ADVA Optical Networking Reports Audited 2012 IFRS Financial Results In Line with Expectations

Wed Feb 27, 2013 6:36pm EST

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ADVA Optical Networking SE / ADVA Optical Networking Reports Audited 2012 IFRS Financial Results
In Line with Expectations . Processed and transmitted by Thomson Reuters ONE. The issuer is solely
responsible for the content of this announcement. 

Q4 2012 revenues at EUR 80.3 million,
IFRS pro forma operating income of EUR 4.8 million (6.0% of revenues)

FY 2012 revenues at EUR 330.1 million,
IFRS pro forma operating income of EUR 21.8 million (6.6% of revenues)

Q1 2013 revenues expected to range 
between EUR 72 million and EUR 77 million with 
IFRS pro forma operating income between -2% and +2% of revenues

Martinsried/Munich, Germany. February 28, 2013. ADVA Optical Networking announced Q4 and audited
full-year 2012 financial results for the period ended December 31, 2012, and prepared in
accordance with International Financial Reporting Standards (IFRS).


Revenues totaled EUR 80.3 million in Q4 2012 and were in the upper half of guidance of between EUR
77 million and EUR 82 million. Revenues are down 3.8% vs. Q4 2011 at EUR 83.4 million and down
2.4% vs. Q3 2012 at EUR 82.3 million. IFRS pro forma operating income, excluding stock-based
compensation and amortization & impairment of goodwill & acquisition-related intangible assets,
amounted to EUR 4.8 million in Q4 2012 or 6.0% of revenues, at the upper end of guidance of
between 2% and 6% of revenues. This compares to Q4 2011 IFRS pro forma operating income of EUR 7.4
million or 8.9% of revenues, and to Q3 2012 IFRS pro forma operating income of EUR 5.6 million or
6.8% of revenues. These developments are largely due to lower revenues and increased selling and
marketing expenses.

The IFRS operating income in Q4 2012 was EUR 4.3 million, down from EUR 6.7 million in Q4 2011.
This is due to the above-mentioned reasons for lower pro forma operating income.

The IFRS net income in Q4 2012 amounted to EUR 4.1 million after EUR 8.7 million in Q4 2011.
Beyond the reduced operating income, net foreign currency exchange losses of EUR 0.1 million in Q4
2012 after gains of EUR 1.9 million in Q4 2011 contributed to this decrease. Basic and diluted
IFRS net earnings per share were EUR 0.09 and EUR 0.08, respectively, down from EUR 0.18 each in
Q4 2011.

Driven by increased Ethernet access business, revenues rose to a record high of EUR 330.1 million
in 2012, 6.2% above the EUR 310.9 million reported in 2011. IFRS pro forma operating income
increased from EUR 17.3 million or 5.6% of revenues in 2011 to EUR 21.8 million or 6.6% of
revenues in 2012. This improvement is largely due to revenue and gross margin growth.

2012 IFRS operating income at EUR 18.8 million also increased significantly from EUR 13.2 million
in 2011. The main reason for this positive development is the above-mentioned increase in pro
forma operating income and a reduction in amortization of intangible assets from acquisitions from
EUR 2.5 million in 2011 to EUR 1.6 million in 2012.

Finally, IFRS net income amounted to EUR 16.7 million in 2012, slightly down vs. EUR 16.9 million
in 2011. The positive operating income development was mostly compensated by income tax expenses
of EUR 1.8 million after income tax benefits of EUR 2.9 million in 2011. Furthermore, net foreign
currency exchange gains of EUR 0.8 million in 2012 were lower than the EUR 2.3 million recorded in
2011. Basic and diluted IFRS net earnings per share were EUR 0.35 and EUR 0.34 in 2012, slightly
down from EUR 0.36 and EUR 0.35, respectively, in 2011.

"We are very pleased with our Q4 2012 results which were achieved in a very volatile
macro-economic environment. At EUR 80.3 million, our Q4 2012 revenues are in the upper half of
guidance. Our pro forma gross margin strengthened from 39.3% in Q3 2012 and 40.0% in Q4 2011, to
41.8% in Q4 2012. Prior to amortization of capitalized development expenses, pro forma gross
margin increased from 44.5% in Q3 2012 and 43.9% in Q4 2011, to 46.7% in Q4 2012. We achieved pro
forma operating income of 6.0% of revenues in Q4 2012, at the upper end of guidance, demonstrating
our focus on managing operational costs. In addition, cash and cash equivalents were at another
record high of EUR 70.6 million at the end of Q4 2012, slightly up from EUR 70.3 million at the
end of the previous quarter. Throughout the year, ADVA Optical Networking maintained financial
strength, with an equity ratio in excess of 50% and record high net liquidity at the end of every
quarter. At year-end 2012, net liquidity was at an all-time high of EUR 41.6 million, up from EUR
41.3 million at the end of Q3 2012. For the full year 2012, through a combination of revenue
growth, increased gross margins, and enhanced operational excellence, we were able to further grow
profitability. Pro forma operating income grew by 26%, from EUR 17.3 million or 5.6% of revenues
in 2011 to EUR 21.8 million or 6.6% of revenues in 2012," commented Jaswir Singh, chief financial
officer & chief operating officer of ADVA Optical Networking.


