NAVTEQ Reports Record Revenue for Third Quarter of 2006
CHICAGO, Oct. 25, 2006 -- NAVTEQ Corporation , a leading global provider of digital map data for vehicle navigation and location-based solutions, today reported record third quarter revenue for the quarter ended October 1, 2006.
Revenue in the quarter rose 16% over the third quarter of 2005 to $142.7 million. Operating income grew 22% over the year-ago period to $37.0 million. Net income in the quarter was $27.1 million, compared to $101.1 million in the prior year's third quarter. Diluted earnings per share for the quarter were $0.28, compared to $1.07 in the prior year's third quarter.
For the first nine months of 2006, revenue was $400.9 million, which represented growth of 14% over the same period in 2005. Year-to-date operating income decreased 2% to $90.9 million. Net income for the first nine months of 2006 decreased to $67.0 million, compared to $143.2 million for the same period in 2005. Year-to-date diluted earnings per share were $0.70, compared to $1.52 for the first nine months of 2005.
Last year's net income and diluted earnings per share for both the third quarter and the first nine months were increased significantly due in large part to the recording of a net income tax benefit of $80.6 million, or $0.85 per diluted share, primarily related to the reversal of a valuation allowance on deferred tax assets associated with net operating loss and deferred interest carryforwards.
"We are pleased with our third quarter results given the challenges we have faced in 2006," said Judson Green, President and Chief Executive Officer of NAVTEQ. "Solid third quarter revenue performance and effective cost management helped to drive improved margins and profit growth. We expect to continue this trend as the year comes to a close."
Revenue from NAVTEQ's Europe, Middle East & Africa (EMEA) operations totaled $85.2 million in the quarter, up 10% from the third quarter of 2005. The average U.S. dollar/Euro exchange rate in the second quarter was $1.27, compared to $1.22 in the comparable period last year. Americas revenue was $56.1 million in the quarter, a 31% increase over the $42.7 million posted in the third quarter of 2005. Asia Pacific revenue, principally derived from the company's Picture Map International subsidiary in South Korea acquired in July 2005, was $1.4 million, compared to $3.1 million in the prior year.
Cash and marketable securities totaled $278.7 million at October 1, 2006. Net cash provided by operating activities for the first nine months of 2006 was $62.6 million.
Business Outlook
Our 2006 financial performance is being negatively impacted by a number of factors, including unfavorable car sales trends in both Europe and North America, lower than expected revenue relating to portable devices in Europe, and the collectibility of a customer receivable. Due to the impact of these factors, management is updating its guidance on 2006 financial performance.
The following forward-looking statement reflects NAVTEQ management's expectations as of October 25, 2006. For the fiscal year 2006, NAVTEQ expects revenue in the range of $565 million to $580 million and earnings per diluted share of $1.10 to $1.16, assuming an average annual U.S. dollar/Euro exchange rate of $1.25 and average diluted shares outstanding of 95.7 million.
Earnings Call Information
The information for the company's earnings release conference call is as follows:
When: Wednesday, October 25, 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
800-659-2037 (North America) or 617-614-2713 (international),
passcode 94858900
Contact: investorrelations@navteq.com
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 2,100 employees located in 139 offices in 25 countries.
NAVTEQ is a trademark in the U.S. and other countries.
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 also include statements about the company's future financial and operating results. The statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2005 and "Item 1A. Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended July 2, 2006, in each case 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.
NAVTEQ CORPORATION
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Quarter Ended Nine Months Ended
Sept. 25, Oct. 1, Sept. 25, Oct. 1,
2005 2006 2005 2006
(Unaudited)
Net revenue $123,005 142,658 $350,534 400,928
Operating costs and expenses:
Database creation and
distribution costs 60,906 69,397 169,227 197,934
Selling, general, and
administrative expenses 31,676 36,217 88,611 112,101
Total operating costs and
expenses 92,582 105,614 257,838 310,035
Operating income 30,423 37,044 92,696 90,893
Other income 1,202 2,925 2,640 7,293
Income before income taxes 31,625 39,969 95,336 98,186
Income tax (benefit) expense (69,490) 12,890 (47,828) 31,665
Net income before cumulative
effect of change in
accounting principle 101,115 27,079 143,164 66,521
Cumulative effect of change
in accounting principle,
net of tax - - - 506
Net income $101,115 27,079 $143,164 67,027
Earnings per share of common
stock before cumulative
effect of change in
accounting principle -
Basic $1.11 $0.29 $1.60 $0.72
Diluted $1.07 $0.28 $1.52 $0.70
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 $1.11 $0.29 $1.60 $0.72
Diluted $1.07 $0.28 $1.52 $0.70
Weighted average shares of
common stock outstanding -
Basic 90,701 93,293 89,700 92,884
Diluted 94,521 95,718 93,959 95,668
NAVTEQ CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Oct. 1,
2005 2006
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $85,070 66,403
Short-term marketable securities 84,299 151,419
Accounts receivable, net 82,352 108,634
Deferred income taxes 42,584 17,327
Prepaid expenses and other current
assets 15,203 18,848
Total current assets 309,508 362,631
Property and equipment, net 20,828 22,898
Capitalized software development
costs, net 25,761 21,115
Long-term deferred income taxes, net 169,264 190,110
Long-term marketable securities 49,429 60,881
Acquired intangible assets, net 16,815 17,265
Goodwill 11,778 15,148
Deposits and other assets 12,505 11,796
Total assets $615,888 701,844
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $19,572 12,519
Accrued payroll and related
liabilities 28,365 26,587
Fair value of foreign currency
derivative 3,265 -
Other accrued expenses 28,658 32,417
Deferred revenue 38,703 35,625
Total current liabilities 118,563 107,148
Long-term deferred revenue 3,446 2,638
Other long-term liabilities 3,815 2,145
Total liabilities 125,824 111,931
Stockholders' equity 490,064 589,913
Total liabilities and
stockholders' equity $615,888 701,844
NAVTEQ CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended
Sept. 25, 2005 Oct. 1, 2006
(Unaudited)
Cash flows from operating activities:
Net income $143,164 67,027
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 16,525 21,954
Deferred income taxes (88,768) 5,714
Stock compensation expense 6,887 11,197
Tax benefit on non-qualified
stock options 37,611 -
Cumulative effect of change in
accounting principle - (506)
Provision for doubtful
receivables 1,826 1,605
Noncash other 855 1,728
Changes in operating assets and
liabilities, net of effects of
acquisitions (40,620) (46,142)
Net cash provided by
operating activities 77,480 62,577
Cash flows from investing activities:
Acquisition of property and equipment (5,086) (10,305)
Capitalized software development
costs (8,948) (6,332)
Net purchases of marketable
securities (47,120) (78,604)
Payments for acquisitions, net of
cash acquired (8,234) (5,044)
Purchase of investments (1,201) -
Note receivable - (300)
Net cash used in investing
activities (70,589) (100,585)
Cash flows from financing activities:
Issuance of common stock and other
equity transactions 5,147 17,624
Net cash provided by
financing activities 5,147 17,624
Effect of exchange rate changes on cash (2,183) 1,717
Net increase (decrease) in
cash and cash equivalents 9,855 (18,667)
Cash and cash equivalents at beginning
of period 30,101 85,070
Cash and cash equivalents at end of
period $39,956 66,403
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