Wednesday May 2, 5:55 pm Eastern Time
Press Release
SOURCE: Asia Global Crossing
Asia Global Crossing Earnings Exceed Q1 Guidance
- Proportionate Cash Revenue up 114% over Q1 2000, Proportionate Adjusted EBITDA up 138% over the same period
- Large City-to-City Capacity Sales Drive Quarter
- Company on Track to Meet 2001 Financial Guidance
HAMILTON, Bermuda, May 2 /PRNewswire/ -- Asia Global Crossing (Nasdaq: AGCX - news) today reported financial results for the first quarter which met or exceeded its previously announced quarterly financial guidance. The company also confirmed its previous guidance for the full-year 2001.
(Photo: newscom.com )
For the quarter ended March 31, 2001, the company reported $205.5 million in Proportionate Cash Revenue, an increase of 114 percent over the first quarter of 2000. Proportionate Cash Revenue reflects Asia Global Crossing's ownership percentage of the Cash Revenue of its subsidiaries and joint ventures. Proportionate Adjusted EBITDA, which serves as a measure of operating performance, was $147.6 million for the quarter, an increase of 138 percent over the same quarter last year.
John Legere, president and chief executive officer of Asia Global Crossing, said, ``We had a strong quarter that exceeded our guidance, keeping us on track to achieve our financial goals for the year. With major carriers making larger-than-expected capacity commitments on our network, even before it is fully operational, Asia Global Crossing had a record quarter in terms of capacity sold and Proportionate Cash Revenue.
``Our strategy is to offer customers flexible, city-to-city connectivity, both within Asia and worldwide, and our first quarter results validate this strategy. Customers are responding to our unique combination of network reach, capacity products that range from DS-3s to 10 Gbps wavelengths, and portability, which allows our customers to designate where within our network they want connectivity.
``Our customer list continues to grow and now includes Cable & Wireless, Deutsche Telekom, Qwest, and Sprint,'' said Legere.
``Network build-out continued during the first quarter with the activation of the East Asia Crossing segment connecting Hong Kong and Japan and continued terrestrial and subsea network construction in the rest of the region. We expect East Asia Crossing to be in service in Taiwan during the second quarter, Korea early in the third quarter, and Singapore in the fourth quarter.
``As our network is completed and additional cities connected, Asia Global Crossing will continue to roll out service offerings to meet the increasingly sophisticated and stringent communication requirements of carriers, ISPs and multinational corporations. By year-end, our product suite will include IP Transit, International Private Line, ATM/Frame, Voice Over IP, and IP-based Virtual Private Networks,'' said Legere. ``In Hong Kong, we began offering IP services during the quarter, and in Tokyo, we extended our IP services offering with the launch of IP Dedicated Internet Access, an Internet access service designed for ISPs and multinational corporations.
``Asia Global Crossing now provides IP services to more than 30 customers in Hong Kong and Tokyo, with revenue from IP services doubling over last quarter,'' said Legere. ``This growth reflects revenue generated by new customers, the availability of additional services, and increased usage by existing customers, such as ISPs, migrating more traffic onto our network. In fact, average existing customer usage of our IP services in Japan rose by 25 percent in the quarter.''
Year-on-year Reported Revenue and earnings per share comparisons are influenced by the fact that the company has de-emphasized sales-type leases with customers. Sales-type leases recognize revenue up-front, rather than amortizing it over the life of the contract. In the first quarter of 2000, the company reported $75.0 million of revenue and $30.8 million of cost of sales resulting from sales-type lease transactions, while in 2001 the company had no such transactions.
Reported Revenue was $9.5 million in the first quarter of 2001 compared to $0.8 million in the same period of 2000, excluding the impact of sales-type leases. Net loss of $60.7 million, or $0.11 per share, in the quarter compares to a loss of $43.9 million, or $0.09 per share, in the prior year also excluding such impacts.
Financial Overview
Large, city-to-city capacity sales were the largest component of the company's quarterly performance. The financial performance of the company's joint ventures Global Access Limited (GAL) and Hutchison Global Crossing (HGC) also contributed to the quarter.
