Exhibit 99(a)
US Contacts:
AsiaInfo Holdings, Inc.
ir@asiainfo.com
408-970-0080
China Contacts:
AsiaInfo Technologies (China), Inc.
Lesley Zhang
zhangyan2@asiainfo.com
8610-6250-1658 ext. 6036
Jessica Barist Cohen
Ogilvy Public Relations Worldwide
jessica.cohen@ogilvy.com
86-21-6218-3009 ext. 238
AsiaInfo Reports Second Quarter Results
BEIJING/SANTA CLARA, Calif. - July 22, 2003 - AsiaInfo Holdings, Inc. (Nasdaq:
ASIA), a leading provider of telecom network and software solutions in China,
today announced second quarter results for the period ended June 30, 2003.
As consistent with the company's revised guidance announced in mid-June, second
quarter revenues were lower than originally anticipated, having been impacted by
the SARS outbreak. Second quarter net revenue (total revenue net of hardware
costs) was US$12.8 million, which is approximately flat with the previous
quarter and a 35 percent decrease over the same period a year ago.
Net revenue for the company's Communications Solutions (CS) business unit was
US$7.1 million, a 6 percent increase over the first quarter, and a 26 percent
decrease over the second quarter of the previous year. The company's Operation
Support System solutions (OSS) business unit had net revenue of US$5.7 million
for the second quarter, a 6 percent decrease from the previous quarter and a 44
percent decrease from the same period a year ago. (N.B. Please note that due to
the 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 reached US$44.7 million, an 8 percent increase
over the previous quarter's US$41.3 million, and almost flat with the same
period a year ago.
Gross revenue (which includes hardware costs) for the quarter was US$26.9
million, a 12 percent decrease over the previous quarter and a 26 percent
decrease over the same period in 2002. Gross profit was US$7.2 million,
relatively flat with the previous quarter and a 45 percent decrease over the
second quarter of 2002.
Sales and Marketing expenses increased by 17 percent over the typically slower
first quarter, and decreased by 39 percent compared to the same period a year
ago. General and Administrative expenses increased by 28 percent over the
previous quarter and by about 100 percent compared to the same period in the
previous year. The year-over-year increase is due largely to the collection of
bad debt in the amount of US$1.0 million which took place in the second quarter
last year and drove the G&A expenses down to atypical levels for the period. The
company continued its ongoing investment in Research and Development, which grew
by 5 percent over the 2003 first quarter and 14 percent over the same period a
year ago.
Total operating expenses for the second quarter were US$8.6 million, a 15
percent increase when compared to last quarter, excluding that quarter's
one-time, non-cash impairment charge relating to goodwill and acquired
intangible assets, and a 6 percent decrease compared to the same period a year
ago. The company had a loss of operations for the second quarter of US$1.4
million, compared to last quarter's operating income of US$12 thousand, before
the same one time charge, and operating income of US$3.8 million for the same
period in the previous year.
The company announced a net loss of US$1.1 million, or negative US$0.02 per
basic share. This compares to last quarter's net income of $1.2 million,
excluding the one time impairment charge, and net income of US$3.6 million for
the same period a year ago.
The company generated a negative operating cash flow of US$9.8 million for the
quarter, largely due to delayed cash collections resulting from the SARS
outbreak.
Xingsheng Zhang, AsiaInfo's President and Chief Executive Officer, said, "While
our second quarter revenues are lower than initially expected due to the SARS
outbreak, the company continues to take advantage of improving market
conditions, as evidenced by our second quarter backlog.
"As carriers continue to focus on delivering best customer services and
improving profitability, we believe that our established strengths in customer
reach, technology advancement and management efficiency will further enable us
to capture the market opportunities. Specifically, our increased cooperation
with other suppliers, as well as our deepened relationships with our customers,
will enable us to further move up along the industry value chain, thus
contributing to both our business growth and our profitability. Our recently
announced partnerships with Ericsson and Frost & Sullivan, for example, speak to
these type of expanded relationships and growth opportunities."
Mr. Zhang continued, "I would also like to take this opportunity to thank all of
AsiaInfo's employees for their hard work and diligence during the past quarter.
Despite the sometime difficult conditions caused by the SARS outbreak, they
displayed an unwavering commitment to the highest level of service and quality,
and I am grateful to their continued support and dedication to the company."
New Contract Wins
Despite the effects of the SARS outbreak, AsiaInfo signed a number of contracts
during the second quarter, particularly in the areas of customer care and CRM,
BOSS, and SMS-related products.
