Infonet Fiscal Year 2002 Results; Core Revenue Growth; Record Client Additions.
EL SEGUNDO, Calif.--(BUSINESS WIRE)--June 10, 2002
Infonet Services Corporation (NYSE:IN):
Financial Highlights FY 2002 vs. FY 2001:
-- Revenue: $646 vs. $662 million, down 2% -- Core revenue: $500 vs. $472 million, up 6% -- Network services: $310 vs. $283 million, up 9% -- EBITDA: $69 vs. $87 million, down 20% -- New client contracts: 685 from 582, up 18%
Infonet Services Corporation (NYSE:IN) (FSE:IN) today announced fiscal year 2002 (FY '02) revenue of $646 million compared to revenue of $662 million for the previous year. Infonet's core (non-AUCS platform) revenue grew six percent during FY '02 from $472 million in FY '01 to $500 million in FY '02.
Fourth quarter (Q4) FY '02 revenue declined to $159 million from $190 million in the previous year. Jose A. Collazo, Chairman, President and CEO of Infonet, said, "Fourth quarter core (non-AUCS platform) revenue was essentially flat compared to the previous year. Excluding a one-time contribution from a channel partner in Q4 FY '01, fourth quarter core (non-AUCS platform) revenue for FY '02 increased to $131 million from $125 million, a gain of five percent."
Revenue for network services was $310 million in FY '02 versus $283 million for FY '01, an increase of nine percent. Network services revenue for Q4 '02 was $78 million versus $75 million in the previous year, an increase of four percent.
Infonet's consulting, integration and provisioning revenue increased last year from $180 million in FY '01 to $194 million in FY '02, an increase of eight percent. For the fourth quarter, consulting, integration and provisioning revenue decreased from $52 million in FY '01 to $50 million in FY '02. Core (non-AUCS platform) consulting, integration and provisioning revenue increased from $134 million in FY '01 to $155 million in FY '02, an increase of 16 percent. Fourth quarter core consulting, integration and provisioning revenue increased to $42 million from $36 million, a gain of 16 percent.
Infonet's application services for the year are down from $11 million in FY '01 to $8 million in FY '02. Fourth quarter application services revenues remained unchanged from the prior year.
Other communications services, almost 80 percent of which are composed of AUCS platform-related revenue, declined 29 percent from the previous year, from $188 million to $134 million. For Q4 FY '02, other communications services contributed $28 million versus $61 million in FY '01, a decline of 54 percent. "We expect other communications services to contribute less than six percent to overall revenue after the AUCS contract expires on October 1, 2002," said Mr. Collazo.
"AUCS, over the three-year term of the contract, will have contributed over $450 million in revenue and approximately $100 million in EBITDA. In addition, we expect to continue to convert clients from the AUCS platform to the Infonet platform until the AUCS contract expires. Subsequently we will record revenue from those customers as core Infonet revenue."
EBITDA Excluding Stock-based Compensation Charges
Earnings before interest, tax, depreciation and amortization (EBITDA), excluding stock-based compensation charges, decreased to $69 million for FY '02, from $87 million in FY '01, a decrease of 20 percent. EBITDA for Q4 FY '02 was $21 million versus $33 million in Q4 FY '01. Core (non-AUCS platform) EBITDA decreased to $37 million for FY '02 from $40 million in FY '01, a decrease of six percent. Core (non-AUCS platform) EBITDA for Q4 FY '02 was $14 million versus $21 million for the comparable quarter of FY '01.
Mr. Collazo said that excluding a one-time contribution of approximately $8 million from a channel partner in the fourth quarter of the previous fiscal year, and a write-off of an investment in Broadedge, a joint venture, of $2 million in FY '02, EBITDA from non-AUCS platform business grew from $32 million in FY '01 to $39 million in FY '02, an increase of 23 percent; and excluding this one time contribution, from $13 million in Q4 FY '01 to $14 million in Q4 FY '02, an increase of nine percent. In FY '02, the net cash consumed was approximately $80 million, including a cash outlay of $25 million for a building that was acquired as well as payments for certain capacity obligations from the prior year of approximately $60 million.
Operating Income, Net Income EPS and Capital Expenditures
Operating income for FY '02 decreased to ($25) million from $24 million in FY '01. Operating income for Q4 FY '02 decreased to ($5) million from $11 million in Q4 FY '01. Before non-cash, stock-based compensation charges, operating income was ($8) million for FY '02 and ($1) million for Q4 FY '02.
