UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
__________________________________________________ 
FORM 8-K
 
 __________________________________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 22, 2015
 
__________________________________________________ 
INFINERA CORPORATION
(Exact name of registrant as specified in its charter)
 
__________________________________________________ 

					
 	 	 	 	 	
Delaware	 	001-33486	 	77-0560433	
(State or other jurisdiction of
incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
140 Caspian Court
Sunnyvale, CA 94089
(Address of principal executive offices, including zip code)
(408) 572-5200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
 
__________________________________________________ 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

	

 

		
Item 2.02	Results of Operations and Financial Condition.	
On July 22, 2015, Infinera Corporation issued a press release announcing selected unaudited financial results for its second quarter ended June 27, 2015. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished under Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such a filing.
The press release furnished herewith as Exhibit 99.1 refers to certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the press release.

		
Item 9.01	Financial Statements and Exhibits.	
(d)	Exhibits.	

	
			
Exhibit No.	  	Description	
 	 	
99.1	  	Press release dated July 22, 2015.	

 

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

 	 	 	 	INFINERA CORPORATION	
 	 	 	
Date: July 22, 2015	 	By:	 	/s/ BRAD FELLER	
 	 	 	 	Brad Feller
Chief Financial Officer	

EXHIBIT INDEX

			
Exhibit No.	  	Description	
 	 	
99.1	  	Press release dated July 22, 2015.	

Exhibit 99.1

Infinera Corporation Reports Second Quarter 2015 Financial Results

Sunnyvale, California - July 22, 2015 - Infinera Corporation (NASDAQ: INFN), provider of Intelligent Transport Networks, today released financial results for the second quarter of 2015 ended June 27, 2015.

Revenue for the quarter was $207.3 million compared to $186.9 million in the first quarter of 2015 and $165.4 million in the second quarter of 2014.

GAAP gross margin for the quarter was 46.7% compared to 47.2% in the first quarter of 2015 and 42.5% in the second quarter of 2014. GAAP operating margin for the quarter was 8.0% compared to an operating margin of 8.1% in the first quarter of 2015 and an operating margin of 4.9% in the second quarter of 2014.

GAAP net income for the quarter was $17.9 million, or $0.13 per diluted share, compared to $12.4 million, or $0.09 per diluted share, in the first quarter of 2015, and $4.8 million, or $0.04 per diluted share, in the second quarter of 2014.

Non-GAAP gross margin for the quarter was 47.4% compared to 47.8% in the first quarter of 2015 and 43.3% in the second quarter of 2014. Non-GAAP operating margin for the quarter was 13.0% compared to 12.2% in the first quarter of 2015 and 9.0% in the second quarter of 2014.

Non-GAAP net income for the quarter was $25.7 million, or $0.18 per diluted share, compared to $22.1 million, or $0.16 per diluted share, in the first quarter of 2015, and $13.5 million, or $0.11 per diluted share, in the second quarter of 2014.

The above non-GAAP measures exclude non-cash stock-based compensation expenses, acquisition-related costs, acquisition-related forward contract gains and the amortization of debt discount on Infinera’s 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.
    
“Our outstanding second quarter results were driven by robust demand across multiple verticals, as customers continued to build next generation networks with Infinera. Differentiated products, exceptional customer experience and a vertical business model enable us to continue to grow our top line rapidly and our bottom line even faster,” said Tom Fallon, Infinera's Chief Executive Officer. “With the emergence of new cloud architectures, the strategic importance of optical transport has never been higher. Our technology leadership and superior service experience, puts Infinera in a particularly favorable position to benefit from this ongoing evolution in optical networking.” 

Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its second quarter of 2015 results and its outlook for the third quarter of 2015 today at 5:30 p.m. Eastern Time (2:30 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-800-593-9940 (toll free) or 1-630-395-0029 (international), pass-code PIC . A live webcast of the conference call will also be accessible from the Investor Relations section of Infinera’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 1-800-677-1310. International parties can access the replay at 1-203-369-3644.

