Infonet Reports Fiscal 2003 Second Quarter Results.Business Editors/High-Tech Writers EL SEGUNDO El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , Calif.--(BUSINESS WIRE)--Nov. 7, 2002 Infonet Services Corporation (NYSE NYSE See: New York Stock Exchange :IN) (FSE FSE 1. feline spongiform encephalopathy. 2. focal symmetrical encephalomalacia. :IN): Financial Highlights Q2 FY 2003 vs. Q2 FY 2002 -- Total revenue: $143 vs. $160 million, down 11% -- Core revenue: $132 vs. $120 million, up 9% (Core revenue is 92% of total revenue) -- EBITDA: $10 vs. $13 million, down 26% -- Core EBITDA: $7 vs. $4 million -- Net loss: $6 vs. $4 million -- New client contracts: 195 vs. 185, up 5%. Infonet Services Corporation (NYSE:IN) (FSE:IN), a leading provider of value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: global communications services, today announced results for the second quarter of fiscal year 2003, ended September September: see month. 30, 2002. Results include the expected decline of the company's non-core revenue from the AUCS AuCS Automatic Cleaning System (Manitowoc Inc. ice machines) AUCS Adelaide University Choral Society AUCS AT&T Unisource Communications Services 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. contract. This contract ended October October: see month. 1, 2002. Core revenue (non-AUCS platform), which is 92% of total revenue, increased to $132 million in the second quarter of fiscal year 2003, compared with $120 million in the comparable quarter last year, an increase of 9%. Revenue Total revenue for the second quarter of fiscal year 2003 totaled $143 million, compared with revenue in the corresponding quarter last year of $160 million. Outsourcing revenue from the AUCS contract contributed 25% of last year's second quarter ($40 million), compared to only 8% during the second quarter of this year ($11 million). Core revenue (non-AUCS platform) was up 9% from the second quarter of fiscal year 2002. The largest components of revenue this quarter were network services ($76 million, or 53% of Q2 FY 2003 revenue) and consulting, integration and provisioning services ($48 million, or 34% of Q2 FY 2003 revenue). Network services revenue of $76 million in the second quarter of fiscal year 2003 increased by $3 million, or 4% from a year ago. This reflects good growth in services provided, offset by price erosion on the renewal of multiyear contracts. Consulting, integration and provisioning revenue totaled $48 million, down from $49 million a year ago. The decline, primarily reflecting the expected loss of revenue from clients using the AUCS platform, masks a 20% increase in consulting, integration and provisioning revenue from clients using Infonet's core services The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. . The increase in core revenue reflects the provisioning of new client contracts signed over the last few quarters. Expenses Total expenses for the quarter declined to $156 million from $171 million a year ago. Country representative compensation expenses in the second quarter of fiscal year 2003 declined to $30 million from $56 million a year ago, primarily as a result of the decrease in AUCS-related outsourcing revenue. Bandwidth and related costs totaled $28 million, contrasted to $33 million a year ago, a 16% decline. This is consistent with Infonet's strategy to leverage bandwidth expenses while increasing revenue. Network operations expenses rose slightly to $27 million compared with $26 million in the corresponding year-earlier quarter, because of an increase in network operations depreciation expenses and other expenses. Indirect selling, general and administrative expenses, net of a $12 million increase directly related to revenue for in-country support and local access costs, rose $3 million from the comparable quarter. This $3 million increase includes a write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of $2 million for bad debt expenses offset by a decrease of approximately $2 million in stock-based compensation charges. "While we're we're Contraction of we are. we're we are focusing on holding the line on expenses, we've we've Contraction of we have. we've have increased sales efforts to take advantage of opportunities arising in the market," said Jose JOSE Jealous One's Still Envy (song) JOSE Joint Optics Structures Experiment A. Collazo, Infonet's Chairman, 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. . Total depreciation and amortization for the second quarter of fiscal year 2003 totaled $19 million, about even with the second quarter a year ago. 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. , Net Income, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. As a result of lower total revenue and higher expenses, primarily related to core services, Infonet incurred an 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. in the second quarter of fiscal year 2003 of $13 million, contrasted to an operating loss in the comparable quarter of $11 million. For the current second quarter, Infonet recorded a tax credit of $6 million compared with a tax credit in the second quarter a year ago of $3 million. The net loss for the current second quarter totaled $6 million, or $0.01 per share. In the year-ago second quarter, the company recorded a net loss of $4 million, or $0.01 per share. "We have taken measures to bring our expenses down," said Mr. Collazo. "This has allowed us to keep operating costs operating costs npl → gastos mpl operacionales under control in the face of declining total revenue and continued investment in our core business." Other Operating Highlights -- Capital Expenditures The cash outlay for capital expenditures in the first half of fiscal year 2003 was approximately $22 million compared with $122 million for the first half of fiscal year 2002. "We expect capital expenditures for this fiscal year to be approximately $60 million, lower than the $95 million we previously anticipated," said Mr. Collazo. "We've been able to reduce our cap ex by more fully utilizing our existing assets and entering into capacity leases because of attractive terms." -- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
