Infinera Corporation Reports Third Quarter 2007 Financial Results

Customer Growth & Diversification, Market Expansion Drive Performance


SUNNYVALE, Calif., Oct. 23, 2007 (PRIME NEWSWIRE) -- Infinera Corporation (Nasdaq:INFN), a leading provider of digital optical communications systems, today released financial results for the third quarter ended September 29, 2007.



 GAAP Results:
 -------------

   * GAAP revenues for the third quarter of 2007 were $62.2 million
     compared to $58.4 million in the second quarter of 2007.

   * GAAP gross margins were 34% in the third quarter of 2007
     compared to 28% in the second quarter of 2007.

   * Including non-cash stock-based compensation and warrant
     revaluation expenses, the GAAP net loss was $5.5 million, or
     $0.07 per share, for the third quarter of 2007 compared to a GAAP
     net loss of $26.1 million, or $1.10 per share, in the second
     quarter of 2007.

 Invoiced Shipments:
 -------------------

   * Invoiced shipments for the third quarter of 2007 were $80.4
     million compared to $69.0 million in the second quarter of 2007
     and $42.0 million in the third quarter of 2006.

   * Invoiced shipments increased 17% from the prior quarter and 91%
     from the third quarter of 2006.

 Non-GAAP Invoiced Shipment Results:
 -----------------------------------

   * Gross margins on an invoiced shipments basis, excluding non-cash
     stock-based compensation, were 43% in the third quarter of 2007
     compared to 37% in the second quarter of 2007 and 21% in the
     third quarter of 2006.

   * Excluding non-cash stock-based compensation and warrant
     revaluation expenses, the net income on an invoiced shipments
     basis was $10.9 million, or $0.12 per diluted share, for the
     third quarter of 2007 compared to $2.7 million, or $0.04 per
     diluted share, in the second quarter of 2007.

Management Commentary and Other Highlights

"We are pleased with the third quarter results as they demonstrate growing customer acceptance of Infinera's innovative approach to building optical networks," said Jagdeep Singh, chief executive officer of Infinera. "In the third quarter, we made significant strides in reducing our customer concentration and further penetrating other markets. In addition, our gross margin and net income results represent progress toward achieving our long-term target business model.

"Increasingly, we believe that innovative companies are embracing Infinera's vision of bandwidth virtualization-converting their optical network traffic digitally into a pool of bandwidth that can be cost-effectively and flexibly utilized for whatever services their customers require.

"Against a backdrop of customer expansion and significant revenue growth, we believe that Infinera's product quality and customer satisfaction are both at high levels," said Singh.

Other highlights of the third quarter include:



   * Reduced customer concentration: The company had three 10% or
     greater customers in the third quarter with the largest
     accounting for 28% of revenue on an invoiced shipment basis. In
     the second quarter, its largest customer accounted for 48% of
     revenue on an invoiced shipment basis; a year ago, that customer
     accounted for 55% of revenue on an invoiced shipment basis.

   * Customer growth: Seven new customers were added in the third
     quarter of 2007, expanding the customer roster to 38, versus 31
     in the second quarter of 2007.

   * Market diversification: Announced customer wins in the third
     quarter included deployment of the company's equipment in the
     cable market (Cox Communications) and the internet content
     provider market (OVH), demonstrating a continued broadening of
     markets served by Infinera, and building on the company's
     continued growth in the bandwidth wholesaler market (360
     Networks, XO Communications).

   * Market leadership in North America: The company was number one
     in North America in multi-reach DWDM, according to industry
     analysts Ovum RHK, based on the company's invoiced shipments for
     the trailing four quarters through the second quarter of 2007.

Conference Call Information:

Infinera will host a conference call for analysts and investors to discuss its third 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 866-431-5844. International parties can access the replay at +1-203-369-0959.

