Infinera (INFN) 8-K Infinera Corporation Reports Third Quarter Financial Results

Exhibit 99.1

Contacts:
Press: Jeff Ferry	Investors/Analysts: Bob Blair
jferry@infinera.com	bblair@infinera.com
Infinera Corporation	Infinera Corporation
408-572-5213	408-716-4879

Infinera Corporation Reports Third Quarter Financial Results

Adjusted GAAP Revenue of $80.9 Million, Cash from Operations of $9.9 Million;

Five New Customers Added

Sunnyvale, CA, October 21, 2008 – Infinera Corporation (Nasdaq: INFN), a leading provider of digital optical communications systems, today released financial results for the third quarter ended September 27, 2008.

GAAP Results:

• GAAP revenues for the third quarter of 2008 were $120.5 million compared to $62.2 million in the third quarter of 2007.

• GAAP gross margins were 45% in the third quarter of 2008 compared to 34% in the third quarter of 2007.

• Including non-cash stock-based compensation, GAAP net income was $14.9 million, or $0.15 per diluted share, in the third quarter of 2008 compared to a GAAP net loss of $5.5 million, or $0.07 per share, in the third quarter of 2007.

Adjusted GAAP / Invoiced Shipment Results:

• Adjusted GAAP revenue for the third quarter of 2008 was $80.9 million compared to $80.3 million of invoiced shipments in the third quarter of 2007.

• Gross margins on an adjusted GAAP basis, excluding non-cash stock-based compensation, were 42% in the third quarter of 2008 compared to 43% in the third quarter of 2007.

• Excluding non-cash stock-based compensation, net income on an adjusted GAAP basis was $0.0 million, or $0.00 per diluted share, for the third quarter of 2008 compared to $10.9 million, or $0.12 per diluted share on an invoiced shipment basis, in the third quarter of 2007.

Footnote: For an explanation of our use of Adjusted GAAP and Invoiced Shipments measures and a full reconciliation of these measures to our GAAP results, please see the section of the accompanying tables titled “GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation.”

Management Commentary

“Our third quarter results came in ahead of guidance we provided in July, showing solid revenue performance and good cash generation,” said Jagdeep Singh, president and chief executive officer. “Both existing and new customers continue to turn to Infinera’s PIC-based solution to build out their networks as they address their bandwidth growth needs. We added five new customers in the quarter —including our fifth of the top five major cable MSOs in North America and two additional European customers. We saw strong reception from the installed base and new customers to the new Infinera Line System 2 (ILS2), which began shipping in August. We are pleased with the resumption in new customer-win momentum and we believe that this will continue into Q4 with the addition of at least another four new customers.”

“During the quarter, we also completed the migration of the Deutsche Telekom (DT) Western European network to Infinera equipment in a five-week timeline, highlighting the speed of service advantage that our architecture provides,” said Singh. “DT is now running live traffic on the new network. This represents a significant achievement for the Infinera and DT teams and it is serving as a strong reference account for our new business efforts.”

During the quarter, the Company also achieved these two key milestones:

• Infinera’s photonic integrated circuits (PICs) surpassed a cumulative total of 100 million hours of operation in live networks worldwide without any PIC failures, evidence of the high reliability of the company’s photonic integration technology.

• More than 10,000 Infinera DLM line cards shipped since the company began commercial shipments in late 2004. This equates to a total DWDM network capacity of 1Petabit per second.

Conference Call Information:

Infinera will host a conference call for analysts and investors to discuss its third quarter results today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be accessible from the “Investor Relations” section of the company’s website at www.infinera.com. Following the webcast, an archived version will be available on the website for 30 days. To hear the replay, parties in the United States and Canada should call 1-866-395-1648. International parties can access the replay at +1-203-369-0468.

