AsiaInfo Reports First Quarter Results.Business Editors BEIJING Beijing (bā-jĭng) or Peking (pē-kĭng, pā–), city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People's Republic of China. It is in central Hebei prov. & SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--April 21, 2003 Operating Results In-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with Previously Announced Guidance Excluding One-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. Charge for Goodwill and Intangible Assets Adjustment AsiaInfo Holdings, Inc. (Nasdaq:ASIA Asia (ā`zhə), the world's largest continent, 17,139,000 sq mi (44,390,000 sq km), with about 3.3 billion people, nearly three fifths of the world's total population. ), a leading provider of telecom software solutions in China, today announced first quarter results for the period ended March 31, 2003. As anticipated and consistent with previous guidance, revenues were impacted by the slower industry conditions of the past few quarters, and net revenue (total revenue net of hardware costs) was US$12.7 million, a 5 percent decrease over the previous quarter and a 26 percent decrease over the period a year ago. Net revenue for the company's Communications Solutions (CS) business unit was US$6.7 million, an 8 percent increase over the previous quarter, and a 27 percent decrease over the first quarter of the previous year. The company's Operation Support System solutions (OSS Oss (ôs), city (1994 pop. 62,141), North Brabant prov., S Netherlands; chartered 1399. It is a significant industrial center. Manufactures include meat products, chemicals, pharmaceuticals, electrical equipment, and metalware. ) business unit had net revenue of US$6.0 million for the first quarter, a 16 percent decrease over the previous quarter and a 24 percent decrease over the same period a year ago. (N.B. Due to a change made in the company's reporting structure last quarter, year-ago revenues are being reported on a like basis.) The company's net revenue backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. reached US$41.3 million, a 2 percent increase over the previous quarter's US$40.3 million, and a 20 percent decrease over the period a year ago. The sequential increase is the first after three consecutive decreases last year and is primarily due to greater carrier investment in high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. software. Gross revenue (which includes hardware costs) for the quarter was US$30.7 million, a 30 percent increase over the previous quarter and a 7 percent increase over the same period in 2002. Gross profit was US$7.5 million, a 1 percent increase over the previous quarter and a 34 percent decrease over the first quarter in 2002. The company was able to further reduce Sales and Marketing and General and Administrative expenses by 10 percent compared to the previous quarter and 32 percent compared to the same period in the previous year. At the same time, the company continued to invest in Research and Development, which grew by 42 percent over the 2002 fourth quarter and 12 percent over the same period a year ago. As per the company's announcement made earlier this month, AsiaInfo is recording a one-time, non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of US$30.2 million as a result of an independent valuation of the goodwill and acquired intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. mainly attributable to the company's February 2002 acquisition of Bonson Information Technology Holdings Limited ("Bonson"). Excluding the results of this charge, total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. would have fallen to US$7.5 million, a 3 percent decrease over the previous quarter and a 27 percent decrease over the same period a year ago. The company would have returned to operating profitability with income from operations of US$12 thousand, which represents a positive increase over last quarter's operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of US$300 thousand and a 99 percent decrease over the previous year. However, with the charge, the company's operating expenses were US$37.7 million and the company announced an operating loss of US$30.2 million. In the past quarter the company recorded a tax credit of US$960 thousand. This mainly is due to tax benefits related to the exercising of cheap stock that is now deemed to be deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). based on recent changes in tax regulations. Excluding the one-time impairment charge relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc goodwill and acquired intangible assets described above, net income would have been US$1.2 million, or US$0.03 per basic share. This