About Infinera

Infinera provides Digital Optical Networking systems (the DTN System) to telecommunications carriers, cable operators and other service providers worldwide. Infinera's large-scale photonic integrated circuit (PIC) incorporates 100 Gigabits per second of transmit and receive capacity and the functionality of more than 60 discrete optical components into a pair of indium phosphide chips. Infinera's DTN system and PIC technology are designed to provide optical networks that provide operating simplicity, enhanced revenue generation, faster time-to-service and capital cost savings. 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, our belief that our gross margin and net income results for the third quarter of 2007 represent progress toward achieving our long-term target business model, our belief regarding market acceptance of our products and vision, our belief that our product quality and customer satisfaction are both at high levels and the financial and other benefits of our system for our customers. 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. More information about these and other risks that may impact Infinera's business are set forth in our quarterly report on Form 10-Q, which was filed with the SEC on August 1, 2007, the Registration Statement on Form S-1which was filed with the SEC on October 12, 2007, 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 include 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 third quarter of 2007 results, including an estimate of non-GAAP invoiced shipment earnings for the fourth quarter of 2007 that excludes 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     Nine Months Ended
                             Sept. 29,  Sept. 30,  Sept. 29,  Sept. 30,
                             -------------------   -------------------
                               2007       2006       2007       2006
                             --------   --------   --------   --------
 Revenue:
  Ratable product and
   related support and
   services                  $ 62,130   $  6,118   $162,488   $ 12,825
  Product                          25      1,578      7,275      1,578
                             --------   --------   --------   --------
    Total revenue              62,155      7,696    169,763     14,403

 Cost of revenue(1):
  Cost of ratable product
   and related support
   and services                37,620      7,967    109,992     17,940
  Lower of cost or market
   adjustment                   3,184      4,172      6,470     12,154
  Cost of product                  18        311      3,869        311
                             --------   --------   --------   --------
    Total cost of revenue      40,822     12,450    120,331     30,405

 Gross profit (loss)           21,333     (4,754)    49,432    (16,002)

 Operating expenses(1):
  Sales and marketing           7,995      4,914     22,032     11,777
  Research and development     14,621     14,034     44,758     27,752
  General and administrative    7,069      3,960     17,984      7,624
  Amortization of intangible
   assets                          37         19        111         19
                             --------   --------   --------   --------
   Total operating expenses    29,722     22,927     84,885     47,172
                             --------   --------   --------   --------

 Loss from operations          (8,389)   (27,681)   (35,453)   (63,174)

 Other income (expense), net:
  Interest income               2,459        849      3,373      1,644
  Interest expense                (67)    (1,152)    (2,249)    (3,541)
  Other gain (loss), net(2)       533       (589)   (16,982)       139
                             --------   --------   --------   --------
   Total income (expense),
    net                         2,925       (892)   (15,858)    (1,758)

 Loss before provision of
  income taxes                 (5,464)   (28,573)   (51,311)   (64,932)
 Provision for income taxes        62         23        124         53
                             --------   --------   --------   --------
 Net loss                    $ (5,526)  $(28,596)  $(51,435)  $(64,985)
                             ========   ========   ========   ========
 Net loss per common share,
  basic and diluted          $  (0.07)  $  (4.42)  $  (1.34)  $ (11.40)
                             ========   ========   ========   ========
 Weighted average shares
  used in computing basic
  and diluted net loss per
  common share                 84,017      6,465     38,419      5,701
                             ========   ========   ========   ========

-----------------------------

 (1) The following table summarizes the effects of stock-based
     compensation related to employees, non-recourse notes and
     non-employees for the three and nine months ended September 29,
     2007 and September 30, 2006:

                             Three Months Ended     Nine Months Ended
                             Sept. 29,  Sept. 30,  Sept. 29,  Sept. 30,
                             -------------------   -------------------
                               2007       2006       2007       2006
                             --------   --------   --------   --------
 Cost of revenue             $    143   $     12   $    254   $     16
 Research and development       1,113        226      2,436        284
 Sales and marketing              689        119      1,122        147
 General and administration     1,129        138      2,032        178
                             --------   --------   --------   --------
                                3,074        495      5,844        625
 Cost of revenue -
  amortization from
  balance sheet*                   89         --        129         --
                             --------   --------   --------   --------
 Total stock-based
  compensation expense       $  3,163   $    495   $  5,973   $    625
                             ========   ========   ========   ========

   * Stock-based compensation expense deferred to inventory and
     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     Nine Months Ended
                             Sept. 29,  Sept. 30,  Sept. 29,  Sept. 30,
                             -------------------   -------------------
                               2007       2006       2007       2006
                             --------   --------   --------   --------
    Other gain (loss)        $     --   $   (729)  $(19,761)  $   (147)

