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Global Crossing Reports GCUK's Second Quarter 2011 Results

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Global Crossing Reports GCUK's Second Quarter 2011 Results

PR Newswire

LONDON, Sept. 12, 2011 /PRNewswire/ -- Global Crossing Limited (NASDAQ: GLBC), a leading global IP solutions provider, today announced second-quarter results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK).

Highlights

For the second quarter of 2011, GCUK generated revenue of 72 million pounds and Operating Income Before Depreciation and Amortization (OIBDA) of 12 million pounds.  (OIBDA is a non-GAAP measure defined and reconciled below.)  The company also reported cash generated from operations of 8 million pounds before interest payments of 16 million pounds.  

"We continue to invest in advanced IP-based networking solutions and highly skilled sales resources to expand and diversify our enterprise customer base in the UK," said John Legere, chief executive officer of Global Crossing.  "Meanwhile, we are successfully positioning for broader opportunities with UK government customers.  In fact, GCUK was recently approved as a supplier for UK Government's Managed Telecommunications Convergence Framework, which broadens our addressable market opportunity to an additional 6 million government users.  We also received full Public Service Network certification from the UK Cabinet Office for delivery of its Government Conveyance Network and PSN Internet Protocol Virtual Private Network services to the Public Sector."

Second Quarter Results

GCUK generated revenue of 72 million pounds in the second quarter, a sequential decrease of 2 percent and a year-over-year decrease of 7 percent.  Sequentially, GCUK revenue declined due to lower equipment sales, partially offset by higher sales of services to non-government enterprise customers.  Year-over-year, "invest and grow" revenue declined principally due to price reductions associated with recent contract renewals and extensions, accompanied by lower equipment sales.

Gross profit was 26 million pounds for the quarter, essentially flat sequentially and a decrease of 3 million pounds year-over-year.  The year-over-year decrease was primarily driven by lower revenue.  

GCUK's OIBDA for the second quarter was 12 million pounds, compared to 13 million pounds in the first quarter of 2011 and 15 million pounds in the second quarter of 2010.  The sequential and year-over-year decreases were primarily due to price reductions associated with recent contract renewals and extensions.

GCUK recorded a net loss of 5 million pounds for the second quarter, compared with a net loss of 1 million pounds in the first quarter of 2011 and a net loss of 3 million pounds in the second quarter of 2010.  The sequential increase in net loss was primarily due to unfavorable foreign exchange impacts on net U.S. dollar denominated debt. The year-over-year increase in net loss was primarily due to lower OIBDA.

Cash and Liquidity

As of June 30, 2011, GCUK had cash and cash equivalents of 27 million pounds, compared with 37 million pounds on March 31, 2011 and 38 million pounds on June 30, 2010.  

GCUK's cash and cash equivalents decreased 10 million pounds in the second quarter.  Net cash used in operating activities during the second quarter totaled 8 million pounds after interest payments of 16 million pounds.  During the quarter, GCUK recorded purchases of property, plant and equipment of 3 million pounds and principal payments on finance leases of 1 million pounds.  

International Financial Reporting Standards

GCUK's results reported here include unaudited consolidated financial results for the three months ended June 30, 2011, March 31, 2011 and June 30, 2010; the unaudited consolidated balance sheet as of June 30, 2011; and the audited consolidated balance sheet as of December 31, 2010, all in accordance with IFRS and in pounds sterling, as published by the International Accounting Standards Board (IASB).  GCUK's results for the second quarters of 2011 and 2010 and the first quarter of 2011 were included in Global Crossing's consolidated results previously reported on July 27, 2011, 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.

ABOUT GLOBAL CROSSING

Global Crossing (NASDAQ: GLBC) is a leading global IP, Ethernet, data center and video solutions provider with the world's first integrated global IP-based network.  The company offers a full range of data, voice, collaboration, broadcast and media services delivered with superior customer service. 

Global Crossing provides services to enterprises (including approximately 40 percent of the Fortune 500); government departments and agencies; and 700 carriers, mobile operators and ISPs.  It delivers converged IP services to more than 700 cities in more than 70 countries, and has 17 world-class data centers in major business centers around the globe.

Please visit www.globalcrossing.com for more information about Global Crossing.

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 http://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 failure to occur of any condition to the closing of the acquisition of Global Crossing by Level 3 and uncertainties as to the timing of the closing; the failure to achieve or any delay in achieving expected synergies and other financial benefits from the acquisition; changes in Global Crossing's risk profile resulting from the acquisition; limitations on Global Crossing's financial and operational flexibility that arise under the covenants in the amalgamation agreement that could restrict it from taking advantage of opportunities to strategically enhance its business or improve its capital structure; delays or reductions in purchases from Global Crossing by customers because of their perceived uncertainty about its ability to meet their needs after closing of the acquisition; disruptions in Global Crossing's business due to current and prospective employees experiencing uncertainty about their future roles with the company and the diversion of their time and attention from ongoing business operations; Global Crossing's history of substantial operating losses and the fact that, in the near term, funds from operations will not satisfy cash requirements; the availability of future borrowings in an amount sufficient to pay Global Crossing's indebtedness and to fund its other liquidity needs; legal and contractual restrictions on the inter-company transfer of funds by Global Crossing's subsidiaries; Global Crossing'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 Global Crossing'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 Global Crossing's substantial international operations; risks associated with movements in foreign currency exchange rates; risks related to restrictions on the conversion of the Venezuelan bolivar into U.S. dollars and to the resultant buildup of a material excess bolivar cash balance, which is carried on Global Crossing's books at the official exchange rate, attributing to the bolivar a value that is significantly greater than the value that would prevail on an open market; potential weaknesses in internal controls of acquired businesses, and difficulties in integrating internal controls of those businesses with Global Crossing's own internal controls; exposure to contingent liabilities; and other risks referenced from time to time in Global Crossing'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
Kate Rankin
+ 1 973 937 0417
Kate.Rankin@globalcrossing.com

Analysts/Investors Contact
Mark Gottlieb
+ 1 800 836 0342
glbc@globalcrossing.com

Gino Mathew
United Kingdom
+ 1 973 937 0133
gino.mathew@globalcrossing.com

IR/PR1

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



Schedule 1

Global Crossing (UK) Telecommunications Limited and Subsidiaries

Consolidated Statements of Financial Position

Results below are in pounds sterling in thousands








June 30,


December 31,


2011


2010



(unaudited)










Non-current assets






Intangible assets, net


10,789



10,524

Property, plant and equipment, net


128,046



139,269

Investment in associate


182



218

Retirement benefit asset


299



299

Trade and other receivables


39,363



38,768









178,679



189,078







Current assets






Trade and other receivables, net


58,787



49,718

Cash and cash equivalents


26,564



49,224









85,351



98,942







Total assets


264,030



288,020







Current liabilities






Trade and other payables


(69,510)



(72,680)

Senior secured notes


(1,207)



(10,857)

Deferred revenue


(36,289)



(39,608)

Provisions


(1,219)



(2,011)

Obligations under finance leases


(6,726)



(7,111)

Other debt obligations


-



(18)









(114,951)



(132,285)







Non-current liabilities






Trade and other payables


(22,348)



(22,874)

Senior secured notes


(267,772)



(262,538)

Deferred revenue


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