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2014-04-23

ADVA Optical Networking SE: ADVA Optical Networking Reports Q1 2014 Financial Results In Line with Guidance

ADVA Optical Networking SE / ADVA Optical Networking Reports Q1 2014 Financial
Results In Line with Guidance. Processed and transmitted by NASDAQ OMX
Corporate Solutions. The issuer is solely responsible for the content of this
announcement.
ADVA Optical Networking Reports Q1 2014 Financial Results In Line with
Guidance

Q1 2014 revenues at EUR 78.1 million

Q1 2014 IFRS pro forma operating income of EUR 0.4 million (0.5% of revenues)

Q2 2014 revenues expected to range between EUR 84 million and EUR 89 million
with IFRS pro forma operating income between -2% and +2% of revenues

Martinsried/Munich, Germany. April 24, 2014.
ADVA Optical Networking (FSE: ADV) announced Q1 2014 financial results for the
quarter ended on March 31, 2014, and prepared in accordance with
International Financial Reporting Standards (IFRS).

Q1 2014 IFRS FINANCIAL RESULTS
Revenues totaled EUR 78.1 million in Q1 2014 and were at the upper end of
guidance of between EUR 74 million and EUR 79 million. This is up 1.4% vs. Q1
2013 at EUR 77.0 million and up 2.5% vs. EUR 76.2 million in Q4 2013. IFRS
pro forma operating income, excluding stock-based compensation and
amortization&impairment of goodwill&acquisition-related intangible assets,
amounted to EUR 0.4 million or 0.5% of revenues, and was in line with
guidance of between -2% and +2% of revenues. This compares to EUR 0.8 million
or 1.0% of revenues in Q1 2013 and EUR 2.3 million or 3.0% of revenues in Q4
2013. These developments are largely due to lower gross margins adversely
impacted by product and customer mix, higher amortization charges for
capitalized development projects and reduced income from capitalization of
development expenses.

IFRS operating income amounted to EUR 0.1 million in Q1 2014, after EUR 0.4
million in Q1 2013. The key driver for this unfavorable development is the
above-mentioned decrease of pro forma operating income. The decline in part
is offset by lower stock compensation expenses, which amounted to EUR 0.1
million in Q1 2014 after EUR 0.3 million in Q1 2013.

Q1 2014 IFRS net loss amounted to EUR 0.4 million, after a net income of EUR
0.8 million in Q1 2013. The reduction was largely driven by the development
of the operating result described above, as well as higher interest expenses
of EUR 0.4 million after EUR 0.2 million in Q1 2013. Basic and diluted IFRS
net earnings per share were EUR -0.01 each in Q1 2014 after EUR 0.02 each in
Q1 2013.

"Q1 2014 revenue at EUR 78.1 million was at the upper end of guidance. This
is an increase of 1.4% vs. Q1 2013 and an increase of 2.5% vs. Q4 2013. The
increase in revenue mainly relates to stronger enterprise business in the
Americas and EMEA regions. Our pro forma gross margin decreased from 39.3% in
Q4 2013 to 35.4% in Q1 2014, due to variations in product and customer mix
and higher quarter-on-quarter amortization of capitalized development
projects. Prior to amortization of capitalized development projects, pro
forma gross margin decreased from 45.9% in Q4 2013 to 42.7% in Q1 2014. Our
pro forma operating margin came in at 0.5%, also in line with guidance, and
demonstrates our focus on managing operational costs. Also, operating cash
flow at EUR 4.8 million in Q1 2014 remained positive, and our high
quarter-end cash&cash equivalents and net liquidity of EUR 77.1 million and
EUR 38.5 million, respectively, demonstrate ongoing financial strength,"
commented Jaswir Singh, chief financial officer&chief operating officer of
ADVA Optical Networking.

CONFERENCE CALL
In conjunction with the release of its Q1 2014 financial results on April 24,
2014, ADVA Optical Networking will host a conference call for analysts and
investors at 3:00 p.m. CEST / 9:00 a.m. EDT. 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 566
623#, and download the corresponding presentation from ADVA Optical
Networking's website,www.advaoptical.com, located in the "About Us / Investor
Relations" section on the "Financial Results" page under "Conference Calls".

Q2 2014 OUTLOOK
In Q2 2014, ADVA Optical Networking expects revenues to range between EUR 84
million and EUR 89 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 Q2 2014 and beyond. The pro forma operating income guidance provided above
excludes any such potential impairment charges. ADVA Optical Networking will
hold its annual shareholders' meeting on June 5, 2014, in Meiningen, Germany,
and will publish its Q2 2014 financial results on July 24, 2014.

"Although, we are seeing signs of the telecommunications industry slowly
returning to growth in Europe, the broader sentiment remains cautious as the
shift to software-centric networks and architectural changes is deferring
service provider investment decisions in the short-term. In order to support
the exponential increase of high-capacity data and video applications, the
drive toward Long Term Evolution-Advanced (LTE-A) networks and small cells is
creating pressure on both mobile network operators and backhaul service
providers, and thus both are continuing to evolve their networks to
packet-based solutions. Precise timing and synchronization is critical for
this development. The acquisition of Oscilloquartz is a strategic milestone
for us and provides ADVA Optical Networking with a complete end-to-end
solution for the delivery and, most importantly, assurance of highly accurate
timing - a first within the industry; thereby allowing our rapid expansion
into the synchronization business for next-generation networks. The next few
years will clearly highlight the strategic vision of this acquisition,
heightening our revenue growth potential, margin opportunity, and increasing
shareholder value," stated Brian Protiva, chief executive officer of ADVA
Optical Networking.

THREE-MONTH IFRS CONSOLIDATED INCOME STATEMENT

----------------------------------------------------------------------
|(in thousands of EUR, except earnings per share) Q1 2014 Q1 2013 |
| |
|Revenues 78,119 77,034 |
|Pro forma cost of goods sold -50,503 -47,265 |
|Pro forma gross profit 27,616 29,769 |
|Pro forma selling and marketing expenses -11,389 -11,685 |
|Pro forma general and administrative expenses -6,313 -6,673 |
|Pro forma research and development expenses -16,695 -16,842 |
|Income from capitalization of development expenses 5,063 5,580 |
|Other operating income and expenses, net 2,109 656 |
|Pro forma operating income 391 805 |
|Amortization of intangible assets from acquisitions -171 -171 |
|Stock compensation expenses -135 -252 |
|Operating income 85 382 |
|Interest income and expenses, net -336 -152 |
|Other financial gains and losses, net 40 -756 |
|Income (loss) before tax -211 -526 |
|Income tax benefit (expense), net -186 1,286 |
|Net income (loss) -397 760 |
| |
|Earnings per share in EUR |
|Basic -0.01 0.02 |
|Diluted -0.01 0.02 |
----------------------------------------------------------------------
# # #

About ADVA Optical Networking
At ADVA Optical Networking we're creating new opportunities for tomorrow's
networks, a new vision for a connected world. Our intelligent
telecommunications hardware, software and services have been deployed by
several hundred service providers and thousands of enterprises. Over the past
twenty years, our innovative connectivity solutions have helped to drive our
customers' networks forward, helped to drive their businesses to new levels
of success. We forge close working relationships with all our customers. As
your trusted partner we ensure that we're always ready to exceed your
networking expectations. For more information on our products and our team,
please visit us at: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 Optical Networking SE, Martinsried/Munich and Meiningen, Germany
www.advaoptical.com

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

For Investors:
Karin Tovar
t +1 201 940 7212
investor-relations(at)advaoptical.com

---------------------------------------

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy a...

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