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Finisar Announces Fourth Quarter and Fiscal 2013 Financial Results

Finisar Announces Fourth Quarter and Fiscal 2013 Financial Results 
SUNNYVALE, CA -- (Marketwired) -- 06/19/13 --  Finisar Corporation
(NASDAQ: FNSR), a global technology leader for subsystems and
components for fiber optic communications, today announced financial
results for its fourth quarter and fiscal year ended April 28, 2013.  
COMMENTARY 
"I am pleased to report fiscal fourth quarter revenues of $243.4
million, which is $5.1 million, or 2.1%, greater than the prior
quarter. Our growth in revenues came primarily from sales of 10G and
100G Ethernet transceivers and transponders for datacom applications.
Our favorable product mix in the quarter enabled us to achieve gross
margin and earnings per diluted share that exceeded our guidance
range," said Jerry Rawls, Finisar's executive Chairman of the Board.  
"During the quarter, we continued to invest significantly in
technology and product development and made substantial progress on a
number of new products for our datacom and telecom products lines,
including our next generation 100G CFP2 transceiver, 12x25G optical
engine and new generation dual wavelength selective switch product
family," said Eitan Gertel, Finisar's Chief Executive Officer. 


 
                                                                            
        FINANCIAL HIGHLIGHTS - FOURTH QUARTER ENDED April 28, 2013          
                                                                            
Summary GAAP Results                       Fourth              Third        
                                          Quarter             Quarter       
                                           Ended               Ended        
                                       April 28, 2013       Jan 27, 2013    
                                     -----------------   -----------------  
                                        (in thousands, except per share     
                                                    amounts)                
                                                                            
Revenues                             $         243,417   $         238,351  
Gross margin                                      27.7%               28.5% 
Operating expenses                   $          66,941   $          68,841  
Operating income (loss)              $             385   $            (797) 
Operating margin                                   0.2%               (0.3)%
Net income (loss)                    $           3,879   $          (3,407) 
Income(loss) per share-basic         $            0.04   $           (0.04) 
Income(loss) per share-diluted       $            0.04   $           (0.04) 
                                                                            
Basic shares                                    93,567              93,097  
Diluted shares                                  96,192              93,097  
                                                                            
                                                                            
Summary Non-GAAP Results (a)               Fourth              Third        
                                          Quarter             Quarter       
                                           Ended               Ended        
                                       April 28, 2013       Jan 27, 2013    
                                     -----------------   -----------------  
                                        (in thousands, except per share     
                                                    amounts)                
                                                                            
Revenues                             $         243,417   $         238,351  
Gross margin                                      32.2%               30.7% 
Operating expenses                   $          58,295   $          55,816  
Operating income                     $          20,032   $          17,377  
Operating margin                                   8.2%                7.3% 
Net income                                      19,789   $          16,390  
Income per share-basic               $            0.21   $            0.18  
Income per share-diluted             $            0.20   $            0.17  
                                                                            
Basic shares                                    93,567              93,097  
Diluted shares                                  99,941              99,094  

 
(a) In evaluating the operating performance of Finisar's business,
Finisar management utilizes financial measures that exclude certain
charges and credits required by U.S. generally accepted accounting
principles, or GAAP, that are considered by management to be outside
Finisar's core operating results. A reconciliation of Finisar's
non-GAAP financial measures to the most directly comparable GAAP
measures, as well as additional related information, can be found
under the heading "Finisar Non-GAAP Financial Measures" below.  
Financial Statement Highlights for the fourth quarter of fiscal 2013: 


 
--  Revenues increased to $243.4 million, up $5.1 million, or 2.1%, from
    $238.4 million in the preceding quarter as continued strength in sales
    of datacom products was partially offset by lower telecom product
    revenue primarily as the result of sluggish carrier capital
    expenditure levels and a full three month impact of annual price
    reductions for telecom products most of which, as in prior years, went
    into effect in January.
    
    
--  Compared to the preceding quarter, the sale of products for datacom
    applications increased by $16.3 million, or 11.0%, and the sale of
    products for telecom applications decreased by $11.2 million, or
    (12.3)%.
    
    
--  Gross margin decreased to 27.7% on a GAAP basis from 28.5% in the
    preceding quarter, primarily as the result of a charge for impairment
    of certain purchased intangibles related to acquired developed
    technology and other long-lived assets.
    
