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 firstname.lastname@example.org 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