NAVTEQ Reports Record Fourth Quarter and Full Year 2005 Operating Results
CHICAGO, Feb. 8, 2006 -- NAVTEQ Corporation , a leading global provider of digital maps for vehicle navigation and location- based solutions, today reported record revenue and operating income for the fourth quarter and fiscal year ended December 31, 2005.
Revenue in the quarter rose 23% over the fourth quarter of 2004 to $146.0 million. Operating income grew 31% over the prior year to $41.6 million. Net income was up 79% to $27.7 million, compared to $15.4 million in the prior year's fourth quarter. Earnings per diluted share for the fourth quarter grew 75% to $0.29, compared to $0.17 in the prior year's quarter.
For the full year 2005, revenue was $496.5 million, representing growth of 26% over 2004. Operating income for the full year grew 42% to $134.3 million. Net income for 2005 was $170.8 million, compared to $54.1 million in 2004. Earnings per diluted share for the year grew to $1.81, compared to $0.59 per diluted share in 2004.
"Our strong fourth quarter financial performance capped off another exciting year for GPS technology and digital map data. In 2005, our database powered more map-enabled devices than any other solution in Europe and North America," said Judson Green, President and Chief Executive Officer. "We remain focused on growing our geographic coverage and advancing the quality of our product. We believe that acquisitions in Korea and Mexico along with significant coverage and content enhancements in Europe and North America have positioned us well for continued success in the years ahead."
Net income and earnings per diluted share for the full year 2005 were significantly higher than in 2004 due in part to the recording of a net income tax benefit of $80.6 million, or $0.85 per diluted share, during the third quarter of 2005. The recording of this benefit was primarily related to the reversal of the valuation allowance on deferred tax assets associated with net operating loss and deferred interest carry-forwards in the U.S.
In the fourth quarter of 2005, the company incurred additional income tax expense of $0.7 million, or $0.01 per diluted share, related to the revaluation of the company's deferred income tax asset due to a reduction in the 2006 Dutch corporate tax rate enacted in the fourth quarter of 2005 and shifts in the amount of income NAVTEQ generates among various U.S. states. In the fourth quarter of 2004, the company recorded additional tax expense of $3.8 million, or $0.04 per diluted share, related to an earlier reduction in the Dutch corporate tax rate.
NAVTEQ's European revenue totaled $85.0 million in the quarter, up 9% from the fourth quarter of 2004. For the full year, European revenue was $316.2 million, an increase of 18% over 2004. Excluding the impact of foreign currency rate fluctuation, European revenue for the fourth quarter and full year 2005 grew 17% and 18%, respectively. North American revenue was $56.5 million in the quarter, a 38% increase over the fourth quarter of 2004. For the full year, North American revenue was $172.8 million, representing 38% growth over 2004. Asia Pacific revenue, which represents revenue recorded since the July 2005 acquisition of Picture Map International in South Korea, was $4.5 million in the quarter and $7.5 million for the full year.
Cash and marketable securities totaled $218.8 million at December 31, 2005. Net cash provided by operating activities for the full year was $137.8 million, compared to $106.4 million in 2004.
Business Outlook
The following forward-looking statements reflect NAVTEQ management's expectations as of February 8, 2006. For the fiscal year 2006, NAVTEQ expects revenue in the range of $590 million to $615 million and earnings per diluted share of $1.21 to $1.28, assuming an effective worldwide tax rate of 33-34% and an average annual U.S. dollar/euro exchange rate of $1.20. Earnings per diluted share guidance for 2006 include stock-based compensation expense of approximately $15 million due in part to the full expensing of stock options for the first time. Stock-based compensation in 2005 was $9.1 million.
Earnings Call Information
The information for the company's earnings release conference call is as follows:
When: Wednesday, February 8, 2006 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 866-510-0712 (North America) or 617-597-5380 (international), passcode 90837018 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 40603881. The telephone replay will be accessible from 7:00 PM ET Wednesday, February 8, 2006 through 11:59 PM ET on Wednesday, February 15, 2006. An on- demand replay of the conference call will also be available online at investor.navteq.com until March 8, 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, 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 various risks and uncertainties, including those set forth under the caption "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended June 26, 2005, as filed with the Securities and Exchange Commission. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. NAVTEQ does not undertake any obligation to update any forward-looking statements contained in this document.
