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

 

 

 

 

Norcross, Georgia, USA and Martinsried/Munich, Germany. August 5, 2008. 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.

 

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.

 

 

 

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.

 

 

 

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

 

Christine Keck

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

t +44 1904 699 358 (Europe)

t +86 755 8621 7400 (Asia)

 

Wolfgang Guessgen

t +1 201 258 8302 (U.S.)

t +49 89 89 0665 940 (Europe)

t +86 755 8621 7400 (Asia)