is a 17 percent decrease over net income of the same quarter the previous year. With the charge, net loss was US$29.0 million, or a loss of US$0.66 per basic share. The company continued to generate positive operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , which was US$1.0 million for the quarter. Xingsheng Zhang, AsiaInfo's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "As predicted, this was a slow quarter for AsiaInfo, as revenues were impacted by last year's slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. affecting the entire Chinese telecom industry. We are pleased, however, by our continued ability to manage costs during difficult conditions, and our return to positive operating profitability before the one-time, non-cash impairment charge related to the Bonson write down. The company's financials also remain sound and speak to solid asset management." Mr. Zhang continued, "Industry information, as well as our own conversations with major customers, clearly indicate that although overall telecom spending will slightly decrease this year, carriers are increasingly shifting investment focus to optimizing management systems and facilitating value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. that allow for greater competitiveness and profitability. The build up of a national wireless management system, the growth of broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and its applications, and the implementation of CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. 1x, to name a few initiatives, will necessitate ne·ces·si·tate tr.v. ne·ces·si·tat·ed, ne·ces·si·tat·ing, ne·ces·si·tates 1. To make necessary or unavoidable. 2. To require or compel. new and more sophisticated software applications and solutions that will bring significant opportunities to our business units. Our CS Unit, for example, offers critical solutions such as network management, value-added services management and other software solutions. On the OSS side, emphasis on CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. , as demonstrated by our recent series of contract wins, is likely to continue as carriers focus on high-end solutions. AsiaInfo's dominance in nearly every market segment positions us extremely well to take advantage of these areas for growth. While we remain cautious about the timing for a pick up in spending, stronger revenue backlog and order pipeline give us initial indications for a stronger second half of 2003 and into 2004." New Contract Wins During the first quarter, AsiaInfo won a number of new contracts that underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the focus of China's carriers on improvement of management efficiency and implementation of value-added services. These include: -- Various contacts to provide CRM software and/or upgrades to several China Mobile subsidiaries including Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. Mobile, Zhejiang Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, and Shangdong Mobile; -- A contract with China Netcom China Netcom, full name China Netcom Group Corporation (Hong Kong) Limited, abbreviated CNC, was originally formed in August 1999 by the People's Republic of China government to enable inward investments to build high speed Internet communications in the country. Zhejiang, a southern subsidiary of China Netcom, to build a fixed line OSS system; -- A contract to provide Enterprise Information Portal See corporate portal. (EIP (1) (Enterprise Information Portal) See corporate portal. (2) (Extended Instruction Pointer) The program counter on x86 CPUs. ) software solution to Tianjin Netcom, a provincial subsidiary of China Netcom; -- An IP billing software solution contract for Xinjiang Telecom, a subsidiary of China Telecom; -- A contract with China Unicom China Unicom, full name China United Telecommunications Corporation, 中国联通, HKSE: 0762 NYSE: CHU, is a telecommunication operator in the People's Republic of China. 52. to support its third phase UniNet expansion; -- A contract with China Unicom to support its fourth phase VoIP (Voice over IP) network expansion; and, -- Multiple contracts with China Mobile to expand its SMS (1) (Storage Management System) Software used to routinely back up and archive files. See HSM. (2) (Systems Management Server) Systems management software from Microsoft that runs on Windows NT Server. service capabilities. Business Outlook The following outlook statements are based on current expectations. These statements are forward looking, and actual results may differ materially. AsiaInfo expects Q2 2003 net revenue to be US$14 to 15 million. Earnings per basic share is expected to be between US$0.01 to 0.02.
