<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
---------------
FORM 8-K
---------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 18, 2000
--------------------
Global Crossing Ltd.
(Exact name of registrant as specified in its charter)
--------------------
Bermuda 000-24565 98-0189783
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
Wessex House, 45 Reid Street
Hamilton, Bermuda HM12
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (441) 296-8600
================================================================================
<PAGE>
2
Item 5. Other Events
On February 18, 2000, Global Crossing Ltd., a Bermuda company ("Global
Crossing Ltd."), issued a press release, which is attached as Exhibit 99.1 to
this Form 8-K and is incorporated herein by reference.
Item 7. Financial Statement and Exhibits.
(c) Exhibits.
99.1 Press Release of Global Crossing Ltd., dated February 18, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
GLOBAL CROSSING LTD.
Dated: February 18, 2000 By: /s/ Dan J. Cohrs
_____________________________________
Name: Dan J. Cohrs
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
3
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
99.1 Press Release of Global Crossing Ltd., dated
February 18, 2000.
<PAGE>
Exhibit 99.1
[LOGO] Global Crossing
Global Crossing's Fourth Quarter Revenue Exceeds $1 Billion; Pro Forma 1999
Revenue Tops $4 Billion with recurring Adjusted EBITDA of $1.2 Billion
. Global Crossing Network is operational from Europe to Japan, following the
activation of Pacific Crossing 1, Pan-European Crossing, and Mid-Atlantic
Crossing, and the acquisition of networks in North America and the United
Kingdom.
. Expansion throughout Asia launched with Asia Global Crossing and Hutchison
Global Crossing partnerships.
. GlobalCenter more than doubled its complex web-hosting business in 1999;
currently has 1.3 million square feet under lease; new leadership team under
CEO Leo Hindery.
Hamilton, Bermuda - February 18, 2000 - Global Crossing Ltd. (Nasdaq:
GBLX), which is building and operating the world's most advanced global IP-based
fiber optic network, today reported record results for the fourth quarter and
full year 1999. Revenue of $1.1 billion, recurring Adjusted EBITDA of $325
million and a recurring loss of $(152) million were reported for the fourth
quarter of 1999, compared to revenue of $203 million, recurring Adjusted EBITDA
of $168 million, and recurring income of $52 million for the fourth quarter of
1998. Reported recurring loss per share was $(0.20) for the fourth quarter of
1999. For the full year, reported revenue was $1.7 billion and recurring
Adjusted EBITDA was $716 million. Pro forma results giving effect to the
acquisitions of Frontier Corporation, Global Marine Systems and Racal Telecom,
showed that revenue increased 15% from the third quarter of 1999, and recurring
Adjusted EBITDA was up 22%. For the full year, pro forma revenue was $4.1
billion, and recurring Adjusted EBITDA was $1.2 billion.
"These outstanding results demonstrate the rapid pace at which we continue
to expand our global communications network and telecom services offerings,"
said Bob Annunziata, Chief Executive Officer of Global Crossing. "In the past
twelve months, we've completed three major
<PAGE>
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acquisitions and formed two joint ventures, solidifying our network presence in
North America, Europe and Asia and expanding our service offerings beyond
bandwidth to provide our customers with a full range of telecom services. One
year ago our revenue was $420 million, and now we are running at ten times that
level. In that time, we have grown from 148 employees to over 12,000, and
expanded the number of major cities connected by our network from two to over
200. Today, we offer seamless end-to-end connectivity from Paris to New York to
Tokyo through our integrated Global Crossing Network. We are well on our way to
achieving our vision of becoming the world's premier provider of fully
integrated, data-oriented products and services."
Highlights since the third quarter include:
. Closed the acquisition of Racal Telecom, which has a 4,500 route mile U.K.
network utilizing IP-centric technologies and a reach of more than 2,000
cities and towns across the UK. This network will be within 5km of almost
70% of all U.K. business customers by 2001.
. Completed formation of the Asia Global Crossing (AGC) partnership with
Microsoft and Softbank to develop broadband systems throughout Asia.
. Formed Hutchison Global Crossing, a $1.2 billion joint venture with
Hutchison Whampoa. This joint venture, closed January 12, 2000, provides
Global Crossing with a network in Hong Kong and, when regulations permit,
entry into the Greater China region.
. Initiated service on Pacific Crossing-1 in December 1999, three months
ahead of schedule, and inaugurated Pan-European Crossing and Mid-Atlantic
Crossing.
. Completed the North American Crossing Network (formerly the Frontier
Optronics Network), consisting of 20,000 route miles in the United States.
Lit three additional OC-192's on North American Crossing, bringing total
OC-192 capacity on the network to 500,000 gigabit miles. Also completed
the first phase of a multi-vendor IP over OC-192 field trial. This service
is expected to roll out commercially on North American Crossing in the
first half of 2000.
. Expanded the GlobalCenter footprint with new Sunnyvale and Anaheim media
distribution centers, and formed GlobalCenter Japan, a partnership between
Asia Global Crossing and IRI,
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in January 2000. Announced a plan to construct 10 new media distribution
centers worldwide in 2000.
. Provided the world's first IP connectivity via an optical wavelength link,
interfacing at OC48's/STM16's. The link will carry commercial traffic
between London and New York at 2.5 gigabits per second.
. Expanded International Private Line (IPL) service to provide retail
customers greater flexibility at reduced cost. Access to London,
Amsterdam, Frankfurt, Paris and Tokyo is currently available and access
will be available to 18 additional cities within the next six months.
. Launched a new wholesale Asynchronous Transfer Mode (ATM) product to
carrier customers who can now use Global Crossing's network to support
multiple applications (data, Internet, voice & video) over a single
platform.
. Additional deployment of our Voice Over IP (VOIP) platform to a total of
seven regional switching centers. Global Crossing is currently in the
process of deploying 18 trunking gateways, which will cover the United
States, and three soft switches with connectivity to its ATM backbone in
this new `NexGen' network.
. Global Marine Systems' cable-laying ship, Bold Endeavour commenced service
on December 31, 1999.
. Appointed former AT&T and TCI executive Leo Hindery as Chairman and CEO of
GlobalCenter.
. Appointed former Dell and AT&T executive John Legere as new CEO of Asia
Global Crossing.
CONSOLIDATED RESULTS, AS REPORTED
The following table summarizes the reported fourth quarter and full year
results of operations of the Company and consolidated subsidiaries, including
acquired entities from the date of acquisition only.
<PAGE>
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<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(Unaudited) (Unaudited)
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
Consolidated Information: *
- -------------------------
Revenue $1,065 $ 203 $1,665 $ 420
Income (loss) applicable to common shareholders $ (225) $ 52 $ (138) $ (135)
Income (loss) per share applicable to common $(0.29) $ 0.12 $(0.27) $(0.38)
shareholders, diluted
Recurring net income (loss) applicable to common $ (152) $ 52 $ (250) $ 59
shareholders
Recurring income (loss) per share, diluted $(0.20) $ 0.12 $(0.50) $ 0.16
Revenue plus incremental cash deferred revenue $1,129 $ 222 $1,786 $ 484
Recurring Adjusted EBITDA $ 325 $ 168 $ 716 $ 365
</TABLE>
*See Condensed Consolidated Statements of Operations.