	
		
Contacts:	 	
Media:
Anna Vue	Investors:
Jeff Hustis	
Tel. +1 (916) 595-8157	Tel. +1 (408) 213-7150	
avue@infinera.com	jhustis@infinera.com	

About Infinera
Infinera provides Intelligent Transport Networks for network operators, enabling reliable, easy to operate, high-capacity optical networks. Infinera leverages its unique large scale photonic integrated circuits to deliver innovative optical networking solutions for the most demanding network environments. Intelligent Transport Networks enable carriers, Cloud network operators, governments and enterprises to automate, converge and scale their data center, metro, long-haul and subsea optical networks. To learn more about Infinera visit www.infinera.com, follow us on Twitter @Infinera and read Infinera's latest blog posts at blog.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, including Infinera’s ability to continue to grow its top line rapidly and its bottom line even faster; Infinera’s belief that the strategic importance of optical transport has never been higher; and Infinera’s ability to remain in a particularly favorable position to benefit from this ongoing evolution in optical networking. 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. 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 Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include delays in the development and introduction of Infinera’s products and market acceptance of these products; the effect of changes in product pricing or mix, and/or increases in component costs could have on Infinera’s gross margin; Infinera’s reliance on single-source suppliers; aggressive business tactics by Infinera’s competitors; Infinera’s ability to protect Infinera’s intellectual property; claims by others that Infinera infringes their intellectual property; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery or demand of products; Infinera’s ability to respond to rapid technological changes; and other risks detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in its Quarterly Report on Form 10-Q for the quarter ended on March 28, 2015 as filed with the SEC on May 4, 2015, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s 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, acquisition-related costs, acquisition-related forward contract gains and amortization of debt discount on Infinera’s convertible senior notes. Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its 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 its 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, basic and diluted net income per share, gross margin or operating 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.” Infinera anticipates disclosing forward-looking non-GAAP information in its conference call to discuss its second quarter 2015 results, including an estimate of non-GAAP earnings for the third quarter of 2015 that excludes non-cash stock-based compensation expenses, acquisition-related costs, acquisition-related forward contract gains or losses, and amortization of debt discount on Infinera’s 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 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	 	Six Months Ended	
 	 	June 27, 2015	 	June 28, 2014	 	June 27, 2015	 	June 28, 2014	
Revenue:	 	 	 	 	 	 	 	 	
Product	 	$	178,982		 	$	142,364		 	$	339,825		 	$	266,606		
Services	 	28,364		 	23,035		 	54,383		 	41,608		
Total revenue	 	207,346		 	165,399		 	394,208		 	308,214		
Cost of revenue:	 	 	 	 	 	 	 	 	
Cost of product	 	99,491		 	85,906		 	188,997		 	164,344		
Cost of services	 	11,059		 	9,240		 	20,303		 	15,211		
Total cost of revenue	 	110,550		 	95,146		 	209,300		 	179,555		
Gross profit	 	96,796		 	70,253		 	184,908		 	128,659		
Operating expenses:	 	 	 	 	 	 	 	 	
Research and development	 	43,421		 	31,738		 	82,678		 	61,084		
Sales and marketing	 	21,535		 	18,082		 	42,577		 	35,944		
General and administrative	 	15,310		 	12,381		 	27,966		 	24,635		
Total operating expenses	 	80,266		 	62,201		 	153,221		 	121,663		
Income from operations	 	16,530		 	8,052		 	31,687		 	6,996		
Other income (expense), net:	 	 	 	 	 	 	 	 	
Interest income	 	551		 	337		 	965		 	673		
Interest expense	 	(2,947	)	 	(2,728	)	 	(5,837	)	 	(5,405	)	
Other gain (loss), net	 	4,780		 	(264	)	 	5,081		 	(993	)	
Total other income (expense), net	 	2,384		 	(2,655	)	 	209		 	(5,725	)	
Income before income taxes	 	18,914		 	5,397		 	31,896		 	1,271		
Provision for income taxes	 	1,008		 	617		 	1,624		 	865		
Net income	 	$	17,906		 	$	4,780		 	$	30,272		 	$	406		
Net income per common share:	 			 			 	 	 	 	
Basic	 	$	0.14		 	$	0.04		 	$	0.23		 	$	0.00		
Diluted	 	$	0.13		 	$	0.04		 	$	0.22		 	$	0.00		
Weighted average shares used in computing net income per common share:	 	 	 	 	 	 	 	 	
Basic	 	130,349		 	123,128		 	129,094		 	122,240		
Diluted	 	140,642		 	126,758		 	138,973		 	126,112		

Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages and per share data)
(Unaudited)

	
																					
