• Q3 2013 revenues at EUR 79.1 million
• Q3 2013 IFRS pro forma operating income of
• EUR 4.0 million (5.0% of revenues)
• Q4 2013 revenues expected to range between EUR 71 million and EUR 76 million with IFRS pro forma operating income between 1% and 5% of revenues

ADVA Optical Networking announced Q3 2013 financial results for the quarter ended September 30, 2013, and prepared in accordance with International Financial Reporting Standards (IFRS).

Q3 2013 IFRS FINANCIAL RESULTS

Revenues totaled EUR 79.1 million in Q3 2013 and were in line with guidance of between EUR 76 million and EUR 81 million. This is down 3.9% vs. Q3 2012 at EUR 82.3 million and up 0.9% vs. EUR 78.4 million in Q2 2013.  IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 4.0 million or 5.0% of revenues in Q3 2013, at the upper end of guidance of between 1% and  5% of revenues. This compares to EUR 5.6 million or 6.8% of revenues in Q3 2012 and EUR 1.5 million or 2.0% of revenues in Q2 2013. The quarter-on-quarter increase of pro forma operating income is largely due to higher revenues and lower operational expenses,  while the year-on-year decrease is largely due to lower revenues in a weaker demand environment.

The IFRS operating income amounted to EUR 3.5 million in Q3 2013, after EUR 5.1 million in Q3 2012 and EUR 1.2 million in Q2 2013. The key driver for the unfavorable year-on-year development is the above-mentioned  decrease of pro forma operating income, while the favorable quarter-on-quarter development is largely due to the increase in pro forma operating income.

The IFRS net income amounted to EUR 2.3 million in Q3 2013, down from EUR 3.5 million in Q3 2012. This reduction was largely driven by the development of the operating result described above, and was partially  offset by lower Q3 2013 income tax expenses of EUR 0.8 million vs. the EUR 1.3 million seen in Q3 2012. Basic and diluted IFRS net earnings per share in Q3 2013 were EUR 0.05 after EUR 0.07 in Q3 2012.

"At EUR 79.1 million, our Q3 2013 revenues are in line with guidance and up 0.9% vs. the previous quarter. Pro forma operating margin came in at 5.0%, at the upper end of guidance, largely driven by the stronger revenue development and tight management of operational costs. Furthermore, cash and cash equivalents  reached a record high of EUR 80.6 million, and net liquidity increased to EUR 41.4 million at the end of Q3 2013, up EUR 0.8 million vs. the end of the previous quarter, demonstrating our commitment to managing cash and strengthening our balance sheet,"  commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking.

CONFERENCE CALL

In conjunction with the release of its Q3 2013 financial results on October 24, 2013, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CEST / 9:00 a.m. EDT. ADVA Optical Networking's chief executive officer, Brian Protiva, and chief financial officer & chief operating officer, Jaswir Singh, will participate in the call. Interested parties may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 992 170#, and download the corresponding presentation, located on the "financial results" page under "conference  calls" in the investor relations section of ADVA Optical Networking's website at http://www.advaoptical.com/.

Q4 2013 OUTLOOK

ADVA Optical Networking continues to adapt to an unpredictable economic environment by adjusting its operational costs to keep in line with revenue and gross  margin development. With the macro-economic environment continuing to send mixed signals, we are guiding Q4 2013 revenues of between EUR 71 million and EUR 76 million. Furthermore, we anticipate Q4 2013  pro forma operating income to range between 1% and 5% 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 research and development expenses. In case of highly adverse business prospects, these reviews may result in non-cash impairment charges in Q4 2013 and beyond. The pro forma operating income guidance  provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q4 and full-year 2013 financial results on February 20, 2014.

"While our market in H2 2013 so far has been developing disappointingly, ADVA Optical Networking  continues to be a leader in innovation with a broad and deep customer base. ADVA Optical Networking's pipeline is expanding, and there are clear signs that we will return to significant growth in our market for Optical+Ethernet solutions. Although operators  have been delaying project rollouts in wireline activities, the evolution of their network strategies to cope with the explosive bandwidth growth is inevitable. Operators are shifting their attention to the next network bottleneck, the transport links connecting the mobile base stations to core networks. Further, operators are accelerating plans to evaluate the deployment of Software-Defined Networking (SDN) technology, seeking operational efficiency, agility and a more dynamic service offering.  As an industry first SDN solution, in September ADVA Optical Networking successfully demonstrated a virtualized optical transmission network using OpenFlow-based control, developed in  partnership with IBM and Marist College. Finally, ADVA Optical Networking's 100G metro solutions are increasingly gaining traction and are expected to be deployed in large-scale by service providers over the coming quarters," stated Brian Protiva, chief executive officer of ADVA Optical  Networking.