Finisar Corporation Announces Fourth Quarter and Fiscal 2008 Financial Results

Market Wire, June, 2008

Finisar Corporation (NASDAQ: FNSR), a technology leader in gigabit fiber optic solutions for high-speed data networks, today announced financial results for its fourth quarter and fiscal year ended April 30, 2008.

FINANCIAL HIGHLIGHTS - FOURTH QUARTER ENDED APRIL 30, 2008

Financial Results

--  Fourth quarter revenues of $121.0 million, a new record for the
    Company, increased 7% from $112.7 million in the third quarter and 25% from
    $96.6 million in the fourth quarter of the prior year. These results were
    in line with the Company's preannouncement on May 16, 2008 wherein
    management indicated that fourth quarter revenues would be approximately
    $120 million.
--  Optics revenues of $111.4 million increased 8% from $103.0 million in
    the third quarter and 26% from $88.2 million in the prior year; while
    Network Tools revenues of $9.6 million declined slightly from $9.8 million
    in the prior quarter and increased 15% from $8.4 million in the fourth
    quarter of the prior year.
--  Revenues of $31.2 million from products for 10/40 Gbps applications
    increased 7% from $29.1 million in the prior quarter and 110% from $14.9
    million in the fourth quarter of the prior year.
--  Revenues of $50.6 million from products for 1-8 Gbps LAN/SAN
    applications increased 12% from $45.4 million in the prior quarter and 11%
    from $45.7 million in the fourth quarter of the prior year.
--  Gross margin of 32.9% compares to 33.4% in the third quarter and 32.3%
    in the fourth quarter of the prior year.
--  Net loss of $8.7 million, or $.03 per share, compares to a net loss of
    $10.6 million, or $.03 per share, in the third quarter and a net loss of
    $16.0 million, or $.05 per share, in the fourth quarter of the prior year.
--  Cash and short-term investments, plus other long-term investments
    which can be readily converted into cash, of $116.4 million decreased $6.0
    million from $122.4 million at January 27, 2008, but also reflects a
    reduction in outstanding debt of $14.2 million during the quarter and $2.5
    million in minority investments. Excluding these items, cash would have
    increased to approximately $133 million in the fourth quarter. The Company
    has classified certain of its investments as long-term based on its intent
    to hold these securities until maturity, although they can be readily sold
    if required.
    

Non-GAAP Financial Measures

--  Excluding certain items as described below, net income in the fourth
    quarter was $7.9 million, or $.03 per share, compared to $6.7 million, or
    $.02 per share, in the third quarter and $2.3 million, or $.01 per share,
    in the fourth quarter of the prior year.
--  Gross margin, excluding certain items, decreased sequentially to 37.4%
    from 38.2% in the third quarter and from 37.6% in the fourth quarter of the
    prior year. The decrease in gross margins compared to the prior quarter was
    primarily related to an unfavorable product mix as revenues from Network
    Tools declined as a percent of total revenues while revenues for short
    distance LAN/SAN applications increased in the quarter.
--  The Company generated approximately $17 million in EBITDA during the
    fourth quarter while investing approximately $9.5 million in capital
    expenditures.
    

The Company's operating results include a number of non-cash and cash charges and gains or losses principally related to acquisitions, the sale of minority investments, restructuring activities, impairments and financing transactions. For the fourth quarter of fiscal 2008, these items resulted in net charges of $16.6 million and included, among other items, $3.0 million in non-cash stock compensation expense; a $4.8 million non-cash charge related to an impairment in the value of patents that have been capitalized; a $3.1 million non-cash charge related to slow-moving and obsolete inventory; $1.6 million in amortization charges related to acquired developed technology and purchased intangibles arising from previous acquisitions; a $1.4 million loss related to minority investments; $1.2 million related to the amortization of discount on convertible notes issued in 2001; and a $721,000 cash charge associated with employee retention related to a previous acquisition. The charge for slow-moving and obsolete inventory was largely based on an estimate of the amount of inventory that will be unused after twelve months although a portion of that inventory may in fact be used beyond this period.

The Company excludes these and certain other items for the purpose of tracking its performance on a non-GAAP basis. Non-GAAP gross profit and non-GAAP net income (loss), as reported by the Company, give an indication of the Company's baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results.

The Company's non-GAAP net income for the fourth quarter was $7.9 million, or $.03 per share, compared to $6.7 million, or $.02 per share, in the third quarter and $2.3 million, or $.01 per share, in the fourth quarter of the prior year. On a non-GAAP basis, gross margins were 37.4% in the fourth quarter of fiscal 2008 compared to 38.2% in the third quarter and 37.6% in the fourth quarter of the prior year. The decrease in gross margins compared to the prior quarter is primarily related to an unfavorable product mix as revenues from Network Tools declined as a percent of total revenues while revenues for short distance LAN/SAN applications increased in the quarter.