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Global Crossing Reports GCUK's Third Quarter Results
London - November 16, 2005 -- Global Crossing (NASDAQ: GLBC) today reported financial results for the third quarter of 2005 for its Global Crossing (UK) Telecommunications Limited (GCUK) subsidiary in accordance with U.K. Generally Accepted Accounting Principles (UK GAAP). These results were previously announced as part of Global Crossing's consolidated results, which were reported on November 9, 2005 in accordance with U.S. Generally Accepted Accounting Principles (US GAAP).
Highlights
GCUK generated £8 million of cash and £17 million of EBITDA in the third quarter. Revenue was £59 million, with Adjusted Gross Margin (as defined in Table 7 that follows) of £43 million. The company secured 199 new orders from new and existing customers during the third quarter, including a new framework agreement with the Southeast Network for Telecommunications (SENT) consortium and a contract renewal through 2012 with systems integrator Steria.
"Our UK business generated £8 million of cash in the third quarter, providing clear evidence that the business is in good shape," said John Legere, Global Crossing's chief executive officer. "With underlying revenue from long-term enterprise contracts remaining stable and new contracts like the British Council and the Forestry Commission beginning to come on stream, GCUK will continue to be a strong performer and a leader in the UK's managed services market."
Global Crossing also announced during the quarter the creation of a next-generation converged services platform for the UK rail industry, namely the upgrade of RailNet, one of the largest private networks in Europe. Product news in the quarter included the introduction of a new hosted IP voice service, the provision of improved mobility and integrated messaging for 65,000 RailNet users and an enhanced version of the company's flagship IP VPN service.
Revenue and Margin
GCUK revenue for the third quarter of 2005 was £59 million, compared with £66 million in the third quarter of 2004. The year-over-year decline reflects the same customer losses reported in the first quarter of 2005, which were described in the company's annual report to note holders for the year ended December 31, 2004. There were no additional significant customer losses during the third quarter.
Adjusted Gross Margin was £43 million in the third quarter, compared to £40 million in the third quarter of 2004. Cost of access expense was down 38 percent year over year, from £26 million in the third quarter of 2004 to £16 million in the third quarter of 2005.
Customer-specific costs increased by £2 million year over year to £7 million in the third quarter of this year. Sales, general and administrative costs for the third quarter of 2005 were £16 million, compared to £20 million in the third quarter of 2004.
Earnings
GCUK's earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2005, as defined in Table 5 that follows, were £17 million, compared with £16 million in the third quarter of 2004. UK GAAP EBITDA includes foreign exchange gains and losses which significantly affect EBITDA in each quarter. The company incurred non-cash foreign exchange losses of £3 million on the company's senior secured notes in the third quarter of 2005.
GCUK's net loss for the third quarter of 2005 was less than £1 million, compared to net income of £3 million in the third quarter of 2004.
Cash Position
As of September 30, 2005, GCUK had £34 million of cash on hand and short-term deposits. During the third quarter of 2005, GCUK generated £8 million of cash, after using £5 million for capital expenditures and leases.
Beginning in the fourth quarter of 2005, the company will present its results in accordance with International Financial Reporting Standards (IFRS).
Consistent with the Securities and Exchange Commission's (SEC's) Regulation G, the attached schedules include definitions of GCUK's EBITDA and Adjusted Gross Margin measures, as well as reconciliations of such measures to the most directly comparable financial measures calculated and presented in accordance with UK GAAP.
Conference Call
Management has scheduled a conference call for Wednesday, November 16, 2005 at 9:00 a.m. EST / 2:00 p.m. BST to discuss GCUK's financial results. The call may be accessed by dialing +1 212 271 4648 or +44 (0) 870 001 3140. Callers are advised to dial in 15 minutes prior to the 9:00 a.m. start time. The call will also be Webcast at www.globalcrossing.com/xml/investors/index.xml.
A replay of the call will be available on Wednesday, November 16, 2005 beginning at 11:00 a.m. EST and will be accessible until Wednesday, November 23, 2005 at 11:00 a.m. EST. To access the replay, dial +1 402 977 9140 or +1 800 633 8284 and enter reservation number 21266140. UK callers may access the replay by dialing +44 (0) 870 000 3081 or 0800 692 0831 and entering reservation number 21266140.
ABOUT GLOBAL CROSSING (UK) TELECOMMUNICATIONS LTD.
Global Crossing (UK) Telecommunications Ltd. provides a full range of managed telecommunications services in a secure environment ideally suited for IP-based business applications. The company provides managed voice, data, Internet and e-commerce solutions to the strong and established commercial customer base, including more than 100 UK government departments, as well as systems integrators, rail sector customers and major corporate clients. In addition, GCUK provides carrier services to national and international communications service providers.
Global Crossing (UK) Telecommunications operates a high-capacity UK network comprising more than 5,600 route miles of fiber optic cable connecting 150 towns and cities and reaching within just over one mile of 64 percent of UK businesses. The UK network is linked into the wider Global Crossing network that connects more than 300 cities and 30 countries worldwide, and delivers services to nearly 600 cities, 60 countries and 6 continents around the globe.
Financial Tables (pdf)
ABOUT GLOBAL CROSSING
Global Crossing (NASDAQ: GLBC) provides telecommunications solutions over the world's first integrated global IP-based network. Its core network connects more than 300 cities and 30 countries worldwide, and delivers services to nearly 600 cities, 60 countries and 6 continents around the globe. Global Crossing's global sales and support model matches the network footprint and, like the network, delivers a consistent customer experience worldwide.
Global Crossing IP services are global in scale, linking the world's enterprises, governments and carriers with customers, employees and partners worldwide in a secure environment that is ideally suited for IP-based business applications, allowing e-commerce to thrive. Global Crossing offers a full range of managed data and voice products including Global Crossing IP VPN Service, Global Crossing Managed Services and Global Crossing VoIP services, to more than 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs.
Please visit www.globalcrossing.com for more information about Global Crossing.
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This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties that could cause the actual results to differ materially, including: the company's history of substantial operating losses and the fact that, in the near term, funds from operations will not satisfy cash requirements; legal and contractual restrictions on the inter-company transfer of funds by the company's subsidiaries; the company's ability to continue to connect its network to incumbent carriers' networks or maintain Internet peering arrangements on favorable terms; the consequences of any inadvertent violation of the company's Network Security Agreement with the U.S. Government; increased competition and pricing pressures resulting from technology advances and regulatory changes; competitive disadvantages relative to competitors with superior resources; political, legal and other risks due to the company's substantial international operations; risks arising out of the company's material weaknesses in internal controls and possible difficulties and delays in improving such controls; the concentration of revenue in a limited number of customers, and the rights of such customers to terminate their contracts or to simply cease purchasing services thereunder; exposure to unreserved contingent liabilities; and other risks referenced from time to time in the company's filings with the Securities and Exchange Commission. The company undertakes no duty to update information contained in this press release or in other public disclosures at any time.
CONTACT GLOBAL CROSSING:
Press Contacts
Becky Yeamans
+ 1 973 937 0155
PR@globalcrossing.com
Kendra Langlie
Latin America
+ 1 305 808 5912
LatAmPR@globalcrossing.com
Mish Desmidt
Europe
+ 44 (0) 1256 732 866
EuropePR@globalcrossing.com
Analysts/Investors Contact
Laurinda Pang
+ 1 800 836 0342
glbc@globalcrossing.com
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