Year-on-year revenue has increased from $420 million to $1.7 billion,
reflecting acquisition activity and continuing strong global demand for
broadband services. Recurring Adjusted EBITDA increased from $365 million to
$716 million year-on-year.
PRO FORMA CONSOLIDATED RESULTS
The following table summarizes consolidated pro forma results for the
fourth quarter and the year, including Global Marine Systems, Frontier
Corporation, and Racal Telecom, and equity in the income (loss) of the Hutchison
Global Crossing joint venture from the beginning of each period presented.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(Unaudited) (Unaudited)
(in millions, except per share amounts)
<S> <C> <C> <C> <C>
Pro Forma Information: *
- ----------------------
Pro forma revenue $1,113 $1,052 $4,140 $3,644
Pro forma recurring loss applicable to common $ (184) $ (54) $ (635) $ (397)
shareholders
Pro forma recurring loss per share, basic and $(0.24) $(0.07) $(0.83) $(0.56)
diluted
Pro forma revenue plus incremental cash deferred $1,192 $1,081 $4,292 $3,739
revenue
Pro forma recurring Adjusted EBITDA $ 344 $ 363 $1,250 $1,072
</TABLE>
*See Unaudited Pro Forma Condensed Consolidated Statements of Operations.
<PAGE>
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Highlights for pro forma results include:
On a pro forma basis for the year 1999, revenue was $4.1 billion and
recurring Adjusted EBITDA was $1.2 billion, driven by continuing strong global
demand for broadband services.
Fourth quarter Adjusted EBITDA declined compared to the Company's strong
1998 fourth quarter, as it increased spending to augment its sales force, to add
network and web hosting capacity, to add to its fleet of installation and
maintenance vessels, to activate new fiber optic systems, and to consummate and
integrate its acquisitions. In addition, the costs of terminating international
traffic rose, and delays in third-party subsea cable projects deferred
recognition of certain profits under Global Marine's percentage-of-completion
contract accounting method.
Pacific Crossing 1 (PC-1), which entered service in December 1999, is an
unconsolidated joint venture. When Global Crossing includes PC-1 capacity in a
sale to a customer, Global Crossing purchases the capacity from PC-1 and
combines it with capacity from other systems for sale to the customer.
Accordingly, Global Crossing's revenue includes the sale of PC-1 capacity to the
customer, and its Adjusted EBITDA reflects the margin on that sale, based only
upon the amount paid to PC-1 for capacity purchased. The remainder of this
operating margin is reflected in PC-1's results, the Company's share of which is
included in equity in earnings of affiliates.
PRO FORMA CONSOLIDATED SEGMENT RESULTS
The Company's reported business segments are Telecommunications Services,
Installation and Maintenance Services and Incumbent Local Exchange Carrier
Services ("ILEC"). Recurring corporate and administrative costs are fully
allocated to these segments. However, amounts relating to merger and integration
expenses and other non-recurring items are segregated into the
<PAGE>
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Corporate segment. The reported segments, and the supplemental revenue
categories, are summarized below:
<TABLE>
<CAPTION>
<S> <C> <C>
Reportable Segments Revenue Categories Formerly Reported Entity
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Telecommunications Services Carrier Global Crossing
Consumer Frontier Integrated Services
Commercial
Carrier
Commercial Racal Telecom
Carrier
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Installation and Maintenance Installation Global Marine Systems
Services Maintenance
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Incumbent Local Exchange Consumer Frontier Local Communications
Carrier Services
- -------------------------------------------------------------------------------------------
</TABLE>
Telecommunications Services
The Telecommunications Services segment is comprised of commercial,
consumer and carrier businesses for all bandwidth, data, competitive local
exchange (CLEC), long distance, audio/video conferencing and other value-added
services. The following table summarizes pro forma results of operations for the
fourth quarter and for the year for the Telecommunications Services segment:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(Unaudited) (Unaudited)
(in millions)
<S> <C> <C> <C> <C>
Pro Forma Information: *
- ----------------------
Pro forma revenue $ 852 $ 757 $3,072 $2,591
Pro forma operating loss $ (151) $ (9) $ (364) $ (232)
Pro forma revenue plus incremental cash deferred $ 926 $ 785 $3,219 $2,686
revenue
Pro forma Adjusted EBITDA $ 229 $ 244 $ 791 $ 630
</TABLE>
*See Unaudited Pro Forma Business Segment Information.
Highlights for pro forma results for Telecommunications Services include:
Data revenue, which includes bandwidth products, was 46 % of total product
revenue in the fourth quarter of 1999, up from 40% in 1998. Data revenue
increased 63% year-on-year.
<PAGE>
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Commercial Services
Commercial Services include GlobalCenter and business-to-business long
distance voice and data services. Pro forma combined revenue for the fourth
quarter and year was $322 million and $1,274 million, respectively.
In North America, for the seventh consecutive quarter, data products
continued to grow at triple digit rates. Fourth quarter frame relay revenue
increased 237% year-on-year and sales from dedicated internet were up 122%,
while web hosting revenue increased 196%. For the full year, growth rates for
the same products were 304%, 159% and 187%, respectively, over the prior year.
GlobalCenter more than doubled its complex web-hosting business and nearly
doubled its customers for the year. During the year, two new huge media
distribution centers were opened in Anaheim and Sunnyvale, bringing the total to
eight media distribution centers. Currently, 1.3 million square feet are under
lease.
The Competitive Local Exchange Carrier (CLEC) Business provides
facility-based service in 40 markets, with 27 new markets entered during the
year. Revenue grew 28% in the quarter over the same period last year with full
year growth of 46%. Facility-based access lines grew nearly five-fold from
year-end 1998.
Always-on, high-speed SDSL Internet access was offered in 28 major markets.
This offer is expected to extend to 38 markets by the end of the second quarter
of 2000.
Consumer Services
Consumer Services includes retail long distance voice and data services.
Pro forma combined revenue for the fourth quarter and for the year was $47
million and $188 million,
<PAGE>
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respectively, which represent declines from 1998. Although the Company continues
to de-emphasize non-ILEC service territories, consumer long distance market
share within the ILEC territories grew from 33% at December 31, 1998 to 43% at
December 31, 1999.
Carrier Services
Carrier Services includes all subsea and terrestrial network facilities and
related services sold to carrier and Internet Service Provider customers. Pro
forma combined revenue for the fourth quarter and for the year were $483 million
and $1,609 million, respectively, representing growth of 25% and 48%.
The rapid growth of this unit included an 87% increase in wholesale minutes
sold on a year-on-year basis as well as strong growth in international
city-to-city circuit activations. Responding to customer demand for
trans-Pacific capacity, a number of circuits to Tokyo were activated immediately
after Pacific Crossing 1 (PC-1) and the Global Access Ltd. Japan systems were
declared ready for service in late December.
In North America, data product revenue in this segment--primarily private
line--grew 614% and 588% for the quarter and the full year, respectively.
