Global Crossing Reports 2000 Pro Forma Cash Revenue up 36%, Recurring Adjusted EBITDA up 54% from 1999.Business Editors HAMILTON Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , Bermuda--(BUSINESS WIRE)--Feb. 14, 2001 Global Crossing Ltd. (NYSE NYSE See: New York Stock Exchange :GX): -- Cash Revenue from Data Products increased 72% from fourth quarter 1999; represents 62% of Telecommunications Services Cash Revenue, up from 51% from one year ago, pro forma for acquisitions and dispositions. -- Completed an agreement with SWIFT to supply secure global communications to over 7,000 financial institutions in 190 countries. Global Crossing will develop and manage SWIFT's Secure IP Network, with a minimum of $300 million of revenue. -- Completed sale of GlobalCenter to Exodus Communications for 108.2 million shares of Exodus stock, together with a network services agreement that requires Exodus to purchase more than 50% of future bandwidth needs, projected to generate $4-5 billion of revenue over 10 years. -- Reaffirmed 2001 financial guidance with continuing operations expected to generate approximately $7.1-$7.3 billion of Cash Revenue and Recurring Adjusted EBITDA of $2.0-$2.1 billion. -- The Global Crossing Network is now approximately 85% complete, putting into immediate operation the world's most extensive global IP-based fiber optic network, connecting the major regions of North America, Europe, South America and Asia. Global Crossing Ltd. (NYSE:GX), which provides integrated telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. solutions over the world's most extensive global IP-based fiber optic network, today reported record results for the fourth quarter and full year ended December December: see month. 31, 2000. The Company reported fourth quarter Cash Revenue of $1,540 million, Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $418 million, and a Recurring Net Loss of $617 million, or $0.70 per share. Net Loss Applicable to Common Shareholders of $513 million or $0.58 per share for the fourth quarter reflects a $303 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain, included in other income, realized as a result of the October October: see month. 2000 initial public offering of common stock of the Company's Asia Global Crossing subsidiary and related events. For the full year 2000, the Company reported Cash Revenue of $5,160 million, Recurring Adjusted EBITDA of $1,469 million and Recurring Net Loss of $1,779 million, or $2.11 per share. These results exclude both GlobalCenter and the incumbent local exchange carrier ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". (ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. ) business, which are treated as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. as discussed below (see Summary of Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Results). Tom Casey Casey is an Irish surname, and may refer to
For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data the reliability and functionality of our worldwide seamless network. Successes with these global enterprise customers are based on our capabilities in managing secure IP networks, as well as the unmatched combination of bandwidth and geographic presence that we offer. An additional benefit from these relationships is that we plan to have SWIFT's and CSC's sales forces selling Global Crossing's products. We gain not only the direct customer revenue but also the additional revenue generated through new indirect sales channels." Casey continued, "Our successes with global enterprise customers like SWIFT, CSC and Garban have not yet been reflected in our operating results. However, we expect customers such as these to rapidly become significant contributors to growth in revenue and profitability in the Commercial segment as we continue to de-emphasize de-em·pha·size tr.v. de-em·pha·sized, de-em·pha·siz·ing, de-em·pha·siz·es To decrease the emphasis on; minimize the importance of. de-em service offerings to small and medium business customers. With our global network virtually complete and fully funded, and with the IP/VPN capabilities that we're we're Contraction of we are. we're we are implementing for new customers such as SWIFT, we have tremendous operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. as we add new customers to the network at very low incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. . We can reduce network costs for our customers as we increase our own margins." Service Offerings Global Crossing continued its expansion of product capabilities across its global fiber optic network. At the end of the fourth quarter of 2000, international private line services were available in 29 European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. cities, Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. , and the major cities of North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . In addition, the Global Crossing Wavelength Service was available in North America and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Data products such as ATM,
Frame Relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. and IP services are now available in North America, the
United Kingdom, continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. , and Tokyo.Global Crossing completed the first phase of its migration to a next-generation voice-over-IP (VoIP) network by initiating service in 23 core VoIP gateway centers worldwide. The gateway centers are currently deployed in fifteen U.S. cities, seven in Europe, and one in Japan. The Company will continue to rapidly extend its VoIP platform around the world. In 2001, the international footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. is expected to extend into South and Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. with continued expansion throughout Europe and Asia. This effort is consistent with the Company's mission of completing a truly global network based on NexGen IP by the middle of 2001 and allows Global Crossing to provide voice services on its owned and operated core network at a fraction of the cost of traditional switching infrastructure. The Company expects to have most of its new international backbone voice traffic on the VoIP network by the end of 2001. The VoIP network is a key step in providing integrated product capabilities on a worldwide basis for converged services. Network Build During the quarter, Global Crossing continued its successful record of completing its worldwide fiber optic network on time and on budget. The network, which is 85% complete in terms of route miles The number of miles that are spanned by a telecommunications network. It does not include combined wire mileage due to multiple wires or fibers within a single cable or by overlapping segments, just the total geographic distance between cities or other terminal points. , will have more than 100,000 route miles, serving five continents, 27 countries and more than 200 major cities by the middle of 2001. During the quarter, the Company completed landings of the South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Crossing (SAC Sac: see Sac and Fox. SAC - 1. An early system on the Datatron 200 series. [Listed in CACM 2(5):16 (May 1959)]. ) undersea system in Chile, Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , and Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. . The Company also completed the Pan American Crossing (PAC PAC, see political action committee. (1) See perceptual audio coding. (2) (Programmable Automation Controller) A programmable microprocessor-based device that is used for discrete manufacturing, process control ) system, which is a key link in making Global Crossing the first company to connect the three largest telecommunications markets in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. -- Brazil, Mexico, and Argentina -- to the U.S., Europe and Asia via a seamless global fiber optic network. Atlantic Crossing 2 (AC- ac- pref. Variant of ad-. 