Option Announces Third Quarter Results for 2007



    LEUVEN, Belgium, Oct. 25 /CNW/ - Option N.V. (EURONEXT Brussels:
OPTI; OPNVY), the wireless technology company, today announced its results for
the first nine months and the third quarter ended September 30, 2007. The
financial information reported in this release is presented in Euro and has
been prepared in accordance with the recognition and measurement criteria of
IFRS as adopted by the European Union (IFRSs). The accounting policies and
methods of computation followed in the attached financial statements are the
same as those followed in the most recent annual financial statements.

    
    Financial Highlights

    Q3 2007

    -   Revenues of 80.4 million EUR

    -   Gross Margin of 25.0 million EUR or 31.1% of total revenues, after a
        provision of 1.9 million EUR

    -   EBIT of - 0.6 million EUR or - 0.8% of total revenues, after non-
        recurring items totaling 5.3 million EUR

    -   Positive net result of 0.4 million EUR

    -   Excluding non-recurring items, the first-time full quarter
        consolidation of the R&D center Kamp-Lintfort, normalised EBIT was
        6.5 million EUR, or 8.0 % of total revenues

    Q4 2007

    -   Targeting revenues for Q4 of 90 million EUR

    -   Targeting EBIT, excluding non-recurring elements, for Q4 of 9% of
        total revenues

    -   Redesign of the organisation ongoing to equip Option for emerging
        consumer-centric mass market

    -   A comprehensive analyst briefing scheduled for Tuesday 27 November
        2007
    

    "Supplier-related technical issues that prevented the fulfilment of
orders for our most advanced HSUPA devices constrained shipments, revenue,
gross margin and profit from operations and transformed what should have been
a positive quarter into a disappointment," commented Jan Callewaert, CEO of
Option. "Thankfully, as we entered Q4, the technical issues were resolved
allowing the company to move forward."
    "Lessons learned from the investigations into accounts receivable and
inventory, following auditors comments at the half-year, mark an important
turning point for the company," said Jan Callewaert. "The more rigorous
internal controls that are being implemented across the company have served us
well in this quarter and will continue to show significant improvements in the
future."

    Highlights of the third quarter and year-to-date

    Revenues for the third quarter of fiscal year 2007 were 80.4 million EUR,
an increase of 6.2% compared with the revenues of 75.7 million EUR in the
third quarter of 2006.
    Shipments increased 21 percent compared with the third quarter of 2006.
    During the quarter, wireless data cards accounted for 62% of unit sales
and fixed wireless (including USB wireless modems) 29%. Embedded modules made
up 9% of unit sales.
    HSDPA 3.6/7.2 Mbit/s accounted for 74% of data card shipments by volume.
A further 22 % of card shipments were for the previous generation of HSDPA 1.8
Mbit/s devices.

    
    Other notable milestones in the quarter included:

    -   Sony's European and Japanese launches for the new VAIO SZ and VAIO TV
        notebook series incorporating the GTM378 HSDPA module

    -   The introduction of the GlobeSurfer wireless router into Australia by
        Virgin Mobile
    

