cost of revenue         11,162     39,580     33,164
Amortized to cost of revenue                 (34,184)   (37,845)   (26,959)
                                           ---------  ---------  ---------
Ending balance                             $  58,600  $  81,622  $  73,458
                                           =========  =========  =========

                                           ---------  ---------  ---------
Change in deferred cost of inventory
 balance                                   $ (23,022) $   1,735  $   6,205
                                           =========  =========  =========

(c) Excluded amount represents stock-based compensation expense on a
non-GAAP basis. Stock-based compensation is a non-cash expense accounted
for in accordance with the fair value recognition provisions of Statement
of Financial Accounting Standards No. 123(R). While a large component of
our expense, we believe investors want to evaluate our financial results
both including and excluding the effects of stock-based compensation
expense in order to compare our financial performance with that of other
companies and between time periods.

The stock-based compensation expense excluded from cost of revenue is a
non-GAAP financial measure and is reconciled to the corresponding GAAP
amount in the table below:

                                                 Three Months Ended
                                           -------------------------------
                                                      December
                                           March 29,     29,     March 31,
                                             2008       2007       2007
                                           ---------  ---------  ---------

GAAP stock-based compensation in cost of
 revenue                                   $     208  $     156  $      17
GAAP stock-based compensation in cost of
 revenue - amortization from balance sheet     1,150        198         13
  Stock-based compensation not deferred to
   deferred inventory cost                       215        797         37
  Stock-based compensation previously
   recognized on invoiced shipment basis        (432)      (186)       (10)
                                           ---------  ---------  ---------
Non-GAAP stock-based compensation in cost
 of revenue                                $   1,141  $     965  $      57
                                           =========  =========  =========

(d) Excluded amount represents the adjustment to revalue our convertible
preferred warrants to fair value as required by FAS 150.  Subsequent to our
IPO, we are no longer required to revalue these warrants and, therefore, we
believe investors want to evaluate our financial results both including and
excluding the effect of this revaluation expense in order to compare our
financial performance with that of other companies and between periods.



Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                       March     December
                                                         29,        29,
                                                        2008       2007
                                                      ---------  ---------
ASSETS

Current assets:
  Cash and cash equivalents                           $ 121,930  $  91,209
  Short-term investments                                 91,813    181,168
  Short-term restricted cash                                773        743
  Accounts receivable                                    42,547     39,216
  Other receivables                                       1,785      1,127
  Inventory                                              59,241     58,579
  Deferred inventory costs                               55,760     78,362
  Prepaid expenses and other current assets               3,525      3,941
                                                      ---------  ---------
    Total current assets                                377,374    454,345

Property, plant and equipment, net                       38,343     36,973
Intangible assets                                         1,475      1,541
Deferred inventory costs, non-current                     2,840      3,260
Long-term investments                                    99,785     30,116
Long-term restricted cash                                 2,050      2,594
Other non-current assets                                  1,579        359
                                                      ---------  ---------
    Total assets                                      $ 523,446  $ 529,188
                                                      =========  =========

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                    $  24,734  $  17,504
  Accrued expenses                                        9,226      9,497
  Accrued compensation and related benefits               7,983     17,749
  Accrued warranty                                        5,807      4,974
  Deferred revenue                                      128,831    167,031
                                                      ---------  ---------
    Total current liabilities                           176,581    216,755

  Accrued warranty, non-current                           5,220      5,018
  Deferred revenue, non-current                           6,663      7,406
  Long-term exercised unvested options                      639        825
  Other long-term liabilities                             5,201      4,610

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $0.001 par value
     Authorized shares - 25,000 and no shares issued
      and outstanding                                         -          -
  Common stock, $0.001 par value
     Authorized shares - 500,000 as of March 29, 2008
      and  December 29, 2007
      Issued and outstanding shares - 92,633 as
       of March 29, 2008 and 91,580 as of
       December 29, 2007                                     93         92
  Additional paid-in capital                            674,773    663,870
  Accumulated other comprehensive income (loss)          (3,851)        78
  Accumulated deficit                                  (341,873)  (369,466)
                                                      ---------  ---------
  Total stockholders' equity                            329,142    294,574
                                                      ---------  ---------
  Total liabilities, convertible preferred stock and
   Stockholders' equity                               $ 523,446  $ 529,188
                                                      =========  =========

