FLORHAM PARK, N.J.,
July 27, 2011 /PRNewswire/ -- Global
Crossing (NASDAQ: GLBC), a leading global IP solutions provider,
today announced unaudited second-quarter 2011 results. The
company said it will discuss its consolidated financial and
operational results for the second-quarter 2011 on a conference
call this morning.
"Strong demand and continued enterprise-wide focus on customer
experience drove solid progress toward the achievement of our
annual guidance," said John Legere,
chief executive officer of Global Crossing. "We are building
strong operating momentum as we prepare for our strategic
combination with Level 3."
Results at a
Glance
|
|
(Dollars in Millions)
|
|
Change vs.
1Q 2011
|
Change vs.
2Q 2010
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
Constant
|
|
|
2Q
2011
|
Reported
|
Currency
|
Reported
|
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Revenues
|
$ 692
|
5%
|
3%
|
10%
|
6%
|
|
"Invest & Grow"
Revenues
|
$ 622
|
6%
|
4%
|
12%
|
8%
|
|
OIBDA
|
$ 96
|
14%
|
13%
|
3%
|
0%
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
$ 10
|
$ 103
|
|
$ 23
|
|
|
|
|
|
|
|
|
|
The company's OIBDA, Free Cash
Flow and constant currency measures are non-GAAP measures.
See "Non-GAAP Metrics" below and the reconciliations of OIBDA and
Free Cash Flow to the most directly comparable GAAP measures in the
attached financial tables.
|
|
|
|
|
|
|
|
Second Quarter Results
Global Crossing's strategic "invest and grow" services generated
revenue of $622 million in the second
quarter, an increase of 6 percent sequentially and 12 percent year
over year. "Invest and grow" revenue in the second quarter
included $9 million for customer
buyouts of certain long-term obligations under two existing
contracts. The sequential and year-over-year increases in
"invest and grow" revenue were driven by growth in the GC Impsat
and "Rest of World" (ROW) segments.
On a segment basis, ROW, GC Impsat and GCUK generated "invest
and grow" revenue of $349 million,
$163 million, and $116 million, respectively. In constant
currency terms, ROW increased 5 percent sequentially and 10 percent
year over year, GC Impsat increased 7 percent sequentially and 15
percent year over year, and GCUK decreased 1 percent sequentially
and 6 percent year over year.
The company's consolidated revenue, which includes non-strategic
wholesale voice services, was $692
million in the second quarter of 2011, an increase of 5
percent sequentially and 10 percent year over year. The
company's wholesale voice business generated revenue of
$69 million in the second quarter, a
7 percent decrease sequentially and year over year.
Global Crossing reported $96
million of OIBDA in the second quarter, compared with
$84 million in the first quarter of
2011 and $93 million in the second
quarter of 2010. Sequentially, OIBDA growth was driven by
higher revenue and improved revenue mix. Year over year,
margin contributed by revenue growth and improved revenue mix was
largely offset by higher sales, general and administrative
(SG&A) costs related to investment in sales resources, salary
increases and restoration of the 401(k) company match.
Sequentially and year over year, margin contributed by the
customer buyouts of long-term obligations was more than offset by
an increase in accrued annual incentive compensation and
$3 million for professional fees
related to the Level 3 combination. On a segment
basis, ROW, GC Impsat and GCUK contributed OIBDA of $29 million, $50
million and $17 million,
respectively.
Global Crossing's consolidated net loss applicable to common
shareholders was $35 million for the
second quarter of 2011. On a sequential basis, net loss
increased $1 million as an
improvement in operating income and a net benefit from income taxes
were offset by an unfavorable impact from foreign exchange movement
reflected in other income/(expense). On a year-over-year
basis, the $13 million improvement in
net loss was due to improved operating income, lower interest
expense and the net benefit from income taxes in the current
quarter.
Cash and Liquidity
As of June 30, 2011, Global
Crossing had $259 million of
unrestricted cash, compared with $265
million at March 31, 2011 and
$328 million at June 30, 2010. Including $10 million of restricted cash, Global Crossing
had total cash of $269 million at
June 30, 2011.
Cash from operating activities for the second quarter was
$56 million. Global Crossing
received $38 million in proceeds from
the sale of IRUs and prepaid services. Uses of cash for the
quarter included $21 million for
operating working capital, $37
million for cash interest payments and $59 million for capital expenditures and
principal payments on capital leases.
The company reported Free Cash Flow of $10 million in the quarter, compared with
negative $93 million in the prior
quarter and negative $13 million in
the year-ago period. The sequential improvement was primarily
driven by better working capital performance, higher receipts from
IRUs and prepaid services, an increase in OIBDA and a timing-driven
decrease in cash interest. Year over year, the increase was
principally driven by higher receipts from IRUs and prepaid
services and an increase in OIBDA.
2011 Guidance
On February 22, 2011, the company
provided 2011 guidance for "invest and grow" revenue to increase by
approximately 6 to 9 percent. At the midpoint of the revenue
growth range, the company expected OIBDA to increase to roughly
$425 million.
