Asia Global Crossing Exceeds Q2 Guidance; Increases Full Year 2001 Guidance
- Proportionate Cash Revenue reaches $192.0 million, up 246 percent over the same period last year
- Proportionate Adjusted EBITDA reaches $123.0 million, up more than seven fold over the same period last year
- East Asia Crossing system lands in Taiwan
HONG KONG, Aug. 1 /PRNewswire/ -- Asia Global Crossing (NYSE: AX) today reported financial results for the second quarter which significantly exceeded previously announced quarterly guidance. Accordingly, the company is increasing its guidance for the full year 2001.
For the quarter ended June 30, 2001, the company reported $192.0 million in Proportionate Cash Revenue, an increase of 246 percent over the second 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 $123.0 million for the quarter, an increase of 684 percent over the same quarter last year.
John Legere, president and chief executive officer of Asia Global Crossing, said, "This was an excellent quarter, well ahead of our expectations for both bandwidth and services contracts. As a result of our strong financial results for the first half of the year, we are increasing guidance for the full year 2001.
"Asia is at a different stage of development than the rest of the world in both connectivity infrastructure and the penetration of broadband usage. Competitive supply is only now being introduced -- often first by Asia Global Crossing. Our early mover advantage has helped us achieve strong performance since our initial public offering. Fueled by large capacity sales and rapid growth in data services, Asia Global Crossing is well-positioned to become the leading pan-Asian connectivity and services provider.
"Carrier customers continued to make significant capacity commitments in advance of the completion of our East Asia Crossing ring, demonstrating the demand for our unique city-to-city connectivity. Asia Global Crossing continues to extend the reach of the worldwide Global Crossing Network into Asia, on time and on budget. East Asia Crossing landed in Taiwan during the quarter, introducing the first competitive supply to that market. Japan, Hong Kong, and Taiwan are now connected, with Korea on track for the third quarter and Singapore for the fourth quarter.
"Additionally, we continued to see promising growth in our recurring services business. Reported recurring services revenue increased 89 percent and commercial data services was up 60 percent over the previous quarter. IP backbone usage was up almost 50 percent over the previous quarter, and the number of customers increased by 22 percent. We expect commercial data services to continue growing and become a larger component of our business as our network reaches additional major business centers and we evolve from a carrier's carrier to a services-focused business."
Year-on-year Reported Revenue and earnings per share comparisons are influenced by the fact that fewer of the capacity sales by the company can be accounted for as sales-type leases. Sales-type leases are recognized as revenue upon payment and activation of the circuit, rather than amortized over the life of the contract. In the second quarter of 2000, the company reported $31.2 million of sales-type lease revenue and $16.1 million of cost of sales resulting from sales-type lease transactions, while in the second quarter of 2001 the company had no such transactions.
Reported Revenue was $17.9 million in the second quarter of 2001 compared to Reported Revenue of $2.5 million excluding the impact of sales-type leases in the same period of 2000. Net loss of $62.5 million, or $0.11 per share, in the quarter compares to a loss of $73.6 million, or $0.15 per share, in the prior year, also excluding such impacts.
IXnet/IPC Transaction
On July 10, Asia Global Crossing completed its previously announced acquisition of the Asian operations of IXnet and IPC from its parent company Global Crossing. Asia Global Crossing also acquired from Global Crossing the right to operate telecommunications services businesses in Australia and New Zealand. As required under Generally Accepted Accounting Principles, Asia Global Crossing will be restating its financial statements to reflect the operating results of IXnet and IPC from the third quarter 2000 forward, the date IXnet and IPC were acquired by Global Crossing.
"As part of the IXnet/IPC transaction, Asia Global Crossing acquired a point-of-presence (POP) in Sydney, thereby enabling us to extend our services platform into Australia. This POP is managed by the Global Network Operations Center, which allows Asia Global Crossing customers to 'see through' the network from end-to-end. We expect to offer IP transit, IPLC, IP-VPN, ATM, and frame relay services to our customers in Australia by the end of the third quarter," said Legere.
Including the IXnet business, second quarter commercial data services reported revenue would have been $12.5 million with a customer base of approximately 200.
With the completion of the IXnet/IPC acquisition, Asia Global Crossing now has approximately 400 employees and offices in Australia, Hong Kong, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, and the United States.
