Global Crossing Reports GCUK's Third Quarter Results

    LONDON, Nov. 16 /PRNewswire-FirstCall/ -- Global Crossing (Nasdaq:   GLBC)
 today reported financial results for the third quarter of 2005 for its Global
 Crossing (UK) Telecommunications Limited (GCUK) subsidiary in accordance with
 U.K. Generally Accepted Accounting Principles (UK GAAP). These results were
 previously announced as part of Global Crossing's consolidated results, which
 were reported on November 9, 2005 in accordance with U.S. Generally Accepted
 Accounting Principles (US GAAP).
 
     Highlights
     GCUK generated 8 million pounds sterling of cash and 17 million pounds of
 EBITDA in the third quarter.  Revenue was 59 million pounds, with Adjusted
 Gross Margin (as defined in Table 7 that follows) of 43 million pounds.  The
 company secured 199 new orders from new and existing customers during the
 third quarter, including a new framework agreement with the Southeast Network
 for Telecommunications (SENT) consortium and a contract renewal through 2012
 with systems integrator Steria.
     "Our UK business generated 8 million pounds of cash in the third quarter,
 providing clear evidence that the business is in good shape," said John
 Legere, Global Crossing's chief executive officer. "With underlying revenue
 from long-term enterprise contracts remaining stable and new contracts like
 the British Council and the Forestry Commission beginning to come on stream,
 GCUK will continue to be a strong performer and a leader in the UK's managed
 services market."
     Global Crossing also announced during the quarter the creation of a next-
 generation converged services platform for the UK rail industry, namely the
 upgrade of RailNet, one of the largest private networks in Europe.  Product
 news in the quarter included the introduction of a new hosted IP voice
 service, the provision of improved mobility and integrated messaging for
 65,000 RailNet users and an enhanced version of the company's flagship IP VPN
 service.
 
     Revenue and Margin
     GCUK revenue for the third quarter of 2005 was 59 million pounds, compared
 with 66 million pounds in the third quarter of 2004. The year-over-year
 decline reflects the same customer losses reported in the first quarter of
 2005, which were described in the company's annual report to note holders for
 the year ended December 31, 2004.  There were no additional significant
 customer losses during the third quarter.
     Adjusted Gross Margin was 43 million pounds in the third quarter, compared
 to 40 million pounds in the third quarter of 2004.  Cost of access expense was
 down 38 percent year over year, from 26 million pounds in the third quarter of
 2004 to 16 million pounds in the third quarter of 2005.
     Customer-specific costs increased by 2 million pounds year over year to 7
 million pounds in the third quarter of this year.  Sales, general and
 administrative costs for the third quarter of 2005 were 16 million pounds,
 compared to 20 million pounds in the third quarter of 2004.
 
     Earnings
     GCUK's earnings before interest, taxes, depreciation and amortization
 (EBITDA) for the third quarter of 2005, as defined in Table 5 that follows,
 were 17 million pounds, compared with 16 million pounds in the third quarter
 of 2004.  UK GAAP EBITDA includes foreign exchange gains and losses which
 significantly affect EBITDA in each quarter.  The company incurred non-cash
 foreign exchange losses of 3 million pounds on the company's senior secured
 notes in the third quarter of 2005.
     GCUK's net loss for the third quarter of 2005 was less than 1 million
 pounds, compared to net income of 3 million pounds in the third quarter of
 2004.
 
     Cash Position
     As of September 30, 2005, GCUK had 34 million pounds of cash on hand and
 short-term deposits.  During the third quarter of 2005, GCUK generated 8
 million pounds of cash, after using 5 million pounds for capital expenditures
 and leases.
     Beginning in the fourth quarter of 2005, the company will present its
 results in accordance with International Financial Reporting Standards (IFRS).
     Consistent with the Securities and Exchange Commission's (SEC's)
 Regulation G, the attached schedules include definitions of GCUK's 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 UK GAAP.
 
