|
Global Crossing Reports GCUK's First Quarter 2007 Results
London - June 14, 2007 -- Global Crossing (NASDAQ: GLBC) today announced first quarter financial results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK).
Highlights
GCUK generated 75 million pounds in revenue, with adjusted gross margin (defined as revenue minus cost of access) at 69 percent of revenue in the first quarter of 2007. The company generated 18 million pounds of earnings before net financing costs, taxes, depreciation and amortization (EBITDA) and 7 million pounds of cash from operations.
As reported previously, Global Crossing acquired Fibernet in October 2006 and sold it to GCUK on December 28, 2006. GCUK's results for the first quarter of 2007 reflect the first full quarter of financial contribution from the Fibernet business. The integration of Fibernet into GCUK's operations is proceeding well and is nearly complete.
During the first quarter, GCUK announced a five-year contract renewal with National Express Group for a 200-site managed IP VPN supporting converged services. More recently, GCUK announced that it will provide Newsquest Media Group, the UK's second largest regional newspaper publisher, with data and VoIP-ready IP VPN capabilities to 160 sites as part of a five-year contract. On June 12, 2007, the company announced the extension of one of its largest contracts, the Managed Telecommunication Service (Mts) for OGCbuying.solutions, under which it is providing managed telephony, data network services, hosted IP telephony and mobile working services; the extension of the contract is valued at approximately 105 million pounds and now runs through December 2011.
"The recent string of significant contract renewals and new customer wins shows the potential of our UK business and Global Crossing as a whole," said John Legere, Global Crossing's chief executive officer. "With the acquisition of Fibernet now complete and the integration process in the final stages, we expect to build on our success with streamlined operations, an even stronger service offering and expanded network reach throughout the UK."
Revenue, Margin and Costs
During the first quarter of 2007, GCUK generated revenue of 75 million pounds, 98 percent of which was generated from the "invest and grow" segment - namely, that part of the business focused on serving global enterprises, carrier data and indirect channel customers. This represents a 22 percent sequential increase over the previous quarter, when revenue was 62 million pounds, and a 28 percent year-over-year increase from 59 million pounds in the first quarter of 2006. The sequential and year-over-year increases are attributable to the inclusion of Fibernet's UK operations into GCUK, incremental billings resulting from a settlement with a customer and an increase in equipment sales to a large customer. Adjusted gross margin (as further defined in Table 7 that follows) was 52 million pounds during the first quarter of 2007, compared with 42 million pounds in the fourth quarter of 2006 and 41 million pounds in the first quarter of 2006.
Cost of revenue, which includes cost of access, technical real estate, network and operations, third party maintenance and cost of equipment sales, was 49 million pounds for the quarter, compared to 43 million pounds in the fourth quarter of 2006 and 38 million pounds in the first quarter of 2006. Cost of access increased year over year due to the addition of Fibernet operations as well as costs associated with increased enterprise and carrier voice volume. In addition, the year-over-year cost of revenue increase also reflected higher cost of equipment sales. Sales, general and administrative expenses (SG&A) in the first quarter were 8 million pounds, compared with 9 million pounds in the fourth quarter of 2006 and 8 million pounds in the first quarter of 2006.
Earnings
GCUK's EBITDA for the first quarter, as defined in Table 5 that follows, was 18 million pounds, compared with 20 million pounds in the fourth quarter of 2006 and 14 million pounds in the first quarter of 2006. The sequential EBITDA decline was due to an 8 million pound net gain arising from the acquisition of Fibernet that was recorded in the fourth quarter of 2006 (see Table 2 for reference). The increase in EBITDA on a year-over-year basis was primarily attributable to inclusion of Fibernet's operations in first quarter results.
GCUK recorded a net profit of approximately 1 million pounds for the first quarter of 2007, compared with a net loss of 2 million pounds in the fourth quarter of 2006 and a net profit of 5 million pounds in the first quarter of 2006. The year-over-year change in net profit was primarily due to an increase in finance charges driven by a favorable non-cash exchange rate movement on the company's senior secured notes in the first quarter of 2006 and issuing additional senior secured notes in December, as well as recognition of an additional deferred tax asset in the first quarter of 2006.
Cash Position
As of March 31, 2007, GCUK had 38 million pounds of cash and cash equivalents. In the first quarter, GCUK had cash generated from operations of 7 million pounds and made interest payments totaling 1 million pounds on its capital leases. GCUK used a total of 2 million pounds of cash in the first quarter, including 11 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 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).
International Financial Reporting Standards
GCUK's results reported here include unaudited consolidated financial results for the three months ended March 31, 2007 and 2006 and December 31, 2006; unaudited consolidated balance sheets as of March 31, 2007; and the audited consolidated balance sheet as of December 31, 2006, in accordance with IFRS, as adopted by the European Union. GCUK's results for the first quarters of 2007 and 2006 and the fourth quarter of 2006 were included in Global Crossing's consolidated results previously reported on May 10, 2007, in accordance with U.S. GAAP.
Conference Call
Management has scheduled a conference call for Thursday, June 14, 2007, at 9:00 a.m. EDT/2:00 p.m. BST to discuss GCUK's financial results. The call may be accessed by dialing +1 212 271 4642 or +44 (0) 870 001 3140. 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 Thursday, June 14, 2007, beginning at 11:00 a.m. EDT/4:00 p.m. BST and will be accessible until Thursday, June 21, 2007 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 21340100. UK callers may access the replay by dialing +44 (0) 870 000 3081 or 0800 692 0831 and entering reservation number 21340100.
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.
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. Its network is linked into the wider Global Crossing network that connects more than 320 major cities in 31 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 320 cities in 31 countries worldwide, and delivers services to more than 600 cities in 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 data, voice and security products, to approximately 40 percent of the Fortune 500, as well as 700 carriers, mobile operators and ISPs. Its Professional Services and Managed Solutions provide VoIP, security and network consulting and management services to support its Global Crossing IP VPN service and Global Crossing VoIP services. Global Crossing was the first -- and remains the only -- global communications provider with IPv6 natively deployed in both its private and public backbone networks.
Please visit www.globalcrossing.com or blogs.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 GCUK's actual results to differ materially, including: the ability to successfully integrate the Fibernet business and realize the benefits anticipated from the acquisition of Fibernet; dependence on a number of key personnel; the level of competition in the marketplace; pricing pressures resulting from technology advances and regulatory changes; competitive disadvantages relative to competitors with superior resources; the concentration of revenue in a limited number of customers; customer contracts typically do not have firm commitments to purchase minimum levels of revenue or services; the reliance on a limited number of third party suppliers; periodic reviews of the company's financial condition by certain of the company's government customers; a change of control could lead to the termination of many of the company's government contracts; insolvency could lead to termination of certain of the company's contracts; slower than anticipated adoption by customers of next generation products; the influence of the company's parent, and possible conflicts of interest of the parent or of certain of GCUK's directors and officers; 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
Jo Graves
Europe
+ 44 (0) 1256 858 403
EuropePR@globalcrossing.com
Analysts/Investors Contacts
Laurinda Pang
+ 1 800 836 0342
glbc@globalcrossing.com
Gino Mathew
+ 1 973 937 0133
glbc@globalcrossing.com
|