. An AIISMG (Internet Short Messaging Gateway) software solution contract
with China Mobile;
. A contract to provide Jiangsu Unicom, a major China Unicom subsidiary,
with a convergent customer care and billing system;
. Contracts with Chongqing Mobile, Jiangxi Mobile and Jilin Mobile to
provide analytical Customer Relationship Management (CRM) software
solution;
. A contract to upgrade Sichuan Mobile's original CRM system;
. Multiple BOSS consolidation contracts with seven China Mobile
subsidiaries, including Shanghai Mobile, Gansu Mobil, Tibet Mobile,
Jiangxi Mobile, Guizhou Mobile, Zhejiang Mobile and Inner Mongolia Mobile;
. A contract with Liaoning Mobile to provide them with an analytical CRM
software solution;
. A contract to upgrade China Unicom's UniNet-based email system;
. Two contracts with Henan Unicom and Hubei Unicom to support the third
phase of their provincial UniNet construction;
. A contract to upgrade Shanghai Mobile's Internet Short Message Gateway.
. A contract to provide China Netcom with convergent billing software
solution for its BOSS network.
New Partnership
During the second quarter, AsiaInfo announced a Memorandum of Understanding with
Ericsson (China) that formalizes a relationship for deepened strategic
cooperation with AsiaInfo and expanded opportunities for future collaboration.
Business Outlook
The following outlook statements are based on current expectations. These
statements are forward looking, and actual results may differ materially.
AsiaInfo expects third quarter 2003 net revenue to be US$14 to 15 million.
Earnings per basic share is expected to be between US$0.01 to 0.02. At this
point in time it is still too early to comment on previously provided annual
guidance, but the company will do so when a clearer picture of third quarter
sales order booking emerges.
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Excluding Impairment of Goodwill and Acquired Intangible Assets
(Amounts in thousands of US$)
2003 2002 2003 2002
Three Months Ended Jun 30 Six Months Ended Jun 30
Revenues:
Communications solutions 17,095 15,256 40,222 32,550
Operation support system solutions 9,809 21,303 17,355 32,546
Total revenues 26,904 36,559 57,577 65,096
Cost of revenues:
Communications solutions 12,276 9,188 31,014 21,304
Operation support system solutions 7,426 14,334 11,857 19,467
Total cost of revenues 19,702 23,522 42,871 40,771
Gross profit 7,202 13,037 14,706 24,325
Operating expenses:
Sales and marketing 2,930 4,809 5,444 8,377
General and administrative 2,966 1,472 5,283 5,017
Research and development 2,666 2,345 5,211 4,609
Amortization of deferred stock compensation 37 97 106 250
In Process research and development 0 0 0 350
Amortization of intangible assets 40 477 87 795
Impairment of goodwill and acquired intangible assets 0 0 30,221 0
Total operating expenses 8,639 9,200 46,352 19,398
(Loss) income from operations (1,437) 3,837 (31,646) 4,927
Other income (expenses):
Interest income 366 500 820 1,233
Interest expense (1) -30 (2) (74)
Other income (expenses),net (31) 37 (31) 38
Total other income (expenses),net 334 507 787 1,197
Income before income taxes, minority interests and (1,103) 4,344 (30,859) 6,124
equity in loss of affiliate
Income tax expense (134) 529 (958) 796
Minority interests (12) -45 (12) (10)
Equity in loss of affiliate (72) -154 (187) (281)
Net (loss) income (1,053) 3,616 (30,100) 5,037
Net (loss) income per share
Basic (0.02) 0.08 (0.68) 0.12
Diluted (0.02) 0.08 (0.68) 0.11
Shares used in computing per share amounts
Basic 44,261,401 43,629,646 44,234,013 43,040,879
Diluted 44,261,401 46,554,057 44,234,013 46,230,056
Segment information
CS revenue net of hardware cost 7,101 9,603 13,782 18,776
OSS revenue net of hardware cost 5,655 10,009 11,692 17,910
Consolidated revenues net of hardware cost 12,756 19,612 25,474 36,686
Consolidated cost of sales net of hardware cost 5,554 6,575 10,768 12,361
Consolidated gross profit 7,202 13,037 14,706 24,325
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of US$)
2003 2002 2003 2002
Three Months Ended Jun 30 Six Months Ended Jun 30
Revenues:
Communications solutions 17,095 15,256 40,222 32,550
Operation support system solutions 9,809 21,303 17,355 32,546
Total revenues 26,904 36,559 57,577 65,096
Cost of revenues:
Communications solutions 12,276 9,188 31,014 21,304
Operation support system solutions 7,426 14,334 11,857 19,467
Total cost of revenues 19,702 23,522 42,871 40,771
