TomTom Reports Third Quarter 2011 Results

R&D expenses for the quarter were €44 million, a 19% increase year on year (Q3 2010: €36 million). The year on year increase is mainly the result of higher project related expenditure in our Automotive business. Sequentially R&D expenses increased by 7% (Q2 2011: €41 million).

Marketing expenses were €17 million and flat year on year (Q3 2010: €17 million). Sequentially marketing expenses saw a 43% decrease, owing to seasonality (Q2 2011: €30 million).

Financial results

The total interest charge for the quarter was €5.9 million (Q3 2010: €9.5 million, Q2 2011: €6.1 million). The interest expense on the loan facilities for the quarter amounted to €4.5 million. The amortisation of the transaction costs related to the facility amounted to €1.9 million. The interest expense was partially offset by interest income of €0.5 million on cash balances.

The other financial result for the quarter of €1.5 million consisted of a foreign exchange gain mainly attributed to depreciation of the euro against the US dollar during the quarter.

Debt financing

On 30 September 2011, the carrying value of our borrowings amounted to €492 million, a decrease of €98 million compared to the previous quarter (Q2 2011: €591 million) which results from an early repayment of our debt of €100 million partly offset by the amortised transaction costs which are added back to the borrowings over the life time of the borrowings. Excluding transaction costs, which are netted against the borrowings, our outstanding borrowings amounted to €498 million (Q2 2011: €598 million; Q3 2010: €683).

Our net debt as of 30 September 2011 was €316 million compared to €366 million at the end of the previous quarter. Net debt is the sum of the borrowings (€498 million), minus cash and cash equivalents at the end of the period (€182 million) plus our financial lease commitments (€0.6 million).

Balance sheet

At the end of Q3 2011, accounts receivable amounted to €198 million (Q3 2010: €236 million; Q2 2011: €197 million). Lower revenue explains the decrease of €38 million year on year. The inventory level was €73 million, a decrease of €6.7 million year on year and a decrease of €28 million compared to the previous quarter. Cash and cash equivalents at the end of the quarter were €182 million.

Cash flow

During the quarter, we recorded a cash inflow from operations of €75 million which was mainly driven by EBITDA of €68 million and a decrease of working capital of €7.8 million.

The cash flow used in investing activities during the quarter increased by €4.3 million compared to last year to €20 million (Q3 2010: €16 million; Q2 2011 €25 million).

 

Consolidated income statements

(in € thousands)     Q3’11       Q3’10      

YTD’11

     

YTD’10

                               
Revenue     336,445       374,919       915,815       1,005,249
Cost of sales     163,625       196,585       442,119       497,767
Gross result     172,820       178,334       473,696       507,482
                               
Research and development expenses 43,573 36,477 126,077 117,746
Amortisation of technology & databases 19,787 18,374 57,612 54,921
Impairment charge 0 0 511,936 0
Marketing expenses 17,159 17,270 57,555 56,501
Selling, general and administrative expenses 49,241 46,709 148,406 146,163
Stock compensation expense     2,324       4,550       7,196       10,555
Total operating expenses     132,084       123,380       908,782       385,886
                               
Operating result     40,736       54,954       -435,086       121,596
                               
Interest result -5,943 -9,536 -18,036 -26,990
Other finance result 1,529 -20,307 5,379 -21,090
Result associates     -65       -511       -337       -1,977
Result before tax     36,257       24,600       -448,080       71,539
                               
Income tax     -8,130       -5,506       -2,664       -16,049
Net result     28,127       19,094       -450,744       55,490
                               
Minority interests     -811       -167       -1,013       -573
Net result attributed to the group     28,938       19,261       -449,731       56,063
                               
Basic number of shares (in thousands) 221,895 221,718 221,869 221,718
Diluted number of shares (in thousands)     221,940       221,718       221,886       221,752
                               
EPS, € basic 0.13 0.09 -2.03 0.25
EPS, € diluted     0.13       0.09       -2.03       0.25
 

Consolidated balance sheet

(in € thousands)   30 Sep 2011       31 Dec 2010
             
Goodwill   381,569       854,713
Other intangible assets 895,530 946,263
Property, plant and equipment 32,887 38,977
Deferred tax assets 18,978 22,265
Investments   4,731       7,720
Total non-current assets   1,333,695       1,869,938
             
Inventories 73,020 93,822
Trade receivables 197,848 305,821
Other receivables and prepayments 69,348 41,853
Other financial assets 5,376 5,724
Cash and cash equivalents   182,313       305,600
Total current assets   527,905       752,820
             
Total assets   1,861,600       2,622,758
             
Share capital 44,379 44,362
Share Premium 975,260 974,554
Other reserves 63,041 45,757
Stock compensation reserve 78,592 71,662
Accumulated (deficit) -471,090 -222
Minority interests   4,022       5,416
Total equity   694,204       1,141,529
             
Borrowings 386,948 384,011
Provisions 46,608 51,051
Long-term liability 2,214 926
Deferred tax liability   188,202       211,014
Total non-current liabilities   623,972       647,002
             
Trade payables 105,207 218,419
Borrowings 105,522 203,586
Tax and social security 39,734 35,443
Provisions 56,532 58,237
Other liabilities and accruals   236,429       318,542
Total current liabilities   543,424       834,227
             
Total equity and liabilities   1,861,600       2,622,758
 

Consolidated statements of cash flows

(in € thousands)

   

Q3’11

     

Q3’10

      YTD’11       YTD’10
                               
Operating result     40,736       54,954       -435,086       121,596
Financial (losses) -2,335 -1,108 -3,231 -7,395
Depreciation of PPE 2,939 3,379 10,829 11,467
Amortisation of intangible assets 24,745 22,641 71,270 67,129
Impairment charge 0 0 511,936 0
Change to provisions -896 -4,210 -3,579 -6,678
Change to stock compensation reserve 2,124 3,810 6,930 10,809
Changes in working capital:
Change in inventories 26,820 -16,926 18,232 -13,022
Change in receivables and prepayments -17,441 7,650 82,200 37,521
Change in current liabilities     -1,621       -6,928       -202,026       -98,986
Cash generated from operations     75,071       63,262       57,475       122,441
                               
Interest received 450 252 1,336 699
Interest paid -4,516 -8,290 -14,462 -19,464
Corporate income taxes paid     -1,265       -12,155       -4,337       -34,638
Net cash flow from operating activities     69,740       43,069       40,012       69,038
                               
Investments in intangible assets -15,490 -12,211 -48,407 -32,954
Investments in property, plant and equipment -4,334 -3,526 -13,130 -9,711
Investments in financial fixed assets     -239       0       -239       0
Total cash flow used in investing activities     -20,063       -15,737       -61,776       -42,665
                               
Repayments on borrowings -100,000 -125,000 -100,000 -125,000
Proceeds on issue of ordinary shares     0       0       724       0
Total cash flow from financing activities     -100,000       -125,000       -99,276       -125,000
                               
Net decrease in cash and cash equivalents -50,323 -97,668 -121,040 -98,627
Cash and cash equivalents at beginning of period 232,235 366,883 305,600 368,403
Exchange rate effect on cash balances held in foreign currencies     401       -1,600       -2,247       -2,161
Cash and cash equivalents at end of period     182,313       267,615       182,313       267,615

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