AsiaInfo Reports Strong Third Quarter Results; Software Revenue Increases 194 Percent, Net Profit Reaches One Cent Per Share.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. and 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)--October 25, 2000 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 total 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 solutions and software products in China, today announced its third quarter results for the quarter ended September September: see month. 30, 2000. The company reported third quarter 2000 revenues net of hardware costs of US$13.3 million, representing a 66 percent increase over net revenues of US$8.0 million in the comparable third quarter of 1999 and a 13 percent sequential increase over the second quarter of 2000. Net income was $0.01 per share for the third quarter of 2000, or US$0.4 million, compared to a net loss of $0.04 per share on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, or a loss of US$0.5 million in the same quarter of 1999. Software revenue in the third quarter was a record US$4.9 million, a 194 percent increase over US$1.7 million in the same quarter of 1999 and an 11 percent sequential increase over US$4.4 million in the quarter ended on June June: see month. 30, 2000. Software revenue represented 37 percent of total net revenues after hardware costs, compared to 21 percent of total net revenues in the third quarter of last year. Gross revenues for the third quarter of 2000 were US$58.1 million, representing an increase of 147 percent over gross revenues of US$23.5 million in the same period in 1999 and a sequential growth rate of 14 percent over the second quarter of 2000. Gross profit for the third quarter of 2000 was US$9.8 million, representing a 23 percent sequential increase over US$8.0 million last quarter. The increase in gross profit compared to the previous quarter reflected the growth of high margin software revenues, contribution from network solutions and reduced costs resulting from the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of low margin network solutions projects. 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, 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. of AsiaInfo commented, "We are very pleased with the overall financial results of this quarter. Our solid growth in each business segment demonstrates the strong demand for our products and services. The robust growth of our software business further demonstrates the competitiveness of our products. Consistent with our 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. strategy, we expect software business to continue to become a larger contributor to our revenue mix." Third Quarter Highlights Contract Wins During the quarter, AsiaInfo announced several significant contract wins at both the national and municipal levels. AsiaInfo was contracted to provide network solutions as well as messaging and online billing software for China Mobile, Tianjin Tianjin or Tientsin (both: tyän`jĭn`), city (1994 est. pop. 4,720,500), NE China. In E central Hebei prov., it is a politically independent unit (4,400 sq mi/11,399 sq km) administered directly by the central government. Telecom and JiTong Communications. In September, AsiaInfo signed a US$16 million contract with China Mobile to build a national IP backbone connecting China's 31 provincial capitals Noun 1. provincial capital - the capital city of a province capital - a seat of government city, metropolis, urban center - a large and densely populated urban area; may include several independent administrative districts; "Ancient Troy was a great city" . Also included as part of the project were AsiaInfo's messaging and billing software products, accounting for over 30% of the total contract value. At the municipal level, AsiaInfo signed a contract with Tianjin Telecom to build the third phase of its Internet backbone (communications, networking) Internet backbone - High-speed networks that carry Internet traffic. These communications networks are provided by companies such as AT&T, GTE, IBM, MCI, Netcom, Sprint, UUNET and consist of high-speed links in the T1, T3, OC1 and OC3 ranges. and supply the company with advanced billing and messaging software. In August, AsiaInfo signed a contract with a new client, JiTong Communications to provide integration services for its IP infrastructure Phase II expansion project. The contract is a significant milestone for AsiaInfo and further diversifies the company's growing client base. Also during the third quarter, AsiaInfo continued to expand its partnership with one of the largest Internet carriers, 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. (CNC (Computerized Numerical Control) See numerical control. CNC - Collaborative Networked Communication ), by providing CNC's Internet Data Center (IDC) with billing functionality through the AIOBS software platform. In addition to the announcements made in the third quarter, AsiaInfo has achieved other major market successes, such as: -- A US$7.2 million contract with CNC for Shanghai Metro Network project -- A US$2.7 million contract with Hangzhou Telecom for C4 Node Expansion project -- A US$5.6 million contract with Guangdong Telecom for Internet Infrastructure Year 2000 Expansion project Ding commented, "These contract wins further broaden the distance between the company and our competitors, and demonstrate the success that we have realized from the superior quality of our software products and excellent services. Furthermore, these new contracts have helped to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our customer base and contribute to our solid 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. . We expect this trend to continue next quarter and into 2001." Strategic Alliances In September, AsiaInfo and Ericsson (Nasdaq:ERICY), a global leader in mobile communications, signed a memorandum of understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. to collaborate in simplifying customer billing for mobile Internet Refers to gaining access to the Internet using a lightweight, handheld device. See Mobile IP, PDA, smartphone and mobile TV. users in China. As part of the alliance, AsiaInfo will integrate its AIOBS software with Ericsson's general packet radio services (GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. ) and wireless application protocol (WAP (1) (Wireless Access Point) See access point. (2) (Wireless Application Protocol) A standard for providing cellular phones, pagers and other handheld devices with secure access to e-mail and text-based Web pages. ) gateways to provide more flexibility in billing to service providers and simplify the billing process for end users. Key Investment AsiaInfo has invested US$2 million to create a new network security company, Marsec. AsiaInfo holds a 75 percent ownership stake in this new entity. This venture will enable the company to expand its high-end network solutions offerings to include 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 for leading telecom carriers and Internet service providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. in China. Business Outlook The following outlook statements are based on current expectations. These statements are forward looking, and actual results may differ materially. The company expects net revenue for the fourth quarter of 2000 to increase approximately 100-110 percent year-over-year. Software license revenue will grow more rapidly at a year-over-year rate of approximately 160-170 percent. As a result of the completion of the 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. backbone project, hardware pass-through in the fourth quarter will be reduced by 40-50 percent from US$45 million in the third quarter of 2000. Therefore, gross margin will increase significantly. Overall, AsiaInfo will continue to generate positive net income in the fourth quarter. Earnings per share will be approximately one cent per share.