Gross profit 7,202 13,037 14,706 24,325
Operating expenses:
Sales and marketing 2,930 4,809 5,444 8,377
General and administrative 2,966 1,472 5,283 5,017
Research and development 2,666 2,345 5,211 4,609
Amortization of deferred stock compensation 37 97 106 250
In Process research and development 0 0 0 350
Amortization of intangible assets 40 477 87 795
Impairment of goodwill and acquired intangible asstets 0 0 30,221 0
Total operating expenses 8,639 9,200 46,352 19,398
(Loss) income from operations -1,437 3,837 -31,646 4,927
Other income (expenses):
Interest income 366 500 820 1,233
Interest expense -1 -30 -2 -74
Other income (expenses),net -31 37 -31 38
Total other income (expenses),net 334 507 787 1,197
Income before income taxes, minority interests and
equity in loss of affiliate -1,103 4,344 -30,859 6,124
Income tax expense -134 529 -958 796
Minority interests -12 -45 -12 -10
Equity in loss of affiliate -72 -154 -187 -281
Net (loss) income -1,053 3,616 -30,100 5,037
Net (loss) income per share
Basic -0.02 0.08 -0.68 0.12
Diluted -0.02 0.08 -0.68 0.11
Shares used in computing per share amounts
Basic 44,261,401 43,629,646 44,234,013 43,040,879
Diluted 44,261,401 46,554,057 44,234,013 46,230,056
Segment information
CS revenue net of hardware cost 7,101 9,603 13,782 18,776
OSS revenue net of hardware cost 5,655 10,009 11,692 17,910
Consolidated revenues net of hardware cost 12,756 19,612 25,474 36,686
Consolidated cost of sales net of hardware cost 5,554 6,575 10,768 12,361
Consolidated gross margin 7,202 13,037 14,706 24,325
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts In US$)
Jun 30,2003 Dec 31,2002
ASSETS
Current Assets
Cash and cash equivalents 103,818,959 115,152,694
Restricted cash 16,055,151 14,457,903
Short term investments 11,307,255 11,260,429
Notes receivable 2,196,002 63,631
Accounts receivable, trade (net of allowance for
doubtful accounts of 1,133,351, and 2,271,590, at Dec
31, 2002, and Jun 30, 2003 respectively) 70,037,135 49,373,454
Inventories 4,709,641 10,934,289
Other current assets 12,847,533 13,851,978
Total current assets 220,971,676 215,094,378
Property, plant, and equipment-net 3,206,349 4,045,923
Investment in affiliate 2,621,603 2,807,756
Other assets 11,462,660 41,481,895
Total assets 238,262,288 263,429,952
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term bank loans 60,405 60,406
Notes payable 2,907,036 2,447,144
Accounts payable 26,855,039 19,261,283
Accrued employee benefit 5,523,514 5,082,550
Deferred revenue 6,898,279 5,055,831
Income taxes payable 885,450 2,760,486
Other taxes payable 1,371,138 2,578,606
Other current liabilities 13,189,474 15,708,509
Total current liabilities 57,690,335 52,954,815
Total liabilities 57,690,335 52,954,815
Minority interests 0 317,319
Stockholder's equity:
Common stock, 100,000,000 shares authorized; 0.01 par
value, shares issued and outstanding: Dec 31,2002
44,193,474; Jun 30,2003 44,265,446 442,654 441,935
Additional paid-in capital 201,061,220 200,649,428
Deferred stock compensation 0 (105,628)
Retained earnings (accumulated deficit) (20,990,221) 9,109,903
Accumulated other comprehensive income (loss) 58,300 62,180
Total stockholders' equity 180,571,953 210,157,818
Total Liabilities and Stockholders' Equity 238,262,288 263,429,952
Second Quarter Conference Call
AsiaInfo will host a conference call to discuss second quarter earnings at
5:00pm Pacific Time/8:00pm Eastern Time today (Beijing/Hong Kong time: July 23,
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 4020330 between 7:00pm Pacific Time on July 22, 2003 and 7:00pm Pacific
Time on July 29, 2003. Additionally, a live and archived web cast of this call
will be available on the Investor Relations 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
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, customer management and billing solutions; decision support
systems; and service applications encompassing messaging, broadband, wireless
and other advanced applications.
Organized as a Delaware corporation, 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 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 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, 10-Q and 8-K, each
as it may be amended 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 and
notes thereto included in AsiaInfo's most recent reports on Form 10-K and Form
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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