Infinera Corporation Reports Fourth Quarter and Fiscal Year 2013 Financial Results

Infinera Corporation Reports Fourth Quarter and Fiscal Year 2013 Financial  Results  SUNNYVALE, CA -- (Marketwired) -- 01/29/14 --  Infinera Corporation (NASDAQ: INFN), provider of Intelligent Transport Networks(TM), today released financial results for the fourth quarter and fiscal year ended December 28, 2013.  GAAP revenues for the quarter were $139.1 million compared to $142.0 million in the third quarter of 2013 and $128.1 million in the fourth quarter of 2012.   GAAP gross margins for the quarter were 40% compared to 48% in the third quarter of 2013 and 34% in the fourth quarter of 2012. GAAP net loss for the quarter was $(10.2) million, or $(0.08) per share, compared to net income of $3.3 million, or $0.03 per diluted share, in the third quarter of 2013 and a net loss of $(16.1) million, or $(0.14) per share, in the fourth quarter of 2012.   Non-GAAP gross margins for the quarter were 41% compared to 49% in the third quarter of 2013 and 36% in the fourth quarter of 2012. Non-GAAP net loss for the quarter was $(0.2) million, or breakeven on an earnings per share basis, compared to net income of $12.8 million, or $0.10 per diluted share in the third quarter of 2013 and net loss of $(6.0) million, or $(0.05) per share, in the fourth quarter of 2012. These Non-GAAP measures exclude non-cash stock-based compensation expenses and the amortization of debt discount on our convertible senior notes.  GAAP revenues for the year were $544.1 million compared to $438.4 million in 2012.  GAAP gross margins for the year were 40% compared to 36% in 2012. GAAP net loss for the year was $(32.1) million, or $(0.27) per share compared to $(85.3) million, or $(0.77) per share in 2012.   Non-GAAP gross margins for the year were 42% compared to 38% in 2012. Non-GAAP net income for the year was $4.0 million or $0.03 per diluted share in 2013, compared to net loss of $(43.5) million or $(0.38) per diluted share in 2012. These Non-GAAP measures exclude non-cash stock-based compensation expenses and the amortization of debt discount on our convertible senior notes.  A further explanation of the use of non-GAAP financial information and a reconciliation of the non-GAAP financial measures to the GAAP equivalents can be found at the end of this release.   Management Commentary   "The fourth quarter was a solid finish to a very good year for Infinera, driven by continued acceptance of the DTN-X," said Tom Fallon, chief executive officer. "We received purchase commitments from three additional customers in the quarter, including one new to Infinera, and we set another quarterly record for 100G port shipments.   "Our financial results for 2013 demonstrate the strong potential of the DTN-X. Revenues grew 24%, at least double the long haul DWDM market growth estimated by industry analysts; gross margins expanded significantly; we achieved $4 million Non-GAAP net income compared with $43.5 million Non-GAAP net loss in 2012; and we generated $12 million in net free cash flow for the year. Since its introduction in mid 2012, we have received purchase commitments for the DTN-X from a total of 42 customers, representing a cross section of industries including Tier 1 carriers, cable operators, Internet content providers and bandwidth wholesalers. Of these, 15 are new customers to Infinera. These achievements met or exceeded the targets that we provided at our Analyst Day in December of 2012.  "As we look ahead, we believe the opportunity for the DTN-X remains wide open with the 100G cycle still in its early stages. Infinera's Intelligent Transport Network and the DTN-X offers important differentiated features, including its super-channel scale, converged OTN switching and GMPLS network automation. For 2014, we plan to continue our focus on winning new deployments and gaining market share, while driving enhanced profitability, and we remain optimistic about our outlook over the short, intermediate and long-term."   Conference Call Information:   Infinera will host a conference call for analysts and investors to discuss its fourth quarter results and its outlook for the first quarter 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 90 days. To hear the replay, parties in the United States and Canada should call 1-866-379-4236. International parties can access the replay at 1-203-369-0338.  About Infinera   Infinera provides Intelligent Transport Networks to help carriers exploit the increasing demand for cloud-based services and data center connectivity as they advance into the Terabit Era. Infinera is unique in its use of breakthrough semiconductor technology to deliver large scale Photonic Integrated Circuit (PICs) and the application of PICs to vertically integrated optical networking solutions that deliver the industry's only commercially available 500 Gb/s FlexCoherent super-channels. Infinera Intelligent Transport Network solutions include the DTN-X, DTN and ATN platforms. Find more at www.infinera.com.  Forward-Looking Statements   This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. These statements are based on information available to Infinera as of the date hereof and actual results could differ materially from those stated or implied due to risks and uncertainties. Forward-looking statements include statements regarding Infinera's expectations, beliefs, intentions or strategies including statements regarding the opportunity for DTN-X and the Company's plans for 2014. Such forward-looking statements can be identified by forward-looking words such as "anticipated," "believed," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include aggressive business tactics by our competitors, our reliance on single-source suppliers, our ability to protect our intellectual property, claims by others that we infringe their intellectual property, and our ability to respond to rapid technological changes, and other risks that may impact our business are set forth in our annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 5, 2013, as well as subsequent reports filed with or furnished to the SEC. These reports are available on our website at www.infinera.com and the SEC's website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.  Use of Non-GAAP Financial Information  In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP measures that exclude non-cash stock-based compensation expenses and amortization of debt discount on our convertible senior notes. We believe these adjustments are appropriate to enhance an overall understanding of our underlying financial performance and also our prospects for the future 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 o ur 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 (loss), basic and diluted net income (loss) per share, or gross margin 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. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the section titled, "GAAP to Non-GAAP Reconciliations." We anticipate disclosing forward-looking non-GAAP information in our conference call to discuss our fourth quarter results, including an estimate of non-GAAP earnings for the first quarter of 2014 that excludes non-cash stock-based compensation expenses and amortization of debt discount on our convertible senior notes.   