Fourth quarter 1999 results for Carrier Services reflected planned
increases in costs that were incurred as the Company built its worldwide sales
force, expanded GlobalCenter web hosting facilities, integrated acquisitions,
and incurred the initial maintenance costs of the newly lit systems in advance
of revenue recognition. As discussed above, the activation of PC-1 contributed
only marginally to fourth quarter 1999 Adjusted EBITDA, because PC-1 Adjusted
EBITDA is not consolidated.
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Global Crossing's total unrecognized backlog remains at over $2 billion and
was supported by new and returning customers, including Exodus, Microsoft, KDD,
Level 3, MCI Worldcom, Deutsche Telekom and Softbank.
Installation and Maintenance Services
Installation and Maintenance Services provides worldwide subsea cable
installation and maintenance. The following table summarizes pro forma results
of operations for the fourth quarter and year for the Installation and
Maintenance Services segment:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(Unaudited) (Unaudited)
(in millions)
<S> <C> <C> <C> <C>
Pro Forma Information: *
- ----------------------
Pro forma revenue $ 76 $ 113 $ 334 $ 322
Pro forma operating income (loss) $ (3) $ 13 $ 12 $ 21
Pro forma revenue plus incremental cash deferred $ 81 $ 113 $ 339 $ 322
revenue
Pro forma Adjusted EBITDA $ 21 $ 29 $ 86 $ 85
</TABLE>
*See Unaudited Pro Forma Business Segment Information.
Highlights for pro forma results for Installation and Maintenance Services
include:
Global Marine, the Installation and Maintenance business segment, added
three ships since our acquisition, with five ships scheduled to enter service
early in 2000. Global Marine also announced an agreement with Maersk to charter
ships as needed, with the first five ships to come into service during 2000 and
2001 under the agreement.
Fourth quarter installation revenue declined from a year ago due to the
completion of major projects, such as Southern Cross in the third quarter of
1999, and Gemini and SeaMeWe 3 in the fourth quarter of 1998. Delays in the
TAT-14 and U.S.-Japan cables, which had been scheduled for installation during
the fourth quarter of 1999, deferred the realization of revenue on those
projects.
<PAGE>
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Adjusted EBITDA for the fourth quarter was also lower due to these factors, and
due to increased costs related to new ships that were being readied for service
during the quarter and will enter service in 2000.
Incumbent Local Exchange Carrier Services
Incumbent Local Exchange Carrier ("ILEC") Services includes wholesale and
retail local exchange telephone services. The following table summarizes pro
forma results of operations for the fourth quarter and year for the ILEC
Services segment:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
--------------------- --------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(Unaudited) (Unaudited)
(in millions)
<S> <C> <C> <C> <C>
Pro Forma Information: *
- ----------------------
Pro forma revenue $ 186 $ 177 $ 729 $ 702
Pro forma operating income $ 54 $ 64 $ 247 $ 251
Pro forma Adjusted EBITDA $ 95 $ 94 $ 383 $ 367
</TABLE>
*See Unaudited Pro Forma Business Segment Information.
Highlights for pro forma results for ILEC Services include:
The Rochester-based ILEC operation continued to exceed service metrics
required by the New York State Public Service Commission.
Adjusted EBITDA for the year was impacted by the addition of technical
staff, which resulted in a measurable improvement in the customer service
metrics. Market deployment of the consumer ADSL product, LightningLink, was
initiated in selected markets in the fourth quarter. Response to this product
has been extremely positive.
Accounting Matters
During the third and fourth quarters of 1999, changes in the business
activities of the Company, together with a newly effective accounting standard,
caused the Company to modify
<PAGE>
- 11 -
certain of its practices regarding recognition of revenue and costs related to
sales of capacity. None of the accounting practices described below affect the
cash flows of the Company.
As a result of an accounting standard that became effective July 1, 1999,
revenue from terrestrial circuits sold after that date have been amortized over
the terms of the related contracts. Previously, these sales had been recognized
as current revenue upon activation of the circuits. This deferral in revenue
recognition has no impact on cash flow.
With the consummation of the Frontier acquisition on September 28, 1999,
service offerings became a significant source of revenue. Consequently, the
Company initiated service contract accounting for its subsea systems during the
fourth quarter, because the Company, since that date, no longer holds subsea
capacity exclusively for sale. As a result, since the beginning of the fourth
quarter, investments in both subsea and terrestrial systems have been
depreciated over their remaining economic lives, and revenue related to service
contracts have been recognized over the terms of the contracts. Revenue and
costs related to the sale of subsea circuits have been recognized upon
activation if the criteria of sales-type lease accounting have been satisfied
with respect to those circuits.
During the fourth quarter, the Company's global network service
capabilities were significantly expanded by the activation of several previously
announced systems, and by the integration of other networks obtained through
acquisition and joint venture agreements. With this network expansion, the
Company began offering its customers flexible bandwidth products to multiple
destinations, which makes the historical practice of fixed, point-to-point
routing of traffic and restoration capacity both impractical and inefficient. To
ensure the required network flexibility, the Company will modify its future
capacity purchase agreements and its network management in a manner that
precludes the use of sales-type lease accounting.
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Because of these contract changes, and the network management required to
meet customer demands for flexible bandwidth, multiple destinations, and system
performance, the Company anticipates that most of the subsea circuits activated
after January 1, 2000 will be part of a service offering, and therefore will not
meet the criteria of sales-type lease accounting. Consequently, revenue related
to those circuits will be deferred and amortized over the appropriate term of
the contract. In certain circumstances, should a customer's specific terms meet
the requirements, the Company will be required to follow sales-type lease
accounting with revenue recognized upon payment and activation.
The Company does not anticipate significant changes in the terms of payment
for capacity sold, and notes that the accounting recognition of revenue and cost
for such capacity sales does not affect the cash flow from such contracts.
The Company notes that accounting practice and authoritative guidance
regarding the applicability of sales-type lease accounting to the sale of
capacity is still evolving. Based on the accounting practices described above,
the Company believes that changes, if any, in accounting practice or
authoritative guidance affecting sales of capacity would have little or no
impact on its results of operations.
If none of the contracts recognized in the fourth quarter of 1999 had met
the requirements of sales-type lease accounting, the Company would have deferred
approximately $200 million of additional revenue, and incurred an additional
loss of approximately $20 million. In addition, Adjusted EBITDA would not have
changed materially, and cash flow would have been unaffected.
<PAGE>
- 13 -
Definition of Terms Used
In this press release, "incremental cash deferred revenue" refers to the
cash portion of the change in deferred revenue. Adjusted earnings before
interest, taxes, depreciation and amortization, "Adjusted EBITDA," refers to
operating income (loss), plus goodwill amortization, depreciation and
amortization, non-cash cost of capacity sold, stock related expense, incremental
cash deferred revenue, and amounts relating to the termination of the advisory
services agreement. This definition is consistent with financial covenants
contained in the Company's major financial agreements. "Recurring Adjusted
EBITDA" refers to Adjusted EBITDA plus amounts relating to merger and
integration expenses and other non-recurring items.
About Global Crossing
Global Crossing Ltd. (Nasdaq: GBLX) is building, and offering services over, the
world's first global fiber optic network with 97,200 announced route miles,
serving five continents, 24 countries and more than 200 major cities. The Global
Crossing Network and its telecommunications and Internet product offerings will
be available to over 80% of the world's international communications traffic.
