Exhibit 99(a)
AsiaInfo Reports 2004 FIRST Quarter Results
Company Exceeded Guidance with Earnings Per Share of US$0.04
Software Revenue Increased 35% Year-Over-Year
BEIJING/SANTA CLARA, Calif. - April 21, 2004 - AsiaInfo Holdings, Inc. (Nasdaq:
ASIA), a leading provider of telecom network and software solutions in China,
today announced first quarter results for the period ended March 31, 2004.
Business Results
First quarter net revenue (total revenue net of hardware costs) was US$15
million, an 18% increase year-over-year and a 7% decrease over the previous
quarter. Software revenue was US$9.7 million, a 35% increase year-over-year and
a 1% sequential increase. Net revenue for the Network Solutions business was
US$5.3 million, a 3% decrease year-over-year and a 19% decrease sequentially.
Gross revenue (which includes hardware costs) for the quarter was US$32 million,
up by 4% year-over-year and up 4% sequentially. Gross profit was US$9.3 million,
up by 23% year-over-year and flat from the previous quarter.
Revenue from the company's Human Resources Management (HRM) and Business
Intelligence (BI) business, which was acquired from Pacific Software in the
fourth quarter of 2003, accounted for approximately 6% of this quarter's net
revenue.
Total operating expenses for the quarter were US$7.3 million, a significant
decrease from the US$37.7 million in the year-ago period, which included that
quarter's impairment charge of US$30 million relating to goodwill and acquired
intangible assets, and a decrease of 5% from last quarter.
The company reported operating profit for the first quarter of US$2.0 million,
compared to an operating loss of US$30.2 million during the year-ago period
which included the non-cash impairment charge mentioned above, and an operating
profit of US$1.6 million last quarter. First quarter net income was US$2
million, or US$0.04 per basic share, compared to a net loss for the same period
last year of US$29 million or US$0.66 per basic share after that quarter's
non-cash impairment charge, and to a net loss for last quarter of US$0.3 million
or US$0.01 per basic share, which included an impairment charge of approximately
US$2.2 million.
The company generated an operating cash flow of US$2.7 million for the quarter.
"We are pleased that our software revenue continued to grow in the first
quarter," said Mr. Xingsheng Zhang, AsiaInfo's President and Chief Executive
Officer. "We benefited from growth in vertical enterprise markets, with
important contracts signed
for our HRM and BI solutions, as well as the continued focus by Chinese telecom
carriers on operational efficiency, an area in which AsiaInfo is well positioned
with market leading operation support systems and value-added service solutions.
We also continued to benefit from efficiencies generated by the consolidation of
our R&D and sales organizations."
Mr. Zhang added, "The integration of AsiaInfo's HRM and BI business is
continuing smoothly, allowing us to fulfill our vision of becoming a total
customer solutions provider serving a wide range of vertical markets in China."
Major Contracts Signed in This Quarter
The company continued to expand into important new vertical markets with a
contract signed in February 2004 to provide an HRM solution to Angang Group, one
of China's largest steel producers.
Other major contracts signed by AsiaInfo during the first quarter of 2004
include:
.. A contract to construct a Business Support System for China Telecom's
Intelligent Network Backbone.
.. A contract to provide China Unicom's Guangdong Branch with a billing
software solution and ongoing maintenance service.
.. A series of BOSS related software upgrade and maintenance service contracts
for China Mobile's provincial subsidiaries, including Shanghai Mobile,
Inner Mongolia Mobile, Zhejiang Mobile, Guangxi Mobile, and Tibet Branch.
.. Contracts to provide network solutions for IP municipal area network
expansion in Jiangsu and Hainan, two major provincial branches of China
Netcom South.
Second Quarter 2004 Guidance
Net revenue is expected to be US$14 to $15 million in the second quarter of
2004. Earnings per basic share in the second quarter is expected to be US$0.02
to $0.03.
