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AsiaInfo-Linkage Reports Unaudited Fourth Quarter and Full Year 2012 Results

 AsiaInfo-Linkage Reports Unaudited Fourth Quarter and Full Year 2012 Results

-- Met fourth quarter 2012 net revenue (non-GAAP)[1] guidance, net income
attributable to AsiaInfo-Linkage per basic share (non-GAAP)[2] guidance

-- Full year 2012 net revenue (non-GAAP) is US$530.2 million

PR Newswire

BEIJING and SANTA CLARA, Calif., Feb. 4, 2013

BEIJING and SANTA CLARA, Calif., Feb. 4, 2013 /PRNewswire-FirstCall/ --
AsiaInfo-Linkage, Inc. (NASDAQ: ASIA) ("AsiaInfo-Linkage," the "Company,"
"we," "us" or "our"), a leading provider of telecommunication software
solutions and services in China, and the largest Business Support System
("BSS") supplier to the telecommunications industry in Asia, today announced
financial results for the fourth quarter and full year ended December 31,
2012.

"We had a strong fourth quarter to finish another solid year for
AsiaInfo-Linkage," said Steve Zhang, the Company's president and chief
executive officer. "China's telecommunications industry continues to develop
rapidly as it confronts the CRM and monetization challenges of data traffic
growth, which creates exciting business opportunities for our Company."

"Fourth quarter highlights include successfully delivering our latest CRM and
billing solutions to both Shanghai Mobile and Liaoning Mobile, which together
serve more than 50 million subscribers. For China Unicom, we completed the
major initial phase of our project in the northern six provinces and signed
agreements for supplementary work related to that project, which was one of
our biggest and most comprehensive in 2012. For China Telecom, in addition to
finalizing Billing 2.8 contracts and deploying CRM 2.0 solutions across those
same provinces, we won contracts related to the carrier's e-channel business,"
added Mr. Zhang.

AsiaInfo-Linkage chief financial officer Michael Wu said, "We met both our
top-line guidance and our bottom-line guidance for the quarter with strong
sales order bookings and cash collection, as our major clients advanced on a
number of contract signings and project completions before the end of 2012.
Our operating cash flow remained strong and our days of sales outstanding
continued to decrease, and we began 2013 with a healthy cash position."

Fourth Quarter 2012 Financial Results

Total revenues for the fourth quarter of 2012 were US$165.7 million, an
increase of 26.4% year-over-year and 25.3% sequentially. Net revenue
(non-GAAP) for the fourth quarter of 2012 was US$155.2 million, an increase of
21.5% year-over-year and 19.9% sequentially. The year-over-year and sequential
increases were mainly the result of increased sales due to the seasonality of
our business, which also reflected revenue recognized for our services and
products that had been delivered to our major clients in the second and third
quarter of 2012 while associated sales contract signings were pushed into the
fourth quarter of 2012.

Gross margin for the quarter was 40.9%, compared to 41.4% in the year-ago
period and 37.3% in the previous quarter. Gross margin of net revenue
(non-GAAP)[3] was 47.4% in the fourth quarter of 2012, compared to 46.6% in
the year-ago period and 42.6% in the previous quarter. The slight
year-over-year decrease in gross margin was primarily due to wage inflation
and increases in headcount of approximately 880 engineers, which resulted in
increased total compensation costs. The year-over-year and sequential increase
in gross margin of net revenue (non-GAAP) was primarily due to the recognition
of revenue from delayed contract signings pushed into the fourth quarter of
2012, as the associated service costs were booked in the second and third
quarter prior to contract signing in the fourth quarter of 2012, which offset
the negative impact on gross margin of net revenue (non-GAAP) from the
increase in the number of delivery engineers and wage inflation.

Total operating expenses for the fourth quarter of 2012 increased 21.4%
year-over-year and 11.7% sequentially to US$52.7 million. The year-over-year
increase was consistent with the Company's strategic planning regarding new
business and new market expansion, product standardization efforts, and
integration initiatives. Sales and marketing expenses for the fourth quarter
of 2012 increased 21.6% year-over-year and 22.7% sequentially to US$24.6
million. The year-over-year and sequential increases in sales and marketing
expenses were mainly attributable to increased sales commissions due to
increased sales orders in the fourth quarter of 2012. General and
administrative ("G&A") expenses for the fourth quarter of 2012 increased 49.6%
year-over-year and 10.7% sequentially to US$6.9 million. The year-over-year
increase in G&A expenses was mainly due to increased headcount of
approximately 40 professionals, wage inflation and increased third-party
professional service charges. The sequential increase in G&A expenses was
primarily the result of an increase in third-party professional service fees,
which was offset by a reversal of allowance of doubtful account of US$0.8
million in the fourth quarter of 2012. Research and development ("R&D")
expenses increased 21.8% year-over-year and 8.2% sequentially to US$22.6
million. The year-over-year increase in R&D expenses was primarily driven by
an increase of approximately 150 engineers, a portion of which were shifted
from the Company's delivery organizations to execute the Company's product
standardization and integration strategy. The sequential increase in R&D
expenses was mainly due to the increased headcount of approximately 70
engineers to support product delivery. In the fourth quarter of 2012, the
Company received and recorded a government subsidy of US$1.4 million, mainly
as a reward for its high-tech software innovations.

