NAVTEQ Reports Record First Quarter Revenue
CHICAGO, April 26 -- NAVTEQ Corporation , a leading global provider of digital map data for vehicle navigation and location-based solutions, today reported record first quarter revenue for the quarter ended April 2, 2006.
Revenue in the quarter rose 17% over the first quarter of 2005 to $122.3 million. Operating income was $20.7 million, compared to $24.8 million in last year's first quarter. Net income was $16.2 million, compared to $16.8 million in the prior year's first quarter. Earnings per diluted share were $0.17, compared to $0.18 in the first quarter of 2005.
"We were pleased with our first quarter results, which were in line with our expectations. Consumer demand for GPS technologies is growing rapidly around the world and we are optimistic about our prospects," said Judson Green, President and Chief Executive Officer. "We began the year by focusing our investment on the quality of our map data, the scope of our global coverage and the portfolio of unique content we offer to our customers."
Revenue from NAVTEQ's Europe, Middle East & Africa (EMEA) operations totaled $76.6 million in the quarter, up 6% from $72.0 million in the first quarter of 2005. The average U.S. dollar/euro exchange rate in the first quarter was $1.20, compared to $1.32 in the prior year's first three months. Excluding the impact of this foreign currency rate fluctuation, EMEA revenue for the first quarter grew 15%. Americas revenue was $43.9 million in the quarter, a 34% increase over the $32.7 million posted in the first quarter of 2005. Asia Pacific revenue, principally derived from the company's Picture Map International subsidiary in South Korea acquired in July 2005, was $1.8 million.
Cash and marketable securities totaled $226.4 million at April 2, 2006. Net cash provided by operating activities for the first quarter was $14.4 million, compared to $5.8 million in the first quarter of 2005.
In accordance with FASB Statement No. 123(R) ("Share-Based Payment"), adopted by the company on January 1, 2006, additional stock-based compensation expense was recognized in the first quarter related to the full expensing of options. Total stock-based compensation expense in the quarter was $4.0 million, of which $2.2 million was related to the expensing of stock options. In addition, the company recognized a benefit to net income in the first quarter related to the cumulative effect of a change in accounting principle of $0.5 million, or $0.01 per diluted share, resulting from the adoption of FASB 123(R).
Early in 2006, the company conducted a review of the classification of its operating expenses for external reporting. As a result of this review, costs associated with certain functional groups historically classified as selling, general, and administrative expenses have been reclassified as database creation and distribution costs beginning in the first quarter of 2006. Operating expenses for previously reported periods have been reclassified to conform to this presentation. Total operating expenses were not affected by this reclassification. A supplemental schedule attached to this release, entitled "Reclassification of 2005 Quarterly Operating Expenses", summarizes the impact of this reclassification on 2005 quarterly operating expenses.
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.
NAVTEQ CORPORATION
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Quarter Ended
March 27, April 2,
2005 2006
(Unaudited)
Net revenue $104,697 122,325
Operating costs and expenses:
Database creation and
distribution costs 50,888 62,851
Selling, general, and
administrative expenses 28,978 38,751
Total operating costs and
expenses 79,866 101,602
Operating income 24,831 20,723
Other income 601 2,334
Income before income taxes 25,432 23,057
Income tax expense 8,647 7,379
Net income before cumulative
effect of change in accounting
principle 16,785 15,678
Cumulative effect of change in
accounting principle, net of tax - 506
Net income $16,785 16,184
Earnings per share of common stock
before cumulative effect
of change in accounting principle -
Basic $0.19 $0.17
Diluted $0.18 $0.16
Cumulative effect of change in
accounting principle per share of
common stock -
Basic $- $0.01
Diluted $- $0.01
Earnings per share of common stock -
Basic $0.19 $0.18
Diluted $0.18 $0.17
Weighted average shares of common
stock outstanding -
Basic 88,625 92,337
Diluted 93,500 95,533
NAVTEQ CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, April 2,
2005 2006
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $85,070 50,857
Short-term marketable securities 84,299 148,754
Accounts receivable, net 82,352 82,999
Deferred income taxes 42,584 37,393
Prepaid expenses and other current
assets 15,203 16,296
Total current assets 309,508 336,299
Property and equipment, net 20,828 20,391
Capitalized software development
costs, net 25,761 25,848
Long-term deferred income taxes, net 169,264 169,585
Long-term marketable securities 49,429 26,822
Acquired intangible assets, net 16,815 18,495
Goodwill 11,778 14,520
Deposits and other assets 12,505 13,317
Total assets $615,888 625,277
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $19,572 15,692
Accrued payroll and related
liabilities 28,365 21,320
Fair value of foreign currency
derivative 3,265 2,645
Other accrued expenses 28,658 24,948
Deferred revenue 38,703 38,705
Total current liabilities 118,563 103,310
Long-term deferred revenue 3,446 3,026
Other long-term liabilities 3,815 3,954
Total liabilities 125,824 110,290
Stockholders' equity 490,064 514,987
Total liabilities and
stockholders' equity $615,888 625,277
NAVTEQ CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 27, April 2,
2005 2006
(Unaudited)
Cash flows from operating activities:
Net income $16,785 16,184
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 5,032 6,113
Deferred income taxes 5,213 4,843
Stock compensation expense 2,289 4,016
Tax benefit on non-qualified
stock options 3,060 -
Cumulative effect of change in
accounting principle - (506)
Noncash other 1,377 2,368
Changes in operating assets and
liabilities, net of effects of
acquisitions (27,941) (18,607)
Net cash provided by
operating activities 5,815 14,411
Cash flows from investing activities:
Acquisition of property and
equipment (1,491) (2,188)
Capitalized software development
costs (2,995) (3,655)
Net purchases of marketable
securities (8,229) (42,074)
Payments for acquisitions, net of
cash acquired - (4,996)
Purchase of investments (500) -
Note receivable - (200)
Net cash used in investing
activities (13,215) (53,113)
Cash flows from financing activities:
Issuance of common stock and other
equity transactions 4,170 4,060
Net cash provided by
financing activities 4,170 4,060
Effect of exchange rate changes on
cash (850) 429
Net increase in cash and
cash equivalents (4,080) (34,213)
Cash and cash equivalents at beginning
of period 30,101 85,070
Cash and cash equivalents at end of
period $26,021 50,857
NAVTEQ Corporation
Reclassification of 2005 Quarterly Operating Expenses
Previously Reported Q1 Q2 Q3 Q4 2005
Database creation and
distribution costs $47,953 54,050 57,377 63,553 222,933
Selling, general and
administrative expenses 31,913 31,340 35,205 40,865 139,323
Total operating costs and
expenses $79,866 85,390 92,582 104,418 362,256
Reclassified Q1 Q2 Q3 Q4 2005
Database creation and
distribution costs $50,888 57,433 60,906 67,178 236,405
Selling, general and
administrative expenses 28,978 27,957 31,676 37,240 125,851
Total operating costs and
expenses $79,866 85,390 92,582 104,418 362,256