 	 	Three Months Ended	 	Six Months Ended	
 	 	June 27, 2015	 	March 28, 2015	 	June 28, 2014	 	June 27, 2015	 	June 28, 2014	
Reconciliation of Gross Profit:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	$	96,796		 	$	88,112		 	$	70,253		 	$	184,908		 	$	128,659		
Stock-based compensation (1)	 	1,493		 	1,243		 	1,360		 	2,736		 	2,644		
Non-GAAP as adjusted	 	$	98,289		 	$	89,355		 	$	71,613		 	$	187,644		 	$	131,303		
Reconciliation of Gross Margin:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	46.7	%	 	47.2	%	 	42.5	%	 	46.9	%	 	41.7	%	
Stock-based compensation (1)	 	0.7	%	 	0.6	%	 	0.8	%	 	0.7	%	 	0.9	%	
Non-GAAP as adjusted	 	47.4	%	 	47.8	%	 	43.3	%	 	47.6	%	 	42.6	%	
Reconciliation of Income from Operations:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	$	16,530		 	$	15,157		 	$	8,052		 	$	31,687		 	$	6,996		
Stock-based compensation (1)	 	8,209		 	7,208		 	6,804		 	15,417		 	13,476		
Acquisition-related costs (2)	 	2,264		 	462		 	—		 	2,726		 	—		
Non-GAAP as adjusted	 	$	27,003		 	$	22,827		 	$	14,856		 	$	49,830		 	$	20,472		
Reconciliation of Operating Margin:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	8.0	%	 	8.1	%	 	4.9	%	 	8.0	%	 	2.3	%	
Stock-based compensation (1)	 	3.9	%	 	3.9	%	 	4.1	%	 	3.9	%	 	4.3	%	
Acquisition-related costs (2)	 	1.1	%	 	0.2	%	 	0.0	%	 	0.7	%	 	0.0	%	
Non-GAAP as adjusted	 	13.0	%	 	12.2	%	 	9.0	%	 	12.6	%	 	6.6	%	
Reconciliation of Net Income:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	$	17,906		 	$	12,366		 	$	4,780		 	$	30,272		 	$	406		
Stock-based compensation (1)	 	8,209		 	7,208		 	6,804		 	15,417		 	13,476		
Acquisition-related costs (2)	 	2,264		 	462		 	—		 	2,726		 	—		
Acquisition-related forward contract gain (3)	 	(4,782	)	 	—		 	—		 	(4,782	)	 	—		
Amortization of debt discount (4)	 	2,109		 	2,057		 	1,908		 	4,166		 	3,768		
Non-GAAP as adjusted	 	$	25,706		 	$	22,093		 	$	13,492		 	$	47,799		 	$	17,650		
Net Income per Common Share - Basic:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	$	0.14		 	$	0.10		 	$	0.04		 	$	0.23		 	$	0.00		
Non-GAAP as adjusted	 	$	0.20		 	$	0.17		 	$	0.11		 	$	0.37		 	$	0.14		
Net Income per Common Share - Diluted:	 	 	 	 	 	 	 	 	 	 	
U.S. GAAP as reported	 	$	0.13		 	$	0.09		 	$	0.04		 	$	0.22		 	$	0.00		
Non-GAAP as adjusted	 	$	0.18		 	$	0.16		 	$	0.11		 	$	0.34		 	$	0.14		
Weighted Average Shares Used in Computing Net Income per Common Share - U.S. GAAP:	 	 	 	 	 	 	 	 	 	 	
Basic	 	130,349		 	127,840		 	123,128		 	129,094		 	122,240		
Diluted	 	140,642		 	137,304		 	126,758		 	138,973		 	126,112		
Weighted Average Shares Used in Computing Net Income per Common Share - Non-GAAP:	 	 	 	 	 	 	 	 	 	 	
Basic	 	130,349		 	127,840		 	123,128		 	129,094		 	122,240		
Diluted	 	140,642		 	137,304		 	126,758		 	138,973		 	126,112		

_____________________________

(1)  	Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification 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 (in thousands):	

																					
 	 	Three Months Ended	 	Six Months Ended	
 	 	June 27, 2015	 	March 28, 2015	 	June 28, 2014	 	June 27, 2015	 	June 28, 2014	
Cost of revenue	 	$	613		 	$	482		 	$	477		 	$	1,095		 	$	929		
Research and development	 	2,817		 	2,578		 	2,080		 	5,395		 	4,218		
Sales and marketing	 	2,070		 	1,721		 	1,815		 	3,791		 	3,535		
General and administration	 	1,829		 	1,666		 	1,549		 	3,495		 	3,079		
 	 	7,329		 	6,447		 	5,921		 	13,776		 	11,761		
Cost of revenue - amortization from balance sheet*	 	880		 	761		 	883		 	1,641		 	1,715		
Total stock-based compensation expense	 	$	8,209		 	$	7,208		 	$	6,804		 	$	15,417		 	$	13,476		

*	Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods and recognized in the current period.	