Setting aside incremental costs associated with effecting the
Level 3 combination, management continues to forecast 2011 revenue
and OIBDA performance in line with annual guidance. The
guidance reflects various assumptions and projections which may or
may not materialize. Some of the risks and uncertainties that
could cause actual results to differ materially from these
estimates are referenced below.
Non-GAAP Metrics
Pursuant to the Securities and Exchange Commission's (SEC's)
Regulation G and Item 10(e)(1)(i) of Regulation S-X, the attached
financial tables include definitions of non-GAAP financial
measures, as well as reconciliations of such measures to the most
directly comparable financial measures calculated and presented in
accordance with U.S. Generally Accepted Accounting Principles (U.S.
GAAP). In addition, measures referred to in this press
release as being calculated "in constant currency terms" are
non-GAAP measures intended to present the relevant information
assuming a constant exchange rate between the two periods being
compared. Such measures are calculated by applying the
currency exchange rates used in the preparation of the prior period
financial results to the subsequent period results.
Conference Call
The company will hold a conference call on Wednesday, July 27, 2011, at 9:00 a.m. EDT to discuss its financial results.
The call may be accessed by dialing +1 212 231 2938 or, if
calling from within the United
Kingdom, by dialing +44 203 300 0090. Callers are
advised to access the call 15 minutes before the start time.
A Webcast with presentation slides will be available at
http://investors.globalcrossing.com/events.cfm.
A replay of the call will be available on July 27, 2011, beginning at 11:00 a.m. EDT and will be accessible until
August 3, 2011 at 11:00 a.m. EDT. To access the replay, North
American callers may dial +1 402 977 9140 or +1 800 633 8284 and
enter reservation number 21532848. Callers in the
United Kingdom may dial +44 870
000 3081 or +1 800 692 0831 and enter reservation number
21532848.
ABOUT GLOBAL CROSSING
Global Crossing (NASDAQ: GLBC) is a leading global IP, Ethernet,
data center and video solutions provider with the world's first
integrated global IP-based network. The company offers a full
range of data, voice, collaboration, broadcast and media services
delivered with superior customer service.
Global Crossing provides services to enterprises (including
approximately 40 percent of the Fortune 500); government
departments and agencies; and 700 carriers, mobile operators and
ISPs. It delivers converged IP services to more than 700
cities in more than 70 countries, and has 17 world-class data
centers in major business centers around the globe.
Please visit www.globalcrossing.com for more information about
Global Crossing.
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.
IMPORTANT INFORMATION FOR INVESTORS
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. The proposed amalgamation involving
Level 3 Communications, Inc. ("Level 3") and Global Crossing
Limited ("Global Crossing") announced on April 11, 2011 has been submitted to the
stockholders of Level 3 and the stockholders of Global Crossing for
their consideration. Level 3 and Global Crossing have filed
with the SEC a registration statement on Form S-4 that includes a
joint proxy statement of Level 3 and Global Crossing that also
constitutes a prospectus of Level 3, and may in the future file
with the SEC other relevant documents concerning the proposed
transaction. Level 3 and Global Crossing have each provided
the final joint proxy statement/prospectus to its respective
stockholders. Investors and security holders are urged to
read the registration statement and the joint proxy
statement/prospectus and any other relevant documents filed with
the SEC when they become available, as well as any amendments or
supplements to those documents, because they contain and will
contain important information about Level 3, Global Crossing and
the proposed transaction. Investors and security holders may
obtain a copy of the registration statement and joint proxy
statement/prospectus, as well as other filings containing
information about Level 3 and Global Crossing, free of charge at
the SEC's Web Site at http://www.sec.gov. In addition, the joint
proxy statement/prospectus, the SEC filings that are or will be
incorporated by reference in the joint proxy statement/prospectus
and the other documents filed or to be filed with the SEC by Level
3 may be obtained free of charge by directing such request
to: Investor Relations, Level 3, Inc., 1025 Eldorado
Boulevard, Broomfield, Colorado 80021 or from Level 3's
Investor Relations page on its corporate website at
http://www.Level3.com and the joint proxy statement/prospectus, the
SEC filings that are or will be incorporated by reference in the
joint proxy statement/prospectus and the other documents filed or
to be filed with the SEC by Global Crossing may be obtained free of
charge by directing such request to: Global Crossing by telephone
at (800) 836-0342 or by submitting a request by e-mail to
glbc@globalcrossing.com or a written request to the Secretary,
Wessex House, 45 Reid Street, Hamilton HM12 Bermuda or from Global Crossing's Investor
Relations page on its corporate website at
http://www.globalcrossing.com.
