LONDON, Sept. 12, 2011 /PRNewswire/ -- Global Crossing
Limited (NASDAQ: GLBC), a leading global IP solutions provider,
today announced second-quarter results for its subsidiary, Global
Crossing (UK) Telecommunications Limited (GCUK).
Highlights
For the second quarter of 2011, GCUK generated revenue of 72
million pounds and Operating Income Before Depreciation and
Amortization (OIBDA) of 12 million pounds. (OIBDA is a
non-GAAP measure defined and reconciled below.) The company
also reported cash generated from operations of 8 million pounds
before interest payments of 16 million pounds.
"We continue to invest in advanced IP-based networking solutions
and highly skilled sales resources to expand and diversify our
enterprise customer base in the UK," said John Legere, chief executive officer of Global
Crossing. "Meanwhile, we are successfully positioning for
broader opportunities with UK government customers. In fact,
GCUK was recently approved as a supplier for UK Government's
Managed Telecommunications Convergence Framework, which broadens
our addressable market opportunity to an additional 6 million
government users. We also received full Public Service
Network certification from the UK Cabinet Office for delivery of
its Government Conveyance Network and PSN Internet Protocol Virtual
Private Network services to the Public Sector."
Second Quarter Results
GCUK generated revenue of 72 million pounds in the second
quarter, a sequential decrease of 2 percent and a year-over-year
decrease of 7 percent. Sequentially, GCUK revenue declined
due to lower equipment sales, partially offset by higher sales of
services to non-government enterprise customers.
Year-over-year, "invest and grow" revenue declined
principally due to price reductions associated with recent contract
renewals and extensions, accompanied by lower equipment sales.
Gross profit was 26 million pounds for the quarter, essentially
flat sequentially and a decrease of 3 million pounds
year-over-year. The year-over-year decrease was primarily
driven by lower revenue.
GCUK's OIBDA for the second quarter was 12 million pounds,
compared to 13 million pounds in the first quarter of 2011 and 15
million pounds in the second quarter of 2010. The sequential
and year-over-year decreases were primarily due to price reductions
associated with recent contract renewals and extensions.
GCUK recorded a net loss of 5 million pounds for the second
quarter, compared with a net loss of 1 million pounds in the first
quarter of 2011 and a net loss of 3 million pounds in the second
quarter of 2010. The sequential increase in net loss was
primarily due to unfavorable foreign exchange impacts on net U.S.
dollar denominated debt. The year-over-year increase in net loss
was primarily due to lower OIBDA.
Cash and Liquidity
As of June 30, 2011, GCUK had cash
and cash equivalents of 27 million pounds, compared with 37 million
pounds on March 31, 2011 and 38
million pounds on June 30, 2010.
GCUK's cash and cash equivalents decreased 10 million pounds in
the second quarter. Net cash used in operating activities
during the second quarter totaled 8 million pounds after interest
payments of 16 million pounds. During the quarter, GCUK
recorded purchases of property, plant and equipment of 3 million
pounds and principal payments on finance leases of 1 million
pounds.
International Financial Reporting Standards
GCUK's results reported here include unaudited consolidated
financial results for the three months ended June 30, 2011, March 31,
2011 and June 30, 2010; the
unaudited consolidated balance sheet as of June 30, 2011; and the audited consolidated
balance sheet as of December 31,
2010, all in accordance with IFRS and in pounds sterling, as
published by the International Accounting Standards Board (IASB).
GCUK's results for the second quarters of 2011 and 2010 and
the first quarter of 2011 were included in Global Crossing's
consolidated results previously reported on July 27, 2011, in accordance with U.S. GAAP and
in U.S. dollars.
Non-GAAP Financial Measures
Consistent with the U.S. Securities and Exchange Commission's
(SEC's) Regulation G, the attached tables include a definition of
OIBDA, as well as a reconciliation of such measure to the most
directly comparable financial measure calculated in accordance with
IFRS.
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.
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.