About Infinera

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

Forward Looking Statements –

This press release contains forward-looking statements, including statements relating to the strong reception for our installed base and new customers to our products, including our ILS2, our belief that we will continue to add at least another four new customers in Q4, our belief that our PICs’ performance is evidence of the high reliability of our photonic integrated circuit technology, our belief in the economic benefits of our system, and our belief that DT serves as a strong reference account for us. These forward-looking statements involve risks and uncertainties, as well as assumptions that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs and develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our customers; our ability to reduce customer concentration; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission (SEC). More information about these and other risks that may impact Infinera’s business are set forth in our annual report on Form 10-K, which was filed with the SEC on February 19, 2008, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

Non-GAAP and other Financial Measures

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

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

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

Infinera Corporation

GAAP Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 27, 2008		September 29, 2007			September 27, 2008			September 29, 2007
Revenue:
Product	$	76,130	$	25		$	226,763		$	7,275
Ratable product and related support and services		39,495		62,130			181,462			162,488
Services		4,881		—			11,643			—
Total revenue		120,506		62,155			419,868			169,763
Cost of revenue (1):
Cost of product		45,139		18			131,928			3,869
Cost of ratable product and related support and services		18,537		40,804			86,537			116,462
Cost of services		2,592		—			5,814			—
Total cost of revenue		66,268		40,822			224,279			120,331
Gross profit		54,238		21,333			195,589			49,432
Operating expenses (1):
Sales and marketing		11,171		7,995			32,277			22,032
Research and development		21,092		14,621			57,172			44,758
General and administrative		8,713		7,069			25,632			17,984
Amortization of intangible assets		37		37			111			111
Total operating expenses		41,013		29,722			115,192			84,885
Income (loss) from operations		13,225		(8,389	)		80,397			(35,453	)
Other income (expense), net:
Interest income		1,675		2,459			7,236			3,373
Interest expense		—		(67	)		(3	)		(2,249	)
Other gain (loss), net (2):		37		533			1,213			(16,982	)
Total other income (expense), net		1,712		2,925			8,446			(15,858	)
Income (loss) before provision for income taxes		14,937		(5,464	)		88,843			(51,311	)
Provision for income taxes		—		62			3,427			124
Net income (loss)	$	14,937	$	(5,526	)	$	85,416		$	(51,435	)
Net income (loss) per common share:
Basic	$	0.16	$	(0.07	)	$	0.93		$	(1.34	)
Diluted	$	0.15	$	(0.07	)	$	0.88		$	(1.34	)
Weighted average shares used in computing net income (loss) per common share:
Basic		92,888		84,017			92,087			38,419
Diluted		97,208		84,017			97,061			38,419
(1)    The following table summarizes the effects of stock-based compensation related to employees, non-recourse notes and non-employees for the three and nine months ended September 27, 2008 and September 29, 2007:
	Three Months Ended					Nine Months Ended
	September 27, 2008		September 29, 2007			September 27, 2008			September 29, 2007
Cost of revenue	$	299	$	143		$	778		$	254
Research and development		1,870		1,113			4,722			2,436
Sales and marketing		1,250		689			3,264			1,122
General and administration		1,956		1,129			5,530			2,032
		5,375		3,074			14,294			5,844
Cost of revenue - amortization from balance sheet*		1,180		89			3,549			129
Total stock-based compensation expense	$	6,555	$	3,163		$	17,843		$	5,973
*       Stock-based compensation expense deferred to inventory and to deferred inventory costs in prior periods and recognized in the current period. (2)    The following table summarizes the remeasurement of our freestanding preferred stock warrants under FAS 150:
	Three Months Ended					Nine Months Ended
	September 27, 2008		September 29, 2007			September 27, 2008			September 29, 2007
Other loss	$	—	$	—		$	—		$	(19,761	)

Infinera Corporation

GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation

(In thousands, except per share data)

(Unaudited)