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




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


                                                       Three Months Ended
                                                      --------------------
                                                      March 29,  March 31,
                                                        2008       2007
                                                      ---------  ---------
Cash Flows from Operating Activities:
Net Income loss                                       $  27,594  $ (19,813)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
   Depreciation and amortization                          2,616      2,253
   Amortization of debt discount                                        83
   Accretion of investment discount                        (461)
   Stock-based compensation expense                       4,933        644
   Revaluation of warrant liability                                  2,500
   Tax benefit from stock option transactions               235
   Excess tax benefit from stock option transactions        (71)
   Gain on sale of assets                                  (332)      (914)
   Other gain                                               (33)         -
   Changes in assets and liabilities:
       Accounts receivable                               (3,989)    22,193
       Inventory                                         (1,023)     1,522
       Prepaid expenses and other current assets            410     (2,178)
       Deferred inventory costs                          22,805     (6,218)
       Other non-current assets                          (1,220)       538
       Accounts payable                                   5,792    (14,698)
       Accrued liabilities and other expenses            (9,529)      (507)
       Deferred revenue                                 (38,943)    17,467
       Accrued warranty                                   1,035      4,091
                                                      ---------  ---------
         Net cash provided by operating activities        9,819      6,963

Cash Flows from Investing Activities:
   Purchases of available-for-sale investments and
    restricted cash                                     (78,300)         -
   Proceeds from sales of investments                    58,636          -
   Proceeds from maturities of investments and
    restricted cash                                      36,600          -
   Proceeds from disposal of fixed assets                   332      1,139
   Purchase of property and equipment                    (2,481)    (5,164)
                                                      ---------  ---------
         Net cash provided by (used in) investing
          activities                                     14,787     (4,025)

Cash Flows from Financing Activities:
   Principal payments on loan obligations                           (1,605)
   Proceeds from loans                                               7,119
   Proceeds from issuance of common stock                 6,044      1,644
   Excess tax benefit from stock option transactions         71          -
   Repurchase of common stock                                (3)       (20)
                                                      ---------  ---------
         Net cash provided by financing activities        6,112      7,138
                                                      ---------  ---------

Effect of exchange rate changes                               3         10
                                                      ---------  ---------

Net change in cash and cash equivalents                  30,721     10,086
Cash and cash equivalents at beginning of period         91,209     28,884
                                                      ---------  ---------
Cash and cash equivalents at end of period            $ 121,930  $  38,970
                                                      =========  =========

Supplemental disclosures of cash flow information:
   Cash paid for interest                             $       3  $   1,042
   Cash paid for income taxes                         $      63  $      47



Infinera Corporation
Supplemental Financial Information


             Q1'06  Q2'06  Q3'06  Q4'06  Q1'07  Q2'07  Q3'07  Q4'07  Q1'08
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Invoiced
 Shipments   $13.8  $19.7  $42.0  $70.5  $66.7  $69.0  $80.4  $93.4  $95.5
Gross
 Margin %      -43%    16%    21%    25%    35%    37%    43%    47%    45%
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Invoiced
 Shipment
 Composition:
Domestic %      76%    89%    78%    72%    89%    84%    81%    81%    82%
International % 24%    11%    22%    28%    11%    16%    19%    19%    18%
Largest
 Customer%      64%    58%    55%    47%    57%    48%    28%    18%    31%
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Cash Related
 Information:
Cash from
 Operations ($21.6)($12.3)($18.8)($15.0) $ 6.9  ($0.8) ($2.0) $18.9  $ 9.8
Capital
 Expend-
 itures      $ 2.1  $ 2.9  $ 6.2  $ 4.1  $ 5.2  $ 3.6  $ 3.0  $ 8.5  $ 2.5
Depreciation
 & Amort-
 ization     $ 1.6  $ 1.7  $ 1.9  $ 1.8  $ 2.1  $ 2.0  $ 2.7  $ 2.7  $ 2.6
DSO's           54     48     49     54     27     36     47     39     42
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Inventory
 Metrics:
Raw
 Materials   $ 4.0  $ 5.1  $ 7.8  $ 6.7  $ 7.4  $ 8.8  $ 7.5  $10.5  $ 7.9
Work in
 Process     $16.7  $21.2  $30.9  $38.1  $31.6  $36.0  $34.8  $35.1  $40.6
Finished
 Goods       $ 5.7  $12.0  $11.8  $13.5  $18.4  $13.7  $14.8  $13.0  $10.7
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Total
 Inventory   $26.5  $38.3  $50.5  $58.3  $57.3  $58.5  $57.1  $58.6  $59.2
Inventory
 Turns         3.0    1.7    2.6    3.6    3.0    3.0    3.2    3.4    3.5
             -----  -----  -----  -----  -----  -----  -----  -----  -----
Worldwide
 Headcount     363    470    576    605    617    646    668    711    799
             -----  -----  -----  -----  -----  -----  -----  -----  -----

Contact Information

  • Contacts:
    Press:
    Jeff Ferry
    Email Contact
    Infinera Corporation
    408-572-5213

    Investors/Analysts:
    Bob Blair
    Email Contact
    Infinera Corporation
    408-716-4879