Thursday March 1, 5:11 pm Eastern Time
Press Release
SOURCE: 360networks inc.
360networks announces record fourth quarter and 2000 revenue
Exceeds 2000 cash revenue and adjusted EBITDA estimates
Reduces capital expenditure plans and lowers cash revenue guidance for 2001
All figures in U.S. dollars
Prepared in accordance with U.S. generally accepted accounting principles.
VANCOUVER, March 1 /PRNewswire/ - 360networks today announced record fourth quarter revenue in 2000 of $158 million, an increase of 26% over $125 million in the fourth quarter of 1999. Revenue for the year ended December 31, 2000 climbed to $511 million, an increase of 42% over $360 million in 1999.
Cash revenue reached $217 million in the fourth quarter of 2000 compared with $135 million in the fourth quarter of 1999. Cash revenue was $644 million for the year ended December 31, 2000 compared with $370 million in 1999.
EBITDA was $10 million in the fourth quarter of 2000, compared with $29 million in the fourth quarter of 1999 due to further investments in product development and the global sales force. EBITDA grew 6% to $92 million for the year ended December 31, 2000, compared with $87 million in 1999.
Adjusted EBITDA in the fourth quarter of 2000 climbed to $96 million, an increase of 96% over $49 million in the fourth quarter of 1999. Adjusted EBITDA rose to $255 million for the year ended December 31, 2000, an increase of 138% over $107 million in 1999. Adjusted EBITDA is EBITDA adjusted to reflect changes in deferred revenue and non-cash cost of sales.
360networks believes cash revenue and adjusted EBITDA are the most appropriate metrics to measure the performance of emerging network service providers as they track a company's success in obtaining sales contracts and delivering services to customers.
Gross profit in the fourth quarter of 2000 was $48 million (30% of revenue), compared with $39 million (31% of revenue) for the fourth quarter of 1999. Gross profit for the year totaled $186 million (36% of revenue), up from $109 million (30% of revenue) in 1999.
Selling, general and administration expenses increased to $38 million (24% of revenue) in the fourth quarter of 2000 compared to $10 million (8% of revenue) in the fourth quarter of 1999. For the year ended December 31, 2000, selling, general and administration expenses totaled $94 million (18% of revenue), compared with $22 million (6% of revenue) in 1999. 360networks' selling, general and administration expenses continue to compare favorably with expenses of industry peers.
Net loss was $155 million in the fourth quarter of 2000 (20 cents per share) and $355 million (55 cents per share) for the year ended December 31, 2000. This compares to net income of $11 million in the fourth quarter of 1999 and net income of $24 million for the year ended December 31, 1999.
``360networks had many key successes in the fourth quarter,'' said Greg Maffei, president and chief executive officer of 360networks. ``We extended our network reach and service capabilities by entering into alliances with Alcatel to build a transpacific cable and Telseon to offer metro services, and agreeing to acquire NetRail, a Tier 1 IP service provider.''
``We also appointed a COO, filled other key positions and expanded our global sales force. Most importantly, we sold network services to a growing number of industry leaders like Deutsche Telekom, Microsoft, Streaming Media, GiantLoop, PacWest and Q9. Although we are operating in a tough market, there is still strong demand for our global, scalable, portable capacity,'' Maffei added.
``We achieved record cash revenue, which we believe is the strongest affirmation of customer interest in our network and services,'' said Larry Olsen, vice-chairman and chief financial officer of 360networks. ``And we continued to make great progress on completing and lighting our North American and European networks, as well as 360atlantic and 360americas, on time and under budget.''
Revised 2001 financial guidance
``Despite our strong performance in the fourth quarter, we believe that revising our 2001 cash guidance is a prudent step given the current dynamics in the market, and particularly the transatlantic market,'' said Olsen. ``We believe that no one in our sector will be insulated from this market reality.''
360networks is reducing capital expenditure plans for 2001 from $3.5-4.5 billion to $3.5-4 billion as this difference reflects the success-based portion of its original capital expenditure plans.
The company is also revising financial estimates for cash revenue and adjusted EBITDA in 2001. The company previously issued guidance of $3.1-3.3 billion for 2001 cash revenue, which it is now lowering to $2.4-2.6 billion due to deferral of forward capacity purchases by major telecommunications carriers and capital constraints within the telecommunications sector. 360networks is consequently revising the estimate for adjusted EBITDA from $2.5-2.6 billion to $1.8-1.9 billion.
``With the credit facilities which are available to us, we remain fully funded to complete our current business plan,'' Olsen added.
360networks is maintaining its 2001 financial estimates of $650-750 million for GAAP-based revenue, and $110-160 million for EBITDA.
Capital expenditures
- Capital expenditures total $1.2 billion in the fourth quarter and $3
billion for the year ended December 31, 2000.
