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Global Crossing Reports GCUK's Fourth Quarter and Full Year 2008 Results
London - April 8, 2009 -- Global Crossing Limited (NASDAQ: GLBC), a leading global IP solutions provider, today announced fourth quarter and full year 2008 financial results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK).
Highlights
GCUK generated 82 million pounds in revenue in the fourth quarter, with Adjusted Gross Margin of 68 percent, or 56 million pounds, and Adjusted IFRS EBITDA of 13 million pounds. (Adjusted Gross Margin and Adjusted IFRS EBITDA are both non-GAAP measures that are defined and reconciled below.) The company also generated 25 million pounds in cash from operations before interest payments of 16 million pounds.
"In 2008, we continued to strengthen and grow GCUK's market position by offering advanced IP solutions that provide unified communications capabilities and significant cost efficiencies for our customers," said John Legere, Global Crossing's chief executive officer. "While broadening our customer base in our target markets, we continue to focus on providing superior service and support as key differentiators in a highly competitive marketplace."
Fourth Quarter Results
GCUK generated revenue of 82 million pounds, essentially flat on a sequential basis and an increase of 6 million pounds, or 7 percent, year over year. The year-over-year increase came from strength in the company's "invest and grow" category - namely that part of the business focused on serving enterprises and carrier customers excluding wholesale voice - slightly offset by partial attrition of the Camelot contract.
Adjusted Gross Margin for the fourth quarter of 2008 was 56 million pounds, or 68 percent of revenue. This was flat when compared with the prior quarter in which Adjusted Gross Margin was also 56 million pounds, or 68 percent of revenue, and an increase from the fourth quarter of 2007 in which Adjusted Gross Margin was 53 million pounds, or 70 percent of revenue.
Cost of revenue, which includes cost of access, technical real estate, network and operations, third party maintenance and cost of equipment sales, was 51 million pounds for the quarter, compared to 52 million pounds in the prior quarter and 45 million pounds in the fourth quarter of 2007. The year-over-year increase was primarily due to higher access, equipment and professional services costs associated with increased revenue.
Sales, general and administrative expenses (SG&A) were 14 million pounds for the quarter, compared to 10 million pounds in the prior quarter and 8 million pounds in the fourth quarter of 2007. The sequential and year-over-year variances were primarily due to an adjustment to the annual allocation of corporate overhead costs.
GCUK's Adjusted IFRS EBITDA for the fourth quarter was 13 million pounds, compared with 21 million pounds in the third quarter of 2008 and 22 million pounds in the fourth quarter of 2007.
The sequential and year-over-year decreases were primarily due to an adjustment to the annual allocation of corporate overhead costs, as well as foreign exchange translation losses on working capital.
GCUK recorded a net loss of 25 million pounds for the fourth quarter of 2008, compared with a net loss of 7 million pounds in the third quarter of 2008 and a net loss of 2 million pounds in the fourth quarter of 2007. The net loss in the fourth quarter included foreign exchange translation losses on the US dollar-denominated Senior Secured Notes of 28 million pounds, as compared to 10 million pounds in the prior quarter and 2 million pounds in the year-ago quarter. The year-over-year increase in net loss was partially offset by a reduction in the provision for income taxes of 5 million pounds, primarily due to a reduction of the deferred tax asset in the year-ago quarter.
Full Year Results
GCUK generated revenue of 323 million pounds in 2008, compared with 297 million pounds for 2007. This represents an increase of 26 million pounds, or 9 percent on a year-over-year basis. Revenue increased primarily due to strong demand for our products and services from enterprise customers, as well as growth from UK carrier customers that continue to enhance both their mobile broadband and next generation services.
Adjusted Gross Margin for 2008 was 222 million pounds, or 69 percent of revenue, compared to the prior year in which Adjusted Gross Margin was 209 million pounds, or 70 percent of revenue.
Cost of revenue was 204 million pounds for the year, compared to 185 million pounds in the prior year. The year-over-year increase was primarily due to higher access, equipment and professional services costs associated with increased revenue.
SG&A was 43 million pounds for the year, compared to 36 million pounds in the prior year. The year-over-year increase was primarily due to higher payroll costs as well as increases in expenses due to one-time property-related rebates in 2007.
GCUK's Adjusted IFRS EBITDA for 2008 was 77 million pounds, compared with 78 million pounds in 2007.
GCUK recorded a net loss of 30 million pounds for 2008, compared with a net loss of 2 million pounds in 2007. The net loss in 2008 included foreign exchange translation losses on the US dollar- denominated Senior Secured Notes of 38 million pounds in 2008, as compared to 2 million pounds translation gain in the prior year. The year-over-year increase in net loss was partially offset by a reduction in the provision for income taxes of 5 million pounds, primarily due to a reduction of the deferred tax asset in the previous year.
Cash and Liquidity
As of December 31, 2008, GCUK had cash and cash equivalents of 36 million pounds compared to 34 million pounds at the end of September 30, 2008, and 24 million pounds at the end of December 31, 2007.
Cash generated from operations during the fourth quarter totaled 25 million pounds. GCUK's cash and cash equivalents increased 2 million pounds in the fourth quarter, after interest payments of 16 million pounds and capital expenditures and principal payments on finance leases of 8 million pounds.
Cash generated from operations during 2008 totaled 74 million pounds. GCUK's cash and cash equivalents increased 12 million pounds in the year, after interest payments of 33 million pounds and capital expenditures and principal payments on finance leases of 32 million pounds.
Non-GAAP Financial Measures
Consistent with the U.S. Securities and Exchange Commission's (SEC's) Regulation G, the attached tables include definitions of Adjusted IFRS 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 International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB).
International Financial Reporting Standards
GCUK's results reported here include audited consolidated financial results for the year ended December 31, 2007; unaudited consolidated financial results for the year ended December 31, 2008 and the three months ended December 31, 2008 and 2007; audited consolidated balance sheet as of December 31, 2007; and unaudited consolidated balance sheet as of December 31, 2008, in accordance with IFRS. GCUK's fourth quarter 2008 and 2007 results, as well as those for the full years 2008 and 2007, were included in Global Crossing's consolidated results previously reported on February 16, 2009, in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP).
Conference Call
Management has scheduled a conference call for Wednesday, April 8, 2009, 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 2926 or +44 (0) 20 3300 0097. 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 Wednesday, April 8, 2009, beginning at 11:00 a.m. EDT/4:00 p.m. BST and will be accessible until Wednesday, April 15, 2009, 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 21419045. UK callers may access the replay by dialing +44 (0) 87 0000 3081 or +44 (0) 80 0692 0831 and entering reservation number 21419045.
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 more than 690 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; 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; potential weaknesses in internal controls of acquired businesses, and difficulties in integrating internal controls of those businesses with GCUK's 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; 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. GCUK 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
Suzanne Lipton
+ 1 800 836 0342
glbc@globalcrossing.com
Gino Mathew
United Kingdom
+ 1 973 937 0133
gino.mathew@globalcrossing.com
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