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GCUK generated 79 million pounds of revenue in the first quarter and Operating Income Before Depreciation and Amortization (OIBDA) of 17 million pounds. (OIBDA is a non-GAAP measure that is defined and reconciled below.) Net cash provided by operating activities in the quarter was 3 million pounds.
"In a challenging economic environment, GCUK continues to deliver value-added products and services to customers seeking rapid efficiency gains through the deployment of advanced networking solutions," said John Legere, Global Crossing's chief executive officer. "As compared with the year-ago period, we have effectively replaced revenue lost through attrition of our Camelot contract, demonstrating positive sales momentum and setting a new foundation for growth."
First Quarter Results
The results discussed below are prepared in accordance with International Financial Reporting Standards (IFRS) and presented in U.S. Generally Accepted Accounting Principles (U.S. GAAP) format.
GCUK generated revenue of 79 million pounds, a decrease of 3 million pounds or 4 percent, sequentially and essentially flat on a year-over-year basis. The sequential decrease in revenue was primarily due to the remaining attrition of the Camelot contract, partially offset by continued growth in enterprise, carrier data and indirect channel services. The year-over-year impact of the Camelot attrition was offset by growth in enterprise, carrier data and indirect channel services, as well as growth in carrier voice revenue.
Cost of revenue, which includes cost of access, technical real estate, network and operations, third party maintenance and cost of equipment sales, was 52 million pounds for the quarter, compared with 51 million pounds in the prior quarter and 50 million pounds in the first quarter of 2008. The year-over-year increase was primarily driven by higher equipment and professional services costs in the period.
Sales, general and administrative expenses (SG&A) were 9 million pounds for the quarter, declining by 5 million pounds from the prior quarter and essentially flat on a year-over-year basis. The sequential decrease in these costs was primarily due to lower allocated corporate overhead expenses and lower restructuring provisions for real estate.
GCUK's OIBDA for the first quarter was 17 million pounds, compared with 16 million pounds in the fourth quarter of 2008 and 20 million pounds in the first quarter of 2008. The sequential increase in OIBDA was primarily due to lower allocated corporate overhead costs, a decrease in the restructuring provision, and lower access costs. The beneficial impact of these items in the quarter was somewhat offset by lower revenue, primarily due to the remaining attrition of the Camelot contract, and higher equipment and professional services costs. The year-over-year decrease in OIBDA was primarily due to higher equipment and professional services costs in the period.
GCUK recorded a net loss of 2 million pounds for the first quarter of 2009, compared with a net loss of 25 million pounds in the fourth quarter of 2008 and net income of 1 million pounds in the first quarter of 2008. In addition to the variances described above, the sequential decrease in net loss was primarily due to lower foreign exchange translation losses on the GCUK's US dollar-denominated Senior Secured Notes in the first quarter of 2009 compared with the prior quarter.
Cash and Liquidity
As of March 31, 2009, GCUK had cash and cash equivalents of 33 million pounds compared with 36 million pounds at December 31, 2008, and 33 million pounds at March 31, 2008.
Net cash provided by operating activities during the first quarter totaled 3 million pounds after operating working capital use of 9 million pounds. GCUK's cash and cash equivalents decreased by 3 million pounds in the first quarter, after purchases of property, plant and equipment of 3 million pounds and principal payments on finance leases and other debt obligations of 4 million pounds.
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 and presented in the US GAAP reporting format.
International Financial Reporting Standards
GCUK's results reported here include unaudited consolidated financial results for the three months ended March 31, 2009, December 31, 2008 and March 31, 2008; the unaudited consolidated balance sheet as of March 31, 2009; and the audited consolidated balance sheet as of December 31, 2008, all in accordance with IFRS, as published by the International Accounting Standards Board (IASB). GCUK's results for the first quarters of 2009 and 2008 and the fourth quarter of 2008 were included in Global Crossing's consolidated results previously reported on May 4, 2009, in accordance with US GAAP and in U.S. dollars.
Conference Call
Management has scheduled a conference call for Thursday, June 11, 2009, at 9:00 a.m. EDT/2:00 p.m. BST to discuss GCUK's financial results. The call may be accessed by dialing +1 212 231 2901 or +44 (0) 20 3300 0096. 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 http://investors.globalcrossing.com/results.cfm.
