<PAGE>
================================================================================
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 September 30, 2000
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 (I.R.S. Employer Identification No.)
incorporation or organization)
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 changes list 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 [_]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed under Sections 12, 13 or 15(d) of the Securities
Exchange of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [_] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of November 8, 2000, the registrant had the following number of shares
outstanding:
Class A common stock: 161,403,358
Class B common stock: 308,891,055
================================================================================
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except per Share Amounts)
<TABLE>
<CAPTION>
March 31, September 30,
2000 2000
---------- -------------
ASSETS
------ (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 727,681 $ 321,204
Short-term investments............................. -- 397,980
Accounts receivable, net........................... 138,762 155,533
Deferred income taxes.............................. 6,011 6,695
Prepaid expenses................................... 9,308 11,224
Other current assets............................... 177 187
---------- ----------
Total current assets.............................. 881,939 892,823
---------- ----------
PROPERTY, EQUIPMENT AND COMMUNICATION LINES, Net..... 226,562 369,898
GOODWILL AND OTHER INTANGIBLE ASSETS, Net............ 3,425 9,164
OTHER ASSETS......................................... 110,401 56,969
---------- ----------
TOTAL ASSETS......................................... $1,222,327 $1,328,854
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term obligations........... $ 2,059 $ 2,826
Current portion of capital lease obligations....... 3,191 3,177
Accounts payable................................... 83,694 70,515
Network communications............................. 50,717 134,316
Accrued salaries and related benefits.............. 22,119 14,015
Income taxes payable............................... 7,538 11,886
Advance billings................................... 22,168 22,188
Other accrued expenses............................. 12,079 16,297
---------- ----------
Total current liabilities......................... 203,565 275,220
---------- ----------
DEFERRED INCOME AND COMPENSATION..................... 29,714 27,363
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION...... 12,058 10,572
LONG TERM OBLIGATIONS, LESS CURRENT PORTION.......... 73,081 111,980
LONG TERM BANDWIDTH OBLIGATIONS...................... 27,393 237
MINORITY INTEREST.................................... 465 555
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock, $0.01 par value per share:
400,000 shares authorized, 370,160 and 364,160
shares issued as of March 31, 2000 and
September 30, 2000, respectively, and 167,403 and
161,403 shares outstanding as of March 31, 2000 and
September 30, 2000, respectively; 202,757 shares
held in treasury as of March 31, 2000 and September
30, 2000........................................... 67,167 66,078
Class B common stock, $0.01 par value per share:
600,000 shares authorized, 302,778 and 308,867
shares issued and outstanding as of March 31, 2000
and September 30, 2000, respectively............... 959,870 976,848
Treasury stock, at cost, 202,757 shares............ (121,184) (121,184)
Notes receivable from issuance of common stock..... (8,134) (8,060)
Accumulated deficit................................ (19,741) (7,348)
Accumulated other comprehensive loss............... (1,927) (3,407)
---------- ----------
Total stockholders' equity........................ 876,051 902,927
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $1,222,327 $1,328,854
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In Thousands, Except per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------- ------------------
1999 2000 1999 2000
--------- --------- -------- --------
<S> <C> <C> <C> <C>
REVENUES, Net......................... $ 87,513 $ 156,062 $173,219 $310,227
-------- --------- -------- --------
EXPENSES:
Country representative
compensation....................... 15,174 52,942 31,035 106,648
Bandwidth and related costs......... 20,823 29,874 35,443 61,359
Network operations.................. 18,649 20,133 32,899 36,389
Selling, general and
administrative..................... 41,963 46,592 83,481 94,074
-------- --------- -------- --------
Total expenses.................... 96,609 149,541 182,858 298,470
-------- --------- -------- --------
OPERATING INCOME (LOSS)............... (9,096) 6,521 (9,639) 11,757
-------- --------- -------- --------
OTHER INCOME (EXPENSE):
Interest income..................... 582 10,332 1,073 23,062
Interest expense.................... (2,231) (2,512) (2,883) (5,001)
Other, net.......................... (96) (3,283) (111) (1,926)
-------- --------- -------- --------
Total other income (expense),
net.............................. (1,745) 4,537 (1,921) 16,135
-------- --------- -------- --------
INCOME (LOSS) BEFORE PROVISION
(CREDIT) FOR INCOME TAXES, MINORITY
INTEREST AND EXTRAORDINARY ITEM...... (10,841) 11,058 (11,560) 27,892
PROVISION (CREDIT) FOR INCOME TAXES... (2,455) 6,320 (1,748) 14,881
-------- --------- -------- --------
INCOME (LOSS) BEFORE MINORITY INTEREST
AND EXTRAORDINARY ITEM............... (8,386) 4,738 (9,812) 13,011
MINORITY INTEREST..................... 14 46 (38) 116
-------- --------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM................................. (8,400) 4,692 (9,774) 12,895
EXTRAORDINARY ITEM, NET OF INCOME
TAXES OF $363...................... -- -- -- 502
-------- --------- -------- --------
NET INCOME (LOSS)..................... (8,400) 4,692 (9,774) 12,393
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation
adjustments........................ 806 (1,093) 390 (2,435)
Unrealized gains (losses) on
securities......................... (10) 1,035 (20) 955
Minimum pension liability
adjustment, net of tax of $92...... -- -- 138 --
-------- --------- -------- --------
Total other comprehensive income
(loss), net...................... 796 (58) 508 (1,480)
-------- --------- -------- --------
COMPREHENSIVE INCOME (LOSS)........... $ (7,604) $ 4,634 $ (9,266) $ 10,913
======== ========= ======== ========
BASIC AND DILUTED EARNINGS (LOSS) PER
COMMON SHARE......................... $ (0.02) $ 0.01 $ (0.03) $ 0.03
======== ========= ======== ========
BASIC WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING............ 383,720 470,266 382,004 470,248
DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING............ 383,720 470,819 382,004 470,852
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED SEPTEMBER 30, 2000
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Notes