Financial Overview
Chief Financial Officer Stefan Riesenfeld said, "We are pleased with Asia Global Crossing's quarterly results, which exceeded our guidance for all metrics. Based on Asia Global Crossing's performance during the first half of 2001, we are now increasing our guidance for the full year operating results.
"We are also increasing guidance to reflect the results of the Asian operations of IXnet/IPC, which will be incorporated from the third quarter forward. As we integrate the Asian operations of IXnet into our company, we expect that they will be an important catalyst for accelerating our growth in data services."
Financial highlights for the three months ended June 30, 2001 and June 30, 2000 are as follows:
Three Months Ended Three Months Ended
June 30, 2001 June 30, 2000
(unaudited) (unaudited)
(in millions, except for per share data)
Proportionate Cash Revenue $192.0 $55.5
Proportionate Adjusted EBITDA $123.0 $15.7
Reported Revenue $17.9 $33.7
Reported Revenue Excluding
Sales-Type Leases $17.9 $2.5
Earnings (Loss) per Share $(0.11) $(0.12)
Earnings (Loss) per Share Excluding
Sales-Type Leases $(0.11) $(0.15)
Note: All figures exclude impacts from IXnet/IPC, as the transaction was completed on July 10, 2001.
Sales on subsea systems accounted for 36 percent of Proportionate Cash Revenue. Recurring services revenue, comprised of commercial data services, wholesale leases, and OA&M, contributed 34 percent. Joint ventures Global Access Limited (GAL) added 4 percent, and Hutchison Global Crossing (HGC) added 11 percent to Proportionate Cash Revenue. Other joint ventures contributed 4 percent. The remaining 11 percent primarily consisted of sales commissions.
Included in Proportionate Cash Revenue and in Proportionate Adjusted EBITDA was $127 million received from carrier customers to whom Global Crossing or Asia Global Crossing made purchase commitments during the quarter. Payments made by Asia Global Crossing during the quarter to such carriers totaled approximately $82 million.
Second quarter consolidated capital expenditure totaled $209.7 million.
Pro Forma Results
Asia Global Crossing will be accounting for the recently completed IXnet/IPC transaction similarly to a pooling-of-interests method of accounting since the entities were under the common control of parent company Global Crossing. The results for the second quarter on a pro forma basis, which include the operating results of IXnet/IPC, are presented below.
Asia Global Crossing's pro forma Proportionate Cash Revenue was $199.9 million and pro forma Proportionate Adjusted EBITDA was $116.0 million for the second quarter. Pro forma Reported Revenue was $25.8 million and pro forma net loss was $0.13 per share in the second quarter.
Three Months Ended Three Months Ended
June 30, 2001 June 30, 2000
(unaudited) (unaudited)
(in millions, except for per share data)
Pro Forma Proportionate
Cash Revenue $199.9 $60.9
Pro Forma Proportionate
Adjusted EBITDA $116.0 $12.8
Pro Forma Reported Revenue $25.8 $39.0
Pro Forma Earnings (Loss)
per Share $(0.13) $(0.13)
Revised Guidance
The company gave the following full year 2001 guidance, which includes the impact of the IXnet/IPC transaction:
Proportionate Cash Revenue $660 million - $740 million
Proportionate Adjusted EBITDA $280 million - $325 million
Reported Revenue $125 million - $140 million
Earnings (loss) per share $(0.65) - $(0.60)
Consolidated Capital Expenditures $900 million - $1 billion
Excluding the impact of the IXnet/IPC transaction, the company noted that the prior guidance of $610 million - $630 million for Proportionate Cash Revenue would have been raised to $625 million - $700 million and the prior guidance of $220 million - $250 million for Proportionate Adjusted EBITDA would have been raised to $300 million - $350 million.
"As part of our overall increase in guidance, we have taken our capital expenditure range up slightly to reflect the acceleration of services offerings, the addition of our new territory, and the integration of IXnet," Riesenfeld said.
The company provided the following guidance for the third quarter, which includes the results of IXnet/IPC:
Proportionate Cash Revenue $80 million - $120 million
Proportionate Adjusted EBITDA $10 million - $30 million
Reported Revenue $30 million - $40 million
Earnings (loss) per share $(0.18) - $(0.16)
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, cash received by Asia Global Crossing and its affiliates for capacity purchases on specific systems are treated as cash received by the companies which provide the capacity. In addition, 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.