    Gross margin in Q3 2007 declined to 25.0 million EUR (31.1 % of total
revenues) compared with 26.2 million EUR (34.6% of total revenues) in Q3 2006,
primarily due to a provision of 1.9 million EUR against inventory. Excluding
the provision, the gross margin was 33.5 % and was in line with the gross
margin reported in the first and second quarters of 2007.
    Quarterly EBIT of - 0.6 million EUR was impacted by higher operating
expenses and non-recurring expenses totaling 5.4 million EUR. The company
invested in human resources in order to prepare the company better for the
future. As a consequence the human resources expenses for the Group increased
by 13%.
    The activities of the former BenQ/Siemens R&D facility (R&D center
Kamp-Lintfort), acquired during Q2 2007, were consolidated for a full quarter
for the first time. Research and Development expenses increased by 2.6 million
EUR to 9.1 million EUR compared with 6.6 million EUR in the previous quarter
and 4.6 million EUR in the third quarter of 2006 as simultaneous developments
continued across multiple product lines. The decision was also taken to
accelerate the amortization of some of the R&D expenditure to reflect shorter
product life-cycles. By investing heavily in R&D the company enhances its
market position.
    Sales, marketing and royalty expenses increased by 4.5 million EUR to
12.5 million EUR compared with 8.1 million EUR in the previous quarter and
8.2 million EUR in the third quarter of 2006. The increase included
adjustments totaling 2.3 million EUR for bad debt and a provision related to
embedded module royalty payments.
    The Net Result for the quarter, after provisions and adjustments,
remained positive at 0.4 million EUR or 0.01 EUR per ordinary share and 0.01
EUR per diluted share.
    Excluding non-recurring items, the first-time consolidation of R&D centre
Kamp-Lintfort and the provision relating to accelerated amortization of R&D,
normalised EBIT was 6.5 million EUR or 8.0 % of revenues of 80.4 million EUR.
The normalised net result was 5.3 million EUR or 0.13 EUR per ordinary share
or 0.13 EURO per diluted share.
    Accounts Receivable decreased by 2.2 million EUR to 66.0 million EUR
compared with 68.2 million EUR in the previous quarter and 63.0 million EUR
reported in the third quarter of 2006. Overall, accounts receivables have
remained broadly stable over the last six quarters. Sales to Option's contract
manufacturing partners accounted for 15 % of total accounts receivable at the
quarter end.
    Inventories grew by 1.5 million EUR in the first three quarters to
42.1 million EUR. A provision of 1.9 million EUR has been taken. Finished
goods, which included HSUPA devices, represented 18% of total inventory by
value at the quarter-end.
    The Cash Flow position of the company is healthy. Cash flow from
operating activities was +23.6 million EUR for the first nine months of 2007
compared with +5.5 million EUR for the same period of 2006.
    Cash flow from investing activities was 22.1 million EUR for the first
nine months of 2007 compared with 10.1 million EUR for the same period of
2006. During the third quarter of 2007, a total of 9.6 million EUR was mainly
invested in R&D and test equipment for use at the R&D center Kamp-Lintfort and
the outsourced production site in Wuxi, China.
    The non-recurring provisions that contributed to negative EBIT for the
quarter had no cash-flow impact.

    Strategic initiatives

    Building on more robust financial and operational systems and staffing,
management is continuing a strategic review across Option and its
manufacturing partners to identify opportunities to increase revenue, bear
down on costs and maximise margins by driving efficiency.

    
    Tactical priorities already highlighted and on which we have taken action:

    -   Refocusing sales teams to ensure sufficient emphasis is placed on
        securing timely and full payment for outstanding invoices.

    -   Achieving a more equitable allocation of the costs associated with
        handling of product returns from operator customers.

    -   Optimising the benefits from improved inventory management.

    -   Execution of a sales incentive plan emphasizing the attractive value
        proposition of previous generation products still held in inventory.
    

    The benefits of the initiatives are expected to start reaching critical
mass over the next couple of quarters.

    4th Quarter Guidance

    Fourth quarter revenues are targeted at 90 million EUR.
    Based on current forecasts for revenues, gross margin and operating
expenses we target normalised EBIT at 9.0 %.

    Analyst Briefing

    The company has scheduled an analyst briefing on the latest market
trends, opportunities and the corporate strategy for Tuesday November 27th
2007.

    
    Consolidated Performance

    For the third quarter and the
    9 month period ended 30 September

    Million EUR (except per
    share figures)               Q3 2007     Q3 2006     9M 2007     9M 2006

    Revenues                        80.4        75.7       231.6       216.5

    Gross profit                    25.0        26.2        75.9        83.7

    Operating expenses             (25.7)      (16.2)      (59.3)      (48.7)

    EBIT                            (0.6)        9.9        16.6        35.0

    Net profit                       0.4         7.9        14.9        28.9

    Weighted average number
     of ordinary shares       41 249 296  41 249 296  41 249 296  41 249 296

    Earnings per share
     after the stock split
    (EUR)                           0.01        0.19        0.36        0.70
    

    Interim Financial Information

    Consolidated income statement for the first nine months of fiscal year
2007

    Revenues

    Total revenues for the first nine months of fiscal year 2007 increased by
7.0% to EUR 231.6 million compared with the EUR 216.5 million in the
corresponding period of 2006.

    Gross Profit

    During the first three quarters of 2007 the gross profit amounted to
EUR 75.9 million, compared to a gross profit of 83.7 EUR million in the first
three quarters of 2006.
    Gross margin in the first three quarters of 2007 was 32.8% on total
revenues, compared with gross margin of 38.7% of first three quarters of 2006.

    Operating expenses

    During the first nine months of 2007, the operating expenses, including
depreciation and amortization charges, were EUR 59.3 million, compared to
EUR 48.7 million in the first nine months of 2006.

    EBIT

    EBIT for the first three quarters of 2007 was EUR 16.6 million, or 7.2%
on total revenues, compared to EUR 35.0 million, or 16.2% on the total
revenues of the first three quarters of 2006, representing a decrease of
52.7%.

