SOURCE: ADVA AG Optical Networking

August 04, 2008 18:48 ET

Ad hoc: ADVA AG Optical Networking: ADVA Optical Networking Reports Q2 2008 Financial Results Slightly Above Revised Guidance

NORCROSS, GA and MARTINSRIED/MUNICH, GERMANY--(Marketwire - August 4, 2008) - ADVA AG Optical Networking / Quarterly report / ADVA OPTICAL NETWORKING REPORTS Q2 2008 FINANCIAL RESULTS SLIGHTLY ABOVE REVISED GUIDANCE

Ad hoc announcement according to §15 WpHG processed and transmitted by Hugin ASA. The issuer is solely responsible for the content of this announcement.

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ADVA OPTICAL NETWORKING REPORTS Q2 2008 FINANCIAL RESULTS SLIGHTLY ABOVE REVISED GUIDANCE

Q2 2008 revenues at EUR 52.7 million

Q2 2008 IFRS pro forma operating income of EUR -0.1 million (-0.1% of revenues), including restructuring charges of EUR 1.3 million

Q3 2008 revenues expected to range between EUR 50 million and EUR 58 million with IFRS pro forma operating income between -4% and +4% of revenues, including minor restructuring charges of up to EUR 0.2 million

ADVA Optical Networking today announced Q2 2008 financial results for the quarter ended June 30, 2008, and prepared in accordance with International Financial Reporting Standards (IFRS).

Q2 2008 IFRS FINANCIAL RESULTS

Revenues in Q2 2008 totaled EUR 52.7 million after EUR 67.5 million in Q2 2007 and EUR 54.0 million in Q1 2008. This was slightly above the revised guidance provided on June 30, 2008 of between EUR 50 million and EUR 52 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, came in at negative EUR 0.1 million in Q2 2008 or -0.1% of revenues and was at the upper end of guidance of between -3% and 0%. This compares to Q2 2007 IFRS pro forma operating income of positive EUR 5.2 million or 7.7% of revenues. The Q2 2008 result included charges of EUR 1.3 million related to a previously announced restructuring initiative. Excluding these restructuring charges, pro forma operating income was at +2.3% of revenues. Year-on-year, the pro forma operating income reduction was primarily driven by weaker revenues. This effect was partially offset by a higher pro forma gross margin of 43.7% in Q2 2008, after 41.5% in Q2 2007 and higher income from capitalization of development expenses. Net of depreciation for already capitalized development projects, these expenses amounted to EUR 3.0 million in Q2 2008 after EUR 1.9 million in Q2 2007.

The IFRS operating loss in Q2 2008 was EUR 2.6 million, after an operating income of EUR 1.9 million in Q2 2007. The key driver for this development is the above-mentioned decline of pro forma operating income. The decline in part is offset by lower scheduled amortization of intangible assets from acquisitions and lower stock compensation expenses. These items amounted to EUR 2.0 million and EUR 0.6 million in Q2 2008 after EUR 2.4 million and EUR 0.9 million in Q2 2007, respectively.

The IFRS net loss in Q2 2008 amounted to EUR 2.7 million, after a net income of EUR 0.3 million in Q2 2007. The net loss was largely driven by negative operating income. In part, this effect was offset by a tax benefit of EUR 0.3 million in Q2 2008 related to deferred tax adjustments on tax losses carried forward and temporary differences between tax and IFRS accounting. In contrast, based on positive income before taxes, there was a tax expense of EUR 0.9 million in Q2 2007. Basic and diluted IFRS net earnings per share were EUR - 0.06 each in Q2 2008 after EUR 0.01 each in Q2 2007.


Conference Call and Webcast

In conjunction with the release of its Q2 2008 IFRS financial results today, August 5, 2008, 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, Jaswir Singh. Interested parties may dial in at +49 69 4035 9611 or +1 866 306 3455, 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.

Q3 2008 OUTLOOK

ADVA Optical Networking expects Q3 2008 revenues to range between EUR 50 million and EUR 58 million. Further, we anticipate pro forma operating income of between -4% and +4% of revenues in Q3 2008, including final restructuring charges of up to EUR 0.2 million. In December 2007, ADVA Optical Networking made the decision to restructure the Company to adjust its cost base to a temporarily challenging market environment. The restructuring initiative was implemented immediately, leading to an overall reduction of 7% of employees and a one-off restructuring charge of up to EUR 2.5 million through Q3 2008. EUR 2.3 million of this charge has been included in the pro forma operating income for H1 2008. ADVA Optical Networking will publish its Q3 2008 financial results on November 6, 2008.

SIX-MONTH IFRS CONSOLIDATED INCOME STATEMENT


(in thousands of EUR,                      Q2      Q2      6M
6M
except earnings per share)               2008   20071    2008
2007

Revenues                               52,679  67,535 106,707
136,214
Pro forma cost of goods sold          -29,678 -39,533 -62,555 -
80,558
Pro forma gross profit                 23,001  28,002  44,152
55,656
Pro forma selling and marketing
expenses                               -8,460  -8,409 -16,438 -
16,577
Pro forma
general and administrative expenses    -6,783  -6,794 -12,902 -
12,435
Pro forma
research and development expenses     -10,015  -9,763 -20,935 -
19,864
Income from capitalization of
development expenses, net of
amortization for capitalized
development projects                    2,958   1,853   5,440
2,669
Restructuring expenses                 -1,302       0  -2,251
0
Other operating income (expenses),
net                                       533     336     837
446
Pro forma operating income                -68   5,225  -2,097
9,895
Amortization of
intangible assets from acquisitions    -2,003  -2,439  -3,195  -
4,878
Stock compensation expenses              -573    -888  -1,121  -
1,793
Operating income (loss)                -2,644   1,898  -6,413
3,224
Interest income (expense), net           -247    -245    -413    -
451
Other income (expense), net              -137    -427  -1,458    -
583
Income (loss) before tax               -3,028   1,226  -8,284
2,190
Income tax benefit (expense), net         338    -939   1,217  -
2,751
Net income (loss)                      -2,690     287  -7,067    -
561

Earnings per share in EUR
   basic                                -0.06    0.01   -0.15   -
0.01
   diluted                              -0.06    0.01   -0.15   -
0.01

(1) For select revenues in Q1 2007, cost of goods sold amounting to EUR 2,258 thousand had not been recognized in Q1, but only in Q2 2007. Pro forma gross profit, pro forma operating income, operating income, income before tax, net income (loss) and earnings per share have been restated accordingly.


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


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ADVA AG Optical Networking Campus Martinsried, Fraunhoferstr. 9a Martinsried/Munich Germany

WKN: 510300; ISIN: DE0005103006 ; Index: CDAX, Prime All Share, TECH All Share, TecDAX; Listed: Geregelter Markt in Frankfurter Wertpapierbörse, Amtlicher Markt in Börse Stuttgart, Prime Standard in Frankfurter Wertpapierbörse, Amtlicher Markt in Bayerische Börse München, Amtlicher Markt in Börse Berlin, Amtlicher Markt in Hanseatische Wertpapierbörse zu Hamburg, Amtlicher Markt in Niedersächsische Börse zu Hannover, Amtlicher Markt in Börse Düsseldorf;



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