Global Crossing Reports GCUK's First Quarter ResultsBy Global Crossing, PRNE
Sunday, June 13, 2010
LONDON, June 14, 2010 - Global Crossing Limited (Nasdaq: GLBC), a leading global IP solutions
provider, today announced first quarter results for its subsidiary, Global
Crossing (UK) Telecommunications Limited (GCUK).
For the first quarter of 2010, GCUK generated revenue of 78 million
pounds and Operating Income Before Depreciation and Amortization (OIBDA) of
20 million pounds. (OIBDA is a non-GAAP measure defined and reconciled
below.) The company also reported cash use from operations of 8 million
pounds before interest payments of 1 million pounds.
"Our investments in new products and services, and the expansion of our
enterprise sales force are progressing as planned," said John Legere, chief
executive officer of Global Crossing. "These actions will enable us to
diversify and profitably grow GCUK's revenue over the coming quarters of
First Quarter Results
GCUK generated revenue of 78 million pounds, flat sequentially and a
year-over-year decrease of 1 percent. The year-over-year decline was
primarily due to a decrease in wholesale voice revenue.
Gross profit was 29 million pounds for the quarter, a 1 million pound
increase sequentially and year over year. The sequential and year-over-year
increase in gross profit was principally due to an improvement in revenue mix
with lower equipment and professional services costs, partially offset by an
increase in access costs.
GCUK's OIBDA for the first quarter was 20 million pounds, compared with
16 million pounds in the fourth quarter of 2009 and 17 million pounds in the
first quarter of 2009. The sequential and year-over-year increases were
driven by 6 million pounds of property tax and insurance recoveries in the
quarter, partially offset by an increase in accrued incentive compensation,
salaries and commissions and higher restructuring provisions for real estate.
GCUK recorded a net loss of 5 million pounds for the first quarter,
compared with a net loss of 2 million pounds in both the fourth quarter of
2009 and the first quarter of 2009. The sequential and year-over-year
increases in net loss were primarily due to an unfavorable foreign exchange
impact on net U.S. dollar-denominated debt.
Cash and Liquidity
As of March 31, 2010, GCUK had cash and cash equivalents of 33 million
pounds, compared with 37 million pounds at the end of December 31, 2009, and
33 million pounds at the end of March 31, 2009.
GCUK's cash and cash equivalents decreased 4 million pounds in the first
quarter. Net cash used in operating activities during the first quarter
totaled 9 million pounds, including cash use from operating working capital
of 27 million pounds and interest payments of 1 million pounds. During the
quarter, GCUK recorded purchases of property, plant and equipment of 5
million pounds, and principal payments on finance leases and other debt of 3
million pounds. In addition, GCUK borrowed 13 million pounds from Global
Crossing Europe Limited, a subsidiary of Global Crossing Limited, for general
In accordance with the indenture governing the senior secured notes, on
May 14, 2010, the company repurchased approximately 0.2 million pounds of its
senior secured notes, including aggregate principal amount and accrued and
International Financial Reporting Standards
GCUK's results reported here include unaudited consolidated financial
results for the three months ended March 31, 2010, December 31, 2009 and
March 31, 2009; the unaudited consolidated balance sheet as of March 31,
2010; and the audited consolidated balance sheet as of December 31, 2009, all
in accordance with IFRS and in pounds sterling, as published by the
International Accounting Standards Board (IASB). GCUK's results for the first
quarters of 2010 and 2009 and the fourth quarter of 2009 were included in
Global Crossing's consolidated results previously reported on April 28, 2010,
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.
Management has scheduled a conference call for Monday, June 14, 2010, at
9:00 a.m. EDT/2:00 p.m. BST to discuss GCUK's financial results. The call may
be accessed by dialing +1-212-231-2900 or +44-(0)-20-8196-2883. Callers are
advised to dial in 15 minutes prior to the 9:00 a.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 Monday, June 14, 2010,
beginning at 11:00 a.m. EDT/4:00 p.m. BST and will be accessible until
Monday, June 21, 2010, at 11:00 a.m. EDT/4:00 p.m. BST. To access the replay,
dial +1-402-977-9140 or +1-800-633-8284 and enter reservation number
21470298. UK callers may access the replay by dialing +44-(0)-87-0000-3081 or
(0)-80-0692-0831 and entering reservation number 21470298.