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands of US$)
2004 2003 2003
Three Months Three Months Three Months
ended Mar 31 ended Mar 31 Ended Dec 31
Revenues:
Network solutions 22,309 23,500 21,081
Software revenue 9,672 7,174 9,531
Total revenues 31,981 30,674 30,612
Cost of revenues:
Network solutions 18,804 20,096 17,321
Software cost 3,923 3,073 4,041
Total cost of revenues 22,727 23,169 21,362
Gross profit 9,254 7,505 9,250
Operating expenses:
Sales and marketing 2,613 2,515 3,075
General and administrative 2,469 2,317 2,428
Research and development 2,022 2,545 1,882
In-Process research and development - - 169
Impairment of goodwill and acquired intangible assets - 30,221 -
Amortization of deferred stock compensation - 68 -
Amortization of intangible assets 178 47 81
Total operating expenses 7,282 37,713 7,635
Income (loss) from operations 1,972 -30,208 1,615
Other income (expenses):
Interest income 352 454 394
Interest expense - -1 -1
Other expenses, net -21 -1 -100
Total other income, net 331 452 293
Income (loss) before income taxes, minority interests 2,303 -29,756 1,908
and equity in loss of affiliate
Income tax expense (benefit) 288 -824 -20
Minority interests in loss (income) of consolidated
subsidiaries - - -
Equity in loss of affiliate -38 -115 -2,196
Net income (loss) 1,977 -29,047 -268
Net income (loss) per share
Basic 0.04 -0.66 -0.01
Diluted 0.04 -0.66 -0.01
Shares used in computation
Basic 45,301,278 44,206,625 44,846,989
Diluted 47,354,713 44,206,625 44,846,989
Segment information
Network solutions net of hardware cost 5,355 5,545 6,624
Software revenue 9,672 7,174 9,531
Total revenues net of hardware cost 15,027 12,719 16,155
Total cost of sales net of hardware cost 5,773 5,214 6,905
Gross profit 9,254 7,505 9,250
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In US$)
Mar 31,2004 Dec 31,2003
ASSETS:
Current Assets
Cash and cash equivalents 124,685,561 119,394,988
Restricted cash 14,742,686 14,827,219
Short term investments 10,373,840 13,218,115
Notes receivable 2,791,800 3,832,141
Accounts receivable, trade (net of allowance for doubtful accounts of
3,094,733 and 2,941,966 at Dec 31, 2003 and Mar 31,2004 respectively) 65,805,660 51,923,491
Inventories 3,843,238 3,234,614
Other current assets 7,274,830 13,050,244
Total current assets 229,517,615 219,480,812
Property, plant, and equipment-net 2,289,478 2,347,693
Investment in affiliate 292,329 330,663
Other assets 17,720,769 17,862,623
Total Assets 249,820,191 240,021,791
LIABILITY AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term bank loans 0 60,411
Notes payable 5,790,026 2,608,377
Accounts payable 17,933,366 13,944,835
Accrued employee benefit 7,003,167 5,971,003
Deferred revenue 10,631,634 11,738,288
Income taxes payable 1,721,649 1,231,794
Other taxes payable 1,666,586 2,212,280
Other current liabilities 15,436,577 15,597,604
Total current liabilities 60,183,005 53,364,592
Minority Interest 0 0
Stockholders' Equity:
Common stock, 100,000,000 shares authorized; 0.01 par value, shares issued and
outstanding : Dec 31,2003 45,112,278; Mar 31,2004 45,385,538 453,855 451,123
Additional paid-in capital 206,158,331 205,154,007
Deferred stock compensation 0 0
(Accumulated deficit) retained earnings (17,032,541) (19,008,996)
Accumulated other comprehensive income 57,541 61,065
Total stockholder's Equity 189,637,186 186,657,199
Total Liability and Stockholder's Equity 249,820,191 240,021,791
Reconciliation of Non-GAAP Measures
This earnings release contains a presentation of AsiaInfo's net revenue, which
represents revenue net of hardware costs that are passed through to our
customers. Under applicable U.S. securities regulations, net revenue is
considered a "Non-GAAP financial measure". We believe that the presentation of
this Non-GAAP measure provides useful information for investors regarding our
regular financial performance. Our management uses this measure for the same
purpose. The presentation of this additional information is not meant to be
considered in isolation or as a substitute for our financial results prepared in
accordance with GAAP. Pursuant to relevant regulatory requirements, we are
providing in this release the following reconciliation of the Non-GAAP financial
measure (Net Revenue) to the most directly comparable GAAP financial measure
(Revenues).
