Tuesday August 3, 5:30 am Eastern Time
Company Press Release
SOURCE: Global Crossing Ltd.
Global Crossing Announces Strong Results for Second Quarter
- Second Quarter Revenues of $190 Million and Adjusted EBITDA of $114 Million Exceed Analysts' Estimates
- Significant Progress on Frontier Merger
- Strong Circuit Activation on Atlantic Crossing 1
HAMILTON, Bermuda, Aug. 3 /PRNewswire/ -- Global Crossing Ltd. (Nasdaq: GBLX - news), which is building and operating the world's first and most advanced global IP-based datacentric network, today reported results for the second quarter ended June 30, 1999. Second quarter revenues were $190 million and Adjusted EBITDA was $114 million. Income was affected by $8 million of net non-recurring expenses resulting in a reported net loss of $4 million.
''Our strong revenues in the Atlantic demonstrate the steadily growing demand for bandwidth to serve the international market,'' said Bob Annunziata, Chief Executive Officer of Global Crossing. ''We're also seeing growing sales on our other systems around the world, months in advance of their in-service dates, another indicator of future demand. And after we close the Frontier merger, we'll be able to bring their products to the world, over our global network.''
The company's solid sales performance resulted in revenue higher than analysts' consensus estimates. Global Crossing also disclosed today that its customer base increased by 29 percent in the first half of 1999, and that 38 percent of its current customers are already repeat buyers of wholesale capacity on the Global Crossing network.
Financial highlights for the three and six months ended June 30, 1999 and
June 30, 1998
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
(Unaudited) (Unaudited)
(in millions, except per share data)
Results of Operations: *
Revenues $190 $101 $368 $101
Adjusted EBITDA $114 $72 $225 $68
Net loss applicable
to common shareholders $(4) $(193) $(19) $(202)
Loss per share,
basic and diluted $(0.01) $(0.58) $(0.05) $(0.61)
* See Statements of Operations and accompanying footnote.
Global Crossing Network summary
The company has announced 88,800 kilometers planned for its growing Global Crossing Network, of which 82,400 kilometers have been either completed or placed under contract for construction. Of the total kilometers planned, 14,300 kilometers are in service.
Non-recurring expenses
During the quarter, Global Crossing incurred other expenses of $8 million, arising from various non-recurring transactions, which are net of gains on the sale of certain marketable securities. Such expenses include losses on a currency hedging contract related to the purchase of Global Marine Systems and a fee paid in connection with amendments to outstanding debt as the company modified its capital structure and implemented a $3 billion senior secured corporate credit facility.
Senior Secured Credit Facility
On June 24, 1999, the company amended certain terms of its outstanding 9-5/8% Senior Notes as a preparatory step to the creation of a Senior Secured Credit Facility.
On July 2, 1999, Global Crossing entered into a $3 billion Senior Secured Credit Facility to refinance certain non-recourse project debt, to fund the acquisition of Global Marine Systems, and to provide financing for future network construction.
On July 7, 1999, Global Crossing borrowed approximately $1.5 billion under the facility. The borrowing was used, as planned, to partially finance the Global Marine Systems acquisition, provide for current working capital requirements, and to retire various outstanding obligations including an Atlantic Crossing 1 Credit Facility, a Mid-Atlantic Crossing Credit Facility, and financing provided under an agreement with Lucent Technologies relating to the Pan European Crossing and South American Crossing systems.
Additional milestones
-- Frontier Merger Progress. In the first quarter, on March 17th, Global
Crossing entered into a definitive agreement and plan of merger with
Frontier Corporation. The merger is subject to approval of
shareholders of both companies and to other customary conditions,
including regulatory approvals. During the second quarter, the
company continued to receive regulatory approvals required for the
transaction. Completion of the Frontier merger is anticipated to
occur either late in the third quarter or early in the fourth quarter
of 1999.
