Thursday, 21. July 2011 00:35
ADVA AG Optical Networking /
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Q2 2011 Revenues at EUR 77.8 Million

Q2 2011 IFRS Pro Forma Operating Income of
EUR 3.5 Million (4.5% of Revenues)

Q3 2011 Revenues Expected to Range
between EUR 73 Million and EUR 78 Million with
IFRS Pro Forma Operating Income between 2% and 5% of Revenues

Norcross, Georgia, USA and Martinsried/Munich, Germany. July 21, 2011. ADVA
Optical Networking announced Q2 2011 financial results for the quarter ended
June 30, 2011, and prepared in accordance with International Financial Reporting
Standards (IFRS).


Revenues in Q2 2011 at EUR 77.8 million were slightly above guidance of between
EUR 72 million and EUR 77 million, up a sound 13.4% vs. EUR 68.6 million
achieved in Q2 2010 and up 10.6% vs. EUR 70.4 million reported in Q1 2011. IFRS
pro forma operating income, excluding stock-based compensation and amortization
& impairment of goodwill & acquisition-related intangible assets, amounted to
EUR 3.5 million or 4.5% of revenues in Q2 2011, also slightly above guidance of
between 1% and 4% of revenues. This compares to EUR 1.9 million or 2.8% of
revenues in Q2 2010 and EUR 0.9 million or 1.3% of revenues in Q1 2011. Both the
year-on-year and the quarter-on-quarter increases of pro forma operating income
are largely related to higher revenues.

The IFRS operating income rose to EUR 2.4 million in Q2 2011, after EUR 1.0
million in Q2 2010. The key driver for this improvement is the above-mentioned
increase of pro forma operating income.

The IFRS net income amounted to EUR 0.8 million in Q2 2011, up from EUR 0.6
million in Q2 2010. The positive development of the operating income was mostly
compensated by net foreign currency exchange losses of EUR 1.0 million in
Q2 2011 after a gain of EUR 0.7 million in Q2 2010, and a loss of EUR 1.6
million in Q1 2011. Basic and diluted IFRS net earnings per share were EUR 0.02
each after EUR 0.01 each in Q2 2010.

"We are very pleased with our Q2 2011 revenues of EUR 77.8 million, which exceed
guidance and are up 11% vs. the previous quarter and 13% vs. Q2 2010. The
quarter-on-quarter rise is based on increased carrier infrastructure as well as
enterprise business, reflecting continued network traffic growth driven by video
applications and increasing adoption of cloud computing services. Year-on-year,
in addition to the above, the pick-up is also due to higher demand for Ethernet
access solutions. Our pro forma gross margin increased from 41.2% in Q1 2011 and
41.0% in Q2 2010 to 43.0% in Q2 2011. This improvement is due to changes in
product and customer mix and positive effects of our cost reduction programs.
With significant investment driven by our partnership with Juniper Networks and
tight management of operational expenses, our pro forma operating income came in
at 4.5% of revenues. Furthermore, cash and cash equivalents were at EUR 55.4
million at the end of Q2 2011, up a strong 24% from EUR 44.7 million at the end
of the previous quarter. This sound development is driven by working capital
improvements and results in a net liquidity improvement to EUR 27.3 million, up
EUR 11.3 million or 70% vs. the end of the previous quarter. This represents a
quarter-end all-time high and demonstrates our commitment to strongly managing
our cash flows and balance sheet," commented Jaswir Singh, chief financial
officer & chief operating officer of ADVA Optical Networking.

In conjunction with the release of its Q2 2011 financial results on July 21,
2011, ADVA Optical Networking will host a conference call for analysts and
investors at 3:00 p.m. CEST / 9:00 a.m. EDT. 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 916221#, and
download the corresponding presentation from ADVA Optical Networking's website,
located on the "financial results" page under "conference calls" in the investor
relations section of ADVA Optical Networking's website at

With its sound business model, ADVA Optical Networking remains flexible and is
able to respond quickly to continuous change in the global market. Although the
global economic sentiment is still creating mixed messages, the Company expects
Q3 2011 revenues of between EUR 73 million and EUR 78 million. Further, ADVA
Optical Networking anticipates Q3 2011 pro forma operating income to range
between 2% and 5% of revenues. ADVA Optical Networking notes that it will
continue to perform detailed quarterly reviews of the expected business
development with respect to all intangible assets, including capitalized
research and development expenses. These reviews may result in non-cash
impairment charges in Q3 2011 and beyond. The pro forma operating income
guidance provided above excludes any such potential impairment charges. ADVA
Optical Networking will publish its Q3 2011 financial results on October 20,