Income from operations in the fourth quarter of 2012 was US$15.0 million, an
increase of 38.2% year-over-year and 584.5% sequentially. Operating margin of
total revenue was 9.1% for the fourth quarter of 2012, compared to 8.3% in the
year-ago period and 1.7% in the previous quarter. Operating margin of net
revenue (non-GAAP)[4] for the fourth quarter of 2012 was 19.0%, compared to
17.5% in the year-ago period and 11.6% in the previous quarter. The
year-over-year and sequential increases in operating margin and operating
margin of net revenue (non-GAAP) were primarily due to revenue recognized from
delayed contracts signed in the fourth quarter of 2012 for which services had
been performed prior to signing, as well as seasonality of the Company's
business.

Other income for the fourth quarter of 2012 was US$3.0 million compared to
US$1.9 million in the year-ago period and US$2.1 million in the previous
quarter. The year-over-year and sequential increases in other income were
mainly due to dividend income from financial products of US$1.4 million in the
fourth quarter of 2012.

On a GAAP basis in the fourth quarter of 2012, the Company recorded net income
attributable to AsiaInfo-Linkage, Inc. of US$15.6 million, or US$0.21 per
basic share, compared to US$10.5 million, or US$0.15 per basic share, in the
year-ago period and US$4.6 million, or US$0.06 per basic share, in the
previous quarter.

In the fourth quarter of 2012, net income attributable to AsiaInfo-Linkage,
Inc. (non-GAAP) was US$30.1 million, or US$0.41 per basic share. Net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) in the year-ago period was
US$22.0 million, or US$0.30 per basic share. Net income attributable to
AsiaInfo-Linkage, Inc. (non-GAAP) in the previous quarter was US$17.4 million,
or US$0.24 per basic share. Net income attributable to AsiaInfo-Linkage, Inc.
(non-GAAP) increased 37.2% year-over-year and 72.9% sequentially, reflecting
the factors discussed above.

In the fourth quarter of 2012, the Company had a net operating cash inflow of
US$57.4 million, compared to a net operating cash inflow of US$57.8 million in
the fourth quarter of 2011, and net operating cash inflow of US$9.4 million in
the third quarter of 2012. The year-over-year change in operating cash flow
was mainly due to a decrease in net income which was partially offset by
improved cash collection.

Full Year 2012 Financial Results

Full year 2012 total revenues increased 13.9% year-over-year to US$547.9
million. Net revenue (non-GAAP) for full year 2012 increased 14.3%
year-over-year to US$530.2 million. The year-over-year increases were mainly
due to increased demand for the Company's solutions and services from its
China and Southeast Asia telecommunication customers.

Gross margin for full year 2012 was 39.1%, compared to 43.2% in the year-ago
period. The decrease in gross margin was mainly attributable to increases in
headcount of approximately 1,200 implementation engineers, wage inflation and
share-based compensation. Gross margin of net revenue (non-GAAP) for full year
2012 was 44.8%, compared to 49.5% in the year-ago period. The decreases in
gross margin and gross margin (non-GAAP) for full year 2012 were primarily due
to a headcount increase of approximately 1,200 implementation engineers and
increased wage inflation.

Total operating expenses for full year 2012 increased 26.3% year-over-year to
US$192.4 million. The year-over-year increase was consistent with the
Company's strategic planning regarding new business and new market expansion,
product standardization and integration efforts. Sales and marketing expenses
for full year 2012 increased 11.3% to US$83.5 million in line with revenue
growth. The increase was primarily due to increases in headcount of
approximately 25 professionals, increases in sales commissions and marketing
activities and an increase in share-based compensation. G&A expenses for full
year 2012 increased 39.8% to US$28.8 million primarily due to increased
headcount of approximately 40 professionals, increased wage inflation and
increased third-party professional service fees. R&D expenses for full year
2012 increased 38.9% to US$81.8 million primarily due to wage inflation and
increased headcount of approximately 460 engineers, a portion of which were
shifted from the Company's delivery organizations. Government subsidy, as a
reward for the Company's high-tech software innovations, decreased 21.0%
year-over-year to US$1.7 million.