     Conference Call
     Management has scheduled a conference call for Wednesday, November 16,
 2005 at 9:00 a.m. EST / 2:00 p.m. BST to discuss GCUK's financial results. The
 call may be accessed by dialing +1 212 271 4648 or +44 (0) 870 001 3140.
 Callers are advised to dial in 15 minutes prior to the 9:00 a.m. start time.
 The call will also be Webcast at
 http://www.globalcrossing.com/xml/investors/index.xml.
     A replay of the call will be available on Wednesday, November 16, 2005
 beginning at 11:00 a.m. EST and will be accessible until Wednesday, November
 23, 2005 at 11:00 a.m. EST.  To access the replay, dial +1 402 977 9140 or
 +1 800 633 8284 and enter reservation number 21266140.  UK callers may access
 the replay by dialing +44 (0) 870 000 3081 or 0800 692 0831 and entering
 reservation number 21266140.
 
     ABOUT GLOBAL CROSSING (UK) TELECOMMUNICATIONS LTD.
     Global Crossing (UK) Telecommunications Ltd. 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 comprising more than 5,600 route miles of fiber optic cable 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 cities and 30 countries worldwide, and delivers
 services to nearly 600 cities, 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 and 30 countries worldwide, and delivers
 services to nearly 600 cities, 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 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 http://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
 
     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
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     UK GAAP - Summary of Consolidated Revenues
     (Results below are in pounds sterling in thousands.)
 
                                                       Quarter Ended
                                             September      June     September
                                                 30,         30,         30,
                                                2005        2005        2004
 
      Revenues:
          Enterprise and carrier data          58,639      59,980      63,435
          Wholesale voice                         232         419       3,009
          Consolidated revenues                58,871      60,399      66,444
 
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     UK GAAP - Condensed Consolidated Statements of Operations (unaudited)
     (Results below are in pounds sterling in thousands.)
 
                                                        Quarter Ended
                                                          Adjusted
                                             September      June      September
                                                 30,         30,         30,
                                                2005         2005        2004
     UK GAAP in UK Reporting Format
 
     Turnover                                  58,871       60,399      66,444
     Cost of sales                            (37,291)     (39,691)    (47,345)
     Gross profit                              21,580       20,708      19,099
 
     Distribution costs                        (2,215)      (2,495)     (2,292)
     Administrative expenses                  (12,181)     (19,664)    (12,588)
                                              (14,396)     (22,159)    (14,880)
     Operating profit/(loss)                    7,184       (1,451)      4,219
 
     Finance charges, net                      (7,586)      (7,653)     (1,353)
     Profit (loss) on ordinary activities
      before taxation                            (402)      (9,104)      2,866
     Taxation on profit on ordinary
      activities                                  -         (2,153)          -
     Profit/(loss) for the period                (402)     (11,257)      2,866
 
 
                                                       Quarter Ended
                                                          Adjusted
                                                September   June    September
                                                   30,       30,       30,
     UK GAAP in US Reporting Format               2005      2005     2004
 
     REVENUES                                     58,871    60,399   66,444
     OPERATING EXPENSES:
     Cost of revenue (excluding depreciation
      and amortization shown separately
      below)                                     (23,331)  (26,430) (31,148)
           Selling, general & administrative     (15,545)  (21,574) (19,720)
     Depreciation and amortization               (10,030)   (9,387) (11,385)
                                                 (48,906)  (57,391) (62,253)
     OPERATING INCOME                              9,965     3,008    4,191
     OTHER EXPENSE:
     Interest expense, net                        (7,586)   (7,653)  (1,353)
     Other expense, net                           (2,781)   (4,459)      28
     INCOME (LOSS) FROM CONTINUING
      OPERATIONS BEFORE BENEFIT (PROVISION)
      FOR INCOME TAXES                              (402)   (9,104)   2,866
     Provision (benefit) for income taxes            -      (2,153)     -
     NET INCOME (LOSS)                              (402)  (11,257)   2,866
 
 
 
     Note: The classification differences between reporting under UK GAAP and
     US GAAP are as follows:
 
       Cost of sales:
       Under UK GAAP the company includes Cost of Access, Third Party
       Maintenance, Customer-specific costs and depreciation on network assets.
       Under US GAAP the company includes Cost of Access and Customer-specific
       costs within Cost of Revenue.
 