Global Crossing hosts more than 300 of the top Internet brands at its web
hosting division, GlobalCenter. Among the brands are some of the largest and
most densely trafficked sites on the Web, including Yahoo!, The Motley Fool,
Ziff Davis, MP3.com and eToys. Global Crossing's operations are headquartered in
Hamilton, Bermuda, with principal offices in Los Angeles, California; London,
England; Morristown, New Jersey; and Rochester, New York. For more information,
visit www.globalcrossing.com.
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. Such forward-looking statements are subject to a
number of risks, assumptions and uncertainties that could cause the
<PAGE>
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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.
Investor contacts:
Jerry Leshne
+ 1 310 385 3838
[email protected]
Jensen Chow
+1 310 385 5283
[email protected]
Press contacts:
Kim Polan
+ 1 212 687 8080
[email protected]
Tom Goff
+ 1 310 385 5231
[email protected]
<PAGE>
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GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
----------------------- --------------------
1999 1998 Amount Percent
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $1,065,461 $203,128 $862,333 424.5%
EXPENSES:
Cost of sales 571,175 88,054 (483,121) (548.7%)
Operations, administrative and maintenance 91,316 7,404 (83,912) (1,133.3%)
Sales and marketing 112,658 12,539 (100,119) (798.5%)
Network development 10,582 3,728 (6,854) (183.9%)
General and administrative 136,802 9,227 (127,575) (1,382.6%)
Stock related expense 12,697 6,316 (6,381) (101.0%)
Depreciation and amortization 107,974 136 (107,838) (79,292.6%)
Goodwill amortization 123,814 - (123,814) (100.0%)
- ---------------------------------------------------------------------------------------------------
1,167,018 127,404 (1,039,614) (816.0%)
- ---------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (101,557) 75,724 (177,281) (234.1%)
Equity in income (loss) of affiliates 21,180 (1,471) 22,651 1,539.8%
Minority interest (1,338) - (1,338) (100.0%)
Other income (expense):
Interest income 21,744 15,726 6,018 38.3%
Interest expense (57,539) (17,220) (40,319) (234.1%)
Other expense, net (34,957) - (34,957) (100.0%)
- ---------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY ITEM (152,467) 72,759 (225,226) (309.6%)
Provision for income taxes (16,483) (16,735) 252 1.5%
- ---------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (168,950) 56,024 (224,974) (401.6%)
Extraordinary loss on retirement of debt (30,816) - (30,816) (100.0%)
- ---------------------------------------------------------------------------------------------------
NET INCOME (LOSS) (199,766) 56,024 (255,790) (456.6%)
Preferred stock dividends (25,329) (4,375) (20,954) (478.9%)
- ---------------------------------------------------------------------------------------------------
INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS $(225,095) $51,649 $(276,744) (535.8%)
- ---------------------------------------------------------------------------------------------------
(The three months ended December 31, 1999, includes Global Crossing, Frontier, Global Marine
Systems and Racal Telecom from November 24, 1999)
</TABLE>
<PAGE>
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GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998 (Continued)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
----------------------- ----------------------
1999 1998 Amount Percent
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME (LOSS) PER COMMON SHARE:
Income (loss) applicable to common shareholders
before extraordinary item
Basic $ (0.25) $ 0.13 $ (0.38) (292.3%)
Diluted $ (0.25) $ 0.12 $ (0.37) (308.3%)
Extraordinary loss on retirement of debt
Basic $ (0.04) $ - $ (0.04) (100.0%)
Diluted $ (0.04) $ - $ (0.04) (100.0%)
Net income (loss) applicable to common
shareholders
Basic $ (0.29) $ 0.13 $ (0.42) (323.1%)
Diluted $ (0.29) $ 0.12 $ (0.41) (341.7%)
Shares used in computing income (loss) per share
Basic 772,929,855 410,278,814 362,651,041 88.4%
Diluted 772,929,855 437,042,278 335,887,577 76.9%
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS):
Income (loss) applicable to common shareholders $(225,095) $ 51,649 $(276,744) (535.8%)
Merger-related expenses 7,600 - 7,600 100.0%
Other expense, net 34,957 - 34,957 100.0%
Extraordinary loss on retirement of debt 30,816 - 30,816 100.0%
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS (151,722) 51,649 (203,371) (393.8%)
- -----------------------------------------------------------------------------------------------------
Goodwill amortization 123,814 - 123,814 100.0%
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS BEFORE GOODWILL AMORTIZATION $(27,908) $ 51,649 $(79,557) (154.0%)
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) PER COMMON SHARE:
Recurring income (loss) applicable to common
shareholders
Basic $ (0.20) $ 0.13 $ (0.33) (253.8%)
Diluted $ (0.20) $ 0.12 $ (0.32) (266.7%)
Recurring income (loss) applicable to common
shareholders before goodwill amortization
Basic $ (0.04) $ 0.13 $ (0.17) (130.8%)
Diluted $ (0.04) $ 0.12 $ (0.16) (133.3%)
Shares used in computing income (loss) per share
Basic 772,929,855 410,278,814 362,651,041 88.4%
Diluted 772,929,855 437,042,278 335,887,577 76.9%
- -----------------------------------------------------------------------------------------------------
ADJUSTED EBITDA AND RECURRING ADJUSTED EBITDA:
Operating income (loss) $(101,557) $ 75,724 $(177,281) (234.1%)
Goodwill amortization 123,814 - 123,814 100.0%
Depreciation and amortization 107,974 136 107,838 79,292.6%
Stock related expense 12,697 6,316 6,381 101.0%
Non-cash cost of capacity sold 111,175 67,032 44,143 65.9%
Incremental cash deferred revenue 63,740 18,862 44,878 237.9%
- -----------------------------------------------------------------------------------------------------
ADJUSTED EBITDA 317,843 168,070 149,773 89.1%
- -----------------------------------------------------------------------------------------------------
Merger-related expenses 7,600 - 7,600 100.0%
- -----------------------------------------------------------------------------------------------------
RECURRING ADJUSTED EBITDA $325,443 $168,070 $157,373 93.6%
- -----------------------------------------------------------------------------------------------------
(The three months ended December 31, 1999, includes Global Crossing, Frontier, Global Marine
Systems and Racal Telecom from November 24, 1999)
</TABLE>
<PAGE>
- 17 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
For the Three Months Ended December 31, 1999 and 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
------------------------- ------------------------
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES:
REVENUE:
Commercial $279,603 $ - $279,603 100.0%
Consumer 46,661 - 46,661 100.0%
Carrier 477,357 203,128 274,229 135.0%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 803,621 203,128 600,493 295.6%
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (139,095) 75,724 (214,819) (283.7%)
ADJUSTED EBITDA 210,297 168,070 42,227 25.1%
TOTAL ASSETS 16,882,314 2,639,177 14,243,137 539.7%
- ----------------------------------------------------------------------------------------------------
INSTALLATION AND MAINTENANCE SERVICES:
REVENUE:
Maintenance 36,539 - 36,539 100.0%
Installation 39,380 - 39,380 100.0%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 75,919 - 75,919 100.0%
- ----------------------------------------------------------------------------------------------------
OPERATING LOSS (8,841) - (8,841) (100.0%)
ADJUSTED EBITDA 20,540 - 20,540 100.0%
TOTAL ASSETS 1,486,283 - 1,486,283 100.0%
- ----------------------------------------------------------------------------------------------------
INCUMBENT LOCAL EXCHANGE CARRIER SERVICES:
CONSUMER REVENUE 185,921 - 185,921 100.0%
OPERATING INCOME 53,979 - 53,979 100.0%
ADJUSTED EBITDA 94,606 - 94,606 100.0%
TOTAL ASSETS 1,373,172 - 1,373,172 100.0%
- ----------------------------------------------------------------------------------------------------
CORPORATE AND OTHER:
OPERATING LOSS (7,600) - (7,600) (100.0%)
ADJUSTED EBITDA (7,600) - (7,600) (100.0%)
RECURRING OPERATING LOSS - - - -
RECURRING ADJUSTED EBITDA - - - -
TOTAL ASSETS - - - -
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED:
REVENUE 1,065,461 203,128 862,333 424.5%
OPERATING INCOME (LOSS) (101,557) 75,724 (177,281) (234.1%)
ADJUSTED EBITDA 317,843 168,070 149,773 89.1%
RECURRING OPERATING INCOME (LOSS) (93,957) 75,724 (169,681) (224.1%)
RECURRING ADJUSTED EBITDA 325,443 168,070 157,373 93.6%
TOTAL ASSETS $19,741,769 $2,639,177 $17,102,592 648.0%
- ----------------------------------------------------------------------------------------------------
(The three months ended December 31, 1999, includes Global Crossing, Frontier, Global Marine
Systems and Racal Telecom from November 24, 1999.)