2004 Q1 2003 Q4 2003 Q1
--------- --------- ---------
(in thousands of US dollars)
Net Revenue 15,027 16,155 12,719
Hardware Costs 16,954 14,457 17,955
------- ------- -------
Revenues 31,981 30,612 30,674
======= ======= =======
First Quarter Conference Call
AsiaInfo will host a conference call to discuss first quarter earnings at 5:00pm
Pacific Time/8:00pm Eastern Time today (Beijing/Hong Kong time: April 22, 2004
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 4671974
between 9:00pm Pacific Time on April 21, 2004 until 9:00pm Pacific Time on April
29, 2004. 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 high-quality
software and solutions in China. The company provides total customer solutions
to some of China's largest companies, and helps its customers to increase their
business value in fast-growing and evolving markets. AsiaInfo's products and
services cover telecom network infrastructure and application services,
encompassing messaging, broadband and wireless; customer relationship management
(CRM) and billing solutions; decision support systems; business intelligence
(BI); and human resource management (HRM).
Organized as a Delaware corporation, AsiaInfo began in 1995 as the constructor
of national backbones and provincial access networks for all of China's major
national telecom carriers, including China Telecom, China Mobile, China Unicom
and China Netcom. After its acquisition of OSS vendor Bonson in 2002, and the
HRM and BI business from Pacific Software in 2003, the company has successfully
leveraged its strengths as a IT systems integrator and telecom software solution
provider, to offer a full suite of IT services to a broad range of customers.
For more information about AsiaInfo, please visit http://www.asiainfo.com.
The information contained in this documents is as of April 21, 2004. AsiaInfo
assumes no obligation to update any forward-looking statements contained in this
document as a result of new information or future events or developments.
This document contains forward-looking information about AsiaInfo's operating
results and business prospects that involve substantial risks and uncertainties.
You can identify these statements by the fact that they use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and
other words and terms of similar meaning in connection with any discussion of
future operating or financial performance. Among the factors that could cause
actual results to differ materially are the following: government
telecommunications infrastructure and budgetary policy in China; our ability to
maintain our concentrated customer base; the long and variable cycles for our
products and services that can cause our revenues and operating results to vary
significantly from period to period; our ability to meet our working capital
requirements; our ability to retain our executive officers; our ability to
attract and retain skilled personnel; potential liabilities we are exposed to
because we extend warranties to our customers; risks associated with cost
overruns and delays; our ability to develop or acquire new products or
enhancements to our software products that are marketable on a timely and
cost-effective basis; our ability to adequately protect our proprietary rights;
the competitive nature of the markets we operate in; political and economic
policies of the Chinese government. A further list and description of these
risks, uncertainties, and other matters can be found in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2003, and in our periodic
reports on Forms 10-Q and 8-K (if any) filed with the United States Securities
and Exchange Commission and available at www.sec.gov.
US Contacts:
Christina Splinder
AsiaInfo Holdings, Inc.
ir@asiainfo.com
1-800-618-0588
408-970-0080
China Contacts:
Rachel Huo
AsiaInfo Technologies (China), Inc.
huoran@asiainfo.com
8610-6250-1658 ext. 8687
Philip Lisio
Ogilvy Public Relations Worldwide
philip.lisio@ogilvy.com
8610-6443-6488 ext.324
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