-- Client Data During the second quarter of fiscal year 2003, Infonet added 195 new client service contracts. Of the new contracts, 97 were new clients and 98 represented additional sales to existing clients. "Our client wins have continued at a strong pace, and we have benefited from the signing of former KPNQwest KPNQwest was a telecommunications company equally owned by the Dutch national telecom operator KPN and Qwest Communications International Inc., the Internet communications company, headquartered in Denver, Colorado. clients," said Mr. Collazo. "While the financial problems of some of our competitors have led to increased sales opportunities, it will take some time to translate this into new clients and new revenue for Infonet." -- AUCS Outsourcing Contract Completed The AUCS outsourcing contract contributed $11 million to revenue and $3 million to EBITDA in the second quarter of fiscal year 2003. Over the course of the three-year outsourcing contract, which was completed as scheduled on October 1, 2002, revenue contribution totaled approximately $462 million, and EBITDA totaled approximately $107 million. Infonet also has received $9 million in management fees related to the management contract, which also terminated on October 1, 2002. "We have migrated 229 customers onto the Infonet platform as a result of the AUCS contract," said Mr. Collazo. "We are projecting approximately $25 million in recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. core revenue from these migrated customers in the second half of this fiscal year. In addition, Infonet purchased approximately $1 million of AUCS assets in the third quarter of fiscal year 2003." -- AUCS Incentive Fee "Under the terms of the management contract, and subject to final audit and agreements by other parties, we believe we have earned an incentive fee in excess of $50 million, a substantial portion of which we expect to be payable in cash to Infonet this fiscal year," said Mr. Collazo. Balance Sheet and Cash Flow At September 30, 2002, Infonet's balance sheet reflected cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaling approximately $511 million, compared with $518 million at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. March 31, 2002. Net cash generated from operating activities during the first six months was approximately $33 million, offset by a capital expenditure payment of approximately $22 million, a new business investment of approximately $8 million, a stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. of approximately $5 million, a debt repayment of approximately $6 million and a capital lease repayment of approximately $1 million. Debt totaled approximately $110 million at quarter's end, down from $118 million at March 31, 2002. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. equaled approximately $1.1 billion at the close of the quarter. Stock Repurchase Program In January January: see month. 2002, Infonet's Board of Directors approved the expenditure of up to $100 million over 24 months to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares of the company's common stock. As of September 30, 2002, Infonet had repurchased approximately 3.5 million shares at an average price of $2.23 per share. Financial Summary "Infonet continues to be in an enviable en·vi·a·ble adj. So desirable as to arouse envy: "the enviable English quality of being able to be mute without unrest" Henry James. financial position with approximately $511 million in cash on our books and relatively little debt," said Mr. Collazo. "This is of strategic value as multinational companies looking to outsource their mission critical applications are seeking financially stable partners to minimize the risk of business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. . With financial stability, 30 years of experience and cash to cover potential needs, Infonet is an attractive alternative. "Although we expect the turmoil impacting the industry to benefit Infonet in the long run, it is premature to speculate on any specific impact. Nor are we planning on any substantial relief from the significant pricing pressures we have faced all year, which are particularly evident when renewing multiyear contracts. "The next six months represent a period of high economic and political uncertainty. Nevertheless, we expect core revenue, including the AUCS incentive fee, to result in strong growth over last fiscal year. "Our strategy remains the same: to focus our energies on providing the highest levels of reliability and customer service available to multinational corporations
Operational and Strategic Highlights -- Infonet launches new IP Intranet service, IP VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. Secure, providing secure IP Intranet networks with end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. class of service. (September 4, 2002) -- Infonet announces next-generation voice and video converged services. (October 1, 2002) -- Infonet named best carrier in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and is named finalist infour additional categories. (October 4, 2002) -- Infonet earns Telemark Telemark (tĕ`ləmärk), county (1995 pop. 163,143), 5,915 sq mi (15,320 sq km), SE Norway, bordering on the Skagerrak in the east. Skien (the capital), Porsgrunn, Kragerø, and Notodden are the chief towns. Consulting "Best in Class" among international service providers for the fourth consecutive time. (October 14, 2002) -- Infonet launches global IP voice VPN service. (November November: see month. 