    
--  Non-GAAP gross margin increased to 32.2% from 30.7% in the preceding
    quarter, primarily as the result of favorable product mix.
    
    
--  GAAP operating income increased $1.2 million to $0.4 million, or 0.2%
    of revenues, compared to $(0.8) million, or (0.3)% of revenues in the
    preceding quarter, primarily as the result of a gain on the fair value
    remeasurement of contingent consideration liability.
    
    
--  Non-GAAP operating income increased $2.7 million to $20.0 million, or
    8.2% of revenues, compared to $17.4 million, or 7.3% of revenues, in
    the preceding quarter, primarily as the result of higher non-GAAP
    gross margins.
    
    
--  Cash and cash equivalents totaled $289.1 million at the end of the
    fourth quarter, compared to $265.5 million at the end of the preceding
    quarter.
    
    

 
                                                                            
           FINANCIAL HIGHLIGHTS - FISCAL YEAR ENDED APRIL 28, 2013          
                                                                            
Summary GAAP Results                    Fiscal Year          Fiscal Year    
                                           Ended                Ended       
                                       April 28, 2013       April 30, 2012  
                                     -----------------    ----------------- 
                                         (in thousands, except per share    
                                                    amounts)                
                                                                            
Revenues                             $         934,335    $         952,579 
Gross margin                                      27.5%                28.7%
Operating expenses                   $         262,596    $         229,165 
Operating income (loss)              $          (5,555)   $          44,179 
Operating margin                                  (0.6)%                4.6%
Net income (loss)                    $          (5,454)   $          42,993 
Income (loss) per share-basic        $           (0.06)   $            0.47 
Income (loss) per share-diluted      $           (0.06)   $            0.46 
                                                                            
Basic shares                                    92,860               90,823 
Diluted shares                                  92,860               94,186 
                                                                            
                                                                            
Summary Non-GAAP Results (a)            Fiscal Year          Fiscal Year    
                                           Ended                Ended       
                                       April 28, 2013       April 30, 2012  
                                     -----------------    ----------------- 
                                         (in thousands, except per share    
                                                    amounts)                
                                                                            
Revenues                             $         934,335    $         952,579 
Gross margin                                      30.9%                31.9%
Operating expenses                   $         223,667    $         214,100 
Operating income                     $          65,247    $          89,332 
Operating margin                                   7.0%                 9.4%
Net income                           $          61,255    $          83,177 
Income per share-basic               $            0.66    $            0.92 
Income per share-diluted             $            0.64    $            0.87 
                                                                            
Basic shares                                    92,860               90,823 
Diluted shares                                  99,284               97,935 

 
Financial Statement Highlights for fiscal year 2013:  


 
--  Revenues decreased to $934.3 million, down $18.2 million, or (1.9)%,
    from $952.6 million in the preceding year.
    
    
--  Compared to the preceding year, the sale of products for datacom
    applications increased by $53.6 million, or 10.0%, primarily from
    sales of 10G and 100G transceivers and transponders and the sale of
    products for telecom applications decreased by $71.8 million, or
    (17.3)%, primarily as the result of sluggish carrier capital
    expenditure levels.
    
    
--  Gross margin decreased to 27.5% on a GAAP basis and 30.9% on a
    non-GAAP basis from 28.7% and 31.9%, respectively, in the preceding
    year, primarily as the result of a decline in average selling prices.
    
    
--  Non-GAAP operating income decreased $24.1 million to $65.2 million, or
    7.0% of revenues, from $89.3 million, or 9.4% of revenues, primarily
    as the result of lower gross margin and an increase in operating
    expenses, due to increases in employee related expenses, costs of
    materials associated with new product development, and the
    consolidation of financial results of Red-C Optical Networks, which
    was acquired in fiscal 2013.
    
    
--  GAAP operating income (loss) decreased $49.7 million to $(5.6)
    million, or (0.6)% of revenues, from $44.2 million or 4.6% of revenues
    primarily as the result of the factors affecting Non-GAAP operating
    income and in addition the impairment of acquired developed technology
    and other long-lived assets.