In conjunction with the release of its full-year 2012 audited IFRS financial results on February
28, 2013, 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 997 939#,
and download the corresponding presentation from ADVA Optical Networking's website, , located in the "About Us / Investor Relations"
section on the "Financial Results" page under "Conference Calls

In Q1 2013, ADVA Optical Networking expects revenues to range between EUR 72 million and EUR 77
million, and anticipates pro forma operating income of between -2% and +2% of revenues. As a
matter of caution, ADVA Optical Networking notes that it will continue to perform quarterly
reviews of the expected business development with respect to all intangible assets, including
capitalized development expenses. In case of highly adverse business prospects, these reviews may
result in non-cash impairment charges in Q1 2013 and beyond. The pro forma operating income
guidance provided above excludes any such potential impairment charges. ADVA Optical Networking
will publish its Q1 2013 financial results on April 25, 2013.

"Despite the difficult macro-economic environment, we achieved our goal to grow profitably. ADVA
Optical Networking successfully recognizes and targets rapidly changing technology trends and
growth markets. We continue to be the multi-year global market leader in Ethernet Access Devices
with a market share of more than 20%, and remain a strong competitor in EMEA for metro optical
transport solutions. Although long-term growth perspectives continue to be strong, for 2013 we are
likely to face significant volatility in our market. Current carrier investment plans draw a mixed
picture. However, an increasing share of the carriers' spending will flow into the migration to
LTE projects which should translate into incremental business for ADVA Optical Networking. Beyond
potential full-year revenue growth, our focus on innovation and strategic technology partnerships
will result in an expanding share of higher-margin, software-heavy applications as well as
expanded service offerings, supporting our long-term profitability commitment," stated Brian
Protiva, chief executive officer of ADVA Optical Networking.


 (in thousands of EUR,                                     Q4       Q4        FY        FY  
 except earnings per share)                               2012     2011      2012      2011 
 Revenues                                               80,268   83,432   330,069   310,945 
 Pro forma cost of goods sold*                         -46,711  -50,099  -196,820  -191,560 
 Pro forma gross profit*                                33,557   33,333   133,249   119,385 
 Pro forma                                             -12,995  -11,296   -46,259   -43,411 
 selling and marketing expenses                                                             
 Pro forma                                              -6,114   -5,465   -25,725   -24,007 
 general and administrative expenses                                                        
 Pro forma                                             -15,515  -16,848   -65,055   -60,083 
 research and development expenses                                                          
 Income from capitalization of development expenses*     5,064    7,397    23,529    23,648 
 Other operating income and expenses, net                  840      291     2,059     1,751 
 Pro forma operating income                              4,837    7,412    21,798    17,283 
 Amortization of                                          -145     -640    -1,620    -2,493 
 intangible assets from acquisitions                                                        
 Stock compensation expenses                              -404      -98    -1,344    -1,583 
 Operating income                                        4,288    6,674    18,834    13,207 
 Interest income and expenses, net                        -298     -378    -1,163    -1,531 
 Other financial gains and losses, net                    -138    1,937       834     2,328 
 Income before tax                                       3,852    8,233    18,505    14,004 
 Income tax benefit (expense), net                         249      451    -1,783     2,935 
 Net income                                              4,101    8,684    16,722    16,939 
 Earnings per share in EUR                                                                  
 Basic                                                    0.09     0.18      0.35      0.36 
 Diluted                                                  0.08     0.18      0.34      0.35 

* Research and development expenses include income from capitalization of development expenses.
From 2012, amortization for capitalized development projects is presented as cost of goods sold.
Prior period information has been adjusted accordingly, by reclassification of amortization from
research and development expenses to cost of goods sold. The effect on cost of goods sold amounted
to EUR 3,917/15,394 thousand and EUR 3,267/14,131 thousand in Q4/12M 2012 and Q4/12M 2011,

# # #

About ADVA Optical Networking
ADVA Optical Networking 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 two decades, the Company has become a trusted partner for more than 250
carriers and 10,000 enterprises across the globe. For more information, please visit us at .

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 Optical Networking SE, Martinsried/Munich and Meiningen, Germany 

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

For Investors:
Wolfgang Guessgen
t +49 89 89 0665 940


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

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