	Three Months Ended September 27, 2008
	GAAP			Deferral Adjustments			Adjusted GAAP Results			Adjusted GAAP Stock Comp			Adjusted GAAP Excluding Stock Comp
Revenue
Product and ratable revenue	$	115,625		$	(39,588	)(a)	$	76,037		$	—		$	76,037
Services revenue		4,881			—			4,881			—			4,881
Total revenue		120,506			(39,588	)		80,918			—			80,918
Cost of revenue		66,268			(18,338	)(c)		47,930			(1,270	)(e)		46,660
Gross profit		54,238			(21,250	)		32,988			1,270			34,258
Gross margin		45	%											42	%
Operating expenses		41,013			—			41,013			(5,076	)(e)		35,937
Income (loss) from operations		13,225			(21,250	)		(8,025	)		6,346			(1,679	)
Other income (expense), net		1,712			—			1,712			—			1,712
Income (loss) before provision for income taxes		14,937			(21,250	)		(6,313	)		6,346			33
Provision for income taxes		—			—			—			—			—
Net income (loss)	$	14,937		$	(21,250	)	$	(6,313	)	$	6,346		$	33
Net income (loss) per common share:
Basic	$	0.16											$	0.00
Diluted	$	0.15											$	0.00
Weighted average shares used in computing net income (loss) per common share:
Basic		92,888												92,888
Diluted		97,208												97,208
	Three Months Ended June 28, 2008
	GAAP			Deferral Adjustments			Adjusted GAAP Results			Adjusted GAAP Stock Comp			Adjusted GAAP Excluding Stock Comp
Revenue
Product and ratable revenue	$	156,086		$	(70,349	)(b)	$	85,737		$	—		$	85,737
Services revenue		5,023			—			5,023			—			5,023
Total revenue		161,109			(70,349	)		90,760			—			90,760
Cost of revenue		81,325			(32,090	)(d)		49,235			(1,176	)(e)		48,059
Gross profit		79,784			(38,259	)		41,525			1,176			42,701
Gross margin		50	%											47	%
Operating expenses		37,186			—			37,186			(4,865	)(e)		32,321
Income (loss) from operations		42,598			(38,259	)		4,339			6,041			10,380
Other income (expense), net		2,554			—			2,554			—			2,554
Income (loss) before provision for income taxes		45,152			(38,259	)		6,893			6,041			12,934
Provision for income taxes		2,267			—			2,267			—			2,267
Net income (loss)	$	42,885		$	(38,259	)	$	4,626		$	6,041		$	10,667
Net income (loss) per common share:
Basic	$	0.47											$	0.12
Diluted	$	0.44											$	0.11
Weighted average shares used in computing net income (loss) per common share:
Basic		92,124												92,124
Diluted		97,284												97,284

Infinera Corporation

GAAP to Non-GAAP Invoiced Shipment and Adjusted GAAP Reconciliation

(In thousands, except per share data)

(Unaudited)

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

Use of Non-GAAP Invoiced Shipments Information:

Prior to the second quarter of 2008, in order to supplement our condensed consolidated financial statements presented on a GAAP basis, Infinera used invoiced shipment measures of operating results and net income. Invoiced shipment measures reflected GAAP results adjusted for changes in our deferred revenue and deferred cost of inventory balances from the prior period. We further presented non-GAAP measures of operating results, net income and net income per share, which included invoiced shipments and excluded non-GAAP stock-based compensation expense. These adjustments to our GAAP results were made to provide both management and investors with an understanding of Infinera’s underlying operating results and trends as they would have been reflected had we established vendor specific objective evidence (“VSOE”) of fair value for our service offerings and not been required to recognize revenue ratably.