"While the Optical+Ethernet transport market in H1 2011 developed slowly, ADVA
Optical Networking's revenues in Q2 2011 grew nicely. Citing growth in mobile
backhaul and business Ethernet as key reasons for our market leadership,
Infonetics Research confirms that we continue to dominate the Ethernet Access
Device (EAD) market for the fifth consecutive year. Over the past several years,
ADVA Optical Networking has focused extensively on streamlining and developing
its business effectively, from daily operations to the consolidation of our
product platform and investment in our engineering and services teams. This has
proven to be key in achieving agility and flexibility during swift changes in
the economic landscape. Our current market position is a strong basis from which
we will drive profitability and revenue growth beyond market growth rates. Over
time, we will see gross margin improvements, based on the development of our
product mix, further effects from the consolidation of our product portfolio to
two hardware platforms, and our cost reduction focus. These drivers should
create further value for shareholders. We are excited about creatively shaping a
market which is projected to accelerate rapidly due to rising data traffic and
emergence of new applications and devices," stated Brian Protiva, chief
executive officer of ADVA Optical Networking.


(in thousands of EUR, Q2 Q2 6M 6M
except earnings per share) 2011 2010 2011 2010

Revenues 77,837 68,611 148,188 131,773

Pro forma cost of goods sold -44,399 -40,513 -85,767 -76,487
Pro forma gross profit 33,438 28,098 62,421 55,286

Pro forma selling and marketing expenses -11,099 -10,885 -21,132 -20,358

Pro forma
general and administrative expenses -6,183 -5,921 -12,269 -11,453

Pro forma
research and development expenses -14,094 -12,235 -28,453 -24,095

Income from capitalization of development
expenses, net of amortization for capitalized
development projects 1,160 863 2,848 2,292

Other operating income (expense), net 277 1,969 991 2,918
Pro forma operating income 3,499 1,889 4,406 4,590

Amortization of intangible assets
from acquisitions -607 -435 -1,239 -846

Stock compensation expenses -479 -443 -1,061 -823
Operating income 2,413 1,011 2,106 2,921

Interest income (expense), net -409 -327 -751 -654

Other income (expense), net -988 717 -2,597 1,851
Income (loss) before tax 1,016 1,401 -1,242 4,118

Income tax benefit (expense), net -179 -816 -235 -1,163
Net income (loss) 837 585 -1,477 2,955

Earnings per share in EUR

   basic 0.02 0.01 -0.03 0.06

   diluted 0.02 0.01 -0.03 0.06

# # #

ADVA Optical Networking (FSE: ADV) is a global provider of intelligent
telecommunications infrastructure solutions. With software-automated
Optical+Ethernet transmission technology, the Company builds the foundation for
high-speed, next-generation networks. The Company's FSP product family adds
scalability and intelligence to customers' networks while removing complexity
and cost. With a flexible and fast-moving organization, ADVA Optical Networking
forges close partnerships with its customers to meet the growing demand for
data, storage, voice and video services. Thanks to reliable performance for more
than 15 years, the Company has become a trusted partner for more than 250
carriers and 10,000 enterprises across the globe. For more information, please

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.

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

Gareth Spence
t +1 408 778 2024 (U.S.)
t +44 1904 699 358 (Europe)
t +86 755 8621 7400 (Asia)

Wolfgang Guessgen
t +1 201 940 7212 (U.S.)
t +49 89 89 0665 940 (Europe)
t +86 755 8621 7400 (Asia)

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

WKN: 510300;ISIN: DE0005103006;
Listed: Freiverkehr in Hanseatische Wertpapierbörse zu Hamburg,
Freiverkehr in Börse Berlin,
Freiverkehr in Börse Düsseldorf,
Freiverkehr in Bayerische Börse München,
Freiverkehr in Niedersächsische Börse zu Hannover,
Prime Standard in Frankfurter Wertpapierbörse,
Regulierter Markt in Frankfurter Wertpapierbörse;

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