Receivable
from Accumulated
Common Stock Treasury Stock Issuance Other
------------------ ------------------- of Common Accumulated Comprehensive
Shares Amount Shares Amount Stock Deficit Loss Total
------- ---------- -------- --------- ---------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31,
2000................... 672,938 $1,027,037 (202,757) $(121,184) $(8,134) $(19,741) $(1,927) $876,051
Net income............. -- -- -- -- -- 12,393 -- 12,393
Exercise of stock op-
tions................. 89 75 -- -- -- -- -- 75
Stock based compensa-
tion charge........... -- 15,814 -- -- -- -- -- 15,814
Repayment of notes re-
ceivable from issuance
of common stock....... -- -- -- -- 74 -- -- 74
Foreign currency trans-
lation adjustments.... -- -- -- -- -- -- (2,435) (2,435)
Unrealized losses on
securities............ -- -- -- -- -- -- 955 955
------- ---------- -------- --------- ------- -------- ------- --------
BALANCE, SEPTEMBER 30,
2000................... 673,027 $1,042,926 (202,757) $(121,184) $(8,060) $ (7,348) $(3,407) $902,927
======= ========== ======== ========= ======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
-----------------
1999 2000
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $(9,774) $ 12,393
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................ 13,772 19,752
Amortization of debt acquisition costs................... -- 1,275
Loss on sale of business and other....................... -- 480
Extraordinary loss due to early retirement of debt, net
of tax of $363.......................................... -- 502
Stock based compensation charge.......................... -- 2,810
Loss on sale of property, equipment and communication
lines................................................... -- 40
Discount amortization on marketable securities........... -- (773)
Realized gain on marketable securities................... -- (134)
Deferred income taxes.................................... (1,803) (3,933)
Minority interest........................................ (38) 90
Changes in operating assets and liabilities, net of
business sold:
Accounts receivable, net................................. (818) (19,351)
Prepaid expenses......................................... (589) (2,196)
Other current assets..................................... 63 (22)
Accounts payable......................................... 7,856 (10,524)
Network communications................................... (841) (27,454)
Accrued salaries and related benefits.................... (1,846) 1,379
Income taxes payable..................................... (6,408) 4,925
Advance billings......................................... (191) 20
Other accrued expenses................................... 5,305 4,823
Deferred income and compensation......................... 5,574 2,287
Purchases of trading securities.......................... (12,391) (11,572)
Proceeds from sales of trading securities................ 4,459 9,754
Other operating activities............................... (67) 434
------- --------
Net cash provided by (used in) operating activities.... 2,263 (14,995)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and communication lines.. (51,518) (53,615)
Proceeds from sale of property, equipment and
communication lines...................................... 10 90
Net acquisition cost of minority interest in subsidiary... -- (7,800)
Net proceeds from sale of business........................ -- 716
Purchases of short-term investments....................... (1,957) (497,789)
Proceeds from sale of short-term investments.............. 6,737 150,483
Maturities of short-term investments...................... 2,440 9,995
Purchases of held-to-maturity securities.................. (2,467) --
Maturity of held-to maturity securities................... 7,975 --
Other investing activities................................ (3,910) (3,675)
------- --------
Net cash used in investing activities.................. (42,690) (401,595)
------- --------
</TABLE>
(Table continued on following page)
5
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
------------------
1999 2000
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term obligations........... $110,000 $117,000
Repayments of long-term obligations....................... (59,040) (77,334)
Repayments of capital lease obligations................... (1,057) (1,500)
Repayments of long-term bandwidth obligations............. -- (27,000)
Net proceeds from issuance of common stock................ 26,708 75
Repayments of notes receivable from issuance of common
stock.................................................... -- 70
Debt issuance cost........................................ (4,938) --
Dividends paid............................................ (487) --
-------- --------
Net cash provided by financing activities.............. 71,186 11,311
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.................... (238) (1,198)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....... 30,521 (406,477)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............. 8,681 727,681
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD................... $ 39,202 $321,204
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes............................................. $ 6,741 $ 9,596
Interest................................................. $ 2,642 $ 4,705
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisitions of equipment through capital leases.......... $ 1,938 --
Acquisitions of communication lines accrued but not yet
paid..................................................... -- $110,226
</TABLE>
During June 1999, the Company acquired a right of use of capacity in a
fiberoptic submarine cable system for a total commitment of $45.0 million. Of
the total commitment, $18.0 million was settled in cash in June 1999.
During the six months ended September 30, 1999, the Company issued shares of
class C common stock for notes receivable amounting to approximately $7.9
million and shares of class B common stock for a stock subscription receivable
amounting to approximately $13.3 million.
During April 2000, the Company amended its 1998 Stock Appreciation Rights
Plan resulting in a new measurement date. The Company consequently reduced
accrued salaries and related benefits and deferred income and compensation by
approximately $5.3 million to reflect the stock price at the new measurement
date. The Company also reclassified approximately $7.7 million of accrued
salaries and related benefits and deferred income and compensation to class B
common stock as a result of the amendment.
See accompanying notes to consolidated financial statemens.
6
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited financial
statements of Infonet Services Corporation and subsidiaries (the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Regulation S-X promulgated under the Securities Exchange Act of 1934.
Correspondingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. All normal, recurring adjustments considered necessary for a fair
presentation have been included. Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenue and expenses. Actual results may differ from
these estimates. The financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on June
26, 2000. Certain items have been reclassed to conform to current period
presentation. The results of operations for the three and six months ended
September 30, 2000 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 31, 2001.
The Company's fiscal year is the 52- or 53-week period ending on the Friday
nearest to March 31. For simplicity of presentation, the Company has described
the 52-week period ended March 31, 2000 as the year ended March 31, 2000, and
the 13- and the 26-week periods ended October 1, 1999 and September 29, 2000 as
the three and six months ended September 30, 1999 and September 30, 2000,
respectively.
Note 2. Consolidated Balance Sheet Components
Certain balance sheet components are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
2000 2000
--------- -------------
<S> <C> <C>
Property, equipment and communication lines:
Communication, computer and related equipment......... $160,461 $183,921
Communication lines................................... 112,786 241,163
Land, buildings and leasehold improvements............ 48,041 49,781
Furniture and other equipment......................... 17,347 15,247
-------- --------
338,635 490,112
Less accumulated depreciation and amortization........ 112,073 120,214
-------- --------
Total................................................. $226,562 $369,898
======== ========
Other assets:
SERP minimum pension liability........................ $ 1,924 $ 1,924
SERP assets........................................... 24 25
IDIP assets........................................... 21,217 22,377
Deferred income taxes................................. 16,329 19,578
Unamortized debt acquisition costs.................... 4,495 3,220
Unconsolidated investments in affiliates.............. 1,088 3,990
Available-for-sale securities......................... 58,807 --
Other................................................. 6,517 5,855
-------- --------
Total................................................. $110,401 $ 56,969
======== ========
</TABLE>
7
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)
Note 3. Earnings (Loss) Per Share
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share", basic earnings (loss) per share for the three and
six months ended September 30, 1999 and 2000 were computed by dividing net
income (loss) by the weighted average number of shares outstanding during the
periods presented.
At September 30, 1999 and 2000 the Company's outstanding stock options
represented the only form of potential common stock. Using these shares to
calculate diluted earnings per share had an antidilutive effect on reported
loss per share at September 30, 1999 and no effect on basic earnings per share
at September 30, 2000. Consequently, basic and diluted earnings (loss) per
share are the same amount for the three and six months ended September 30, 1999
and 2000, respectively.
Note 4. Income Taxes
The provision for income taxes for the three and six months ended September
30, 1999 and September 30, 2000 is higher than normal due to the provision of a
valuation allowance against deferred tax assets and primarily an inability to
deduct certain incentive stock option charges.
The provision (credit) for income taxes is summarized as follows (in
thousands).
<TABLE>
<CAPTION>
Three Months
Ended Six Months Ended
September 30, September 30,
----------------- -----------------
1999 2000 1999 2000
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Income (loss) before provision (credit) for
income taxes, minority interest and
extraordinary item........................ $(10,841) $11,058 $(11,560) $27,892
-------- ------- -------- -------
Provision (credit) for income taxes at 34%
and 35% for September 30, 1999 and 2000,
respectively.............................. $ (3,686) $ 3,870 $ (3,930) $ 9,762
Incentive stock option charges............. -- 1,076 -- 2,110
Valuation allowance........................ 1,150 308 1,940 1,335
Sales tax and other, net................... 81 1,066 242 1,674
-------- ------- -------- -------
Reported provision (credit) for income
taxes..................................... $ (2,455) $ 6,320 $ (1,748) $14,881
======== ======= ======== =======
</TABLE>
Note 5. Segment Information
The Company conducts business in two operating segments: country
representatives or Direct Sales Channels ("Direct") and Alternate Sales
Channels ("Alternate"). Both these segments generate revenues by providing our
customers with a complete global networking solution.
The Company has organized its operating segments around differences in
distribution channels used to deliver its services to customers. These segments
are managed and evaluated separately because each segment possesses different
economic characteristics requiring different marketing strategies.
The accounting policies adopted for each segment are the same as those
described in the summary of significant accounting policies in the Company's
Annual Report on Form 10-K. The Company's management evaluates performance
based on operating contribution, where segment revenues are reduced by those
costs that are allocable to the segments. Costs relating to operating the
Company's core network, and non-allocable general, administrative, marketing
and overhead costs, including income tax expense, are not charged to the
8
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)
segments. Accordingly, neither assets related to the core network, nor their
associated depreciation expense are allocated to the segments.
The Company accounts for intersegment transactions on the same terms and
conditions as if the transactions were with third parties.
Summarized financial information concerning the Company's reportable
segments is shown in the following table (in thousands).