Effective April 2008, we had established VSOE of fair value for most of our service offerings. Therefore, beginning in the second quarter of 2008, we have used adjusted GAAP measures of operating results and net income. Adjusted GAAP results reflect our GAAP results reduced for amounts released from deferred revenue and deferred cost of inventory balances recorded prior to the second quarter of 2008 and previously reported in our invoiced shipment results. Deferred services and deferred ratable and product revenue and cost amounts recorded after March 29, 2008 have not been adjusted and are recognized on a GAAP basis in arriving at the adjusted GAAP results. We have continued to present non-GAAP measures of operating results, net income and net income per share, which include adjusted GAAP results and exclude non-GAAP stock-based compensation expense.

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

(a) Adjustment amount represents the release of ratable and product deferred revenue amounts related to periods prior to March 29, 2008 as these amounts have been previously reported as invoiced shipments. No adjustment has been made for changes in services deferred revenue as these amounts relate to future service deliverables and are appropriately deferred. Deferred ratable and product amounts recorded after March 29, 2008 have not been adjusted as these amounts are recognized on a GAAP basis in arriving at the adjusted GAAP results.

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

	Three Months Ended September 27, 2008
Deferred Revenue	Pre Mar 29, 2008 Ratable and Product Revenue			Post Mar 29, 2008 Ratable and Product Revenue			Services			Total
(In thousands)
Beginning balance	$	61,340		$	3,113		$	5,456		$	69,909
Additions to deferred revenue		—			2,075			3,567			5,642
Amortization to revenue		(39,588	)		(891	)		(2,616	)		(43,095	)
Ending balance	$	21,752		$	4,297		$	6,407		$	32,456
Change in deferred revenue balance	$	(39,588	)	$	1,184		$	951		$	(37,453	)

(b)    Adjustment amount represents the release of ratable and product deferred revenue amounts related to periods prior to March 29, 2008 as these amounts have been previously reported as invoiced shipments. No adjustment has been made for changes in services deferred revenue as these amounts relate to future service deliverables and are appropriately deferred. Deferred ratable and product amounts recorded after March 29, 2008 have not been adjusted as these amounts are recognized on a GAAP basis in arriving at the adjusted GAAP results.

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

	Three Months Ended June 28, 2008												Three Months Ended September 29, 2007
Deferred Revenue	Pre Mar 29, 2008 Ratable and Product Revenue			Post Mar 29, 2008 Ratable and Product Revenue			Services			Total			Total
(In thousands)
Beginning balance	$	131,689		$	—		$	3,805		$	135,494		$	138,955
Additions to deferred revenue		—			4,979			3,651			8,630			80,325
Amortization to revenue		(70,349	)		(1,866	)		(2,000	)		(74,215	)		(62,130	)
Ending balance	$	61,340		$	3,113		$	5,456		$	69,909		$	157,150
Change in deferred revenue balance	$	(70,349	)	$	3,113		$	1,651		$	(65,585	)	$	18,195

(c) Adjustment amount represents the release of ratable and product deferred cost amounts related to periods prior to March 29, 2008 as these amounts have been previously included as invoiced shipments. Deferred ratable and product amounts recorded after March 29, 2008 have not been adjusted as these amounts are recognized on a GAAP basis in arriving at the adjusted GAAP results.

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

	Three Months Ended September 27, 2008
Deferred Inventory Cost	Pre Mar 29 2008 Ratable and Product Cost			Post Mar 29, 2008 Ratable and Product Cost			Total
(In thousands)
Beginning balance	$	26,510		$	450		$	26,960
Additions to deferred cost of revenue		—			710			710
Amortized to cost of revenue		(18,338	)		(40	)		(18,378	)
Ending balance	$	8,172		$	1,120		$	9,292
Change in deferred inventory cost balance	$	(18,338	)	$	670		$	(17,668	)

(d) Adjustment amount represents the release of ratable and product deferred cost amounts related to periods prior to March 29, 2008 as these amounts have been previously included as invoiced shipments. Deferred ratable and product amounts recorded after March 29, 2008 have not been adjusted as these amounts are recognized on a GAAP basis in arriving at the adjusted GAAP results.