  
OUTLOOK 
The Company indicated that it currently expects revenues for the first
quarter of fiscal 2014 to be in the range of $245 to $260 million;
GAAP operating margin to in the range of approximately 5.0% to 6.5%;
non-GAAP operating margin to be in the range of approximately 9.0% to
10.5% and non-GAAP earnings per diluted share to be in the range of
approximately $0.22 to $0.26. The Company also noted that during the
fourth fiscal quarter of 2013 and during the first week of the first
quarter of fiscal 2014, the Company completed the divestment of two
non-strategic subsidiaries of Ignis AS, which was acquired by Finisar
in May 2012. These divested businesses accounted for approximately $5
million in revenues during the fourth quarter of fiscal 2013.  
CONFERENCE CALL 
Finisar will discuss its financial results for the fourth quarter and
current business outlook during its regular quarterly conference call
scheduled for Wednesday, June 19, 2013, at 2:00 pm PDT (5:00 pm EDT).
To listen to the call you may connect through the Finisar investor
relations page at http://investor.finisar.com/ or dial 1-888-438-5491 (domestic) or (719) 325-2458 (international) and enter
conference ID 8003705. 
An audio replay will be available for two weeks following the call by
dialing 1-888-203-1112 (domestic) or (719) 457-0820 and then
following the prompts: enter conference ID 8003705 and provide your
name, affiliation, and contact number. A replay of the webcast will
be available shortly after the conclusion of the call on the
Company's website until the next regularly scheduled earnings
conference call. 
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 
The statements contained in this press release that are not purely
historical are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. All
forward-looking statements included in this press release are based
upon information available to Finisar as of the date hereof, and
Finisar assumes no obligation to update any such forward-looking
statements. Forward-looking statements involve risks and
uncertainties which could cause actual results to differ materially
from those projected. Examples of such risks include those associated
with: the uncertainty of customer demand for Finisar's products; the
rapidly evolving markets for Finisar's products and uncertainty
regarding the development of these markets; Finisar's historical
dependence on sales to a limited number of customers and fluctuations
in the mix of products and customers in any period; ongoing new
product development and introduction of new and enhanced products;
the challenges of rapid growth followed by periods of contraction;
and intensive competition. Further information regarding these and
other risks relating to Finisar's business is set forth in Finisar's
annual report on Form 10-K (filed June 29, 2012) and quarterly SEC
filings.  
ABOUT FINISAR 
Finisar Corporation (NASDAQ: FNSR) is a global technology leader for
fiber optic subsystems and components that enable high-speed voice,
video and data communications for telecommunications, networking,
storage, wireless, and cable TV applications. For 25 years, Finisar
has provided critical optics technologies to system manufacturers to
meet the increasing demands for network bandwidth. Finisar is
headquartered in Sunnyvale, California, USA with R&D, manufacturing
sites, and sales offices worldwide. For additional information, visit
www.finisar.com.  
FINISAR FINANCIAL STATEMENTS 
The following financial tables are presented in accordance with GAAP. 


 
                                                                            
                            Finisar Corporation                             
                        Consolidated Balance Sheets                         
                               (in thousands)                               
                                                                            
             April 28,   January 27,  October 28,    July 29,    April 30,  
                2013         2013         2012         2012         2012    
            -----------  -----------  -----------  -----------  ----------- 
            (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)      Note    
            -----------  -----------  -----------  -----------  ----------- 
   ASSETS                                                                   
Current                                                                     
 assets:                                                                    
 Cash and                                                                   
  cash                                                                      
equivalents $   289,076  $   265,454  $   262,432  $   220,409  $   234,544 
 Accounts                                                                   
  receivable, 
  net           149,612      155,502      155,949      179,441      167,760 
 Accounts                                                                   
  receivable, 
  other          16,538       10,843       15,240       14,972       21,004 
 Inventories    200,670      202,123      203,554      208,168      218,432 
 Prepaid                                                                    
  expenses       18,402       22,875       25,183       24,430       25,482 
            -----------  -----------  -----------  -----------  ----------- 
  Total                                                                     
   current                                                                  
   assets       674,298      656,797      662,358      647,420      667,222 
Property,                                                                   
 equipment                                                                  
 and                                                                        
 improvements, 
 net            201,442      192,381      173,284      165,837      163,817 
Purchased                                                                   
 intangible                                                                 
 assets,                                                                    
 net             30,457       45,823       53,300       43,049       45,177 
Goodwill         90,986       91,551       91,098       97,994       81,431 
Minority                                                                    
 investments        884          884          884          884          884 
Other                                                                       
 assets           9,780        7,321        7,263        7,393       10,896 
            -----------  -----------  -----------  -----------  ----------- 
  Total                                                                     
   assets   $ 1,007,847  $   994,757  $   988,187  $   962,577  $   969,427 
            ===========  ===========  ===========  ===========  =========== 
                                                                            