Technology
- 360networks announces an alliance with Alcatel to extend 360networks'
global optical network. Combining their respective expertise in the
development and implementation of optical networking technologies, the
two companies capitalize on their strengths to accelerate the
development of 360networks' seamless, optical network infrastructure.
- 360networks becomes the only company in North America to deploy the
most advanced and capital-efficient fiber optic conduit and cabling
system. This new system by NKF Kabel uses compressed air to jet
multiple mini-ducts (containing up to 60 fiber strands) into new or
previously installed conduit. The compressed air is used to install the
mini-ducts quickly and efficiently over long distances.
- The company deploys the highest performance MPLS-based global IP
network, using Cisco's latest MPLS (Multi-protocol Label Switching)
technology. MPLS is a technology that brings the engineering
capabilities of asynchronous transfer mode (ATM) to packet networks by
tagging IP packets with 'labels' that specify a route and priority. By
eliminating the need for routers to perform an address lookup for every
packet, MPLS speeds packets to their destination with greater
efficiency.
- 360networks carries out one of the world's largest deployments of the
Nortel Networks OPTera Long Haul 1600 Optical Line System. This dense
wave division multiplexing (DWDM) system is capable of delivering up to
1.6 terabits per second of capacity per fiber with up to 160
wavelengths at 10 gigabits per second.
North America
- 360networks completes 34,000 kilometers (21,000 miles) of its
43,000- kilometer (26,700-mile) North American fiber optic network. The
company also lights 19,000 kilometers (12,000 miles) of the network.
The entire network is scheduled to enter commercial service by
mid-2001.
- 360networks provides broadband services on the first seamless
coast-to- coast Canadian fiber optic network. Spanning 11,500 route
kilometers (7,000 miles), the network connects 13 major cities across
Canada.
- 360networks and T-Cubed, the telecommunications subsidiary of Norfolk
Southern Corporation, enter into an agreement to jointly install and
market fiber optic network infrastructure on Norfolk Southern's eastern
United States rights of way.
360atlantic
- 360atlantic, an 11,700-kilometer (7,300-mile) undersea cable system
connecting the United States, Canada, the United Kingdom and Ireland is
scheduled to enter service by the second quarter of 2001. Cable ships
are currently completing the installation of the transatlantic
cables. The four cable stations and related infrastructure are complete
and are undergoing testing.
Europe
- 360networks completes 10,000 kilometers (6,200 miles) of its
20,200-kilometer (12,500-mile) European fiber optic network. The
company also lights 6,100 kilometers (3,800 miles) of the network in
the United Kingdom, France, Germany and Holland.
360americas
- 360networks completes the installation and lighting of 360americas
between the United States and Brazil. This is the first fiber optic
cable to provide high-speed connectivity between South America and
North America. The company also lands 360americas near Caracas,
Venezuela. This marks the first direct fiber optic connection between
the United States and Venezuela.
- The entire 29,000-kilometer (18,000-mile) terrestrial and undersea
cable system connecting the United States, Bermuda, Brazil, Argentina
and Venezuela is on schedule to enter service in early 2002.
360pacific
- 360networks begins development of 360pacific, a 22,700-kilometer
(14,100-mile) transpacific cable that will connect the United States,
Canada and Japan by mid-2002.
360asia
- 360networks agrees to acquire the use of fiber optic strands from C2C,
a subsidiary of Singapore Telecommunications, on C2C's cable network.
The 16,300-kilometer (10,100-mile) undersea cable system will link
Japan, South Korea, Taiwan, the Philippines, Hong Kong, Singapore and
mainland China. This system is anticipated to be in service in the
fourth quarter of 2001.
Metropolitan network highlights
- 360networks announces plans for metro rings in more than 35 major
cities worldwide by mid-2001. The company is developing these
metropolitan networks in key cities of North America, Europe and South
America through construction projects, as well as network capacity
exchanges, purchases and leases with other telecommunications carriers.
Fourth quarter sales highlights
- 360networks announces an agreement to provide Deutsche Telekom -
Europe's largest telecommunications company - with network capacity,
dark fiber, network and maintenance services totaling an estimated $230
million.
- Streaming Media Corporation becomes the first company to beta test
360networks' IP transit service, which provides high-speed,
high-capacity access to the Internet. SMC uses the new 360networks
service to deliver high-quality streaming video and audio directly to
broadband users in Los Angeles, Toronto and Vancouver.
- 360networks sells to EPIK Communications dark fiber that spans more
than 6,000 kilometers (3,700 miles) on routes connecting major cities
in North America.
- Backlog sales revenue totals approximately $1.4 billion.
