TomTom Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091027006777/en

AMSTERDAM--(Business Wire)--
TomTom (Amsterdam:TOM2)

Excluding restructuring charges1
(in € millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change

Revenue 365 429 -15% 368 -1%

Gross result 191 240 -20% 188 2%
Gross margin 52% 56% 51%

EBITDA 96 119 -20% 88 9%
EBITDA margin 26% 28% 24%

Operating result 70 93 -25% 59 19%
Operating margin 19% 22% 16%

Net result 31 58 -48% 21 42%
EPS, € diluted 0.14 0.39 -63% 0.14 0%
Adjusted EPS2, € diluted 0.20 0.47 -58% 0.22 -12%

Reported
(in € millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change

Revenue 365 429 -15% 368 -1%

Gross result 191 240 -20% 188 2%
Gross margin 52% 56% 51%

EBITDA 96 118 -19% 85 12%
EBITDA margin 26% 28% 23%

Operating result 70 92 -24% 57 23%
Operating margin 19% 21% 15%

Net result 31 58 -47% 20 53%
EPS, € diluted 0.14 0.38 -63% 0.13 8%
Adjusted EPS2, € diluted 0.20 0.47 -58% 0.22 -12%

Third quarter 2009 financial highlights1

* Revenue of €365 million
* Operating result of €70 million, operating margin of 19%
* Operating expenses reduced by €26 million, 17% year on year
* Net cash flow from operating activities of €79 million
* Net debt of €599 million (Q2 2009: €1,006 million)

Third quarter 2009 operational highlights

* Launch of TomTom application for Apple iPhone
* TomTom solution for Fiat Punto Evo launched
* Further roll-out of LIVE Services in Portugal and Belgium
* New PND ranges: TomTom XXL and TomTom Start
* Tele Atlas leadership team fully in place

1For comparative reasons the restructuring charges of €2.1 million in Q2 2009 and €0.7 million in Q3 2008 have been excluded.
2Earnings per share adjusted for acquisition related amortisation, non-cash goodwill impairment and restructuring charges on a post tax basis.

TomTom`s Chief Executive Officer, Harold Goddijn

"We delivered strong profitability and cash flow in the third quarter as a
result of our continued focus on cost and cash management. At the same time we
are broadening our revenue base. In the past twelve months we were able to
increase the contribution of non PND revenue from 20 percent to 30 percent of
group revenue.``

Market and TomTom outlook 2009

End user demand continued to develop in line with our expectations in both
Europe and North America. For the full year 2009, the European and North
American PND market sizes are expected to be approximately 15 million and 17
million units respectively.

We are ahead of schedule to achieve our €90 million operating expenses savings
target when comparing operating expenses in 2009 to the 2008 full year pro forma
operating expenses of €627 million.

Operational review

Key figures TomTom (excluding Tele Atlas)

(in € millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change

Revenue 318 377 -16% 322 -1%
- of which PNDs 255 343 -26% 276 -7%
- of which Other 63 34 85% 47 34%

# of PNDs sold (in 000s) 2,581 2,526 2% 2,458 5%
ASP 99 136 -27% 112 -12%

In the third quarter the market showed a stable PND end user demand on a
sequential basis. Year over year the market decreased in Europe in the quarter
by 7% from 4.1 million to 3.8 million units. In North America the market
increased by 3% from 3.3 million to 3.4 million units during the same period.
Our market shares in both geographies remained fairly stable at 44% in Europe
and 18% in North America.

In the quarter the Consumer business unit refreshed our premium range with the
TomTom GO X50 series, including a series of devices with LIVE Services. At the
end of the quarter we also introduced a connected volume product in the USA, the
TomTom XL LIVE. To address a broader range of customers we added two new PND
ranges to our offering, the TomTom XXL and Start, catering to individual
preferences and needs.

Halfway through the quarter we launched our iPhone application. The initial
demand was strong and overall the reception of the application was positive. In
the quarter close to 80 thousand downloads were registered.