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 data)                                            (Unaudited)                                                                                                                                                                     Three Months Ended            Twelve Months Ended                       ----------------------------  ----------------------------                    December 28,   December 29,   December 28,   December 29,                        2013           2012           2013           2012                       -------------  -------------  -------------  -------------  Revenue:                                                                       Product        $     115,102  $     109,444  $     465,424  $     380,035    Services              23,990         18,620         78,698         58,402                   -------------  -------------  -------------  -------------      Total                                                                         revenue           139,092        128,064        544,122        438,437                                                                               Cost of revenue                                                               (1):                                                                          Cost of                                                                       product              73,385         77,127        295,715        259,437    Cost of                                                                       services              9,795          7,669         29,768         21,431                   -------------  -------------  -------------  -------------      Total cost                                                                    of revenue         83,180         84,796        325,483        280,868                                                                               Gross profit            55,912         43,268        218,639        157,569                                                                               Operating                                                                     expenses (1):                                                                 Research and                                                                  development          30,859         26,660        124,794        117,233    Sales and                                                                     marketing            19,857         20,558         72,778         75,862    General and                                                                   administrativ                                                                e                    12,277         11,563         45,253         47,475                   -------------  -------------  -------------  -------------      Total                                                                         operating                                                                    expenses           62,993         58,781        242,825        240,570                                                                               Loss from                                                                     operations             (7,081)       (15,513)       (24,186)       (83,001)                                                                              Other income                                                                  (expense), net:                                                               Interest                                                                      income                  287            233            923            911    Interest                                                                      expense              (2,634)             -         (6,061)             -    Other gain                                                                    (loss), net:           (336)          (158)        (1,141)        (1,050)                  -------------  -------------  -------------  -------------      Total other                                                                   income                                                                       (expense),                                                                   net                (2,683)            75         (6,279)          (139)                                                                              Loss before                                                                   income taxes           (9,764)       (15,438)       (30,465)       (83,140) Provision for                                                                 income taxes              414            650          1,654          2,190                   -------------  -------------  -------------  -------------  Net loss         $     (10,178) $     (16,088) $     (32,119) $     (85,330)                  =============  =============  =============  =============                                                                               Net loss per                                                                  common share,                                                                basic and                                                                    diluted         $       (0.08) $       (0.14) $       (0.27) $       (0.77)                  =============  =============  =============  =============                                                                               Weighted average                                                              shares used in                                                               computing basic                                                             and diluted  net                                                               loss per common                                                              share                 119,743        112,311        117,425        110,739                   =============  =============  =============  =============                                                                                                                                                            (1) The following table summarizes the effects of stock-based compensation    related to employees and non-employees for the three and twelve months       ended December 28, 2013 and December 29, 2012:                                                                                                                                  Three Months Ended           Twelve Months Ended                       ----------------------------  ----------------------------                    December 28,   December 29,   December 28,   December 29,                        2013           2012           2013           2012                       -------------  -------------  -------------  -------------    Cost of                                                                       revenue       $         489  $         735  $       1,871  $       2,710    Research and                                                                  development           2,725          2,852         10,900         13,306    Sales and                                                                     marketing             1,965          2,802          7,624         10,450    General and                                                                   administratio                                                                n                     1,789          1,797          5,956          9,529                   -------------  -------------  -------------  -------------                           6,968          8,186         26,351         35,995    Cost of                                                                       revenue -                                                                    amortization                                                                 from balance                                                                 sheet*                1,206          1,949          5,625          5,824                   -------------  -------------  -------------  -------------    Total stock-                                                                  based                                                                        compensation                                                                 expense       $       8,174  $      10,135  $      31,976  $      41,819                   =============  =============  =============  =============                                                                                  * Stock-based compensation expense deferred to inventory and deferred      inventory costs in prior periods and recognized in the current period.      