    EBITDA

    EBITDA for the first nine months of 2007 was EUR 29.7 million, or 12.8%
on total revenues, compared to EUR 43.2 million, or 20.0% on the total
revenues of the first nine months of 2006, representing a decrease of 31.4%.

    Finance result

    During the first three quarters of 2007, Option obtained a positive
financial result of EUR 476 thousand. The total exchange rate gains amounted
to EUR 493 thousand mainly thanks to USD rates and Option received
EUR 798 thousand from risk free investments of the available cash.
    A total of EUR 750 thousand financial discounts were given to customers
for cash payments and other financial result of EUR 65 thousand.

    Net Profit

    As from April 24th, 2006, the company executed a four for one stock
split. Applying the transaction retroactively, earnings per share would have
been the following:
    The net profit for the first nine months of 2007 amounted to
EUR 14.9 million or EUR 0.36 per basic share (or EUR 0.36 per diluted share).
This compared to a net profit of EUR 28.9 million or EUR 0.70 per basic share
(or EUR 0.70 per diluted share) during the first nine months of 2006.

    Consolidated income statement for the third quater of fiscal year 2007

    Revenues

    Total revenues for the third quarter of fiscal year 2007 increased by
6.2% to EUR 80.4 million compared with the EUR 75.7 million in the third
quarter of 2006.

    Gross Profit

    Taking into account a cost of goods sold of EUR 55.3 million during the
third quarter of 2007, the gross profit reached EUR 25.0 million, compared to
a gross profit of 26.2 EUR million in the third quarter of 2006.
    Gross margin in Q3 2007 was 31.1% on total revenues, compared with gross
margin of 34.6% of Q3 2006.

    Operating expenses

    The quarterly operating expenses, including depreciation and amortization
charges, were EUR 25.7 million, compared with EUR 16.2 million in the third
quarter of 2006.

    EBIT

    EBIT for the third quarter 2007 was EUR -0.6 million, or -0.8% on Q3
total revenues, compared to EUR 9.9 million, or 13.1% on the total revenues of
the third quarter of 2006.

    EBITDA

    EBITDA for the third quarter 2007 was EUR 5.2 million, or 6.5% on Q3
total revenues, compared to EUR 12.8 million, or 16.9% on the total revenues
of the third quarter of 2006.

    Finance result

    During the third quarter of 2007, Option obtained a positive financial
result of EUR 278 thousand. The total exchange rate gains amounted to
EUR 293 thousand mainly thanks to USD rates and Option received EUR 323
thousand from risk free investments of the available cash.
    A total of EUR 331 thousand financial discounts were given to customers
for cash payments and other financial result of EUR 7 thousand.

    Net Profit

    The net profit for the third quarter of 2007 amounted to EUR 0.4 million
or EUR 0.01 per basic share (or EUR 0.01 per diluted share). This compared to
a net profit of EUR 7.9 million or EUR 0.19 per basic share (or EUR 0.19 per
diluted share) during the third quarter of 2006.

    Consolidated balance sheet

    Cash and cash equivalents increased from EUR 36.1 million at the end of
2006 to EUR 37.4 million at the end of the third quarter of 2007.
    Trade and other receivables increased from EUR 54.2 million at the end of
2006 to EUR 66.0 million at the end of the first nine months of 2007.
    Inventories increased form EUR 40.6 million at the end of 2006 to
EUR 42.1 million during the first nine months of 2007. The finished goods at
quarter-end represented 18.0% of total inventory value.
    Fixed assets were EUR 52.9 million (net book value) as at September 30th
2007, an increase of EUR 10.8 million compared to the net book value of
EUR 42.1 million at the end of the previous fiscal year. During the first
three quarters of 2007, the total investments in tangible assets amounted to
EUR 9.2 million and the Company invested EUR 12.9 million in intangible assets
of which 12.2 million for capitalized developments projects and 0.7 million
for additional licenses and other intangibles assets.
    Total current liabilities increased from EUR 53.1 million at the end of
2006 to EUR 64.6 million. This increase is mainly due to combination of the
decrease of the income tax payable (-EUR 2.0 million) and the growth of the
trade and other payables (+EUR 13.5 million).
    On total assets of EUR 202.8 million, the equity amounted to
EUR 126.6 million, which results in a solvency ratio of 62.4% at quarter-end.
    The Company generated EUR 23.6 million cash from operating activities
during the first three quarters of 2007, compared to EUR 5.6 million generated
in same period of 2006.


