NAVTEQ Reports Record Fourth Quarter and Full Year 2006 Operating Results
CHICAGO, Feb. 8, 2007 -- 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, 2006.
Revenue in the quarter rose 24% over the fourth quarter of 2005 to $180.7 million. Operating income grew 51% over the prior year to $62.8 million. Net income was up 55% over last year's fourth quarter to $42.9 million. Earnings per diluted share grew 54% to $0.45, compared to $0.29 in the prior year's quarter.
For the full year 2006, revenue was $581.6 million, representing growth of 17% over 2005. Operating income for the full year grew 14% to $153.7 million. Net income for 2006 was $110.0 million, compared to $170.8 million in 2005. Earnings per diluted share for the year totaled $1.15, compared to $1.81 in 2005.
"The fourth quarter brought to a close another exciting year for GPS technology and digital maps," said Judson Green, President and Chief Executive Officer. "We continued to grow our geographic footprint, rolled out important technology enhancements, and announced two important acquisitions that will expand our portfolio of content. While 2006 was a challenging year, we believe that our many accomplishments have positioned us well for continued success in the years ahead."
Full year net income and earnings per diluted share for 2006 were significantly lower than in 2005 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 company's valuation allowance on deferred tax assets associated with net operating loss and deferred interest carryforwards in the U.S.
NAVTEQ revenue from the Europe, Middle East & Africa (EMEA) region totaled $113.6 million in the quarter, up 34% from the fourth quarter of 2005. For the full year, EMEA revenue was $360.1 million, an increase of 14% over 2005. Excluding the impact of foreign currency rate fluctuation, EMEA revenue for the fourth quarter and full year 2006 grew 25% and 12%, respectively. Revenue for the Americas region was $66.3 million in the quarter, a 17% increase over the fourth quarter of 2005. For the full year, Americas revenue was $216.2 million, representing 25% growth over 2005. Asia Pacific revenue was $0.8 million in the quarter and $5.4 million for the full year.
Cash and marketable securities totaled $322.5 million at December 31, 2006. Net cash provided by operating activities for 2006 was $140.0 million.
Business Outlook
The following forward-looking statements reflect NAVTEQ management's expectations as of February 8, 2007. For the fiscal year 2007, NAVTEQ expects revenue in the range of $720 million to $750 million and earnings per diluted share of $1.20 to $1.26. This guidance reflects the following key assumptions and projections:
-- effective worldwide tax rate of approximately 29%;
-- average annual U.S. Dollar/Euro exchange rate of $1.27;
-- average diluted shares outstanding of approximately 100 million;
-- stock-based compensation expense of approximately $18 million;
-- additional rent expense of $3.5 million related to the corporate
headquarters move; and
-- 12 months of financial results from the acquisition of The Map Network,
which closed December 15, 2006, and 10 months of financial results from
the pending acquisition of Traffic.com, which is assumed to close in
early March 2007. These acquisitions are expected to contribute
aggregate revenue of approximately $60 million and reduce earnings per
diluted share by approximately $0.25 on a standalone basis.
NAVTEQ expects fixed asset capital expenditures of approximately $60 million in 2007. This represents a significant increase over prior years and is primarily due to:
-- leasehold improvements related to the move to a new corporate
headquarters in the Chicago area; and
-- Traffic.com capital expenditures of approximately $15 million.
Earnings Call Information
The information for the company's earnings release conference call is as follows:
When: Thursday, February 8, 2007 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
800.638.4930 (North America) or 617.614.3944 (international),
passcode 70466928
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 91547504. The telephone replay will be accessible from 7:00 PM ET Thursday, February 8, 2007 through 11:59 PM ET on Thursday, February 15, 2007. An on-demand replay of the conference call will also be available online at http://investor.navteq.com/ until March 8, 2007.
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 2,200 employees located in 144 offices in 27 countries.
NAVTEQ is a trademark in the U.S. and other countries. All rights reserved.
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 performance 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.
A Registration Statement on Form S-4, containing a proxy statement/prospectus of NAVTEQ and Traffic.com relating to the proposed merger of NAVTEQ and Traffic.com was declared effective by the SEC on February 1, 2007. The definitive proxy statement/prospectus has been sent to security holders of Traffic.com seeking their approval of the proposed merger. Investors and security holders are urged to read carefully the definitive proxy statement/prospectus and any other relevant documents filed by either party with the SEC before making any voting or investment decision because they will contain important information regarding NAVTEQ, Traffic.com and the proposed merger. The documents filed with the SEC by NAVTEQ may be obtained free of charge from NAVTEQ's website at http://www.navteq.com/ or by directing a request to NAVTEQ Corporation, 222 Merchandise Mart, Suite 900, Chicago, Illinois 60654, Attention: Investor Relations, telephone: (312) 894-7500. The documents filed with the SEC by Traffic.com may be obtained free of charge from Traffic.com's website at http://www.traffic.com/ or by directing a request to Traffic.com, Inc., 851 Duportail Road, Wayne, Pennsylvania, 19087, Attention: Investor Relations, telephone: (610) 725-9700. The documents filed by NAVTEQ and Traffic.com are also available free of charge from the SEC's website at http://www.sec.gov/ .
