UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
| ¨ | 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 001-15713
ASIAINFO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 752506390 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
4TH FLOOR, ZHONGDIAN INFORMATION TOWER
6 ZHONGGUANCUN SOUTH STREET, HAIDIAN DISTRICT
BEIJING 100086, CHINA
(Address of principal executive office, including zip code)
+8610 6250 1658
(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 ¨
The number of shares outstanding of the Registrant’s common stock as of May 6, 2004 was 45,424,291.
ASIAINFO HOLDINGS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2004
PART I. FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In US Dollars thousands, except per share amounts)
| Three months Ended March 31, |
||||||||
| 2003 |
2004 |
|||||||
| Revenues: |
||||||||
| Network solutions |
$ | 23,500 | $ | 22,309 | ||||
| Software revenue |
7,174 | 9,672 | ||||||
| Total revenues |
30,674 | 31,981 | ||||||
| Cost of revenues: |
||||||||
| Network solutions |
20,096 | 18,804 | ||||||
| Software revenue |
3,073 | 3,923 | ||||||
| Total cost of revenues |
23,169 | 22,727 | ||||||
| Gross profit |
7,505 | 9,254 | ||||||
| Operating expenses: |
||||||||
| Sales and marketing (excluding stock-based compensation: 2004: nil; 2003: $28) |
2,515 | 2,613 | ||||||
| General and administrative (excluding stock-based compensation: 2004: nil; 2003: $31) |
2,317 | 2,469 | ||||||
| Research and development (excluding stock-based compensation: 2004: nil; 2003: $9) |
2,545 | 2,022 | ||||||
| Impairment of goodwill and acquired intangible assets |
30,221 | — | ||||||
| Amortization of deferred stock compensation |
68 | — | ||||||
| Amortization of acquired intangible assets |
47 | 178 | ||||||
| Total operating expenses |
37,713 | 7,282 | ||||||
| (Loss) income from operations |
(30,208 | ) | 1,972 | |||||
| Other income (expense): |
||||||||
| Interest income |
454 | 352 | ||||||
| Interest expense |
(1 | ) | — | |||||
| Other expense, net |
(1 | ) | (21 | ) | ||||
| Total other income, net |
452 | 331 | ||||||
| (Loss) income before income taxes and equity in loss of affiliates |
(29,756 | ) | 2,303 | |||||
| Income tax (benefit) expense |
(824 | ) | 288 | |||||
| (Loss) income before equity in loss of affiliates |
(28,932 | ) | 2,015 | |||||
| Equity in loss of affiliate |
(115 | ) | (38 | ) | ||||
| Net (loss) income |
$ | (29,047 | ) | $ | 1,977 | |||
| Net (loss) income per share: |
||||||||
| Basic |
$ | (0.66 | ) | $ | 0.04 | |||
| Diluted |
$ | (0.66 | ) | $ | 0.04 | |||
| Shares used in computation: |
||||||||
| Basic |
44,206,625 | 45,301,278 | ||||||
| Diluted |
44,206,625 | 47,354,713 | ||||||
See notes to condensed consolidated financial statements.
