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ADVA AG Optical Networking (OJ:ADV) REPORTS Q3 2008 FINANCIAL RESULTS IN LINE WITH EXPECTATIONS ADVA OPTICAL NETWORKING REPORTS Q3 2008 FINANCIAL RESULTS IN LINE WITH EXPECTATIONS
Q3 2008 revenues at EUR 54.1 million
Q3 2008 IFRS pro forma operating income of EUR 1.3 million (2.4% of revenues)
Q4 2008 revenues expected to range between EUR 50 million and EUR 55 million with IFRS pro forma operating income between -3% and +2% of revenues
Norcross, Georgia, USA and Martinsried/Munich, Germany. November 6, 2008. ADVA Optical Networking today announced Q3 2008 financial results for the quarter ended September 30, 2008, and prepared in accordance with International Financial Reporting Standards (IFRS).
Q3 2008 IFRS FINANCIAL RESULTS Revenues in Q3 2008 totaled EUR 54.1 million after EUR 61.5 million in Q3 2007 and EUR 52.7 million in Q2 2008, and in line with guidance of between EUR 50 million and EUR 58 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, came in at EUR 1.3 million in Q3 2008 or 2.4% of revenues, also in line with guidance of between -4% and +4%. This compares to Q3 2007 IFRS pro forma operating income of EUR 4.0 million or 6.5% of revenues, and to Q2 2008 IFRS pro forma operating income of EUR -0.1 million or -0.1% of revenues. The year-over-year pro forma operating income reduction to the largest extent was driven by weaker revenues.
The IFRS operating loss in Q3 2008 was EUR 0.1 million, after an operating income of EUR 1.3 million in Q3 2007. The key driver for this development is the above-mentioned decline of pro forma operating income. In part, the decline is offset by lower scheduled amortization of intangible assets from acquisitions, which amounted to EUR 0.6 million in Q3 2008 after EUR 2.0 million in Q3 2007.
IFRS net income in Q3 2008 amounted to EUR 0.4 million, after a net loss of EUR 1.2 million in Q3 2007. The Q3 2008 net income was largely driven by the factors impacting the operating result described above, by net foreign currency exchange gains of EUR 0.5 million and by an income tax benefit of EUR 0.3 million. The net foreign currency exchange gains were largely due to the devaluation of the EUR against the USD, and the income tax benefit related to deferred tax adjustments on tax losses carried forward and temporary differences between tax and IFRS accounting. In Q3 2007, in contrast, there were net foreign currency exchange gains of EUR 1.3 million and an income tax expense of EUR 1.0 million. Basic and diluted IFRS net earnings per share were EUR 0.01 each in Q3 2008 after EUR -0.03 each in Q3 2007.
CONFERENCE CALL AND WEBCAST In conjunction with the release of its Q3 2008 IFRS financial results today, November 6, 2008, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CET/9:00 a.m. EST. 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 4035 9616 (no dial-in code) or +1 800 814 6417 (participant code: 572371#), 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.
Q4 2008 OUTLOOK Based on the volatile macro environment, ADVA Optical Networking expects Q4 2008 revenues to range between EUR 50 million and EUR 55 million. Further, we anticipate pro forma operating income of between -3% and +2% of revenues in Q4 2008. Further, ADVA Optical Networking notes that like in prior years, as part of the IFRS year-end 2008 closing process, it will perform a detailed review of the expected business development in respect of all intangible assets, including capitalized research and development expenses. This review may result in non-cash impairment charges in Q4 2008. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q4 and full-year 2008 financial results on March 10, 2009.
NINE-MONTH IFRS CONSOLIDATED INCOME STATEMENT
(in thousands of EUR, Q3 Q3 9M 9M except earnings per share) 2008 2007 2008 2007
Revenues 54,116 61,460 160,823 197,674 Pro forma cost of goods sold -30,501 -34,468 -93,056 -115,026 Pro forma gross profit 23,615 26,992 67,767 82,648 Pro forma selling and marketing expenses -8,492 -7,510 -24,930 -24,087 Pro forma general and administrative expenses -6,650 -6,531 -19,552 -18,966 Pro forma research and development expenses -9,737 -10,743 -30,672 -30,607 Income from capitalization of development expenses, net of amortization for capitalized development projects 2,063 1,735 7,503 4,404 Restructuring expenses 0 0 -2,251 0 Other operating income (expenses), net 511 69 1,348 515 Pro forma operating income 1,310 4,012 -787 13,907 Amortization of intangible assets from acquisitions -632 -1,992 -3,827 -6,870 Stock compensation expenses -761 -735 -1,882 -2,528 Operating income (loss) -83 1,285 -6,496 4,509 Interest income (expense), net -330 -210 -743 -661 Other income (expense), net 526 -1,294 -932 -1,877 Income (loss) before tax 113 -219 -8,171 1,971 Income tax benefit (expense), net 256 -968 1,473 -3,719 Net income (loss) 369 -1,187 -6,698 -1,748
Earnings per share in EUR basic 0.01 -0.03 -0.15 -0.04 diluted 0.01 -0.03 -0.15 -0.04
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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 www.advaoptical.com
FOR PRESS: Christine Keck t +1 201 258 8293 (U.S.) t +44 1904 699 358 (Europe) t +86 755 8621 7400 (Asia) public-relations@advaoptical.com
FOR INVESTORS: Wolfgang Guessgen t +1 201 258 8302 (U.S.) t +49 89 89 0665 940 (Europe) t +86 755 8621 7400 (Asia) investor-relations@advaoptical.com
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ADVA AG Optical Networking Campus Martinsried, Fraunhoferstr. 9a Martinsried/Munich Germany
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