Financial highlights for the three months ended March 31, 2001 and March 31, 2000 are as follows (in millions, except for per share data):
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
(unaudited) (unaudited)
Proportionate Cash Revenue $205.5 $96.2
Proportionate Adjusted EBITDA $147.6 $61.9
Reported Revenue $9.5 $75.8
Reported Revenue Excluding
Sales-Type Leases $9.5 $0.8
Earnings (Loss) per Share $(0.11) $0.00
Earnings (Loss) per Share Excluding
Sales-Type Leases $(0.11) $(0.09)
Sales on subsea systems accounted for 66 percent of Proportionate Cash Revenue. GAL added 4 percent, and HGC added 10 percent to Proportionate Cash Revenue. Other joint ventures contributed 12 percent. The remaining 8 percent primarily comprises revenue from IP services and margin on sales made by Asia Global Crossing's direct sales force.
During the quarter, Asia Global Crossing's majority owner, Global Crossing, entered into several agreements with various carriers for the purchase of capacity and co-location space. Asia Global Crossing's Proportionate Cash Revenue includes $148 million of payments received from certain of these carriers.
First quarter consolidated capital expenditure totaled $247.3 million, including $163.7 million on East Asia Crossing, which is consistent with the company's plan.
Chief Financial Officer Stefan Riesenfeld said, ``During the quarter, we saw major customers committing to capacity that will be activated as East Asia Crossing becomes fully operational. This continued success enables us to reaffirm our guidance for the year, and we remain fully funded against our business plan.''
Business Outlook
Asia Global Crossing re-affirmed the following financial goals for 2001:
-- Proportionate Cash Revenue $610 million - $630 million
-- Proportionate Adjusted EBITDA $220 million - $250 million
-- Reported Revenue $90 million - $100 million
-- Earning (loss) per share $(0.65) - $(0.60)
-- Consolidated capital expenditures $850 million - $925 million
Asia Global Crossing provided the following guidance for the second quarter:
Proportionate Cash Revenue $80 million - $100 million
Proportionate Adjusted EBITDA $10 million - $20 million
Reported Revenue $10 million - $15 million
Earning (loss) per share $(0.16) - $(0.14)
Definition of Terms Used
Asia Global Crossing conducts its business through a number of entities, many of which, in conformity with U.S. Generally Accepted Accounting Principles (GAAP), are not consolidated. The company presents certain proportionate financial metrics which management believes reflect the economic results of the business in this context. In calculating Proportionate Cash Revenue, management makes certain estimates and assumptions since, among other things, Cash Revenue may be associated with capacity selections that the customer may make at a later time. Actual amounts and results could differ from those estimates. If the customer has the option to select systems outside of those controlled by the company or its joint ventures, the associated Cash Revenue is not included in determining Proportionate Cash Revenue until such selection is made.
The following defines terms used in this press release:
-- Proportionate Cash Revenue represents the sum of the Asia Global
Crossing ownership percentage of the Cash Revenue allocated to
Asia Global Crossing and non-consolidated joint ventures plus
incremental Cash Revenue contributions from these joint ventures.
-- Proportionate Adjusted EBITDA refers to Proportionate Cash Revenue less
proportionate cash operating expense, which represents the Asia Global
Crossing ownership percentage of the cash operating expense of Asia
Global Crossing and non-consolidated joint ventures. Cash operating
expense is defined as operating expenses plus goodwill and intangible
amortization, depreciation and amortization, which includes non-cash
cost of capacity sold, and stock related expenses.
-- Reported Revenue refers to recognized revenue in accordance with U.S.
GAAP.
-- Cash Revenue refers to Reported Revenue plus the cash portion of the
change in deferred revenue.
-- Adjusted EBITDA refers to operating income (loss) plus goodwill and
intangible amortization, depreciation and amortization. This includes
non-cash cost of capacity sold, stock-related expenses and the cash
portion of the change in deferred revenue, which definition is
consistent with the financial covenants contained in the company's
major financing agreements. |