    - OPTION N.V. -


    Financial report prepared in accordance with International Financial
Reporting Standards (IFRSs) measurement and recognition principles


    
    Consolidated income statement

    For the 9 month period ended
    30 September Thousands EUR                         September   September
    (except per share figures)   Q3/2007     Q3/2006    30, 2007    30, 2006

    Revenues                      80 367      75 696     231 577     216 257
    Other revenues                                                       254

    Total Revenues                80 367      75 696     231 577     216 511

    Cost of products sold        (55 342)    (49 531)   (155 725)   (132 771)

    Gross profit                  25 025      26 165      75 852      83 740

    Gross margin/Total
     revenues %                     31.1%       34.6%       32.8%       38.7%

    Research and
     development expenses         (9 056)     (4 622)    (20 838)    (13 682)

    Sales, marketing
     and royalties expenses      (12 526)     (8 178)    (26 602)    (27 022)

    General and
     administrative expenses      (4 073)     (3 432)    (11 853)     (8 015)

    Total operating expenses     (25 655)    (16 232)    (59 293)    (48 719)

    Profit from
     operations (EBIT)              (630)      9 933      16 559      35 021

    EBIT/Total revenues %           (0.8)%      13.1%        7.2%       16.2%

    Depreciation and
     amortization                  5 854       2 889      13 103       8 214

    EBITDA                         5 224      12 822      29 662      43 235
    EBITDA/Total revenues %          6.5%       16.9%       12.8%       20.0%

    Exchange gain/(loss)             293        (389)        493         975

    Interest income/(expense)
     and other financial
     income/(expense)                (15)       (137)        (17)       (454)
    Finance result                   278        (526)        476         521

    Profit before taxes             (352)      9 407      17 035      35 542

    Tax expense                      800      (1 460)     (2 121)     (6 630)

    Net profit                       448       7 947       4 914      28 912

    Weighted average
     number of ordinary
     shares                   41 249 269  41 249 269  41 249 269  41 249 269

    Diluted average
     number of ordinary
     shares                   41 249 269  41 249 269  41 249 269  41 249 269

    Earnings per share
     (in EUR)                       0.01        0.19        0.36        0.70
    Diluted earnings per
     share (in EUR)                 0.01        0.19        0.36        0.70


    - OPTION N.V. -


    Financial report prepared in accordance with International Financial
Reporting Standards (IFRSs) measurement and recognition principles


    Consolidated balance sheet

    Thousands EUR                                          30          31
                                                       September    December
    For the period ended                                  2007        2006

    Assets
    Current assets
    Cash and cash equivalents                             37 428      36 062
    Trade and other receivables                           66 001      54 201
    Income tax receivable                                    209         110
    Inventories                                           42 112      40 572

                                                         145 750     130 945

    Non-current assets

    Property, plant
     and equipment                                        19 515      12 099
    Intangible assets                                     33 362      29 998
    Deferred tax assets                                    3 996       3 303
    0ther receivables                                        139         144

                                                          57 012      45 544

    Total assets                                         202 762     176 489

    Equity and Liabilities

    Current liabilities
    Trade and other payables                              62 626      49 137
    Income tax payable                                     1 959       3 914

    Current portion
     of long-term debt                                        19          74

                                                          64 604      53 125

    Non-current liabilities

    Trade and other payables                              11 326      11 326

    Non-current portion
     of long-term debt                                       148         148
    Deferred tax liabilities                                 125         256

                                                          11 599      11 730

    Equity

    Issued capital                                         6 116       6 116
    Share premium                                         43 865      43 865
    Reserves                                                 346         335
    Retained earnings                                     76 232      61 318

    Shareholders' equity                                 126 559     111 634

    Total liabilities and
     shareholders' equity                                202 762     176 489


    - OPTION N.V. -


    Financial report prepared in accordance with International Financial
Reporting Standards (IFRSs) measurement and recognition principles


    Consolidated cash flow statement

    Thousands EUR                                          30          30
                                                       September   September
    For the period ended                                  2007        2006

    Operating activities

    Net profit(A)                                         14 914      28 912

    Depreciation and amortization                         11 992       8 214

    Reversal/write-offs non
     current and current assets                            1 232         145

    Impairment losses                                      1 111

    Unrealized foreign
     exchange losses/(gains)                                 952          (4)
    Interest income                                         (889)

    Interest expense                                          92

    Loss/(gains) on sale
     of plant & equipment                                     10
    Tax expense                                            2 121       6 630

    Total(B)                                              16 621      14 985

    Cash flow from operating
     activities before changes
     in working capital (C)=(A)+(B)             31 535      43 897

    Decrease/(increase) in trade
     and other receivables                               (15 944)    (26 346)
    Decrease/(increase) in inventories                    (1 540)    (13 430)
    Increase/(decrease) in trade
     and other payables                                   13 489       1 764

