AsiaInfo Reports Second Quarter Results; Operating Profit Increases 118% Over Same Period One Year Ago, Meeting Previously Announced Quarterly Guidance.Business Editors/High-Tech Writers 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)--July 23, 2002 Delays in Industry Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Compel Compel - COMpute ParallEL Company to Revise Fiscal-Year 2002 Guidance 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. ), the leading provider of telecom network integration and software solutions in China, today announced second quarter results for the period ended June June: see month. 30, 2002. Meeting previously released guidance, AsiaInfo reported operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of US$3.8 million in the second quarter, a 118% increase over the period a year ago and a 252% increase over last quarter. Bonson Information Technology (Bonson), a wireless operation support system (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. ) vendor acquired by AsiaInfo in February February: see month. 2002, contributed 7.5% to the operating profit. The company increased 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. in the second quarter to reach US$14.7 million, as it continued to demonstrate the strategic benefits of its focus on high-margin software and solutions. Net income reached US$3.6 million in the second quarter, or US$0.08 per basic share, 8% of which was contributed by Bonson. This figure represents a 40% increase over the period a year ago and a 154% increase over last quarter. 106% of this quarter's net income was generated from operations, compared to 85% of net income generated from operations in the same period a year ago. Second quarter net revenue increased 15% over the period a year ago and 15% over last quarter to reach US$19.6 million. Total software revenue was US$8.8 million, a 13% increase over the period a year ago and a 29% increase over last quarter's software revenue of US$6.8 million. Bonson contributed 23% to the second quarter's total net revenue and 32% to software solutions revenue. At the end of the second quarter, 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. was US$45.2 million, a 12% sequential decrease. Software solutions represented 56% of net revenue backlog. Bonson contributed 31% to the total net revenue backlog and 43% to the software net revenue backlog. The decrease in net revenue backlog results from delays in AsiaInfo's order pipeline, due to the slower-than-anticipated reorganization within the China telecom industry. Of the US$32 million net orders in the pipeline at the beginning of April 2002, 24% (in terms of order value) were signed during the second quarter, 60% were delayed, 11% were cancelled, and 4% were lost to competitors. Due to the temporary delays in the Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. telecom restructuring, AsiaInfo anticipates a challenging market environment for the remainder of the 2002 fiscal year. The company is therefore revising its full year guidance downward to reflect the current business condition, and now expects full year net revenue to be in the range of US$60-65 million, operating profit to be in the range of US$4-6 million and net income to be in the range of US$5-7 million, or US$0.11 to US$0.15 per basic share. For the business outlook for the third quarter, please refer to the business outlook statements at the end of this release. 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. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Ding commented, "We are pleased with AsiaInfo's on target performance during the second quarter and our continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. improving market position, but we are disappointed that the continued delays in telecom spending due to the industry's reorganization will prevent us from meeting our original full year financial expectations. While the completion of the restructuring was finally announced on May 16th, the integration of the assets of the merged companies and resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the in spending are taking much longer than anticipated, with overall capital expenditures by China's telecom carriers decreasing by nearly 32% for the first five months year-over-year. This, as a result, has slowed AsiaInfo's sales, and may continue to affect our orders over the next one to two quarters." Ding continued, "Fortunately for AsiaInfo, this is a temporary condition and we are well-poised to excel when the restructuring is complete and the industry resumes its previous trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. of growth. Our market-leading position and strong balance sheet have moreover allowed us to weather these uncertain conditions better than some of our competitors. At the same time, we are taking prudent measures to ensure that AsiaInfo is in the best possible financial and operating condition to meet future growth opportunities. We are confident that with our strong market positioning, we will benefit from our high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. software and service offerings once China's telecom carriers resume spending towards next year." Cost-Cutting Measures In order to conservatively plan for the 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. in revenue growth, AsiaInfo will implement several cost-cutting strategies designed to scale costs until revenue growth resumes. Several payroll related measures will be taken. As the integration of Bonson is complete, combined staff levels will be reduced by 10% to eliminate redundancies. Moreover, tight control over operating and administrative expenses will be applied across all functions with the exception of research and development. The company will continue its research and development investment on key solutions to ensure sustainable future growth. The combined effects of these measures will reduce AsiaInfo's operating costs operating costs npl → gastos mpl operacionales by approximately 20 - 30% during the next five months. Ding commented, "We are firm believers Believers is a seinen manga by Naoki Yamamoto and is his first weekly serial manga created entirely without the help of any assistants.