|
Global Crossing Announces Consolidated Third Quarter Results
Florham Park, NJ - November 9, 2005 -- Global Crossing (NASDAQ: GLBC) today reported financial and operational results for the third quarter of 2005.
Highlights
Global Crossing's year-over-year improvement shows continued execution of its business transformation initiatives. The company's "invest and grow" revenue -- that is, revenue from Global Crossing's core businesses serving global enterprises, collaboration and carrier data customers through direct and indirect channels -- grew by 2 percent to $269 million in the third quarter, reflecting data and conferencing revenue growth of 7 percent. "Invest and grow" revenue generated outside of the company's UK business continued to strengthen, with a $15 million or 10 percent increase year over year. "Invest and grow" Adjusted Gross Margin grew 8 percent to $143 million.
The company also continued efforts to drive the business closer to profitability, yielding a 30-percent decline in cost of access year over year. Improvements in the company's revenue mix, lower wholesale voice volumes and network efficiencies contributed to the lower costs.
"We continue to meet our targets, demonstrating momentum as we become the premier network services provider, serving our carrier and enterprise customers with global converged IP services," said John Legere, Global Crossing's chief executive officer. "We've extended our reach into 12 key markets in mainland China through an agreement with CPCNet, and we became the first global VoIP provider rated as 'SIP-compliant' by Avaya. Our focus on delivering converged IP services is unwavering."
Global Crossing carried close to seven billion minutes of Voice over Internet Protocol (VoIP) traffic during the third quarter, comprising 64 percent of the company's voice traffic. Since the end of 2004, Global Crossing's IP traffic has increased from 90 Gbps to 122 Gbps. Global Crossing's IP VPN traffic, which supports converged IP solutions for enterprise customers around the world, grew 300 percent on an annualized basis, highlighting the increased uptake in these scalable, high-performance solutions by the company's customers.
Product and service news during the third quarter included Global Crossing's E911 offer for VoIP service providers, supporting the ongoing adoption of VoIP in the marketplace. In October the company announced the deployment of IPv6 in its global network. This powerful standard, the adoption of which has been mandated by the U.S. government, simplifies mobile networking and lays the groundwork for the deployment and adoption of next-generation IP-based applications. Global Crossing also released a number of key enhancements to its flagship IP VPN service in October, delivering an increasingly powerful and versatile solution for businesses, and it announced expansion of its telecommunications license in Mexico. The license now permits the company to sell international and domestic long-distance services directly to Mexican-based businesses and carriers, opening the door to the possibility of delivering VoIP services to this important market.
Revenue and Margin
Revenue for the third quarter of 2005 was $481 million, representing a year-over-year decline of 22 percent and well ahead of the trajectory required to meet the company's revenue guidance. "Invest and grow" revenue grew by 2 percent year over year to $269 million, while wholesale voice revenue declined 41 percent to $189 million.
"Our goal in transforming Global Crossing's business was to achieve higher margins by focusing on the higher-quality IP revenue for which our network was built," continued Mr. Legere. "Today's results are good news for Global Crossing, showing solid performance in our area of focus. Our business transformation is on track."
Adjusted Gross Margin (defined in the tables that follow) as a percentage of revenue was 36 percent in the third quarter of 2005, compared to 30 percent in the third quarter of 2004. Adjusted Gross Margin dollars were $175 million, compared to $185 million in the third quarter of 2004 -- a 5 percent decline compared to the 22 percent decline in revenue. On a year-to-date basis, Adjusted Gross Margin dollars increased 3 percent, while revenue declined 21 percent.
Adjusted Gross Margin in the "invest and grow" category was $143 million in the third quarter of 2005, representing 8 percent year-over-year growth.
Outside of cost of access expense, the company reduced its sales, general and administrative expense by $17 million year over year to $195 million in the third quarter, while costs of equipment sales increased by $5 million during the same time period.
Earnings
For the third quarter of 2005, Adjusted EBITDA (as defined in the tables that follow) was reported at a loss of $33 million, compared with a loss of $35 million in the third quarter of 2004.
Consolidated loss applicable to common shareholders in the third quarter of 2005 was $95 million, compared to a loss of $96 million in the third quarter of 2004.
Cash and Liquidity
As of September 30, 2005, unrestricted cash and cash equivalents were $260 million. Restricted cash was $23 million. Global Crossing used $45 million of cash in the third quarter, including $19 million of cash for capital expenditures and capital leases.
Guidance
Below is a summary of the specific financial guidance for 2005 provided on March 16, 2005, and year-to-date results for the first three quarters of the year.
Pursuant to the Securities and Exchange Commission's Regulation G, the attached schedules include definitions of Global Crossing's Adjusted 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 U.S. Generally Accepted Accounting Principles (U.S. GAAP).
Conference Call
The company will hold a conference call for Wednesday, November 9, 2005, at 9:00 a.m. EST to discuss its financial results. The call may be accessed at +1 212 896 6121 or +44 (0) 870 001 3135. Callers are advised to access the call 15 minutes prior to the start time. A Webcast will also be available at www.globalcrossing.com/xml/investors/index.xml.
A replay of the call will be available on Wednesday, November 9, 2005, beginning at 11:00 a.m. EST and will be accessible until Wednesday, November 16, 2005, at 11:00 a.m. EST. The replay may be accessed by dialing +1 402 977 9140 or +1 800 633 8284 and enter reservation 21266134. Callers in the UK can dial +44 (0) 870 000 3081 or 0800 692 0831 and entering reservation number 21266134.
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 major cities, 60 countries and 6 continents around the globe. The company'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. The company 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.
###
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
Tisha Kresler
+ 1 973 937 0146
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
|