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ADVA Optical Networking Reports Audited 2011 IFRS Financial Results In Line with Expectations

(February 22, 2012)

MARTINSRIED/MUNICH, GERMANY -- (Marketwire) -- 02/22/12 --


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Q4 2011 Revenues at EUR 83.4 Million, IFRS Pro Forma Operating Income of EUR 7.4 Million (8.9% of Revenues)


FY 2011 Revenues at EUR 310.9 Million, IFRS Pro Forma Operating Income of EUR 17.3 Million (5.6% of Revenues)

Q1 2012 Revenues Expected to Range between EUR 79 Million and EUR 83 Million with IFRS Pro Forma Operating Income between 2% and 5% of Revenues

ADVA Optical Networking announced Q4 and audited full-year 2011 financial results for the period ended December 31, 2011, and prepared in accordance with International Financial Reporting Standards (IFRS).

Q4 2011 IFRS Financial Results

Revenues in Q4 2011 rose to a record high of EUR 83.4 million after EUR 79.4 million in Q4 2010 and EUR 79.3 million in Q3 2011. This result is at the upper end of guidance of between EUR 79 million and EUR 84 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 7.4 million in Q4 2011 or 8.9% of revenues, also at the upper end of guidance of between 6% and 9% of revenues. This compares to Q4 2010 IFRS pro forma operating income of EUR 4.3 million or 5.4% of revenues, and to Q3 2011 IFRS pro forma operating income of EUR 5.5 million or 6.9% of revenues. To a large degree, the year-over-year improvement of pro forma operating income is due to revenue and gross margin growth as well as increased net capitalization of development expenses.

The IFRS operating income in Q4 2011 was EUR 6.7 million, up significantly from EUR 3.1 million in Q4 2010. The key drivers for this development are the above-mentioned reasons for the increase in pro forma operating income.

The IFRS net income in Q4 2011 amounted to EUR 8.7 million after EUR 1.6 million in Q4 2010. Beyond the improvement of the operating income, net foreign currency exchange gains of EUR 1.9 million in Q4 2011 after EUR 0.8 million in Q4 2010 drove this major improvement. Further, ADVA Optical Networking reported income tax benefits of EUR 0.5 million in Q4 2011 after income tax expenses of EUR 1.9 million in Q4 2010. The Q4 2011 income tax benefit is due to recognition of deferred taxes in ADVA Optical Networking's U.S. entity. Basic and diluted IFRS net earnings per share were EUR 0.18 each, significantly up from EUR 0.03 each in Q4 2010.

Full-Year 2011 IFRS Financial Results

Driven by increased Ethernet access and carrier infrastructure business, revenues rose to a record high of EUR 310.9 million in 2011, 6.6% higher than the EUR 291.7 million reported in 2010. IFRS pro forma operating income at EUR 17.3 million in 2011 or 5.6% of revenues was up from EUR 13.3 million or 4.6% of revenues in 2010. This improvement is largely due to revenue and gross margin growth as well as increased net capitalization of development expenses.

The IFRS operating income at EUR 13.2 million in 2011 also increased significantly from EUR 9.3 million in 2010. The major reason for this positive development is the above-mentioned increase in pro forma operating income.

Finally, IFRS net income amounted to EUR 16.9 million in 2011, significantly up vs. EUR 7.0 million in 2010. Beyond the development of the operating income mentioned above, the increase in the net result was positively affected by income tax benefits of EUR 2.9 million in 2011 after income tax expenses of EUR 4.0 million in 2010. The 2011 income tax benefit is due to recognition of deferred taxes in ADVA Optical Networking's U.S. entity in H2 2011. Basic and diluted IFRS net earnings per share were EUR 0.36 and EUR 0.35 in 2011, significantly up from EUR 0.15 each in 2010.

Conference Call

In conjunction with the release of its full-year 2011 audited IFRS financial results on February 23, 2012, 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 & chief operating officer, Jaswir Singh. Interested parties may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 235 135#, and download the corresponding presentation from ADVA Optical Networking's website, www.advaoptical.com, located in the "About Us / Investor Relations" section on the "Financial Results" page under "Conference Calls".

Q1 2012 Outlook

In Q1 2012, ADVA Optical Networking expects revenues to range between EUR 79 million and EUR 83 million, and anticipates pro forma operating income of between 2% and 5% of revenues. Further, ADVA Optical Networking notes that it will continue to perform detailed quarterly reviews of the expected business development in respect of all intangible assets, including capitalized research and development expenses. These reviews may result in non-cash impairment charges in Q1 2012 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q1 2012 financial results on April 24, 2012.

IFRS Consolidated Income Statement (in thousands of EUR, Q4 Q4 FY FY except earnings per share) 2011 2010 2011 2010 Revenues 83,432 79,403 310,945 291,725 Pro forma cost of goods sold -46,832 -45,656 -177,429 -170,501 -------------------------------------------------------------------------- Pro forma gross profit 36,600 33,747 133,516 121,224 Pro forma selling and marketing expenses -11,296 -12,304 -43,411 -42,947 Pro forma general and administrative expenses -5,465 -5,932 -24,007 -23,277 Pro forma research and development expenses -16,848 -12,565 -60,083 -49,391 Income from capitalization of development expenses, net of amortization for capitalized development projects 4,130 681 9,517 3,918 Other operating income and expenses, net 291 667 1,751 3,761 -------------------------------------------------------------------------- Pro forma operating income 7,412 4,294 17,283 13,288 Amortization of intangible assets from acquisitions -640 -638 -2,493 -2,141 Stock compensation expenses -98 -551 -1,583 -1,848 -------------------------------------------------------------------------- Operating income 6,674 3,105 13,207 9,299 Interest income and expenses, net -378 -447 -1,531 -1,439 Other financial gains and losses, net 1,937 828 2,328 3,130 -------------------------------------------------------------------------- Income before tax 8,233 3,486 14,004 10,990 Income tax benefit (expense), net 451 -1,863 2,935 -3,983 -------------------------------------------------------------------------- Net income 8,684 1,623 16,939 7,007 Earnings per share in EUR basic 0.18 0.03 0.36 0.15 diluted 0.18 0.03 0.35 0.15

# # #

The economic projections and forward-looking statements contained in this document relate to future facts. Such projections and forward-looking statements are subject to risks which cannot be foreseen and which are beyond the control of ADVA Optical Networking. ADVA Optical Networking is therefore not in a position to make any representation as to the accuracy of economic projections and forward-looking statements or their impact on the financial situation of ADVA Optical Networking or the market in the shares of ADVA Optical Networking.

ADVA Optical Networking provides consolidated pro forma financial results in this press release solely as supplemental financial information to help investors and the financial community make meaningful comparisons of ADVA Optical Networking's operating results from one financial period to another. ADVA Optical Networking believes that these pro forma consolidated financial results are helpful because they exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition- related intangible assets, which are not reflective of the Company's operating results for the period presented. This pro forma information is not prepared in accordance with IFRS and should not be considered a substitute for historical information presented in accordance with IFRS.

Published by: ADVA AG Optical Networking, Martinsried/Munich and Meiningen, Germany www.advaoptical.com



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Source: ADVA AG Optical Networking via Thomson Reuters ONE

[HUG#1588382]

For Press:
Gareth Spence
t +44 1904 699 358
public-relations(at)advaoptical.com

For Investors:
Wolfgang Guessgen
t +49 89 89 0665 940
investor-relations(at)advaoptical.com


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