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, Global Crossing UK provides carrier services to national and
international communications service providers.
ABOUT GLOBAL CROSSING
Global Crossing (Nasdaq: GLBC) is a leading global IP and Ethernet
solutions provider with the world's first integrated global IP-based network.
The company offers a full range of data, voice and collaboration services
with an industry leading customer experience to approximately 40 percent of
the Fortune 500, as well as to 700 carriers, mobile operators and ISPs. It
delivers converged IP services to more than 700 cities in more than 70
countries 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.
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 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 the tightening of budgets by UK government
agencies, including significant customers of GCUK; 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 in an amount sufficient to pay our indebtedness and to fund our
other liquidity needs; 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 Contact Michael Schneider +1-973-937-0146 Michael.Schneider@globalcrossing.com Analysts/Investors Contacts Mark Gottlieb +1-800-836-0342 firstname.lastname@example.org Gino Mathew United Kingdom +1-973-937-0133 email@example.com
6 Schedules to Follow Schedule 1: Consolidated Statements of Financial Position Schedule 2: Consolidated Statements of Operations Schedule 3: Consolidated Statements of Cash Flows Schedule 4: Summary of Consolidated Revenues Schedule 5: Supplemental Information provided pursuant to the indenture governing the GCUK senior secured notes Schedule 6: Reconciliation of OIBDA to Net Loss Global Crossing (UK) Telecommunications Limited and Subsidiaries Schedule 1 Consolidated Statements of Financial Position Results below are in pounds sterling in thousands March 31, December 31, 2010 2009 ---- ---- (unaudited) Non-current assets Intangible assets, net 11,396 11,417 Property, plant and equipment, net 155,118 157,526 Investment in associate 218 210 Retirement benefit asset 468 468 Trade and other receivables 34,991 33,230 202,191 202,851 ------- ------- Current assets Trade and other receivables 76,472 58,125 Cash and cash equivalents 32,918 37,331 109,390 95,456 Total assets 311,581 298,307 ======= ======= Current liabilities Trade and other payables (79,015) (81,085) Senior secured notes (11,819) (11,819) Deferred revenue (39,094) (37,313) Provisions (1,610) (1,281) Obligations under finance leases (7,446) (7,310) Other debt obligations (111) (285) (139,095) (139,093) -------- -------- Non-current liabilities Trade and other payables (23,979) (10,830) Senior secured notes (263,834) (255,496) Deferred revenue (88,303) (90,326) Retirement benefit obligation (2,551) (2,551) Provisions (2,067) (2,211) Obligations under finance leases (10,961) (12,262) Other debt obligations - (9) (391,695) (373,685) Total liabilities (530,790) (512,778) Net liabilities (219,209) (214,471) ======== ======== Capital and reserves Equity share capital (101,000 shares outstanding 101 101 at 1 pound each) Capital reserve 31,397 31,271 Accumulated deficit (250,707) (245,843) Total equity (219,209) (214,471) ======== ========
Global Crossing (UK) Telecommunications Limited and Subsidiaries Schedule 2 Consolidated Statements of Operations Results below are in pounds sterling in thousands Three months ended ------------------ March 31, December 31, March 31, 2010 2009 2009 ---------- ------------- ---------- (unaudited) (unaudited) (unaudited) Revenue 77,880 78,126 78,588 Cost of sales (49,095) (50,457) (50,524) Gross profit 28,785 27,669 28,064 Distribution costs (6,528) (5,417) (4,574) Administrative expenses (12,509) (16,839) (16,902) Operating profit 9,748 5,413 6,588 Finance revenue 1,253 1,026 1,237 Finance charges (9,153) (8,538) (8,559) Net foreign exchange (loss)/gain (6,565) 686 (1,299) on foreign currency borrowings, net Loss before tax (4,717) (1,413) (2,033) Tax charge (147) (149) (158) ---- ---- ---- Loss for the period (4,864) (1,562) (2,191) ====== ====== ====== Global Crossing (UK) Telecommunications Limited and Subsidiaries Schedule 3 Consolidated Statements of Cash Flows Results below are in pounds sterling in thousands Three months ended ------------------ March 31, March 31, 2010 2009 ---------- ---------- (unaudited) (unaudited) Operating activities Loss for the period (4,864) (2,191) Adjustments for: Finance costs, net 14,465 8,621 Income tax charges 147 158 Depreciation of property, plant and equipment 8,585 8,262 Amortization of intangible assets 506 394 Amortization