The AUTO business unit announced that together with Fiat Group Automobiles we
have developed an integrated portable navigation solution, which will be sold as
an option in the Fiat Punto Evo. The collaboration offers Fiat the opportunity
to integrate our solutions into multiple car models. During the quarter, the
Carminat-TomTom solution was rolled out over multiple car models within Renault.

The WORK business unit announced the fully portable TomTom GO 9000 which is
aimed at fleets where drivers and vehicles change frequently or where
subcontractors are used. Early in October we announced the TomTom GO 7000 TRUCK,
a product specifically designed for trucks and large vehicles. In the quarter
the net number of subscribers grew by six thousand to 87 thousand.

Key figures Tele Atlas1

(in € millions) Q3'09 Q3'08 y.o.y. change Q2'09 q.o.q. change

Revenue 47 52 -8% 46 3%
- of which PNDs (external) 11 14 -17% 8 35%
- of which Automotive (external) 13 13 -4% 13 -6%
- of which Other 24 25 -5% 24 -3%

# of map licenses (external, in 000s)2 1,249 1,520 -18% 1,017 22%
1 excluding restructuring charges
2 PND and automotive maps

Tele Atlas made clear progress in processing community input to further improve
its map database. By using more community input to update, validate and realign
or extend the data in our map database we have been able to further improve the
freshness and accuracy of our maps at lower cost.

Tele Atlas signed an agreement with Vodafone to supply digital maps and
location-based content, marked 20 years of collaboration with GIS modelling and
mapping software leader ESRI and signed on with consumer electronics developer
Nextar. We also expanded our digital map coverage in Argentina and Uruguay,
working jointly with Datamap.

Tele Atlas` leadership team was completed with the appointments of the Chief
Technology Officer and the Executive Vice President of Sales and Marketing.

Financial review

For ease of comparison restructuring charges are excluded from the financial
review.

Revenue

Revenue for the group was €365 million for the quarter, a slight decrease of
0.8% sequentially (Q2 2009: €368 million) and a decrease of 15% compared with
last year (Q3 2008: €429 million). The year on year decline reflects the
continued impact of the weak economic environment on our business. The rate of
year on year revenue decline slowed this quarter.

The revenue of the TomTom business (excluding the Tele Atlas business) over the
past quarter amounted to €318 million, a decrease of 1.4% sequentially (Q2 2009:
€322 million) and a decline of 16% compared to the previous year (Q3 2008: €377
million).

PND sales amounted to €255 million, representing 70% of group revenue in the
quarter (Q2 2009: €276 million and 75%; Q3 2008: €343 million and 80%).

Other revenue, which consists of WORK, AUTO, services and other consumer
revenue, increased by 34% sequentially to €63 million from €47 million in the
second quarter of the year (Q3 2008: €34 million). The increase in other revenue
was mainly driven by a strong increase in automotive sales and the new iPhone
application.

Tele Atlas revenue (excluding inter company) was €47 million for the quarter, an
increase of 3.2% sequentially (Q2 2009: €46 million) and a decline of 8.3%
compared to the same quarter of last year (Q3 2008: €52 million). The year over
year revenue decline was mainly the result of lower PND map sales.

Volumes and average selling prices

We shipped 2.58 million PND units in the quarter, an increase of 5.0%
sequentially (Q2 2009: 2.46 million) and an increase of 2.2% year on year (Q3
2008: 2.53 million).

The average selling price for PNDs in the second quarter was €99, a decrease of
12% compared to the previous quarter (Q2 2009: €112) and a decrease of 27%
compared to the third quarter of 2008 (Q3 2008: €136). The decline was driven by
price decreases across a number of products, partly in anticipation of
promotional activities in the fourth quarter. We continue to expect that the
rate of ASP decline for the full year will be slower than in 2008.