NAVTEQ, Traffic.com and their respective executive officers, directors and other employees may be deemed to be participants in the solicitation of proxies from stockholders of Traffic.com in favor of the proposed merger. Information about the executive officers, directors and other employees of NAVTEQ and Traffic.com and their direct and indirect interests, by security holdings or otherwise, in the merger are described in the definitive proxy statement/prospectus.
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of the securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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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,
2005 2006 2005 2006
(Unaudited) (Unaudited)
Net revenue $145,978 180,691 $496,512 581,619
Operating costs and expenses:
Database creation and distribution
costs 67,177 77,515 236,405 275,449
Selling, general, and
administrative expenses 37,241 40,373 125,851 152,474
Total operating costs and
expenses 104,418 117,888 362,256 427,923
Operating income 41,560 62,803 134,256 153,696
Other income 2,095 2,956 4,735 10,249
Income before income taxes 43,655 65,759 138,991 163,945
Income tax (benefit) expense 15,989 22,816 (31,839) 54,481
Net income before cumulative effect
of change in accounting principle 27,666 42,943 170,830 109,464
Cumulative effect of change in
accounting principle, net of tax - - - 506
Net income $27,666 42,943 $170,830 109,970
Earnings per share of common stock
before cumulative effect of change
in accounting principle -
Basic $0.30 0.46 $1.90 1.18
Diluted $0.29 0.45 $1.81 1.14
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 $0.30 0.46 $1.90 1.18
Diluted $0.29 0.45 $1.81 1.15
Weighted average shares of common
stock outstanding -
Basic 91,361 93,470 90,115 93,029
Diluted 94,918 95,852 94,198 95,713
NAVTEQ CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2005 2006
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $85,070 122,335
Short-term marketable securities 84,299 137,163
Accounts receivable, net 82,352 126,081
Deferred income taxes 42,584 9,232
Prepaid expenses and other current assets 15,203 17,744
Total current assets 309,508 412,555
Property and equipment, net 20,828 27,462
Capitalized software development costs, net 25,761 18,844
Long-term deferred income taxes, net 169,264 184,645
Long-term marketable securities 49,429 63,033
Goodwill and acquired intangible assets, net 28,593 75,560
Deposits and other assets 12,505 12,602
Total assets $615,888 794,701
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $19,572 22,874
Accrued payroll and related liabilities 28,365 33,571
Fair value of foreign currency derivative 3,265 -
Other accrued expenses 28,658 40,327
Deferred revenue 38,703 43,639
Total current liabilities 118,563 140,411
Long-term deferred revenue 3,446 2,874
Other long-term liabilities 3,815 2,035
Total liabilities 125,824 145,320
Stockholders' equity 490,064 649,381
Total liabilities and
stockholders' equity $615,888 794,701
NAVTEQ CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
Year Ended
Dec. 31, 2005 Dec. 31, 2006
(Unaudited)
Cash flows from operating activities:
Net income $170,830 109,970
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 23,070 29,700
Deferred income taxes (77,737) 15,046
Stock compensation expense 9,117 14,501
Tax benefit on non-qualified
stock options 40,936 -
Cumulative effect of change in
accounting principle - (506)
Provision for doubtful receivables 2,303 2,548
Noncash other 1,302 2,433
Changes in operating assets and
liabilities, net of effects of
acquisitions (32,068) (33,684)
Net cash provided by
operating activities 137,753 140,008
Cash flows from investing activities:
Acquisition of property and equipment (10,466) (17,834)
Capitalized software development costs (12,369) (9,055)
Net purchases of marketable securities (62,260) (65,408)
Payments for acquisitions, net of
cash acquired (8,234) (42,216)
Purchase of investments (1,201) -
Note receivable - (300)
Net cash used in investing
activities (94,530) (134,813)
Cash flows from financing activities:
Issuance of common stock and other
equity transactions 14,190 26,256
Net cash provided by
financing activities 14,190 26,256
Effect of exchange rate changes on cash (2,444) 5,814
Net increase in cash and cash
equivalents 54,969 37,265
Cash and cash equivalents at beginning
of period 30,101 85,070
Cash and cash equivalents at end of period $85,070 122,335
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