CONTACT GLOBAL CROSSING:
Press Contact
Kate Rankin
+ 1 973 937 0417
Kate.Rankin@globalcrossing.com
Analysts/Investors Contact
Mark Gottlieb
+ 1 800 836 0342
glbc@globalcrossing.com
Gino Mathew
United Kingdom
+ 1 973 937 0133
gino.mathew@globalcrossing.com
IR/PR1
6 Schedules
to Follow
|
|
|
|
|
SCHEDULE 1:
|
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
|
SCHEDULE 2:
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
SCHEDULE 3:
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
SCHEDULE 4:
|
SUMMARY OF CONSOLIDATED
REVENUES
|
|
SCHEDULE 5:
|
SUPPLEMENTAL INFORMATION
PROVIDED PURSUANT TO THE INDENTURE GOVERNING THE GCUK SENIOR
SECURED NOTES
|
|
SCHEDULE 6:
|
RECONCILIATION OF OIBDA TO NET
LOSS
|
|
|
|
Schedule
1
|
|
Global Crossing (UK)
Telecommunications Limited and Subsidiaries
|
|
Consolidated Statements of
Financial Position
|
|
Results below are in pounds
sterling in thousands
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Intangible assets,
net
|
|
10,789
|
|
|
10,524
|
|
Property, plant and
equipment, net
|
|
128,046
|
|
|
139,269
|
|
Investment in
associate
|
|
182
|
|
|
218
|
|
Retirement benefit
asset
|
|
299
|
|
|
299
|
|
Trade and other
receivables
|
|
39,363
|
|
|
38,768
|
|
|
|
|
|
|
|
|
|
|
178,679
|
|
|
189,078
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Trade and other
receivables, net
|
|
58,787
|
|
|
49,718
|
|
Cash and cash
equivalents
|
|
26,564
|
|
|
49,224
|
|
|
|
|
|
|
|
|
|
|
85,351
|
|
|
98,942
|
|
|
|
|
|
|
|
|
Total assets
|
|
264,030
|
|
|
288,020
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
(69,510)
|
|
|
(72,680)
|
|
Senior secured
notes
|
|
(1,207)
|
|
|
(10,857)
|
|
Deferred
revenue
|
|
(36,289)
|
|
|
(39,608)
|
|
Provisions
|
|
(1,219)
|
|
|
(2,011)
|
|
Obligations under finance
leases
|
|
(6,726)
|
|
|
(7,111)
|
|
Other debt
obligations
|
|
-
|
|
|
(18)
|
|
|
|
|
|
|
|
|
|
|
(114,951)
|
|
|
(132,285)
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Trade and other
payables
|
|
(22,348)
|
|
|
(22,874)
|
|
Senior secured
notes
|
|
(267,772)
|
|
|
(262,538)
|
|
Deferred
revenue
|
|
(73,932)
|
|
|
(79,099)
|
|
Retirement benefit
obligation
|
|
(1,842)
|
|
|
(1,842)
|
|
Provisions
|
|
(1,707)
|
|
|
(1,636)
|
|
Obligations under finance
leases
|
|
(8,088)
|
|
|
(8,109)
|
|
|
|
|
|
|
|
|
|
|
(375,689)
|
|
|
(376,098)
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
(490,640)
|
|
|
(508,383)
|
|
|
|
|
|
|
|
|
Net liabilities
|
|
(226,610)
|
|
|
(220,363)
|
|
|
|
|
|
|
|
|
Capital and
reserves
|
|
|
|
|
|
|
Equity share capital
(101,000 shares outstanding at 1 pound each)
|
|
101
|
|
|
101
|
|
Capital reserve
|
|
32,520
|
|
|
32,330
|
|
Accumulated
deficit
|
|
(259,231)
|
|
|
(252,794)
|
|
|
|
|
|
|
|
|
Total equity
|
|
(226,610)
|
|
|
(220,363)
|
|
|
|
|
|
|
|
Schedule
2
|
|
Global Crossing (UK)
Telecommunications Limited and Subsidiaries
|
|
Consolidated Statements of
Operations
|
|
Results below are in pounds
sterling in thousands
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2011
|
|
March 31,
2011
|
|
June 30,
2010
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Revenue
|
72,181
|
|
73,855
|
|
77,994
|
|
Cost of sales
|
(46,160)
|
|
(47,570)
|
|
(49,317)
|
|
|
|
|
|
|
|
|
Gross profit
|
26,021
|
|
26,285
|
|
28,677
|
|
|
|
|
|
|
|
|
Distribution costs
|
(6,791)
|
|
(7,030)
|
|
(6,334)
|
|
Administrative
expenses
|
(16,601)
|
|
(17,117)
|
|
(17,316)
|
|
|
|
|
|
|
|
|
Operating profit
|
2,629
|
|
2,138
|
|
5,027
|
|
|
|
|
|
|
|
|
Finance revenue
|
1,064
|
|
1,119
|
|
1,161
|
|
Finance charges
|
(8,896)
|
|
(9,155)
|
|
(9,385)
|
|
Net foreign exchange (loss)/gain
on foreign currency borrowings, net
|
(83)
|
|
4,711
|
|
(220)
|
|
|
|
|
|
|
|
|
Loss before tax
|
(5,286)
|
|
(1,187)
|
|
(3,417)
|
|
|
|
|
|
|
|
|
Tax benefit (charge)
|
10
|
|
26
|
|
(5)
|
|
|
|
|
|
|
|
|
Loss for the period
|
(5,276)
|
|
(1,161)
|
|
(3,422)
|
|
|
|
|
|
|
|
Schedule
3
|
|
Global Crossing (UK)
Telecommunications Limited and Subsidiaries
|
|
Consolidated Statements of Cash
Flows
|
|
Results below are in pounds
sterling in thousands