2) was completed, providing a third meshed Meshed: see Mashhad, Iran. connection between the U.S. and Europe which more than doubles the Company's current capacity in this region. In the Pacific, the final legs (Southern and Eastern) of the Pacific Crossing (PC-1) system were completed, providing full ring restoration capability to traffic from Asia to North America. The East Asia East Asia A region of Asia coextensive with the Far East. East Asian adj. & n. Crossing (EAC EAC an abbreviation used in studies of complement, in which E represents erythrocyte, A antibody, and C complement. ) subsea Subsea is a general term frequently used to refer to equipment, technology, and methods employed to explore, drill, and develop oil and gas fields that exist below the ocean floors. This may be in "shallow" or "deepwater". cable system was landed in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , connecting that city to PC-1 and the rest of the worldwide Global Crossing Network. EAC is also connected to the Hutchison Hutchison may refer to: People with the surname Hutchison:
pref. Middle: midbrain. 2001. Global Crossing's metropolitan fiber roll-out is also well underway worldwide, bringing fiber from the global network directly to customer premises. In 2000, the Company completed metro rings in 10 cities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. , Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. D.C., Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Miami, Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. , Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. ), 4 cities in Europe (London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Paris, Frankfurt, Amsterdam), and 3 cities in Asia (Tokyo, Osaka, Hong Kong). This local connectivity is expected to dramatically reduce provisioning time and transmission costs, provide better control over quality of service, and enable the delivery of new products and services (e.g., gigabit ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. ), creating significant new revenue opportunities. Financing Activities The Company arranged approximately $2 billion in financing since the third quarter 2000, which is intended to lower the Company's overall cost of capital. Proceeds from a $1 billion ILEC bridge loan completed in October 2000 were used to repay an existing Racal credit facility. Proceeds from a $1 billion offering of Senior Notes Due 2007 completed in January 2001 were used to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. existing indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. under the Company's corporate credit facility. During fiscal 2000, the Company and its affiliates arranged approximately $5 billion in financing which includes the completion of Asia Global Crossing's (AGC AGC Automatic Gain Control AGC Automotive Glass Cartridge (fuse) AGC Associated General Contractors AGC Associated General Contractors of America AGC Atypical Glandular Cells AGC Attorney-General's Chambers ) initial public offering of common stock ($479 million, including exercise of the underwriters' over-allotment option), and AGC's issuance of $400 million of 13.375% Senior Notes Due 2010. When combined with the $3.65 billion in estimated pre-tax cash proceeds from the sale of its ILEC business and the Company's expected operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , these financings complete the funding of the Company's current business plan. Summary of Pro Forma Results Results for Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the exclude Global Crossing's ILEC business, which the Company has agreed to sell to Citizens Communications Citizens Communications is the parent company of Frontier Telephone, providing telephone and internet access in 24 states. The company headquarters are located at 3 High Ridge Park in Stamford, Connecticut. for an estimated $3.65 billion in cash, and GlobalCenter, whose sale to Exodus Exodus (ĕk`sədəs), book of the Bible, 2d of the 5 books of the Law (the Pentateuch or Torah) ascribed by tradition to Moses. The book continues the story of the ancestors of Israel in Egypt, now grown in number to a large landless was completed on January 10, 2001 for 108.2 million shares of Exodus common stock. GlobalCenter has been treated as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. for all periods presented because it was sold to Exodus Communications Exodus Communications was a high-flying internet hosting and service provider to dot-com businesses that went broke along with their customers. Exodus inception Exodus was founded in 1992 as Fouress, Inc., and reincorporated in 1994 to Exodus Communications. and Global Crossing now owns less than 20% of the outstanding common stock of Exodus and exercises no control or significant influence over the management of Exodus. When the Company reported third quarter results, GlobalCenter was classified as part of continuing operations because, pursuant to a merger agreement signed on September 28, 2000, the Company expected at that time to own more than 20% of Exodus. The reduction in ownership percentage occurred because the number of outstanding shares of Exodus common stock increased. Unless otherwise noted, period-to-period comparisons throughout this press release are discussed giving pro forma effect to all acquisitions (Frontier, Global Marine, Racal, Hutchison Global Crossing and IPC/IXnet) and dispositions (ILEC and GlobalCenter), as if each had occurred on January 1, 1999. Detailed pro forma comparisons are shown in the attached schedules. The "Continuing Operations" section of the tables below summarize sum·ma·rize intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es To make a summary or make a summary of. sum both the pro forma quarterly and pro forma annual operating results of the Company and its subsidiaries excluding the ILEC and GlobalCenter. The "Discontinued Operations" section of the tables below summarize both the pro forma quarterly and pro forma annual operating results of the discontinued operations of the ILEC and Global Center.