Level 3, Global Crossing and their respective directors,
executive officers, and certain other members of management and
employees may be deemed to be participants in the solicitation of
proxies in favor of the proposed transaction from the stockholders
of Level 3 and from the stockholders of Global Crossing,
respectively. Information about the directors and executive
officers of Level 3 is set forth in the proxy statement on Schedule
14A for Level 3's 2011 Annual Meeting of Stockholders, which was
filed with the SEC on April 4, 2011
and information about the directors and executive officers of
Global Crossing is set forth in the proxy statement on Schedule 14A
for Global Crossing's 2011 Annual General Meeting of Shareholders,
which was filed with the SEC on April 29,
2011. Additional information regarding participants in the
proxy solicitation may be obtained by reading the joint proxy
statement/prospectus regarding the proposed transaction.
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 failure to occur of any condition
to the closing of the acquisition of Global Crossing by Level 3 and
uncertainties as to the timing of the closing; the failure to
achieve or any delay in achieving expected synergies and other
financial benefits from the acquisition; changes in Global
Crossing's risk profile resulting from the acquisition; limitations
on Global Crossing's financial and operational flexibility that
arise under the covenants in the amalgamation agreement that could
restrict it from taking advantage of opportunities to strategically
enhance its business or improve its capital structure; delays or
reductions in purchases from Global Crossing by customers because
of their perceived uncertainty about its ability to meet their
needs after closing of the acquisition; disruptions in Global
Crossing's business due to current and prospective employees
experiencing uncertainty about their future roles with the company
and the diversion of their time and attention from ongoing business
operations; Global Crossing's history of substantial operating
losses and the fact that, in the near term, funds from operations
will not satisfy cash requirements; the availability of future
borrowings in an amount sufficient to pay Global Crossing's
indebtedness and to fund its other liquidity needs; legal and
contractual restrictions on the inter-company transfer of funds by
Global Crossing's subsidiaries; Global Crossing's ability to
continue to connect its network to incumbent carriers' networks or
maintain Internet peering arrangements on favorable terms; the
consequences of any inadvertent violation of Global Crossing's
Network Security Agreement with the U.S. Government; increased
competition and pricing pressures resulting from technology
advances and regulatory changes; competitive disadvantages relative
to competitors with superior resources; political, legal and other
risks due to Global Crossing's substantial international
operations; risks associated with movements in foreign currency
exchange rates; risks related to restrictions on the conversion of
the Venezuelan bolivar into U.S. dollars and to the resultant
buildup of a material excess bolivar cash balance, which is carried
on Global Crossing's books at the official exchange rate,
attributing to the bolivar a value that is significantly greater
than the value that would prevail on an open market; potential
weaknesses in internal controls of acquired businesses, and
difficulties in integrating internal controls of those businesses
with Global Crossing's own internal controls; exposure to
contingent liabilities; and other risks referenced from time to
time in Global Crossing'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.
IR/PR1
Global Crossing Limited and
Subsidiaries
|
Table
1
|
|
Condensed Consolidated Balance
Sheets
($ in
millions)
|
|
|
|
|
|
|
|
June 30,
2011
|
|
December 31,
2010
|
|
|
|
(unaudited)
|
|
|
|
ASSETS:
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
259
|
|
$
372
|
|
Restricted cash and cash
equivalents - current portion
|
|
5
|
|
4
|
|
Accounts receivable, net
of allowances of $46 and $45
|
|
370
|
|
324
|
|
Prepaid costs and other
current assets
|
|
110
|
|
91
|
|
|
|
|
|
|