|
|
|
|
|
|
|
|
|
|
For the
Three Months Ended
|
|
|
June 30,
2011
|
|
March 31,
2011
|
|
June 30,
2010
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
Operating
activities
|
|
|
|
|
|
|
Loss for the period
|
(5,276)
|
|
(1,161)
|
|
(3,422)
|
|
Adjustments for:
|
|
|
|
|
|
|
Finance costs, net
|
7,915
|
|
3,325
|
|
8,444
|
|
Income tax charges
|
(10)
|
|
(26)
|
|
5
|
|
Depreciation of property, plant
and equipment
|
8,458
|
|
8,449
|
|
8,557
|
|
Amortization of intangible
assets
|
610
|
|
609
|
|
556
|
|
Amortization of prepaid
connection costs
|
1,154
|
|
1,541
|
|
1,623
|
|
Share based payment
expense
|
90
|
|
100
|
|
107
|
|
Loss on disposal of property,
plant and equipment
|
19
|
|
12
|
|
-
|
|
Equity income for
associate
|
-
|
|
36
|
|
-
|
|
Change in long term deferred
revenue
|
(1,686)
|
|
(3,481)
|
|
(4,678)
|
|
Change in long term other assets
and liabilities
|
(1,342)
|
|
(1,097)
|
|
(929)
|
|
Change in operating working
capital:
|
|
|
|
|
|
|
- Change in trade accounts
receivable and accrued income
|
(7,278)
|
|
3,806
|
|
813
|
|
- Change in trade accounts
payable and accrued cost of access
|
4,511
|
|
(5,115)
|
|
8,983
|
|
- Change in other
receivables current
|
(7,949)
|
|
(2,320)
|
|
765
|
|
- Change in other payables
current
|
8,745
|
|
(14,372)
|
|
1,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from
operations
|
7,961
|
|
(9,694)
|
|
21,956
|
|
Interest paid
|
(15,954)
|
|
(1,599)
|
|
(16,922)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)/provided by
operating activities
|
(7,993)
|
|
(11,293)
|
|
5,034
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Interest received
|
1,370
|
|
2,790
|
|
6,063
|
|
Proceeds from disposal of
property, plant and equipment
|
18
|
|
-
|
|
-
|
|
Purchase of property, plant and
equipment
|
(2,598)
|
|
(4,317)
|
|
(4,304)
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
(1,210)
|
|
(1,527)
|
|
1,759
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Repayment of senior secured
notes
|
-
|
|
-
|
|
(221)
|
|
Proceeds from
sale/leaseback
|
-
|
|
2,513
|
|
-
|
|
Repayments of capital elements
under finance leases
|
(1,108)
|
|
(2,024)
|
|
(1,191)
|
|
Repayment of capital element of
other debt obligations
|
-
|
|
(18)
|
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in)
financing activities
|
(1,108)
|
|
471
|
|
(1,451)
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash
and cash equivalents
|
(10,311)
|
|
(12,349)
|
|
5,342
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
36,875
|
|
49,224
|
|
32,918
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
26,564
|
|
36,875
|
|
38,260
|
|
|
|
|
|
|
|
Schedule
4
|
|
Global Crossing (UK)
Telecommunications Limited and Subsidiaries
|
|
Summary of Consolidated
Revenues
|
|
Results below are in pounds
sterling in thousands
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2011
|
|
March 31,
2011
|
|
June 30,
2010
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
|
|
|
|
Enterprise, carrier data and
indirect sales channels
|
71,603
|
|
73,328
|
|
76,938
|
|
|
Carrier voice
|
470
|
|
419
|
|
931
|
|
|
Revenues from third party
customers
|
72,073
|
|
73,747
|
|
77,869
|
|
|
Revenues from Global Crossing
group companies
|
108
|
|
108
|
|
125
|
|
|
Consolidated revenues
|
72,181
|
|
73,855
|
|
77,994
|
|
|
|
|
|
|
|
|
Schedule
5
|
|
SUPPLEMENTAL INFORMATION
PROVIDED PURSUANT TO THE INDENTURE GOVERNING THE GCUK SENIOR
SECURED NOTES
|
|
GCUK
is required to provide the holders of its Senior Secured Notes due
2014 with quarterly information pursuant to Section 4.17(a)(2) of
the indenture governing such notes. For quarters prior to the
first quarter of 2010, GCUK satisfied this requirement by providing
the note holders with a quarterly report separate and apart from
its quarterly earnings press releases. Starting with the
first quarter of 2010, GCUK has satisfied this requirement by
providing the note holders with its quarterly earnings press
releases. This schedule of supplemental information is being
included with the earnings press release to ensure that the