</TABLE>
<PAGE>
- 18 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years Ended
December 31, Change
---------------------- ---------------------
1999 1998 Amount Percent
- -----------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
REVENUE $1,664,824 $ 419,866 $1,244,958 296.5%
EXPENSES:
Cost of sales 850,483 178,492 (671,991) (376.5%)
Operations, administrative and maintenance 133,202 18,056 (115,146) (637.7%)
Sales and marketing 149,119 26,194 (122,925) (469.3%)
Network development 26,153 10,962 (15,191) (138.6%)
General and administrative 210,107 26,303 (183,804) (698.8%)
Stock related expense 51,306 39,374 (11,932) (30.3%)
Depreciation and amortization 124,294 541 (123,753) (22,874.9%)
Goodwill amortization 127,621 - (127,621) (100.0%)
Termination of Advisory Services Agreement - 139,669 139,669 100.0%
- -----------------------------------------------------------------------------------------------------
1,672,285 439,591 (1,232,694) (280.4%)
- -----------------------------------------------------------------------------------------------------
OPERATING LOSS (7,461) (19,725) 12,264 62.2%
Equity in income (loss) of affiliates 15,708 (2,508) 18,216 726.3%
Minority interest (1,338) - (1,338) (100.0%)
Other income (expense):
Interest income 67,407 29,986 37,421 124.8%
Interest expense (139,077) (42,880) (96,197) (224.3%)
Other income, net 180,765 - 180,765 100.0%
- -----------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES,
EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN 116,004 (35,127) 151,131 430.2%
ACCOUNTING PRINCIPLE
Provision for income taxes (126,539) (33,067) (93,472) (282.7%)
- -----------------------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (10,535) (68,194) 57,659 84.6%
Extraordinary loss on retirement of debt (45,681) (19,709) (25,972) (131.8%)
- -----------------------------------------------------------------------------------------------------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE (56,216) (87,903) 31,687 36.0%
Cumulative effect of change in accounting (14,710) - (14,710) (100.0%)
principle, net
- -----------------------------------------------------------------------------------------------------
NET LOSS (70,926) (87,903) 16,977 19.3%
Preferred stock dividends (66,642) (12,681) (53,961) (425.5%)
Redemption of preferred stock - (34,140) 34,140 100.0%
- -----------------------------------------------------------------------------------------------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS $(137,568)$(134,724) $ (2,844) (2.1%)
- -----------------------------------------------------------------------------------------------------
</TABLE>
(The year ended December 31, 1999, includes
Global Crossing, Frontier from October
1, 1999, Global Marine Systems from
July 1, 1999, and Racal Telecom from November 24, 1999.)
<PAGE>
- 19 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998 (Continued)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Years Ended
December 31, Change
---------------------- -----------------------
1999 1998 Amount Percent
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOSS PER COMMON SHARE: (unaudited)
Loss applicable to common shareholders before
extraordinary item and cumulative effect of
change in accounting principle
Basic and diluted $ (0.15) $ (0.32) $ 0.17 53.1%
Extraordinary loss on retirement of debt
Basic and diluted $ (0.09) $ (0.06) $ (0.03) (50.0%)
Cumulative effect of change in accounting
principle, net of income tax benefit
Basic and diluted $ (0.03) $ - $ (0.03) (100.0%)
Net loss applicable to common shareholders
Basic and diluted $ (0.27) $ (0.38) $ 0.11 28.9%
Shares used in computing loss per share
Basic and diluted 502,400,851 358,735,340 143,665,511 40.0%
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS):
Loss applicable to common shareholders $(137,568) $(134,724) $ (2,844) (2.1%)
Termination of Advisory Service Agreements - 139,669 (139,669) (100.0%)
Merger-related expenses 7,600 - 7,600 100.0%
Other income, net ( 180,765) - (180,765) (100.0%)
Extraordinary loss on retirement of debt 45,681 19,709 25,972 131.8%
Cumulative effect of change in accounting 14,710 - 14,710 100.0%
principle, net
Redemption of preferred stock - 34,140 (34,140) (100.0%)
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS (250,342) 58,794 (309,136) (525.8%)
- -----------------------------------------------------------------------------------------------------
Goodwill amortization 127,621 - 127,621 100.0%
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS BEFORE GOODWILL AMORTIZATION $(122,721) $ 58,794 $(181,515) (308.7%)
- -----------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) PER COMMON SHARE:
Recurring income (loss) applicable to common
shareholders
Basic and diluted $ (0.50) $ 0.16 $ (0.66) (412.5%)
Recurring income (loss) applicable to common
shareholders before goodwill amortization
Basic and diluted $ (0.24) $ 0.16 $ (0.40) (250.0%)
Shares used in computing income (loss) per share
Basic and diluted 502,400,851 358,735,340 143,665,511 40.0%
- -----------------------------------------------------------------------------------------------------
ADJUSTED EBITDA AND RECURRING ADJUSTED EBITDA:
Operating loss $(7,461) $(19,725) $ 12,264 62.2%
Goodwill amortization 127,621 - 127,621 100.0%
Depreciation and amortization 124,294 541 123,753 22,874.9%
Stock related expense 51,306 39,374 11,932 30.3%
Non-cash cost of capacity sold 291,764 140,892 150,872 107.1%
Incremental cash deferred revenue 120,657 64,197 56,460 87.9%
Termination of Advisory Service Agreements - 139,669 (139,669) (100.0%)
- -----------------------------------------------------------------------------------------------------
ADJUSTED EBITDA 708,181 364,948 343,233 94.0%
- -----------------------------------------------------------------------------------------------------
Merger-related expenses 7,600 - 7,600 100.0%
- -----------------------------------------------------------------------------------------------------
RECURRING ADJUSTED EBITDA $715,781 $364,948 $350,833 96.1%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(The year ended December 31, 1999, includes
Global Crossing, Frontier from October
1, 1999, Global Marine Systems from
July 1, 1999, and Racal Telecom from November 24, 1999.)
