ADVA Optical Networking Reports Q3 2008 Financial Results in Line with Expectations

Q3 2008 revenues at EUR 54.1 million; Q3 2008 IFRS pro forma operating income of EUR 1.3 million (2.4% of revenues); Q4 2008 revenues expected to range between EUR 50 million and EUR 55 million with IFRS pro forma operating income between -3% and +2% of revenues

Norcross, Georgia, USA and Martinsried/Munich, Germany (PRWEB) November 5, 2008 -- ADVA Optical Networking (www.advaoptical.com) today announced Q3 2008 financial results for the quarter ended September 30, 2008, and prepared in accordance with International Financial Reporting Standards (IFRS).

Q3 2008 IFRS FINANCIAL RESULTS

Revenues in Q3 2008 totaled EUR 54.1 million after EUR 61.5 million in Q3 2007 and EUR 52.7 million in Q2 2008, and in line with guidance of between EUR 50 million and EUR 58 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, came in at EUR 1.3 million in Q3 2008 or 2.4% of revenues, also in line with guidance of between -4% and +4%. This compares to Q3 2007 IFRS pro forma operating income of EUR 4.0 million or 6.5% of revenues, and to Q2 2008 IFRS pro forma operating income of EUR -0.1 million or -0.1% of revenues. The year-over-year pro forma operating income reduction to the largest extent was driven by weaker revenues.

The IFRS operating loss in Q3 2008 was EUR 0.1 million, after an operating income of EUR 1.3 million in Q3 2007. The key driver for this development is the above-mentioned decline of pro forma operating income. In part, the decline is offset by lower scheduled amortization of intangible assets from acquisitions, which amounted to EUR 0.6 million in Q3 2008 after EUR 2.0 million in Q3 2007.

IFRS net income in Q3 2008 amounted to EUR 0.4 million, after a net loss of EUR 1.2 million in Q3 2007. The Q3 2008 net income was largely driven by the factors impacting the operating result described above, by net foreign currency exchange gains of EUR 0.5 million and by an income tax benefit of EUR 0.3 million. The net foreign currency exchange gains were largely due to the devaluation of the EUR against the USD, and the income tax benefit related to deferred tax adjustments on tax losses carried forward and temporary differences between tax and IFRS accounting. In Q3 2007, in contrast, there were net foreign currency exchange gains of EUR 1.3 million and an income tax expense of EUR 1.0 million. Basic and diluted IFRS net earnings per share were EUR 0.01 each in Q3 2008 after EUR -0.03 each in Q3 2007.

"Our Q3 2008 revenues at EUR 54.1 million came in at about the midpoint of guidance of between EUR 50 million and EUR 55 million, while our pro forma operating income at 2.4% of revenues was at the upper end of our guidance of between -4% and+4% of revenues. This development was driven by variations in regional revenue distribution and in product and customer mix, which led to higher gross margins than originally anticipated, and by slightly higher than expected net capitalization of development expenses. In addition, we saw a significant rise in our operating cash flow to EUR 9.2 million in Q3 2008, fueled by improved working capital management. Consequently, our quarter-end net liquidity rose to EUR 5.4 million, an increase of EUR 4.6 million vs. the previous quarter," commented Jaswir Singh, chief financial officer of ADVA Optical Networking.

CONFERENCE CALL AND WEBCAST

In conjunction with the release of its Q3 2008 IFRS financial results today, November 6, 2008, 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, Jaswir Singh. Interested parties may dial in at +49 69 4035 9616 (no dial-in code) or +1 800 814 6417 (participant code: 572371#), 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.

Q4 2008 OUTLOOK

Based on the volatile macro environment, ADVA Optical Networking expects Q4 2008 revenues to range between EUR 50 million and EUR 55 million. Further, we anticipate pro forma operating income of between -3% and +2% of revenues in Q4 2008. Further, ADVA Optical Networking notes that like in prior years, as part of the IFRS year-end 2008 closing process, it will perform a detailed review of the expected business development in respect of all intangible assets, including capitalized research and devel¬opment expenses. This review may result in non-cash impairment charges in Q4 2008. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q4 and full-year 2008 financial results on March 10, 2009.

"Despite the global economic uncertainty, we have the potential to continue growing our revenues quarter by quarter. Nevertheless, we remain cautious and thus continue to guide in a wide range for Q4 2008. Further out, at least carriers should continue to invest heavily, given tight competition, well-utilized networks, good traffic growth and their mostly strong balance sheets. I am confident that in the challenging times ahead of us, driven by our focus on optical networking, a direct touch sales model and our innovation leadership, ADVA Optical Networking will become a stronger company. Our Q3 2008 results confirm that we have set the correct course to support sustainable profitability, even in a depressed environment," stated Brian Protiva, chief executive officer of ADVA Optical Networking.

ABOUT ADVA OPTICAL NETWORKING

ADVA Optical Networking (FSE: ADV) is at the forefront of providing Optical+Ethernet solutions that advance next-generation networks for data, storage, voice and video services. Our company's strength comes from passionate and dedicated employees, all sharing a common vision: a fast, customized response to customers' ever-changing needs. Our innovative FSP products and strong customer focus provide carriers and enterprises the ability to scale their networks and deliver intelligent, competitive new services. ADVA Optical Networking's solutions have been deployed at more than 200 carriers and 10,000 enterprises around the world. For further information about ADVA Optical Networking: www.advaoptical.com.

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

ADVA Optical Networking North America, Inc., Norcross, Georgia, USA

ADVA Optical Networking (Shenzhen) Ltd., Shenzhen, China

www.advaoptical.com

FOR PRESS:

Christine Keck

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

t +44 1904 699 358 (Europe)

t +86 755 8621 7400 (Asia)

public-relations @ advaoptical.com

FOR INVESTORS:

Wolfgang Guessgen

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

t +49 89 89 0665 940 (Europe)

t +86 755 8621 7400 (Asia)

investor-relations @ advaoptical.com

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