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

                          Three Months Ended September 29, 2007
               -------------------------------------------------------
                                                             Non-GAAP
                                                             Invoiced
                                                             Shipments
                          Deferral    Invoiced   Non-GAAP    Excluding
                GAAP    Adjustments   Shipments Stock Comp   Stock Comp
               -------   --------     --------   --------     --------
 Revenue       $62,155   $ 18,195(a)  $ 80,350   $     --     $ 80,350
 Cost of
  revenue       40,822      5,181(b)    46,003       (470)(c)   45,533
               -------   --------     --------   --------     --------
 Gross profit   21,333     13,014       34,347        470       34,817
 Gross margin       34%                                             43%
 Operating
  expenses      29,722         --       29,722     (2,931)(c)   26,791
               -------   --------     --------   --------     --------
 Income (loss)
  from
  operations    (8,389)    13,014        4,625      3,401        8,026
 Other income
  (expense),
  net            2,925         --        2,925         --        2,925
               -------   --------     --------   --------     --------
 Income (loss)
  before pro-
  vision for
  income taxes  (5,464)    13,014        7,550      3,401       10,951
 Provision for
  income taxes      62         --           62         --           62
               -------   --------     --------   --------     --------
 Net income
  (loss)       $(5,526)  $ 13,014     $  7,488   $  3,401     $ 10,889
               =======   ========     ========   ========     ========
 Net income
  (loss) per
  common share:
   Basic       $  (0.07)                                      $   0.13
               ========                                       ========
   Diluted     $  (0.07)                                      $   0.12
               ========                                       ========
 Weighted shares
  used in
  computing net
  income (loss)
  per common
  share:
   Basic         84,017                                         84,017
               ========                                       ========
   Diluted       84,017                                         92,007
               ========                                       ========


                           Three Months Ended June 30, 2007
               -------------------------------------------------------
                                                            Non-GAAP
                                                            Invoiced
                                                            Shipments
                                                Non-GAAP    Excluding
                                               Stock Comp/  Stock Comp/
                         Deferral     Invoiced   Warrant      Warrant
                GAAP    Adjustments   Shipments Valuation    Valuation
               --------  --------     --------   --------     --------
 Revenue       $ 58,416  $ 10,535(a)  $ 68,951   $     --     $ 68,951
 Cost of
  revenue        42,236     1,248(b)    43,484       (169)(c)   43,315
               --------  --------     --------   --------     --------
 Gross profit    16,180     9,287       25,467        169       25,636
 Gross margin        28%                                            37%
 Operating
  expenses       25,875        --       25,875     (2,045)(c)   23,830
               --------  --------     --------   --------     --------
 Income (loss)
  from
  operations     (9,695)    9,287         (408)     2,214        1,806
 Other income
  (expense),
  net           (16,368)       --      (16,368)    17,261(d)       893
               --------  --------     --------   --------     --------
 Income (loss)
  before pro-
  vision for
  income taxes  (26,063)    9,287      (16,776)    19,475        2,699
 Provision for
  income taxes       33        --           33         --           33
               --------  --------     --------   --------     --------
 Net income
  (loss)       $(26,096) $  9,287     $(16,809)  $ 19,475     $  2,666
               ========  ========     ========   ========     ========
 Net income
  (loss) per
  common share:
   Basic       $  (1.10)                                      $   0.11
               ========                                       ========
   Diluted     $  (1.10)                                      $   0.04
               ========                                       ========
 Weighted shares
  used in
  computing net
  income (loss)
  per common
  share:
   Basic         23,678                                         23,678
               ========                                       ========
   Diluted       23,678                                         59,284
               ========                                       ========


                       Three Months Ended September 30, 2006
               -------------------------------------------------------
                                                            Non-GAAP
                                                            Invoiced
                                                            Shipments
                                                Non-GAAP    Excluding
                                               Stock Comp/  Stock Comp/
                         Deferral     Invoiced   Warrant      Warrant
                GAAP    Adjustments   Shipments Valuation    Valuation
               --------  --------     --------   --------     --------
 Revenue       $  7,696  $ 34,307(a)  $ 42,003   $     --     $ 42,003
 Cost of
  revenue        12,450    20,574(b)    33,024        (12)(c)   33,012
               --------  --------     --------   --------     --------
 Gross profit    (4,754)   13,733        8,979         12        8,991
 Gross margin       -62%                                            21%
 Operating
  expenses       22,927        --       22,927       (483)(c)   22,444
               --------  --------     --------   --------     --------
 Income (loss)
  from
  operations    (27,681)   13,733      (13,948)       495      (13,453)
 Other income
  (expense),
  net              (892)       --         (892)       729(d)      (163)
               --------  --------     --------   --------     --------
 Income (loss)
  before pro-
  vision for
  income taxes  (28,573)   13,733      (14,840)     1,224      (13,616)
 Provision for
  income taxes       23        --           23         --           23
               --------  --------     --------   --------     --------
 Net income
  (loss)       $(28,596) $ 13,733     $(14,863)  $  1,224     $(13,639)
               ========  ========     ========   ========     ========
 Net income
  (loss) per
  common share:
   Basic       $  (4.42)                                      $  (2.11)
               ========                                       ========
   Diluted     $  (4.42)                                      $  (2.11)
               ========                                       ========
 Weighted shares
  used in
  computing net
  income (loss)
  per common
  share:
   Basic          6,465                                          6,465
               ========                                       ========
   Diluted        6,465                                          6,465
               ========                                       ========

Use of Non-GAAP 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 deferred revenue balance for the period as reported on our balance sheet. We believe investors want to see the income statement with the change in deferred revenue balance included in order to understand the gross margin profile of the underlying invoiced shipments.