Summary of Quarterly Pro Forma Operations:
Three Months Ended Change
Dec. 31, Dec. 31, Amount Percent
2000 1999
(Unaudited) (Unaudited)
(in millions)
Pro Forma Continuing
Operations:
Cash Revenue (a) $ 1,540 $ 1,078 $ 462 43%
Recurring Adjusted EBITDA $ 418 $ 310 $ 108 35%
Discontinued Operations --
ILEC & GlobalCenter:
Cash Revenue (a) $ 235 $ 211 $ 24 11%
Recurring Adjusted EBITDA $ 52 $ 89 ($ 37) (42%)
(a) Consistent with industry practice, the Company has reclassified
bad debt expense to be a component of other operating expenses for all
periods presented. These reclassifications have no effect on reported
operating results or cash flows. The impact of this change in the
fourth quarter of 2000 was to increase reported revenue and cash
revenue by approximately $14 million.
Summary of Annual Pro Forma Operations:
Year Ended Change
Dec. 31, Dec. 31, Amount Percent
2000 1999
(Unaudited) (Unaudited)
(in millions)
Pro Forma Continuing
Operations:
Cash Revenue (a) $ 5,329 $ 3,913 $ 1,416 36%
Recurring Adjusted EBITDA $ 1,463 $ 947 $ 516 54%
Discontinued Operations --
ILEC & GlobalCenter:
Cash Revenue (a) $ 936 $ 808 $ 128 16%
Recurring Adjusted EBITDA $ 288 $ 363 ($ 75) (21%)
(a) Consistent with industry practice, the Company has reclassified
bad debt expense to be a component of other operating expenses for all
periods presented. These reclassifications have no effect on reported
operating results or cash flows. The impact of this change in the
fourth quarter of 2000 was to increase reported revenue and cash
revenue by approximately $77 million.
The results exceeded the Company's projections for 2000, which were published on August 31, 2000, and assumed GlobalCenter as part of continuing operations. Had GlobalCenter been included as a continuing operation, the Company would have reported Cash Revenue of $1,595 million and Recurring Adjusted EBITDA of $372 million for the fourth quarter, and Cash Revenue of $5,350 million and Recurring Adjusted EBITDA of $1,371 million for the year. In the fourth quarter of 2000, the Company adopted effective January 1, 2000, Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB SAB Spontaneous abortion. See Abortion. 101"), which requires amortization of certain start-up Start-up The earliest stage of a new business venture. and activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. revenues and deferral deferral - Waiting for quiet on the Ethernet. of associated costs over the longer of the contract period or expected customer relationship. Previously, such revenues and expenses were recognized upon service activation. The net impact of SAB 101 reduced fourth quarter 2000 revenue by approximately $2.4 million, and increased fourth quarter amortization expense by approximately $10.8 million. The cumulative impact on the results of prior years was reflected as a $9.1 million cumulative effect of a change in accounting principle in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the adoption provisions of this bulletin. Telecommunications Services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. Segment The Telecommunications Services Segment, which is comprised of commercial, consumer and carrier businesses for bandwidth, data, voice, audio/video conferencing See teleconferencing. and other value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. , experienced Cash Revenue growth of 40% and Adjusted EBITDA growth of 37%, from fourth quarter 1999. Cash Revenue increased 36%, and Adjusted EBITDA of $1,362 million for the full year 2000 increased 58% over 1999 results. Cash Revenue from data products, up 72% from fourth quarter 1999, now accounts for 62% of Telecommunications Services Cash Revenue, up from 51% in the fourth quarter of 1999. The accelerating growth in Telecommunications Services is being driven by the initiation of service on new systems in Latin America (MAC/SAC) and Asia (PC-1/EAC) which are now selling value-added services to meet the growing needs of global enterprises. In addition, data Service Revenue increased 34% from the fourth quarter 1999, led by strong growth in data products such as Frame Relay, ATM and IP. The unrecognized sales backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. for the Telecommunications Services Segment exceeded $2.5 billion as of December 31, 2000. Because Global Crossing has de-emphasized service offerings to the small and medium enterprise (SME (1) (Small