ADVA Reports Q2

MUNICH and MAHWAH, N.J. -- ADVA Optical Networking today announced Q2 2006 financial results for the quarter ended June 30, 2006, and prepared in accordance with International Financial Reporting Standards (IFRS). ADVA today also published key financials as per U.S. Generally Accepted Accounting Principles (U.S. GAAP), the accounting framewor k applied in financial statements published prior to the release of the annual report 2005.

Q2 2006 IFRS FINANCIAL RESULTS

In Q2 2006 revenues totaled EUR 41.2 million, up 26% compared to EUR 32.7 million in Q2 2005 and up 11% compared to EUR 37.1 million in Q1 2006, respectively. IFRS pro forma operating income, excluding stock-based compensation and amortization and impairment of goodwill and acquisition-related intangible assets, was at EUR 3.5 million in Q2 2006 after EUR 3.8 million in Q2 2005, driven by higher revenues and significantly expanded selling & marketing and research & development expenses. IFRS pro forma quarterly net profit was at EUR 2.2 million in Q2 2006 after EUR 3.0 million in Q2 2005, with diluted pro forma net earnings per share of EUR 0.06 in Q2 2006 after EUR 0.08 in Q2 2005.

Q2 2006 IFRS actual net profit amounted to EUR 1.4 million after EUR 2.5 million in Q2 2005. Diluted net earnings per share were EUR 0.04 in Q2 2006 and EUR 0.07 in Q2 2005.

Andreas G. Rutsch, ADVA's chief financial officer, comments: "With Q2 2006, ADVA concluded ten consecutive quarters of growth in revenues since Q1 2004, reflecting the strong and sustainable underlying market growth and, in contrast to many competitors, our excellence in steadily growing our business. IFRS pro forma operating income in Q2 2006 at EUR 3.5 million or 8% of revenues was within our guidance, but also reflected component shortages and resulting order backlog for Q3 2006, increased working capital requirements and higher selling and marketing expenses related to one-off promotiona l and marketing campaign activities."

ADVA Optical Networking