       Foreign currency gains/(losses):
       Under UK GAAP the company includes foreign currency gains and losses
       within operating profit/(loss),
       whereas under US GAAP these amounts are included in other income
       (expense), net.
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     UK GAAP - Condensed Consolidated Balance Sheets
     (Results below are in pounds sterling in thousands.)
 
                                                September 30,      December 31,
                                                     2005              2004
                                                 (unaudited)
 
     Fixed assets
       Goodwill                                           -                 -
       Tangible assets                              167,433           186,477
       Trade investment                                   4                 4
                                                    167,437           186,481
 
     Current assets
       Debtors: amounts receivable in less
        than one year (including amounts
        receivable from group companies of
        3,574 and 3,802, respectively)               62,884            65,138
       Debtors: amounts receivable in more
        than one year                                12,502            18,422
       Investment-short term deposits                     -            20,727
       Cash at bank and in hand                      34,178               466
                                                    109,564           104,753
     Creditors: amounts falling due within
      one year (including amounts owed to
      group companies of  5,023 and
      5,743, respectively)                         (102,373)          (94,407)
     Net current assets                               7,191            10,346
     Total assets less current liabilities          174,628           196,827
     Creditors: amounts falling due after
      more than one year                           (339,263)         (345,911)
     Provisions for liabilities and
      charges                                       (12,006)          (12,481)
     Net liabilities                               (176,641)         (161,565)
     Capital and reserves
     Called-up share capital                            101               101
     Share premium                                   21,895            21,895
     Profit and loss account                       (198,637)         (183,561)
     Equity shareholder's deficit                  (176,641)         (161,565)
 
 
                                                       Quarter Ended
                                             September     June       September
                                                30,         30,          30,
                                                2005        2005        2004
 
     Net cash inflow from operating
      activities                               13,008      18,171      16,985
     Returns on investments and servicing
      of finance                                  (96)    (11,519)     (1,733)
     Capital expenditure                       (2,527)     (2,168)     (1,764)
     Cash inflow before management of
      liquid resources and financing           10,385       4,484      13,488
     Management of liquid resources                 -           -      (6,000)
     Financing                                 (2,246)       (876)     (8,725)
     Increase/(decrease) in cash                8,139       3,608      (1,237)
 
 
 
     Reconciliation of Net Cash Flow to
      Reduction/(Increase) in Net Debt
 
 
     Increase/(decrease) in cash in the
      period                                    8,139       3,608      (1,237)
     Cash inflow from decreases in short
      term deposits                                 -           -       6,000
     Cash outflow from repayments of loans
      provided by group companies                   -           -      30,374
     Cash inflow from loans provided by
      group companies                               -           -     (22,021)
     Cash outflow from repayment of
      finance lease obligations                 2,246         876         956
     Change in net debt resulting from
      cash flow                                10,385       4,484      14,072
     Foreign exchange movements on loans
      to group companies                            -           -        (292)
     Foreign exchange movements on senior
      secured notes                            (2,864)     (4,271)          -
     Intercompany debt waiver                       -           -       3,307
     Amortization of deferred finance fees       (270)       (266)          -
     Amortization of discount on senior
      secured notes                               (77)        (76)          -
     Change in finance fee accrual               (434)          -           -
     Changes in lease related accruals            218       4,039       1,747
     Disposal of finance leases                     -           -           1
     New finance leases                             -        (228)     (7,200)
     Reduction/(increase) in net debt           6,958       3,682      11,635
     Net debt at beginning of period         (211,207)   (214,889)   (299,691)
     Net debt at end of period               (204,249)   (211,207)   (288,056)
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     UK GAAP - Reconciliation of UK GAAP EBITDA to Profit (Loss) for the
     Period
     (Results below are in pounds sterling in thousands.)
 