and Medium-sized Enterprise) See SMB. (2) (Subject Matter Expert) An individual who is well-versed in the policies and procedures of a particular department or division. ) business segment in North America and the UK, the Company is managing revenue from this segment to levels representing less growth in commercial data products. Recently announced contracts like SWIFT, CSC and Garban are expected to accelerate commercial services growth to more than make up for the slowing revenues from SME's. Carrier Cash Revenue for 2000 was $3,110 million compared to $1,840 million in 1999, an increase of 69%. In addition to bandwidth sales and rapid growth in wholesale data products, a contributor to this strong growth is the performance of the carrier voice business, which increased revenues from 1999 by 32%. Cost of Access and Maintenance (COA&M) was higher in the fourth quarter of 2000 as maintenance costs increased due to the initiation of new systems, and accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. access charges increased as a percentage of revenue. In future periods, the Company expects COA&M as a percentage of revenue to decline from the level reported for the fourth quarter 2000. Installation and Maintenance Services Segment The installation and maintenance business segment, consisting of the Company's Global Marine subsidiary, reported revenue of $149 million for the fourth quarter of 2000, an increase of approximately 83% as compared to the fourth quarter of 1999. During the quarter, the Company experienced an increase in revenue due to the redeployment re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. of vessels from maintenance projects to installation projects including the initiation of contract work for KDD KDD Knowledge Discovery and Data Mining (International Conference) KDD Knowledge Discovery in Databases KDD Kokusai Denshin Denwa (Japan) KDD Key Distribution Device and Tyco on East Asian Crossing and Pan American Crossing subsea systems. For the full year 2000, reported revenue was $460 million, an increase of 36% from 1999, while Recurring Adjusted EBITDA was $102 million, an increase of 19% from 1999 results. Discontinued Operations -- Incumbent Local Exchange Carrier & GlobalCenter The Company's discontinued operations, consisting of its ILEC and GlobalCenter segments, reported revenue of $235 million for the fourth quarter with Recurring Adjusted EBITDA of $52 million. Annual revenue of $936 million was $127 million higher than 1999 results, while annual Recurring Adjusted EBITDA of $288 million was 21% less than 1999 results. Global Crossing announced an agreement on July 12, 2000 to sell the ILEC business, acquired as part of its acquisition of Frontier, to Citizens Communications for an estimated $3.65 billion in cash. The transaction, which is subject to regulatory approvals, is expected to close during the summer of 2001. 2001 Projected Annual and Quarterly Financial Results The Company reaffirmed previously announced projections of its financial performance for the fiscal year ending December 31, 2001. Global Crossing expects its continuing operations to generate approximately $7.1-$7.3 billion of Cash Revenue, a 33%-37% increase over pro forma 2000 Cash Revenue results, and Recurring Adjusted EBITDA of $2.0-$2.1 billion, a 37%-43% increase over pro forma 2000 Recurring Adjusted EBITDA results. These growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. are consistent with the Company's previously stated long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth objectives of 30% annual growth in Cash Revenue and 35%-40% growth in Adjusted EBITDA. The table below summarizes the Company's estimates of its financial performance for the first quarter ending March 31, 2001, and for the full year 2001.
($ -- in millions)
(Unaudited)
Three Months Ended Full Percent
March 31, March 31, Percent Full Year Year Increase/
2001 2000 Increase/ 2001 2000 (Decrease)
Forecast Pro Forma (Decrease) Forecasted Pro in
Range Range Range Forma Range
Continuing
Operations:
Revenue $990-1,040 $994(a) 5% $5,050-5,300 $3,958 28-34%
Service
Revenue $975-1,025 $824 18-24% $5,000-5,250 $3,580 40-47%
Cash
Revenue $1,500-1,600 $1,160 29-38% $7,100-7,300 $5,329 33-37%
Adjusted
EBITDA $430-450 $307 40-47% $2,000-2,100 $1,463 37-43%
(a) Revenue for the first quarter of 2000 included approximately $170
million associated with sales type leases.
