Q3 2012 revenues at EUR 82.3 million
Q3 2012 IFRS pro forma operating income of
EUR 5.6 million (6.8% of revenues)
Q4 2012 revenues expected to range
between EUR 77 million and EUR 82 million with
IFRS pro forma operating income between 2% and 6% of revenues
Martinsried/Munich, Germany. October 23, 2012. ADVA Optical Networking announced Q3 2012 financial results for the quarter ended on September 30, 2012, and prepared in accordance with International Financial Reporting Standards (IFRS).
Q3 2012 IFRS FINANCIAL RESULTS
Revenues in Q3 2012 totaled EUR 82.3 million, up 3.7% year-on-year from EUR 79.3 million in Q3 2011. This result is in line with guidance of between EUR 82 million and EUR 87 million and down 4.2% from EUR 85.9 million achieved in Q2 2012. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 5.6 million or 6.8% of revenues, at the upper half of guidance of between 4% and 8% of revenues. This compares to Q3 2011 IFRS pro forma operating income of EUR 5.5 million or 6.9% of revenues, and to Q2 2012 IFRS pro forma operating income of EUR 6.8 million or 8.0% of revenues. The year-on-year as well as the quarter-on-quarter development of pro forma operating income is largely due to variations in revenues and gross margins.
The IFRS operating income rose to EUR 5.1 million in Q3 2012, after EUR 4.4 million in Q3 2011. Beyond the factors impacting pro forma operating income, this improvement is driven by a decrease in amortization of intangible assets from acquisitions, which amounted to EUR 0.2 million in Q3 2012 after EUR 0.6 million in Q3 2011.
The IFRS net income amounted to EUR 3.5 million in Q3 2012, down from EUR 9.7 million in Q3 2011. This reduction is largely driven by high net foreign currency exchange gains of EUR 3.0 million in Q3 2011 while respective gains amounted to nil in Q3 2012. Further, ADVA Optical Networking reported a tax expense of EUR 1.4 million in Q3 2012 after a tax benefit of EUR 2.7 million in Q3 2011. This tax benefit related to the initial recognition of deferred taxes in ADVA Optical Networking's U.S. entity. Basic and diluted IFRS net earnings per share in Q3 2012 were EUR 0.07 each after EUR 0.21 and EUR 0.20 in Q3 2011.
CONFERENCE CALL
In conjunction with the release of its Q3 2012 financial results on October 23, 2012, ADVA Optical Networking hosts a conference call for analysts and investors at 3:00 p.m. CEST / 9:00 a.m. EDT. ADVA Optical Networking's chief executive officer, Brian Protiva, and chief financial officer & chief operating officer, Jaswir Singh, will participate in the call. Interested parties may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 390 507#, and download the corresponding presentation, located on the "financial results" page under "conference calls" in the investor relations section of ADVA Optical Networking's website at www.advaoptical.com.
Q4 2012 OUTLOOK
ADVA Optical Networking has adapted rapidly to an unpredictable economic environment and remains confident that it will continue delivering profitable growth by matching its operational costs to both the Company's growth and gross margin expansion capabilities and by winning new mobile backhauling customers. While the global economy continues to thwart expectations and magnify uncertainty, we are guiding Q4 2012 revenues of between EUR 77 million and EUR 82 million. Furthermore, we anticipate Q4 2012 pro forma operating income to range between 2% and 6% of revenues. As a matter of caution, ADVA Optical Networking notes that it will continue to perform quarterly reviews of the expected business development with respect to all intangible assets, including capitalized research and development expenses. In case of highly adverse business prospects, these reviews may result in non-cash impairment charges in Q4 2012 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q4 and full-year 2012 financial results on February 28, 2013.
NINE-MONTH IFRS CONSOLIDATED INCOME STATEMENT
| (in thousands of EUR, except earnings per share) | Q3 2012 | Q3 2011 | 9M 2012 | 9M 2011 |
| Revenues | 82,267 | 79,325 | 249,801 | 227,513 |
| Pro forma cost of goods sold* | -49,942 | -48,424 | -150,109 | -141,461 |
| Pro forma gross profit* | 32,325 | 30,901 | 99,692 | 86,052 |
| Pro forma selling and marketing expenses | -10,712 | -10,983 | -33,264 | -32,115 |
| Pro forma general and administrative expenses | -6,123 | -6,273 | -19,611 | -18,542 |
| Pro forma research and development expenses | -16,151 | -14,782 | -49,540 | -43,235 |
| Income from capitalization of development expenses* | 5,966 | 6,133 | 18,465 | 16,251 |
| Other operating income and expenses, net | 324 | 469 | 1,219 | 1,460 |
| Pro forma operating income | 5,629 | 5,465 | 16,961 | 9,871 |
| Amortization of intangible assets from acquisitions | -160 | -614 | -1,475 | -1,853 |
| Stock compensation expenses | -335 | -424 | -940 | -1,485 |
| Operating income | 5,134 | 4,427 | 14,546 | 6,533 |
| Interest income and expenses, net | -234 | -402 | -865 | -1,153 |
| Other financial gains and losses, net | -36 | 2,988 | 972 | 391 |
| Income before tax | 4,864 | 7,013 | 14,653 | 5,771 |
| Income tax benefit (expense), net | -1,386 | 2,719 | -2,032 | 2,484 |
| Net income | 3,478 | 9,732 | 12,621 | 8,255 |
| Earnings per share in EUR | ||||
| basic | 0.07 | 0.21 | 0.27 | 0.17 |
| diluted | 0.07 | 0.20 | 0.26 | 0.17 |
* Research and development expenses include income from capitalization of development expenses. From 2012, amortization for capitalized development projects is presented as cost of goods sold. Prior period information has been adjusted accordingly, by reclassification of amortization from research and development expenses to cost of goods sold. The effect on cost of goods sold amounted to EUR 4,255/11,477 thousand and EUR 3,594/10,864 thousand in Q3/9M 2012 and Q3/9M 2011, respectively.
# # #
The economic projections and forward-looking statements contained in this document relate to future facts. Such projections and forward-looking statements are subject to risks which cannot be foreseen and which are beyond the control of ADVA Optical Networking. ADVA Optical Networking is therefore not in a position to make any representation as to the accuracy of economic projections and forward-looking statements or their impact on the financial situation of ADVA Optical Networking or the market in the shares of ADVA Optical Networking.
ADVA Optical Networking provides consolidated pro forma financial results in this press release solely as supplemental financial information to help investors and the financial community make meaningful comparisons of ADVA Optical Networking's operating results from one financial period to another. ADVA Optical Networking believes that these pro forma consolidated financial results are helpful because they exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets, which are not reflective of the Company's operating results for the period presented. This pro forma information is not prepared in accordance with IFRS and should not be considered a substitute for historical information presented in accordance with IFRS.
Published By:
ADVA Optical Networking SE, Martinsried/Munich and Meiningen, Germany
www.advaoptical.com
For Press:
Gareth Spence
t +44 1904 699 358
public-relations(at)advaoptical.com
For Investors:
Wolfgang Guessgen
t +49 89 89 0665 940
investor-relations(at)advaoptical.com