A replay of the call will be available on Thursday, June 11, 2009, beginning at 11:00 a.m. EDT/4:00 p.m. BST and will be accessible until Thursday, June 18, 2009, 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 21424980. UK callers may access the replay by dialing +44 (0) 87 0000 3081 or +44 (0) 80 0692 0831 and entering reservation number 21424980.
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.
ABOUT GLOBAL CROSSING
Global Crossing Limited (Nasdaq: GLBC | Quote | Chart | News | PowerRating) is a leading global IP solutions provider with the world's first integrated global IP-based network. The company offers a full range of secure data, voice, and video products to approximately 40 percent of the Fortune 500, as well as to 700 carriers, mobile operators and ISPs. It delivers services to more than 690 cities in more than 60 countries and six continents around the globe.
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 impact on the business of current global economic conditions and the severe tightening in global credit markets; increased competition and pricing pressures resulting from technology advances and regulatory changes; competitive disadvantages relative to competitors with superior resources; the impact on the business of an economic downturn or recession; dependence on a number of key personnel; potential weaknesses in internal controls of acquired businesses, and difficulties in integrating internal controls of those businesses with GCUK's internal 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; the influence of the company's parent, and possible conflicts of interest of the parent or of certain of GCUK's directors and officers; our ability to raise capital through financing activities; exposure to contingent liabilities; and other risks referenced from time to time in GCUK'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
Michael Schneider
+ 1 973 937 0146
Michael.Schneider@globalcrossing.com
Analysts/Investors Contacts
Mark Gottlieb
+ 1 800 836 0342
glbc@globalcrossing.com
Gino Mathew
United Kingdom
+ 1 973 937 0133
gino.mathew@globalcrossing.com
IR/PR1
5 Financial Tables Follow
Global Crossing (UK) Telecommunications Limited
and Subsidiaries Table 1
Consolidated Statement of Financial Position
Results below are in pounds sterling in thousands
March 31, December 31,
2009 2008
------------- -------------
(unaudited) (audited)
Non-current assets
Intangible assets, net BPS 11,857 BPS 11,955
Property, plant and equipment, net 174,121 179,544
Investment in associate 210 178
Retirement benefit asset 1,020 1,020
Trade and other receivables 37,726 37,006
------------- -------------
224,934 229,703
------------- -------------
Current assets
Trade and other receivables 61,184 56,276
Derivative financial instrument 3,013 2,787
Cash and cash equivalents 32,658 36,100
------------- -------------
96,855 95,163
------------- -------------
Total assets BPS 321,789 BPS 324,866
============= =============
Current liabilities
Trade and other payables BPS (85,951) BPS (81,909)
Senior secured notes (7,382) (7,382)
Deferred revenue (40,188) (38,751)
Provisions (1,779) (1,590)
Obligations under finance leases (8,524) (10,182)
Other debt obligations (741) (740)
------------- -------------
(144,565) (140,554)
------------- -------------
Non-current liabilities
Trade and other payables (257) (335)
Senior secured notes (281,593) (279,546)
Deferred revenue (96,989) (100,694)
Retirement benefit obligation (2,957) (2,880)
Provisions (2,429) (3,786)
Obligations under finance leases (12,295) (14,043)
Other debt obligations (110) (240)
------------- -------------
(396,630) (401,524)
------------- -------------
Total liabilities (541,195) (542,078)
