Q4 2007 revenues at EUR 53.8 million,
IFRS pro forma operating income of EUR -12.1 million, or -23% of revenues
IFRS pro forma operating income of EUR -12.1 million, or -23% of revenues
31% y-o-y 2007 revenue growth to EUR 251.5 million,
IFRS pro forma operating income of EUR 1.8 million, or 1% of revenues
IFRS pro forma operating income of EUR 1.8 million, or 1% of revenues
Q1 2008 revenues expected to range
between EUR 51 million and EUR 55 million with
IFRS pro forma operating income between -8% and -4% of revenues
between EUR 51 million and EUR 55 million with
IFRS pro forma operating income between -8% and -4% of revenues
Norcross, Georgia, USA and Martinsried/Munich, Germany. March 18, 2008. ADVA Optical Networking today announced Q4 and audited full-year 2007 financial results for the period ended December 31, 2007, and prepared in accordance with International Financial Reporting Standards (IFRS).
Q4 2007 IFRS FINANCIAL RESULTS
In line with guidance provided in December 2007, revenues in Q4 2007 totaled EUR 53.8 million after EUR 61.3 million in Q4 2006 and EUR 61.5 million in Q3 2007. Also in line with guidance, IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, was at negative EUR 12.1 million in Q4 2007 after positive EUR 3.0 million in Q4 2006. This development was primarily driven by one-off non-cash charges related to the write-down of outdated inventory items (EUR 5.5 million) and to the impairment of capitalized research and development expenses (EUR 4.6 million) and significantly decreased revenue contribution by one major U.S. distribution channel. Additional causes are temporary business weakness with carrier and enterprise customers in Q4 2007, and higher operational expenses.
The IFRS operating loss in Q4 2007 was EUR 23.2 million, after an operating loss of EUR 2.9 million in Q4 2006. Key drivers for this development are the above-mentioned decline of pro forma operating income and significantly increased amortization of intangible assets from acquisitions of EUR 10.4 million in Q4 2007 after EUR 1.8 million in Q4 2006. The strong increase relates to one-off impairments of goodwill (EUR 6.6 million), purchased technology (EUR 1.0 million) and in-process R&D projects (EUR 1.0 million) in Q4 2007. The impairment of goodwill reflects valuation adjustments from ADVA Optical Networking's subsidiaries in the United Kingdom (EUR 3.0 million), Sweden (EUR 2.3 million) and Norway (EUR 1.3 million). While the Swedish research and development facility will be closed, our United Kingdom and Norway operations, and our purchased technology and in-process R&D projects are assumed to generate more moderate future economic benefits than previously estimated. Partially offsetting these developments are reduced stock compensation expenses of EUR 0.7 million in Q4 2007 after EUR 4.1 million in Q4 2006. The decline of this expense item is largely due to a Q4 2006 one-off charge related to shares issued to former Covaro employees taken over by ADVA Optical Networking in 2006.
Also, there was an IFRS net loss in Q4 2007 amounting to EUR 27.7 million, after a net loss of EUR 10.4 million in Q4 2006. In Q4 2007, beyond the operating loss, income tax expenses amounting to EUR 4.4 million drove the net loss. The tax expense arises mainly from changes in deferred tax assets and liabilities related to the ongoing 2001 to 2004 tax audit in Germany and the impairment of intangible assets. Basic and diluted IFRS net earnings per share were EUR -0.60 each in Q4 2007 after EUR -0.23 each in Q4 2006.
FULL-YEAR 2007 IFRS FINANCIAL RESULTS
Revenues increased 30.5% from EUR 192.7 million in 2006 to EUR 251.5 million in 2007, including Movaz revenues since July 12, 2006. This increase was primarily driven by the full-year inclusion of Movaz operations in 2007, overall sound business growth through Q3 2007 and significantly decreased revenue contribution by one major U.S. distribution channel between Q1 and Q3 2007. IFRS pro forma operating income was EUR 1.8 million in 2007 after EUR 13.1 million in 2006, largely due to the same factors as described in the Q4 2007 analysis.
The IFRS operating loss in 2007 was EUR 18.7 million, after an operating income of EUR 0.9 million in 2006. Key drivers for this development are the above-mentioned decline of pro forma operating income and significantly increased amortization of intangible assets from acquisitions, as described in the Q4 2007 analysis.
Also, we reported an IFRS net loss in 2007 amounting to EUR 29.5 million, after a net loss of EUR 10.3 million in 2006. Beyond the operating loss, income tax expenses amounting to EUR 8.2 million drove the 2007 net loss. As stated above, the 2007 tax expense is mainly driven by the changes in deferred tax assets and liabilities related to the ongoing 2001 to 2004 tax audit in Germany and the impairment of intangible assets. Basic and diluted IFRS net earnings per share were EUR -0.64 each in 2007, after
EUR -0.26 each in 2006. Basic and diluted weighted average shares outstanding increased by 5.4 million each to 45.7 million each in 2007, largely driven by the 2006 issuance of new shares related to the acquisition of Movaz (+6.5 million shares in July 2006) and a capital increase for cash in October 2006 (+1.3 million shares).
EUR -0.26 each in 2006. Basic and diluted weighted average shares outstanding increased by 5.4 million each to 45.7 million each in 2007, largely driven by the 2006 issuance of new shares related to the acquisition of Movaz (+6.5 million shares in July 2006) and a capital increase for cash in October 2006 (+1.3 million shares).
conference call and webcast
In conjunction with the release of its full-year 2007 audited IFRS financial results today, March 18, 2007, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CET/10:00 a.m. EDT. Participating in the call will be ADVA Optical Networking's Chief Executive Officer, Brian Protiva, and Chief Financial Officer, Jaswir Singh. 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 'financial results' page in the investor relations section of ADVA Optical Networking's website at www.advaoptical.com.
Q1 2008 OUTLOOK
ADVA Optical Networking expects Q1 2008 revenues to range between EUR 51 million and EUR 55 million. In December 2007, based on increased global economic uncertainty, ADVA Optical Networking decided to restructure the Company. The restructuring initiative encompasses closure of select research and development facilities as well as headcount reductions across all sites, implying an overall cutback of 7% of employees through Q3 2008. The initiative will entail a one-off restructuring charge of around EUR 3.0 million. As a consequence and due to our short-term largely inflexible operational cost base, we anticipate a pro forma operating loss of between -8% and -4% of revenues in Q1 2008. ADVA Optical Networking will publish its Q1 2008 financial results on May 8, 2008, and host its annual shareholders' meeting on June 11, 2008, in Meiningen, Germany.
# # #
PUBLISHED BY:
ADVA AG Optical Networking, Martinsried/Munich and Meiningen, Germany
ADVA Optical Networking North America, Inc., Norcross, Georgia, USA
ADVA Optical Networking (Shenzhen) Ltd., Shenzhen, China
FOR PRESS:
Christine Keck
t +1 201 258 8293 (U.S.)
t +44 1904 699 358 (Europe)
t +86 755 8621 7400 (Asia)
FOR INVESTORS:
Wolfgang Guessgen
t +1 201 258 8302 (U.S.)
t +49 89 89 0665 940 (Europe)
t +86 755 8621 7400 (Asia)