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Calix Reports Second Quarter 2011 Financial Results

July 21, 2011

PETALUMA, CA, Jul 21, 2011 (MARKETWIRE via COMTEX) --

Calix, Inc. (NYSE: CALX) today announced unaudited financial results for the second quarter ended June 25, 2011. Revenue for the second quarter of 2011 was $98.0 million, an increase of 36.7% compared to $71.7 million for the second quarter of 2010.

"Calix set a new revenue record in Q2 as we built upon favorable secular trends affecting our markets," said Carl Russo, president and CEO of Calix. "In our first full quarter of operations after closing our acquisition, we executed well across all areas of the business, and reported results that were ahead of expectations."

Non-GAAP net income for the second quarter of 2011 was $7.8 million, or $0.16 per fully diluted share, an increase of 40.8% compared to non-GAAP net income of $5.5 million, or $0.14 per fully diluted share, for the second quarter of 2010. A reconciliation of GAAP and non-GAAP results is included as part of this release.

GAAP net loss for the second quarter of 2011 was $17.6 million, or $(0.38) per basic and diluted share, compared to a GAAP net loss of $3.2 million, or $(0.09) per basic and diluted share for the second quarter of 2010. A reconciliation of our Q2 2011 operating results from non-GAAP to GAAP is provided below:

                            Merger                   Amortization
                            Related                       of
                           and Other   Stock-Based    Intangible
                Non-GAAP   Expenses   Compensation      Assets       GAAP
                --------  ----------  ------------  -------------  --------
Revenue         $ 97,959  $        -  $          -  $           -  $ 97,959

Cost of revenue   54,568       9,709           331          3,188    67,796
                --------  ----------  ------------  -------------  --------
Gross profit      43,391      (9,709)         (331)        (3,188)   30,163

Operating
 expense          35,504       4,408         4,993          2,795    47,700
                --------  ----------  ------------  -------------  --------
Operating
 income (loss)     7,887     (14,117)       (5,324)        (5,983)  (17,537)

Other income /
 (expense), net        5           -             -              -         5
                --------  ----------  ------------  -------------  --------
Income (loss)
 before taxes      7,892     (14,117)       (5,324)        (5,983)  (17,532)
Provision for
 income taxes        114           -             -              -       114
                --------  ----------  ------------  -------------  --------
Net income
 (loss)         $  7,778  $  (14,117) $     (5,324) $      (5,983) $(17,646)
                ========  ==========  ============  =============  ========

Weighted
 average basic
 and diluted
 shares used to
 compute GAAP
 net loss per
 common share                                                        46,050
                                                                   ========

Weighted
 average
 diluted shares
 used to
 compute non-
 GAAP net
 income per
 common share     48,139      48,139        48,139         48,139
                ========  ==========  ============  =============

GAAP net loss
 per common
 share                                                             $  (0.38)
                                                                   ========

Non-GAAP net
 income (loss)
 per share      $   0.16  $    (0.29) $      (0.11) $       (0.12)
                ========  ==========  ============  =============


Conference Call

In conjunction with this announcement, Calix will host a conference call at 1:30 p.m. PDT (4:30 p.m. EDT) today to discuss its second quarter 2011 financial results. A live audio webcast and replay of the call will be available in the Investor Relations section of the Calix web site at http://investor-relations.calix.com.

Live call access information:

--  Dial-in number: (800) 320-2978 (U.S.) or (617) 614-4923 (outside the
    U.S.)
--  Passcode: 80168277

Replay call access information:

--  Replay call dial-in: (888) 286-8010 (U.S.) or (617) 801-6888 (outside
    the U.S.)
--  Passcode: 82555257

The conference call and webcast will include forward looking information.

About Calix

Calix (NYSE: CALX) is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enable communications service providers worldwide to be the broadband provider of choice to their subscribers. For more information, visit the Calix website at www.calix.com.

