Martinsried/Munich, Germany; Mahwah/New Jersey, USA. November 5, 2002. ADVA Optical Networking (German Neuer Markt: ADV), a leading global provider of optical networking solutions, today announced third quarter and nine-month 2002 financial results for the period ended September 30, 2002, and prepared in accordance with U.S. General Accepted Accounting Principles (“U.S. GAAP”).
third quarter 2002 FINANCIAL RESULTS
Revenues in the third quarter 2002 totalled EUR 22.0 million, a decrease of 5.2% compared to revenues in the third quarter 2001 of EUR 23.2 million. Pro forma operating income increased to EUR 1.6 million in the third quarter 2002, a large improvement over pro forma operating loss of EUR 0.6 million in the third quarter 2001, due to operating efficiencies, cost-reduction measures, and higher gross margins. Pro forma net income from continuing operations increased to EUR 1.2 million in the third quarter 2002, compared to pro forma net loss from continuing operations of EUR 1.3 million in the third quarter 2001.
Andreas G. Rutsch, Chief Financial Officer at ADVA, remarked, “General market conditions did not change during the third quarter 2002. We continued to see interest by both carriers and enterprises in investing at customer premise sites and in metro access networks, which led to our ability to generate a sixth consecutive quarter of stable revenues at EUR 22.0 million. Higher gross margins, as a result of improved inventory management, greater operating efficiencies, and several quarter-specific positive effects from variations in regional distribution and product mix, enabled us to deliver a significantly higher pro forma operating income of EUR 1.6 million.”
“Disaster recovery, storage area network connectivity, and local area network extension remain the most sought-after applications in the market today,” commented Brian L. Protiva, Chief Executive Officer at ADVA. “We have focused intensely on revenue opportunities like these, delivering advanced technology solutions with the lowest total cost of ownership which meet and exceed customer requirements.”
ADVA posted an actual net loss of EUR 0.1 million in the third quarter 2002, compared to EUR 93.2 million in the third quarter 2001. The improvement in actual net loss was primarily due to the loss from discontinuing operations at the company’s Cambridge site in the third quarter 2001.
Actual basic net earnings per share totalled EUR 0.00 in the third quarter 2002 and EUR –2.81 in the third quarter 2001. ADVA has included charges for stock option compensation in its actual financial results since the company first issued options in 1999.
nine-MONTH 2002 FINANCIAL RESULTS
Revenues during the first nine months of 2002 remained at a relatively similar level to the first nine months of 2001, totalling 65.8 million. Pro forma operating results improved from a loss of EUR 5.4 million during the first nine months of 2001 to pro forma operating income of EUR 1.9 million during the first nine months of 2002. The improvement from an operating loss to operating income resulted from greater operating efficiencies, cost-reduction measures, and higher gross margins. Pro forma net loss from continuing operations improved from EUR 6.1 million during the first nine months of 2001 to pro forma net income from continuing operations of EUR 0.9 million during the first nine months of 2002.
ADVA posted an actual net loss of EUR 5.3 million during the first nine months of 2002, compared to EUR 104.6 million during the first nine months of 2001. Actual basic net earnings per share totalled EUR -0.16 during the first nine months of 2002 and EUR –3.23 during the first nine months of 2001.
third quarter 2002 HIGHLIGHTS
fourth QUARTER 2002 outlook and full-year 2002 earnings release date
“The challenges presented over the past several years in the optical networking market – from exponential growth to an unprecedented downturn – have tested the character and strength of every management team,” commented Brian L. Protiva further. “While we at ADVA have not been isolated from such developments, we balanced our marketing approach on both enterprise and carrier business opportunities and thereby created two solid legs to stand on. This stable business model combined with superior execution capability distinguishes us from all other companies in our space.”
ADVA anticipates consistent revenues between EUR 20 to 25 million in the fourth quarter 2002.
ADVA will announce audited financial results for the fourth quarter and full-year 2002 for the period ending December 31, 2002, on Wednesday, March 19, 2003. In conjunction with the release of its full-year 2002 audited financial results, ADVA will host a conference call for investors at 3:00 p.m. CET / 9:00 a.m. EST on the same day.
conference call and webcast
In conjunction with the release of its third quarter and nine-month 2002 financial results, ADVA will host a conference call for investors at 3:00 p.m. CET / 9:00 a.m. EST today, November 5, 2002. Investors may listen live via Webcast on ADVA’s website. Participating in the call will be ADVA’s Chief Executive Officer, Brian L. Protiva, and Chief Financial Officer, Andreas G. Rutsch.
To listen to the Webcast, interested investors are encouraged to log onto the broadcast at least 15 minutes prior to the call, located on the con calls and presentations page in the investor relations section of ADVA’s website at www.advaoptical.com. The call will be archived as an audio file and the conference call presentation will also be available in the investor relations section of ADVA’s website.
ADVA’s complete financial statements and report for the first nine months 2002 can be found on its website.
About ADVA Optical Networking
ADVA Optical Networking is a leading global provider of optical networking solutions for rapid and cost-effective provisioning of high-speed data, storage, voice, and video services in the metropolitan area. ADVA’s carrier-class portfolio is comprised of the Fiber Service Platform family of products - explicitly designed to ensure the lowest total cost of ownership. ADVA’s solutions have been deployed at over 68 carriers and service providers (including PTTs, RBOCs, LECs, and IXCs) and more than 500 enterprises worldwide. ADVA’s products are sold through an international network of blue-chip distribution partners in addition to its own direct sales force. Further information about ADVA Optical Networking: www.advaoptical.com.
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 AG Optical Networking. ADVA AG 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 AG Optical Networking or the market in the shares of ADVA AG 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, purchased in-process R&D, amortization and impairment of goodwill and intangible assets, as well as loss from discontinued operations of the component, which are not reflective of the company’s operating results for the period presented. This pro forma information is not prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered a substitute for historical information presented in accordance with U.S. GAAP.
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