world's most extensive global IP-based fiber optic network, today reported second quarter 2000 financial results that exceeded the consensus estimates of analysts. Because of the pending sale of Global Crossing's incumbent local exchange carrier business for an estimated
$3.65 billion in cash to Citizens Communications, the Company now treats this segment as a discontinued operation and reports financial
results broken down between continuing operations and discontinued operations for all periods presented.
Pro forma for the effects of acquisitions, Cash Revenue for continuing operations was up 39% from the second quarter of 1999, and 10% sequentially, while pro forma Recurring Adjusted EBITDA increased 65% from the previous year's second quarter, and 11% sequentially. Reported results, reflecting two weeks' contributions in the second
quarter of 2000 from IXnet and IPC, showed Cash Revenue of $1,226 million in the second quarter, an increase of 12% over the prior quarter's $1,099 million, with Recurring Adjusted EBITDA of $336 million up 10% from the first quarter's $307 million. Recurring net loss applicable to common shareholders for the quarter was $504 million, or $0.61 per share.
Revenue for the discontinued operations was $189 million, and Adjusted EBITDA relating to these operations was $99 million.
Revenue recognized in the quarter for continuing operations was $918 million, a decrease of 1.5% from the first quarter of 2000, due to fewer subsea circuits having met the requirements for immediate revenue recognition in the second quarter. (The Company previously announced that, as of January 1, 2000, it began selling subsea
capacity under contract terms that require amortization of revenue over the contract life rather than under terms that qualify for
immediate revenue recognition, although certain circuits continue to qualify for immediate revenue recognition due to the specific terms of
the associated contracts.) Service Revenue, which excludes both the impact of immediate revenue recognition for sales type leases and cash
collected as deferred revenue, increased 5% from the first quarter of 2000, and 20% over the second quarter of 1999, on a pro forma basis.
"The strong growth in Adjusted EBITDA exceeded consensus analysts' estimates and leads us to have higher expectations for the year,"
said Leo Hindery, Jr., Chief Executive Officer of Global Crossing. "The healthy growth this quarter in Telecommunications Services, especially data products, is a recognition by the market of the
worldwide value of our global network."
Added Hindery: "The Global Crossing Network is now an operating reality on three continents - Europe, North America and Asia - and we
landed our first cable on Latin American shores in the second quarter. The announced segments of our network will be completed by the middle
of next year, and we have already begun breaking through to new vertical segments of customers. This company was founded to serve multi-national corporations (MNCs), large telecommunications services users and telecommunication carriers that need capacity. This quarter we've added customers in all three of these markets, including two major new vertical markets - the global financial community and worldwide government networking."
During the quarter, Global Crossing continued its successful record of completing on budget the announced segments of its 101,000 route mile worldwide network that will serve five continents, 27 countries and more than 200 major cities. In Europe, Global Crossing completed its Eastern Ring, bringing to 19 the number of European cities already lit for service. Pan European Crossing is planned to connect over 40 major commercial centers in Europe. Global Crossing also completed the 2,180 route mile Mexican Crossing ring which provides backhaul services for the Pan-American Crossing system with
service delivery to Monterrey, Guadalajara and Mexico City. Furthermore, the final leg of the 4,700 route mile Mid-Atlantic Crossing System, which connects Miami, St. Croix, and New York, was
placed in service in late June.
Global Crossing continued its expansion of product capabilities across its global fiber network. At the end of the second quarter,
private line services were available in 13 European cities, Tokyo, Hong Kong and throughout the major cities of North America. The
company has signed contracts to provide these private line services to a variety of customers and has launched IP transit services in Japan
with several of the leading Japanese Internet service providers (ISPs) as new customers. Additionally, data products such as ATM, Frame Relay and IP services are now available in North America, the United Kingdom, continental Europe, Japan and Hong Kong. During the quarter,
Global Crossing conducted operational tests of Voice over Internet Protocol (VOIP) in North America, and this technology became commercially available in July. VOIP will be tested in Europe during the third quarter and is expected to be available in Europe later this year. In May, Global Crossing signed a landmark Unified Messaging (UM) agreement with Tornado Development, a leading provider of UM
solutions, to offer the only carrier-grade UM engine to ISPs and to wireless providers.
In addition, Global Crossing North America announced in the second quarter that it is now offering real-time and on-demand Internet
broadcast of audio and video conference calls through its Webcast Service. The Webcast Service complements Global Crossing's industry-leading audio and video conferencing services and allows
business customers to broadcast meetings or conferences over the Internet in a convenient, flexible and cost-effective manner anywhere
in the world.
The acquisition on June 15 of IXnet and IPC added an entirely new customer base to the Global Crossing Network. IXnet and IPC bring to
Global Crossing over 2,000 financial services firms as customers, a global extranet with a presence in 38 countries, and over 1,500
customer access nodes designed for the financial community and other MNCs. Through a single connection, IXnet delivers end-to-end data and
voice communications solutions around the world, 24 hours a day. Customers get voice and data connectivity, plus financial content and
transactional capabilities, through the IXnet extranet without the need to access disparate public networks or rely on multiple customer
service organizations.
During the quarter, Global Crossing signed a major government contract to provide a worldwide Virtual Private Network for 240 British embassies and consulates. This project will provide managed voice, data and messaging services to 10,000 users in 100 countries. The contract will run over 10 years, with minimum guaranteed revenue of $270 million and the prospect of substantial additional revenue based on bandwidth usage. A sales effort aimed at providing similar
services for U.S. federal agencies was launched in July with the opening of a Washington, D.C. office.
During the quarter, the company raised a total of $1.8 billion in net proceeds through the offering of 21.7 million shares of common stock and 4.6 million shares of 6-3/4% preferred stock. When combined with the $3.65 billion in estimated pre-tax cash proceeds from the sale of the ILEC, operating cash flow and the planned proceeds from
financings related to the company's Asian joint ventures, the company expects to be in a position to fully fund all of its anticipated business expansion activities.
Global Crossing has made a number of strategic investments in companies that are developing new technologies and/or products complementary to Global Crossing's worldwide products and services. At the end of the second quarter, the company had unrealized gains of more than $600 million from its investment portfolio, which includes companies such as Sonus Networks and Storage Networks.