-- Termination of U S WEST Merger Agreement. On July 18, 1999, Global
Crossing and U S WEST agreed to terminate their previous agreement to
merge, and Qwest Communications International withdrew its offer to
acquire Frontier. As a result, U S WEST paid Global Crossing a
termination fee of $140 million in cash, and returned to Global
Crossing approximately 2.2 million shares of Global Crossing common
stock which U S WEST had acquired in a tender offer, under the terms
of the Global Crossing U S WEST merger agreement, at $62.75 per share.
In addition, Qwest committed to purchase capacity on the Global
Crossing network at established market prices in an aggregate amount
of $140 million during the next two years.
-- Africa ONE. On June 4th, Africa ONE, builder of a fiber optic ring
system around the African continent, awarded contracts expected to
exceed $100 million to Global Crossing subsidiaries to provide project
management and undersea construction to the system.
-- Global Marine Systems. In April, Global Crossing agreed to acquire
the Global Marine business of Cable & Wireless plc. On July 2, that
acquisition was completed. The renamed Global Marine Systems is the
world's largest undersea cable installation and maintenance company
with a fleet of 13 cable ships, representing approximately 33% of the
world's total, 21 submersible vehicles and 1,200 employees servicing
approximately 35% of the world's undersea cable miles.
-- Irish Ring. On July 5th, Global Crossing announced an agreement with
the Irish government to build an undersea fiber optic cable system
that will link Ireland's leading companies and multinationals, via two
diverse fiber cables, to the Global Crossing Network. The Irish
government has committed to $80 million of capacity purchases.
-- Pan European Crossing. Global Crossing recently announced that it had
received the remaining necessary licenses and authorizations for the
completion of its Pan European Crossing (PEC), which will link
25 European metropolitan centers to each other and to more than
135 additional metropolitan centers worldwide through the Global
Crossing Network. Construction of the PEC system is on schedule for a
December 31, 1999 initial service date for Phase 1, which will connect
13 European cities, including Amsterdam, Antwerp, Brussels, Cologne,
Copenhagen, Dusseldorf, Frankfurt, Hamburg, Hannover, London, Paris,
Rotterdam and Strasbourg.
About Global Crossing
Global Crossing is building and operating the world's first and most advanced global IP-based datacentric network, an end-to-end fiber optic platform for data, voice, video and Internet transmissions. The Global Crossing Network will span five continents and address 80% of the world's international traffic. A new unit of Global Crossing, Global Marine Systems Limited, possesses the largest flotilla of cable laying and maintenance vessels in the world and currently services more than a third of the world's undersea cable kilometers. Global Crossing's operations are headquartered in Hamilton, Bermuda, with executive offices in Los Angeles.
Statements made in this press release that state the company's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward- looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company's filings with the U.S. Securities and Exchange Commission (SEC). Copies of these filings may be obtained by contacting the company or the SEC.
General information: Visit Global Crossing at www.globalcrossing.com on the World Wide Web.
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 1999 and 1998
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
1999 1998 1999 1998
REVENUES $190,278 $101,256 $368,461 $101,256
EXPENSES:
Cost of capacity sold 80,905 41,200 150,292 41,200
Operations,
administration
and maintenance 14,008 2,470 25,869 2,470
General and
administrative 22,089 6,508 44,503 8,850
Sales and marketing 13,498 6,529 23,256 7,313
Network development 4,848 4,314 9,753 4,314
Stock related expense 9,358 22,760 26,074 23,398
Depreciation and
amortization 3,989 443 4,200 473
Provision for
doubtful accounts 1,819 1,012 3,683 1,012
Termination of
advisory services
agreement --- 139,669 --- 139,669
150,514 224,905 287,630 228,699