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Excluding Impairment of Goodwill and Acquired Intangible Assets
(Amounts in thousands of US$)
2003 2002
Three Months Ended Mar 31
AsiaInfo AsiaInfo
Revenues:
Communications solutions 23,127 17,294
Operation support system solutions 7,546 11,243
Total revenues 30,673 28,537
Cost of revenues:
Communications solutions 18,739 12,116
Operation support system solutions 4,430 5,133
Total cost of revenues 23,169 17,249
Gross profit 7,504 11,288
Operating expenses:
Sales and marketing 2,514 3,569
General and administrative 2,317 3,545
Research and development 2,545 2,264
Amortization of deferred stock compensation 69 152
In Process research and development 0 350
Amortization of intangible assets 47 318
Total operating expenses 7,492 10,198
(Loss) income from operations 12 1,090
Other income (expenses):
Interest income 454 734
Interest expense (1) -44
Other income (expenses), net 0 1
Total other income (expenses), net 453 691
Income before income taxes, minority
interests and equity in loss of affiliate 465 1,781
Income tax expense (824) 267
Minority interests 0 35
Equity in loss of affiliate (115) -127
Net (loss) income 1,174 1,422
Net (loss) income per share
Basic 0.03 0.03
Diluted 0.03 0.03
Shares used in computing per share amounts
Basic 44,206,625 42,430,509
Diluted 45,196,786 45,884,452
Segment information
CS revenue net of hardware cost 6,681 9,173
OSS revenue net of hardware cost 6,037 7,901
Consolidated revenues net of hardware cost 12,718 17,074
Consolidated cost of sales net of hardware
cost 5,214 5,786
Consolidated gross profit 7,504 11,288
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of US$)
2003 2002
Three Months Ended Mar 31
AsiaInfo AsiaInfo
Revenues:
Communications solutions 23,127 17,294
Operation support system solutions 7,546 11,243
Total revenues 30,673 28,537
Cost of revenues:
Communications solutions 18,739 12,116
Operation support system solutions 4,430 5,133
Total cost of revenues 23,169 17,249
Gross profit 7,504 11,288
Operating expenses:
Sales and marketing 2,514 3,569
General and administrative 2,317 3,545
Research and development 2,545 2,264
Amortization of deferred stock compensation 69 152
In Process research and development 0 350
Amortization of intangible assets 47 318
Impairment of Goodwill and Acquired
Intangible Assets 30,221 0
Total operating expenses 37,713 10,198
(Loss) income from operations (30,209) 1,090
Other income (expenses):
Interest income 454 734
Interest expense (1) (44)
Other income (expenses), net 0 1
Total other income (expenses), net 453 691
Income before income taxes, minority
interests and equity in loss of affiliate (29,756) 1,781
Income tax expense (824) 267
Minority interests 0 35
Equity in loss of affiliate (115) -127
Net (loss) income (29,047) 1,422
Net (loss) income per share
Basic (0.66) 0.03
Diluted (0.66) 0.03
Shares used in computing per share amounts
Basic 44,206,625 42,430,509
Diluted 44,206,625 45,884,452
Segment information
CS revenue net of hardware cost 6,681 9,173
OSS revenue net of hardware cost 6,037 7,901
Consolidated revenues net of hardware cost 12,718 17,074
Consolidated cost of sales net of hardware
cost 5,214 5,786
Consolidated gross profit 7,504 11,288
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in US)
Mar 31,2003 Dec 31,2002
ASSETS
Current Assets:
Cash and cash equivalents 115,199,910 115,152,694
Restricted cash 15,272,919 14,457,903
Short term investments 11,294,337 11,260,429
Accounts receivable, trade (net of
allowance for doubtful accounts of
1,133,351 and 1,417,762, at Dec 31,
2002 and Mar 31, 2003 respectively) 64,980,058 49,437,085
Inventories 6,952,132 10,934,289
Other current assets 11,635,107 13,851,978
Total current assets 225,334,463 215,094,378
Property, plant, and equipment-net 3,567,832 4,045,923
Investment in affiliate 2,693,232 2,807,756
Other assets 11,890,340 41,481,895
Total assets 243,485,867 263,429,952
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans 60,408 60,406
Accounts payable 32,474,380 21,708,427
Accrued employee benefit 5,344,245 5,082,550
Deferred revenue 5,342,745 5,055,831
Income taxes payable 2,115,388 2,760,486
Other taxes payable 2,204,204 2,578,606
Other current liabilities 14,116,578 15,708,509
Total current liabilities 61,657,948 52,954,815
Total liabilities 61,657,948 52,954,815
Minority interests 452,238 317,319
Stockholders' equity:
Common stock, 100,000,000 shares
authorized; 0.01 par value, shares
issued and outstanding: Dec 31, 2002
44,193,474; Mar 31,2003 44,210,949 442,109 441,935
Additional paid-in capital 200,841,113 200,649,428
Deferred stock compensation (36,551) (105,628)
Retained earnings (accumulated deficit) (19,937,331) 9,109,903
Accumulated other comprehensive income
(loss) 66,341 62,180
Total stockholders' equity 181,375,681 210,157,818
Total Liabilities and Stockholders'
Equity 243,485,867 263,429,952