|
Total current
assets
|
|
744
|
|
791
|
|
|
|
|
|
|
|
Restricted cash and cash
equivalents - long term
|
|
5
|
|
5
|
|
Property and equipment,
net of accumulated depreciation of $1,691 and $1,514
|
|
1,191
|
|
1,179
|
|
Intangible assets, net
(including goodwill of $217 and $208)
|
|
234
|
|
227
|
|
Other assets
|
|
110
|
|
108
|
|
|
|
|
|
|
|
Total assets
|
|
$
2,284
|
|
$
2,310
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
273
|
|
$
297
|
|
Accrued cost of
access
|
|
90
|
|
78
|
|
Short term debt and
current portion of long term debt
|
|
48
|
|
27
|
|
Obligations under capital
leases - current portion
|
|
54
|
|
51
|
|
Deferred revenue - current
portion
|
|
173
|
|
184
|
|
Other current
liabilities
|
|
346
|
|
376
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
984
|
|
1,013
|
|
|
|
|
|
|
|
Long term debt
|
|
1,346
|
|
1,311
|
|
Obligations under capital
leases
|
|
81
|
|
72
|
|
Deferred
revenue
|
|
365
|
|
338
|
|
Other deferred
liabilities
|
|
56
|
|
53
|
|
|
|
|
|
|
|
Total
liabilities
|
|
2,832
|
|
2,787
|
|
|
|
|
|
|
|
SHAREHOLDERS'
DEFICIT:
|
|
|
|
|
|
Common stock,
110,000,000 shares authorized, $.01 par value,
|
|
|
|
|
|
61,187,796 and 60,497,709
shares issued and outstanding as of
|
|
|
|
|
|
June 30, 2011 and December
31, 2010, respectively
|
|
1
|
|
1
|
|
Preferred stock with
controlling shareholder, 45,000,000 shares authorized, $.10 par
value, 18,000,000 shares issued and outstanding
|
|
2
|
|
2
|
|
Additional paid-in
capital
|
|
1,448
|
|
1,443
|
|
Accumulated other
comprehensive income
|
|
6
|
|
15
|
|
Accumulated
deficit
|
|
(2,005)
|
|
(1,938)
|
|
|
|
|
|
|
|
Total shareholders'
deficit
|
|
(548)
|
|
(477)
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' deficit
|
|
$
2,284
|
|
$
2,310
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
2
|
|
Unaudited Condensed Consolidated
Statements of Operations
|
|
($ in millions)
|
|
|
|
|
Three Months
Ended
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
|
2011 (1)
|
|
2011 (1)
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
692
|
|
$
661
|
|
$
630
|
|
|
|
|
|
|
|
|
Cost of revenue (excluding
depreciation and amortization, shown separately below):
|
|
|
|
|
|
|
Cost of access
|
(299)
|
|
(298)
|
|
(276)
|
|
Real estate, network and
operations
|
(121)
|
|
(108)
|
|
(103)
|
|
Third party
maintenance
|
(23)
|
|
(24)
|
|
(26)
|
|
Cost of equipment and
other sales
|
(25)
|
|
(26)
|
|
(26)
|
|
Total cost of
revenue
|
(468)
|
|
(456)
|
|
(431)
|
|
Gross margin
|
224
|
|
205
|
|
199
|
|
Selling, general and
administrative
|
(128)
|
|
(121)
|
|
(106)
|
|
Depreciation and
amortization
|
(82)
|
|
(80)
|
|
(82)
|
|
Operating income
|
14
|
|
4
|
|
11
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest income
|
1
|
|
-
|
|
1
|
|
Interest
expense
|
(45)
|
|
(45)
|
|
(48)
|
|
Other income (expense),
net
|
(5)
|
|
18
|
|
(6)
|
|
Loss before benefit (provision)
for income taxes
|
(35)
|
|
(23)
|
|
(42)
|
|
Benefit (provision) for
income taxes
|
1
|
|
(10)
|
|
(5)
|
|
Net loss
|
(34)
|
|
(33)
|
|
(47)
|
|
Preferred stock
dividends
|
(1)
|
|
(1)
|
|
(1)
|
|
Loss applicable to common
shareholders
|
$
(35)
|
|
$
(34)
|
|
$
(48)
|
|
|
|
|
|
|
|
|
Loss per common share, basic and
diluted:
|
|
|
|
|
|
|
Loss applicable to common
shareholders
|
$
(0.57)
|
|
$
(0.56)
|
|
$
(0.79)
|
|
Weighted average number of
common shares
|
61,149,087
|
|
60,755,348
|
|
60,434,227
|
|
|
|
|
|
|
|
|
(1) On October 29, 2010, Global
Crossing acquired Genesis Networks Inc. (Genesis), and since that
date Genesis' results have been consolidated into Global
Crossing.
|
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
3
|
|
Unaudited Condensed Consolidated
Statements of Cash Flows
|
|
($ in
millions)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
|
|
2011 (1)
|
|
2011 (1)
|
|
2010
|
|
|
|
|
|
Cash flows provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
(34)
|
|
$
(33)
|
|
$
(47)
|
|
Adjustments to reconcile
net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
Deferred income
tax
|
|
4
|
|
2
|
|
-
|
|
Non-cash stock
compensation expense
|
|
4
|
|
4
|
|
5
|
|
Depreciation and
amortization
|
|
82
|
|
80
|
|
82
|
|
Provision for doubtful
accounts
|
|
2
|
|
1
|
|
-
|
|
Amortization of prior
