NAVTEQ Reports Record Fourth Quarter and Full Year 2004 Operating Results
CHICAGO, Feb. 9, 2005 -- NAVTEQ Corporation , a leading global provider of digital map data for vehicle navigation and location-based solutions, today reported record revenue and operating income for the fourth quarter and fiscal year ended December 31, 2004.
Revenue in the quarter rose 46% over the fourth quarter of 2003 to $119.0 million. Operating income grew 166% over the prior year to $31.7 million. Net income was $15.4 million, compared to $178.9 million in the prior year's fourth quarter. Diluted earnings per share for the fourth quarter were $0.17, compared to $2.01 in the prior year's quarter.
For the full year 2004, revenue was $392.9 million, representing growth of 44% over 2003. Operating income for the full year grew 48% to $94.6 million. Net income for 2004 was $54.1 million, compared to $235.8 million in 2003. Diluted earnings per share for the year were $0.59, compared to $2.69 in 2003.
"Our strong results in the fourth quarter bring to a close a very exciting and productive year for NAVTEQ," said Judson Green, President and Chief Executive Officer. "I am very pleased with all that we accomplished in 2004. We have grown our business significantly in all of our key markets, while investing in the coverage, content and technology initiatives that will strengthen our competitive position in the years to come."
Despite the operating income growth in the fourth quarter and full year results, net income and diluted earnings per share declined when compared to the same periods in 2003 principally due to the effect of the $168.8 million reversal in 2003 of the valuation allowance on deferred tax assets related to net operating loss carryforwards, the recording of a full tax provision throughout 2004, and tax adjustments that resulted in additional income tax expense in the fourth quarter of 2004. The tax adjustments in the fourth quarter of 2004 resulted in additional income tax expense of $3.8 million or $0.04 per share primarily due to a change in Dutch tax law. The new law, which was enacted on December 14, 2004, will reduce the statutory corporate tax rate in the Netherlands to 30% from 34.5% over the next three years. As a result, the deferred income tax asset on NAVTEQ's balance sheet was revalued, resulting in a decrease in the asset and a charge to income tax expense. While the Dutch tax law change increased the company's effective tax rate in the fourth quarter, it will lower the company's effective tax rate in future years.
Revenue from NAVTEQ's European operations totaled $78.1 million in the quarter, up 50% from $52.2 million in the fourth quarter of 2003. For the full year, European revenue was $267.5 million, an increase of 48% over 2003. North American revenue was $40.9 million in the quarter, a 38% increase over the $29.5 million posted in the fourth quarter of 2003. For the full year, North American revenue was $125.3 million, representing 37% growth over 2003.
Cash and marketable securities totaled $103.0 million at December 31, 2004. Cash flow from operating activities for the full year was $106.4 million, compared to $65.9 million in 2003.
Business Outlook
The following forward-looking statement reflects NAVTEQ management's expectations as of February 9, 2005. For the fiscal year 2005, NAVTEQ expects revenue in the range of $475 million to $500 million and diluted earnings per share of $0.90 to $0.95, assuming an effective worldwide tax rate of 34-36% and an average U.S. dollar/euro exchange rate of $1.30.
Earnings Call Information
The information for the company's earnings release conference call is as follows:
When: Wednesday, February 9, 2005 at 5:00 PM ET Where: http://investor.navteq.com/ How: Log on to the web at the URL above or call to listen in at 800-884-5695 (North America) or 617-786-2960 (international), passcode 38416249 Contact: investorrelations@navteq.com
The company will provide a telephone replay of the conference call at 888-286-8010 (North America) or 617-801-6888 (international), passcode 95001311. The telephone replay will be accessible from 7:00 PM ET Wednesday, February 9, 2005 through 11:59 PM ET on Wednesday, February 16, 2005. An on-demand replay of the conference call will also be available online at http://investor.navteq.com/ until February 9, 2006.
This document may include certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control.
Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory risk factors. Information concerning risk factors that could affect NAVTEQ's actual results is contained in the company's Quarterly Report on Form 10-Q for the quarter ended June 27, 2004 filed by NAVTEQ with the Securities and Exchange Commission. NAVTEQ disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, or other events, except as required by law.
About NAVTEQ
NAVTEQ is a leading provider of comprehensive digital map information for automotive navigation systems, mobile navigation devices and Internet-based mapping applications. NAVTEQ creates the digital maps and map content that power navigation and location-based services solutions around the world. The Chicago-based company was founded in 1985 and has approximately 1,500 employees located in over 100 offices in 20 countries.
NAVTEQ is a trademark in the U.S. and other countries.
NAVTEQ CORPORATION
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2004 2003 2004
Net revenue $81,734 119,000 272,623 392,858
Operating costs and
expenses:
Database creation
and distribution
costs 42,170 53,190 125,841 186,330
Selling, general,
and administrative
expenses 27,620 34,102 83,024 111,942
Total operating
costs and
expenses 69,790 87,292 208,865 298,272
Operating income 11,944 31,708 63,758 94,586
Other income
(expense) (251) (200) 6,543 (758)
Income before
income taxes 11,693 31,508 70,301 93,828
Income tax benefit
(expense) 167,179 (16,080) 165,514 (39,762)
Net income 178,872 15,428 235,815 54,066
Earnings per share
of common stock -
Basic $2.13 0.18 2.81 0.62
Diluted $2.01 0.17 2.69 0.59
Weighted average shares
of common stock
outstanding -
Basic 84,151 87,693 84,062 86,509
Diluted 89,155 92,729 87,593 92,001
NAVTEQ CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2003 2004
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $1,982 73,751
Cash on deposit with affiliate 65,307 -
Short-term marketable securities - 2,000
Accounts receivable, net 44,545 56,582
Deferred income taxes 36,614 43,951
Prepaid expenses and other current assets 6,466 8,348
Total current assets 154,914 184,632
Property and equipment, net 11,918 18,220
Capitalized software development costs, net 22,605 26,243
Long-term deferred income taxes, net 135,451 98,814
Long-term marketable securities - 27,280
Deposits and other assets 277 9,519
Total assets $325,165 364,708
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $15,539 13,962
Accrued payroll and related
liabilities 20,344 28,054
Other accrued expenses 16,410 20,609
Deferred revenue 24,968 31,165
Total current liabilities 77,261 93,790
Fair value of foreign currency derivative 23,799 21,616
Long-term deferred revenue 3,582 13,342
Other long-term liabilities 2,612 3,142
Total liabilities 107,254 131,890
Stockholders' equity 217,911 232,818
Total liabilities and
stockholders' equity $325,165 364,708
NAVTEQ CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Year Ended
Dec. 31, Dec. 31,
2003 2004
(Unaudited)
Cash flows from operating activities:
Net income $235,815 54,066
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 12,030 15,568
Deferred income taxes (172,076) 31,841
Stock compensation expense 816 7,016
Noncash other (4,067) 3,080
Changes in operating assets and
liabilities (6,570) (5,149)
Net cash provided by
operating activities 65,948 106,422
Cash flows from investing activities:
Acquisition of property and equipment (9,269) (12,875)
Capitalized software development costs (9,966) (12,792)
Net purchases of marketable securities - (29,516)
Investment in joint venture - (490)
Cash on deposit with affiliate, net (55,307) 65,199
Net cash provided by (used
in) investing activities (74,542) 9,526
Cash flows from financing activities:
Issuance of common stock and other
equity transactions 288 1,393
Dividends paid - (47,159)
Net cash provided by (used
in) financing activities 288 (45,766)
Effect of exchange rate changes on cash 861 1,587
Net increase (decrease) in
cash and cash equivalents (7,445) 71,769
Cash and cash equivalents at beginning
of period 9,427 1,982
Cash and cash equivalents at end of period $1,982 73,751