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.

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
                                      Sept. 29,   June 30,   Sept. 30,
                                      --------    -------    --------
                                         2007       2007       2006
                                        -----      -----      -----
 GAAP stock-based compensation
  in cost of revenue                    $ 143      $  94      $  12
 GAAP stock-based compensation
  in cost of revenue - amortization
  from balance sheet                       89      $  27         --
 Stock-based compensation not
  deferred to deferred inventory
  cost                                    308         71         --
 Stock-based compensation
  previously recognized on
  invoiced shipment basis                 (70)       (23)        --
                                        -----      -----      -----
 Non-GAAP stock-based compensation
  in cost of revenue                    $ 470      $ 169      $  12
                                        =====      =====      =====

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)
                                              Sept. 29,       Dec. 31,
                                                 2007           2006
                                              ---------      ---------
                                             (Unaudited)
 ASSETS
 Current assets:
  Cash and cash equivalents                   $  88,823      $  28,884
  Short-term investments                         86,003            688
  Short-term restricted cash                        410             --
  Accounts receivable                            38,608         41,635
  Other receivables                               2,635            513
  Inventory                                      57,116         58,269
  Deferred inventory costs                       76,052         62,936
  Prepaid expenses and other current assets       3,715          3,115
                                              ---------      ---------
     Total current assets                       353,362        196,040

 Property, plant and equipment, net              31,216         26,665
 Intangible assets                                1,607          1,806
 Deferred inventory costs, non-current            3,835          4,317
 Long-term investments                           14,247             --
 Long-term restricted cash                        1,871             --
 Other non-current assets                           431          1,638
                                              ---------      ---------
     Total assets                             $ 406,569      $ 230,466
                                              =========      =========

 LIABILITIES, CONVERTIBLE PREFERRED STOCK
  AND STOCKHOLDERS' EQUITY (DEFICIT)

 Current liabilities:
  Accounts payable                            $  27,032      $  41,767
  Accrued expenses                                5,712         16,574
  Accrued compensation and related benefits      13,327          7,628
  Accrued warranty                                4,283          1,339
  Deferred revenue                              148,752        101,080
  Preferred stock warrant liability                  --          5,409
  Current portion of debt                            --         20,025
                                              ---------      ---------
     Total current liabilities                  199,106        193,822

 Long-term portion of debt                           --          8,357
 Accrued warranty, non-current                    5,088          1,378
 Deferred revenue, non-current                    8,398          9,873
 Long-term exercised unvested options             1,041            996
 Other long-term liabilities                      4,710          1,811

 Convertible preferred stock                         --        320,550

 Stockholders' equity (deficit):
  Common stock                                       86              9
  Additional paid-in capital                    553,714          7,911
  Accumulated other comprehensive loss              (51)          (153)
  Accumulated deficit                          (365,523)      (314,088)
                                              ---------      ---------
  Total stockholders' equity (deficit)          188,226       (306,321)
                                              ---------      ---------
  Total liabilities, convertible preferred
   stock and stockholders' equity (deficit)   $ 406,569      $ 230,466
                                              =========      =========

 Infinera Corporation
 Condensed Consolidated Statements of Cash Flows
 (In thousands)
 (Unaudited)                                    Nine Months Ended
                                             Sept. 29,     Sept. 30,
                                             ------------------------
                                                2007          2006
                                             ---------      ---------
 Cash Flows from Operating Activities:
 Net loss                                    $ (51,435)     $ (64,985)
 Adjustments to reconcile net loss to
  net cash provided by (used in)
  operating activities:
   Depreciation and amortization                 7,150          5,482
   Amortization of debt discount                   282            156
   Issuance of warrants                             --            189
   In-process research and development              --          4,474
   Asset impairment charges                        393             --
   Stock-based compensation expense              5,973            625
   Revaluation of warrant liabilities           19,761            147
   Gain on disposal of fixed assets                (46)            --
   Gain on sale of assets held for sale         (2,363)            --
   Other gain                                      (73)            --
   Changes in assets and liabilities:
    Accounts receivable                          3,196        (18,250)
    Other receivables                           (2,049)        (1,001)
    Inventory                                    3,215        (25,511)
    Prepaid expenses and other current
     assets                                     (1,234)          (849)
    Deferred inventory costs                   (12,764)       (38,926)
    Other non-current assets                    (1,266)          (411)
    Accounts payable                           (14,692)        14,459
    Accrued liabilities and other expenses      (2,694)         9,710
    Deferred revenue                            46,197         61,084
    Accrued warranty                             6,653            855
                                             ---------      ---------
      Net cash provided by (used in)
       operating activities                      4,204        (52,752)