More recently:
- 360networks and GiantLoop Network Inc. announce an alliance in which
360networks will be GiantLoop's preferred provider of North American
and transatlantic broadband network services.
- 360networks enters into an agreement with Telseon that will increase
significantly the reach and availability of instantly scalable IP and
Ethernet-based data network services in U.S. metropolitan markets.
Under the agreement, 360networks will have access to Telseon's optical
Ethernet services in metropolitan areas, enabling 360networks to extend
its IP transit, IP transport and backbone services to its customers
colocated in points of presence (POPs) on the Telseon network.
Additionally, Telseon will be a preferred provider of GigE metropolitan
access services to 360networks, and 360networks will be a preferred
provider of dark fiber and long-haul capacity to Telseon.
- The U.S. Securities and Exchange Commission declares effective a shelf
registration statement filed by 360networks regarding the potential
offering of up to $3 billion of debt securities, preferred shares,
subordinate voting shares and warrants.
- 360networks agrees to acquire NetRail, a Tier 1 wholesale IP service
provider, in an all-stock transaction. This acquisition will
accelerate 360networks' entry into the IP services market due to
NetRail's established peering arrangements with all other Tier 1
Internet backbones and a talented group of IP network engineers.
- The company announces it will provide high-speed optical services to
Verio, the world's largest Web hosting company, a leading Internet
services provider and a subsidiary of NTT Communications, Asia's
largest telecommunications company. 360networks will provide these
services over the next three years on routes in North America and
Europe as well as on 360atlantic.
About 360networks
360networks (NASDAQ: TSIX and TSE: TSX) offers network services to telecommunications and data-centric organizations. 360networks is developing one of the largest and most technologically advanced fiber optic mesh networks in the world. By mid-2002, the planned network will span 143,000 kilometers (89,000 miles) and link more than 100 major cities with terrestrial routes and undersea cable systems joining North America, Europe, South America and Asia. 360networks is also developing nearly 3.7 million square feet of network facilities. More information is available at www.360.net.
This document may contain forward-looking statements that involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to vary from the results, performance or achievements expressed or implied by our forward- looking statements. These factors include, but are not limited to, general economic and business conditions, both nationally and in the markets in which we operate or will operate; competition; existing government regulations and changes in, or the failure to comply with, government regulations; the loss of any significant number of customers; changes in business strategy or development plans; technological developments; the ability to attract and retain qualified personnel; our ability to access markets, design effective fiber optic routes, install cable and facilities, and obtain rights-of-way, building access rights and any required governmental authorizations, franchises and permits, all in a timely manner, at reasonable costs and on satisfactory terms and conditions and demographic change. For such statements, we claim the safe harbor for ``forward looking statements'' within the meaning of the Private Securities Litigation Reform of 1995.
360networks will host a conference call to discuss these results at 5 p.m. Eastern time on March 1. You can listen to the call on a live Webcast at www.360.net.
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360networks inc.
Selected Income Statement Information
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Three Three Year Year
In millions of U.S. months months ended ended
dollars ended ended December 31, December 31,
U.S. GAAP December 31, December 31, 2000 1999
2000 1999
Cash Revenue $ 217 $ 135 $ 644 $ 370
Adjusted EBITDA (1) $ 96 $ 49 $ 255 $ 107
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Revenue $ 158 $ 125 $ 511 $ 360
Costs 110 86 325 251
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Gross profit 48 39 186 109
Selling, general
and administration
expenses 38 10 94 22
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EBITDA (1) 10 29 92 87
Non-cash stock-based
compensation 52 2 258 7
Depreciation 34 2 56 3
Interest expense 53 13 135 34
Interest income 15 10 60 18
Other 15 - 15 -
Provision for
income taxes 26 10 41 30
Minority interest - 1 2 7
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Net income (loss) for
the period $ (155) $ 11 $ (355) $ 24
------------------------------------------------
------------------------------------------------
(1) EBITDA represents earnings before interest, taxes, depreciation,
amortization, stock-based compensation and minority interest.
Adjusted EBITDA is EBITDA adjusted to reflect changes in
deferred revenue and non-cash cost of sales.
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360networks inc.
Selected Balance Sheet Information
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In millions of U.S. December 31, 2000 December 31, 1999
dollars
U.S. GAAP
Cash (2) $ 507 $ 521
Other current assets 873 378
Fixed assets 746 77
Other assets 3,470 335
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$ 5,596 $ 1,311
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Current liabilities $ 857 $ 244
Other liabilities 54 3
Long-term debt 1,895 675
Minority interest - 9
Preferred stock 707 350
Capital stock 2,494 292
Other capital
accounts 22 (221)
Deficit (433) (41)
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$ 5,596 $ 1,311
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(2) Cash includes cash, cash equivalents and restricted cash.
SOURCE: 360networks inc. |