<PAGE>
- 20 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
For the Years Ended December 31, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Years Ended
December 31, Change
------------------------- ------------------------
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES:
REVENUE:
Commercial $279,603 $ - $279,603 100.0%
Consumer 46,661 - 46,661 100.0%
Carrier 991,984 419,866 572,118 136.3%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 1,318,248 419,866 898,382 214.0%
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (52,286) 119,944 (172,230) (143.6%)
ADJUSTED EBITDA 581,912 364,948 216,964 59.5%
TOTAL ASSETS 16,882,314 2,639,177 14,243,137 539.7%
- ----------------------------------------------------------------------------------------------------
INSTALLATION AND MAINTENANCE SERVICES:
REVENUE:
Maintenance 67,981 - 67,981 100.0%
Installation 92,674 - 92,674 100.0%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 160,655 - 160,655 100.0%
- ----------------------------------------------------------------------------------------------------
OPERATING LOSS (1,554) - (1,554) (100.0%)
ADJUSTED EBITDA 39,263 - 39,263 100.0%
TOTAL ASSETS 1,486,283 - 1,486,283 100.0%
- ----------------------------------------------------------------------------------------------------
INCUMBENT LOCAL EXCHANGE CARRIER SERVICES:
CONSUMER REVENUE 185,921 - 185,921 100.0%
OPERATING INCOME 53,979 - 53,979 100.0%
ADJUSTED EBITDA 94,606 - 94,606 100.0%
TOTAL ASSETS 1,373,172 - 1,373,172 100.0%
- ----------------------------------------------------------------------------------------------------
CORPORATE AND OTHER:
OPERATING LOSS (7,600) (139,669) 132,069 94.6%
ADJUSTED EBITDA (7,600) - (7,600) (100.0%)
RECURRING ADJUSTED EBITDA - - -
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED:
REVENUE 1,664,824 419,866 1,244,958 296.5%
OPERATING LOSS (7,461) (19,725) 12,264 62.2%
ADJUSTED EBITDA 708,181 364,948 343,233 94.0%
RECURRING ADJUSTED EBITDA 715,781 364,948 350,833 96.1%
TOTAL ASSETS $19,741,769 $2,639,177 $17,102,592 648.0%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(The year ended December 31, 1999, includes
Global Crossing, Frontier from October
1, 1999, Global Marine Systems from
July 1, 1999, and Racal Telecom from November 24, 1999.)
<PAGE>
- 21 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
December 31, Change
---------------------------- ----------------------------
1999 1998 Amount Percent
- -----------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $1,633,499 $ 806,593 $ 826,906 102.5%
Restricted cash and cash 93,294 77,190 16,104 20.9%
equivalents
Accounts receivable, net 977,019 71,195 905,824 1,272.3%
Other assets and prepaid costs 288,910 47,137 241,773 512.9%
- -----------------------------------------------------------------------------------------------------
Total current assets 2,992,722 1,002,115 1,990,607 198.6%
Restricted cash and investments 138,118 367,600 (229,482) (62.4%)
Accounts receivable 52,052 43,315 8,737 20.2%
Property, plant and equipment, net 6,171,393 1,003,056 5,168,337 515.3%
Goodwill, net 9,557,422 - 9,557,422 100.0%
Investments in and advances to/from 160,820 177,334 (16,514) (9.3%)
affiliates
Other assets 669,242 45,757 623,485 1,362.6%
- -----------------------------------------------------------------------------------------------------
Total assets $19,741,769 $2,639,177 $17,102,592 648.0%
- -----------------------------------------------------------------------------------------------------
LIABILITIES:
Current liabilities:
Accrued construction costs $ 275,361 $ 129,081 $ 146,280 113.3%
Accounts payable and accrued 944,780 31,990 912,790 2,853.4%
liabilities
Accrued interest and preferred 66,745 14,428 52,317 362.6%
dividends
Deferred revenue 137,413 44,197 93,216 210.9%
Income taxes payable 130,677 15,604 115,073 737.5%
Current portion of long term debt 5,496 6,393 (897) (14.0%)
Other current liabilities 292,810 14,572 278,238 1,909.4%
- -----------------------------------------------------------------------------------------------------
Total current liabilities 1,853,282 256,265 1,597,017 623.2%
Long term debt 5,018,544 1,066,093 3,952,451 370.7%
Deferred revenue 381,687 25,325 356,362 1,407.2%
Deferred credits and other 833,706 34,174 799,532 2,339.6%
- -----------------------------------------------------------------------------------------------------
Total liabilities 8,087,219 1,381,857 6,705,362 485.2%
- -----------------------------------------------------------------------------------------------------
MINORITY INTEREST 351,338 - 351,338 100.0%
PREFERRED STOCK 2,084,697 483,000 1,601,697 331.6%
SHAREHOLDERS' EQUITY:
Common stock 7,992 4,328 3,664 84.7%
Treasury stock (209,415) (209,415) - 0.0%
Other shareholders' equity 9,578,927 1,067,470 8,511,457 797.3%
Accumulated deficit (158,989) (88,063) (70,926) (80.5%)
- -----------------------------------------------------------------------------------------------------
9,218,515 774,320 8,444,195 1,090.5%
- -----------------------------------------------------------------------------------------------------
Total liabilities and $19,741,769 $2,639,17 $17,102,592 648.0%
shareholders' equity
- -----------------------------------------------------------------------------------------------------
</TABLE>
(As of December 31, 1999, includes Global Crossing, Frontier,
Global Marine Systems and Racal Telecom.)
