UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2002
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 333-88799
INFONET SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware |
95-4148675 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
2160 East Grand Avenue, El Segundo, California
(Address of principal executive offices)
90245-1022
(Zip Code)
(310) 335-2600
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of February 7, 2003, the registrant had the following number of shares outstanding:
Class A common stock: 161,403,358
Class B common stock: 306,023,301
PART I
ITEM 1. FINANCIAL STATEMENTS
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except per Share Amounts)
| March 31, 2002 |
December 31, 2002 |
|||||||
| (Unaudited) |
||||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ |
147,180 |
|
$ |
132,979 |
| ||
| Short-term investments |
|
370,591 |
|
|
349,148 |
| ||
| Accounts receivable, net |
|
130,748 |
|
|
109,372 |
| ||
| Deferred income taxes |
|
24,773 |
|
|
22,370 |
| ||
| Prepaid expenses |
|
20,721 |
|
|
21,319 |
| ||
| Other current assets |
|
33,650 |
|
|
22,181 |
| ||
| Total current assets |
|
727,663 |
|
|
657,369 |
| ||
| Property, Equipment And Communication Lines, Net |
|
494,401 |
|
|
432,197 |
| ||
| Deferred Income Taxes |
|
142,699 |
|
|
158,290 |
| ||
| Intangible and other Assets, Net |
|
45,376 |
|
|
50,207 |
| ||
| Total Assets |
$ |
1,410,139 |
|
$ |
1,298,063 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term obligations |
$ |
10,315 |
|
$ |
1,701 |
| ||
| Current portion of capital lease obligations |
|
2,727 |
|
|
2,597 |
| ||
| Accounts payable |
|
51,185 |
|
|
31,448 |
| ||
| Network communications |
|
24,927 |
|
|
27,737 |
| ||
| Accrued salaries and related benefits |
|
18,947 |
|
|
19,583 |
| ||
| Income taxes payable |
|
4,669 |
|
|
5,444 |
| ||
| Advance billings |
|
26,996 |
|
|
25,235 |
| ||
| Deferred installation revenues |
|
10,714 |
|
|
10,994 |
| ||
| Other accrued expenses |
|
19,440 |
|
|
31,839 |
| ||
| Total current liabilities |
|
169,920 |
|
|
156,578 |
| ||
| Deferred Revenue And Compensation |
|
35,849 |
|
|
34,072 |
| ||
| Capital Lease Obligations, Less Current Portion |
|
6,227 |
|
|
4,445 |
| ||
| Long Term Obligations, Less Current Portion |
|
98,902 |
|
|
19,278 |
| ||
| Minority Interest |
|
1,450 |
|
|
1,700 |
| ||
| Commitments and Contingencies |
||||||||
| Stockholders’ Equity: |
||||||||
| Class A common stock, $0.01 par value per share: |
||||||||
| 400,000 shares authorized; 364,160 shares issued as of March 31, 2002 and December 31, 2002 and 161,403 shares outstanding as of March 31, 2002 and December 31, 2002; 202,757 shares held in treasury |
|
66,078 |
|
|
66,078 |
| ||
| Class B common stock $0.01 par value per share: |
||||||||
| 600,000 shares authorized; 310,287 and 311,030 shares issued as of March 31, 2002 and December 31, 2002; 1,171 and 4,860 shares held in treasury as of March 31, 2002 and December 31, 2002 |
|
1,174,577 |
|
|
1,185,701 |
| ||
| Treasury stock, at cost, 203,928 and 207,617 shares as of March 31, 2002 and December 31, 2002 |
|
(123,753 |
) |
|
(131,965 |
) | ||
| Notes receivable from issuance of common stock |
|
(8,577 |
) |
|
(8,632 |
) | ||
| Accumulated deficit |
|
(5,827 |
) |
|
(30,235 |
) | ||
| Accumulated other comprehensive income (loss) |
|
(4,707 |
) |
|
1,043 |
| ||
| Total stockholders’ equity |
|
1,097,791 |
|
|
1,081,990 |
| ||
| Total Liabilities and Stockholders’ Equity |
$ |
1,410,139 |
|
$ |
1,298,063 |
| ||
See accompanying notes to consolidated financial statements.
1
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In Thousands, Except per Share Amounts)
(Unaudited)
| Three Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||||||
| 2001 |
2002 |
2001 |
2002 |
|||||||||||||
| Services Revenues, Net |
$ |
155,100 |
|
$ |
141,588 |
|
$ |
487,184 |
|
$ |
431,710 |
| ||||
| Management Contract Incentive Fee |
|
— |
|
|
56,706 |
|
|
— |
|
|
56,706 |
| ||||
| Total Revenues |
|
155,100 |
|
|
198,294 |
|
|
487,184 |
|
|
488,416 |
| ||||
| Expenses: |
||||||||||||||||
| Country representative compensation |
|
48,548 |
|
|
25,457 |
|
|
166,079 |
|
|
93,439 |
| ||||
| Bandwidth and related costs |
|
30,850 |
|
|
32,325 |
|
|
93,159 |
|
|
129,143 |
| ||||
| Network operations |
|
25,266 |
|
|
33,417 |
|
|
76,917 |
|
|
86,915 |
| ||||
| Selling, general and administrative |
|
59,148 |
|
|
75,118 |
|
|
170,481 |
|
|
214,448 |
| ||||
| Total expenses |
|
163,812 |
|
|
166,317 |
|
|
506,636 |
|
|
523,945 |
| ||||
| Operating Income (Loss) |
|
(8,712 |
) |
|
31,977 |
|
|
(19,452 |
) |
|
(35,529 |
) | ||||
| Other Income (Expense): |
||||||||||||||||
| Interest income |
|
5,135 |
|
|
3,254 |
|
|
20,231 |
|
|
11,177 |
| ||||
| Interest expense |
|
(3,012 |
) |
|
(1,773 |
) |
|
(8,857 |
) |
|
(6,216 |
) | ||||
| Other, net |
|
(515 |
) |
|
384 |
|
|
(85 |
) |
|
2,855 |
| ||||
| Total other income net |
|
1,608 |
|
|
1,865 |
|
|
11,289 |
|
|
7,816 |
| ||||
| Income (Loss) Before Provision For Income Taxes, Minority Interest And Extraordinary Item |
|
(7,104 |
) |
|
33,842 |
|
|
(8,163 |
) |
|
(27,713 |
) | ||||
| Provision For Income Taxes |
|
1,593 |
|
|
13,959 |
|
|
1,037 |
|
|
(5,230 |
) | ||||
| Income (Loss) Before Minority Interest And Extraordinary Item |
|
(8,697 |
) |
|
19,883 |
|
|
(9,200 |
) |
|
(22,483 |
) | ||||
| Minority Interest |
|
111 |
|
|
39 |
|
|
580 |
|
|
310 |
| ||||
| Income (Loss) Before Extraordinary Item |
|
(8,808 |
) |
|
19,844 |
|
|
(9,780 |
) |
|
(22,793 |
) | ||||
| Extraordinary Item, Net Of Income Tax Of $1,014 |
|
— |
|
|
1,615 |
|
|
— |
|
|
1,615 |
| ||||
| Net Income (Loss) |
| |||||||||||||||