71% y-o-y Q4 revenue growth to EUR 61.3 million;
IFRS pro forma operating income of EUR 3.0 million, or 5% of revenues
47% y-o-y 2006 revenue growth to EUR 192.7 million,
IFRS pro forma operating income of EUR 13.1 million, or 7% of
revenues
FY 2007 revenues expected to grow to at least EUR 260 million with
H2 2007 IFRS pro forma operating income between
10% and 13% of revenues
MARTINSRIED/MUNICH, Germany, and MAHWAH, N.J., March 12, 2007 (PRIME NEWSWIRE) -- ADVA Optical Networking today announced Q4 and audited full-year 2006 financial results for the period ended December 31, 2006, and prepared in accordance with International Financial Reporting Standards (IFRS).
Q4 2006 IFRS FINANCIAL RESULTS
Including the operations of Movaz Networks since July 12, 2006, revenues in Q4 2006 totaled EUR 61.3 million, up 71% when compared to EUR 35.8 million in Q4 2005 and up 16% when compared to EUR 53.1 million in Q3 2006, respectively. IFRS pro forma operating income, excluding stock-based compensation and amortization and impairrment of goodwill and acquisition-related intangible assets, was at EUR 3.0 million in Q4 2006 after EUR 5.1 million in Q4 2005, primarily driven by initially lower gross margin Movaz operations and variations in regional revenue distribution, product and customer mix. IFRS pro forma operating income in Q4 2006 was also impacted significantly by expanded research & development expenses, largely due to increased headcount related to the acquisition of Movaz and Covaro as well as to risen development activities for our advanced Optical+Ethernet product portfolio when compared to Q4 2005.
On an IFRS pro forma basis, there was a net loss of EUR 4.5 million in Q4 2006 after a net profit of EUR 3.6 million in Q4 2005. The net loss to the largest extent was caused by an income tax expense of EUR 6.6 million in Q4 2006 after EUR 1.4 million in Q4 2005. The tax expense in Q4 2006 was predominantly due to a EUR 6.0 million one-off charge related to a tax balance sheet appreciation of ADVA Optical Networking's investment into its subsidiary in the United Kingdom (UK). This appreciation was necessary due to the recent win of a multi-year contract with British Telecom (BT) and the related likely positive impact on ADVA Optical Networking's business going forward. Beyond the one-off charge, there were current income tax expenses of EUR 0.6 million in Q4 2006.
Diluted IFRS pro forma net earnings per share were EUR -0.10 in Q4 2006 after EUR 0.10 in Q4 2005. Beyond the factors impacting the net loss in Q4 2006, the increased number of shares during 2006 had further influence on the earnings per share numbers. Diluted weighted average shares outstanding increased from 35.6 million in Q4 2005 to 46.0 million in Q4 2006, largely driven by the issuance of new shares related to the acquisitions of Covaro (+2.0 million shares in January 2006) and Movaz (+6.5 million shares in July 2006) and a capital increase for cash in October 2006 (+1.3 million shares).
After an IFRS actual net profit of EUR 3.1 million in Q4 2005, ADVA Optical Networking experienced an IFRS actual net loss of EUR 10.4 million in Q4 2006, due to the factors mentioned above, as well as initially high amortization of intangible assets of EUR 1.8 million and another one-time valuation-adjustment related charge affecting actual selling & marketing expenses, largely related to the Movaz acquisition. Further, a EUR 1.9 million one-off charge related to shares issued to former Covaro employees taken over by ADVA Optical Networking in January 2006 and held under escrow until year-end 2006 impacted actual research & development expenses. Diluted net earnings per share were EUR -0.23 in Q4 2006 and EUR 0.09 in Q4 2005.
FULL-YEAR 2006 IFRS FINANCIAL RESULTS
Revenues increased 46.8% from EUR 131.3 million in 2005 to EUR 192.7 million in 2006, including Movaz revenues since July 12, 2006. IFRS pro forma operating income was EUR 13.1 million in 2006 after EUR 19.1 million in 2005, primarily driven by the same factors described in the Q4 2006 analysis.
IFRS pro forma net income was EUR 1.9 million in 2006 after EUR 13.8 million in 2005, with pro forma diluted net earnings per share of EUR 0.05 and EUR 0.39, respectively. The drivers of these developments match the ones described in the Q4 2006 analysis. Additionally impacting pro forma net income were foreign exchange losses of EUR 1.1 million in 2006 after respective gains of EUR 0.2 million in 2005, largely related to the devaluation of the USD in 2006.
IFRS actual net income of EUR 11.9 million in 2005 turned into a net loss of EUR 10.3 million in 2006, impacted by higher acquisition-related expense charges in 2006 and the aforementioned extraordinary tax charge. IFRS actual diluted net earnings per share were EUR -0.25 in 2006 after EUR 0.34 in 2005.
INFORMATION ON Q4 AND FULL-YEAR 2006 U.S. GAAP RESULTS
Based on the same revenue figures quoted under IFRS, ADVA Optical Networking's U.S. GAAP actual net loss for Q4 2006 was EUR 12.1 million, or EUR 1.7 million higher than the figure reported under IFRS. For full-year 2006, ADVA Optical Networking reports U.S. GAAP actual net loss of EUR 17.4 million, EUR 7.1 million more than EUR 10.3 million under IFRS. These differences are largely attributable to the capitalization under IFRS of part of the Company's development costs, different amortization of intangible assets related to the Movaz acquisition and a lower valuation of inventories under U.S. GAAP. Further details on key U.S. GAAP financial numbers are provided in the Annual Report 2006, available in the investor relations section of the corporate web site, www.advaoptical.com.
CONFERENCE CALL AND WEBCAST In conjunction with the release of its full-year 2006 audited IFRS financial results today, March 13, 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, 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.
2007 OUTLOOK
ADVA Optical Networking confirms Q1 2007 guidance of sequential revenue growth to at least EUR 68 million at an IFRS pro forma operating income margin of at least 10% of revenues. Furthermore, for full-year 2007 ADVA Optical Networking expects revenues of at least EUR 260 million and, as communicated earlier, H2 2007 IFRS pro forma operating income margins between 10% and 13% of revenues. ADVA Optical Networking will publish its Q1 2007 financial results on May 8, 2007, and host its annual shareholders' meeting on June 13, 2007, in Meiningen, Germany.