    Total changes in
     working capital (D)                                  (3 995)    (38 012)

    Cash generated from
     operations (E)=(C)+(D)                     27 540       5 885

    Interests (paid) (F)                                     (54)
    Interests received (G)                                   883
    Income tax (paid)/received(H)                         (4 797)       (307)
    Cash flow from operating
     activities (i)=(e)+(f)+(g)+(h)             23 572       5 578

    Investing activities

    Proceeds from sale of
     plant & equipment                                       (77)          -
    Acquisition of property,
     plant and equipment                                  (9 183)     (2 649)
    Acquisition of intangible
     assets                                                 (700)     (1 306)
    Development expenditures                             (12 168)     (6 155)

    Cash Flow from
     Investing Activities (j)                            (22 128)    (10 110)

    Financing activities
    Proceeds from borrowings                                 (55)          -

    Payment of finance lease
     liabilities                                               -        (286)
    Cash flow from financing
     activities (k)                                          (55)       (286)

    Net increase/(decrease)
     in cash and cash equivalents (I)+(J)+(K)              1 389      (4 818)

    Cash and cash equivalents
     at beginning of period                               36 062      49 288

    Effect of exchange rate
     fluctuations on                                         (23)

    Cash and cash equivalents
     at end of period                                     37 428      44 470

    Difference                                             1 389      (4 818)


    Financial report prepared in accordance with International Financial
Reporting Standards (IFRSs) measurement and recognition principles


    Consolidated Statement of Changes in Equity

    Thousands EUR                                Shareholders' equity

    For the 9 month
    period ended 30
    September 2006
                                        Share
                                        based     Trans-
                   Issued    Share      payment-  lation    Retained  Total
                   capital   premium    reserves  reserves  earnings  equity

    As per 31
    December 2005    6 116    43 865       360        (3)   26 002    76 340

    Net profit           -         -         -         -    28 912    28 912

    Conversion
     Translation
     adjustment          -         -         -       (27)         -      (27)

    As per 30
     September 2006  6 116    43 865       360       (30)    54 914  105 225


    Thousands EUR                                Shareholders' equity

    For the 9 month
     period ended 30
     September 2007
                                        Share
                                        based     Trans-
                   Issued    Share      payment-  lation    Retained  Total
                   capital   premium    reserves  reserves  earnings  equity




    As per 31
     December 2006   6 116    43 865       360       (25)   61 318   111 634


    Net profit           -         -         -         -    14 914    14 914

    Conversion
     Translation
     adjustment          -         -         -        11         -        11

    As per 30
     September 2007  6 116    43 865       360       (14)   76 232   126 559
    

    This press release contains forward-looking information that involves
risks and uncertainties, including statements about the company's plans,
objectives, expectations and intentions. Such statements include, without
limitation, discussions concerning the company's strategic direction and new
product introductions and developments. Readers are cautioned that such
forward-looking statements involve known and unknown risks and uncertainties
that may cause actual results to differ materially than those set forth in the
forward looking statements. The risks and uncertainties include, without
limitation, the early stage of the market for connectivity and integrated
wireless products and solutions for portable and handheld computers and mobile
telephones, the management of growth, the ability of the company to develop
and successfully market new products, rapid technological change and
competition. Some of these risk factors were highlighted in the Consolidated
and Statutory Report 2006 of the Board of Directors which can be found in the
Annual Report 2006 page 51-52. The forward-looking statements contained herein
speak only as of the date of this press release. The company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any such statement to reflect any change in the company's
expectations or any change in events, conditions or circumstance on which any
such statement is based.

    About Option http://www.option.com - (EURONEXT Brussels OPTI, OPNVY)

    Option, the wireless technology company, is a leading innovator in the
design, development and manufacture of 3G HSUPA, HSDPA, UMTS, EDGE, and WLAN
technology products for wireless connectivity solutions. Option has built up
an enviable reputation for creating exciting products that enhance the
performance and functionality of wireless communications. Option's
headquarters are in Belgium (Leuven). The company has Research & Development
in Belgium (Leuven), Germany (Dusseldorf and Adelsried), Sweden (Stockholm),
and an ISO 9002 production engineering and logistics facility in Ireland
(Cork). Option also has offices in Europe, US, Asia, Japan and Australia. For
more information please visit http://www.option.com.





For further information:

For further information: Jan Callewaert, CEO, Guy Schroyen, Interim
Financial Manager, Gaston Geenslaan 14, B-3001 Leuven, Belgium, TEL:
+32(0)16-31-74-11, FAX: +32(0)16-31-74-90, E-mail: investor@option.com

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OPTION N.V.

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