Gross margin

The gross margin for the group was strong at 52%, which represents an increase
of one percentage point sequentially (Q2 2009: 51%) and a decrease of four
percentage points compared to the third quarter of last year (Q3 2008: 56%).

Operating expenses

In the quarter, total operating expenses amounted to €122 million, which
represents a decrease of 5.7% or €7.3 million compared to the second quarter (Q2
2009: €129 million). The decrease in operating expenses was the result of
reduced costs across all operating expense categories. Year on year pro forma
operating expenses decreased by 17% for the quarter (Q3 2008: €147 million).
Operating expenses as a percentage of revenue for the quarter decreased to 33%
(Q2 2009: 35%, Q3 2008: 34%).

Research and development (R&D) expenses for the quarter were €31 million, an
8.1% decrease compared to the previous quarter (Q2 2009: €34 million) and a
decrease of 18% compared to the R&D expenses for the previous year (Q3 2008: €38
million). The decrease is the result of improving efficiency in our map
production activities.

Amortisation of technology and databases for the quarter was €19 million (Q2
2009: €21 million, Q3 2008: €17 million).

Marketing expenses showed a slight decline for the quarter at €21 million (Q2
2009: €22 million). The year on year comparison shows a decrease in marketing
expenses of 31% (Q3 2008: €31 million). Total marketing expenses represented
5.8% of group revenue, a slight decrease compared to the previous quarter (Q2
2009: 6.0%), and a decrease of 1.4 percentage points compared to the same
quarter last year (Q3 2008: 7.2%).

Selling, general and administrative (SG&A) expenses for the quarter amounted to
€46 million, down slightly compared to the previous quarter (Q2 2009: €47
million) and by 18% compared to the same quarter last year (Q3 2008: €56
million). SG&A expenses for the group represented 13% of revenue, the same as in
the previous quarter.

Stock compensation expenses for the quarter were €3.6 million, down from €5.1
million in the previous quarter. The costs in the previous quarter were higher
because of share options which have since vested which resulted in lower ongoing
costs.

The operating result for the quarter increased by €11 million quarter on quarter
to €70 million (Q2 2009: €59 million). As a percentage of revenue, the operating
profit increased by three percentage points to 19% (Q2 2009: 16%). Year on year
the operating profit decreased by €23 million (Q3 2008: €93 million).

Financial results

The interest expense for the third quarter amounted to €27 million (Q2 2009: €15
million). The increased interest expense is explained by the one-off accelerated
amortisation of the capitalised transaction costs on the borrowings (€13
million) which resulted from the debt repayment of €409 million. The interest
expense was partly offset by a €3.0 million gain resulting from buying back part
of the outstanding debt at a discount.

The other finance result shows a loss of €2.5 million, which arose mainly from
foreign exchange contracts which were put in place to cover our committed and
anticipated exposure in non-functional currencies. The loss on our foreign
exchange hedge instruments was mainly driven by a weaker US dollar against the
euro during the quarter which was partly offset by the weakening of the GB pound
as we hedge both our GB pound sales and our net exposure related to our US
dollar sales and purchases.

Tax

The net income tax charge in all the jurisdictions in which we operate was €9.8
million in the third quarter (Q2 2009: €6.8 million). The effective tax rate in
the third quarter was 24.0% (Q2 2009: 24.1%).

Cash flow

In the third quarter, we had strong cash flows from operations of €114 million,
an increase of €8.6 million versus the same period last year (Q3 2008: €105
million) and an increase of €16 million versus the previous quarter. The cash
generated from operations was mainly driven by our operating profit of €70
million and by a further reduction of working capital which resulted in a cash
inflow of €8.2 million. Net cash flow from operating activities was €79 million
compared to €37 million in the same period last year and €96 million in the
previous quarter.

The net proceeds of the equity issue were used to repay the loan and resulted in
a cash outflow from financing activities of €64 million as the cash inflow from
the private placement was booked in the previous quarter.