 Cash Flows from Investing Activities:
   Net purchase of investments                (111,294)        (5,762)
   Net proceeds from sale of investments        12,000          1,099
   Proceeds from disposition of
    acquired assets                                 --          1,450
   Proceeds from disposal of fixed assets           60             --
   Proceeds from sale of assets held
    for sale                                     2,721             --
   Purchase of property and equipment          (11,710)       (11,171)
   Acquisition of certain assets, net               --         (4,675)
                                             ---------      ---------
      Net cash used in investing
       activities                             (108,223)       (19,059)

 Cash Flows from Financing Activities:
   Principal payments on loan obligation       (35,401)       (12,313)
   Proceeds from loans                           7,119         13,652
   Proceeds from initial public offering,
    net of issuance costs                      190,078             --
   Proceeds from issuance of common stock        2,097          2,994
   Proceeds from issuance of preferred
    stock, net of issuance costs                    --         73,574
   Proceeds from exercise of warrants               45             --
   Proceeds from non-recourse notes                 --            126
   Repurchase of common stock                      (50)            --
                                             ---------      ---------
      Net cash provided by financing
       activities                              163,888         78,033

 Effect of exchange rate changes                    70            (72)

 Net change in cash and cash equivalents        59,939          6,150
 Cash and cash equivalents at
   beginning of period                          28,884         36,013
                                             ---------      ---------
 Cash and cash equivalents at
   end of period                             $  88,823      $  42,163
                                             =========      =========
 Supplemental disclosures of cash
  flow information:
   Cash paid for interest                    $   2,473      $   2,467
   Cash paid for income taxes                $      62      $      28


 Infinera Corporation
 Supplemental Financial Information

                 Q1'06   Q2'06   Q3'06   Q4'06   Q1'07   Q2'07   Q3'07
                ------  ------  ------  ------  ------  ------  ------
  Invoiced
   Shipments    $ 13.8  $ 19.7  $ 42.0  $ 70.5  $ 66.7  $ 69.0  $ 80.4
  Gross
   Margin %       -43%     16%     21%     25%     35%     37%     43%
                ------  ------  ------  ------  ------  ------  ------

  Invoiced Shipment
   Composition:
  -----------------
  Domestic %       76%     89%     78%     72%     89%     84%     81%
  International %  24%     11%     22%     28%     11%     16%     19%
  Largest
   Customer %      64%     58%     55%     47%     57%     48%     28%
                ------  ------  ------  ------  ------  ------  ------

  Cash Related
   Information:
  -------------
  Cash from
   Operations   ($21.6) ($12.3) ($18.8) ($15.0) $  6.9  ($ 0.8) ($ 2.0)
  Capital
   Expenditures $  2.1  $  2.9  $  6.2  $  4.1  $  5.2  $  3.6  $  3.0
  Depreciation &
   Amortization $  1.6  $  1.7  $  1.9  $  1.8  $  2.1  $  2.0  $  2.7
  DSOs              54      48      49      54      27      36      47
                ------  ------  ------  ------  ------  ------  ------

  Inventory Metrics:
  ------------------
  Raw
   Materials    $  4.0  $  5.1  $  7.8  $  6.7  $  7.4  $  8.8  $  7.5
  Work in
   Process      $ 16.7  $ 21.2  $ 30.9  $ 38.1  $ 31.6  $ 36.0  $ 34.8
  Finished
   Goods        $  5.7  $ 12.0  $ 11.8  $ 13.5  $ 18.4  $ 13.7  $ 14.8
                ------  ------  ------  ------  ------  ------  ------
  Total
   Inventory    $ 26.5  $ 38.3  $ 50.5  $ 58.3  $ 57.3  $ 58.5  $ 57.1
  Inventory
   Turns           3.0     1.7     2.6     3.6     3.0     3.0     3.2
                ------  ------  ------  ------  ------  ------  ------

  Worldwide
   Headcount       363     470     576     605     617     646     668
                ------  ------  ------  ------  ------  ------  ------


            

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