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

	Three Months Ended June 28, 2008									Three Months Ended September 29, 2007
Deferred Inventory Cost	Pre Mar 29, 2008 Ratable and Product Cost			Post Mar 29, 2008 Ratable and Product Cost			Total			Total
(In thousands)
Beginning balance	$	58,600		$	—		$	58,600		$	74,706
Additions to deferred cost of revenue		—			459			459			38,830
Amortized to cost of revenue		(32,090	)		(9	)		(32,099	)		(33,649	)
Ending balance	$	26,510		$	450		$	26,960		$	79,887
Change in deferred inventory cost balance	$	(32,090	)	$	450		$	(31,640	)	$	5,181

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

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

	Three Months Ended
	September 27, 2008			June 28, 2008			September 29, 2007
(In thousands)
GAAP stock-based compensation in cost of revenue	$	299		$	271		$	143
GAAP stock-based compensation in cost of revenue - amortization from balance sheet		1,180			1,219			89
Stock-based compensation not deferred to deferred inventory cost		—			—			308
Stock-based compensation previously recognized on invoiced shipment basis		(209	)		(314	)		(70	)
Non-GAAP stock-based compensation in cost of revenue	$	1,270		$	1,176		$	470

Infinera Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	September 27, 2008			December 29, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	169,439		$	91,209
Short-term investments		78,551			181,168
Short-term restricted cash		840			743
Accounts receivable		48,571			39,216
Other receivables		250			1,127
Inventory		58,620			58,579
Deferred inventory costs		6,505			78,362
Prepaid expenses and other current assets		7,016			3,941
Total current assets		369,792			454,345
Property, plant and equipment, net		42,860			36,973
Intangible assets		1,342			1,541
Deferred inventory costs, non-current		2,787			3,260
Long-term investments		73,803			30,116
Long-term restricted cash		1,959			2,594
Other non-current assets		2,297			359
Total assets	$	494,840		$	529,188
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,834		$	17,504
Accrued expenses		10,160			9,497
Accrued compensation and related benefits		9,078			17,749
Accrued warranty		5,814			4,974
Deferred revenue		25,444			167,031
Total current liabilities		75,330			216,755
Accrued warranty, non-current		4,862			5,018
Deferred revenue, non-current		7,012			7,406
Long-term exercised unvested options		318			825
Other long-term liabilities		3,747			4,610
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value Authorized shares - 25,000 and no shares issued and outstanding		—			—
Common stock, $0.001 par value Authorized shares – 500,000 as of September 27, 2008 and December 29, 2007 Issued and outstanding shares – 93,773 as of September 27, 2008 and 91,580 as of December 29, 2007		94			92
Additional paid-in capital		695,158			663,870
Accumulated other comprehensive income (loss)		(7,631	)		78
Accumulated deficit		(284,050	)		(369,466	)
Total stockholders’ equity		403,571			294,574
Total liabilities and stockholders’ equity	$	494,840		$	529,188