period IRUs
|
|
(7)
|
|
(7)
|
|
(6)
|
|
Change in long term
deferred revenue
|
|
33
|
|
4
|
|
(2)
|
|
Other
|
|
(7)
|
|
(20)
|
|
18
|
|
Change in operating
working capital:
|
|
|
|
|
|
|
|
- Changes in accounts
receivable
|
|
(12)
|
|
(28)
|
|
23
|
|
- Changes in accounts
payable and accrued cost of access
|
|
10
|
|
(27)
|
|
(30)
|
|
- Changes in other current
assets
|
|
(15)
|
|
(12)
|
|
1
|
|
- Changes in other current
liabilities
|
|
(4)
|
|
(21)
|
|
(8)
|
|
Net cash provided by (used in)
operating activities
|
|
56
|
|
(57)
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in)
investing activities:
|
|
|
|
|
|
|
|
Purchases of property and
equipment
|
|
(46)
|
|
(36)
|
|
(49)
|
|
Proceeds from sale of
property and equipment
|
|
-
|
|
-
|
|
1
|
|
Change in restricted cash
and cash equivalents
|
|
-
|
|
-
|
|
(1)
|
|
Net cash used in investing
activities
|
|
(46)
|
|
(36)
|
|
(49)
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used in)
financing activities:
|
|
|
|
|
|
|
|
Repayment of capital lease
obligations
|
|
(13)
|
|
(16)
|
|
(14)
|
|
Repayment of long term
debt (including current portion)
|
|
(5)
|
|
(1)
|
|
(3)
|
|
Proceeds from exercise of
stock options
|
|
1
|
|
1
|
|
-
|
|
Finance costs
incurred
|
|
-
|
|
(1)
|
|
-
|
|
Proceeds from
sales/leasebacks
|
|
-
|
|
4
|
|
-
|
|
Payment of employee taxes
on share-based compensation
|
|
-
|
|
(3)
|
|
-
|
|
Other
|
|
1
|
|
-
|
|
-
|
|
Net cash used in financing
activities
|
|
(16)
|
|
(16)
|
|
(17)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
-
|
|
2
|
|
(1)
|
|
Net decrease in cash and cash
equivalents
|
|
(6)
|
|
(107)
|
|
(31)
|
|
Cash and cash equivalents,
beginning of period
|
|
265
|
|
372
|
|
359
|
|
Cash and cash equivalents, end
of period
|
|
$
259
|
|
$
265
|
|
$
328
|
|
|
|
|
|
|
|
|
|
(1) On October 29, 2010, Global
Crossing acquired Genesis Networks Inc. (Genesis),
and since that date Genesis' cash flows have been consolidated into
Global Crossing.
|
|
|
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
4
|
|
Unaudited Condensed Consolidated
Statements of Operations
|
|
($ in millions)
|
|
|
|
|
|
|
|
Quarter
Ended June 30, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
116
|
|
$
164
|
|
$
418
|
|
$
(6)
|
|
$
692
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
Cost of access
|
|
(38)
|
|
(33)
|
|
(233)
|
|
5
|
|
(299)
|
|
Real estate, network and
operations
|
|
(19)
|
|
(32)
|
|
(71)
|
|
1
|
|
(121)
|
|
Third party
maintenance
|
|
(5)
|
|
(6)
|
|
(12)
|
|
-
|
|
(23)
|
|
Cost of equipment and
other sales
|
|
(16)
|
|
(7)
|
|
(2)
|
|
-
|
|
(25)
|
|
Total cost of
revenue
|
|
(78)
|
|
(78)
|
|
(318)
|
|
6
|
|
(468)
|
|
Gross margin
|
|
38
|
|
86
|
|
100
|
|
-
|
|
224
|
|
Selling, general and
administrative
|
|
(21)
|
|
(36)
|
|
(71)
|
|
-
|
|
(128)
|
|
Depreciation and
amortization
|
|
(16)
|
|
(20)
|
|
(46)
|
|
-
|
|
(82)
|
|
Operating income
(loss)
|
|
1
|
|
30
|
|
(17)
|
|
-
|
|
14
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
2
|
|
-
|
|
4
|
|
(5)
|
|
1
|
|
Interest
expense
|
|
(13)
|
|
(3)
|
|
(34)
|
|
5
|
|
(45)
|
|
Other income (expense),
net
|
|
(1)
|
|
-
|
|
(4)
|
|
-
|
|
(5)
|
|
Income (loss) before benefit
(provision) for income taxes
|
|
(11)
|
|
27
|
|
(51)
|
|
-
|
|
(35)
|
|
Benefit (provision) for
income taxes
|
|
-
|
|
1
|
|
-
|
|
-
|
|
1
|
|
Net income (loss)
|
|
(11)
|
|
28
|
|
(51)
|
|
-
|
|
(34)
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(11)
|
|
$
28
|
|
$
(52)
|
|
$
-
|
|
$
(35)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended March 31, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
114
|
|
$
152
|
|
$
403
|
|
$
(8)
|
|
$
661
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
Cost of access
|
|
(35)
|
|
(34)
|
|
(237)
|
|
8
|
|
(298)
|
|
Real estate, network and
operations
|
|
(19)
|
|
(24)
|
|
(65)
|
|
-
|
|
(108)
|
|
Third party
maintenance
|
|
(5)
|
|
(6)
|
|
(13)
|
|
-
|
|
(24)
|
|
Cost of equipment and
other sales
|
|
(17)
|
|
(5)
|
|
(4)
|
|
-
|
|
(26)
|
|
Total cost of
revenue
|
|
(76)
|
|
(69)
|
|
(319)
|
|
8
|
|
(456)
|
|
Gross margin
|
|
38
|
|
83
|
|
84
|
|
-
|
|
205
|
|
Selling, general and
administrative
|
|
(20)
|
|
(34)
|
|
(67)
|
|
-
|
|
(121)
|
|
Depreciation and
amortization