- 3 -
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In US Dollars thousands, except per share amounts)
| December 31, 2003 (1) |
March 31, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 119,395 | $ | 124,686 | ||||
| Restricted cash |
14,827 | 14,743 | ||||||
| Short-term investments |
13,218 | 10,374 | ||||||
| Notes receivable |
3,832 | 2,792 | ||||||
| Accounts receivable (net of allowances of $3,095 and $2,942 December 31, 2003 and March 31, 2004, respectively) |
51,923 | 65,806 | ||||||
| Inventories |
3,235 | 3,843 | ||||||
| Other receivables |
8,528 | 2,594 | ||||||
| Deferred income taxes – current |
1,842 | 1,842 | ||||||
| Prepaid expenses and other current assets |
2,680 | 2,838 | ||||||
| Total current assets |
219,480 | 229,518 | ||||||
| Property and equipment-net |
2,348 | 2,289 | ||||||
| Goodwill |
15,368 | 15,368 | ||||||
| Other acquired intangible assets-net |
2,341 | 2,197 | ||||||
| Investment in affiliate |
331 | 293 | ||||||
| Deferred income taxes |
154 | 156 | ||||||
| Total Assets |
$ | 240,022 | $ | 249,821 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Short-term bank loans |
$ | 60 | $ | — | ||||
| Notes payable |
2,609 | 5,790 | ||||||
| Accounts payable |
13,945 | 17,933 | ||||||
| Accrued expenses |
12,822 | 13,609 | ||||||
| Deferred revenue |
11,738 | 10,632 | ||||||
| Accrued employee benefits |
5,971 | 7,003 | ||||||
| Other payables |
2,776 | 1,828 | ||||||
| Other taxes payables |
2,212 | 1,667 | ||||||
| Income taxes payables |
1,232 | 1,722 | ||||||
| Total current liabilities |
53,365 | 60,184 | ||||||
| Commitments and contingencies (Note 14) |
||||||||
| Stockholders’ Equity: |
||||||||
| Common stock, 100,000,000 shares authorized, $0.01 par value, shares issued and outstanding: 2003: 45,112,278; 2004:45,385,538 |
451 | 454 | ||||||
| Additional paid-in capital |
205,154 | 206,158 | ||||||
| Accumulated (deficit) |
(19,009 | ) | (17,033 | ) | ||||
| Accumulated other comprehensive income |
61 | 58 | ||||||
| Total stockholders’ equity |
186,657 | 189,637 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 240,022 | $ | 249,821 | ||||
See notes to condensed consolidated financial statements.
| (1) | December 31, 2003 balances were obtained from audited financial statements. |
- 4 -
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In US Dollars thousands, except per share amounts)
| Three Months Ended March 31, |
||||||||
| 2003 |
2004 |
|||||||
| (unaudited) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (29,047 | ) | $ | 1,977 | |||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |
||||||||
| Depreciation |
616 | 374 | ||||||
| Amortization of other acquired intangible assets |
47 | 178 | ||||||
| Impairment of goodwill and acquired intangible assets |
30,221 | — | ||||||
| Amortization of deferred stock compensation |
69 | — | ||||||
| Deferred income taxes |
(168 | ) | (2 | ) | ||||
| Equity in loss of an affiliate |
115 | 38 | ||||||
| Loss on disposal of property and equipment |
6 | 5 | ||||||
| Bad debt expense |
284 | (153 | ) | |||||
| Changes in operating assets and liabilities, net of effects of business acquired: |
||||||||
| Restricted cash |
(815 | ) | 85 | |||||
| Notes receivable |
— | 1,040 | ||||||
| Accounts receivable |
(15,827 | ) | (13,764 | ) | ||||
| Inventories |
3,982 | (608 | ) | |||||
| Other receivables |
1,960 | 5,934 | ||||||
| Prepaid expenses and other current assets |
257 | (158 | ) | |||||
| Notes payable |
— | 3,181 | ||||||
| Accounts payable |
10,766 | 3,988 | ||||||
| Other payables |
(321 | ) | (9 | ) | ||||
| Deferred revenue |
287 | (1,106 | ) | |||||
| Accrued employee benefits |
262 | 1,032 | ||||||
| Accrued expenses |
(1,421 | ) | 787 | |||||
| Income taxes payable |
(688 | ) | 490 | |||||
| Other taxes payable |
(375 | ) | (545 | ) | ||||
| Net cash (used in) provided by operating activities |
210 | 2,764 | ||||||
| Cash flows from investing activities: |
||||||||
| Decrease (increase) in short-term investments |
(34 | ) | 2,844 | |||||
| Purchases of property and equipment |
(143 | ) | (322 | ) | ||||
| Purchases of business |
— | (939 | ) | |||||
| Proceeds on disposal of property, plant, and equipment |
— | 1 | ||||||
| Net cash used in investing activities |
(177 | ) | 1,584 | |||||
- 5 -
ASIAINFO HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) — (CONTINUED)
(In US Dollars thousands, except per share amounts)
| Three Months Ended March 31, |
|||||||
| 2003 |
2004 |
||||||
| (unaudited) | |||||||
| Cash flows from financing activities: |
|||||||
| Repayment of short-term bank loans |
— | (60 | ) | ||||
| Proceeds on exercise of stock options |
12 | 1,007 | |||||
| Net cash (used in) provided by financing activities |
12 | ||||||