Operating margin of total revenue was 4.0% for full year 2012, compared to
11.6% in the year-ago period. Operating margin of net revenue (non-GAAP) for
full year 2012 was 14.1% compared to 23.5% in the year-ago period. Operating
margin decreased year-over-year primarily as a result of increased headcount
and wage inflation.

Other income for full year 2012 was US$13.4 million compared to US$5.2 million
in the year-ago period. The year-over-year increase in other income was mainly
due to an increase in dividend gain of US$1.9 million, an increase in interest
income of US$2.3 million, and an increase in gain from sale of investments of
US$2.9 million. In addition, in the third quarter of 2011, there was a US$1.1
million impairment charge on both short-term and long-term investments.

The Company recorded net income attributable to AsiaInfo-Linkage, Inc. of
US$32.8 million, or US$0.45 per basic share, for full year 2012, compared to
US$74.6 million, or US$1.02 per basic share, in full year 2011. Net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) for full year 2012 was
US$86.1 million, or US$1.18 per basic share. Net income attributable to
AsiaInfo-Linkage, Inc. (non-GAAP) for full year 2011 was US$110.8 million, or
US$1.51 per basic share. The decreases in net income attributable to
AsiaInfo-Linkage, Inc. and net income attributable to AsiaInfo-Linkage, Inc.
(non-GAAP) reflect the factors discussed above.

As of December 31, 2012, AsiaInfo-Linkage had cash and cash equivalents and
restricted cash totaling US$313.2 million and short-term investments totaling
US$40.7 million. Operating cash flow for the full year 2012 was a net inflow
of US$45.5 million compared to US$76.5 million for the full year 2011. The
year-over-year change in operating cash flow was mainly due to a decrease in
net income which was partially offset by improved cash collection.

As of December 31, 2012, AsiaInfo-Linkage had gross accounts receivable ("AR")
of US$285.7 million compared to US$282.4 million as of September 30, 2012 and
US$281.6 million as of December 31, 2011. Gross AR includes agent arrangements
with International Business Machines Corporation ("IBM") or its distributors,
as well as a few other hardware companies ("IBM-Type Arrangements"). Since
these arrangements typically consist of back-to-back payment terms for certain
products sold to AsiaInfo-Linkage customers, there is no impact on the
Company's cash flow or days of sales outstanding ("DSO"). Net AR, which
excludes IBM-Type Arrangements, was US$233.0 million as of December 31, 2012,
compared to US$222.1 million as of September 30, 2012 and US$204.4 million as
of December 31, 2011. The combined effect of revenue and AR trends, including
the Company's focus on the collections process, resulted in the Company's DSO
being 144 days as of December 31, 2012, compared to 151 days as of September
30, 2012 and 147 days as of December 31, 2011. A table presenting additional
information regarding the Company's gross AR, AR relating to IBM-Type
Arrangements ("IBM-Related AR"), net AR, revenues, and DSO is provided at the
end of this press release.

    Net revenue (non-GAAP) measures used in this press release represent total
[1] revenue net of third-party hardware costs. A reconciliation of all
    non-GAAP measures used in this press release to the most directly
    comparable GAAP measures is provided at the end of this press release.
    Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) and net
    income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share
[2] measures exclude share-based compensation expenses, amortization of
    acquired intangible assets, impairment loss on investments, non-recurring
    consulting related expenses and a 15% tax rate adjustment for the
    Company's Nanjing subsidiary ("LKNJ").
    Gross margin of net revenue (non-GAAP) is calculated by dividing gross
[3] profit, excluding third-party hardware costs, amortization of acquired
    intangible assets and share-based compensation expenses, by net revenue
    (non-GAAP).
    Operating margin of net revenue (non-GAAP) is calculated by dividing
[4] income from operations, excluding amortization of acquired intangible
    assets, share-based compensation expenses and non-recurring consulting
    related expenses, by net revenue (non-GAAP).

Recent Developments

On January 29, 2013, the Company announced the successful implementation of
its industry leading Veris billing system for the CDMA network of Nepal
Doorsanchar Company Limited, the largest telecommunications operator in Nepal.

On February 4, 2013, the Company announced the availability in Europe, the
Middle East, and Africa markets of its advanced Veris suite of BSS solutions.

Business Outlook

AsiaInfo-Linkage expects first quarter 2013 net revenue (non-GAAP) to be in
the range of US$133.0 million to US$136.0 million. The Company expects first
quarter 2013 net income attributable to AsiaInfo-Linkage, Inc. per basic share
(non-GAAP) to be in the range of US$0.23 to US$0.25.