Infinera Corporation            GAAP to Non-GAAP                Reconciliations                 (In thousands, except per share data)                           (Unaudited)                                                                                                                                               Three Months Ended                                              -------------------------------------------                                   December 28,  September 28,   December 29,                                       2013           2013           2012                                      -------------  -------------  -------------  Reconciliation of Gross Profit:                                              U.S. GAAP as reported           $      55,912  $      68,371  $      43,268  Stock-based compensation(1)             1,695          1,549          2,684                                  -------------  -------------  -------------  Non-GAAP as adjusted            $      57,607  $      69,920  $      45,952                                  =============  =============  =============                                                                               Reconciliation of Gross Margin:                                              U.S. GAAP as reported                      40%            48%            34% Stock-based compensation(1)                 1%             1%             2%                                 -------------  -------------  -------------  Non-GAAP as adjusted                       41%            49%            36%                                 =============  =============  =============                                                                               Reconciliation of Income (Loss)                                              from Operations:                                                             U.S. GAAP as reported           $      (7,081) $       6,445  $     (15,513) Stock-based compensation(1)             8,174          7,643         10,135                                  -------------  -------------  -------------  Non-GAAP as adjusted            $       1,093  $      14,088  $      (5,378)                                 =============  =============  =============                                                                               Reconciliation of Net Income                                                  (Loss):                                                                     U.S. GAAP as reported           $     (10,178) $       3,347  $     (16,088) Stock-based compensation(1)             8,174          7,643         10,135  Amortization of debt                                                          discount(2)                            1,814          1,770              -                                  -------------  -------------  -------------  Non-GAAP as adjusted            $        (190) $      12,760  $      (5,953)                                 =============  =============  =============                                                                               Net Income (Loss) per Common                                                 Share - Basic:                                                               U.S. GAAP as reported           $       (0.08) $        0.03  $       (0.14)                                 =============  =============  =============  Non-GAAP as adjusted            $           -  $        0.11  $       (0.05)                                 =============  =============  =============                                                                               Net Income (Loss) per Common                                                 Share - Diluted:                                                             U.S. GAAP as reported           $       (0.08) $        0.03  $       (0.14)                                 =============  =============  =============  Non-GAAP as adjusted(3)         $           -  $        0.10  $       (0.05)                                 =============  =============  =============                                                                               Weighted average shares                                                      used in computing net income                                                  (loss)                                                                      per common share - U.S. GAAP:                                                Basic                                 119,743        118,740        112,311                                  =============  =============  =============  Diluted                               119,743        124,679        112,311                                  =============  =============  =============                                                                               Weighted average shares                                                      used in computing net income                                                   (loss)                                                                      per common share - Non-GAAP:                                                 Basic                                 119,743        118,740        112,311                                  =============  =============  =============  Diluted(3)                            125,134        124,679        114,115                                  =============  =============  =============                                                                                                       Twelve Months Ended                                      ----------------------------                                   December 28,   December 29,                                       2013           2012                                      -------------  -------------  Reconciliation of Gross Profit:                               U.S. GAAP as reported           $     218,639  $     157,569  Stock-based compensation(1)             7,496          8,534                                  -------------  -------------  Non-GAAP as adjusted            $     226,135  $     166,103                                  =============  =============                                                                Reconciliation of Gross Margin:                               U.S. GAAP as reported                      40%            36% Stock-based compensation(1)                 2%             2%                                 -------------  -------------  Non-GAAP as adjusted                       42%            38%                                 =============  =============                                                                Reconciliation of Income (Loss)                               from Operations:                                              U.S. GAAP