|
|
(16)
|
|
(20)
|
|
(44)
|
|
-
|
|
(80)
|
|
Operating income
(loss)
|
|
2
|
|
29
|
|
(27)
|
|
-
|
|
4
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
2
|
|
1
|
|
3
|
|
(6)
|
|
-
|
|
Interest
expense
|
|
(15)
|
|
(3)
|
|
(33)
|
|
6
|
|
(45)
|
|
Other income (expense),
net
|
|
7
|
|
1
|
|
10
|
|
-
|
|
18
|
|
Income (loss) before benefit
(provision) for income taxes
|
|
(4)
|
|
28
|
|
(47)
|
|
-
|
|
(23)
|
|
Benefit (provision) for
income taxes
|
|
-
|
|
(9)
|
|
(1)
|
|
-
|
|
(10)
|
|
Net income (loss)
|
|
(4)
|
|
19
|
|
(48)
|
|
-
|
|
(33)
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(4)
|
|
$
19
|
|
$
(49)
|
|
$
-
|
|
$
(34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended June 30, 2010
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW
(1)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
115
|
|
$
137
|
|
$
384
|
|
$
(6)
|
|
$
630
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
Cost of access
|
|
(35)
|
|
(31)
|
|
(215)
|
|
5
|
|
(276)
|
|
Real estate, network and
operations
|
|
(18)
|
|
(24)
|
|
(62)
|
|
1
|
|
(103)
|
|
Third party
maintenance
|
|
(6)
|
|
(6)
|
|
(14)
|
|
-
|
|
(26)
|
|
Cost of equipment and
other sales
|
|
(17)
|
|
(5)
|
|
(4)
|
|
-
|
|
(26)
|
|
Total cost of
revenue
|
|
(76)
|
|
(66)
|
|
(295)
|
|
6
|
|
(431)
|
|
Gross margin
|
|
39
|
|
71
|
|
89
|
|
-
|
|
199
|
|
Selling, general and
administrative
|
|
(19)
|
|
(30)
|
|
(57)
|
|
-
|
|
(106)
|
|
Depreciation and
amortization
|
|
(15)
|
|
(20)
|
|
(47)
|
|
-
|
|
(82)
|
|
Operating income
(loss)
|
|
5
|
|
21
|
|
(15)
|
|
-
|
|
11
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
2
|
|
-
|
|
6
|
|
(7)
|
|
1
|
|
Interest
expense
|
|
(14)
|
|
(6)
|
|
(35)
|
|
7
|
|
(48)
|
|
Other income (expense),
net
|
|
(1)
|
|
1
|
|
(6)
|
|
-
|
|
(6)
|
|
Income (loss) before benefit
(provision) for income taxes
|
|
(8)
|
|
16
|
|
(50)
|
|
-
|
|
(42)
|
|
Benefit (provision) for
income taxes
|
|
-
|
|
(6)
|
|
1
|
|
-
|
|
(5)
|
|
Net income (loss)
|
|
(8)
|
|
10
|
|
(49)
|
|
-
|
|
(47)
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(8)
|
|
$
10
|
|
$
(50)
|
|
$
-
|
|
$
(48)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Rest of
World (ROW) represents operations of Global Crossing Limited and
subsidiaries excluding Global Crossing (UK) Telecommunications Ltd.
and subsidiaries (GCUK) and GC Impsat Holdings I Plc and
subsidiaries (GC Impsat).
|
|
|
|
(2) On October
29, 2010, Global Crossing acquired Genesis Networks Inc. (Genesis),
and since that date Genesis' results have been consolidated into
Global Crossing results as ROW.
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
5
|
|
Unaudited Summary of
Consolidated Revenue
|
|
($ in millions)
|
|
|
|
|
|
|
|
Quarter
Ended June 30, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise, carrier data and
indirect sales channel
|
|
$
116
|
|
$
160
|
|
$
346
|
|
$
-
|
|
$
622
|
|
Carrier voice
|
|
-
|
|
1
|
|
68
|
|
-
|
|
69
|
|
Other
|
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
Intersegment revenue
|
|
-
|
|
3
|
|
3
|
|
(6)
|
|
-
|
|
Consolidated revenue
|
|
$
116
|
|
$
164
|
|
$
418
|
|
$
(6)
|
|
$
692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended March 31, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise, carrier data and
indirect sales channel
|
|
$
113
|
|
$
148
|
|
$
326
|
|
$
-
|
|
$
587
|
|
Carrier voice
|
|
1
|
|
2
|
|
71
|
|
-
|
|
74
|
|
Intersegment revenue
|
|
-
|
|
2
|
|
6
|
|
(8)
|
|
-
|
|
Consolidated revenue
|
|
$
114
|
|
$
152
|
|
$
403
|
|
$
(8)
|
|
$
661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended June 30, 2010
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW
(1)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise, carrier data and
indirect sales channel
|
|
$
113
|
|
$
132
|
|
$
310
|
|
$
-
|
|
$
555
|
|
Carrier voice
|
|
2
|
|
3
|
|
69
|
|
-
|
|
74
|
|
Other
|
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
Intersegment revenue
|
|
-
|
|
2
|
|
4
|
|
(6)
|
|
-
|
|
Consolidated revenue
|
|
$
115
|
|
$
137
|
|
$
384
|
|
$
(6)
|
|
$
630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Rest of
World (ROW) represents operations of Global Crossing Limited and
subsidiaries excluding Global Crossing (UK) Telecommunications Ltd.