LIABILITIES                                                                 
     AND                                                                    
 STOCKHOLDERS' 
   EQUITY                                                                 
Current                                                                     
 liabilities:                                                                   
      
 Accounts                                                                   
  payable   $    77,630  $    67,264  $    72,844  $    71,295  $    72,339 
 Accrued                                                                    
  compensation   31,492       28,436       27,901       22,210       27,090 
 Other                                                                      
  accrued                                                                   
  liabilities    23,533       31,901       22,774       21,456       20,871  
 Deferred                                                                   
  revenue         9,182        9,760        7,868        9,775        8,970 
 Current                                                                    
  portion                                                                   
  of long-                                                                  
  term debt           -            -            -            -        3,150 
            -----------  -----------  -----------  -----------  ----------- 
  Total                                                                     
   current                                                                  
   liabilities  141,837      137,361      131,387      124,736      132,420 
Long-term                                                                   
 liabilities:                                                                   
      
 Convertible notes,                                                             
     
  net of                                                                    
  current                                                                   
  portion        40,015       40,015       40,015       40,015       40,015 
 Other non-                                                                 
  current                                                                   
  liabilities    13,480       14,078       21,171       16,274       15,175 
 Deferred                                                                   
  tax                                                                       
  liabilities         -        2,512        2,459        2,433        1,972 
            -----------  -----------  -----------  -----------  ----------- 
  Total                                                                     
   liabilities  195,332      193,966      195,032      183,458      189,582 
Stockholders' 
 equity:                                                                 
 Common                                                                     
  stock              94           93           93           93           91 
 Additional                                                                 
  paid-in                                                                   
  capital     2,350,146    2,341,448    2,330,683    2,321,064    2,309,219 
 Accumulated 
  other                                                                   
  comprehensive                                                                 
     
  income         28,525       26,904       26,346       22,356       28,720 
 Accumulated 
  deficit    (1,571,960)  (1,575,839)  (1,572,432)  (1,572,703)  (1,566,506)
            -----------  -----------  -----------  -----------  ----------- 
  Finisar                                                                   
   Corporation                                                                  
    
   stockholders'                                                                
    
   equity       806,805      792,606      784,690      770,810      771,524 
 Non-                                                                       
  controlling                                                                   
     
  interest        5,710        8,185        8,465        8,309        8,321 
            -----------  -----------  -----------  -----------  ----------- 
  Total                                                                     
   stockholders'                                                                
    
   equity       812,515      800,791      793,155      779,119      779,845 
            -----------  -----------  -----------  -----------  ----------- 
Total                                                                       
 liabilities 
 and                                                                      
 stockholders' 
 equity     $ 1,007,847  $   994,757  $   988,187  $   962,577  $   969,427 
            ===========  ===========  ===========  ===========  =========== 

 
Note - Balance sheet amounts as of April 30, 2012 are derived from the
audited consolidated financial statements as of the date.             


 
                                                                            
                                                                            
                                                                            
                            Finisar Corporation                             
                   Consolidated Statements of Operations                    
                   (in thousands, except per share data)                    
                                                                            