<TABLE>
<CAPTION>
Three Months
Ended Six Months Ended
September 30, September 30,
---------------- -----------------
1999 2000 1999 2000
------- -------- -------- --------
<S> <C> <C> <C> <C>
Reportable segments:
Revenues from external customers:
Direct.................................... $76,567 $ 96,916 $153,081 $196,984
Alternate................................. 10,946 59,146 20,138 113,243
------- -------- -------- --------
Totals.................................. $87,513 $156,062 $173,219 $310,227
======= ======== ======== ========
Operating contribution:
Direct.................................... $27,590 $ 39,406 $ 55,367 $ 77,637
Alternate................................. 6,509 24,742 11,842 44,076
------- -------- -------- --------
Totals.................................. $34,099 $ 64,148 $ 67,209 $121,713
======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of
September 30,
----------------
1999 2000
------- --------
<S> <C> <C>
Total assets:
Direct....................................................... $62,808 $ 96,236
Alternate.................................................... 9,191 67,748
------- --------
Totals..................................................... $71,999 $163,984
======= ========
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended Six Months Ended
September 30, September 30,
----------------- -------------------
1999 2000 1999 2000
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Reconciliations:
Operating contribution from reportable
segments.............................. $ 34,099 $64,148 $ 67,209 $ 121,713
Core network, overhead and other non-
allocable costs....................... (44,940) (53,090) (78,769) (93,821)
-------- ------- -------- ---------
Income (loss) before provision (credit)
for income taxes, minority interest,
and extraordinary item................ $(10,841) $11,058 $(11,560) $ 27,892
======== ======= ======== =========
</TABLE>
<TABLE>
<CAPTION>
As of September 30,
-------------------
1999 2000
-------- ----------
<S> <C> <C>
Total assets of reportable segments........................ $ 71,999 $ 163,984
Core network, corporate and other non-allocable assets..... 220,078 1,164,870
-------- ----------
Total assets........................................... $292,077 $1,328,854
======== ==========
</TABLE>
9
<PAGE>
INFONET SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Unaudited)
Note 6. Stock Incentive Plans
On April 18, 2000, the Company's Board of Directors adopted the 2000
Employee Stock Purchase Plan and the 2000 International Employee Stock Purchase
Plan which authorizes the Company to issue rights to employees of the Company,
to purchase up to a combined total of 2.0 million shares, and on September 11,
2000, at the Company's annual stockholders meeting, the stockholders adopted
this plan.
Additionally, on April 18, 2000 the Company's Board of Directors adopted the
Omnibus Stock Plan ("the Omnibus Plan") which authorizes the Company to grant
or issue options, restricted stock and performance awards, dividend
equivalents, deferred stock and stock payments, and on September 11, 2000, at
the Company's annual stockholders meeting, the stockholders adopted this plan.
Included in the Omnibus Plan is the 2000 Stock Option Plan, which authorizes
the Company to issue options to employees of the Company and subsidiaries,
directors, affiliates and consultants grants of up to 6.0 million options.
During the six months ended September 30, 2000, approximately 2.6 million
options were outstanding. These are being accounted for under the provisions of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees," and SFAS No. 123, "Accounting for Stock-Based
Compensation."
Note 7. Assignment Agreement with AUCS
The Company entered into an assignment agreement with AUCS whereby AUCS has
assigned the management of its AT&T/GME customers to the Company. As a result
of the channel management function performed, the Company earns a fee equal to
20% of the revenues AUCS generates from these clients. During the current
quarter, the Company earned revenue of approximately $6 million dollars, which
is included in Other Communication Services.
Note 8. Long-term Obligations
In April 2000, the Company repaid all of its debt outstanding under the
Tranche B Term Loan, amounting to $49.6 million. As a result of this early
extinguishment, maximum borrowings available to the Company under the Senior
Secured Credit Facility were reduced by $50.0 million. The write-off of
unamortized debt issuance costs associated with this repayment in the amount of
$502,000, net of income taxes of $363,000, is reported as an extraordinary item
in the six month period ended September 30, 2000. Additionally, in August 2000,
the Company borrowed $90 million under the Tranche B Term Loan.
Note 9. Acquisition and Divestitures
On August 4, 2000, the Company paid $12 million in cash to acquire the
remaining 51 percent in its subsidiary Network Telephony Corporation ("NTC").
This acquisition increased the Company's ownership in NTC to 100 percent. The
excess of the purchase price of the stock over the fair value of the additional
interest obtained in NTC's tangible net assets was $7.8 million.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In the following Management's Discussion and Analysis, the revenues and
expenses described as resulting from outsourcing services refer to the
Outsourcing Agreement with three of our stockholders, AUCS, and its
distributors described in our Annual Report on Form 10-K for the fiscal year
ended March 31, 2000.
You should read this discussion together with our consolidated financial
statements and the related notes to those statements appearing elsewhere in
this report.
Results of Operations
The following tables summarize revenues by service, by distribution channel,
and by region and are provided in support of the accompanying management's
discussion and analysis for the three and six month periods ended September 30,
1999 and 2000 (dollars in thousands).