and subsidiaries (GCUK) and GC Impsat Holdings I Plc and
subsidiaries (GC Impsat).
|
|
|
|
(2) On October
29, 2010, Global Crossing acquired Genesis Networks Inc. (Genesis),
and since that date Genesis' results have been consolidated into
Global Crossing results as ROW.
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table 6
|
|
Unaudited Reconciliation of
OIBDA to Income (Loss) Applicable to Common
Shareholders
|
|
($ in millions)
|
|
|
|
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 income (loss) applicable to common
shareholders.
|
|
OIBDA is defined as operating
income (loss) before depreciation and amortization. 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, other non-operating income or
expense items and preferred stock dividends. 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, income taxes and preferred stock dividends, and
of other items not associated with our everyday
operations.
|
|
|
|
|
|
Quarter
Ended June 30, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIBDA
|
|
$
17
|
|
$
50
|
|
$
29
|
|
$
-
|
|
$
96
|
|
Depreciation and
amortization
|
|
(16)
|
|
(20)
|
|
(46)
|
|
-
|
|
(82)
|
|
Operating income
(loss)
|
|
1
|
|
30
|
|
(17)
|
|
-
|
|
14
|
|
Interest income
|
|
2
|
|
-
|
|
4
|
|
(5)
|
|
1
|
|
Interest expense
|
|
(13)
|
|
(3)
|
|
(34)
|
|
5
|
|
(45)
|
|
Other expense, net
|
|
(1)
|
|
-
|
|
(4)
|
|
-
|
|
(5)
|
|
Benefit for income
taxes
|
|
-
|
|
1
|
|
-
|
|
-
|
|
1
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(11)
|
|
$
28
|
|
$
(52)
|
|
$
-
|
|
$
(35)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended March 31, 2011
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW (1,
2)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIBDA
|
|
$
18
|
|
$
49
|
|
$
17
|
|
$
-
|
|
$
84
|
|
Depreciation and
amortization
|
|
(16)
|
|
(20)
|
|
(44)
|
|
-
|
|
(80)
|
|
Operating income
(loss)
|
|
2
|
|
29
|
|
(27)
|
|
-
|
|
4
|
|
Interest income
|
|
2
|
|
1
|
|
3
|
|
(6)
|
|
-
|
|
Interest expense
|
|
(15)
|
|
(3)
|
|
(33)
|
|
6
|
|
(45)
|
|
Other income, net
|
|
7
|
|
1
|
|
10
|
|
-
|
|
18
|
|
Provision for income
taxes
|
|
-
|
|
(9)
|
|
(1)
|
|
-
|
|
(10)
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(4)
|
|
$
19
|
|
$
(49)
|
|
$
-
|
|
$
(34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended June 30, 2010
|
|
|
|
GCUK
|
|
GC
Impsat
|
|
ROW
(1)
|
|
Eliminations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIBDA
|
|
$
20
|
|
$
41
|
|
$
32
|
|
$
-
|
|
$
93
|
|
Depreciation and
amortization
|
|
(15)
|
|
(20)
|
|
(47)
|
|
-
|
|
(82)
|
|
Operating income
(loss)
|
|
5
|
|
21
|
|
(15)
|
|
-
|
|
11
|
|
Interest income
|
|
2
|
|
-
|
|
6
|
|
(7)
|
|
1
|
|
Interest expense
|
|
(14)
|
|
(6)
|
|
(35)
|
|
7
|
|
(48)
|
|
Other income (expense),
net
|
|
(1)
|
|
1
|
|
(6)
|
|
-
|
|
(6)
|
|
Benefit (provision) for income
taxes
|
|
-
|
|
(6)
|
|
1
|
|
-
|
|
(5)
|
|
Preferred stock
dividends
|
|
-
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
Income (loss) applicable to
common shareholders
|
|
$
(8)
|
|
$
10
|
|
$
(50)
|
|
$
-
|
|
$
(48)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Rest of
World (ROW) represents operations of Global Crossing Limited and
subsidiaries excluding Global Crossing (UK) Telecommunications Ltd.
and subsidiaries (GCUK) and GC Impsat Holdings I Plc and
subsidiaries (GC Impsat).
|
|
|
|
(2) On October
29, 2010, Global Crossing acquired Genesis Networks Inc. (Genesis),
and since that date Genesis' results have been consolidated into
Global Crossing results as ROW.