                                                                    Three   
                                                                   Months   
                   Three Months Ended      Twelve Months Ended      Ended   
                 ----------------------  ----------------------  ---------- 
                  April 28,   April 30,   April 28,   April 30,    January  
                    2013        2012        2013        2012      27, 2013  
                 ----------  ----------  ----------  ----------  ---------- 
                 (Unaudited) (Unaudited) (Unaudited)             (Unaudited) 
                 ----------  ----------  ----------  ----------  ---------- 
Revenues         $  243,417  $  239,910  $  934,335  $  952,579  $  238,351 
Cost of revenues    166,093     172,915     662,094     672,924     168,377 
Impairment of                                                               
 acquired                                                                   
 developed                                                                  
 technology and                                                             
 other long-                                                                
 lived assets         8,156           -       8,156           -           - 
Amortization of                                                             
 acquired                                                                   
 developed                                                                  
 technology           1,842       1,515       7,044       6,311       1,930 
                 ----------  ----------  ----------  ----------  ---------- 
Gross profit         67,326      65,480     257,041     273,344      68,044 
Gross margin           27.7%       27.3%       27.5%       28.7%       28.5%
Operating                                                                   
 expenses:                                                                  
 Research and                                                               
  development        41,270      37,430     158,784     146,003      39,725 
 Sales and                                                                  
  marketing          11,056      10,114      42,347      40,424      10,398 
 General and                                                                
  administrative      6,279          75      45,337      39,566      12,797 
 Amortization of                                                            
  purchased                                                                 
  intangibles           734         897       3,640       3,494       1,035 
 Impairment of                                                              
  long-lived                                                                
  assets              7,602           -      12,488           -       4,886 
 Restructuring                                                              
  recoveries              -           -           -        (322)          - 
                 ----------  ----------  ----------  ----------  ---------- 
  Total                                                                     
   operating                                                                
   expenses          66,941      48,516     262,596     229,165      68,841 
                 ----------  ----------  ----------  ----------  ---------- 
Income (loss)                                                               
 from operations        385      16,964      (5,555)     44,179        (797)
Interest income         211         662         755       1,073         186 
Interest expense       (544)       (805)     (2,589)     (3,716)       (648)
Loss on debt                                                                
 extinguishment           -           -           -        (419)          - 
Other income                                                                
 (expenses), net       (154)       (266)       (449)      3,902        (275)
                 ----------  ----------  ----------  ----------  ---------- 
Income (loss)                                                               
 before income                                                              
 taxes and non-                                                             
 controlling                                                                
 interest              (102)     16,555      (7,838)     45,019      (1,534)
Provision                                                                   
 (benefits) for                                                             
 income taxes        (1,506)       (787)        227       2,005       2,153 
                 ----------  ----------  ----------  ----------  ---------- 
Income (loss)                                                               
 before non-                                                                
 controlling                                                                
 interest             1,404      17,342      (8,065)     43,014      (3,687)
Adjust for net                                                              
 (income) loss                                                              
 attributable to                                                            
 non-controlling                                                            
 interest             2,475         673       2,611         (21)        280 
                 ----------  ----------  ----------  ----------  ---------- 
Net income                                                                  
 (loss)                                                                     
 attributable to                                                            
 Finisar                                                                    
 Corporation     $    3,879  $   18,015  $   (5,454) $   42,993  $   (3,407)
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
Net income                                                                  
 (loss) per                                                                 
 share                                                                      
 attributable to                                                            
 Finisar                                                                    
 Corporation                                                                
 common                                                                     
 stockholders:                                                              
                                                                            
 Basic           $     0.04  $     0.20  $    (0.06) $     0.47  $    (0.04)
 Diluted         $     0.04  $     0.19  $    (0.06) $     0.46  $    (0.04)
                                                                            
Shares used in                                                              
 computing net                                                              
 income (loss)                                                              
 per share -                                                                
 basic               93,567      91,349      92,860      90,823      93,097 
Shares used in                                                              
 computing net                                                              
 income (loss)                                                              
 per share -                                                                
 diluted             96,192      98,528      92,860      94,186      93,097 

 
FINISAR NON-GAAP FINANCIAL MEASURES 
In addition to reporting financial results in accordance with U.S.
generally accepted accounting principles, or GAAP, Finisar provides
supplemental information regarding the Company's operating
performance on a non-GAAP basis that excludes certain gains, losses
and charges of a non-cash nature or which occur relatively
infrequently and which management considers to be outside our core
operating results. Some of these non-GAAP measures also exclude the
ongoing impact of historical business decisions made in different
business and economic environments. Management believes that tracking
non-GAAP gross profit, non-GAAP income from operations, non-GAAP net
income and non-GAAP net income per share provides management and the
investment community with valuable insight into our current
operations, our ability to generate cash and the underlying business
trends which are affecting our performance. These non-GAAP measures
are used by both management and our Board of Directors, along with
the comparable GAAP information, in evaluating our current
performance and planning our future business activities. In
particular, management finds it useful to exclude non-cash charges in
order to better correlate our operating activities with our ability
to generate cash from operations and to exclude certain cash charges
as a means of more accurately predicting our liquidity requirements.
We believe that these non-GAAP measures, when used in conjunction
with our GAAP financial information, also allow investors to better
evaluate our financial performance in comparison to other periods and
to other companies in our industry. 
In calculating non-GAAP gross profit in this release, we have
excluded the following items from cost of revenues in applicable
periods:  