5, 2002) Regional Highlights Americas A·mer·i·cas , the See America. Revenue in the Americas decreased 3% from $34 million in the second quarter of fiscal year 2002 to $32 million this quarter. The decrease is largely attributable to competition and pricing pressures 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. . Sales to new clients in the Americas for the second quarter of this fiscal year include 31 new client contracts: 14 new clients and 17 new contracts with existing clients. This compares with 30 new contracts signed in the second quarter of fiscal year 2002, representing an increase of 3%. Asia Pacific Infonet's revenue in Asia Pacific increased 20% from $19 million in the second quarter of fiscal year 2002 to $23 million this quarter due to higher demand in this market. Sales to new clients in Asia Pacific for the second quarter of this fiscal year include 37 new client contracts: 22 new clients and 15 new contracts with existing clients. This compares to 56 new contracts signed in the second quarter of fiscal year 2002, the result of higher-than-normal Asia Pacific contract signings in that quarter. Europe, Middle East and Africa (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ) Infonet's core (non-AUCS platform) revenue in the EMEA region increased 13% from $68 million in the second quarter of fiscal year 2002 to $77 million this quarter. Sales to new clients in EMEA for the second quarter of this fiscal year include 127 new client contracts: 61 new clients and 66 new contracts with existing clients. The increase compares to 99 new contracts signed in the second quarter of fiscal year 2002, and represents an increase of 28%. Filing, Web Cast/Conference Call Information Infonet expects to file its 10-Q with the Securities and Exchange Commission for the period ended September 30, 2002 on November 12, 2002. It will be available through www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. , which can be accessed through Infonet's investor relations Investor relations The process by which the corporation communicates with its investors. site at www.infonet.com. Infonet will host an investor conference call and audio Webcast to review second quarter results on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November 8, 2002, at 9 a.m. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of time (2 p.m. in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , 6 a.m. in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. ). Participants within the United States should call 1-800-289-0436. Outside the United States, participants should call +1-913-981-5507. For a replay of the call within the United States, call 1-888-203-1112; outside the United States, call +1-719-457-0820. The replay will be available from noon, Eastern Standard Time on Friday, November 8, through midnight on Tuesday, November 12. The confirmation code for the replay is 222822. In addition, Infonet will host its annual Investor Day on Thursday, November 21, 2002, at the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . This year's theme is "Stability in Times of Turmoil." Presentations will begin at 9:00 a.m. Eastern Time and end by noon. To attend this event, please call the Investor Relations department. Seats are limited and security will be tight, so advance registration is required. Audio access to Investor Day presentations will be available by dialing 1-800-289-0730 (from the U.S.) or +1-913-981-5509 (outside the U.S.). A replay of Investor Day will be available by calling 1-888-203-1112 (from the U.S.) or +1-719-457-0820 (international callers). The replay will be available from 4:00 p.m. Eastern Time on Thursday, November 21, through midnight on Monday, November 25. The confirmation code for the replay is 698557. Access live Webcasts of above events via the investor relations section of Infonet's Web site (www.infonet.com) on the day of the event. Questions during any of these events can be directed to management via e-mail at irideas@infonet.com. About Infonet Infonet Services Corporation, known for its quality of service, is a leading provider of managed network communications services for over 3,000 multinational enterprises. Employing a unique consultative approach, Infonet offers integrated solutions optimizing the complex relationship between enterprise applications and the global network. Extensive project management capabilities are the foundation for the services and solution offerings (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). , 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 , intranet, multimedia, remote and local access, provisioning, application and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" ), positioning Infonet as a single-source partner for multinational corporations. In particular, Infonet IP VPN solutions offer multinationals a unique combination of Private and Public IP services as well as a full set of Managed 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 . Rated "Best in Class" overall in Telemark's survey of Global Managed Data Network Services, Infonet has also won "Best Customer Care" and "Best Carrier" at the World Communication Awards. Founded in 1970, Infonet owns and operates The World Network(R), accessible from more than 180 countries, and provides local service support in over 70 countries and territories. Infonet's stock is traded on the New York and Frankfurt Stock Exchanges Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. under the symbol IN. Additional information about the company is available at www.infonet.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Infonet may have made 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. in this release. These statements, if any, are based on information available to the company as of the date of this release and Infonet undertakes no duty to update the information to take account of later events. The accuracy of our forward-looking statements will also be affected by the strength of the market for Infonet products and services, competition, the timely transitioning of new business opportunities to Infonet's network, final auditing of the factors relevant to the AUCS incentive fee and the effect of currency fluctuation Fluctuation A price or interest rate change. . Investors should bear these risk factors in mind as well as those elaborated on in Infonet's 10-K, 10-Qs and other recent filings made with the U.S. Securities and Exchange Commission. These documents are available through the investor relations portion of Infonet's web site at www.infonet.com.