The Company stated that the current consensus of analysts' estimates of Recurring Net Income for 2001 and for the first quarter of 2001 is reasonable. The Company also reaffirmed its previously announced plans to make capital expenditures of approximately $10 billion in the aggregate for 2000-2001. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for continuing operations during 2001 (including spending by its Asia Global Crossing subsidiary) is expected to be approximately $4.9 to $5.1 billion, an amount that includes approximately $1 billion of previously announced capital spending from the 2000 capital program for which payments will be made in 2001. Definition of Terms Used Throughout this press release, Pro Forma results have been discussed, which give effect to all acquisitions (Frontier, Global Marine, Racal, Hutchison Global Crossing and IPC/IXnet) and dispositions (ILEC and GlobalCenter), as if each had occurred on January 1, 1999. In this press release, Revenue refers to revenue reported on the Company's statements of operations under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Cash Revenue refers to Revenue plus the cash portion of the change in deferred revenue. Service Revenue excludes all impacts of IRU Iru (ī`r  ), in the Bible, Caleb's eldest son. sales, and refers to Revenue less any revenue recognized
immediately for circuit activations that qualified as sales type leases.
Adjusted EBITDA refers to operating income Operating IncomeThe profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (loss) plus goodwill and intangibles amortization, depreciation and amortization, non-cash cost of capacity sold, stock related expense 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 Financing Agreements In the context of project financing, the documents which provide the project financing and sponsor support for the project as defined in the project contracts. . Recurring Adjusted EBITDA refers to Adjusted EBITDA plus one-time merger and integration expenses and other non-recurring expenses. For all periods presented, net income generated by the ILEC and GlobalCenter businesses is reported as "Income from discontinued operations, net of taxes" on the accompanying Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Operations. About Global Crossing Global Crossing Ltd. (NYSE:GX) provides integrated telecommunications solutions over the world's most extensive global IP-based fiber optic network, which will have more than 100,000 route miles, reaching five continents, 27 countries and more than 200 major cities by mid-2001. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas, Europe, and the Asia/Pacific region, and provides services in Asia through its subsidiary, Asia Global Crossing. Global Crossing Solutions provides integrated telecommunications solutions, including network outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , to large global enterprises. Please visit www.globalcrossing.com or www.asiaglobalcrossing.com for more information. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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 and other countries; 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.
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited) (Unaudited)
Pro forma
Three Months Ended Three Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
REVENUES $ 996,965 $ 867,266 $ 996,965 $ 999,609
OPERATING EXPENSES:
Cost of access and
maintenance 547,232 374,139 547,232 383,550
Other operating
expenses 601,296 341,010 601,296 415,003
Depreciation and
amortization 428,425 250,770 446,925 403,734
Total operating
expenses 1,576,953 965,919 1,595,453 1,202,287
OPERATING LOSS (579,988) (98,653) (598,488) (202,678)
Other income (expense):
Equity in (loss)
income of affiliates (36,533) 21,179 (36,533) (5,221)
Minority interest 21,145 (1,338) 21,145 (13,310)
Interest income 56,439 15,572 56,439 17,001
Interest expense (99,780) (55,469) (99,780) (95,814)
Other income (expense),
net 279,724 (34,616) 279,724 (33,876)
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE (358,993) (153,325) (377,493) (333,898)
Benefit (provision)
from income taxes 61,486 2,204 61,486 17,510
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE EXTRAORDINARY
ITEMS AND CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (297,507) (151,121) (316,007) (316,388)
(Loss) income from
discontinued
operations, net (123,622) (58,666) (123,622) (58,666)
Extraordinary loss
on retirement of