 
--  Changes in excess and obsolete inventory reserve (predominantly
    non-cash charges or non-cash benefits);
--  Amortization of acquired technology (non-cash charges related to
    technology obtained in acquisitions);
--  Stock-based compensation expense (non-cash charges);
--  Impairment of acquired developed technology and other long-lived
    assets (non-cash charges);
--  Acquisition method accounting adjustment for sale of acquired
    inventory (non-cash charges);
--  Flood related expense (non-recurring cash charge);
--  Reduction in force costs (non-recurring cash charges); and
--  Acquisition related retention payments (non-recurring charges).

  
In calculating non-GAAP operating income in this release, we have
excluded the same items to the extent they are classified as
operating expenses, and have also excluded the following items in
applicable periods: 


 
--  Gain or loss on litigation settlements and resolutions and related
    costs (non-recurring cash charges or benefits);
--  Shareholder class action and derivative litigation costs
    (non-recurring cash expenses associated with the derivative litigation
    related to our historical stock option granting practices and related
    to the class action and derivative litigation related to our March 8,
    2011 earnings announcement);
--  Gain on fair value re-measurement of contingent consideration
    (non-cash benefit);
--  Acquisition related costs (non-recurring cash charges);
--  Amortization of purchased intangibles (non-cash charges);
--  Restructuring costs and recoveries (non-recurring charges and
    benefits); and
--  Impairment of purchased intangibles and other long-lived assets.

  
In calculating non-GAAP income and non-GAAP income per share in this
release, we have also excluded the following items in applicable
periods: 


 
--  Interest income from legal settlements (non-recurring benefit);
--  Imputed interest related to restructuring (non-cash charges);
--  Gains and losses on sales of assets (non-recurring or non-cash losses
    and cash gains related to the periodic disposal of assets no longer
    required for current activities);
--  Loss related to minority and equity method investments (non-cash
    charges);
--  Other miscellaneous expenses (income) (non-recurring charges or
    benefits);
--  Dollar denominated foreign exchange transaction losses (gains)
    (non-cash charges or benefits);
--  Debt extinguishment loss (non-recurring charges);
--  Fair value re-measurement of equity investment (non-cash gain from
    re-measurement of value of prior investment in an investee); and
--  Differences between cash payable for income taxes and the provision
    for income taxes in accordance with GAAP, less discrete items.

  
In calculating non-GAAP income per share in this release, we have
included the shares issuable upon conversion of our outstanding
convertible notes and excluded the interest expenses associated with
such notes in such periods where such treatment is dilutive to
non-GAAP income (loss) per share. 
A reconciliation of this non-GAAP financial information to the
corresponding GAAP information is set forth below:  


 
                                                                            
                            Finisar Corporation                             
      Reconciliation of Results of Operations under GAAP and non-GAAP       
              (Unaudited, in thousands, except per share data)              
                                                                            
                                                                    Three   
                                                                   Months   
                   Three Months Ended      Twelve Months Ended      Ended   
                 ----------------------  ----------------------  ---------- 
                  April 28,   April 30,   April 28,   April 30,    January  
                    2013        2012        2013        2012      27, 2013  
                 ----------  ----------  ----------  ----------  ---------- 
GAAP to non-GAAP                                                            
 reconciliation                                                             
 of gross                                                                   
 profit:                                                                    
Gross profit -                                                              
 GAAP            $   67,326  $   65,480  $  257,041  $  273,344  $   68,044 
Gross margin -                                                              
 GAAP                  27.7%       27.3%       27.5%       28.7%       28.5%
Adjustments:                                                                
Cost of revenues                                                            
 Change in                                                                  
  excess and                                                                
  obsolete                                                                  
  inventory                                                                 
  reserve               390       5,027       8,248      10,370         989 
 Amortization of                                                            
  acquired                                                                  
  technology          1,842       1,515       7,044       6,311       1,930 
 Stock                                                                      
  compensation        1,731       1,139       7,233       6,281       2,140 
 Impairment of                                                              
  acquired                                                                  
  developed                                                                 
  technology and                                                            
  other long-                                                               
  lived assets        8,156           -       8,156           -           - 
 Acquisition                                                                
  method                                                                    
  accounting                                                                
  adjustment for                                                            
  sale of                                                                   
  acquired                                                                  
  inventory               -         963       1,363       4,998           - 
 Flood-related                                                              
  expense                                                                   
  (recovery)         (1,197)      1,222      (1,197)      1,222           - 
 Reduction in                                                               
  force costs            17          62         818         906          17 
 Acquisition                                                                
  related                                                                   
  retention                                                                 
  payment                62           -         208           -          73 
                 ----------  ----------  ----------  ----------  ---------- 
  Total cost of                                                             
   revenue                                                                  
   adjustments       11,001       9,928      31,873      30,088       5,149 
                 ----------  ----------  ----------  ----------  ---------- 
Gross profit -                                                              
 non-GAAP            78,327      75,408     288,914     303,432      73,193 
                 ----------  ----------  ----------  ----------  ---------- 
Gross margin -                                                              
 non-GAAP              32.2%       31.4%       30.9%       31.9%       30.7%
                                                                            