as reported           $     (24,186) $     (83,001) Stock-based compensation(1)            31,976         41,819                                  -------------  -------------  Non-GAAP as adjusted            $       7,790  $     (41,182)                                 =============  =============                                                                Reconciliation of Net Income                                   (Loss):                                                      U.S. GAAP as reported           $     (32,119) $     (85,330) Stock-based compensation(1)            31,976         41,819  Amortization of debt                                           discount(2)                            4,164              -                                  -------------  -------------  Non-GAAP as adjusted            $       4,021  $     (43,511)                                 =============  =============                                                                Net Income (Loss) per Common                                  Share - Basic:                                                U.S. GAAP as reported           $       (0.27) $       (0.77)                                 =============  =============  Non-GAAP as adjusted            $        0.03  $       (0.39)                                 =============  =============                                                                Net Income (Loss) per Common                                  Share - Diluted:                                              U.S. GAAP as reported           $       (0.27) $       (0.77)                                 =============  =============  Non-GAAP as adjusted(3)         $        0.03  $       (0.38)                                 =============  =============                                                                Weighted average shares                                       used in computing net income                                   (loss)                                                       per common share - U.S. GAAP:                                 Basic                                 117,425        110,739                                  =============  =============  Diluted                               117,425        110,739                                  =============  =============                                                                Weighted average shares                                       used in computing net income                                   (loss)                                                       per common share - Non-GAAP:                                  Basic                                 117,425        110,739                                  =============  =============  Diluted(3)                            122,167        113,124                                  =============  =============                                                                               (1) Stock-based compensation expense is calculated in accordance with the     fair value recognition provisions of Financial Accounting Standards Board    Accounting Standards Codification (ASC) Topic 718, Compensation-Stock        Compensation effective January 1, 2006. The following table summarizes the   effects of stock-based compensation related to employees and non-employees:                                                                                                                               Three Months Ended                                               -----------------------------------------                                     December 28, September 28,  December 29,                                         2013          2013          2012                                        ------------- ------------- -------------  Cost of revenue                   $         489 $         422 $         735  Research and development                  2,725         2,434         2,852  Sales and marketing                       1,965         1,853         2,802  General and administration                1,789         1,807         1,797                                    ------------- ------------- -------------                                            6,968         6,516         8,186  Cost of revenue - amortization                                                from balance sheet*                      1,206         1,127         1,949                                    ------------- ------------- -------------  Total stock-based compensation                                                expense                          $       8,174 $       7,643 $      10,135                                    ============= ============= =============                                                                                                      Twelve Months Ended                                      ---------------------------                                   December 28,  December 29,                                       2013          2012                                      ------------- ------------- Cost of revenue                  $       1,871 $       2,710 Research and development                10,900        13,306 Sales and marketing                      7,624        10,450 General and administration               5,956         9,529                                  ------------- -------------                                         26,351        35,995 Cost of revenue - amortization                                from balance sheet*                     5,625         5,824                                  ------------- ------------- Total stock-based compensation                                expense                         $      31,976 $      41,819                                  ============= =============                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                * Stock-based compensation expense deferred to inventory and deferred inventory  costs in prior periods and recognized in the current period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 (2) Under GAAP, certain convertible debt instruments that may be settled in  cash on conversion are required to be separately accounted for as liability  (debt) and equity (conversion option) components of the instrument in a manner  that reflects the issuer's non-convertible debt borrowing rate. Accordingly,  for GAAP purposes, we are required to amortize as a debt discount an amount  equal to the fair value of the conversion option that was recorded in equity as  interest expense on our $150 million 1.75% convertible debt issuance in May  2013 over the term of the notes. These amounts have been adjusted in arriving  at our non-GAAP results because management believes that this non-cash expense  is not indicative of ongoing operating performance and provides a better  indication of our underlying business performance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                (3) Diluted shares used to calculate net loss per share on a non-GAAP basis  provided for informational purposes only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Infinera Corporation                                                         Condensed Consolidated Balance Sheets                                        (In thousands, except par values)                                            (Unaudited)                                                                                                                                                                                               December 28,   December 29,                                                      