(2)  	In April 2015, Infinera announced its offer to acquire Transmode, a leader in metro packet-optical networking. Acquisition-related costs include legal and other professional fees and have been adjusted in arriving at Infinera's non-GAAP results because management believes that these expenses are not indicative of ongoing operating performance and provides a better indication of Infinera's underlying business performance.	
		
(3)  	In April 2015, Infinera entered into a foreign currency forward contract with a notional amount of SEK 831 million ($95.3 million) at an exchange rate of 8.7210 to hedge currency exposures associated with the cash portion of the offer to acquire Transmode. Changes in the fair value of this forward contract will impact Infinera's financial statements for the interim reporting periods prior to the close of the offer. As a result, these gains have been adjusted in arriving at Infinera's non-GAAP results because management believes that these gains are not indicative of ongoing operating performance and provides a better indication of Infinera's underlying business performance.	
		
(4)  	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, Infinera is 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 its $150 million 1.75% convertible debt issuance in May 2013 over the term of the notes. These amounts have been adjusted in arriving at Infinera's non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and provides a better indication of Infinera's underlying business performance.	

Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)

									
 	 	June 27, 2015	 	December 27, 2014	
ASSETS	 	 	 	 	
Current assets:	 	 	 	 	
Cash and cash equivalents	 	$	198,018		 	$	86,495		
Short-term investments	 	199,204		 	239,628		
Accounts receivable, net of allowance for doubtful accounts of $47 in 2015 and $38 in 2014	 	109,448		 	154,596		
Inventory	 	157,181		 	146,500		
Prepaid expenses and other current assets	 	29,368		 	24,636		
Total current assets	 	693,219		 	651,855		
Property, plant and equipment, net	 	86,981		 	81,566		
Long-term investments	 	57,519		 	59,233		
Cost-method investment	 	14,500		 	14,500		
Long-term restricted cash	 	5,171		 	5,460		
Other non-current assets	 	6,150		 	5,402		
Total assets	 	$	863,540		 	$	818,016		
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	
Current liabilities:	 	 	 	 	
Accounts payable	 	$	38,807		 	$	61,533		
Accrued expenses	 	30,114		 	26,441		
Accrued compensation and related benefits	 	33,856		 	38,795		
Accrued warranty	 	12,576		 	12,241		
Deferred revenue	 	37,261		 	35,321		
Total current liabilities	 	152,614		 	174,331		
Long-term debt, net	 	121,059		 	116,894		
Accrued warranty, non-current	 	15,863		 	14,799		
Deferred revenue, non-current	 	13,035		 	10,758		
Other long-term liabilities	 	21,179		 	19,327		
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 June 27, 2015 and December 27, 2014	 	 	 	 	
Issued and outstanding shares - 131,164 as of June 27, 2015 and 126,160 as of December 27, 2014	 	131		 	126		
Additional paid-in capital	 	1,104,672		 	1,077,225		
Accumulated other comprehensive loss	 	(4,459	)	 	(4,618	)	
Accumulated deficit	 	(560,554	)	 	(590,826	)	
Total stockholders’ equity	 	539,790		 	481,907		
Total liabilities and stockholders’ equity	 	$	863,540		 	$	818,016		

Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)  