GAAP to non-GAAP                                                            
 reconciliation                                                             
 of operating                                                               
 income:                                                                    
Operating income                                                            
 (loss) - GAAP          385      16,964      (5,555)     44,179        (797)
Operating margin                                                            
 - GAAP                 0.2%        7.1%       -0.6%        4.6%       -0.3%
Adjustments:                                                                
Total cost of                                                               
 revenue                                                                    
 adjustments         11,001       9,928      31,873      30,088       5,149 
Research and                                                                
 development                                                                
 Reduction in                                                               
  force costs            52          35         240         801          11 
 Acquisition                                                                
  related                                                                   
  retention                                                                 
  payment               204           -         639           -         213 
 Stock                                                                      
  compensation        2,856       2,288      11,796       9,123       2,601 
Sales and                                                                   
 marketing                                                                  
 Reduction in                                                               
  force costs             -          36           -          36           - 
 Acquisition                                                                
  related                                                                   
  retention                                                                 
  payment                17           -          54           -          17 
 Stock                                                                      
  compensation        1,015         727       3,979       3,105         885 
General and                                                                 
 administrative                                                             
 Reduction in                                                               
  force costs            24          41         118       1,055          25 
 Acquisition                                                                
  related                                                                   
  retention                                                                 
  payment               220           -         696           -         223 
 Stock                                                                      
  compensation        2,586       1,768      10,589       7,467       2,218 
 Acquisition                                                                
  related costs         322           -       1,474       1,602         731 
 Litigation                                                                 
  settlements                                                               
  and                                                                       
  resolutions                                                               
  and related                                                               
  costs                   -      (7,422)         13      (7,515)          - 
 Shareholder                                                                
  class action                                                              
  and derivative                                                            
  litigation                                                                
  costs                 144         447         333       1,072         180 
 Gain on fair                                                               
  value                                                                     
  remeasurement                                                             
  of contingent                                                             
  consideration                                                             
  liability          (7,130)     (4,853)     (7,130)     (4,853)          - 
Amortization of                                                             
 purchased                                                                  
 intangibles            734         897       3,640       3,494       1,035 
Impairment                                                                  
 purchased                                                                  
 intangibles and                                                            
 other long-                                                                
 lived assets         7,602           -      12,488           -       4,886 
Restructuring                                                               
 recoveries               -           -           -        (322)          - 
                 ----------  ----------  ----------  ----------  ---------- 
  Total cost of                                                             
   revenue and                                                              
   operating                                                                
   expense                                                                  
   adjustments       19,647       3,892      70,802      45,153      18,174 
                 ----------  ----------  ----------  ----------  ---------- 
Operating income                                                            
 - non-GAAP          20,032      20,856      65,247      89,332      17,377 
                 ----------  ----------  ----------  ----------  ---------- 
Operating margin                                                            
 - non-GAAP             8.2%        8.7%        7.0%        9.4%        7.3%
                                                                            