Use of Non-GAAP Financial Information

The Company uses certain non-GAAP financial measures in this press release to supplement its consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP measures include non-GAAP net income and non-GAAP basic and diluted income per share. These non-GAAP measures are provided to enhance the reader's understanding of the Company's operating performance as they primarily exclude certain non-cash charges for stock-based compensation and amortization of acquisition-related intangible assets, and non-recurring merger-related and other expenses, which the Company believes are not indicative of its core operating results. Merger-related and other expenses largely include the charge resulting from the required revaluation of Occam inventory to its estimated fair value, legal and professional expenses, and severance and integration-related expenses and inventory-related charges associated with our merger with Occam and to a lesser extent the settlement of litigation. Management believes that the non-GAAP measures used in this press release provide investors with important perspectives into the Company's ongoing business performance and management uses these non-GAAP measures to evaluate financial results and to establish operational goals. The presentation of these non-GAAP measures is not meant to be a substitute for results presented in accordance with GAAP, but rather should be evaluated in conjunction with these results. A reconciliation of the non-GAAP results to the most directly comparable GAAP results is provided in the financial schedules portion of this press release. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

              Condensed Consolidated Statements of Operations
                               (in thousands)

                                     Three Months Ended   Six Months Ended
                                     ------------------  ------------------
                                     June 25,  June 26,  June 25,  June 26,
                                       2011      2010      2011      2010
                                     --------  --------  --------  --------
                                         (unaudited)         (unaudited)
Revenue                              $ 97,959  $ 71,653  $169,429  $119,856
Cost of revenue:
     Products and services(1)          54,899    41,855    94,207    72,026
     Merger-related expenses            9,709         -    19,966         -
     Amortization of intangible
      assets                            3,188     1,360     4,704     2,720
                                     --------  --------  --------  --------
Total cost of revenue                  67,796    43,215   118,877    74,746
                                     --------  --------  --------  --------
     Gross profit                      30,163    28,438    50,552    45,110

Operating expenses:
     Research and development(1)       18,584    13,086    33,623    24,933
     Sales and marketing(1)            14,172    10,184    26,238    18,606
     General and administrative(1)      6,667     7,423    15,975    12,171
     Merger-related and other
      expenses(1)                       5,482         -    11,523         -
     Amortization of intangible
      assets                            2,795       185     3,464       370
                                     --------  --------  --------  --------
Total operating expenses               47,700    30,878    90,823    56,080
                                     --------  --------  --------  --------
Loss from operations                  (17,537)   (2,440)  (40,271)  (10,970)

Other income (expense):
     Interest income                       26       103        69       177
     Interest expense                     (45)     (620)      (91)   (1,093)
     Change in fair value of
      preferred stock warrants              -         -         -      (173)
     Other income                          24        (2)       29         9
                                     --------  --------  --------  --------
Loss before provision for income
 taxes                                (17,532)   (2,959)  (40,264)  (12,050)
Provision for income taxes                114       243       138       414
                                     --------  --------  --------  --------
Net loss                              (17,646)   (3,202)  (40,402)  (12,464)
Preferred stock dividends                   -         -         -       900
                                     --------  --------  --------  --------
Net loss attributable to common
 stockholders                        $(17,646) $ (3,202) $(40,402) $(13,364)
                                     ========  ========  ========  ========

Net loss per common share:
     Basic and diluted               $  (0.38) $  (0.09) $  (0.92) $  (0.63)
                                     ========  ========  ========  ========
     Pro forma basic and diluted     $  (0.38) $  (0.09) $  (0.92) $  (0.36)
                                     ========  ========  ========  ========

Weighted average number of shares
 used to compute net loss per common
 share:
     Basic and diluted                 46,050    37,212    43,697    21,305
                                     ========  ========  ========  ========
     Pro forma basic and diluted (2)   46,050    37,212    43,697    34,614
                                     ========  ========  ========  ========