[1] Believers in the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. positive impact of the restructuring of China's telecom industry and the increased business opportunities this will provide to AsiaInfo, particularly when the newly formed carriers begin to compete with one another aggressively. While this transitional period will be a difficult one, it is a positive step for the industry as the carriers complete their integration." Second Quarter Highlights During the second quarter, AsiaInfo continued to outpace out·pace tr.v. out·paced, out·pac·ing, out·pac·es To surpass or outdo (another), as in speed, growth, or performance. outpace Verb [-pacing, its competition. Strong demand for its high-end OSS solutions, convergent billing software, network integration, management and security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the continued to demonstrate the competitiveness of AsiaInfo's advanced offerings and its ongoing ability to leverage its existing customer relationships to promote high-end software and services. Software Upgrades To meet increasingly sophisticated customer needs AsiaInfo released new versions of its two software products during the quarter: -- Contracts with China Mobile subsidiaries Zhejiang Mobile, Jiangxi Mobile and Inner Mongolia Mobile to provide integrated OSS solutions. -- A contract with Shandong Telecom for CRM solutions. -- Contracts with China Railcom and Tianjin Telecom to provide AsiaInfo's network management software (AISerBase). -- Multiple contract wins for AsiaInfo Subsidiary Marsec for its Network Security software and services with China Netcom, The China Internet Information System and China Agriculture Bank. -- An expansion contract with Jilin Mobile for the second phase of its IP network expansion and to provide AsiaInfo's network management software (AISerBase). -- Three contracts with China Netcom to provide AsiaInfo's billing software (AIOBS and AICBS). -- Email software and services sale (AIMC) to Mongolia Telecom. New Contract Wins Highlights of contracts signed in the second quarter include: -- Contracts with China Mobile subsidiaries Zhejiang Mobile, Jiangxi Mobile and Inner Mongolia Mobile to provide integrated OSS solutions. -- A contract with Shandong Telecom for CRM solutions. -- Contracts with China Railcom and Tianjin Telecom to provide AsiaInfo's network management software (AISerBase). -- Multiple contract wins for AsiaInfo Subsidiary Marsec for its Network Security software and services with China Netcom, The China Internet Information System and China Agriculture Bank. -- An expansion contract with Jilin Mobile for the second phase of its IP network expansion and to provide AsiaInfo's network management software (AISerBase). -- Three contracts with China Netcom to provide AsiaInfo's billing software (AIOBS and AICBS). -- Email software and services sale (AIMC) to Mongolia Telecom. Ding commented, "The winning of these contracts in a challenging market environment underscores the leading position AsiaInfo holds in China's telecom software and services market. During the second quarter, we won three out of the four OSS contracts awarded by China Mobile's provincial subsidiaries, we closed multiple network security contracts both in and outside the telecom sector, and we continue to leverage our existing client relationships to provide high-end solutions." Conclusion "Despite the industry's temporary organizational delay," said Ding, "the overall growth of China's telecom sector is expected to be strong, fueled by improving economic conditions and increasing end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. demand. The Chinese economy grew at over 7% in the first six months, and is on track to continue this level of growth through the rest of the year. All reports indicate that the telecom market is continuing to grow at a strong pace, with new fixed line users increasing by 19.9 million in the first six months of 2002 to reach 198 million, mobile users increasing by 31.4 million to reach 176 million users, and Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f increasing by 3.6 million to reach 40 million in China. At the same time, the penetration rates for China's fixed-line Refers to wired devices. For example, a fixed-line phone is a standard phone with the handset wired to the base unit in contrast to a portable phone or cellphone. and cell phones are at 30.2% and 13.9% respectively, demonstrating significant room for continued development. Once China Telecom and 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. resume spending, they are likely to aggressively develop their national networks and focus on high-end, multi-service offerings. As AsiaInfo continues to outpace the competition, even during the temporary slowdown, we are in a strong position to reap the benefits of the next stage of telecom network infrastructure build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. and enhancement." Business Outlook The following outlook statements are based on current expectations. These statements are forward looking and actual results may differ materially. Third Quarter 2002 Guidance As mentioned earlier in the release, delays in the reorganization of the Chinese telecom industry have impacted AsiaInfo's orders during the past few quarters, and therefore revenue for the coming quarters. In particular, third quarter revenues will be affected by the fewer-than-expected second quarter contracts. The company thus expects net revenue for the third quarter of 2002 to be between US$13 - 14 million. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. is expected to approximately break even, translating into US$0.01 - 0.02 earnings per basic share.