information being provided complies with Section 4.17(a)(2) of the
indenture.
|
|
Liquidity and Capital
Resources
|
|
|
|
GCUK's ability to make payments on and to refinance its
indebtedness and to fund planned capital expenditures will depend
on its ability to generate cash in the future. This depends to a
degree on general economic, financial, competitive, legislative,
regulatory and other factors that are beyond GCUK's
control.
|
|
Based
on GCUK's current level of operations, expected revenue growth
trends and anticipated cost management and operating improvements,
GCUK believes its future cash flow from operations, available cash
and cash available from financing activities will be adequate to
meet its future liquidity needs for at least the next twelve
months. However, GCUK currently expects its cash and cash
equivalents to decrease in 2011 as a result of relatively flat
operating performance and greater working capital requirements as
compared to 2010.
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There
can be no assurance that GCUK's business will generate sufficient
cash flow from operations that currently anticipated operating
improvements will be realized on schedule or that future borrowings
will be available to GCUK in an amount sufficient to enable it to
pay its indebtedness or to fund its other liquidity needs. GCUK
will need to refinance all or a substantial portion of its
indebtedness on or before maturity. GCUK cannot provide assurances
that it will be able to refinance any of its indebtedness on
commercially reasonable terms or at all.
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GCUK
monitors its capital structure on an ongoing basis and from time to
time considers financing and refinancing options to improve its
capital structure and to enhance its financial flexibility. GCUK's
ability to enter into new financing arrangements is subject to
restrictions in its outstanding debt instruments. In addition, the
interim operating covenants in the agreement of amalgamation
between Level 3 Communications, Inc. and Global Crossing Limited
(GCUK's parent company) also limit GCUK's financial and operational
flexibility unless Level 3's consent is obtained. These covenants
include, among others, agreements by Global Crossing on behalf of
it and its subsidiaries (including GCUK)
(i) to continue conducting their businesses in the ordinary
course, consistent with past practice and in compliance with
applicable law, during the interim period between the execution of
the amalgamation agreement on April 10, 2011 and consummation of
the amalgamation between Level 3 and Global Crossing and
(ii) not to engage in certain specified kinds of transactions
during that period without Level 3's consent, including equity and
debt financings, including any such financings that may be needed
for general corporate purposes during the period prior to the
consummation of the Amalgamation, which could be delayed due to the
need for regulatory approvals or otherwise. Subject to the
foregoing restrictions, at any given time GCUK may pursue a variety
of financing opportunities, and its decision to proceed with any
financing will depend, among other things, on prevailing market
conditions, near term maturities and available terms. In
addition, from time to time GCUK reviews its operations and may
consider opportunities to strategically enhance, expand or change
its operations and leverage its capabilities. The aforementioned
covenants in the amalgamation agreement may limit GCUK's
flexibility to take advantage of such opportunities unless Level
3's consent is obtained. If GCUK pursues any such opportunities, it
may require additional equity or debt financing, and there can be
no assurance that it will be able to obtain such financing on
favorable terms or at all or that Level 3 will provide any
necessary consent to pursue such financings. Undertaking any such
initiatives may place greater demands on GCUK's cash flows due to
increased capital and operating expenses and debt
service.