									
 	 	Six Months Ended	
 	 	June 27, 2015	 	June 28, 2014	
Cash Flows from Operating Activities:	 	 	 	 	
Net income	 	$	30,272		 	$	406		
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	 	 	 	 	
Depreciation and amortization	 	12,850		 	12,813		
Amortization of debt discount and issuance costs	 	4,524		 	4,092		
Amortization of premium on investments	 	1,792		 	1,747		
Unrealized gain from forward contract	 	(4,782	)	 	—		
Stock-based compensation expense	 	15,417		 	13,476		
Other loss (gain)	 	2		 	(22	)	
Changes in assets and liabilities:	 	 	 	 	
Accounts receivable	 	45,140		 	(20,043	)	
Inventory	 	(12,774	)	 	(8,107	)	
Prepaid expenses and other assets	 	(1,080	)	 	(3,389	)	
Accounts payable	 	(23,597	)	 	(6,428	)	
Accrued liabilities and other expenses	 	1,491		 	(3,318	)	
Deferred revenue	 	4,216		 	(1,448	)	
Accrued warranty	 	1,399		 	5,040		
Net cash provided by (used in) operating activities	 	74,870		 	(5,181	)	
Cash Flows from Investing Activities:	 	 	 	 	
Purchase of available-for-sale investments	 	(112,940	)	 	(158,496	)	
Proceeds from sale of available-for-sale investments	 	9,998		 	9,824		
Proceeds from maturities and calls of investments	 	143,483		 	116,290		
Purchase of property and equipment	 	(16,098	)	 	(9,985	)	
Change in restricted cash	 	290		 	(491	)	
Net cash provided by (used in) investing activities	 	24,733		 	(42,858	)	
Cash Flows from Financing Activities:	 	 	 	 	
Proceeds from issuance of common stock	 	16,488		 	8,401		
Minimum tax withholding paid on behalf of employees for net share settlement	 	(4,561	)	 	(1,619	)	
Net cash provided by financing activities	 	11,927		 	6,782		
Effect of exchange rate changes on cash	 	(7	)	 	234		
Net change in cash and cash equivalents	 	111,523		 	(41,023	)	
Cash and cash equivalents at beginning of period	 	86,495		 	124,330		
Cash and cash equivalents at end of period	 	$	198,018		 	$	83,307		
Supplemental disclosures of cash flow information:	 	 	 	 	
Cash paid for income taxes, net of refunds	 	$	1,481		 	$	482		
Cash paid for interest	 	$	1,313		 	$	1,313		
Supplemental schedule of non-cash financing activities:	 	 	 	 	
Transfer of inventory to fixed assets	 	$	2,205		 	$	978		

Infinera Corporation
Supplemental Financial Information
(Unaudited)

	
																									
 	 	Q3'13	 	Q4'13	 	Q1'14	 	Q2'14	 	Q3'14	 	Q4'14	 	Q1'15	 	Q2'15	
Revenue ($ Mil)	 	$142.0	 	$139.1	 	$142.8	 	$165.4	 	$173.6	 	$186.3	 	$186.9	 	$207.3	
Gross Margin % (1)	 	49.2	%	 	41.4	%	 	41.8	%	 	43.3	%	 	44.2	%	 	46.1	%	 	47.8	%	 	47.4	%	
Revenue Composition:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic %	 	73	%	 	54	%	 	78	%	 	82	%	 	70	%	 	58	%	 	68	%	 	75	%	
International %	 	27	%	 	46	%	 	22	%	 	18	%	 	30	%	 	42	%	 	32	%	 	25	%	
Customers >10% of Revenue	 	3		 	1		 	2		 	2		 	1		 	1		 	2		 	3		
Cash Related Information:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash from (Used in) Operations ($ Mil)	 	$12.8	 	$25.8	 	-$15.4	 	$10.3	 	$22.3	 	$18.7	 	$19.8	 	$55.0	
Capital Expenditures ($ Mil)	 	$4.2	 	$7.5	 	$5.6	 	$4.4	 	$4.4	 	$8.8	 	$7.4	 	$8.7	
Depreciation & Amortization
($ Mil)	 	$5.9	 	$6.0	 	$6.3	 	$6.5	 	$6.5	 	$6.6	 	$6.6	 	$6.3	
DSO’s	 	56		 	66		 	68		 	66		 	71		 	76		 	64		 	48		
Inventory Metrics:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Raw Materials ($ Mil)	 	$12.1	 	$14.3	 	$13.2	 	$11.2	 	$11.6	 	$15.2	 	$22.4	 	$30.2	
Work in Process ($ Mil)	 	$45.7	 	$49.2	 	$47.8	 	$40.6	 	$44.4	 	$50.0	 	$45.9	 	$43.9	
Finished Goods ($ Mil)	 	$65.7	 	$60.2	 	$65.5	 	$79.1	 	$74.8	 	$81.3	 	$88.9	 	$83.1	
Total Inventory ($ Mil)	 	$123.5	 	$123.7	 	$126.5	 	$130.9	 	$130.8	 	$146.5	 	$157.2	 	$157.2	
Inventory Turns (2)	 	2.3		 	2.6		 	2.6		 	2.9		 	3.0		 	2.7		 	2.5		 	2.8		
Worldwide Headcount	 	1,296		 	1,318		 	1,346		 	1,396		 	1,456		 	1,495		 	1,530		 	1,598		

	

		
(1)  	Amounts reflect non-GAAP results. Non-GAAP adjustments include non-cash stock-based compensation expense.	

(2)  	Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for non-cash stock-based compensation expense divided by the average inventory for the quarter.