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of US$)
2002 2001 2002 2001
Three Months Ended Six Months Ended
June 30 June 30
AsiaInfo Asia AsiaInfo Asia
without without
Bonson Bonson
Revenues:
Network solutions 27,778 13,772 49,509 43,681
Software solutions 8,781 7,779 15,587 13,649
Total revenues 36,559 21,551 65,096 57,330
Cost of revenues:
Network solutions 20,564 7,336 35,816 30,981
Software solutions 2,958 866 4,955 1,721
Total cost of revenues 23,522 8,202 40,771 32,702
Gross profit 13,037 13,349 24,325 24,628
Operating expenses:
Sales and marketing 4,810 5,820 8,377 11,447
General and administrative 1,471 3,275 5,017 6,617
Research and development 2,345 1,945 4,609 3,577
Amortization of deferred
stock compensation 98 283 250 720
In Process research and
development 0 0 350 0
Amortization of intangible
assets 477 264 795 528
Total operating expenses 9,201 11,587 19,398 22,889
Income (loss) from
operations 3,836 1,762 4,927 1,739
Other income (expenses):
Interest income 500 2,194 1,234 4,580
Interest expense -30 -340 -74 -667
Other income, net 37 -27 37 -34
Total other income, net 507 1,827 1,197 3,879
Income before income
taxes, minority interests
and equity in loss
of affiliated 4,343 3,589 6,124 5,618
Income tax expense 528 805 796 1,276
Minority interests -45 48 -10 -131
Equity in loss of affiliate -154 -256 -281 -256
Net income (loss) 3,616 2,576 5,037 3,955
Net (loss) income per share
Basic 0.08 0.06 0.12 0.10
Diluted 0.08 0.06 0.11 0.09
Shares used in computation
Basic 43,629,646 41,305,291 43,040,879 41,136,459
Diluted 46,554,057 46,761,204 46,230,056 45,955,050
Segment information
Network solutions net of
hardware cost 10,831 9,247 21,099 17,583
Software solutions 8,781 7,779 15,587 13,649
Consolidated revenues
net of hardware cost 19,612 17,026 36,686 31,232
Consolidated cost of sales
net of hardware cost 6,575 3,677 12,361 6,604
Consolidated gross profit 13,037 13,349 24,325 24,628
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In US$)
June 30, 2002 Dec 31, 2001
ASSETS
Current Assets:
Cash and cash equivalents 120,604,028 110,634,635
Restricted cash 13,396,203 13,474,945
Short term investments 1,389,857 27,184,487
Accounts receivable, trade (net of
allowance for doubtful accounts
of $1,093,582 and $1,393,546 at
Dec 31, 2001 and Jun 30, 2002
respectively) 74,170,537 66,723,537
Inventories 3,276,585 1,180,160
Other current assets 11,129,254 13,638,312
Total current assets 223,966,464 232,836,076
Property, plant, and equipment-net 5,389,896 5,375,519
Investment in affiliate 4,990,577 5,272,066
Other assets 42,239,647 2,375,877
Total assets 276,586,584 245,859,537
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans 1,522,272 2,923,906
Accounts payable 25,739,782 23,789,295
Accrued employee benefit 9,143,855 9,088,443
Deferred Revenue 4,664,693 4,279,272
Income Taxes payable 5,099,150 4,743,019
Other Taxes payable 3,330,158 2,523,839
Other current liabilities 15,886,435 13,112,294
Total current liabilities 65,386,345 60,460,068
Deferred income tax liabilities 240,785
Total liabilities 65,627,130 60,460,068
Minority interest 401,999 609,475
Stockholders' Equity:
Preferred stock, 10,000,000 shares
authorized, $0.01 par value 0 0
Common stock, 100,000,000 shares
authorized; $0.01 par value, shares
issued and outstanding:
Dec 31, 2001 42,132,818;
Jun 30, 2002 44,003,407 440,034 421,328
Additional paid-in capital 199,074,066 178,649,268
Deferred stock compensation (262,465) (512,071)
Retained earnings
(accumulated deficit) 11,240,628 6,203,313
Accumulated other comprehensive
income (loss) 65,192 28,156
Total stockholders' equity 210,557,455 184,789,994
Total Liabilities and
Stockholders' Equity 276,586,584 245,859,537
Second Quarter Conference Call AsiaInfo will host a conference call to discuss its first quarter results at 5:00 p.m. Pacific Time / 8:00 p.m. Eastern Time on July July: see month. 23, 2002 (Beijing/Hong Kong Kong is the Danish word for king, but can also refer to the following:
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 334-6543 between 5:00 p.m. Pacific Time on July 23, 2002 until 5:00 p.m. Pacific Time on August 23, 2002. Live and archived Web casts of this call also 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 www.asiainfo.com. 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 adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive industry. The company's three strategic business units - Network Infrastructure, Operation Support Systems and Service Applications - offer a full-range A Full-range loudspeaker drive unit is defined as a driver which reproduces as much of the audible frequency range as possible, with high-fidelity, within the boundaries imposed by the physical limitations of the specific design. of front- and back-end (programming) back-end - Any software performing either the final stage in a process, or a task not apparent to the user. A common usage is in a compiler. A compiler's back-end generates machine language and performs optimisations specific to the machine's architecture. telecom software solutions. 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 solution; decision support system; and service applications encompassing messaging, 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). , wireless and other advanced applications. A Delaware-registered company, 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 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. 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. The statements in this news release contain 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. that involve risks and uncertainties that could cause actual results to differ from anticipated results. Further information on risk factors that could affect AsiaInfo's results of operation are detailed in AsiaInfo's registration statement, as filed with the Securities and Exchange Commission. A copy of the registration statement, including exhibits, may be reviewed at the Commission's public reference room at Judiciary judiciary Branch of government in which judicial power is vested. The principal work of any judiciary is the adjudication of disputes or controversies. Regulations govern what parties are allowed before a judicial assembly, or court, what evidence will be admitted, what Plaza, 450 Fifth Street, N.W., Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C. 20549. The registration statement and other company filings can also be reviewed by accessing the Commission's Internet site at http://www.sec.gov, which contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. |
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