Revenues by Service
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
1999 2000 1999 2000
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Network Services........ $50,292 57% $ 67,300 43% $ 95,891 55% $132,830 43%
Consulting, Integration
and Provisioning
Services............... 20,048 23% 44,170 28% 45,729 27% 84,865 27%
Applications Services... 3,382 4% 2,613 2% 7,673 4% 6,152 2%
Other Communication
Services............... 13,791 16% 41,979 27% 23,926 14% 86,380 28%
------- -------- -------- --------
Total revenues.......... $87,513 100% $156,062 100% $173,219 100% $310,227 100%
======= ======== ======== ========
</TABLE>
Revenues by Distribution Channel
<TABLE>
<CAPTION>
Three Months
Ended Six Months Ended
September 30, September 30,
---------------- ------------------
1999 2000 1999 2000
------- ------- -------- --------
<S> <C> <C> <C> <C>
Country representatives:
Number of representatives.............. 56 55 56 55
Number of clients...................... 1,189 1,478 1,189 1,478
Country representatives revenues....... $76,567 $96,916 $153,081 $196,984
Percent of total revenues.............. 87% 62% 88% 63%
Alternate sales channels:
Number of sales channel partners....... 18 20 18 20
Number of sales channel partners'
clients............................... 195 998 195 998
Alternate sales channel revenues....... $10,946 $59,146 $ 20,138 $113,243
Percent of total revenues.............. 13% 38% 12% 37%
</TABLE>
Revenues by Region
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
1999 2000 1999 2000
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Americas................ $30,598 35% $ 39,414 25% $ 62,127 36% $ 81,060 26%
Europe, Middle East and
Africa (EMEA).......... 47,261 54% 104,767 67% 93,082 54% 205,294 66%
Asia Pacific............ 9,654 11% 11,881 8% 18,010 10% 23,873 8%
------- -------- -------- --------
Total revenues.......... $87,513 100% $156,062 100% $173,219 100% $310,227 100%
======= ======== ======== ========
</TABLE>
11
<PAGE>
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Revenues increased $68.5 million, or 78%, from $87.5 million in the three
months ended September 30, 1999 to $156.1 million in the three months ended
September 30, 2000. Excluding revenues resulting from a significant outsourcing
agreement entered into on September 30, 1999, revenues increased $29.0 million,
or 33%, over the prior year period from $87.5 million to $116.5 million. The
overall increase in revenues was due to increases of $28.2 million, or 204%, in
Other Communication Services, $24.1 million, or 120%, in Consulting,
Integration and Provisioning Services, and $17.0 million, or 34%, in Network
Services. The majority of growth in sales of Network Services came from
increased sales of Frame Relay, ATM and remote access services. Other
Communication Services and Consulting, Integration and Provisioning Services
increases included approximately $28 million and $12 million, respectively, in
revenues from outsourcing services. Excluding outsourcing services revenues,
Other Communication Services increased $164,000, which is the net impact of
decreasing X.25 transport services offset by approximately $6.0 million of
revenues from a new assignment agreement with AUCS. Excluding outsourcing
services revenues, Consulting, Integration and Provisioning Services increased
$12.6 million, or 63%.
Revenues from country representatives increased $20.3 million, or 27%, from
$76.6 million for the three months ended September 30, 1999 to $96.9 million
for the three months ended September 30, 2000. Approximately $5 million of the
increase resulted from outsourcing services. Although we decreased the number
of our country representatives from 56 as of September 30, 1999 to 55 as of
September 30, 2000, we saw increased revenue that was derived largely through
the growth of existing country representatives. The number of our country
representative clients increased 289, or 24%, from 1,189 as of September 30,
1999 to 1,478 as of September 30, 2000. Revenues from our alternate sales
channels also grew $48.2 million, or 440%, from $10.9 million to $59.1 million.
Approximately $34 million of the increase resulted from outsourcing services.
Our alternate sales channel partners resold our suite of services to a net
additional 803 clients, including 780 new outsource customers, from 195 clients
as of September 30, 1999 to 998 clients as of September 30, 2000.
In terms of revenues billed on a regional basis, the majority of our growth
was in the EMEA region, which increased $57.5 million, or 122%, from $47.3
million for the three months ended September 30, 1999 to $104.8 million for the
three months ended September 30, 2000. Approximately $40 million of this
revenue growth was in Europe as a result of the outsourcing transaction; the
balance of the increase is due to the addition of new clients and increases in
sales of services to existing clients. Revenues billed in the Americas grew
$8.8 million, or 29%, from $30.6 million to $39.4 million over the three month
periods. Revenues billed in the Asia Pacific region grew $2.2 million, or 23%,
from $9.7 million to $11.9 million over the three month periods.
Country Representative Compensation increased $37.8 million, or 249%, from
$15.2 million for the three months ended September 30, 1999 to $52.9 million
for the three months ended September 30, 2000. Approximately $31 million of
this increase resulted from outsourcing services revenues. The balance of this
expense grew in line with the related revenue.
Bandwidth and Related Costs increased $9.1 million, or 43%, from $20.8
million for the three months ended September 30, 1999 to $29.9 million for the
three months ended September 30, 2000. This increase was directly related to
higher network leasing expenses associated with increasing the capacity of our
network and our newly introduced ATM capability. The usage growth reflects
additional client port growth and increased capacity per port. Lease expense,
the largest component of bandwidth and related costs, increased $5.7 million,
or 31%, from $18.1 million to $23.7 million over the three month periods.
Amortization of purchased capacity increased $2.4 million, from $793,000 to
$3.2 million over the three month periods.
Network Operations increased $1.5 million, or 8%, from $18.6 million for the
three months ended September 30, 1999 to $20.1 million for the three months
ended September 30, 2000. Stock related compensation charges of $701,000 were
recorded in the three months ended September 30, 2000. Depreciation
12
<PAGE>
expense related to network equipment increased $2.4 million, or 91%, from $2.6
million to $5.0 million over the three month periods. An impairment charge of
$3.6 million related to the disposition of ESG was recorded in the three months
ended September 30, 1999. The remaining increase was related to the increased
costs associated with our network management, operations and support
activities, personnel costs and other network operations expenses.
Selling, General and Administrative increased $4.6 million, or 11%, from
$42.0 million for the three months ended September 30, 1999 to $46.6 million
for the three months ended September 30, 2000. Stock related compensation
charges of $3.5 million were recorded in the three months ended September 30,
2000. Our sales support expenses for multinational support activities decreased
$938,000 from $17.8 million for the three months ended September 30, 1999 to
$16.8 million for the three months ended September 30, 2000. Sales and
Marketing personnel-related expenses increased by $1.5 million, or 10% from
$14.7 million to $16.3 million for the three month period due to increased
sales and marketing efforts to increase our business. Administrative expense,
excluding stock related compensation, decreased by $586,000 from $5.9 million
for the three months ended September 30, 1999 to $5.3 million for the three
months ended September 30, 2000.