<PAGE>
- 22 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
------------------------ --------------------
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $1,113,401 $1,052,350 $61,051 5.8%
EXPENSES:
Operating, selling, general and
administrative 976,043 784,307 (191,736) (24.5%)
Stock related expense 12,697 6,316 (6,381) (101.0%)
Depreciation and amortization 114,189 71,155 (43,034) (60.5%)
Goodwill amortization 126,732 126,732 - 0.0%
- ----------------------------------------------------------------------------------------------
1,229,661 988,510 (241,151) (24.4%)
- ----------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (116,260) 63,840 (180,100) (282.1%)
Equity in income (loss) of affiliates 12,190 (7,193) 19,383 269.5%
Minority interest (1,338) - (1,338) (100.0%)
Other income (expense):
Interest income 22,512 20,248 2,264 11.2%
Interest expense (76,859) (80,411) 3,552 4.4%
Other income, net (35,213) 5,048 (40,261) (797.6%)
- ----------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAXES AND EXTRAORDINARY ITEM (194,968) 1,532 (196,500) (12,826.4%)
Provision for income taxes (8,778) (40,150) 31,372 78.1%
- ----------------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY ITEM (203,746) (38,618) (165,128) (427.6%)
Preferred stock dividends (31,734) (10,750) (20,984) (195.2%)
- ----------------------------------------------------------------------------------------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS BEFORE $(235,480) $(49,368) $(186,112) (377.0%)
EXTRAORDINARY ITEM
- ----------------------------------------------------------------------------------------------
LOSS PER COMMON SHARE:
Loss applicable to common shareholders
before extraordinary items
Basic and diluted $ (0.30) $ (0.06) $ (0.24) (400.0%)
Shares used in computing loss per share
Basic and diluted 772,929,855 759,943,214 12,986,641 1.7%
- ----------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 23 -
FGLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1999 and 1998 (Continued)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
------------------------- -----------------------
1999 1998 Amount Percent
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RECURRING INCOME (LOSS):
Loss applicable to common shareholders $(235,480) $(49,368) $(186,112) (377.0%)
before extraordinary item
Merger-related expenses 16,700 - 16,700 100.0%
Other income, net 35,213 (5,048) 40,261 797.6%
- -------------------------------------------------------------------------------------------------
RECURRING LOSS APPLICABLE TO COMMON
SHAREHOLDERS BEFORE EXTRAORDINARY ITEM (183,567) (54,416) (129,151) (237.3%)
- -------------------------------------------------------------------------------------------------
Goodwill amortization 126,732 126,732 - 0.0%
- -------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS BEFORE EXTRAORDINARY ITEM AND
GOODWILL AMORTIZATION $(56,835) $ 72,316 $(129,151) (178.6%)
- -------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) PER COMMON SHARE:
Recurring loss applicable to common
shareholders before extraordinary item
Basic and diluted $ (0.24) $ (0.07) $ (0.17) (242.9%)
Recurring loss applicable to common
shareholders before extraordinary item and
goodwill amortization
Basic and diluted $ (0.07) $ 0.10 $ (0.17) (170.0%)
Shares used in computing income (loss) per
share
Basic and diluted 772,929,855 759,943,214 12,986,641 1.7%
- -------------------------------------------------------------------------------------------------
ADJUSTED EBITDA AND RECURRING ADJUSTED EBITDA:
Operating income (loss) $(116,260) $ 63,840 $(180,100) (282.1)%
Goodwill amortization 126,732 126,732 - 0.0%
Depreciation and amortization 114,189 71,155 43,034 60.5%
Stock related expense 12,697 6,316 6,381 101.0%
Non-cash cost of capacity sold 111,175 67,032 44,143 65.9%
Incremental cash deferred revenue 78,460 28,295 50,165 177.3%
- -------------------------------------------------------------------------------------------------
ADJUSTED EBITDA 326,993 363,370 (36,377) (10.0%)
- -------------------------------------------------------------------------------------------------
Merger-related expenses 16,700 - 16,700 100.0%
- -------------------------------------------------------------------------------------------------
RECURRING ADJUSTED EBITDA $343,693 $363,370 $(19,677) (5.4%)
- -------------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 24 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA BUSINESS SEGMENT INFORMATION
For the Three Months Ended December 31, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Three Months Ended
December 31, Change
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES:
REVENUE:
Commercial $321,630 $ 318,436 $ 3,194 1.0%
Consumer 46,661 53,128 (6,467) (12.2%)
Carrier 483,270 385,781 97,489 25.3%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 851,561 757,345 94,216 12.4%
- ----------------------------------------------------------------------------------------------------
OPERATING LOSS (150,785) (8,724) (142,061) (1,628.4%)
ADJUSTED EBITDA 228,547 244,451 (15,904) (6.5%)
- ----------------------------------------------------------------------------------------------------
INSTALLATION AND MAINTENANCE SERVICES:
REVENUE:
Maintenance 36,539 31,384 5,155 16.4%
Installation 39,380 81,512 (42,132) (51.7%)
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 75,919 112,896 (36,977) (32.8%)
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) (2,754) 13,052 (15,806) (121.1%)
ADJUSTED EBITDA 20,540 29,296 (8,756) (29.9%)
- ----------------------------------------------------------------------------------------------------
INCUMBENT LOCAL EXCHANGE CARRIER
SERVICES:
CONSUMER REVENUE 185,921 177,296 8,625 4.9%
OPERATING INCOME 53,979 64,330 (10,351) (16.1%)
ADJUSTED EBITDA 94,606 93,792 814 0.9%
- ----------------------------------------------------------------------------------------------------
CORPORATE AND OTHER:
OTHER REVENUE - 4,813 (4,813) (100.0%)
OPERATING LOSS (16,700) (4,818) (11,882) (246.6%)
ADJUSTED EBITDA (16,700) (4,169) (12,531) (300.6%)
RECURRING ADJUSTED EBITDA - (4,169) 4,169 100.0%
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED:
REVENUE 1,113,401 1,052,350 61,051 5.8%
OPERATING INCOME (LOSS) (116,260) 63,840 (180,100) (282.1%)
ADJUSTED EBITDA 326,993 363,370 (36,377) (10.0%)
RECURRING ADJUSTED EBITDA $343,693 $363,370 $(19,677) (5.4%)
- ----------------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 25 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Years Ended
December 31, Change
------------------------ --------------------
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $4,139,897 $3,643,521 $496,376 13.6%
EXPENSES:
Operating, selling, general and 3,433,024 2,807,671 (625,353) (22.3%)
administrative
Stock related expense 51,306 39,374 (11,932) (30.3%)
Depreciation and amortization 363,427 262,847 (100,580) (38.3%)
Goodwill amortization 506,928 506,928 - 0.0%
Termination of Advisory Services Agreement - 139,669 139,669 100.0%
- ----------------------------------------------------------------------------------------------
4,354,685 3,756,489 (598,196) (15.9%)
- ----------------------------------------------------------------------------------------------
OPERATING LOSS (214,788) (112,968) (101,820) (90.1%)
Equity in loss of affiliates (747) (21,180) 20,433 96.5%
Minority interest (1,338) - (1,338) (100.0%)
Other income (expense):
Interest income 76,528 42,877 33,651 78.5%
Interest expense (345,956) (283,984) (61,972) (21.8%)
Other income, net 178,931 23,641 155,290 656.9%
- ----------------------------------------------------------------------------------------------
LOSS BEFORE PROVISION FOR INCOME TAXES,
EXTRAORDINARY ITEM AND CUMULATIVE EFFECT IN (307,370) (351,614) 44,244 12.6%
CHANGE IN ACCOUNTING PRINCIPLE
