Global Crossing Reports GCUK's Third Quarter Results (GLBC, GCUK)

Global Crossing Limited GLBC today announced third quarter results for its subsidiary, Global Crossing (UK) Telecommunications Limited (GCUK). For the third quarter of 2010, GCUK generated revenue of 75 million pounds and Operating Income Before Depreciation and Amortization (OIBDA) of 16 million pounds. (OIBDA is a non-GAAP measure defined and reconciled below.) The company also reported net cash provided by operations of 10 million pounds. "The UK business continues to be an important contributor to our global strategy to offer advanced IP, Ethernet and data center services to customers with multi-regional requirements," said John Legere, chief executive officer of Global Crossing. "We are gaining traction in our efforts to expand and diversify our base of commercial enterprise customers while broadening our valuable market position with UK government customers." Third Quarter Results GCUK generated revenue of 75 million pounds, a sequential decrease of 3 percent and a year-over-year increase of 1 percent. The sequential decrease was primarily due to lower sales related to short-interval demand, such as purchases of equipment and professional services, and somewhat higher sales credits after lower than average sales credits in the prior quarter. The year-over-year increase was primarily due to increased sales to enterprise customers. Gross profit was 28 million pounds for the quarter, a sequential decrease of less than 1 million pounds and a year-over-year decrease of 1 million pounds. The year-over-year decrease was due to a 4 million pound favorable regulatory ruling in the year-ago period, mostly offset by sales growth and lower depreciation and amortization. GCUK's OIBDA for the third quarter was 16 million pounds, compared with 15 million pounds in the second quarter of 2010 and 20 million pounds in the third quarter of 2009. The sequential increase was principally driven by a reduction in accrued incentive compensation and sales commissions. The year-over-year decrease was primarily due to the previously mentioned favorable regulatory ruling in the year-ago period and higher real estate restructuring costs, partially offset by sales growth. GCUK recorded a net profit of 3 million pounds for the third quarter, compared with a net loss of 3 million pounds in the second quarter of 2010 and a net loss of 2 million pounds in the third quarter of 2009. The sequential and year-over-year increase in net profit was primarily due to favorable foreign exchange impacts on net U.S. dollar-denominated debt in the third quarter of 2010 compared with unfavorable foreign exchange impacts in the prior quarter and prior year. Cash and Liquidity As of September 30, 2010, GCUK had cash and cash equivalents of 42 million pounds, compared with 38 million pounds on June 30, 2010, and 26 million pounds on September 30, 2009. GCUK's cash and cash equivalents increased 4 million pounds in the third quarter. Net cash provided by operating activities during the third quarter totaled 10 million pounds, after 7 million pounds of cash used by operating working capital. During the quarter, GCUK recorded purchases of property, plant and equipment of 4 million pounds and principal payments on finance leases and other debt of 2 million pounds. International Financial Reporting Standards GCUK's results reported here include unaudited consolidated financial results for the three months ended September 30, 2009, June 30, 2010 and September 30, 2010; the unaudited consolidated balance sheet as of September 30, 2010; and the audited consolidated balance sheet as of December 31, 2009, all in accordance with IFRS and in pounds sterling, as published by the International Accounting Standards Board (IASB). GCUK's results for the third quarters of 2010 and 2009 and the second quarter of 2010 were included in Global Crossing's consolidated results previously reported on November 1, 2010, 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. Conference Call Management has scheduled a conference call for Tuesday, December 14, 2010, at 9:00 a.m. EST/2:00 p.m. GMT to discuss GCUK's financial results. The call may be accessed by dialing +1 212 231 2905 or +44 (0) 20 8196 2883.