Debt financing

On 30 September 2009 the book value of our borrowings amounted to €996 million,
a decrease of €398 million compared to the previous quarter (Q2 2009: €1,394
million). Excluding transaction costs, which are netted against the borrowings,
our borrowings amounted to €1,018 million, down from €1,427 million in the
previous quarter. The decrease results from a repayment of €409 million which
includes a €3.0 million gain resulting from buying back part of the outstanding
debt at a discount.

On 30 September 2009 our net debt had decreased to €599 million, down from
€1,006 million at the start of the quarter. The decrease results from the cash
inflow received from the rights issue in combination with a strong operating
cash flow for the quarter. The net debt is the sum of the borrowings (€1,018
million), minus the cash and cash equivalents at the end of the period (€423
million) plus our financial lease commitments (€3.6 million).

The floating interest coupon of the loan is based on Euribor plus a margin. The
Euribor element of the interest coupon is fixed with interest rate swaps.

Balance sheet

Current assets slightly decreased in the quarter, mainly driven by a decrease of
€25 million in trade receivables to an amount of €212 million (Q2 2009: €237
million). Our inventories increased during the quarter by €13 million to €78
million (Q2 2009: €64 million). The cash position remained stable during the
quarter at €423 million (Q2 2009: €423 million).

At the end of the third quarter, we had shareholder`s equity of €943 million, up
from €502 million at the beginning of the quarter, mainly resulting from the
gross proceeds of the private placement and the rights issue.

- END-

Consolidated income statements

(in € thousands) Q3`09 Q3`08 YTD'09 YTD'08

Revenue 365,151 428,712 946,348 1,145,965
Cost of sales 173,857 188,530 460,056 603,169
Gross result 191,294 240,182 486,292 542,796

Research and development expenses 31,385 38,428 102,910 84,723
Amortisation of technology & databases 19,355 17,300 57,080 29,889
Marketing expenses 21,302 31,012 60,445 90,952
Selling, general and administrative expenses 46,132 56,685 146,870 141,326
Stock compensation expense 3,552 4,630 8,829 2,933
Total operating expenses 121,726 148,055 376,134 349,823

Operating result 69,568 92,127 110,158 192,973

Interest result -26,945 -26,460 -59,592 -24,496
Other finance result -2,542 11,424 -35,480 19,506
Result associates 672 0 1,870 -13,456
Result before tax 40,753 77,091 16,956 174,527

Income tax -9,780 -19,422 -3,205 -57,757
Net result 30,973 57,669 13,751 116,770
Minority interests 431 -36 0 162
Net result attributed to the group 30,542 57,705 13,751 116,608

EPS, € basic 0.14 0.39 0.08 0.79
EPS, € diluted 0.14 0.38 0.08 0.78

Basic number of shares (in millions) 213.4 148.7 171.3 147.8
Diluted number of shares (in millions) 215.9 150.8 172.0 150.1

Consolidated pro-forma income statements (excluding restructuring charges)*

(in € thousands) Q3`09 Q3`08 YTD'09 YTD'08

Revenue 365,151 428,712 946,348 1,220,111
Cost of sales 173,857 188,530 460,056 587,232
Gross result 191,294 240,182 486,292 632,879

Research and development expenses 31,385 38,428 102,910 127,440
Amortisation of technology & databases 19,355 17,300 57,080 50,255
Marketing expenses 21,302 31,012 60,445 102,903
Selling, general and administrative expenses 46,132 56,052 139,366 167,678
Stock compensation expense 3,552 4,630 8,829 10,478
Total operating expenses 121,726 147,422 368,630 458,754

Operating result 69,568 92,760 117,662 174,125

Interest result -26,945 -26,461 -59,592 -75,154
Other finance result -2,542 11,424 -35,480 20,060
Result associates 672 0 1,870 -1,211
Result before tax 40,753 77,723 24,460 117,820