debt, net (23,848) (30,816) (23,848) (30,816)
Cumulative effect of
change in accounting
principle, net (9,059) -- (9,059) --
NET LOSS (454,036) (240,603) (472,536) (405,870)
Preferred stock
dividends (59,392) (25,329) (59,392) (69,765)
Conversion of
preferred stock into
common stock -- -- -- --
NET LOSS APPLICABLE TO
COMMON SHAREHOLDERS $ (513,428) $ (265,932) $ (531,928) $ (475,635)
NET LOSS PER COMMON SHARE:
Loss from continuing
operations applicable
to common shareholders:
Basic and diluted (0.40) (0.23) (0.42) (0.45)
Loss from discontinued
operations, net:
Basic and diluted (0.14) (0.08) (0.14) (0.07)
Extraordinary loss on
retirement of debt, net:
Basic and diluted (0.03) (0.04) (0.03) (0.04)
Cumulative effect of
change in accounting
principle, net:
Basic and diluted (0.01) -- (0.01) --
Net loss applicable to
common shareholders:
Basic and diluted (0.58) (0.34) (0.60) (0.56)
Shares used in computing
loss per share:
Basic and diluted 883,786,120 772,929,855 883,786,120 853,294,926
RECURRING NET LOSS
PER COMMON SHARE:
Net loss applicable to
common shareholders $ (513,428) $ (265,932) $ (531,928) $ (475,635)
Tyco claims settlement 9,065 -- 9,065 --
Merger-related expenses
and severance 5,385 7,600 5,385 16,700
Non-cash severance 5,085 -- 5,085 --
Extraordinary loss on
retirement of debt,
net 23,848 30,816 23,848 30,816
Reversal of tax
provision related to
prior year adjustments -- -- -- --
Conversion of preferred
stock into common stock -- -- -- --
Cumulative effect of
change in accounting
principle, net 9,059 -- 9,059 --
(Loss) income from
discontinued operations,
net 123,622 58,666 123,622 58,666
Other (income) expense,
net (279,724) 34,616 (279,724) 33,876
RECURRING NET LOSS
APPLICABLE TO COMMON
SHAREHOLDERS $ (617,088) $ (134,234) $ (635,588) $ (335,577)
Recurring net loss
applicable to common
shareholders:
Basic and diluted $ (0.70) $ (0.17) $ (0.72) $ (0.39)
ADJUSTED EBITDA AND
RECURRING ADJUSTED
EBITDA:
Operating loss $ (579,988) $ (98,653) $ (598,488) $ (202,678)
Depreciation and
amortization 428,425 250,770 446,925 403,734
Stock related expense 12,218 12,697 12,218 14,060
Cash portion of the
change in deferred
revenue 543,356 63,740 543,356 78,461
ADJUSTED EBITDA $ 404,011 $ 228,554 $ 404,011 $ 293,577
Merger-related expenses
and severance 5,385 7,600 5,385 16,700
Tyco claims settlement 9,065 -- 9,065 --
RECURRING ADJUSTED
EBITDA $ 418,461 $ 236,154 $ 418,461 $ 310,277
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
Pro forma
Years Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
REVENUES $ 3,789,179 $ 1,490,826 $ 3,957,643 $ 3,761,116
OPERATING EXPENSES:
Cost of access and
maintenance 1,861,617 396,245 1,911,529 1,448,802
Other operating
expenses 1,941,764 647,690 2,111,473 1,677,945
Depreciation and
amortization 1,381,063 451,487 1,631,710 1,354,881
Total operating
expenses 5,184,444 1,495,422 5,654,712 4,481,628
OPERATING LOSS (1,395,265) (4,596) (1,697,069) (720,512)
Other income (expense):
Equity in (loss)
income of affiliates (66,719) 15,708 (108,292) (24,088)
Minority interest 15,155 (1,338) 65,184 21,186
Interest income 127,755 61,235 129,569 60,231
Interest expense (390,020) (137,011) (447,629) (574,856)
Other income (expense),
net 256,038 181,366 255,223 177,056
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE (1,453,056) 115,364 (1,803,014) (1,060,983)
Benefit (provision)
from income taxes 145,210 (107,851) 155,189 1,899
(LOSS) INCOME FROM
CONTINUING OPERATIONS
BEFORE EXTRAORDINARY
ITEMS AND CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (1,307,846) 7,513 (1,647,825) (1,059,084)
(Loss) income from
discontinued
operations, net (307,778) (58,666) (307,778) 41,162
Extraordinary loss
on retirement of
debt, net (41,643) (45,681) (41,643) (45,681)
Cumulative effect of
change in accounting
principle, net (9,059) (14,710) (9,059) (14,710)
NET LOSS (1,666,326) (111,544) (2,006,305) (1,078,313)
Preferred stock
dividends (221,448) (66,642) (240,854) (278,703)
Conversion of
preferred stock into
common stock (92,277) -- (92,277) --
NET LOSS APPLICABLE TO
COMMON SHAREHOLDERS $(1,980,051) $ (178,186)$(2,339,436)$(1,357,016)
NET LOSS PER COMMON SHARE:
Loss from continuing
operations applicable
to common shareholders:
Basic and diluted (1.92) (0.12) (2.28) (1.58)
Loss from discontinued
operations, net:
Basic and diluted (0.36) (0.12) (0.35) 0.05
Extraordinary loss on
retirement of debt, net:
Basic and diluted (0.05) (0.09) (0.05) (0.05)
Cumulative effect of
change in accounting