-
(1)  Includes stock-based
      compensation as follows:       Three Months Ended   Six Months Ended
                                     ------------------  ------------------
                                     June 25,  June 26,  June 25,  June 26,
                                       2011      2010      2011      2010
                                     --------  --------  --------  --------
                                         (unaudited)         (unaudited)
     Cost of revenue                 $    331  $    484  $    835  $    624
     Research and development           1,233     1,686     2,875     2,256
     Sales and marketing                  831     1,247     2,129     1,681
     General and administrative         1,855     3,764     6,438     5,427
     Merger-related                     1,074         -     1,164         -
                                     --------  --------  --------  --------
                                     $  5,324  $  7,181  $ 13,441  $  9,988
                                     ========  ========  ========  ========

(2)  For the six months ended June 26, 2010, includes outstanding common
      shares and common shares resulting from the assumed conversion of
      preferred shares as if conversion occurred at the beginning of the
      first quarter of 2010.




                 Reconciliation of GAAP to Non-GAAP Results
              (Unaudited, in thousands except per share data)

                                     Three Months Ended   Six Months Ended
                                     ------------------  ------------------
                                     June 25,  June 26,  June 25,  June 26,
                                       2011      2010      2011      2010
                                     --------  --------  --------  --------


GAAP net loss                        $(17,646) $ (3,202) $(40,402) $(13,364)
Adjustments to reconcile GAAP net
 loss to non-GAAP net income (loss):
Stock-based compensation                4,250     7,181    12,277     9,988
Stock-based compensation (MRE)          1,074         -     1,164         -
Amortization of intangible assets       5,983     1,545     8,168     3,090
Merger-related expenses (COGS)          9,709         -    19,966         -
Merger-related and other expenses
 (OPEX)                                 4,408         -    10,359         -
Change in fair value of preferred
 stock warrants                             -         -         -       173
Preferred stock dividends                   -         -         -       900
                                     --------  --------  --------  --------
Non-GAAP net income                  $  7,778  $  5,524  $ 11,532  $    787
                                     ========  ========  ========  ========


Non-GAAP net income per common share
     Basic                           $   0.17  $   0.15  $   0.26  $   0.02
                                     ========  ========  ========  ========

     Diluted                         $   0.16  $   0.14  $   0.25  $   0.02
                                     ========  ========  ========  ========


Weighted average shares used to
 compute non-GAAP net income per
 common share - Basic (1)              46,050    37,212    43,697    34,614
                                     ========  ========  ========  ========


Weighted average shares used to
 compute non-GAAP net income per
 common share - Diluted (1)(2)         48,139    39,413    46,008    36,409
                                     ========  ========  ========  ========


(1)  For the six months ended June 26, 2010, includes outstanding common
     shares and common shares resulting from the assumed conversion of
     preferred shares as if conversion occurred at the beginning of the
     first quarter of 2010.

(2)  Includes the dilutive effect of oustanding stock options, warrants and
     restricted stock units for all periods presented.

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


                        Three Months Ended            Six Months Ended
                     --------------------------  --------------------------
                      June 25,      June 26,      June 25,      June 26,
                        2011          2010          2011          2010
                     --------------------------  --------------------------

GAAP gross profit
 and gross margin    $30,163 30.8% $28,438 39.7% $50,552 29.8% $45,110 37.6%
Adjustments to
 reconcile GAAP
 gross profit and
 gross margin to
 non-GAAP gross
 profit and gross
 margin:
Stock-based
 compensation            331           484           835           624
Amortization of
 intangible assets     3,188         1,360         4,704         2,720
Merger-related
 expenses              9,709             -        19,966             -
                     -------       -------       -------       -------
Non-GAAP gross
 profit and gross
 margin              $43,391 44.3% $30,282 42.3% $76,057 44.9% $48,454 40.4%
                     =======       =======       =======       =======




                   Condensed Consolidated Balance Sheets
                               (In thousands)