                                                Quarter Ended
                                                   Adjusted
                                         September    June    September
                                             30,       30,      30,
                                            2005      2005     2004
 
     Profit (loss) for the period            (402)  (11,257)   2,866
     Finance charges, net                   7,586     7,653    1,353
     Taxes                                    -       2,153      -
     Depreciation and amortization         10,030     9,387   11,385
     UK GAAP EBITDA                        17,214     7,936   15,604
 
     Consistent with the SEC's Regulation G, the foregoing table provides a
     reconciliation of EBITDA, which is considered a non-GAAP (Generally
     Accepted Accounting Principles) financial metric, to profit (loss) for the
     period, which is the most directly comparable GAAP measure. Management
     believes that EBITDA is a relevant indicator of operating performance,
     especially in a capital-intensive industry such as telecommunications.
     EBITDA is an important aspect of the company's internal reporting and is
     also used by the investment community in assessing financial performance.
     This non-GAAP measure should be used in addition to, but not as a
     substitute for, the analysis provide in the condensed consolidated
     statement of operations.
 
     Definition:
 
     UK GAAP EBITDA consists of loss for the period before taxation, finance
     charges, net, and depreciation and amortization expense.
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     UK GAAP - Reconciliation to US GAAP (unaudited)
     (Results below are in pounds sterling in thousands.)
 
                                                       Quarter Ended
                                                         Adjusted
                                             September     June     September
                                                 30,        30,         30,
                                                2005        2005        2004
 
     Net Income (loss), under UK GAAP           (402)     (11,257)     2,866
     Reconciling items:
       Push down of Global Crossing's fresh
        start accounting                       2,835        2,347      2,577
       Long-term IRU agreements                  274         (274)       (92)
       Third party service agreements            -          5,697       (332)
       Restructuring costs                       203          (53)       302
       Share-based compensation                 (487)        (796)      (235)
       Income taxes                           (2,145)       1,689     (1,481)
       Other items                                29           29        (54)
 
     Net Income (loss) under US GAAP on a
      standalone basis                           307       (2,618)     3,551
 
 
 
     Global Crossing (UK) Telecommunications Limited and Subsidiaries
     Reconciliation of Adjusted Gross Margin to gross profit
     (Results below are in pounds sterling in thousands.)
 
                                                  Quarter Ended
                                                    Adjusted
                                            September  June  September
                                               30,      30,      30,
                                              2005     2005     2004
 
     Adjusted Gross Margin                   42,672   40,713   40,447
     Less:
     Customer-specific costs                 (7,132)  (6,744)  (5,151)
     Gross margin                            35,540   33,969   35,296
     Less:
     Third-party maintenance                 (4,331)  (4,246)  (5,048)
     Depreciation & amortization             (9,629)  (9,015) (11,149)
     Gross profit (UK GAAP)                  21,580   20,708   19,099
 
 
     Consistent with the SEC's Regulation G, the foregoing table provides a
     reconciliation of Adjusted Gross Margin, which is considered a non-GAAP
     financial metric, to gross profit, which is the most directly comparable
     UK GAAP measure.  Adjusted Gross Margin is presented to increase the
     comparability to the parent company's quarterly financial presentations,
     which include this metric.
 
 
     Definitions:
 
     Adjusted Gross Margin is revenue minus cost of access. Gross margin is
     revenue minus cost of access and customer-specific costs. Gross profit is
     revenue minus cost of access, customer-specific costs, third party
     maintenance and depreciation & amortization.
 
 
 

SOURCE Global Crossing (UK) Telecommunications Limited

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