Q2
FY03 FY02
Core Non Core Total Core Non Core Total
Income Statement
Data
Revenues:
Network services $76,400 $0 $76,400 $73,754 $0 $73,754
Consulting,
integration
and provisioning
services 45,648 2,418 48,066 38,042 10,865 48,907
Application
services 2,854 0 2,854 1,881 0 1,881
Other
communication
services 6,807 8,688 15,495 6,683 29,005 35,688
Total revenues 131,709 11,106 142,815 120,360 39,870 160,230
Expenses:
Country
representative
compensation 29,767 56,092
Bandwidth and
related costs 27,679 32,849
Network
operations 26,965 26,028
Selling,
general and
administrative 71,284 56,118
Total expenses 155,695 171,087
Operating income
(loss) ($12,880) ($10,857)
Other income
(expense):
Interest income 3,601 6,692
Interest expense (2,174) (2,855)
Other, net (545) 718
Total other
income
(expense) 882 4,555
Provision
(credit) for
income taxes (5,985) (2,946)
Minority
interest 204 146
Net income
(loss) ($6,217) ($3,502)
EPS ($0.01) ($0.01)
Depreciation,
amortization
and asset
write-offs $19,416 $18,690
EBITDA $6,863 $2,897 $9,760 $4,460 $8,727 $13,187
Operating income and EBITDA excluding
stock-based compensation charges:
EBITDA $9,760 $13,187
Operating income ($9,656) ($5,503)
Q2
% change
Core Non Core Total
Income Statement Data Revenues:
Network services 4% na 4%
Consulting, integration
and provisioning services 20% (78%) (2%)
Application services 52% na 52%
Other communication services 2% (70%) (57%)
Total revenues 9% (72%) (11%)
Expenses:
Country representative compensation (47%)
Bandwidth and related costs (16%)
Network operations 4%
Selling, general and administrative 27%
Total expenses (9%)
Operating income (loss) na
Other income (expense):
Interest income (46%)
Interest expense (24%)
Other, net na
Total other income (expense) (81%)
Provision (credit) for income taxes na
Minority interest 40%
Net income (loss) na
EPS na
Depreciation, amortization and asset
write-offs 4%
EBITDA 54% (67%) (26%)
Operating income and EBITDA excluding
stock-based compensation charges:
EBITDA (26%)
Operating income na
SIX MONTHS YTD
FY03 FY02
Core Non Core Total Core Non Core Total
Income
Statement
Data
Revenues:
Network
services $155,683 $0 $155,683 $150,680 $0 $150,680
Consulting,
integration
and
provisioning
services 87,398 6,661 94,059 73,752 22,810 96,562
Application
services 4,821 0 4,821 3,885 0 3,885
Other
communication
services 14,140 21,419 35,559 16,395 64,562 80,957
Total
revenues 262,042 28,080 290,122 244,712 87,372 332,084
Expenses:
Country
representative
compensation 67,982 117,531
Bandwidth
and related
costs 96,818 62,309
Network
operations 53,498 51,651
Selling,
general and
administrative 139,330 111,333
Total
expenses 357,628 342,824
Operating
income
(loss) ($67,506) ($10,740)
Other income
(expense):
Interest
income 7,923 15,096
Interest
expense (4,443) (5,845)
Other, net 2,471 430
Total other
income
(expense) 5,951 9,681
Provision
(credit) for
income taxes (19,189) (556)
Minority
interest 271 469
Net income
(loss) ($42,637) ($972)
EPS ($0.09) ($0.00)
Depreciation,
amortization
and asset
write-offs $79,897 $36,217
EBITDA $12,347 $7,045 $19,392 $16,436 $18,595 $35,031
Operating income and EBITDA
excluding stock-based
compensation charges:
EBITDA $19,392 $35,031
Operating
income ($60,505) ($1,186)
SIX MONTHS YTD
% change
Core Non Core Total
Income Statement Data Revenues:
Network services 3% na 3%
Consulting, integration
and provisioning services 19% (71%) (3%)
Application services 24% na 24%
Other communication services (14%) (67%) (56%)
Total revenues 7% (68%) (13%)
Expenses:
Country representative compensation (42%)
Bandwidth and related costs 55%
Network operations 4%
Selling, general and administrative 25%
Total expenses 4%
Operating income (loss) na
Other income (expense):
Interest income (48%)
Interest expense (24%)
Other, net na
Total other income (expense) (39%)
Provision (credit) for income taxes na
Minority interest (42%)
Net income (loss) na
EPS na
Depreciation, amortization and asset
write-offs 121%
EBITDA (25%) (62%) (45%)
Operating income and EBITDA excluding
stock-based compensation charges:
EBITDA (45%)
Operating income na
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