On January 28, 2002, certain companies in the Global Crossing Group (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda.
Global Crossing noted that it is still evaluating the appropriate write-down of certain of its tangible assets. In addition, the accounting treatment of certain of its capacity transactions is under investigation by an independent committee of its board of directors, the U.S. Securities and Exchange Commission and the U. S. Attorney's Office for the Central District of California.
For Continuing Operations in the fourth quarter of 2001, Global Crossing expects to report Revenue of approximately $804 million, which includes Service Revenue of approximately $764 million. For the full year 2001, Global Crossing expects to report Revenue from Continuing Operations of approximately $32 billion, including approximately $3.1 billion in Service Revenue.
Global Crossing also announced that it expects to report a significant Net Loss Applicable to Common Shareholders for the fourth quarter and the full year 2001. The 2001 loss will reflect items previously reported during the first three quarters, including restructuring charges of $294 million, $545 million related to the impairment of goodwill associated with its Global Marine unit, and $2,084 million due to the write down of Global Crossing's equity investment portfolio, including its investment in Exodus Communications. In addition, Global Crossing's net loss for both the fourth quarter and the full year are expected to reflect the write-off of Global Crossing's remaining goodwill and other identifiable intangible assets (approximately $8 billion) as well as a multi-billion dollar write-down of its tangible assets. The write-off of goodwill and other identifiable intangible assets and write-down of tangible assets will be non-cash charges. These pending write-downs were previously discussed in Global Crossing's September 30, 2001 Quarterly Report on Form 10-Q.
Commenting on the quarter's performance, John Legere, CEO of Global Crossing said, "You can take a company's measure by how it responds to adversity. I'm proud of the way Global Crossing employees have maintained outstanding service to our customers as we restructure and work through the Chapter 11 process. In the fourth quarter, we overcame a number of challenges to show strength in Service Revenue, which is the vast majority of our revenue mix and the expected source of our growth for the future. We're pleased that customers have continued to choose our network over many others, demonstrating the appeal of our service offerings to our targeted customers -- global enterprises and carriers. As we look forward to successfully emerging from Chapter 11, we'll maintain our focus on serving customers."
CASH POSITION
Global Crossing reported that it holds approximately $1,520 million of cash in its bank accounts on a consolidated basis as of February 25, 2002. Included in that amount is approximately $492 million of cash in Asia Global Crossing bank accounts and approximately $327 million in other bank accounts that are restricted. These amounts do not represent Generally Accepted Accounting Principles (GAAP) cash balances as of February 25, 2002.
CONFERENCE CALL UPDATE
Global Crossing will not conduct the conference call previously scheduled for Wednesday, February 27, 2002, due to the need to defer the release of complete results until the filing of the Annual Report on Form 10-K. In light of the Chapter 11 filing on January 28, 2002 and the other matters discussed in this release, guidance previously issued by Global Crossing should be disregarded.
BOARD OF DIRECTORS UPDATE
Global Crossing announced today that it is actively recruiting additional outside directors to join its board. Global Crossing also announced that Mark Attanasio has submitted his resignation as a member of the board, due to the requirements of his other professional responsibilities.
DEFINITION OF TERMS USED
Results from Continuing Operations exclude GlobalCenter, the incumbent local exchange carrier (ILEC) business, IPC Trading Systems and Global Marine.
In this press release, Revenue refers to revenue reported on Global Crossing's statements of operations under GAAP. Service Revenue, which excludes all impacts of IRU sales, refers to Revenue less any revenue recognized immediately for circuit activations that qualified as sales type leases, as well as the revenue recognized due to the amortization of IRU's sold in prior periods and not recognized as sales-type leases.
ABOUT GLOBAL CROSSING
Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. 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 and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing (NYSE: AX).
On January 28, 2002, certain companies in the Global Crossing Group (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda.
Please visit www.globalcrossingcom or www.asiaglobalcrossing.com for more information about Global Crossing and Asia Global Crossing