ASIAINFO-LINKAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of US$, except share and per share amounts)
                                                                                                                               Three Months            Twelve Months
                                                                                                                               Ended December 31,      Ended December 31,
                                                                                                                               2012        2011        2012        2011
Revenues:
 Software products and solutions                                                                                            $145,287    $118,694    $496,991    $431,355
Service 9,352       8,866       32,271      31,513
 Third-party hardware                                                                                                       11,044      3,531       18,610      18,116
Total revenues                                                                                                                 165,683     131,091     547,872     480,984
Cost of revenues:
 Software products and solutions                                                                                            82,362      68,900      297,901     238,593
 Service                                                                                                                    5,124       4,575       18,184      17,291
 Third-party hardware                                                                                                       10,492      3,355       17,679      17,211
Total cost of revenues                                                                                                         97,978      76,830      333,764     273,095
Gross profit                                                                                                                   67,705      54,261      214,108     207,889
Operating expenses (income):
 Sales and marketing                                                                                                        24,612      20,238      83,455      74,963
 General and administrative                                                                                                 6,928       4,632       28,754      20,566
 Research and development                                                                                                   22,533      18,507      81,845      58,905
 Government subsidies                                                                                                       (1,415)     0           (1,679)     (2,125)
Total operating expenses                                                                                                       52,658      43,377      192,375     152,309
Income from operations                                                                                                         15,047      10,884      21,733      55,580
Other income (expenses), net
 Interest income                                                                                                            1,567       1,668       7,910       5,651
 Dividend income                                                                                                            1,376       0           2,058       180
 Gain from sales of short-term investments                                                                                  0           280         3,333       479
 Impairment loss on short-term investments                                                                                  0           0           0           (144)
 Impairment loss on long-term investments                                                                                   0           0           0           (950)
 Other income (expenses)                                                                                                    49          (17)        59          4
Total other income, net                                                                                                       2,992       1,931       13,360      5,220
Income before income tax expense (benefit), loss on equity method
 investment and income from discontinued operations, net of                                                                 18,039      12,815      35,093      60,800
 income tax
Income tax expense (benefit)                                                                                                   2,785       2,320       5,087       (12,096)
Income after income tax expense (benefit) before loss on equity
 method investment and income from discontinued operations, net                                                             15,254      10,495      30,006      72,896
 of income tax
Loss on equity method investment, net of income tax                                                                            189         0           282         0
Income from continuing operations                                                                                              15,065      10,495      29,724      72,896
Discontinued operations:
 Income from operations of discontinued operations                                                                          280         70          280         190
 Income tax expense for discontinued operations                                                                             43          28          51          100
Income from discontinued operations, net of income tax                                                                         237         42          229         90
Net income                                                                                                                     15,302      10,537      29,953      72,986
 Less: Net (loss) income attributable to noncontrolling interest                                                            (325)       56          (2,880)     (1,573)
Net income attributable to AsiaInfo-Linkage, Inc.                                                                              $15,627     $10,481     $32,833     $74,559
Earnings per share:
Net income from continuing operations attributable to AsiaInfo-Linkage, Inc.
common stockholders:
 Basic                                                                                                                      0.21        0.15        0.45        1.02
 Diluted                                                                                                                    0.21        0.14        0.45        1.01
Net income from discontinued operations attributable to AsiaInfo-Linkage, Inc.
common stockholders:
Basic                                                                                                                      0.00        0.00        0.00        0.00
 Diluted                                                                                                                    0.00        0.00        0.00        0.00
Net income attributable to AsiaInfo-Linkage, Inc.
common stockholders
 Basic                                                                                                                      $0.21       $0.15       $0.45       $1.02
 Diluted                                                                                                                    $0.21       $0.14       $0.45       $1.01
Weighted average shares used in computation:
 Basic                                                                                                                      72,691,431  72,221,644  72,572,074  73,106,037
 Diluted                                                                                                                    72,819,556  72,590,685  72,778,781  73,670,981





ASIAINFO-LINKAGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in thousands of US$)


                                      Three Months Ended   TwelveMonthsEnded

                                      December 31,         December 31,
                                        2012      2011     2012        2011
Net income                            $ 15,302  $ 10,537 $ 29,953   $  72,986
Other comprehensive income (loss),
net of tax:
Change in cumulative foreign currency   3,203     3,167    642         17,281
translation adjustment
Transfer to statements of operations
of realized gain on
available-for-sale
 securities, net of tax
effects of $0 and $93, $637 and $123    0         (187)    (2,696)     (356)
for the three
months and twelve months
ended December 31, 2012 and 2011,
respectively
Net unrealized (loss) gain on
available-for-sale securities, net of
tax
 effects of $220 and $0, $12   (551)     (88)     80          (739)
and $128 for the three months and
twelve
months ended December 31,
2012 and 2011, respectively
Transfer to statements of operations
of other-than-temporary impairment on   0         0        0           144
 available-for-sale
investment
Other comprehensive income (loss)       2,652     2,892    (1,974)     16,330
Comprehensive income                    17,954    13,429   27,979      89,316
Less: Comprehensive (loss) income
attributable to noncontrolling          (325)     56       (2,880)     (1,573)
interest
Comprehensive income attributable to  $ 18,279  $ 13,373 $ 30,859   $  90,889
AsiaInfo-Linkage, Inc.