                                                  June 25,     December 31,
                                                    2011           2010
                                                ------------   ------------
ASSETS                                           (unaudited)
Current Assets:
  Cash and cash equivalents                     $     18,660   $     66,304
  Marketable securities                                8,911         32,020
  Restricted cash                                      1,054              -
  Accounts receivable, net                            57,940         43,377
  Inventory                                           38,489         24,557
  Deferred cost of revenue                            10,835          7,771
  Prepaid and other current assets                     5,340          3,245
                                                ------------   ------------
Total current assets                                 141,229        177,274

Property and equipment, net                           18,206         11,815
Goodwill                                             116,175         65,576
Intangible assets, net                                90,001            515
Other assets                                           2,381          2,376
                                                ------------   ------------
Total assets                                    $    367,992   $    257,556
                                                ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                              $     10,932   $     10,268
  Accrued liabilities                                 39,629         25,987
  Deferred revenue                                    23,081         14,062
                                                ------------   ------------
Total current liabilities                             73,642         50,317

Long-term portion of deferred revenue                 11,970         10,985
Other long term liabilities                            1,588            951
                                                ------------   ------------
Total liabilities                                     87,200         62,253
                                                ------------   ------------

Stockholders' equity:
  Common stock                                         1,167            968
  Additional paid-in capital                         731,617        605,939
  Other comprehensive income                              45             31
  Accumulated deficit                               (452,037)      (411,635)
                                                ------------   ------------
Total stockholders' equity                           280,792        195,303

                                                ------------   ------------
Total liabilities and stockholders' equity      $    367,992   $    257,556
                                                ============   ============




              Condensed Consolidated Statements of Cash Flows
                               (in thousands)

                                                      Six Months Ended
                                                ---------------------------
                                                  June 25,       June 26,
                                                    2011           2010
                                                ------------   ------------
                                                        (unaudited)
Operating activities
Net loss                                        $    (40,402)  $    (12,464)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
  Amortization of premiums relating to
   available-for-sale securities                         184            415
  Loss on retirement of property and equipment         1,621              -
  Depreciation and amortization                        3,859          2,381
  Amortization of intangible assets                    8,168          3,090
  Revaluation of warrant liability                         -            173
  Stock-based compensation                            13,441          9,988
  Changes in operating assets and liabilities:
    Change in restricted cash                              -            629
    Accounts receivable, net                           2,290         11,452
    Inventory                                         15,297         (6,387)
    Deferred cost of revenue                          (3,064)           622
    Prepaids and other assets                         (1,246)           858
    Accounts payable                                 (11,136)       (10,326)
    Accrued liabilities                                3,029         (2,119)
    Deferred Revenue                                   9,138          1,358
    Other long-term liabilities                         (253)           130
                                                ------------   ------------
  Net cash provided by (used in) operating
   activities                                            926           (200)
                                                ------------   ------------

Investing activities
  Acquisition of property and equipment               (4,508)        (2,906)
  Acquisition of Occam Networks, net of cash
   assumed                                           (60,809)             -
  Purchase of marketable securities                        -        (56,567)
  Sales of marketable securities                           -         15,208
  Maturities of marketable securities                 22,905              -
                                                ------------   ------------
  Net cash used in investing activities              (42,412)       (44,265)
                                                ------------   ------------

Financing activities
  Proceeds from exercise of stock options and
   other                                                 667             72
  Proceeds from employee stock purchase plan           2,062              -
  Taxes withheld upon vesting of restricted
   stock units                                        (8,921)             -
  Principal payment on loans                               -        (20,000)
  Proceeds from initial public offering of
   common stock, net of issuance costs                     -         57,293
                                                ------------   ------------
  Net cash provided by (used in) financing
   activities                                         (6,192)        37,365
                                                ------------   ------------

  Effect of exchange rate changes on cash and
   cash equivalents                                       34              -

Net decrease in cash and cash equivalents            (47,644)        (7,100)
Cash and cash equivalents at beginning of
 period                                               66,304         31,821
                                                ------------   ------------
Cash and cash equivalents at end of period      $     18,660   $     24,721
                                                ============   ============


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