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At
June 30, 2011, GCUK's available liquidity consisted of 27
million of unrestricted cash and cash equivalents.
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In
the long term, GCUK expects its operating results and cash flows to
improve as a result of growth of its revenues, including the
economies of scale expected to result from such growth, and from
ongoing cost management initiatives, including initiatives to
optimize the access network and effectively lower unit prices.
Thus, in the long term, GCUK expects to generate positive cash flow
from operating activities in an amount sufficient to fund all
investing and financing requirements, subject to the need to
refinance the GCUK Senior Secured Notes. However, its ability to
improve cash flows is subject to the risks and uncertainties, such
as the variability of quarterly cash flows, discussed
below.
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In
the short term, GCUK expects cash provided by operating activities
to exceed purchases of property and equipment. This
expectation is based in part on the raising of financing for
certain property and equipment from vendors and other third parties
in similar amounts to 2010. Its ability to arrange such
financings is subject to negotiating acceptable terms from
equipment vendors and financing parties. In addition, GCUK's
short term liquidity and more specifically its quarterly cash flows
are subject to considerable variability as a result of the timing
of interest payments as well as the following factors.
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- Working capital variability
significantly impacts its cash flows and can cause its
intra-quarter cash balances to drop to levels significantly lower
than those levels prevailing at the end of a quarter.
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- The UK government's austerity
measures aimed at reducing costs in a wide range of areas,
including telecommunications could have a negative effect on GCUK's
future revenue performance.
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- Within 120 days after each
calendar year, GCUK must offer to purchase a portion of the Senior
Secured Notes at 100% of their principal amount using 50% of the
Operating Cash Flow (as defined in the Indenture) for that year. In
respect of 2010, it offered to purchase 11 million
of the Notes, excluding accrued interest. No Notes were
tendered.
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If the current year to date
results were the results for the full year to December 31, 2011,
the Company would be obliged to make an Annual Repurchase Offer of
approximately 1 million, inclusive of accrued but unpaid
interest.
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- GCUK's liquidity may also be
adversely affected if it is found liable in respect of contingent
legal, tax and other liabilities. The amount and timing of the
resolution of these contingencies remain uncertain.
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Schedule
6
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Global Crossing (UK)
Telecommunications Limited and Subsidiaries
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Reconciliation of Net (Loss)
Profit to OIBDA
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Results below are in pounds
sterling in thousands
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|
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Pursuant to the SEC's Regulation
G, the following table provides a reconciliation of net
(loss)profit under IFRS to OIBDA, which is considered a non-GAAP
(Generally Accepted Accounting Principles) financial
measure.
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OIBDA is defined as operating
profit before depreciation and amortization and foreign exchange
(losses) gains on operating working capital movements, based upon
our consolidated statements of operations. OIBDA differs from
operating profit, 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.
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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.
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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, finance revenue, finance charges, foreign exchange
(losses) gains, income taxes and other non-operating profit or loss
items. OIBDA should be considered in addition to, and not as a
substitute for, other measures of financial performance reported in
accordance with GAAP.
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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 and income taxes, and of other items not
associated with our everyday operations.
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Three Months
Ended
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June 30,
2011
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|
March 31,
2011
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June 30,
2010
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(unaudited)
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|
(unaudited)
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|
(unaudited)
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|
|
|
|
|
|
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Net loss
|
(5,276)
|
|
(1,161)
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|
(3,422)
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|
Tax (benefit)/charge
|
(10)
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|
(26)
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|
5
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Finance revenue
|
(1,064)
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|
(1,119)
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|
(1,161)
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Finance charges
|
8,896
|
|
9,155
|
|
9,385
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|
Net foreign exchange loss/(gain)
on foreign currency borrowings, net
|
83
|
|
(4,711)
|
|
220
|
|
Operating profit
|
2,629
|
|
2,138
|
|
5,027
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|
Depreciation and
amortization
|
9,750
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|
10,127
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|
10,105
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Other foreign exchange
gain/(loss), loss on disposal of fixed assets and other
income
|
55
|
|
370
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|
(17)
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OIBDA
|
12,434
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|
12,635
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|
15,115
|
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SOURCE Global Crossing Limited