                                                                                               ASIAINFO-LINKAGE, INC.
                                                                                               CONDENSED CONSOLIDATED BALANCE
                                                                                               SHEETS (UNAUDITED)
                                                                                               (Amounts in thousands of US$)
                                                                                               As of
ASSETS:                                                                                        December31,2012  December31,2011
Current Assets:
Cash and cash equivalents                                                                      $273,520           $272,438
Restrictedcash 39,639             21,226
Short-term investments - available-for-sale securities                                         27,928             27,909
Short-term investments - held-to-maturity securities                                           12,728             0
Accounts receivable (net of allowances of $2,999 and $2,905 as                                 285,695            281,564
 of December 31, 2012 and 2011, respectively)
Inventories, net                                                                               24,107             15,309
Other receivables                                                                              6,504              4,480
Deferred income tax assets - current                                                           5,559              14,294
Prepaid expenses and other current assets                                                      8,311              6,453
Total current assets                                                                           683,991            643,673
Long-term investments                                                                          5,936              4,863
Property and equipment, net                                                                    19,104             8,778
Other acquired intangible assets, net                                                          121,529            163,028
Deferred income tax assets - non-current                                                       2,560              1,751
Goodwill                                                                                       433,545            433,525
Land use right, net                                                                            14,326             14,543
Other non-current assets                                                                       1,332              0
Total assets                                                                                   $1,282,323         $1,270,161


LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current Liabilities:
Accounts payable                                                                               $78,079            $91,094
Accrued expenses                                                                               28,065             22,905
Deferred revenue                                                                               40,491             32,378
Accrued employee benefits                                                                      76,803             78,972
Other payables                                                                                 5,270              5,582
Income taxes payable                                                                           6,875              12,602
Other taxes payable                                                                            10,305             11,864
Deferred income tax liabilities – current                                                      1,565              9,091
Total current liabilities                                                                      247,453            264,488
Unrecognized tax benefits                                                                      1,703              3,344
Deferred income tax liabilities – non-current                                                  17,928             24,458
Other long term liabilities                                                                    387                573
Total Liabilities                                                                              $267,471           $292,863
Redeemable noncontrolling interest                                                             (3,488)            385
Equity:
AsiaInfo-Linkage, Inc. Stockholders' Equity:
Common stock                                                                                   789                786
Additional paid-in capital                                                                     858,711            847,879
Treasury stock, at cost                                                                        (87,746)           (87,746)
Statutory reserve                                                                              22,050             21,748
Retained earnings                                                                              179,058            146,527
Accumulated other comprehensive income                                                         45,150             47,124
Total AsiaInfo-Linkage, Inc. stockholders' equity                                              $1,018,012         $976,318
Noncontrolling interest                                                                        328                595
Total Equity                                                                                   1,018,340          976,913
TotalLiabilities,RedeemableNoncontrollingInterestandEquity                               $1,282,323         $1,270,161

Fourth Quarter and Full Year 2012 Conference Call Details

AsiaInfo-Linkage management will hold an earnings conference call at 4:00 p.m.
Pacific Time / 7:00 p.m. Eastern Time on February 4, 2013 (8:00 a.m.
Beijing/Hong Kong Time on February 5, 2013). Management will discuss results
and highlights of the quarter and answer questions from investors.

The conference call webcast URL ishttp://www.media-server.com/m/p/ppdjaari.

The dial-in numbers for the conference call are as follows:

Local:

New York: +1-718-354-1231
Hong Kong: +852-2475-0994
China, Domestic Mobile:400-620-8038
China, Domestic:800-819-0121

International Toll Free:

United States:+1-866-519-4004
Hong Kong:800-930-346
International Toll:+65-6723-9381

The conference ID # is 85071222

A replay of the call will be available until 06:59 a.m. Eastern Time on
February 12, 2013 by dialing one of the following numbers:

U.S Toll Free:+1-855-452-5696
International:+61-2-8199-0299

The replay ID # is 85071222

Additionally, a live and archived webcast of this call will be available on
the Investor Relations section of the AsiaInfo-Linkage website at
www.asiainfo-linkage.com.

About AsiaInfo-Linkage, Inc.