of prepaid connection costs 1,701 2,441 Share based payment expense 126 543 Loss/(gain) on disposal of property, plant and equipment 126 (50) Equity income for associate (8) (32) Change in long term deferred revenue (2,023) (3,705) Change in long term other assets and liabilities (209) (1,513) Change in operating working capital: Change in trade accounts receivable and accrued (10,860) (3,188) income Change in trade accounts payable and accrued cost of (7,845) (4,158) access Change in other receivables current (7,950) (3,817) Change in other payables current (175) 2,226 Cash generated from operations (8,278) 3,991 Interest paid (1,113) (528) Net cash (used in)/provided by operating activities (9,391) 3,463 ------ ----- Investing activities Interest received 15 121 Proceeds from disposal of property, plant and equipment - 58 Purchase of property, plant and equipment (5,435) (3,142) ------ ------ Net cash used in investing activities (5,420) (2,963) ------ ------ Financing activities Loans provided by group companies 13,100 - Repayment of employee taxes on share- based payments - (416) Repayments of capital elements under finance leases (2,519) (3,405) Repayment of capital element of other debt obligations (183) (121) Net cash provided by/(used in) financing activities 10,398 (3,942) ------ ------ Net decrease in cash and cash equivalents (4,413) (3,442) Cash and cash equivalents at beginning of period 37,331 36,100 Cash and cash equivalents at end of period 32,918 32,658 ====== ====== Non-cash investing activities: Capital lease and debt obligations incurred 1,354 - ===== ===
Global Crossing (UK) Telecommunications Limited and Subsidiaries Schedule 4 Summary of Consolidated Revenues Results below are in pounds sterling in thousands Three months ended ------------------ March 31, December March 31, 2010 31, 2009 2009 ---------- --------- ---------- (unaudited) (unaudited) (unaudited) Revenues: Enterprise, carrier data and indirect 76,575 76,618 76,589 sales channels Carrier voice 1,180 1,383 1,874 ----- ----- ----- Revenues from third party customers 77,755 78,001 78,463 Revenues from Global Crossing group companies 125 125 125 --- --- Consolidated revenues 77,880 78,126 78,588 ====== ====== ====== Schedule 5 SUPPLEMENTAL INFORMATION PROVIDED PURSUANT TO THE INDENTURE GOVERNING THE GCUK SENIOR SECURED NOTES GCUK is required to provide the holders of its Senior Secured Notes due 2014 with quarterly information pursuant to Section 4.17(a)(2) of the indenture governing such notes. For quarters prior to the first quarter of 2010, GCUK satisfied this requirement by providing the note holders with a quarterly report separate and apart from its quarterly earnings press releases. Starting with the first quarter of 2010, GCUK will satisfy this requirement by providing the note holders with its quarterly earnings press releases. This schedule of supplemental information is being included with the earnings press release to ensure that the information being provided complies with Section 4.17(a)(2) of the indenture. Liquidity and Capital Resources In the long term, GCUK expects its operating results and cash flows to improve as a result of growth of its revenues, including the economies of scale expected to result from such growth, and from ongoing cost management initiatives, including initiatives to optimize the access network and effectively lower unit prices. Thus, in the long term, GCUK expects to generate positive cash flow from operating activities in an amount sufficient to fund all investing and financing requirements, subject to the need to refinance its existing major debt instruments as described below. However, its ability to improve cash flows is subject to the risks and uncertainties discussed below. In the short term, GCUK expects cash provided by operating activities to exceed purchases of property and equipment. In addition, its short term liquidity and more specifically its quarterly cash flows are subject to considerable variability as a result of the timing of interest payments as well as the factors noted below. -- Working capital variability significantly impacts its cash flows and can cause its intra-quarter cash balances to drop to levels significantly lower than those levels prevailing at the end of a quarter. -- Adverse general economic conditions could cause customer buying patterns with GCUK to change as a result of their cash conservation efforts, which could have an adverse impact on its cash flows. Such adverse conditions could also adversely impact its working capital to the extent suppliers seek more timely payment from