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Global Crossing Reports GCUK's Third Quarter 2006 Results
London - December 8, 2006 -- Global Crossing (NASDAQ: GLBC) today announced unaudited third quarter financial results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK).
Highlights
GCUK continued to perform steadily in the third quarter, generating a sequential increase in its "invest and grow" segment, namely that part of the business focused on serving global enterprises, carrier data and indirect channel customers. GCUK generated revenue of 60 million pounds and EBITDA margin of 24 percent of revenue. On October 11, 2006, Global Crossing completed its acquisition of UK-based Fibernet, and integration of Fibernet's customer networks, complementary services and operational systems is already well underway.
"We continue to assert ourselves as a leader in the highly-competitive and rapidly-consolidating UK market by expanding our regional and global capabilities to provide customers with a superior experience," said John Legere, Global Crossing's chief executive officer. "Since the third quarter we have taken steps to further strengthen our competitive position in the UK, as well as continue to meet the growing demand for global converged IP services, Ethernet and managed service offerings."
Revenue, Margin and Costs
GCUK generated total revenue of 60 million pounds sterling, including a 1 million pound sequential increase in its "invest and grow" segment. Revenue for the third quarter of 2006 increased by 3 percent compared with the third quarter of 2005, including contributions from the recently signed contract for managed telephony and conferencing for the Crown Prosecution Service.
Adjusted gross margin, as defined in Table 7 below, was 41 million pounds or 68 percent of revenue for the third quarter of 2006, compared to 40 million pounds or 67 percent of revenue in the second quarter of 2006.
Cost of revenue, which includes cost of access; real estate, network and operations; third party maintenance and cost of equipment sales, was 39 million pounds in the third quarter, flat compared with the second quarter of 2006. Sales, general and administrative expenses (SG&A) were also flat sequentially at 7 million pounds for the third quarter.
Earnings
GCUK's earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2006, as defined in Table 5 that follows, were 15 million pounds, compared with 13 million pounds in the second quarter of 2006.
GCUK's net income for the third quarter of 2006 was 4 million pounds, compared with net income of 6 million pounds in the second quarter.
Cash Position
As of September 30, 2006, GCUK had 28 million pounds sterling of cash and cash equivalents. During the third quarter of 2006, GCUK generated 5 million pounds sterling of cash, after using 6 million pounds for capital expenditures and principal payments on capital leases.
Non-GAAP Financial Metrics
Consistent with the Securities and Exchange Commission's (SEC's) Regulation G, the attached schedules include definitions of EBITDA and adjusted gross margin, which are non-GAAP financial metrics, as well as reconciliations of such measures to the most directly comparable financial metrics calculated and presented in accordance with International Financial Reporting Standards (IFRS).
International Financial Reporting Standards ("IFRS")
GCUK's results reported here include unaudited consolidated financial results for the three and nine months ended September 30, 2006 and September 30, 2005, and unaudited consolidated balance sheet as of September 30, 2006 and audited consolidated balance sheet as of December 31, 2005, in accordance with IFRS, as adopted by the European Union. GCUK's third quarter 2006 and 2005 results were included in Global Crossing's consolidated results previously reported on November 9, 2006, in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP).
Conference Call
Management has scheduled a conference call for Friday, December 8, 2006 at 9:00 a.m. EST/2:00 p.m. GMT to discuss GCUK's financial results. The call may be accessed by dialing +1 212 896 6169 or +44 (0) 870 001 3140. Callers are advised to dial in 15 minutes prior to the 9:00 a.m. EST start time. The call will also be Webcast at investors.globalcrossing.com/results.cfm.
A replay of the call will be available on Friday, December 8, 2006 beginning at 11:00 a.m. EST/4:00 p.m. GMT and will be accessible until Friday, December 15, 2006 at 11:00 a.m. EST/4:00 p.m. GMT. To access the replay, dial +1 402 977 9140 or +1 800 633 8284 and enter reservation number 21310244. UK callers may access the replay by dialing +44 (0) 870 000 3081 or 0800 692 0831 and entering reservation number 21310244.
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 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 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 major cities in 29 countries worldwide, and delivers services to more than 600 cities in 60 countries and 6 continents around the globe.
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 in 29 countries worldwide, and delivers services to more than 600 cities in 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 Solutions and Global Crossing VoIP services, to 36 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs.
Please visit www.globalcrossing.com or blogs.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 possibility that the proposed acquisition of Impsat is not completed due to the failure of a closing condition, the making of a superior offer by another bidder or the failure to obtain acquisition financing as contemplated by the financing commitment provided by Credit Suisse; failure to achieve expected synergies or operating results resulting from the acquisition of Fibernet or Impsat; Global Crossing'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 deficiencies in the company's internal controls and possible difficulties and delays in improving such controls; potential weaknesses in internal controls of acquired businesses, and difficulties in integrating internal controls of those businesses with the company's own internal 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 contingent liabilities; and other risks referenced from time to time in the company's and Impsat'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
Becky Yeamans
+ 1 973 937 0155
PR@globalcrossing.com
Adriana Huerta
Latin America
+ 1 305 808 5919
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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