Financial Information
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of US$)
Three Months Ended Nine Months Ended
Sept 30, Sept 30,
2000 1999 2000 1999
Revenues
Network solutions 53,159 21,852 120,907 43,673
Software license 4,909 1,669 11,145 4,642
Total revenues 58,068 23,521 132,051 48,315
Cost of revenues
Network solutions 48,252 16,220 111,566 33,532
Software license 26 1 29 3
Total cost of revenues 48,278 16,221 111,594 33,535
Gross profit 9,790 7,300 20,457 14,780
GP Ratio 17% 31% 15% 31%
Operating expenses
Sales and marketing 5,702 2,347 13,291 4,868
General and
administrative 3,500 2,794 9,274 6,387
Research and
development 1,743 895 4,433 1,993
Amortization
of deferred stock
compensation 467 1,848 1,752 2,809
Total operating
expenses 11,412 7,884 28,750 16,058
(Loss) income from
operations (1,622) (584) (8,293) (1,278)
Other income (expenses)
Interest income 2,283 204 5,504 499
Interest expense (285) (182) (894) (451)
Other income, net 14 149 (193) 324
Total other income, net 2,012 171 4,417 371
Income before income
taxes and minority
interests 390 (413) (3,876) (907)
Income tax (6) 121 (68) 297
Minority interests 19 21 19 84
Equity in loss of
affiliate (9) 0 (9)
Net income (loss) 415 (522) (3,789) (1,129)
Net income (loss)
per share
Basic 0.01 (0.04) (0.10) (0.08)
Diluted 0.01 (0.04) (0.10) (0.08)
Shares used in
computation
Basic 39,841,935 14,128,275 36,133,972 13,969,317
Diluted 45,456,176 14,128,275 36,133,972 13,969,317
Segment information
Network solutions net of
hardware cost 8,389 6,343 19,361 14,106
Software license 4,909 1,669 11,145 4,642
Consolidated revenues
net of hardware cost 13,299 8,012 30,506 18,748
Consolidated cost of
sales net of hardware
cost 3,509 712 10,049 3,968
Consolidated gross
margin 9,790 7,300 20,457 14,780
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(US$)
Sept 30, 2000 Dec 31, 1999
ASSETS
Current Assets
Cash and cash equivalents 106,344,378 25,403,884
Restricted cash 23,166,369 12,189,794
Short term investment 50,100,000
Accounts receivable, trade
(net of allowance
for doubtful accounts of
$640,269 and $351,582 at
Dec 31, 1999 and Sep 30, 2000
respectively) 62,099,751 21,928,036
Inventories 1,167,401 2,908,426
Other current assets 4,572,244 2,342,433
Total current assets 247,450,143 64,772,573
Property, plant, and
equipment-net 5,318,671 2,183,545
Other assets 3,756,852 4,470,861
Total assets 256,525,666 71,426,979
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term bank loans 19,432,837 9,698,882
Accounts payable 51,257,586 11,867,188
Accrued employee benefit 9,401,634 4,810,650
Taxes payable 2,020,767 2,475,505
Deferred Revenue 3,455,413 495,470
Other current liabilities 5,332,121 2,291,113
Total current liabilities 90,900,358 31,638,808
Minority interest 198,589
Stockholders' Equity
Convertible preferred stock:
Series A: 3,000,000 shares
authorized; $0.01
par value; 2,160,864 shares
issued and outstanding at
December 31, 1999; 0 at
September 30,2000 0 21,609
Series B: 5,000,000 shares
authorized at Dec 31, 1999;
$0.01 par value; 2,630,425
shares issued and outstanding
at December 31, 1999; 0
at September 30, 2000 0 26,304
Common stock, 50,000,000
shares authorized;
$0.01 par value, shares
issued and outstanding: 1999,
25,532,144; September 30, 2000
39,970,680 399,707 255,321
Additional paid-in capital 173,677,702 46,118,424
Deferred stock compensation (2,113,560) (3,865,373)
Retained earnings (accumulated
deficit) (6,554,233) (2,764,854)
Accumulated other comprehensive
income (loss) 17,103 (3,260)
Total stockholders' equity 165,426,719 39,788,171
Total Liabilities and
Stockholders' Equity 256,525,666 71,426,979
Third Quarter 2000 Conference Call AsiaInfo will host a conference call to discuss third quarter earnings at 8:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday, October 25, 2000. To participate on the call, please dial 973-321-2000. A replay of the call will be available until November 1st by dialing (402) 220-1356 for international callers and (877) 375-5693 for domestic callers. Additionally, the conference call will be broadcast via the Internet and can be accessed from the investor relations Investor relations The process by which the corporation communicates with its investors. section of AsiaInfo's corporate Web site at the address shown below. About AsiaInfo Holdings, Inc. AsiaInfo Holdings, Inc. (Nasdaq:ASIA) is a leading provider of Internet infrastructure, total solutions and software in China, one of the world's fastest growing Internet markets. The company offers telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in China total network solutions for their Internet infrastructure requirements and develops proprietary software for Internet service providers, Internet content providers See content provider. and telecommunications service providers. AsiaInfo develops, markets and supports real time, scalable and adaptable a·dapt·a·ble adj. Capable of adapting or of being adapted. a·dapt  a·bil proprietary Internet software
solutions tailored to meet the needs of clients in China. 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, 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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