AsiaInfo-Linkage, Inc. (NASDAQ: ASIA) is a leading provider of high-quality
software solutions and IT services to the telecommunications industry.
Headquartered in Beijing, we employ more than 11,000 professionals worldwide.
We provide a full suite of business and operational support solutions
(BSS/OSS) and associated professional services. Our core Veris product line
includes billing and customer care systems that serve nearly a billion
subscribers globally – almost one seventh of the world's population – plus
business intelligence, network management and security solutions.

Our customers work with us to converge large scale pre- and post-paid mobile
operations; improve time to market for new products and services; and develop
cost-effective new business models. In China, we have more than 50% market
share in billing, CRM and business intelligence through our longstanding
partnerships with China Mobile, China Unicom and China Telecom. We aim to be
the leading IT solutions provider to the global telecommunications industry,
enabling the Connected Digital Lifestyle, and helping our customers build,
maintain, operate and constantly improve their network infrastructure and IT
environment.

For more information about AsiaInfo-Linkage, please visit
www.asiainfo-linkage.com .

Reconciliation of non-GAAP Measures

This earnings release presents the following "non-GAAP financial measures" as
defined by applicable U.S. securities regulations. The presentation of these
non-GAAP financial measures is not meant to be considered in isolation or as a
substitute for the Company's financial results prepared in accordance with
GAAP. The non-GAAP financial measures are provided as additional information
to help both management and investors compare business trends among different
reporting periods on a consistent and more meaningful basis and enhance
investors' overall understanding of the Company's current financial
performance and prospects for the future. These non-GAAP measures have
limitations, however, because they do not include all items of income and
expenses that impact the Company's operations. Management compensates for
these limitations by also considering the Company's GAAP results. The
non-GAAP financial measures the Company uses are not prepared in accordance
with, and should not be considered an alternative to measurements required by
GAAP and should not be considered measures of the Company's liquidity.
Pursuant to relevant regulatory requirements, the Company is providing the
following reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP measures.

(1) Net revenue (non-GAAP)

AsiaInfo-Linkage's net revenue (non-GAAP) represents total revenue net of
third-party hardware costs that are passed through to the Company's customers.
Management believes total revenues net of third-party hardware costs more
accurately reflects the Company's core business, which is the provision of
software solutions and services, and provides transparency to the Company's
investors. It is also the same measure used by management to evaluate the
competitiveness and development of the Company's business.

Reconciliation of net revenue (non-GAAP) to GAAP total revenues

                     Three Months Ended Dec 31 Twelve Months Ended Dec
                                               31                      2012 Q3
                     2012         2011         2012        2011
                     (in US dollar thousands)
Total revenues       165,683      131,091      547,872     480,984     132,221
Third-party hardware 10,492       3,355        17,679      17,211      2,792
costs
Net revenue          155,191      127,736      530,193     463,773     129,429
(non-GAAP)

(2) Gross margin of net revenue (non-GAAP)

Gross margin of net revenue (non-GAAP) is calculated by dividing gross profit,
excluding third-party hardware costs, amortization of acquired intangible
assets and share-based compensation expenses, by net revenue (non-GAAP).
Management believes that this non-GAAP financial measure provides meaningful
supplemental information regarding the Company's performance by excluding
certain expenses and income that may not be indicative of the Company's
operating performance. Management uses the gross margin of net revenue
(non-GAAP) measure to gain a better understanding of the Company's comparative
operating performance from period-to-period and as a basis of planning and
forecasting future periods. Management believes this non-GAAP measure, when
read in conjunction with the Company's GAAP gross margin and other GAAP
financial metrics, provides useful information to investors by offering: a)
the ability to make more meaningful period-to-period comparisons of the
Company's on-going operating results; b) the ability to better identify trends
in the Company's underlying business and perform related trend analysis; c) a
better understanding of how management plans and measures the Company's
underlying business; and d) an easier way to compare the Company's most recent
results of operations against investor and analyst financial models.

Reconciliation of gross margin of net revenue (non-GAAP) to GAAP gross margin

                            Three Months Ended Dec Twelve Months Ended
                            31                     Dec 31              2012 Q3
                            2012        2011       2012      2011
Gross margin (GAAP)         40.9%       41.4%      39.1%     43.2%     37.3%
Third-party hardware        2.8%        1.1%       1.3%      1.6%      0.8%
costs[1]
Amortization of acquired    3.2%        3.9%       3.8%      4.3%      3.9%
intangible assets[2]
Share-based compensation    0.5%        0.2%       0.6%      0.4%      0.6%
expenses[2]
Gross margin (non-GAAP)     47.4%       46.6%      44.8%     49.5%     42.6%

[1] Percentages represent the difference between GAAP gross profit divided by
    GAAP revenue and GAAP gross profit divided by net revenue (non-GAAP).
    Percentages represent the result of dividing the amounts of amortization
[2] of acquired intangible assets or share-based compensation expenses by net
    revenue (non-GAAP).

