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.
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: Email Contact 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 (Logo: http://www.newscom.com/cgi-bin/prnh/20060313/NAVTEQLOGO )