------------- -------------
Net liabilities BPS (219,406) BPS (217,212)
============= =============
Capital and reserves
Equity share capital (101,000
shares outstanding at BPS 1 each) BPS 101 BPS 101
Capital reserve 31,047 30,504
Hedging reserve 2,148 2,694
Accumulated deficit (252,702) (250,511)
------------- -------------
Total equity BPS (219,406) BPS (217,212)
============= =============
Global Crossing (UK) Telecommunications Limited and
Subsidiaries Table 2
Consolidated Statements of Operations
Results below are in pounds sterling in thousands
Three months ended
--------------------------------------
March 31, December 31, March 31,
IFRS in IFRS Reporting Format 2009 2008 2008
----------- ------------ -----------
(unaudited) (unaudited) (unaudited)
Revenue BPS 78,588 BPS 81,647 BPS 78,402
Cost of sales (50,524) (51,435) (48,592)
----------- ------------ -----------
Gross profit 28,064 30,212 29,810
Distribution costs (4,574) (4,723) (4,073)
Administrative expenses (16,902) (22,694) (16,987)
----------- ------------ -----------
Operating profit 6,588 2,795 8,750
Finance revenue 1,678 8,233 1,036
Finance charges (10,299) (36,140) (8,735)
----------- ------------ -----------
(Loss)/profit before tax (2,033) (25,112) 1,051
Tax charge (158) (142) (244)
----------- ------------ -----------
(Loss)/profit for the period BPS (2,191) BPS (25,254) BPS 807
=========== ============ ===========
Three months ended
--------------------------------------
March 31, December 31, March 31,
IFRS in U.S. GAAP Reporting 2009 2008 2008
Format ----------- ------------ -----------
(unaudited) (unaudited) (unaudited)
REVENUES BPS 78,588 BPS 81,647 BPS 78,402
Cost of revenue (excluding
depreciation and amortization
shown separately below)
Cost of access (24,580) (26,058) (24,048)
Real estate, network and
operations (12,784) (11,568) (12,735)
Third party maintenance (3,659) (3,681) (4,417)
Cost of equipment and
other sales (11,217) (9,954) (8,882)
----------- ------------ -----------
Total cost of revenue (52,240) (51,261) (50,082)
----------- ------------ -----------
Gross margin 26,348 30,386 28,320
Selling, general and
administrative (9,012) (14,143) (8,619)
Depreciation and amortization (10,463) (11,393) (10,951)
----------- ------------ -----------
Total operating expenses (71,715) (76,797) (69,652)
----------- ------------ -----------
OPERATING INCOME 6,873 4,850 8,750
OTHER INCOME (EXPENSE)
Interest expense, net (7,322) (7,201) (7,759)
Other income (expense), net (1,584) (22,761) 60
----------- ------------ -----------
(LOSS) INCOME BEFORE PROVISION
FOR INCOME TAXES (2,033) (25,112) 1,051
Provision for income taxes (158) (142) (244)
----------- ------------ -----------
NET (LOSS) INCOME BPS (2,191) BPS (25,254) BPS 807
=========== ============ ===========
Note: The classification differences between reporting under IFRS and U.S. GAAP Reporting Format are as follows:
Cost of sales:
Under IFRS reporting format, the company includes cost of access, third party maintenance, customer-specific costs and depreciation on network assets within cost of sales.
Cost of revenue:
Under U.S. GAAP reporting format, the company includes cost of access, real estate, network and operations, third party maintenance and cost of equipment and other sales within cost of revenue.
Foreign currency gains and losses:
Under IFRS reporting format, the company includes foreign currency gains and losses within operating profit, except for those related to the senior secured notes, which are included in finance charges, and those related to loans to related parties, which are included in finance revenue. Under U.S. GAAP reporting format, all foreign exchange gains and losses are included in other income (expense), net.