principle, net:
Basic and diluted (0.01) (0.03) (0.01) (0.02)
Net loss applicable to
common shareholders:
Basic and diluted (2.35) (0.35) (2.69) (1.60)
Shares used in computing
loss per share:
Basic and diluted 844,153,231 502,400,851 869,130,969 848,607,626
RECURRING NET LOSS
PER COMMON SHARE:
Net loss applicable
to common
shareholders $ (1,980,051) $ (178,186)$(2,339,436)$(1,357,016)
Tyco claims settlement 28,065 -- 28,065 --
Merger-related expenses
and severance 36,121 7,600 70,496 99,119
Non-cash severance 14,947 -- 14,947 --
Extraordinary loss on
retirement of debt,
net 41,643 45,681 41,643 45,681
Reversal of tax
provision related to
prior year adjustments (73,040) -- (73,040) --
Conversion of preferred
stock into common stock 92,277 -- 92,277 --
Cumulative effect of
change in accounting
principle, net 9,059 14,710 9,059 14,710
(Loss) income from
discontinued operations,
net 307,778 58,666 307,778 (41,162)
Other (income) expense,
net (256,038) (181,366) (255,223) (177,056)
RECURRING NET LOSS
APPLICABLE TO COMMON
SHAREHOLDERS $ (1,779,239) $ (232,895)$(2,103,434)$(1,415,724)
Recurring net loss
applicable to common
shareholders:
Basic and diluted $ (2.11) $ (0.46) $ (2.42) $ (1.67)
ADJUSTED EBITDA AND
RECURRING ADJUSTED
EBITDA:
Operating loss $ (1,395,265) $ (4,596)$(1,697,069) $ (720,512)
Depreciation and
amortization 1,381,063 451,487 1,631,710 1,354,881
Stock related expense 47,785 51,306 58,940 61,839
Cash portion of the
change in deferred
revenue 1,371,087 120,657 1,371,087 152,009
ADJUSTED EBITDA $ 1,404,670 $ 618,854 $ 1,364,668 $ 848,217
Merger-related expenses
and severance 36,121 7,600 70,496 99,119
Tyco claims settlement 28,065 -- 28,065 --
RECURRING ADJUSTED
EBITDA $ 1,468,856 $ 626,454 $ 1,463,229 $ 947,336
GLOBAL CROSSING LTD. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Reported (a) Pro forma (b)
Three Months Ended Three Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
Revenue Summary:
CASH REVENUE:
Commercial 394,623 257,882 394,623 384,958
Consumer 39,616 48,189 39,616 48,189
Carrier 957,481 543,940 957,481 563,934
Telecommunications
Services Cash Revenue 1,391,720 850,011 1,391,720 997,081
Telecommunications
Services Cash Revenue
-- Data Products 866,718 376,683 866,718 504,098
Telecommunications
Services Cash Revenue
-- Voice Products 525,002 473,328 525,002 492,983
Telecommunications
Services Cash Revenue 1,391,720 850,011 1,391,720 997,081
Installation and
Maintenance Cash
Revenue 148,601 80,995 148,601 80,995
Continuing Operations
Cash Revenue 1,540,321 931,006 1,540,321 1,078,076
REVENUE:
Commercial 394,623 257,882 394,623 384,958
Consumer 39,616 48,189 39,616 48,189
Carrier:
Service Revenue 371,918 265,031 371,918 270,298
Sales Type Lease
Revenue 31,495 217,804 31,495 217,804
Amortization of
prior period IRUs 10,712 2,441 10,712 2,441
Carrier 414,125 485,276 414,125 490,543
Telecommunications
Services Revenue 848,364 791,347 848,364 923,690
Telecommunications
Services Revenue
-- Data Products 323,362 318,019 323,362 430,707
Telecommunications
Services Revenue
-- Voice Products 525,002 473,328 525,002 492,983
Telecommunications
Services Revenue 848,364 791,347 848,364 923,690
Installation and
Maintenance Revenue 148,601 75,919 148,601 75,919
Continuing Operations
Revenue 996,965 867,266 996,965 999,609
SERVICE REVENUE:
Telecommunications
Services Service
Revenue -- Data
Products 281,155 97,774 281,155 210,462
Telecommunications
Services Service
Revenue -- Voice
Products 525,002 473,328 525,002 492,983
Telecommunications
Services Service
Revenue 806,157 571,102 806,157 703,445
Continuing Operations
Service Revenue 954,758 647,021 954,758 779,364
Selected Financial
Information:
Recurring Adjusted
EBITDA:
TELECOMMUNICATIONS
SERVICES 395,759 215,614 395,759 289,737
INSTALLATION &
MAINTENANCE 22,702 20,540 22,702 20,540
CONTINUING OPERATIONS 418,461 236,154 418,461 310,277
Cash Paid For Capital
Expenditures:
TELECOMMUNICATIONS
SERVICES 1,695,898 506,729
INSTALLATION &
MAINTENANCE 38,544 34,828
CONTINUING
OPERATIONS 1,734,442 541,557
Discontinued
Operations:
REVENUE 234,881 211,152 234,881 211,152
RECURRING ADJUSTED
EBITDA 51,976 89,327 51,976 89,327
CASH PAID FOR CAPITAL
EXPENDITURES 253,344 101,022
(a) The Reported amounts in the table above reflect the Company's
quarterly results for continuing operations for the three months ended
December 31, 2000 and December 31, 1999. Results for the three months
ended December 31, 1999 include the results of Racal from November 24,
1999.
