ADVA Optical networking posts 7% sequential revenue growth in Q2

1 August 2003 Munich -- ADVA Optical Networking has announced improved second quarter and six-month 2003 reviewed financial results for the period ended 30 June.

Revenues in the second quarter 2003 totalled EUR 22.7 million, a sequential increase of 6.7% compared to revenues of EUR 21.3 million in the first quarter 2003, and a year-over-year increase of 1.9% compared to revenues of EUR 22.3 million in the second quarter 2002.

Excluding amortisation of intangible assets and non-cash charges related to the stock option programs, pro forma operating income increased to EUR 2.2 million in Q2 2003, compared to EUR 0.2 million in Q2 2002.

Pro forma net income from continuing operations increased to EUR 2.0 million in Q2 2003, compared to a pro forma net loss from continuing operations of EUR 0.2 million in Q2 2002.

Actual net income increased to EUR 0.6 million in the second quarter 2003, compared to an actual net loss of EUR 3.7 million in the second quarter 2002. Actual basic net earnings per share totalled EUR 0.02 in the second quarter 2003 and EUR -0.11 in the second quarter 2002.

Andreas G. Rutsch, ADVA's CFO, said, "We are laying the foundation for future growth through a greater number of deployments of our FSP 3000 carrier-class metro infrastructure solution, increased revenues in North America, and continued expansion of our carrier customer base. Profitability has remained solid over the past several quarters as a result of tight margin and cost management.

Positive operating cash flow has enabled us to both pay down our credit facility and increase our cash position - all critical factors to further improve ADVA's financial standing and enable us to invest for growth in the coming quarters."

"The telecommunications market continues to undergo significant structural change," said Brian L. Protiva, ADVA CEO. "Customers are considerably more cost-conscious, both with regard to up-front capital expenditures and ongoing operating expenditures.

"Competition continues to be intense with a small, select group of vendors competing at every enterprise and carrier account today. We focus on differentiating ADVA solutions with the lowest total cost of ownership, best-of-breed products, and innovation. ADVA is one of the few companies competing successfully in this cost-driven environment."

Revenues during the first six months of 2003 totalled EUR 44.0 million compared to revenues of EUR 43.8 million during the first six months of 2002. Excluding amortisation of intangible assets and non-cash charges related to the stock option programs, pro forma operating income increased to EUR 4.4 million during the first six months of 2003, compared to EUR 0.3 million in the first six months of 2002.

Pro forma net income from continuing operations increased to EUR 3.8 million during the first six months of 2003, compared to a pro forma net loss from continuing operations of EUR 0.3 million during the first six months of 2002.

Actual net income increased to EUR 1.2 million during the first six months of 2003, compared to an actual net loss of EUR 5.2 million during the first six months of 2002. Actual basic net earnings per share totalled EUR 0.04 during the first six months of 2003 and EUR -0.16 during the first six months of 2002.

Q2 highlights
- ADVA won five new carrier end customers in the second quarter 2003, bringing the total to 77. These additions comprised a mix of carriers from each of ADVA's three major regions: two North American service providers, a continental European incumbent carrier and UK-based broadband service provider, and a Japanese service provider.

- U.S.-based carrier AboveNet was announced as having deployed a business continuity solution together with ADVA for the New York Mercantile Exchange. A three-year contract extension was announced with long-standing customer British Telecom, extending a prior four-year contract, to deploy ADVA's FSP 500 for Local Area Network (LAN) extension services.

- ADVA's FSP systems successfully completed interoperability testing with NEC's disk arrays for replication of storage traffic over extended distances in metro areas. EMC successfully tested ADVA's FSP 3000 with its networked storage systems and remote replication software for applications such as disaster recovery and business continuity.

- The company received external recognition for our best-in-class logistics through "The Best Factory/Industrial Excellence Award 2003" competition.

- ADVA held its annual shareholders meeting in June 2003 in Meiningen, Germany, and all agenda items were approved by shareholders.