Income tax -9,780 -19,583 -5,118 -45,448
Net result 30,973 58,140 19,342 72,372
Minority interests 431 -36 0 -137
Net result attributed to the group 30,542 58,176 19,342 72,509

EPS, € basic 0.14 0.39 0.11 0.49
EPS, € diluted 0.14 0.39 0.11 0.48

Basic number of shares (in millions) 213.4 148.7 171.3 147.8
Diluted number of shares (in millions) 215.9 150.8 172.0 150.1

* The figures assume consolidation of Tele Atlas throughout 2008 and exclude the
restructuring charges of €0.7 million in Q3 2008, €5.4 million in Q1 2009 and
€2.1 million in Q2 2009.

Consolidated balance sheet

(in € thousands) 30 Sept 2009 31 Dec 2008

Goodwill 854,717 854,713
Other intangible assets 977,637 1,011,194
Property, plant and equipment 45,204 53,155
Deferred tax assets 37,156 32,977
Investments 7,494 5,663
Total non-current assets 1,922,208 1,957,702

Inventories 77,509 145,398
Trade receivables 212,093 289,981
Other receivables and prepayments 36,501 15,987
Other financial assets 19,077 36,583
Cash and cash equivalents 422,932 321,039
Total current assets 768,112 808,988

Total assets 2,690,320 2,766,690

Share capital 44,337 24,663
Share Premium 973,691 575,918
Other reserves 42,218 32,746
Stock compensation reserve 74,932 69,469
Retained earnings/ (deficit) -196,602 -194,387
Minority interests 4,191 4,964
Total equity 942,767 513,373

Borrowings 795,233 1,241,900
Provisions 54,049 55,702
Long-term liability 3,640 4,749
Deferred tax liability 227,560 229,075
Total non-current liabilities 1,080,482 1,531,426

Trade payables 137,932 152,119
Borrowings 200,841 146,588
Tax and social security 42,584 29,044
Provisions 47,407 57,231
Other liabilities and accruals 238,307 336,909
Total current liabilities 667,071 721,891

Total equity and liabilities 2,690,320 2,766,690

Consolidated statements of cash flows

(in € thousands) Q3'09 Q3'08 YTD'09 YTD'08

Operating result 69,568 92,127 110,158 192,973
Financial gains / (losses) 8,766 25,569 -15,851 13,609
Depreciation of PPE 2,418 5,831 14,465 10,689
Amortisation of intangible assets 23,555 18,415 66,115 33,933
Change to provisions -2,529 1,331 -12,074 11,866
Change to stock compensation reserve 3,632 2,288 7,043 1,247
Changes in working capital:
Change in inventories -12,464 -55,503 68,487 -68,103
Change in receivables and prepayments 7,073 80,753 57,379 194,187
Change in current liabilities 13,558 -65,826 -70,678 -178,166
Cash generated from operations 113,577 104,985 225,044 212,235
Interest received 289 565 1,877 11,566
Interest paid -23,155 -24,190 -57,745 -32,680
Corporate income taxes paid -12,184 -44,459 -14,985 -86,275
Net cash flow from operating activities 78,527 36,901 154,191 104,846

Investments in intangible assets -7,624 -12,401 -42,429 -20,931
Investments in property, plant and equipment -3,340 -4,374 -12,185 -25,159
Acquisition of subsidiary -2,604 -59,558 -2,604 -1,829,495
Total cash flow used in investing activities -13,568 -76,333 -57,218 -1,875,585

Repayment/proceeds from borrowings -412,048 -3,648 -412,048 1,550,789
Proceeds on issue of ordinary shares 348,189 7,686 415,867 20,376
Total cash flow from financing activities -63,859 4,038 3,819 1,571,165

Net increase in cash and cash equivalents 1,100 -35,394 100,792 -199,574
Cash and Cash equivalents at beginning of period 422,530 296,277 321,039 463,339
Exchange rate effect on cash balances held in foreign currencies -698 1,631 1,101 -1,251
Cash and Cash equivalents at end of period 422,932 262,514 422,932 262,514