(b) The Pro forma amounts in the table above reflect, for both
periods presented, the Company's acquisitions of Racal, Hutchison
Global Crossing and IPC/IXnet and the dispositions of both the ILEC
and GlobalCenter, as if each had occurred on January 1, 1999.
GLOBAL CROSSING LTD. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
(In thousands)
Reported (a) Pro forma (b)
Years Ended Years Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
Revenue Summary:
CASH REVENUE:
Commercial 1,421,575 257,882 1,590,039 1,540,352
Consumer 168,674 48,189 168,674 193,789
Carrier 3,110,014 1,139,681 3,110,014 1,839,754
Telecommunications
Services Cash Revenue 4,700,263 1,445,752 4,868,727 3,573,895
Telecommunications
Services Cash Revenue
-- Data Products 2,626,864 972,424 2,795,328 1,668,314
Telecommunications
Services Cash Revenue
-- Voice Products 2,073,399 473,328 2,073,399 1,905,581
Telecommunications
Services Cash Revenue 4,700,263 1,445,752 4,868,727 3,573,895
Installation and
Maintenance Cash
Revenue 460,003 165,731 460,003 339,229
Continuing Operations
Cash Revenue 5,160,266 1,611,483 5,328,730 3,913,124
REVENUE:
Commercial 1,421,575 257,882 1,590,039 1,540,352
Consumer 168,674 48,189 168,674 193,789
Carrier:
Service Revenue 1,361,043 289,143 1,361,043 957,866
Sales Type Lease
Revenue 349,603 727,644 349,603 727,643
Amortization of
prior period IRUs 28,281 7,313 28,281 7,313
Carrier 1,738,927 1,024,100 1,738,927 1,692,822
Telecommunications
Services Revenue 3,329,176 1,330,171 3,497,640 3,426,963
Telecommunications
Services Revenue
-- Data Products 1,255,777 856,843 1,424,241 1,521,382
Telecommunications
Services Revenue
-- Voice Products 2,073,399 473,328 2,073,399 1,905,581
Telecommunications
Services Revenue 3,329,176 1,330,171 3,497,640 3,426,963
Installation and
Maintenance Revenue 460,003 160,655 460,003 334,153
Continuing Operations
Revenue 3,789,179 1,490,826 3,957,643 3,761,116
SERVICE REVENUE:
Telecommunications
Services Service
Revenue -- Data
Products 877,893 121,886 1,046,357 786,426
Telecommunications
Services Service
Revenue -- Voice
Products 2,073,399 473,328 2,073,399 1,905,581
Telecommunications
Services Service
Revenue 2,951,292 595,214 3,119,756 2,692,007
Continuing Operations
Service Revenue 3,411,295 755,869 3,579,759 3,026,160
Selected Financial
Information:
Recurring Adjusted
EBITDA:
TELECOMMUNICATIONS
SERVICES 1,367,297 587,191 1,361,670 861,740
INSTALLATION &
MAINTENANCE 101,559 39,263 101,559 85,596
CONTINUING
OPERATIONS 1,468,856 626,454 1,463,229 947,336
Cash Paid For Capital
Expenditures:
TELECOMMUNICATIONS
SERVICES 4,324,126 1,499,308
INSTALLATION &
MAINTENANCE 67,472 170,585
CONTINUING
OPERATIONS 4,391,598 1,669,893
Discontinued
Operations:
REVENUE 935,747 211,152 935,747 808,313
RECURRING ADJUSTED
EBITDA 287,844 89,327 287,844 362,658
CASH PAID FOR CAPITAL
EXPENDITURES 598,575 101,022
(a) The Reported amounts in the table above reflect the Company's
annual results for continuing operations for the twelve months ended
December 31, 2000 and December 31, 1999. Results for the twelve months
ended December 31, 2000 include the results of IPC Communications and
IXnet from June 15, 2000 and Hutchison Global Crossing from January
12, 2000. Results for the twelve months ended December 31, 1999
include the results of Global Marine from July 2, 1999, Frontier from
October 1, 1999 and Racal from November 24, 1999.
(b) The Pro forma amounts in the table above reflect, for both
periods presented, the Company's acquisitions of Frontier, Global
Marine, Racal, Hutchison Global Crossing and IPC/IXnet and the
dispositions of both the ILEC and GlobalCenter, as if each had
occurred on January 1, 1999.
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