Reconciliation of Non-GAAP Measures This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical numerical expressed in numbers, i.e. Arabic numerals of 0 to 9 inclusive. numerical nomenclature a numerical code is used to indicate the words, or other alphabetical signals, intended. measure of a registrant's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). in the statement of operation, balance sheet or statement of cash flows (or equivalent statements) of the registrant An individual or organization that signs up (registers) for a training class or service. See domain name registrar. ; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Pursuant to the requirements of Regulation G, we have provided in this Addendum addendum n. an addition to a completed written document. Most commonly this is a proposed change or explanation (such as a list of goods to be included) in a contract, or some point that has been subject of negotiation after the contract was originally proposed by a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure. The following table is a reconciliation of Net Income and Earning Per Share Noun 1. earning per share - the portion of a company's profit allocated to each outstanding share of common stock net income, net profit, profit, profits, earnings, lucre, net - the excess of revenues over outlays in a given period of time (including depreciation for the first quarter of year 2003:
(Amount in thousands of US$)
Net Loss as per GAAP $ (29,047)
Adjustment for impairment of Goodwill
and Acquired Intangible Assets (a) 30,221
Adjusted Net Income for non-GAAP measure $ 1,174
Basic
Earning Per Share per GAAP $ (0.66)
Adjustment for impairment of Goodwill
and Acquired Intangible Assets (a) 0.69
Earning Per Share for non-GAAP measure $ 0.03
Diluted
Earning Per Share per GAAP $ (0.66)
Adjustment for impairment of Goodwill
and Acquired Intangible Assets (a) 0.69
Earning Per Share for non-GAAP measure $ 0.03
(a) The non-GAAP measure represents a one-time, non-cash impairment
charge as a result of an independent valuation of the goodwill and
acquired intangible assets attributable mainly to the Company's
February 2002 acquisition of Bonson Information Technology
Holdings Limited. We believe that the presentation of this
non-GAAP measure provides useful information for investors
regarding our regular financial performance. Our management uses
this measure for the same purpose. The presentation of this
additional information is not meant to be considered in isolation
or as a substitute for our financial results prepared in
accordance with GAAP.
First Quarter Conference Call AsiaInfo will host a conference call to discuss first quarter earnings at 5:00pm Pacific Time/8:00pm Eastern Time today (Beijing/Hong Kong time: April 22, 2003 at 8:00am). The management team will discuss quarterly results and highlights, and answer any questions. The dial-in number for the call is 973/582-2732. A replay will be available by dialing 877/519-4471 for US callers or 973/341-3080 for international callers with a personal identification number (PIN) of 3829653 between 5:00pm Pacific Time on April 21, 2003 and 5:00pm Pacific Time on April 28, 2003. Additionally, a live and archived web cast of this call will be available on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the AsiaInfo web site at the address shown below. About AsiaInfo Holdings, Inc. AsiaInfo Holdings, Inc. (Nasdaq:ASIA) is a leading provider of telecom network integration and software solutions in China. The company provides high-quality software and solutions to China's telecom carriers, meeting the demanding needs of a fast-growing industry. AsiaInfo's products and services cover network infrastructure services including design, implementation, operation and optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , customer management and billing solutions; decision support systems; and service applications encompassing messaging, broadband, wireless and other advanced applications. Organized as a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. , AsiaInfo has constructed national backbones and provincial access networks for all of China's major national telecom carriers since 1995, including China Telecom, China Mobile, China Unicom and China Netcom. Since 2000, the company has successfully shifted its focus from Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the infrastructure construction to the provision of a full suite of telecom software solutions. For more information about AsiaInfo, please visit http:/www.asiainfo.com. This release contains projections and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events and the future financial performance of AsiaInfo that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by AsiaInfo with the SEC, specifically the most recent reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , 10-Q and 8-K, each as it may be amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. from time to time, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. The financial information contained in this release should be read in conjunction with the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. included in AsiaInfo's most recent reports on Form 10-K and Form 10-Q Form 10-Q See 10-Q. , each as it may be amended from time to time. Any projections in this release are based on limited information currently available to AsiaInfo, which is subject to change. |
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