(3) Operating margin of net revenue (non-GAAP)

Operating margin of net revenue (non-GAAP) is calculated by dividing income
from operations, excluding amortization of acquired intangible assets,
share-based compensation expenses and non-recurring consulting related
expenses, by net revenue (non-GAAP). Management believes that this non-GAAP
financial measure provides meaningful supplemental information regarding the
Company's performance by excluding certain expenses and income that may not be
indicative of the Company's operating performance. Management uses the
operating margin of net revenue (non-GAAP) measure to gain a better
understanding of the Company's comparative operating performance from
period-to-period and as a basis of planning and forecasting future periods.
Management believes this non-GAAP measure, when read in conjunction with the
Company's GAAP operating margin and other GAAP financial metrics, provides
useful information to investors by offering: a) the ability to make more
meaningful period-to-period comparisons of the Company's on-going operating
results; b) the ability to better identify trends in the Company's underlying
business and perform related trend analysis; c) a better understanding of how
management plans and measures the Company's underlying business; and d) an
easier way to compare the Company's most recent results of operations against
investor and analyst financial models.

Reconciliation of operating margin (non-GAAP) to GAAP operating margin

                            Three Months Ended Dec Twelve Months Ended
                            31                     Dec 31              2012 Q3
                            2012        2011       2012      2011
Operating margin (GAAP)     9.1%        8.3%       4.0%      11.6%     1.7%
Third-party hardware        0.6%        0.2%       0.1%      0.4%      0.0%
costs[1]
Amortization of acquired    6.7%        8.2%       7.8%      10.0%     8.0%
intangible assets[2]
Share-based compensation    1.6%        0.8%       1.8%      1.5%      1.9%
expenses[2]
Non-recurring consulting    1.0%        0.0%       0.4%      0.0%      0.0%
related expense[2]
Operating margin (Non-GAAP) 19.0%       17.5%      14.1%     23.5%     11.6%

    Percentages represent the difference between GAAP income from operations
[1] divided by GAAP revenue and GAAP income from operations divided by net
    revenue (non-GAAP).
    Percentages represent the result of dividing the amounts of amortization
[2] of acquired intangible assets, share-based compensation or non-recurring
    consulting related expenses, as applicable, by net revenue (non-GAAP).

(4) Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)

Net income attributable to AsiaInfo-Linkage, Inc.  (non-GAAP) excludes
share-based compensation expenses, amortization of acquired intangible assets,
impairment loss on investments, non-recurring consulting related expenses and
a 15% tax rate adjustment for LKNJ. Management believes that this non-GAAP
financial measure provides meaningful supplemental information regarding the
Company's performance by excluding certain expenses and income that may not be
indicative of the Company's operating performance. Management uses the net
income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) measure to gain a
better understanding of the Company's comparative operating performance from
period-to-period and as a basis of planning and forecasting future periods.
Management believes the Company's net income attributable to AsiaInfo-Linkage,
Inc. (non-GAAP) measure, when read in conjunction with the Company's GAAP net
income measure and other GAAP financial metrics, provides useful information
to investors by offering: a) the ability to make more meaningful
period-to-period comparisons of the Company's on-going operating results; b)
the ability to better identify trends in the Company's underlying business and
perform related trend analysis; c) a better understanding of how management
plans and measures the Company's underlying business; and d) an easier way to
compare the Company's most recent results of operations against investor and
analyst financial models.

Reconciliation of net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)
to GAAP net income attributable to AsiaInfo-Linkage, Inc.

                               Three Months Ended Twelve Months Ended
                               Dec 31             Dec 31              2012 Q3
                               2012      2011     2012     2011
                               (in US dollar thousands)
Net income attributable to     15,627    10,481   32,833   74,559     4,619
AsiaInfo-Linkage, Inc. (GAAP)
Adjustments:
- Share-based compensation    2,537     1,059    9,832    6,787      2,415
expenses
- Amortization of acquired    10,373    10,416   41,498   46,618     10,375
intangible assets
- Impairment loss on          0         0        0        1,094      0
investments
- Non-recurring consulting    1,580     0        1,950    0          6
related expenses
- LKNJ tax rate 15%          0         0        0        (18,289)   0
adjustment
Net income attributable to
AsiaInfo-Linkage, Inc.         30,117    21,956   86,113   110,769    17,415
(non-GAAP)

(5) Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic
share

Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share
is calculated by dividing net income attributable to AsiaInfo-Linkage, Inc.
(non-GAAP) (which as discussed above excludes share-based compensation
expenses, amortization of acquired intangible assets, impairment loss on
investments, non-recurring consulting related expenses and a 15% tax rate
adjustment for LKNJ) by the same number of weighted average shares outstanding
used in the computation of net income per basic share. Management believes
that net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic
share, when used in conjunction with the Company's GAAP net income
attributable to AsiaInfo-Linkage, Inc. per basic share, provides useful
information to investors for the same reasons discussed above regarding net
income attributable to AsiaInfo-Linkage, Inc (non-GAAP). In addition, net
income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share
allows investors to evaluate the Company's operating performance from period
to period on a per share basis, thus providing a useful basis for assessing
the Company's value on a per share basis.