GAAP to non-GAAP                                                            
 reconciliation                                                             
 of income                                                                  
 attributable to                                                            
 Finisar                                                                    
 Corporation:                                                               
Income (loss)                                                               
 attributable to                                                            
 Finisar                                                                    
 Corporation -                                                              
 GAAP                 3,879      18,015      (5,454)     42,993      (3,407)
Adjustments:                                                                
Total cost of                                                               
 revenue and                                                                
 operating                                                                  
 expense                                                                    
 adjustments         19,647       3,892      70,802      45,153      18,174 
Interest income                                                             
 from legal                                                                 
 settlement               -        (434)          -        (434)          - 
Imputed interest                                                            
 related to                                                                 
 restructuring          146         133         520         805         148 
Other (income)                                                              
 expense, net                                                               
 Loss (gain) on                                                             
  sale of assets     (1,160)          3      (1,311)         (4)         38 
 Loss related to                                                            
  minority and                                                              
  equity method                                                             
  investments             -           -           -         619           - 
 Other                                                                      
  miscellaneous                                                             
  (income) or                                                               
  expenses               (2)       (424)       (263)        177        (101)
 Foreign                                                                    
  exchange                                                                  
  transaction                                                               
  loss                1,034         506         854         226         431 
 Debt                                                                       
  extinguishment                                                            
  loss                    -           -         573         419           - 
 Fair value                                                                 
  remeasurement                                                             
  of equity                                                                 
  investment              -          (3)          -      (5,432)          - 
Provision for                                                               
 income taxes                                                               
 Income tax                                                                 
  provision                                                                 
  adjustments        (1,506)     (1,454)     (2,217)     (1,345)      1,107 
Non-controlling                                                             
 in
terest                                                                   
 adjustment          (2,249)          -      (2,249)          -           - 
                 ----------  ----------  ----------  ----------  ---------- 
Total                                                                       
 adjustments         15,910       2,219      66,709      40,184      19,797 
                 ----------  ----------  ----------  ----------  ---------- 
Net income                                                                  
 attributable to                                                            
 Finisar                                                                    
 Corporation -                                                              
 non-GAAP            19,789      20,234      61,255      83,177      16,390 
                 ----------  ----------  ----------  ----------  ---------- 
                                                                            
Non-GAAP income                                                             
 attributable to                                                            
 Finisar                                                                    
 Corporation     $   19,789  $   20,234  $   61,255  $   83,177  $   16,390 
Add: interest                                                               
 expense for                                                                
 dilutive                                                                   
 convertible                                                                
 notes                  539         539       2,157       2,156         539 
                 ----------  ----------  ----------  ----------  ---------- 
Adjusted non-                                                               
 GAAP income                                                                
 attributable to                                                            
 Finisar               
                                                     
 Corporation     $   20,328  $   20,773  $   63,412  $   85,333  $   16,929 
                 ==========  ==========  ==========  ==========  ========== 
                                                                            
Non-GAAP income                                                             
 per share                                                                  
 attributable to                                                            
 Finisar                                                                    
 Corporation                                                                
 common                                                                     
 stockholders                                                               
 Basic           $     0.21  $     0.22  $     0.66  $     0.92  $     0.18 
 Diluted         $     0.20  $     0.21  $     0.64  $     0.87  $     0.17 
Shares used in                                                              
 computing non-                                                             
 GAAP income per                                                            
 share                                                                      
 attributable to                                                            
 Finisar                                                                    
 Corporation                                                                
 common                                                                     
 stockholders                                                               
 Basic               93,567      91,349      92,860      90,823      93,097 
 Diluted             99,941      98,528      99,284      97,935      99,094 
                                                                            
Non-GAAP EBITDA                                                             
Non-GAAP income                                                             
 attributable to                                                            
 Finisar                                                                    
 Corporation     $   19,789  $   20,234  $   61,255  $   83,177  $   16,390 
Depreciation                                                                
 expense             13,692      12,583      52,815      45,561      13,306 
Amortization             94         227         653         851          86 
Interest expense        187         444       1,314       2,272         314 
Income tax                                                                  
 expense                  0         667       2,444       3,350       1,046 
                 ----------  ----------  ----------  ----------  ---------- 
Non-GAAP EBITDA  $   33,762  $   34,155  $  118,481  $  135,211  $   31,142 
                 ==========  ==========  ==========  ==========  ========== 

  
Investor Contact: 
Kurt Adzema 
Chief Financial Officer 
408-542-5050 
Investor.relations@finisar.com  
Press contact:
Victoria McDonald
Sr. Manager, Corporate Communications
408-542-4261 
 
 
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