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Global Crossing Reports GCUK's Second Quarter 2009 Results
London - September 3, 2009 -- Global Crossing Limited (NASDAQ: GLBC), a leading global IP solutions provider, today announced second quarter results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK).
Business Highlights
GCUK generated 77 million pounds of revenue in the second quarter and Operating Income Before Depreciation and Amortization (OIBDA) of 12 million pounds. (OIBDA is a non-GAAP measure that is defined and reconciled below.) The company also reported cash generated from operations of 4 million pounds before interest.
"Demand for our value-added products and services continue to be robust despite a challenging economic and competitive environment," said John Legere, Global Crossing's chief executive officer. "We continue to see healthy levels of new orders and good opportunities in the UK market as customers pursue productivity gains and cost reductions through the deployment of advanced IP-based networking solutions."
Second Quarter Results
The results discussed below are prepared in accordance with International Financial Reporting Standards and presented in U.S. Generally Accepted Accounting Principles (U.S. GAAP) format.
GCUK generated revenue of 77 million pounds, a decrease of 1 million pounds or 2 percent, sequentially and a decrease of 3 million pounds or 4 percent on a year-over-year basis. The sequential decrease in revenue was primarily due to lower equipment sales compared to the previous quarter. The year-over-year decrease in revenue was primarily due to attrition from the Camelot contract, partially offset by growth from other customers across our enterprise and carrier sales channels. For the six months ended June 30, 2009, a year-over-year decline in revenue from the Camelot relationship of 12 million pounds was largely offset by revenue growth from other customers across our enterprise and carrier sales channels of 9 million pounds.
Cost of revenue, which includes cost of access, technical real estate, network and operations, third party maintenance and cost of equipment sales, was 54 million pounds for the quarter, compared with 52 million pounds in the prior quarter and 51 million pounds in the second quarter of 2008. The sequential increase was primarily due to the impact of a 3 million pound retroactive real estate tax assessment revision for the cumulative period of December 2006 through June 2009. The year-over-year increase was primarily due to the aforementioned real estate tax assessment.
Sales, general and administrative expenses (SG&A) were 10 million pounds for the quarter, an increase of 1 million pounds from the prior quarter and essentially flat on a year-over-year basis. The sequential increase was primarily due to higher restructuring provisions for real estate.
GCUK's OIBDA for the second quarter was 12 million pounds, compared with 17 million pounds in the first quarter of 2009 and 20 million pounds in the second quarter of 2008. The sequential decrease in OIBDA was primarily due to lower gross margin from equipment sales, higher real estate taxes and higher restructuring provisions for real estate. The year-over-year decrease in OIBDA was due to lower revenue, primarily due to the attrition of the Camelot contract, and higher real estate taxes.
GCUK recorded net income of 10 million pounds for the second quarter of 2009, compared with a net loss of 2 million pounds in the first quarter of 2009 and net income of 1 million pounds in the second quarter of 2008. In addition to the variances described above, the increase in net income was primarily due to foreign exchange gains on the GCUK's U.S. dollar-denominated Senior Secured Notes in the second quarter of 2009 as compared with the prior comparable quarters.
Cash and Liquidity
As of June 30, 2009, GCUK had cash and cash equivalents of 17 million pounds compared with 33 million pounds at March 31, 2009, and 27 million pounds at June 30, 2008.
Net cash used in operating activities during the second quarter totaled 12 million pounds after operating working capital use of 8 million pounds and interest paid of 16 million pounds. GCUK's cash and cash equivalents decreased by 16 million pounds in the second quarter, after purchases of property, plant and equipment of 4 million pounds and principal payments on finance leases and other debt obligations of 2 million pounds.
In accordance with the indenture governing the senior secured notes, the company repurchased 7 million pounds of the Senior Secured Notes, excluding accrued interest, on May 29, 2009. To support this debt repurchase and other working capital needs, GCUK borrowed 10 million pounds from GC Impsat during the quarter.