Reconciliation of net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)
per basic share to GAAP net income attributable to AsiaInfo-Linkage, Inc. per
basic share

                                Three Months Ended Twelve Months Ended
                                Dec 31             Dec 31              2012 Q3
                                2012      2011     2012     2011
                                (in US dollar)
Net income attributable to
AsiaInfo-Linkage, Inc. per      0.21      0.15     0.45     1.02       0.06
basic share (GAAP)
Adjustments:
- Share-based compensation     0.03      0.01     0.14     0.09       0.03
expenses
- Amortization of acquired     0.15      0.14     0.57     0.64       0.15
intangible assets
- Impairment loss on           0.00      0.00     0.00     0.01       0.00
investments
- Non-recurring consulting     0.02      0.00     0.02     0.00       0.00
related expenses
- LKNJ tax rate 15%           0.00      0.00     0.00     (0.25)     0.00
adjustment
Net income attributable to
AsiaInfo-Linkage, Inc.          0.41      0.30     1.18     1.51       0.24
(Non-GAAP) per basic share

AR, IBM-Related AR, Revenue and DSO

AR balances included both billed and unbilled amounts. Revenue recognized in
excess of billings is recorded as unbilled receivable. In addition to revenues
from the sales of its goods and services and from hardware procured on behalf
of customers, the Company generated service revenues by acting as a sales
agent pursuant to the IBM-Type Arrangements. The Company's DSO calculations
are as follows as of the last day of the respective periods indicated, with
net AR excluding the receivables attributable to the IBM-Type Arrangements,
and with revenues excluding those attributable to the IT Security Business,
respectively:

1) Q1 2011 DSO = (Q4 2010 net AR + Q1 2011 net AR)/2/Q1 revenue x 90
2) Q2 2011 DSO = (Q4 2010 net AR + Q2 2011 net AR)/2/Q2 cumulative revenue x
180
3) Q3 2011 DSO = (Q4 2010 net AR + Q3 2011 net AR)/2/Q3 cumulative revenue x
270
4) Q4 2011 DSO = (Q4 2010 net AR + Q4 2011 net AR)/2/Q4 cumulative revenue x
360
5) Q1 2012 DSO = (Q4 2011 net AR + Q1 2012 net AR)/2/Q1 revenue x 90
6) Q2 2012 DSO = (Q4 2011 net AR + Q2 2012 net AR)/2/Q2 cumulative revenue x
180
7) Q3 2012 DSO = (Q4 2011 net AR + Q3 2012 net AR)/2/Q3 cumulative revenue x
270
8) Q4 2012 DSO = (Q4 2011 net AR + Q4 2012 net AR)/2/Q4 cumulative revenue x
360

The following table presents further information regarding the Company's gross
AR, net AR, revenues, and DSO.

               2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4
               (inUSdollarthousands,exceptDSO)
Gross AR       302,806 298,146 292,220 281,564 301,333 307,261 282,424 285,695
- IBM Related  85,923  77,476  67,950  77,200  79,345  84,357  60,354  52,717
AR
Net AR         216,883 220,670 224,270 204,364 221,988 222,904 222,070 232,978
Revenues       114,481 116,186 119,285 131,091 123,697 126,271 132,221 165,683
DSO (in days)  159     159     159     147     155     154     151     144

Cautionary Note Regarding Forward-Looking Statements

The information contained in this document is as of February 4, 2013.
AsiaInfo-Linkage 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-Linkage'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," "will" 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 billing 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; and the
outcome of the Special Committee's evaluation of strategic alternatives,
including the privatization proposal announced on January 20, 2012. 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 December31,
2011, and in our reports on Forms 10-Q and 8-K filed with the United States
Securities and Exchange Commission and available at www.sec.gov.

For more information about AsiaInfo-Linkage, please visit
www.asiainfo-linkage.com.

For investor and media inquiries, please contact:

In China:

Mr. Jimmy Xia
AsiaInfo-Linkage, Inc.
Tel: +86-10-8216-6039
Email: ir@asiainfo-linkage.com

Mr. Justin Knapp
Ogilvy Financial, Beijing
Tel: +86-10-8520-6556
Email: asia@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: asia@ogilvy.com



SOURCE AsiaInfo-Linkage, Inc.

Website: http://www.asiainfo-linkage.com
 
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