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, which includes non- cash cost of capacity sold, stock-related expenses and the cash portion of the change in deferred revenue. This definition is consistent with the financial covenants contained in the company's major financing agreements.
About Asia Global Crossing
Asia Global Crossing (NYSE: AX), a public company whose largest shareholders include Global Crossing (NYSE: GX), Softbank (Tokyo Stock Exchange: 9984), and Microsoft (Nasdaq: MSFT), provides the Asia Pacific region with a full range of integrated telecommunications and IP services. Through a combination of undersea cables, terrestrial networks, city fiber rings and complex web hosting data centers, Asia Global Crossing is building one of the first truly pan-Asian networks, which, in combination with the worldwide Global Crossing Network, will provide the Asia Pacific region with seamless access to major business centers worldwide. As part of its strategy to provide city-to-city connectivity, Asia Global Crossing partners with leading companies in each country it connects to provide backhaul networks.
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. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include: the ability to complete systems within currently estimated time frames and budgets; the ability to compete effectively in a rapidly evolving and price competitive marketplace; changes in the nature of telecommunications regulation in the United States, Asia, and other countries and regions; changes in business strategy; the successful integration of newly-acquired businesses; the impact of technological change; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. One is cautioned not to put undue reliance on such forward- looking statements, which speak only as of the date of this press release. Asia Global Crossing expressly disclaims any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION
Investor contacts: Jensen Chow, Los Angeles, CA, +1-310-385-5283,
jensen.chow@asiaglobalcrossing.com
Sui Ling Cheah, Hong Kong, +852-2121-2809,
sui.ling.cheah@asiaglobalcrossing.com
Press contacts:
Madelyn Smith, Los Angeles, CA, +1-310-385-3816,
madelyn.smith@asiaglobalcrossing.com
Selene Lo, Hong Kong, +852-2121-2936, selene.lo@asiaglobalcrossing.com
General information:
Visit Asia Global Crossing at asiaglobalcrossing.com on the World Wide Web.
To be added/removed from Asia Global Crossing's e-mail distribution, please visit: asiaglobalcrossing.com
To be added/removed from Asia Global Crossing's fax distribution, please call +1 213 244 9031 or email axinvest@asiaglobalcrossing.com
Live webcast of earnings conference call available 8:00 am EDT, Thursday, August 2 at asiaglobalcrossing.com.
ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended June 30,
2001 2000
REVENUES $17,913 $33,667
OPERATING EXPENSES:
Cost of access and maintenance 17,990 11,714
Other operating expenses 34,395 12,367
Depreciation and amortization (1) 21,864 58,029
Total operating expenses 74,249 82,110
Operating loss (56,336) (48,443)
OTHER INCOME (EXPENSE):
Minority interest 16,430 (1,457)
Equity in income (loss) of affiliates (17,291) (12,719)
Interest income 9,060 4,192
Interest expense (12,923) (72)
Other expense (895) (46)
Total other expense (5,619) (10,102)
LOSS BEFORE PROVISION FOR INCOME TAXES (61,955) (58,545)
PROVISION FOR INCOME TAXES (500) --
NET LOSS $(62,455) $(58,545)
INCOME (LOSS) PER COMMON SHARE:
Loss applicable to common
shareholders - basic and diluted $(0.11) $(0.12)
Shares used in computing loss per
share - basic and diluted 555,125,125 486,625,125
(1) Depreciation and amortization includes non-cash cost of capacity sold.
For the quarter ended June 30, 2001, there was no non-cash cost of
capacity sold.
For the quarter ended June 30, 2000, the non-cash cost of capacity
sold was $54,065.
ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
SIGNIFICANT JOINT VENTURE INVESTMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
June 30, 2001 June 30, 2000
GLOBAL ACCESS LIMITED
Revenues $10,096 $5,062
Operating loss (4,707) (2,206)
Net loss $(5,376) $(2,699)
HUTCHISON GLOBAL CROSSING
HOLDINGS LIMITED AND SUBSIDIARIES
Revenues $33,511 $30,782
Operating loss (12,314) (8,465)
Net loss $(13,727) $(8,450)
ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(Unaudited)
(In thousands)
Three Months Ended
June 30, 2001 June 30, 2000
Revenues $17,913 $33,667
Proportionate Cash Revenue 192,000 55,540
Proportionate Adjusted EBITDA 122,970 15,691
Cash paid for capital expenditure $209,700 $90,838
Revenues:
Sales-type leases $-- $31,193
Services (1) 16,104 1,979
Amortization of prior period IRU's 1,809 495
Total Revenues $17,913 $33,667
Adjusted EBITDA:
Operating loss $(56,336) $(48,443)
Depreciation and amortization 21,864 58,029
Cash portion of the change
in deferred revenue 223,037 45,933
Adjusted EBITDA $188,565 $55,519
Proportionate Cash Revenue and
Proportionate Adjusted EBITDA
Cash Revenue $240,950 $79,600
Less: Cash Revenue proportionately
owned by other companies (2) (67,340) (39,451)
Add: Incremental contributions from
non-consolidated joint ventures (3) 18,390 15,391
Proportionate Cash Revenue $192,000 $55,540
Less: Proportionate cash
operating expense (4) (69,030) (39,849)
Proportionate Adjusted EBITDA $122,970 $15,691
(1) Service revenue includes revenue from telecommunications services and
maintenance services.
(2) This amount represents other companies' ownership percentage in the
company's Cash Revenue. The calculation of this amount requires
management to make certain estimates and assumptions since, amongst
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.
(3) This amount represents the company's ownership percentage in Cash
Revenue generated by business between the company's non-consolidated
joint ventures and third parties.
(4) This amount represents the company's ownership percentage in cash
operating expenses of the company and its affiliates. Cash operating
expense is defined as operating expense plus goodwill and intangible
amortization, depreciation and amortization, which includes non-cash
cost of capacity sold, and stock-related expenses.
ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
SUPPLEMENTAL PROPORTIONATE DATA
(Unaudited)
(In millions)
Proportionate Cash Revenue
Three Months Ended Three Months Ended
June 30, 2001 June 30, 2000
Subsea (EAC and PC-1) $68.3 $26.3
Services (1) 64.4 2.0
HGC 20.7 15.4
GAL 7.2 11.8
Other joint ventures (2) 7.5 --
Other 23.9 --
Total $192.0 $55.5
(1) Services include $50.1 million in prepayments.
(2) Other joint ventures mainly include amounts estimated for backhaul
on systems not yet specified by the customers. Such amounts could be
subsequently applied to HGC, GAL and other joint ventures.
ASIA GLOBAL CROSSING LTD. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Pro Forma (1)
Three Months Ended June 30,
2001 2000
REVENUES $25,811 $39,034
OPERATING EXPENSES:
Cost of access and maintenance 25,935 16,197
Other operating expenses 41,346 16,104
Depreciation and amortization 26,583 61,813
Total operating expenses 93,864 94,114
Operating loss (68,053) (55,080)
OTHER INCOME (EXPENSE):
Minority interest 16,430 (1,457)
Equity in income (loss) of affiliates (17,291) (12,719)
Interest income 9,087 4,192
Interest expense (12,921) (72)
Other expense (1,186) (46)
Total other income (expense) (5,881) (10,102)
LOSS BEFORE PROVISION FOR INCOME TAXES (73,934) (65,182)
PROVISION FOR INCOME TAXES (495) (5)
NET LOSS $(74,429) $(65,187)
INCOME (LOSS) PER COMMON SHARE:
Loss applicable to common
shareholders - basic and diluted $(0.13) $(0.13)
Shares used in computing loss
per share - basic and diluted 581,925,125 513,425,125
(1) The Pro Forma amounts in the table above reflect, for both periods
presented, the company's acquisition of IXnet/IPC operations in Asia
in July 2001 as if it had occurred on January 1, 2000.
(2) Depreciation and amortization includes non-cash cost of capacity sold.
For the quarter ended June 30, 2001, there was no non-cash cost of
capacity sold.
For the quarter ended June 30, 2000, the non-cash cost of capacity
sold was $54,065.
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SOURCE Asia Global Crossing
CO: Asia Global Crossing; Global Crossing; Microsoft
ST: China, California
IN: TLS CPR NET
SU: ERN CCA
08/01/2001 16:15 EDT prnewswire.com |