GCUK or customers pay GCUK on a less timely basis. -- Within 120 days after each calendar year, GCUK must offer to purchase a portion of the Senior Secured Notes at 100% of their principal amount with 50% of the Operating Cash Flow (as defined in the Indenture) for that year. In respect of 2009, it offered to purchase 11.8 million pounds of the Notes, excluding accrued interest and purchased 0.2 million pounds of the Notes, plus accrued interest through the purchase date. -- GCUK's liquidity may also be adversely affected if it is found liable in respect of contingent legal, tax and other liabilities. The amount and timing of the resolution of these contingencies remain uncertain. Financing activities On March 30, 2010, GCUK entered into a 0.9 million pounds finance lease facility with Huawei Technologies (UK) Co Ltd which was fully drawn down at that time. The lease is subject to an applicable rate of interest of 8% per annum, with payments made over a period of 18 months from April 30, 2010. On March 31, 2010, GCUK borrowed $20.0 million from Global Crossing Europe Limited ("GCE"), a subsidiary of Global Crossing Limited. The loan matures on September 15, 2013 and accrues interest at 12% per annum, payable semi- annually on March 15 and September 15 of each year. Global Crossing (UK) Telecommunications Limited and Subsidiaries Schedule 6 Reconciliation of OIBDA to Net Loss Results below are in pounds sterling in thousands Pursuant to the SEC's Regulation G, the following table provides a reconciliation of OIBDA, which is considered a non-GAAP (Generally Accepted Accounting Principles) financial measure, to net loss under IFRS. OIBDA is defined as operating profit before depreciation and amortization and foreign exchange gains (losses) on operating working capital movements, based upon our consolidated statements of operations. OIBDA differs from operating profit, in that it excludes depreciation and amortization. Such excluded expenses primarily reflect the non-cash impacts of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods. In addition, OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for reinvestment, distributions or other discretionary uses. Management uses OIBDA as an important part of our internal reporting and planning processes and as a key measure to evaluate profitability and operating performance, make comparisons between periods, and to make resource allocation decisions. Management believes that the investment community uses similar performance measures to compare performance of competitors in our industry. There are material limitations to using non-GAAP financial measures. Our calculation of OIBDA may differ from similarly titled measures used by other companies, and may not be comparable to those other measures. Additionally, OIBDA does not include certain significant items such as depreciation and amortization, finance revenue, finance charges, foreign exchange gains (losses) income taxes and other non-operating profit or loss items. OIBDA should be considered in addition to, and not as a substitute for, other measures of financial performance reported in accordance with GAAP. Management believes that OIBDA is useful to our investors as it is a relevant indicator of operating performance, especially in a capital- intensive industry such as telecommunications. OIBDA provides investors with an indication of the underlying performance of our everyday business operations. It excludes the effect of items associated with our capitalization and tax structures, such as interest income, interest expense and income taxes, and of other items not associated with our everyday operations.
Three months ended ------------------ March 31, December March 31, 2010 31, 2009 2009 ---------- --------- ---------- (unaudited) (unaudited) (unaudited) Net loss (4,864) (1,562) (2,191) Tax charge 147 149 158 Finance revenue (1,253) (1,026) (1,237) Finance charges 9,153 8,538 8,559 Net foreign exchange loss/(gain) on foreign currency borrowings, net 6,565 (686) 1,299 ----- ---- ----- Operating profit 9,748 5,413 6,588 Depreciation and 10,219 10,657 10,463 amortization Other foreign exchange gain 396 (210) 285 (loss), loss on disposal of fixed --- ---- --- assets and other income OIBDA 20,363 15,860 17,336 ====== ====== ======
GLOBAL CROSSING, Press, Michael Schneider, +1-973-937-0146, Michael.Schneider at globalcrossing.com, or Analysts/Investors, Mark Gottlieb, +1-800-836-0342, glbc at globalcrossing.com, or Gino Mathew, United Kingdom, +1-973-937-0133, gino.mathew at globalcrossing.com
Tags: Global Crossing, June 14, London, United Kingdom