Finisar Corporation Announces Financial Results for Third Quarter of Fiscal Year 2000

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1 Finisar Corporation Announces Financial Results for Third Quarter of Fiscal Year 2000 SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 22, Finisar Corporation (Nasdaq: FNSR), a leading provider of gigabit fiber optic solutions for high-speed data networks, today reported financial results for the third quarter ended January 30, Revenues for the third quarter of fiscal 2000 were a record $16.5 million, an 84% increase from $9.0 million in the prior year third quarter. Sales of optical subsystems accounted for $10.9 million in revenues, a 107% increase from $5.3 million in the comparable prior year period. Sales of test instruments were $5.6 million, a 51% increase from $3.7 million in the prior year period. Pro forma net income for the third quarter was a record $2.1 million, or $.04 per diluted share, an increase of 189% from $734,000, or $.02 per diluted share, for the prior year period and compares to $1.3 million, or $.03 per diluted share in the previous quarter. This pro-forma net income excludes a non-cash charge for the amortization of deferred compensation from stock options granted to employees and directors prior to the Company's recent IPO. Actual net income for the third quarter including the amortization of deferred compensation was $343,000, or $.01 per diluted share, compared to $614,000, or $.01 per diluted share, for the prior year period. Revenues of $46.5 million for the first nine months of fiscal 2000 increased 100% from $23.2 million in the prior year. Sales of optical subsystems of $31.2 million increased by 131% from $13.5 million in the prior year period. Sales of test instruments of $15.3 million increased by 57% from $9.7 million in the prior year period. Pro forma net income for the first nine-months of fiscal 2000 totaled $5.0 million, or $.11 per diluted share, an increase of 90% from $2.6 million, or $.06 per diluted share, in the prior year. Actual net income was $1.2 million, or $.03 per diluted share, compared to $2.4 million, or $.06 per diluted share, for the prior year period. Jerry Rawls, CEO of Finisar, commented, "Not only did Finisar achieve record sales and pro-forma profits in the third quarter, but the company also took some major steps toward greater customer diversification. EMC emerged in the quarter as our largest customer. In addition, several important Fibre Channel and Gigabit Ethernet equipment builders qualified Finisar as a supplier. The demand for fiber optic products remains strong in these gigabit networking markets." "Furthermore," added Rawls, "during the quarter we had important technical achievements, product introductions and subsequent product evaluations by key customers in the CATV digital return path market and the Opticity(TM) metropolitan data services market. These markets are significant new growth opportunities for Finisar." Safe Harbor Under the Private Securities Litigation Reform Act of 1995: The results of operations for the three and nine-month periods ended January 30, 2000 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 30, 2000, or any other future period. Period-to-period comparisons of results of operations should not be relied upon as indications of future performance. Other risks are detailed in the Company's registration statement on Form S-1 as filed with the Securities and Exchange Commission in conjunction with the Company's initial public offering and in the Company's current Form 10-Q filing. About Finisar: Finisar Corporation (Nasdaq: FNSR) is a leading provider of fiber optic subsystems and network performance test systems which enable high-speed data communications over Gigabit Ethernet local area networks (LANs), Fibre Channel storage area networks (SANs), metropolitan data network applications (MANs), and CATV. The Company is focused on the application of digital fiber optics to provide a broad line of high-performance, reliable, value-added optical subsystems for networking and storage equipment manufacturers. The Company's operations are located at 1308 Moffett Park Drive, Sunnyvale, CA For more information, visit the Company's web site at FINISAR CORPORATION PRO FORMA CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

2 Three Months Ended Nine Months Ended January 31, January 31, Revenues Optical subsystems $ 10,917 $ 5,271 $ 31,225 $ 13,503 Test equipment 5,593 3,714 15,241 9,678 Total revenues 16,510 8,985 46,466 23,181 Cost of revenues 8,122 4,171 22,252 9,895 Gross profit 8,388 4,814 24,214 13,286 Operating expenses: Research and development 3,878 1,890 10,051 5,048 Sales and marketing 1,643 1,160 5,080 2,864 General and administrative ,597 1,203 Total operating expenses 6,495 3,534 17,728 9,115 Income from operations 1,893 1,280 6,486 4,171 Interest income, net 1,342 (141) 1,169 (131) Other non-operating income (expense), net (16) (21) (72) 4 Income before income taxes 3,219 1,118 7,583 4,044 Provision for income taxes 1, ,583 1,410

3 Net income $ 2,124 $ 734 $ 5,000 $ 2,634 - basic $ 0.05 $ 0.03 $ 0.14 $ diluted $ 0.04 $ 0.02 $ 0.11 $ 0.06 calculation - basic 45,080 28,585 34,628 36,638 calculation - diluted 51,845 44,105 46,029 42,424 The above pro forma results for the third quarter and nine months ended January 30, 2000 have been adjusted to exclude the non-cash charge for the amortization of deferred compensation associated with the issuance of stock options prior to the Company's initial public offering in November Actual results including this charge are summarized below: FINISAR CORPORATION CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended January 31, January 31, Revenues $ 16,510 $ 8,985 $ 46,466 $ 23,181 Cost of revenues 8,122 4,171 22,252 9,895

4 Gross profit 8,388 4,814 24,214 13,286 Operating expenses: Research and development 3,878 1,890 10,051 5,048 Sales and marketing 1,643 1,160 5,080 2,864 General and administrative ,597 1,203 Amortization of deferred compensation 1, , Total operating expenses 8,276 3,654 21,519 9,334 Income from operations 112 1,160 2,695 3,952 Interest income, net 1,342 (141) 1,169 (131) Other non-operating income (expense), net (16) (21) (72) 4 Income before income taxes 1, ,792 3,825 Provision for income taxes 1, ,583 1,410 Net income $ 343 $ 614 $ 1,209 $ 2,415 - basic $ 0.01 $ 0.02 $ 0.03 $ diluted $ 0.01 $ 0.01 $ 0.03 $ 0.06 calculation - basic 45,080 28,585 34,628 36,638 calculation - diluted 51,845 44,105 46,029 42,424

5 FINISAR CORPORATION CONDENSED BALANCE SHEETS (In thousands) January 31, April 30, ASSETS unaudited audited Cash and short-term investments $ 134,115 $ 5,044 Accounts receivable, net 10,170 6,653 Inventories 15,087 5,236 Income tax receivable Deferred income taxes 2,360 1,047 Other current assets Total current assets 162,357 18,177 Property, plant, equipment, improvements, net 5,885 2,482 Other long-term assets Total assets $ 168,705 $ 20,955 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable 4,248 1,394 Accrued compensation 2,258 1,499 Other accrued liabilities 2,279 1,476

6 Income taxes payable 1, Capital lease obligations, current portion Total current liabilities 10,236 5,166 Notes payable, long-term portion -- 11,015 Capital lease obligations, long-term portion Other long-term liabilities Preferred stock -- 26,260 Common stock 194,313 4,304 Deferred stock compensation (11,143) (1,975) Notes receivable from stockholders (3,696) (1,521) Unrealized loss on short-term investments (57) -- Retained earnings (21,102) (22,311) Total preferred stock and stockholders' equity 158,315 4,757 Total liabilities and stockholders' equity $ 168,705 $ 20,955 ========= =========