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
7
|
|
Unaudited Reconciliations of
Free Cash Flow to Net Cash Provided by (Used in) Operating
Activities
|
|
($ in millions)
|
|
|
|
Pursuant to the SEC's Regulation
G, the following table provides a reconciliation of Free Cash Flow,
which is considered a non-GAAP (Generally Accepted Accounting
Principles) financial measure, to net cash provided by (used in)
operating activities.
|
|
We define Free Cash Flow as net
cash provided by (used in) operating activities less purchases of
property and equipment as disclosed in the statement of cash flows.
Free Cash Flow differs from the net change in cash and cash
equivalents in the statement of cash flows in that it excludes the
cash impact of: all investing activities (other than capital
expenditures, which are a fundamental and recurring part of our
business); all financing activities; and exchange rate changes on
cash and cash equivalents balances.
Management uses Free Cash Flow
as a relevant indicator of our ability to generate cash to pay
debt. Free Cash Flow also is an important part of our
internal reporting and a key measure used by management to evaluate
liquidity from period to period. We believe 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 Free
Cash Flow may differ from similarly titled measures used by other
companies, and may not be comparable to those other measures.
Moreover, we do not currently pay a significant amount of
income taxes due to net operating losses, and we therefore generate
higher Free Cash Flow than comparable businesses that do pay income
taxes. Additionally, Free Cash Flow is subject to variability
quarter over quarter as a result of the timing of payments related
to accounts receivable and accounts payable and capital
expenditures. Free Cash Flow also does not include certain
significant cash items such as purchases and sales out of the
ordinary course of business, proceeds from financing activities,
repayments of capital lease obligations and other debt, and the
effect of exchange rate changes on cash and cash equivalents
balances. Free Cash Flow should be considered in addition to,
and not as a substitute for, net change in cash and cash
equivalents in the statement of cash flows reported in accordance
with GAAP.
Management believes that Free
Cash Flow is useful to our investors as it provides an indication
of the underlying cash position of our everyday business operations
and the ability to pay debt.
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
June
30,
|
|
|
2011 (1)
|
|
|
|
|
Free Cash Flow
|
$
10
|
|
Purchases of property and
equipment
|
46
|
|
Net cash provided by
operating activities
|
$
56
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
March
31,
|
|
|
2011 (1)
|
|
|
|
|
Free Cash Flow
|
$
(93)
|
|
Purchases of property and
equipment
|
36
|
|
Net cash used in operating
activities
|
$
(57)
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
June
30,
|
|
|
2010
|
|
|
|
|
Free Cash Flow
|
$
(13)
|
|
Purchases of property and
equipment
|
49
|
|
Net cash provided by
operating activities
|
$
36
|
|
|
|
|
|
|
(1) On October 29, 2010, Global
Crossing acquired Genesis Networks Inc. (Genesis), and since that
date Genesis' cash flows have been
consolidated into Global Crossing.
|
|
|
Global Crossing Limited and
Subsidiaries
|
Table
8
|
|
Unaudited Reconciliation of 2011
OIBDA Guidance
|
|
|
|
|
|
When providing projections for
non-GAAP measures, we are required to provide a reconciliation of
the non-GAAP measure to the most directly comparable GAAP metric to
the extent available without unreasonable efforts. In such
cases, we may indicate an amount or range for GAAP measures that
are components of the reconciliation. The provision of such
amounts or ranges must not be interpreted as explicit or implicit
projections of those GAAP components. To reconcile the non-GAAP
financial metric to GAAP, we must use amounts or ranges for the
GAAP components that arithmetically add up to the non-GAAP
financial metric. While we feel reasonably comfortable with the
methodology used to generate the projections of our non-GAAP
financial metrics, we fully expect that the amounts or ranges used
for the GAAP components will vary from actual results. We have made
numerous assumptions in preparing our projections. These
assumptions, including the amounts of the various components that
comprise a financial metric, may or may not prove to be correct. We
will consider our projections of non-GAAP financial metrics to have
been achieved if the statement we make about a specific non-GAAP
measure is satisfied, even if the GAAP components of the
reconciliation are materially different from those provided in an
earlier reconciliation.
|
|
This reconciliation was prepared
based on the Company's guidance as provided on February 22, 2011,
which included the Company's expectation that 2011 full-year OIBDA
would be roughly $425 million at the midpoint of its revenue
guidance range and otherwise based on the assumptions set forth in
the February 22, 2011 press release.
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
December
31, 2011
|
|
|
($ in
millions)
|
|
|
|
|
OIBDA
|
$
425
|
|
Depreciation and
amortization
|
(321)
|
|
Operating income
|
104
|
|
Interest expense, net
|
(190)
|
|
Provision for income
taxes
|
(38)
|
|
Preferred stock
dividends
|
(4)
|
|
Net loss applicable to common
shareholders
|
$
(128)
|
|
|
|
|
|
|
|
For definition and further
description of this non-GAAP measure see table 6.
|
|
|
|
SOURCE Global Crossing