FY '02 year-end net income was ($13) million, down from $27 million in FY '01. Fourth quarter net income was ($4) million, down from $9 million in Q4 FY '01. Basic and diluted earnings per share for FY '02 were ($0.03) versus $0.06 in FY '01. Basic and diluted earnings per share for Q4 FY '02 were ($0.01) versus $0.02 in Q4 FY '01.
According to Mr. Collazo, net income was impacted by several one-time write-offs, including (net of taxes): approximately $1 million for an investment in Broadedge; $1 million in start-up expenses for Managed Extranet Services, a new addition to the Infonet service portfolio; and a $1 million write-off to cover capacity procurement from a failed service provider. "In addition, depreciation expenses including asset impairment charge increased to $77 million in FY '02 from $52 million in FY '01, an increase of 50 percent. This expense reflects primarily capacity purchases for our network backbone build-out."
Capital expenditures in FY '02 were approximately $107 million compared to $288 million in FY '01. For FY '03 we expect capital expenditures of approximately $95 million. "Much of our planned future cap-ex will be used directly to support customers," said Mr. Collazo. "We call it success-based cap-ex.
"Our cap-ex may increase if there are unplanned expenditures to replace capacity should some of our fiber providers go out of business. Due to the recent events concerning KPNQwest and its subsidiaries, we may be required to write off up to approximately $41 million of network capacity in FY '03. Our planned FY '03 cap-ex of $95 million is sufficient to handle our growth and, if necessary, to replace the KPNQwest capacity at an estimated cost of $15 million. We believe that, should any further unplanned cap-ex increases materialize, they will not materially affect our long-term strategic plans. As our EBITDA is expected to increase and our cash position is strong, if we have to replace additional capacity to continue to ensure service integrity, then we have more than enough cash to do it."
Client Data: Record Number of New Contracts Signed
With 401 new customer contracts signed in FY '02, Infonet reported its strongest year in history for new client signings. Infonet also sold 284 contracts for new services to existing customers. Combined new contracts represent an increase of 18 percent over last year.
"Fourth quarter client gains were off compared to last year's fourth quarter," said Mr. Collazo, "mostly because our client win rate in the fourth quarter of last year and in the first three quarters of FY '02 received a healthy push from a new channel partner that started in the latter part of FY '01. This year's fourth quarter numbers appear to be closer to the normal historical trend and represent good, solid growth."
Mr. Collazo also said that Infonet's ability to generate growth in difficult economic times is evidenced by the number of new accounts obtained during the year. "However, the full impact of this growth has been offset by what appears to be above-normal price erosion resulting from the actions of certain competitors who seem to be trying to win business at all costs.
"The actions of these competitors are most particularly felt when bidding for expiring multiyear contracts. We usually win the business, but only after substantial price erosion for services previously provided. According to published reports, almost all of our competitors are experiencing financial difficulty and while this may eventually result in the abatement of price erosion pressures, we have yet to see any evidence of it.
"Average revenue per client in our core services in FY '02 decreased by five percent compared to an increase of 11 percent in FY '01. Historically we have experienced annual average revenue per client growth of 10-12 percent. We believe this decrease is partially attributable to higher price erosion. Nevertheless, we expect growth in core revenue to be between 15 and 20 percent in FY '03. We're in an enviable financial position with approximately $500 million in cash on our books, and we continue to be fully funded and able to execute our long-term strategic plan. We expect to be profitable for FY '03 excluding the effect of any write-offs of our capacity assets," said Mr. Collazo.
In January 2002, Infonet announced that its board of directors had authorized the expenditure of up to $100 million over 24 months to repurchase shares of the Company's common stock. As of March 31, 2002, Infonet had spent approximately $2.6 million to purchase approximately 1.2 million shares at an average price of $2.19 per share.
"Our strong financial position, enhanced by a favorable IRS ruling, enable us to continue our share repurchase program," said Mr. Collazo. "We feel that this is an additional avenue for building shareholder value."
Infonet Services Corporation, known for its quality of service, is a leading provider of value-added global communications services, including IP VPNs, for nearly 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, Internet, intranet, multimedia, remote and local access, provisioning, application and consulting services) positioning Infonet as the ideal single-source partner for multinationals. 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.
