Ad hoc: ADVA OPTICAL NETWORKING REPORTS FINANCIAL RESULTS FOR Q2 2007

 

Mahwah, New Jersey, USA and Martinsried/Munich, Germany. August 2, 2007. ADVA Optical Networking today announced preliminary Q2 2007 financial results for the quarter ended June 30, 2007, and prepared in accordance with International Financial Reporting Standards (IFRS).

 

Revenues in Q2 2007 totaled EUR 67.5 million, up 64% when compared to EUR 41.2 million in Q2 2006. IFRS pro forma operating income, excluding stock-based compensation and amortization and impairment of goodwill and acquisition-related intangible assets, was at EUR 3.0 million in Q2 2007 after EUR 3.5 million in Q2 2006, driven primarily by lower gross margins and increased research & development expenses. IFRS pro forma quarterly net profit was at EUR 1.4 million in Q2 2007 after EUR 2.2 million in Q2 2006, with diluted pro forma net earnings per share of EUR 0.03 and EUR 0.06 in Q2 2007 and in Q2 2006, respectively.

 

After an IFRS actual net profit of EUR 1.4 million in Q2 2006, ADVA Optical Networking experienced an IFRS actual net loss of EUR 2.0 million in Q2 2007, due to the factors described above, as well as increased amortization of acquisition-related intangible assets excluding goodwill related to the acquisition of Movaz in July 2006. Diluted net earnings per share were EUR -0.04 in Q2 2007 and EUR 0.04 in Q2 2006.

 

During the preparation of the IFRS six-month 2007 Group financial statements ADVA Optical Networking found that for select revenues in Q1 2007 cost of goods sold amounting to at least EUR 1.6 million had not been recognized in Q1, but only in Q2 2007. Therefore, cost of goods sold, gross profit, operating income (loss), income before tax and net income (loss) reported for Q2 are preliminary only. ADVA Optical Networking is currently completing an analysis of costs of goods sold and will provide corrected Q1 and Q2 2007 financial statements in due course. The financial results for the full six-month period to June 30, 2007 are not affected.

 

In conjunction with the release of its Q2 2007 IFRS financial results, today, August 2, 2007, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CEDT/9:00 a.m. EDT. Participating in the call will be ADVA Optical Networking's Chief Executive Officer, Brian Protiva, and Chief Financial Officer, Andreas Rutsch. Interested parties may dial in at +49 69 2711 3400 or +1 877 527 5884, and listen live via webcast on ADVA Optical Networking's website, located on the 'webcasts' page in the investor relations section of ADVA Optical Networking's website at www.advaoptical.com.

 

ADVA Optical Networking continues to forecast its market for optical WDM and Ethernet access solutions for metro networks to grow by 20% to 25% in 2007. These expectations are based on steadily increasing demand for bandwidth from residential end customers and corporations, with carriers returning to rapid investment in new optical networking infrastructure solutions. ADVA Optical Networking confirms its previous guidance of FY 2007 revenues of at least EUR 267 million based on the positive market environment, strong underlying growth of its Optical+Ethernet business and despite further declining revenues from one major U.S. distribution channel. For Q3 and Q4 2007 revenues of at least EUR 62 million and EUR 69 million, respectively, are expected. As for IFRS pro forma operating margins, ADVA Optical Networking is expecting Q3 and Q4 2007 values of at least 5.3% and 8.1% of revenues, respectively, resulting in a FY 2007 IFRS pro forma operating margin of at least 7.0% of revenues. These margin projections are down from the numbers guided so far, primarily due to gross margin levels below original expectation as well as increasing operating expenses. ADVA Optical Networking will release its financial results for the quarter ending September 30, 2007, on November 6, 2007.

 

 

ADVA AG Optical Networking, Martinsried/Munich and Meiningen, Germany

ADVA Optical Networking Inc., Mahwah, New Jersey, USA

ADVA Optical Networking Corp., Tokyo, Japan

 

Christine Keck

t +1 201 258 8293 (U.S.)

t +44 1904 699 358 (Europe)

t +81 3 6667 5830 (Asia)

public-relations@advaoptical.com

 

Wolfgang Guessgen

t +1 201 258 8300 (U.S.)

t +49 89 89 0665 940 (Europe)

t +81 3 6667 5830 (Asia)