2013           2012                                                     -------------  -------------  ASSETS                                                                                                                                                    Current assets:                                                                Cash and cash equivalents                    $     124,330  $     104,666    Short-term investments                             172,660         76,146    Accounts receivable, net of allowance for                                     doubtful accounts of $43 in 2013 and $147                                    in 2012                                           100,643        107,039    Other receivables                                    1,313          2,909    Inventory                                          123,685        127,809    Deferred inventory costs                               705          1,029    Deferred tax asset                                   1,322            155    Prepaid expenses and other current assets           14,412          9,744                                                 -------------  -------------      Total current assets                             539,070        429,497                                                                               Property, plant and equipment, net                    79,668         80,343  Deferred inventory costs, non-current                      2            100  Long-term investments                                 64,419          2,874  Cost-method investment                                 9,000          9,000  Long-term restricted cash                              3,904          3,868  Other non-current assets                               4,863          2,488                                                 -------------  -------------      Total assets                               $     700,926  $     528,170                                                 =============  =============                                                                               LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                      Current liabilities:                                                           Accounts payable                             $      39,843  $      61,428    Accrued expenses                                    22,431         26,288    Accrued compensation and related benefits           33,899         22,325    Accrued warranty                                    12,374          7,262    Deferred revenue                                    32,402         26,744                                                 -------------  -------------      Total curren t liabilities                        140,949        144,047                                                                                 Long-term debt                                     109,164              -    Accrued warranty, non-current                       10,534          9,220    Deferred revenue, non-current                        4,888          3,210    Deferred tax liability                               1,364            117    Other long-term liabilities                         16,217         15,440                                                                               Commitments and contingencies                                                                                                                             Stockholders' equity:                                                          Preferred stock, $0.001 par value                                              Authorized shares - 25,000 and no shares                                      issued and outstanding                                -              -    Common stock, $0.001 par value                                                 Authorized shares - 500,000 as of December                                    28, 2013 and December 29, 2012                                              Issued and outstanding shares - 119,887 as                                    of December 28, 2013 and 112,461 as of                                       December 29, 2012                                   120            112    Additional paid-in capital                       1,025,661        930,618    Accumulated other comprehensive loss                (3,486)        (2,228)   Accumulated deficit                               (604,485)      (572,366)                                                -------------  -------------    Total stockholders' equity                         417,810        356,136                                                 -------------  -------------      Total liabilities and stockholders' equity $     700,926  $     528,170                                                 =============  =============                                                                                                                                                                                                                                         Infinera Corporation                                                         Condensed Consolidated Statements of Cash Flows                              (In thousands)                                                               (Unaudited)                                                                                                                                                                                                   Twelve Months Ended                                                     ----------------------------                                                  December 28,   December 29,                                                      2013           2012                                                     -------------  -------------  Cash Flows from Operating Activities:                                        Net loss                                       $     (32,119) $     (85,330) Adjustments to reconcile net loss to net                                      cashused in operating activities:                                             Depreciation and amortization                       24,562         23,661    (Recovery of) provision for other                                             receivables                                           (88)             -    Provision for doubtful accounts                         55             94    Amotization of debt discount and issuance                                     costs                                               4,522              -    Amortization of premium on investments               1,539          2,068    Stock-based compensation expense                    31,976         41,819    Non-cash tax benefit                                     -             (7)   Other gain                                            (243)          (475)   Changes in assets and liabilities:                                             Accounts receivable                                6,341        (26,517)     Other receivables                                  1,435         (1,894)     Inventory                                         (3,036)       (40,623)     Prepaid expenses and other assets                 (4,992)         2,293      Deferred inventory costs                             395          5,741      Accounts payable                                 (20,202)        15,410      Accrued liabilities and other expenses            11,272          6,915      Deferred revenue                                   7,337          3,763      Accrued warranty                                   