About NAVTEQ
NAVTEQ is a leading provider of comprehensive digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions. 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 1,900 employees located in 131 offices in 23 countries.
NAVTEQ is a trademark in the U.S. and other countries. All rights reserved.
NAVTEQ CORPORATION
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Quarter Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2005 2004 2005
(Unaudited) (Unaudited)
Net revenue $119,000 145,978 392,858 496,512
Operating costs and expenses:
Database creation and distribution
costs 53,190 63,553 186,330 222,933
Selling, general, and
administrative expenses 34,102 40,865 111,942 139,323
Total operating costs and
expenses 87,292 104,418 298,272 362,256
Operating income 31,708 41,560 94,586 134,256
Other income (expense) (200) 2,095 (758) 4,735
Income before income taxes 31,508 43,655 93,828 138,991
Income tax expense (benefit) 16,080 15,989 39,762 (31,839)
Net income $15,428 27,666 54,066 170,830
Earnings per share of common stock -
Basic $0.18 0.30 0.62 1.90
Diluted $0.17 0.29 0.59 1.81
Weighted average shares of common
stock outstanding -
Basic 87,693 91,361 86,509 90,115
Diluted 92,729 94,918 92,001 94,198
NAVTEQ CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2004 2005
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $30,101 85,070
Short-term marketable securities 45,650 84,299
Accounts receivable, net 56,582 82,352
Deferred income taxes 50,696 42,584
Prepaid expenses and other current assets 8,348 15,203
Total current assets 191,377 309,508
Property and equipment, net 18,220 20,828
Capitalized software development costs, net 26,243 25,761
Long-term deferred income taxes, net 92,069 169,264
Long-term marketable securities 27,280 49,429
Acquired intangible assets, net - 16,815
Goodwill - 11,778
Deposits and other assets 9,519 12,505
Total assets $364,708 615,888
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $13,962 19,572
Accrued payroll and related liabilities 28,054 28,365
Other accrued expenses 20,609 28,658
Deferred revenue 31,165 38,703
Total current liabilities 93,790 115,298
Fair value of foreign currency derivative 21,616 3,265
Long-term deferred revenue 13,342 3,446
Other long-term liabilities 3,142 3,815
Total liabilities 131,890 125,824
Stockholders' equity 232,818 490,064
Total liabilities and
stockholders' equity $364,708 615,888
NAVTEQ CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Year Ended
Dec. 31, Dec. 31,
2004 2005
(Unaudited)
Cash flows from operating activities:
Net income $54,066 170,830
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 15,568 21,568
Deferred income taxes 31,841 (77,737)
Stock compensation expense 7,016 9,117
Tax benefit on non-qualified
stock options 1,547 40,936
Noncash other 1,533 5,107
Changes in operating assets and
liabilities, net of effects of
acquisitions (5,149) (32,068)
Net cash provided by
operating activities 106,422 137,753
Cash flows from investing activities:
Acquisition of property and equipment (12,875) (10,466)
Capitalized software development costs (12,792) (12,369)
Net purchases of marketable securities (73,166) (62,260)
Payments for acquisitions, net of
cash acquired - (8,234)
Purchase of investments (490) (1,201)
Cash on deposit with affiliate, net 65,199 -
Net cash used in investing
activities (34,124) (94,530)
Cash flows from financing activities:
Issuance of common stock and other
equity transactions 1,393 14,190
Dividends paid (47,159) -
Net cash provided by (used
in) financing activities (45,766) 14,190
Effect of exchange rate changes on cash 1,587 (2,444)
Net increase in cash and
cash equivalents 28,119 54,969
Cash and cash equivalents at beginning
of period 1,982 30,101
Cash and cash equivalents at end of
period $30,101 85,070