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August 22, 2000 at 12:00 AM EDT

Finisar Corporation Announces Financial Results for First Quarter Ended July 31, 2000

Finisar Corporation Announces Financial Results for First Quarter Ended July 31, 2000 SUNNYVALE, Calif.--(BUSINESS WIRE)--Aug. 22, 2000--Finisar Corporation (Nasdaq:FNSR), a leading provider of gigabit fiber optic solutions for high-speed data networks, today reported financial results for the first quarter ended July 31, 2000.

Revenues for the first quarter of fiscal 2001 grew sequentially by 32% to a record $27.2 million from $20.7 million in the fourth quarter ended April 30, 2000. This represented a 96% increase from $13.9 million in the prior year period. Sales of optical subsystems grew sequentially by 42% to $22.0 million in the first quarter from $15.6 million in the fourth quarter and by 132% from $9.5 million in the prior year period. Sales of network test systems totaled $5.2 million, up sequentially from $5.1 million in the previous quarter and up 18% from $4.4 million in the prior year period.

Pro forma net income for the first quarter was a record $4.9 million, or $.03 per diluted share, an increase of 44% sequentially from $3.4 million, or $.02 per diluted share, in the fourth quarter and up 220% from $1.5 million, or $.01 per diluted share, in the prior year period. 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 IPO in November 1999. If this amortization of deferred compensation is included, net income for the fourth quarter was $3.2 million, or $.02 per diluted share, compared to $1.3 million, or $.01 per diluted share, for the prior year period.

"Our revenue growth within optical subsystems was broadly based for both Fibre Channel and Gigabit Ethernet applications," said Jerry Rawls, Finisar's President and CEO. "Sales to our Fibre Channel customers grew sequentially by 33% while sales to Gigabit Ethernet customers grew by 53% and represented approximately 13% of total revenues in the quarter."

"We are also pleased to report that we have booked several orders for our digital CATV return path subsystem," added Rawls. "Shipments of that product should begin during the second fiscal quarter."

The Company announced on August 16, 2000 that it had entered into a definitive agreement to acquire privately held Sensors Unlimited located in Princeton, New Jersey. The Company anticipates that this transaction will close in October, 2000. Accordingly, the results of Sensors Unlimited will not be included with those of the Company until that time.

Safe Harbor Under the Private Securities Litigation Reform Act of 1995:

The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding Finisar Corporation's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements included in this press release are based upon information available to Finisar Corporation as of the date hereof, and Finisar Corporation assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These risks are set forth in Finisar's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on July 31, 2000, and other reports filed from time to time with the Securities and Exchange Commission.

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 headquarters are located at 1308 Moffett Park Drive, Sunnyvale, CA 94089. For more information, visit the Company's web site at http://www.finisar.com.

FINISAR CORPORATION

              PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

                (In thousands, except per share amounts)

                             August 22, 2000

  

                                                  Three Months Ended

                                                       July 31,

                                                ----------------------

                                                   2000        1999

                                                ----------  ----------

 Revenues

  Optical subsystems                             $ 22,038     $ 9,480

  Test systems                                      5,174       4,399

                                                ----------  ----------

    Total revenues                                 27,212      13,879

  

 Cost of revenues                                  16,471       6,252

                                                ----------  ----------

  

 Gross profit                                      10,741       7,627

                                                    39.5%       55.0%

 Operating expenses:

  Research and development                          4,314       2,840

  Sales and marketing                               2,507       1,542

  General and administrative                        1,385         759

                                                ----------  ----------

    Total operating expenses                        8,206       5,141

  

 Income from operations                             2,535       2,486

 Interest income, net                               4,445         (89)

 Other non-operating income (expense), net            (22)        (28)

                                                ----------  ----------

 Income before income taxes                         6,958       2,369

 Provision for income taxes                         2,036         829

                                                ----------  ----------

  

 Net income                                       $ 4,922     $ 1,540

                                                ==========  ==========

  

 Net income per share - basic                     $  0.03     $  0.02

                                                ==========  ==========

 Net income per share - diluted                   $  0.03     $  0.01

                                                ==========  ==========

  

 Shares used in per-share calculation-basic       149,951      88,392

 Shares used in per-share calculation-diluted     165,313     127,830

  

  

     The above pro forma results for the three months ended July 31,

 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 1999. 

     Results including this charge are summarized below:

  

  

                           FINISAR CORPORATION

                   CONDENSED STATEMENTS OF OPERATIONS

                (In thousands, except per share amounts)

                             August 22, 2000

  

                                                  Three Months Ended

                                                       July 31,

                                                ----------------------

                                                   2000        1999

                                                ----------  ----------

 Revenues

  Optical subsystems                            $  22,038    $   9,480

  Test systems                                      5,174        4,399

                                                ----------  ----------

    Total revenues                                 27,212       13,879

  

 Cost of revenues                                  16,471        6,252

                                                ----------  ----------

  

 Gross profit                                      10,741        7,627

  

 Operating expenses:

   Research and development                         4,314        2,840

   Sales and marketing                              2,507        1,542

   General and administrative                       1,385          759

   Amortization of deferred compensation            1,699          287

                                                ----------  ----------

     Total operating expenses                       9,905        5,428

  

 Income from operations                               836        2,199

 Interest income, net                               4,445          (89)

 Other non-operating income (expense), net            (22)         (28)

                                                ----------  ----------

 Income before income taxes                         5,259        2,082

 Provision for income taxes                         2,036          829

                                                ----------  ----------

  

 Net income                                     $   3,223    $   1,253

                                                ==========  ==========

  

 Net income per share - basic                   $    0.02    $    0.01

                                                ==========  ==========

 Net income per share - diluted                 $    0.02    $    0.01

                                                ==========  ==========

  

 Shares used in per-share calculation - basic     149,951       88,392

 Shares used in per-share calculation - diluted   165,313      127,830

  

  

                           FINISAR CORPORATION

                        CONDENSED BALANCE SHEETS

                             (In thousands)

                             August 22, 2000

  

                                            July 31,     April 30,

                                              2000          2000

 ASSETS                                    ----------   ----------

   Cash and short-term investments         $ 315,105    $ 320,735

   Accounts receivable, net                   20,215       14,348

   Inventories                                23,594       16,494

   Income tax receivable                         148          148

   Other receivables                           1,079          151

   Deferred tax asset                          2,524        2,653

   Other current assets                          473          278

                                           ----------   ----------

      Total current assets                   363,138      354,807

   Property, plant, equipment and 

    improvements, net                         11,694        9,426

   Other long-term assets                        733          809

                                           ----------   ----------

   Total assets                            $ 375,565    $ 365,042

                                           ==========   ==========

  

 LIABILITIES AND STOCKHOLDERS' EQUITY

   Accounts payable                            8,397        5,908

   Accrued compensation                        1,934        3,001

   Other accrued liabilities                   3,163        3,065

   Income taxes payable                        2,099          122

                                           ----------   ----------

      Total current liabilities               15,593       12,096

   Other long-term liabilities                   132          132

   Deferred tax liability                        392          392

  

   Common stock                              386,087      384,686

   Deferred stock compensation                (7,705)      (9,404)

   Notes receivable from stockholders         (2,921)      (3,248)

   Unrealized loss on 

    short-term investments                       194         (182)

   Retained earnings                         (16,207)     (19,430)

                                           ----------   ----------

      Total preferred stock

       and stockholders' equity              359,448      352,422

                                           ----------   ----------

      Total liabilities and

       stockholders' equity                $ 375,565    $ 365,042

                                           ==========   ==========