Operating Income (Loss) grew by $15.6 million, from $(9.1) million for the
three months ended September 30, 1999 to $6.5 million for the three months
ended September 30, 2000 due to the factors stated above.
Other Income (Expense) increased $6.3 million, from expense of $1.7 million
for the three months ended September 30, 1999 to income of $4.5 million for the
three months ended September 30, 2000. This increase was due to an increase in
interest income over the period of $9.8 million from $582,000 to $10.3 million.
The increased interest income resulted from the investment of IPO proceeds
received in December 1999. Other Income (Expense) was also impacted by an
increase in interest expense of $281,000 resulting from building mortgage
indebtedness. Other, net for the three months ended September 30, 2000 included
foreign exchange losses of $3.4 million related primarily to settlement of euro
denominated outsourcing sales.
Provision (Credit) for Income Taxes increased $8.8 million from a credit of
$(2.5) million for the three months ended September 30, 1999 to a provision of
$6.3 million for the three months September 30, 2000. The effective tax rate is
higher in the three month period ended September 30, 2000 due primarily to non-
deductible stock based compensation charges.
Net Income (Loss) increased $13.1 million from $(8.4) million for the three
months ended September 30, 1999 to $4.7 million for the three months ended
September 30, 2000 as a result of the factors described above.
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30,
1999
Revenues increased $137.0 million, or 79%, from $173.2 million in the six
months ended September 30, 1999 to $310.2 million in the six months ended
September 30, 2000. Excluding revenues resulting from a significant outsourcing
agreement entered into on September 30, 1999, revenues increased $56.3 million,
or 33%, over the prior year period from $173.2 million to $229.6 million. The
overall increase in revenues was due to increases of $62.5 million, or 261%, in
Other Communication Services, $39.1 million, or 86%, in Consulting, Integration
and Provisioning Services, and $36.9 million, or 39%, in Network Services. The
majority of growth in sales of Network Services came from increased sales of
Frame Relay, ATM and remote access services. Other Communication Services and
Consulting, Integration and Provisioning Services increases included
approximately $60 million and $21 million, respectively, in revenues from
outsourcing services. Excluding outsourcing services revenues, Other
Communication Services increased $2.6 million, which is the net impact of
decreasing X.25 transport services offset by approximately $6.0 million of
revenues from a new assignment agreement with AUCS. Excluding outsourcing
services revenues, Consulting, Integration and Provisioning Services increased
$18.4 million, or 40%.
Revenues from country representatives increased $43.9 million, or 29%, from
$153.1 million for the six months ended September 30, 1999 to $197.0 million
for the six months ended September 30, 2000.
13
<PAGE>
Approximately $12 million of the increase resulted from outsourcing services.
Although we decreased the number of our country representatives from 56 as of
September 30, 1999 to 55 as of September 30, 2000, we saw increased revenue
that was derived largely through the growth of existing country
representatives. The number of our country representative clients increased
289, or 24%, from 1,189 as of September 30, 1999 to 1,478 as of September 30,
2000. Revenues from our alternate sales channels also grew $93.1 million, or
462%, from $20.1 million to $113.2 million. Approximately $69 million of the
increase resulted from outsourcing services. Our alternate sales channel
partners resold our suite of services to a net additional 803 clients,
including 780 new outsource customers, from 195 clients as of September 30,
1999 to 998 clients as of September 30, 2000.
In terms of revenues billed on a regional basis, the majority of our growth
was in the EMEA region, which increased $112.2 million, or 121%, from $93.1
million for the six months ended September 30, 1999 to $205.3 million for the
six months ended September 30, 2000. Approximately $81 million of this revenue
growth was in Europe as a result of the outsourcing transaction; the balance of
the increase is due to the addition of new clients and increases in sales of
services to existing clients. Revenues billed in the Americas grew $18.9
million, or 30%, from $62.1 million to $81.1 million over the six month
periods. Revenues billed in the Asia Pacific region grew $5.9 million, or 33%,
from $18.0 million to $23.9 million over the six month periods.
Country Representative Compensation increased $75.6 million, or 244%, from
$31.0 million for the six months ended September 30, 1999 to $106.6 million for
the six months September 30, 2000. Approximately $63 million of this increase
resulted from outsourcing services revenues. The balance of this expense grew
in line with the related revenue.
Bandwidth and Related Costs increased $25.9 million, or 73%, from $35.4
million for the six months ended September 30, 1999 to $61.4 million for the
six months ended September 30, 2000. This increase was directly related to
higher network leasing expenses associated with increasing the capacity of our
network and our newly introduced ATM capability. The usage growth reflects
additional client port growth and increased capacity per port. Lease expense,
the largest component of bandwidth and related costs, increased $21.5 million,
or 75%, from $28.5 million to $50.0 million over the six month periods.
Amortization of purchased capacity increased $4.3 million, from $1.0 million to
$5.4 million over the six month period.
Network Operations increased $3.5 million, or 11%, from $32.9 million for
the six months ended September 30, 1999 to $36.4 million for the six months
ended September 30, 2000. Stock related compensation charges of $1.2 million
offset by a one-time credit of $1.6 million were recorded in the six months
ended September 30, 2000. The stock related compensation credit resulted from
an amendment to one of the Company's stock-based compensation plans.
Depreciation expense related to network equipment increased $4.2 million, or
87%, from $4.9 million to $9.1 million over the six month periods. An
impairment charge of $3.6 million related to the disposition of ESG was
recorded in the six months ended September 30, 1999. The remaining increase was
related to the increased costs associated with our network management,
operations and support activities, personnel costs and other network operations
expenses.