OPERATING INCOME (LOSS) 39,764 (123,649) 80,831 (127,443)
EQUITY IN LOSS
OF AFFILIATES (2,806) --- (5,542) ---
OTHER INCOME (EXPENSE):
Interest income 17,274 4,327 31,666 4,422
Interest expense (22,675) (7,403) (46,454) (7,426)
Other expense, net (7,683) --- (7,683) ---
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES, CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE
AND EXTRAORDINARY ITEM 23,874 (126,725) 52,818 (130,447)
Provision for
income taxes (13,896) (9,000) (30,038) (9,000)
INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE AND
EXTRAORDINARY ITEM 9,978 (135,725) 22,780 (139,447)
Cumulative effect of
change in accounting
principle, net of
income tax benefit --- --- (14,710) ---
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 9,978 (135,725) 8,070 (139,447)
Extraordinary loss
on retirement of
senior notes --- (19,709) --- (19,709)
NET INCOME (LOSS) 9,978 (155,434) 8,070 (159,156)
Preferred stock
dividends (14,197) (3,899) (27,241) (8,306)
Redemption of
preferred stock --- (34,140) --- (34,140)
NET LOSS APPLICABLE
TO COMMON SHAREHOLDERS $(4,219) $(193,473) $(19,171) $(201,602)
ADJUSTED EBITDA(a) $113,722 $71,506 $225,230 $68,380
NET LOSS PER COMMON SHARE:
Loss applicable to
common shareholders
before cumulative
effect of change in
accounting principle
and extraordinary item
Basic and diluted $(0.01) $(0.52) $(0.01) $(0.55)
Cumulative effect of
change in accounting
principle
Basic and diluted $--- $--- $(0.04) $---
Extraordinary loss on
retirement of
senior Notes
Basic and diluted $--- $(0.06) $--- $(0.06)
Net loss applicable
to common
shareholders
Basic and diluted $(0.01) $(0.58) $(0.05) $(0.61)
Shares used in
computing loss
per share
Basic and
diluted 413,204,243 332,388,070 412,000,658 332,125,394
Footnote
(a) Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) is calculated as operating income
(loss), plus depreciation and amortization, cost of undersea capacity
sold, stock related expense, and amounts relating to the termination
of the advisory services agreement.
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
June 30, December 31,
1999 1998
(Unaudited)
ASSETS:
Current assets:
Cash and investments $676,082 $806,593
Restricted cash and investments 45,260 77,190
Accounts receivable, net of
allowance for doubtful accounts
of $7,916 as of June 30, 1999
and $4,233 as of December 31, 1998 132,652 71,195
Other assets and prepaid costs 51,475 21,637
Total current assets 905,469 976,615
Restricted cash and investments 367,387 367,600
Accounts receivable 63,128 43,315
Capacity available for sale 503,878 574,849
Property, plant and equipment, net 59,853 5,500
Construction in progress 842,439 428,207
Investment in affiliates 184,676 177,334
Other assets 111,767 65,757
Total assets $3,038,597 $2,639,177
LIABILITIES:
Current liabilities:
Accrued construction costs $158,304 $129,081
Accounts payable and accrued liabilities 59,560 31,990
Accrued interest and preferred dividends 15,968 14,428
Deferred revenue 35,322 44,197
Income taxes payable 20,347 15,604
Current portion of long term debt --- 6,393
Current portion of obligations under
inland services agreements and
capital leases 12,581 14,572
Total current liabilities 302,082 256,265
Long term debt 559,707 269,598
Senior notes 796,682 796,495
Deferred revenue 60,140 25,325
Obligations under inland services
agreements and capital leases 15,237 24,520
Deferred income taxes 24,167 9,654
Total liabilities 1,758,015 1,381,857
MANDATORILY REDEEMABLE PREFERRED STOCK --
5,000,000 shares issued and outstanding,
$100 liquidation preference per share
(net of unamortized issuance costs
of $15,042 as of June 30,1999 and
$17,000 as of December 31, 1998) 484,958 483,000
SHAREHOLDERS' EQUITY:
Common stock, 600,000,000 shares
authorized, par value $.01,
436,167,061 and 432,776,246 shares
issued as of June 30, 1999 and
December 31, 1998, respectively 4,361 4,328
Treasury stock, 22,033,758 shares (209,415) (209,415)
Other shareholders' equity 1,080,671 1,067,470
Accumulated deficit (79,993) (88,063)
795,624 774,320
Total liabilities and
shareholders' equity $3,038,597 $2,639,177
SOURCE: Global Crossing Ltd.
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