6,426          3,616                                                 -------------  -------------        Net cash provided by (used in) operating                                      activities                                     35,180        (49,466)                                                                              Cash Flows from Investing Activities:                                          Purchase of available-for-sale investments        (288,140)       (54,150)   Proceeds from sale of available-for-sale                                      investments                                         2,850         11,584    Proceeds from maturities and calls of                                         investments                                       125,624        117,605    Proceeds from disposal of assets                         3              1    Purchase of property and equipment                 (21,068)       (25,395)   Reimbursement of manufacturing capacity                                       advance                                                 -             50    Change in restricted cash                              (69)          (827)                                                -------------  -------------        Net cash provided by (used in) investing                                      activities                                   (180,800)        48,868                                                                               Cash Flows from Financing Activities:                                          Proceeds from issuance of debt, net                144,469              -    Proceeds from issuance of common stock              23,185         11,580    Repurchase of common stock                          (1,544)          (882)                                                -------------  -------------      Net cash provided by financing activities        166,110         10,698                                                                               Effect of exchange rate changes on cash                 (826)           108                                                                               Net change in cash and cash equivalents               19,664         10,208  Cash and cash equivalents at beginning of                                     period                                              104,666         94,458                                                 -------------  -------------  Cash and cash equivalents at end of period     $     124,330  $     104,666                                                 =============  =============                                                                               Supplemental disclosures of cash flow                                         information:                                                                  Cash paid for income taxes                   $       2,135  $         923    Cash paid for interest                       $       1,320  $           -  Supplemental schedule of non-cash financing                                   activities:                                                                    Non-cash settlement for manufacturing                                         capacity advance                            $           -  $         275    Transfer of inventory to fixed assets        $       5,458  $       3,222                                                                                                                                                                                                                                                                                                                      ---------------------------------------------------------------------        Infinera Corporation                                                         Supplemental                                                                  Financial                                                                    Information                                                                 (Unaudited)                                                                                                                                               ----------------------------------------------------------------------------                      Q1'12  Q2'12  Q3'12  Q4'12  Q1'13  Q2'13  Q3'13  Q4'13  ---------------------------------------------------------------------------- Revenue ($ Mil)      $104.7 $93.5  $112.2 $128.1 $124.6 $138.4 $142.0 $139.1 Gross Margin % (1)    40%    37%    39%    36%    36%    39%    49%    41%   ---------------------------------------------------------------------------- Invoiced Shipment                                                             Composition:                                                                Domestic %            71%    70%    70%    63%    63%    64%    73%    54%   International %       29%    30%    30%    37%    37%    36%    27%    46%   Largest Customer %    13%    15%    13%    13%    14%  < 10%   17%    11%   ---------------------------------------------------------------------------- Cash Related                                                                  Information:                                                                Cash from (used in)                                                           Operations ($ Mil)  ($5.8)($22.7)($29.3)  $8.3 ($21.3) $17.9  $12.8  $25.8  Capital Expenditures                                                          ($ Mil)             $13.6   $6.1   $2.5   $3.2   $4.9   $4.5   $4.2   $7.5  Depreciation &                                                                Amortization ($                                                              Mil)                 $5.5   $5.7   $6.1   $6.4   $6.3   $6.3   $5.9   $6.0  DSO's                  57     55     74     76     82     64     56     66   ---------------------------------------------------------------------------- Inventory Metrics:                                                           Raw Materials ($                                                              Mil)                $15.3  $14.8  $12.4  $13.0  $12.2   $9.8  $12.1  $14.3  Work in Process ($                                                            Mil)                $41.6  $49.4  $59.8  $57.3  $53.1  $41.0  $45.7  $49.2  Finished Goods ($                                                             Mil)                $44.7  $50.9  $46.3  $57.5  $65.7  $70.5  $65.7  $60.2  ---------------------------------------------------------------------------- Total Inventory ($                                                            Mil)                $101.6 $115.1 $118.5 $127.8 $131.0 $121.3 $123.5 $123.7 Inventory Turns (1)   2.5    2.1    2.3    2.6    2.4    2.8    2.3    2.6   ---------------------------------------------------------------------------- Worldwide Headcount  1,210  1,228  1,235  1,242  1,219  1,238  1,296  1,318  ----------------------------------------------------------------------------                                                                                                                                                           --------------------                                                         (1) Amounts reflect non-GAAP results. Non-GAAP adjustments include non-cash   stock-based compensation expense.                                               Contacts: Media: Anna Vue avue@infinera.com Infinera Corporation 916-595-8157  Investors/Analysts: Jenifer Kirtland/Bob Jones  jkirtland@infinera.com / bjones@infinera.com  Infinera Corporation 408-543-8139/408-543-8140