Global Crossing (UK) Telecommunications Limited
and Subsidiaries Table 3
Consolidated Statement of Cash Flows
Results below are in pounds sterling in thousands
Three months ended
------------------------
March 31, March 31,
2009 2008
----------- -----------
(unaudited) (unaudited)
Operating activities:
(Loss) profit for the period BPS (2,191) BPS 807
Adjustments for:
Finance costs, net 8,621 7,699
Income tax 158 244
Depreciation of property, plant and equipment 8,262 8,668
Amortization of intangible assets 394 554
Amortization of prepaid connection costs 2,441 2,295
Share based payment expense 543 1,499
Loss on disposal of property, plant and
equipment (50) -
Equity income from associate (32) -
Change in provisions (1,223) (472)
Change in operating working capital (8,938) (4,408)
Change in other assets and liabilities (3,994) (1,750)
----------- -----------
Cash generated from operations 3,991 15,136
Interest paid (528) (446)
----------- -----------
Net cash provided by operating activities BPS 3,463 BPS 14,690
----------- -----------
Investing activities:
Interest received 121 BPS 220
Purchase of property, plant and equipment (3,142) (4,550)
Proceeds from disposal of property, plant and
equipment 58 -
----------- -----------
Net cash used in investing activities BPS (2,963) BPS (4,330)
----------- -----------
Financing activities:
Repayments of capital elements under finance
leases BPS (3,405) BPS (1,653)
Proceeds from debt obligations, net - 474
Repayment of capital element of other debt
obligations (121) (97)
Payment of employee taxes on share based
compensation (416) -
----------- -----------
Net cash used in financing activities BPS (3,942) BPS (1,276)
----------- -----------
Net (decrease)/increase in cash and cash
equivalents (3,442) 9,084
Cash and cash equivalents at beginning of
period 36,100 23,954
----------- -----------
Cash and cash equivalents at end of period BPS 32,658 BPS 33,038
=========== ===========
Non-cash in financing activities:
Capital lease and debt obligations incurred BPS - BPS 694
=========== ===========
Global Crossing (UK) Telecommunications Limited and
Subsidiaries Table 4
Summary of Consolidated Revenues
Results below are in pounds sterling in thousands
Three months ended
-------------------------------------
March 31, December March 31,
2009 31, 2008 2008
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Revenues:
Enterprise, carrier data and
indirect sales channels BPS 76,589 BPS 79,674 BPS 76,958
Carrier voice 1,874 1,848 1,319
----------- ----------- -----------
Revenue from third party
customers 78,463 81,522 78,277
Revenues from Global Crossing
group companies 125 125 125
----------- ----------- -----------
Consolidated revenues BPS 78,588 BPS 81,647 BPS 78,402
=========== =========== ===========
Global Crossing (UK) Telecommunications Limited and
Subsidiaries Table 5
Reconciliation of OIBDA to Net (Loss) Income
Results below are in pounds sterling in thousands
Pursuant to the SEC's Regulation G, the following table provides a reconciliation of OIBDA, which is considered a non-GAAP (Generally Accepted Accounting Principles) financial measure, to net (loss) income under U.S. GAAP reporting format.
OIBDA is defined as operating income (loss) before depreciation and amortization, based upon our IFRS results in U.S. GAAP reporting format consolidated statement of operations. OIBDA differs from operating income (loss) in that it excludes depreciation and amortization. Such excluded expenses primarily reflect the non-cash impacts of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods. In addition, OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for reinvestment, distributions or other discretionary uses.
Management uses OIBDA as an important part of our internal reporting and planning processes and as a key measure to evaluate profitability and operating performance, make comparisons between periods, and to make resource allocation decisions. Management believes that the investment community uses similar performance measures to compare performance of competitors in our industry.
There are material limitations to using non-GAAP financial measures. Our calculation of OIBDA may differ from similarly titled measures used by other companies, and may not be comparable to those other measures. Additionally, OIBDA does not include certain significant items such as depreciation and amortization, interest income, interest expense, income taxes and other non-operating income or expense items. OIBDA should be considered in addition to, and not as a substitute for, other measures of financial performance reported in accordance with GAAP.
Management believes that OIBDA is useful to our investors as it is a relevant indicator of operating performance, especially in a capital-intensive industry such as telecommunications. OIBDA provides investors with an indication of the underlying performance of our everyday business operations. It excludes the effect of items associated with our capitalization and tax structures, such as interest income, interest expense and income taxes, and of other items not associated with our everyday operations.
Three months ended
--------------------------------------
March 31, December March 31,
2009 31, 2008 2008
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
OIBDA BPS 17,336 BPS 16,243 BPS 19,701
Depreciation and
amortization (10,463) (11,393) (10,951)
----------- ----------- -----------
Operating income 6,873 4,850 8,750
Interest expense, net (7,322) (7,201) (7,759)
Other income (expense),
net (1,584) (22,761) 60
Provision for income
taxes (158) (142) (244)
----------- ----------- -----------
Net (loss) income BPS (2,191) BPS (25,254) BPS 807
=========== ============ ===========
SOURCE Global Crossing Limited
http://www.globalcrossing.com
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