Consolidated statement of changes in stockholders` equity

(in € thousands) share capital share premium other reserves stock compens. reserve retained earnings shareholders equity minority interests total

01 January 2009 24,663 575,918 32,746 69,469 -194,387 508,409 4,964 513,373

Translation differences -1,012 -1,012 -773 -1,785
Transfer to legal reserves 10,484 -15,966 -5,482 -5,482

Net income (expense) recognised directly in equity 0 0 9,472 0 -15,966 -6,494 -773 -7,267

Result for the year 13,751 13,751 0 13,751

Total recognised income and expense 0 0 9,472 0 -2,215 7,257 -773 6,484

Stock compensation reserve 5,463 5,463 5,463
Issue of Share Capital 19,674 397,773 417,447 417,447
31 September 2009 44,337 973,691 42,218 74,932 -196,602 938,576 4,191 942,767

Accounting policies

Basis of accounting

The condensed consolidated financial statements for the three-month period ended
30 September 2009 with related comparative information have been prepared using
International Financial Reporting Standards (IFRS). Accounting policies and
methods of computation followed in the interim financial statements, for the
period ended 30 September 2009, are the same as those followed in the Financial
Statements for the year ended 31 December 2008. Further disclosures as required
under IFRS for a complete set of consolidated financial statements are not
included in the condensed consolidated financial statements.

Audio web cast third quarter 2009 results
The information for our third quarter results audio web cast is as follows:
Date and time: 28 October 2009 at 14:00 CET
Place: http://investors.tomtom.com/tomtom/presentations/

TomTom is listed at Euronext Amsterdam in the Netherlands
ISIN: NL0000387058 / Symbol: TOM2

About TomTom N.V.

TomTom N.V. is the world`s leading provider of navigation solutions and digital
maps. TomTom N.V. has over 3300 employees working in four business units -
TomTom, Tele Atlas, AUTO and WORK.

TomTom's products are developed with an emphasis on innovation, quality, ease of
use, safety and value. TomTom's products include all-in-one navigation devices
which enable customers to navigate right out of the box; these are the
award-winning TomTom GO family, the TomTom XL and TomTom ONE ranges and the
TomTom RIDER. Additionally, independent research proves that TomTom products
have a significant positive effect on driving and road safety.

Tele Atlas delivers the digital maps and dynamic content that power some of the
world`s most essential navigation and location-based services (LBS). Through a
combination of its own products and partnerships, Tele Atlas offers digital map
coverage of more than 200 countries and territories worldwide. The business unit
AUTO develops and sells navigation systems and services to car manufacturers and
OEMs. WORK combines industry leading communication and smart navigation
technology with leading edge tracking and tracing expertise.

TomTom N.V. was founded in 1991 in Amsterdam and has offices in Europe, North
America, Middle East, Africa and Asia Pacific. TomTom is listed at Euronext
Amsterdam in The Netherlands. For more information, go to www.tomtom.com.

This document contains certain forward-looking statements relating to the
business, financial performance and results of the Company and the industry in
which it operates. These statements are based on the Company`s current plans,
estimates and projections, as well as its expectations of external conditions
and events. In particular the words "expect", "anticipate", "estimate", "may",
"should", "believe" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. These include, but are not limited to: the level
of consumer acceptance of existing and new and upgraded products and services;
the growth of overall market demand for the Company`s products or for personal
navigation products generally; the Company`s ability to sustain and effectively
manage its recent rapid growth; and the Company`s relationship with third party
suppliers, and its ability to accurately forecast the volume and timing of
sales. Additional factors could cause future results to differ materially from
those in the forward-looking.

TomTom
Financial Community
Richard Piekaar, +31 20 757 5194
ir@tomtom.com

Copyright Business Wire 2009