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. 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.
Founded in 1970, Infonet's stock is traded on the New York and Frankfurt Stock Exchanges under the symbol IN. Additional information about the company is available at www.infonet.com.
Safe Harbor Statement: Infonet may have made forward-looking statements 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 and the effect of currency fluctuation. Investors should bear these risk factors in mind as well as those elaborated on in Infonet's 10K, 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.
Infonet will file its FY 2002 10-K in late June 2002. It will be available through www.sec.gov, which can be accessed through Infonet's investor relations site at www.infonet.com.
Audio Web Cast/Conference Call Information
Infonet will host a conference call and audio Webcast on Tuesday, June 11, at 9 a.m. New York time (2 p.m. in London, 6 a.m. in Los Angeles).
Participants within the United States should call 1-800-289-0436. Outside the United States, participants should call +1-913-981-5507. Please establish connections 10 minutes before the hour. Those listening in through the Web, should log on to www.infonet.com. 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 12 p.m. New York time on Tuesday, June 11, through midnight on Tuesday, June 25. The confirmation code for the replay is 130332.
Table 1 - Key Comparisons, in thousands, except EPS and Percent Change. Q4 Q402 Q401 Core Non Total Core Non Total Core Core Revenues: Network Services $78,315 $0 $78,315 $75,397 $0 $75,397 Consulting, Integration And Provisioning Services 42,128 7,837 49,965 36,370 15,204 51,574 Application Services 2,106 0 2,106 2,139 0 2,139 Other Communication Services 8,427 19,782 28,209 18,389 42,415 60,804 Total Revenues 130,976 27,619 158,595 132,295 57,619 189,914 EBITDA $14,053 $6,579 $20,632 $20,634 $12,048 $32,682 Operating Income ($5,212) $11,186 Net Income ($3,539) $8,882 EPS ($0.01) $0.02 D&A $21,858 $17,342 Operating Income and EBITDA excluding stock-based compensation charges: EBITDA $20,632 $32,682 Operating Income ($1,226) $15,340 Q4 % change Core Non Total Core Revenues: Network Services 4% na 4% Consulting, Integration And Provisioning Services 16% (48%) (3%) Application Services (2%) na (2%) Other Communication Services (54%) (53%) (54%) Total Revenues (1%) (52%) (16%) EBITDA (32%) (45%) (37%) Operating Income na Net Income na EPS na D&A 26% Operating Income and EBITDA excluding stock-based compensation charges: EBITDA (37%) Operating Income na Table 2 - Key Comparisons, in thousands, except EPS and Percent Change. Full Year FY02 FY01 Core Non Total Core Non Total Core Core Revenues: Network Services $309,645 $0 $309,645 $283,248 $0 $283,248 Consulting, Integration And Provisioning Services 155,434 38,777 194,211 133,782 46,150 179,932 Application Services 8,266 0 8,266 10,540 0 10,540 Other Communication Services 26,738 106,919 133,657 44,580 143,645 188,225 Total Revenues 500,083 145,696 645,779 472,150 189,795 661,945 EBITDA $37,298 $32,055 $69,353 $45,081 $46,649 $91,730 Operating Income ($24,664) $23,687 Net Income ($13,319) $27,233 EPS ($0.03) $0.06 D&A $77,418 $51,654 Operating Income and EBITDA excluding stock-based compensation charges: EBITDA $69,353 $86,453 Operating Income ($8,065) $34,799 Full Year % change Core Non Total Core Revenues: Network Services 9% na 9% Consulting, Integration And Provisioning Services 16% (16%) 8% Application Services (22%) na (22%) Other Communication Services (40%) (26%) (29%) Total Revenues 6% (23%) (2%) EBITDA (17%) (31%) (24%) Operating Income na Net Income na EPS na D&A 50% Operating Income and EBITDA excluding stock-based compensation charges: EBITDA (20%) Operating Income na
|Printer friendly Cite/link Email Feedback|
|Date:||Jun 10, 2002|
|Previous Article:||Catalyst Semiconductor Reports Higher Revenues, Net Income of $0.06 Per Share for 4th Quarter; Profit for the Fiscal Year.|
|Next Article:||Exult CFO to Speak At 13th Annual Bear Stearns Technology Conference.|