International Financial Reporting Standards
GCUK's results reported here include unaudited consolidated financial results for the three months ended June 30, 2009, March 31, 2009 and June 30, 2008; the unaudited consolidated balance sheet as of June 30, 2009; and the audited consolidated balance sheet as of December 31, 2008, all in accordance with IFRS, as published by the International Accounting Standards Board (IASB). GCUK's results for the second quarters of 2009 and 2008 and the first quarter of 2009 were included in Global Crossing's consolidated results previously reported on July 28, 2009, in accordance with U.S. GAAP and in U.S. dollars.
Non-GAAP Financial Measures
Consistent with the U.S. Securities and Exchange Commission's (SEC's) Regulation G, the attached tables include a definition of OIBDA, as well as a reconciliation of such measure to the most directly comparable financial measure calculated in accordance with IFRS and presented in the US GAAP reporting format.
Conference Call
Management has scheduled a conference call for Thursday, September 3, 2009, at 12:00 p.m. EDT/5:00 p.m. BST to discuss GCUK's financial results. The call may be accessed by dialing +1 212 231 2924 or +44 (0) 20 3300 0078. Callers are advised to dial in 15 minutes prior to the 12:00 p.m. EDT start time. The call will also be Webcast at investors.globalcrossing.com/results.cfm.
A replay of the call will be available on Thursday, September 3, 2009, beginning at 3:00 p.m. EDT/8:00 p.m. BST and will be accessible until Thursday, September 10, 2009, at 3:00 p.m. EDT/8:00 p.m. BST. To access the replay, dial +1 402 977 9140 or +1 800 633 8284 and enter reservation number 21435016. UK callers may access the replay by dialing +44 (0) 87 0000 3081 or +44 (0) 80 0692 0831 and entering reservation number 21435016.
ABOUT GLOBAL CROSSING (UK) TELECOMMUNICATIONS LIMITED
Global Crossing (UK) Telecommunications Limited 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 a 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.
ABOUT GLOBAL CROSSING
Global Crossing Limited (NASDAQ: GLBC) is a leading global IP solutions provider with the world's first integrated global IP-based network. The company offers a full range of secure data, voice, and video products to approximately 40 percent of the Fortune 500, as well as to 700 carriers, mobile operators and ISPs. It delivers services to nearly 700 cities in more than 60 countries and six continents around the globe.
Website Access to Company Information
Global Crossing maintains a corporate website at www.globalcrossing.com, and you can find additional information about the company through the Investors pages on that website at investors.globalcrossing.com. Global Crossing utilizes its website as a channel of distribution of important information about the company. Global Crossing routinely posts financial and other important information regarding the company and its business, financial condition and operations on the Investors web pages.
Visitors to the Investors web pages can view and print copies of Global Crossing's SEC filings, including periodic and current reports on Forms 10-K, 10-Q, 8-K, and in respect of GCUK's Forms 20-F and 6-K, as soon as reasonably practicable after those filings are made with the SEC. Copies of the charters for each of the standing committees of Global Crossing's Board of Directors, its Corporate Governance Guidelines, Ethics Policy, press releases and analysts presentations are all available through the Investors web pages.
Please note that the information contained on any of Global Crossing's websites is not incorporated by reference in, or considered to be a part of, any document unless expressly incorporated by reference therein.
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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 impact on the business of current global economic conditions and the severe tightening in global credit markets; increased competition and pricing pressures resulting from technology advances and regulatory changes; competitive disadvantages relative to competitors with superior resources; the impact on the business of an economic downturn or recession; dependence on a number of key personnel; 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; the influence of the company's parent, and possible conflicts of interest of the parent or of certain of GCUK's directors and officers; our ability to raise capital through financing activities; exposure to contingent liabilities; and other risks referenced from time to time in GCUK's filings with the Securities and Exchange Commission. Global Crossing undertakes no duty to update information contained in this press release or in other public disclosures at any time.
CONTACT GLOBAL CROSSING:
Press Contacts
Michael Schneider
+ 1 973 937 0146
michael.schneider@globalcrossing.com
Analysts/Investors Contact
Mark Gottlieb
+ 1 800 836 0342
glbc@globalcrossing.com
Gino Mathew
Europe
+ 1 973 937 0133
gino.mathew@globalcrossing.com
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