Selling, General and Administrative increased $10.6 million, or 13%, from
$83.5 million for the six months ended September 30, 1999 to $94.1 million for
the six months ended September 30, 2000. Stock related compensation charges of
$6.9 million offset by a one-time credit of $3.6 million were recorded in the
six months ended September 30, 2000. The stock related compensation credit
resulted from an amendment to one of the Company's stock-based compensation
plans. Our sales support expenses for multinational support activities
decreased $1.3 million from $34.9 million for the six months ended September
30, 1999 to $33.6 million for the six months ended September 30, 2000. Sales
and Marketing personnel-related expenses increased by $3.6 million, or 12% from
$29.4 million to $33.0 million for the six month period due to increased sales
and marketing efforts to increase our business. Advertising expense increased
$1.1 million from $2.6 million for the six months ended September 30, 1999 to
$3.7 million for the six months ended
14
<PAGE>
September 30, 2000. Administrative expense, excluding stock related
compensation, increased by $1.4 million from $10.6 million for the six months
ended September 30, 1999 to $12.1 million for the six months ended September
30, 2000.
Operating Income (Loss) grew by $21.4 million, from $(9.6) million for the
six months ended September 30, 1999 to $11.8 million for the six months ended
September 30, 2000 due to the factors stated above.
Other Income (Expense) increased $18.1 million, from expense of $1.9 million
for the six months ended September 30, 1999 to income of $16.1 million for the
six months ended September 30, 2000. This increase was due to an increase in
interest income over the period of $22.0 million from $1.1 million to $23.1
million. The increased interest income resulted from the investment of IPO
proceeds received in December 1999. Other Income (Expense) was also impacted by
an increase in interest expense of $2.1 million resulting from borrowings under
the senior secured credit facility and building mortgage indebtedness. Other,
net for the six months ended September 30, 2000 included net foreign exchange
losses of $1.6 million related to foreign exchange losses on settlement of euro
denominated outsourcing sales, offset by foreign exchange gains on settlement
of communication lines purchases.
Provision (Credit) for Income Taxes increased $16.6 million from a credit of
$(1.7) million for the six months ended September 30, 1999 to $14.9 for the six
months September 30, 2000. The effective tax rate is higher in the six month
period ended September 30, 2000 due primarily to non-deductible stock based
compensation charges.
Income (Loss) before Extraordinary Item increased $22.7 million from $(9.8)
million for the six months ended September 30, 1999 to $12.9 million for the
six months ended September 30, 2000 as a result of the factors described above.
Extraordinary Item, Net of Tax for the six month period ended September 30,
2000 represents the write-off of unamortized debt issuance costs associated
with the $49.6 million of long-term debt which was repaid prior to its due date
during the six month period ended September 30, 2000.
Net Income (Loss) increased $22.2 million from $(9.8) million for the six
months ended September 30, 1999 to $12.4 million for the six months ended
September 30, 2000 as a result of the factors described above.
Liquidity and Capital Resources
Net cash used in operating activities during the six months ended September
30, 2000 was $15.0 million compared to net cash provided by operating
activities of $2.3 million during the six months ended September 30, 1999. This
resulted primarily from a decrease in network communications liability of
$26.6 million, a decrease in accounts payable of $18.4 million, and an increase
in accounts receivable of $18.5 million. These changes are partially offset by
an increase in net income of $22.2 million, an increase in income taxes payable
of $11.3 million, an increase in proceeds from sales of trading securities of
$5.3 million, and increased depreciation and amortization of $6.0 million due
to the expansion of our World Network and newly introduced ATM capability. Net
cash used in investing activities for the six months ended September 30, 2000
was $401.6 million compared to $42.7 million during the six months ended
September 30, 1999. This increase was primarily due to the purchases of short-
term investments related to the investment of IPO proceeds. Cash provided by
financing activities for the six months ended September 30, 2000 was $11.3
million compared to $71.2 million for the six months ended September 30, 1999.
This decrease was the result of net proceeds from issuance of common stock of
$26.7 million during the six months ended September 30, 1999 and an increase in
repayments on long-term obligations of $45.3 million.
As of September 30, 2000, the company had $321.2 million of cash and cash
equivalents, working capital of $617.6 million and total assets of $1.3
billion.
15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk, in our Annual Report on Form 10-K for the fiscal
year ended March 31, 2000.
As of September 30, 2000, we were primarily exposed to the following
currencies: the euro, the British pound, and the Swiss franc. Based upon a
hypothetical ten-percent strengthening of the U.S. dollar across all
currencies, the potential losses in future earnings due to foreign currency
exposures would have been approximately $1.6 million as of that date.
16
<PAGE>
PART II
ITEM 1. Legal Proceedings
Not applicable.
ITEM 2. Changes in Securities and Use of Proceeds
On December 15, 1999, the Company's Form S-1 registration statement (File
No. 333-88799) was declared effective by the Securities and Exchange
Commission. The registration statement, as amended, covered the offering of
51,282,300 shares of our Class B common stock. The offering commenced on
December 16, 1999 and the sale to the public of 51,282,300 shares of common
stock at $21.00 per share was completed on December 21, 1999 for an aggregate
price of approximately $1.076 billion. The registration statement covered an
additional 7,692,342 shares of common stock that the underwriters had the
option to purchase solely to cover over-allotments. These additional shares
were purchased on January 13, 2000. The managing underwriters were Merrill
Lynch & Co., Warburg Dillon Read LLC, ABN AMRO Rothschild, Goldman, Sachs &
Co., Lehman Brothers and Salomon Smith Barney. Expenses incurred through
September 30, 2000 in connection with the issuance and distribution of common
stock in the offering included underwriting discounts, commissions and
allowances of approximately $38.5 million and other expenses of approximately
$2.4 million. Total offering expenses of approximately $40.9 million resulted
in net offering proceeds to the Company, of approximately $766.8 million.