Infinera Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 27, 2008			September 29, 2007
Cash Flows from Operating Activities:
Net income (loss)	$	85,416		$	(51,435	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		8,877			7,150
Amortization of debt discount		—			282
Accretion of investment discount		(881	)		—
Asset impairment charges		—			393
Stock-based compensation expense		17,843			5,973
Excess tax benefit from stock option transactions		(2,588	)		—
Tax benefit from stock option transactions		2,588			—
Revaluation of warrant liabilities		—			19,761
Gain on disposal of assets		(1,006	)		(2,409	)
Other loss (gain)		7			(73	)
Changes in assets and liabilities:
Accounts receivable		(8,478	)		1,147
Inventory		(701	)		3,215
Prepaid expenses and other current assets		(3,142	)		(1,234	)
Deferred inventory costs		71,626			(12,764	)
Other non-current assets		(1,964	)		(1,266	)
Accounts payable		7,777			(14,692	)
Accrued liabilities and other expenses		(8,723	)		(2,694	)
Deferred revenue		(141,981	)		46,197
Accrued warranty		684			6,653
Net cash provided by operating activities		25,354			4,204
Cash Flows from Investing Activities:
Purchase of available-for-sale investments		(172,875	)		(111,294	)
Proceeds from sale of investments		103,190			12,000
Proceeds from maturities of investments and restricted cash		122,899			—
Proceeds from disposal of assets		1,080			2,781
Purchase of property and equipment		(15,152	)		(11,710	)
Net cash (used in) investing activities		39,142			(108,223	)
Cash Flows from Financing Activities:
Principal payments on loan obligation		—			(35,401	)
Proceeds from loans		—			7,119
Proceeds from initial public offering, net of issuance costs		—			190,078
Proceeds from issuance of common stock		11,242			2,097
Proceeds from exercise of warrants		—			45
Excess tax benefit from stock option transactions		2,588			—
Repurchase of common stock		(30	)		(50	)
Net cash provided by financing activities		13,800			163,888
Effect of exchange rate changes		(66	)		70
Net change in cash and cash equivalents		78,230			59,939
Cash and cash equivalents at beginning of period		91,209			28,884
Cash and cash equivalents at end of period	$	169,439		$	88,823
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3		$	2,473
Cash paid for income taxes	$	858		$	62

Infinera Corporation

Supplemental Financial Information

	Q1'06			Q2'06			Q3'06			Q4'06			Q1'07			Q2'07			Q3'07			Q4'07			Q1'08			Q2'08			Q3'08
Invoiced Shipments	$	13.8		$	19.7		$	42.0		$	70.5		$	66.7		$	69.0		$	80.4		$	93.4		$	95.5		$	90.8		$	80.9
Gross Margin %		-43	%		16	%		21	%		25	%		35	%		37	%		43	%		47	%		45	%		47	%		42	%
Invoiced Shipment Composition:
Domestic %		76	%		89	%		78	%		72	%		89	%		84	%		81	%		81	%		82	%		78	%		81	%
International %		24	%		11	%		22	%		28	%		11	%		16	%		19	%		19	%		18	%		22	%		19	%
Largest Customer %		64	%		58	%		55	%		47	%		57	%		48	%		28	%		18	%		31	%		21	%		27	%
Cash Related Information:
Cash from Operations	($	21.6	)	($	12.3	)	($	18.8	)	($	15.0	)	$	6.9		($	0.8	)	($	2.0	)	$	18.9		$	9.8		$	5.6		$	9.9
Capital Expenditures	$	2.1		$	2.9		$	6.2		$	4.1		$	5.2		$	3.6		$	3.0		$	8.5		$	4.5		$	4.8		$	5.9
Depreciation & Amortization	$	1.6		$	1.7		$	1.9		$	1.8		$	2.1		$	2.0		$	2.7		$	2.7		$	2.6		$	2.9		$	3.4
DSO's		54			48			49			54			27			36			47			39			42			57			55
Inventory Metrics:
Raw Materials	$	4.0		$	5.1		$	7.8		$	6.7		$	7.4		$	8.8		$	7.5		$	10.5		$	7.9		$	9.2		$	10.0
Work in Process	$	16.7		$	21.2		$	30.9		$	38.1		$	31.6		$	36.0		$	34.8		$	35.1		$	40.6		$	34.6		$	35.8
Finished Goods	$	5.7		$	12.0		$	11.8		$	13.5		$	18.4		$	13.7		$	14.8		$	13.0		$	10.7		$	13.8		$	12.8
Total Inventory	$	26.5		$	38.3		$	50.5		$	58.3		$	57.3		$	58.5		$	57.1		$	58.6		$	59.2		$	57.6		$	58.6
Inventory Turns		3.0			1.7			2.6			3.6			3.0			3.0			3.2			3.4			3.5			3.3			3.2
Worldwide Headcount		363			470			576			605			617			646			668			711			799			853			889