Specified 10% owners of Class B common stock of the Company sold in the
offering and received, net of expenses paid by those owners, an aggregate of
$256.4 million. We have used and continue to use aggregate net proceeds to us
of approximately $766.8 million from our initial public offering as follows:
. the repayment of long-term debt under our credit facility;
. the purchase of assets that were under operating leases of approximately
$13 million;
. expansion of our network infrastructure, including acquisition of
transmission capacity and continued deployment of our ATM-enabled
backbone;
. to fund operating losses; and
. for general corporate purpose.
Our management, subject to supervision by our board of directors, has
significant flexibility in applying the net proceeds of the offering. Pending
any use as described above, we have invested the net proceeds in interest-
bearing investment grade securities.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
17
<PAGE>
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on September 11, 2000.
At the Annual Meeting, the Company's stockholders elected nine directors to the
Company's Board of Directors and approved the proposals as more fully described
below. At the Annual Meeting, a total of 1,962,994,853 votes were represented
in person or by proxy, representing 99.31% of the 1,976,604,126 eligible votes
of common stock outstanding and entitled to vote. The proposals considered at
the Annual Meeting were voted on as follows:
1. Election of Directors Proposal to elect nine directors to hold office
until the 2001 Annual Meeting of Stockholders or his earlier resignation or
removal.
<TABLE>
<CAPTION>
Affirmative Votes Affirmative Votes
Nominee Class A Class B
------- ----------------- -----------------
<S> <C> <C>
Jose A. Collazo.......................... 1,674,033,580 288,508,047
Douglas C. Campbell...................... 1,674,033,580 288,507,595
Eric M. de Jong.......................... 1,674,033,580 288,516,792
Morgan Ekberg............................ 1,674,033,580 288,516,792
Rafael Sagrario.......................... 1,674,033,580 288,516,592
Heinz Karrer............................. 1,674,033,580 288,514,792
Masao Kojima............................. 1,674,033,580 288,516,616
Timothy P. Hartman....................... -- 288,516,492
Matthew J. O'Rourke...................... -- 288,516,142
</TABLE>
2. Adoption of the Infonet Services 2000 Omnibus Stock Plan. The
proposal was approved by 1,948,739,489 votes in favor, 13,067,321 votes
against and 1,188,043 abstain.
3. Adoption of the Infonet Services Employee Stock Purchase Plan. The
proposal was approved by 1,948,739,489 votes in favor, 13,067,321 votes
against and 1,188,043 abstain.
4. Ratification of the Independent Auditor. The ratification of Deloitte
& Touche LLP to serve as the Company's independent auditors for the fiscal
year 2001 was approved by 1,962,911,709 votes in favor, 47,450 votes
against and 35,694 abstain.
ITEM 5. Other Information
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation#
3.2. Amended and Restated Bylaws#
9.1. Form of Amended and Restated Stockholders Agreement#
10.1. 1998 Stock Option Plan#
10.2. 1998 Stock Purchase Plan#
10.3. 1999 Stock Option Plan#
10.4. Infonet Deferred Income Plan#
10.5. 1998 Stock Appreciation Rights Plan#
10.6. Supplemental Executive Retirement Plan#
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.7. Senior Secured Credit Agreement, dated as of August 17, 1999#, as
amended by Amendment No. 1 filed as Exhibit 10.1 with the Company's
Form 10-Q for the period ended June 30, 2000
10.7.(a) Second Amendment to the Senior Secured Credit Agreement, dated as
of September 29, 2000
10.8. Employment Agreement of Jose A. Collazo#
10.9. Employment Agreement of Dr. Ernest U. Gambaro#
10.10. Standard Infonet Services Agreement#
10.11. Capacity Right of Use Agreement with FLAG Limited dated as of June
25, 1999#
10.12. AUCS Services Agreement, dated as of September 30, 1999#
10.13. AUCS Call Option Deed, dated as of September 30, 1999#
10.14. AUCS Management Agreement, dated as of September 30, 1999#
10.15. AUCS Assignment Agreement, dated as of September 30, 1999#
10.16. Lease for Grand Avenue Corporate Center at 2160 Grand Avenue, El
Segundo, California#
10.17. Employment Agreement of Mr. Akbar Firdosy#
10.18. Infonet Services Corporation 2000 Omnibus Stock Plan*
10.19. Infonet Services Corporation 2000 Employee Stock Purchase Plan*
</TABLE>
B. No reports on Form 8-K were filed by registrant during the quarter for
which this report is filed.
<TABLE>
<C> <S>
Exhibit 27.1 Financial Data Schedule.
</TABLE>
--------
# Incorporated by reference to the corresponding exhibit number from the
Registrant's Registration Statement on Form S-1 filed with the Commission on
December 15, 1999.
* Incorporated by reference to Appendices A and B, respectively, of Infonet
Services Corporation definitive proxy statement filed with the Commission on
July 27, 2000.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INFONET SERVICES CORPORATION
Date: November 13, 2000 By: /s/ Akbar H. Firdosy
------------------------------------
Akbar H. Firdosy
Chief Financial Officer
(Chief Accounting Officer)
20