Provision for income taxes (155,174) (123,268) (31,906) (25.9%)
- ----------------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
EFFECT IN CHANGE IN ACCOUNTING PRINCIPLE (462,544) (474,882) 12,338 2.6%
Preferred stock dividends (92,171) (38,181) (53,990) (141.4%)
- ----------------------------------------------------------------------------------------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS BEFORE
EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $(554,715) $(513,063) $(41,652) (8.1%)
- ----------------------------------------------------------------------------------------------
LOSS PER COMMON SHARE:
Loss applicable to common shareholders
before extraordinary items and cumulative
effect of change in accounting principle
Basic and diluted $ (0.72) $ (0.72) $ (0.00) 0.0%
Shares used in computing loss per share
Basic and diluted 767,355,151 708,518,640 58,836,511 8.3%
- ----------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 26 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999 and 1998 (Continued)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Years Ended
December 31, Change
--------------------------- -----------------------
1999 1998 Amount Percent
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RECURRING INCOME (LOSS):
Loss applicable to common shareholders $(554,715) $(513,063) $(41,652) (8.1%)
before extraordinary item and cumulative
effect of change in accounting principle
Termination of Advisory Service Agreements - 139,669 (139,669) (100.0%)
Merger-related expenses 99,119 - 99,119 100.0%
Other income, net (178,931) (23,641) (155,290) (656.9%)
------------------------------------------------------------------------------------------------
RECURRING LOSS APPLICABLE TO COMMON
SHAREHOLDERS BEFORE EXTRAORDINARY ITEM,
CUMULATIVE CHANGE IN ACCOUNTING PRINCIPLE 634,527) (397,035) (237,492) (59.8%)
------------------------------------------------------------------------------------------------
Goodwill amortization 506,928 506,928 - 0.0%
------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS BEFORE EXTRAORDINARY
ITEM, CUMULATIVE CHANGE IN ACCOUNTING
PRINCIPLE AND GOODWILL AMORTIZATION $(127,599) $109,893 $(237,492) (216.1%)
------------------------------------------------------------------------------------------------
RECURRING INCOME (LOSS) PER COMMON SHARE:
Recurring loss applicable to common
shareholders before extraordinary
item and cumulative change in
accounting principle
Basic and diluted $ (0.83) $ (0.56) $ (0.27) (48.2%)
Recurring income (loss) applicable to
common shareholders before extraordinary
item and cumulative change in accounting
principle and goodwill amortization
Basic and diluted $ (0.17) $ 0.16 $ (0.33) (206.3%)
Shares used in computing income (loss) per
share
Basic and diluted 767,355,151 708,518,640 58,836,511 8.3%
------------------------------------------------------------------------------------------------
ADJUSTED EBITDA AND RECURRING ADJUSTED EBITDA:
Operating loss $(214,788) $(112,968) $(101,820) (90.1%)
Goodwill amortization 506,928 506,928 - 0.0%
Depreciation and amortization 363,427 262,847 100,580 38.3%
Stock related expense 51,306 39,374 11,932 30.3%
Non-cash cost of capacity sold 291,764 140,891 150,873 107.1%
Incremental cash deferred revenue 152,007 95,228 56,779 59.6%
Termination of Advisory Service Agreements - 139,669 139,669 (100.0%)
- -------------------------------------------------------------------------------------------------
ADJUSTED EBITDA 1,150,644 1,071,969 78,675 7.3%
- -------------------------------------------------------------------------------------------------
Merger-related expenses 99,119 - 99,119 100.0%
- -------------------------------------------------------------------------------------------------
RECURRING ADJUSTED EBITDA $1,249,763 $1,071,969 $177,794 16.6%
- -------------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 27 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA BUSINESS SEGMENT INFORMATION
For the Years Ended December 31, 1999 and 1998
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Years Ended
December 31, Change
---------------------------- --------------------------
1999 1998 Amount Percent
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES:
REVENUE:
Commercial $1,274,489 $1,262,281 $ 12,208 1.0%
Consumer 187,719 239,782 (52,063) (21.7%)
Carrier 1,609,345 1,089,003 520,342 47.8%
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 3,071,553 2,591,066 480,487 18.5%
- ----------------------------------------------------------------------------------------------------
OPERATING LOSS (364,427) (231,967) (132,460) (57.1%)
ADJUSTED EBITDA 791,481 630,466 161,015 25.5%
- ----------------------------------------------------------------------------------------------------
INSTALLATION AND MAINTENANCE SERVICES:
REVENUE:
Maintenance 139,202 117,182 22,020 18.8%
Installation 194,951 204,835 (9,884) (4.8%)
- ----------------------------------------------------------------------------------------------------
TOTAL REVENUE 334,153 322,017 12,136 3.8%
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME 12,272 21,374 (9,102) (42.6%)
ADJUSTED EBITDA 85,596 84,892 704 0.8%
- ----------------------------------------------------------------------------------------------------
INCUMBENT LOCAL EXCHANGE CARRIER
SERVICES:
CONSUMER REVENUE 729,231 701,935 27,296 3.9%
OPERATING INCOME 247,441 250,760 (3,319) (1.3%)
ADJUSTED EBITDA 382,748 367,293 15,455 4.2%
- ----------------------------------------------------------------------------------------------------
CORPORATE AND OTHER:
OTHER REVENUE 4,960 28,503 (23,543) (82.6%)
OPERATING LOSS (110,074) (153,135) 43,061 28.1%
ADJUSTED EBITDA (109,181) (10,682) (98,499) (922.1%)
RECURRING ADJUSTED EBITDA (10,062) (10,682) 620 5.8%
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED:
REVENUE 4,139,897 3,643,521 496,376 13.6%
OPERATING LOSS (214,788) (112,968) (101,820) (90.1%)
ADJUSTED EBITDA 1,150,644 1,071,969 78,675 7.3%
RECURRING ADJUSTED EBITDA $1,249,763 $1,071,969 $177,794 16.6%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier, Global Marine Systems, Racal Telecom and
equity in income of the Hutchison Global Crossing
joint venture for all periods presented)
<PAGE>
- 28 -
GLOBAL CROSSING LTD. AND SUBSIDIARIES
PRO FORMA SUPPLEMENTAL INFORMATION
For the Three Months and Years Ended December 31, 1999 and 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Three Months Ended Year Ended
December 31, December 31,
---------------------------- --------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TELECOMMUNICATION SERVICES:
PRODUCT REVENUE:
Switched Voice $355,163 $353,292 $1,386,124 $1,416,088
CLEC (Local and LD) 60,171 47,151 223,021 153,109
- ----------------------------------------------------------------------------------------------------
TOTAL BUSINESS VOICE PRODUCTS: 415,334 400,443 1,609,145 1,569,197
Data 389,566 303,774 1,274,689 782,087
Consumer Long Distance 46,661 53,128 187,719 239,782
- ----------------------------------------------------------------------------------------------------
TOTAL PRODUCT REVENUE $851,561 $757,345 $3,071,553 $2,591,066
- ----------------------------------------------------------------------------------------------------
MINUTES:
Commercial 1,579,860 1,579,357 6,415,181 6,385,976
Consumer 277,378 263,741 1,026,282 1,134,519
Carrier 3,976,332 2,110,360 13,030,715 6,961,202
- ----------------------------------------------------------------------------------------------------
TOTAL MINUTES 5,833,570 3,953,458 20,472,178 14,481,697
- ----------------------------------------------------------------------------------------------------
INCUMBENT LOCAL EXCHANGE CARRIER
SERVICES:
CONSUMER ACCESS LINES
Commercial 335 327 335 327
Consumer 737 718 737 718
- ----------------------------------------------------------------------------------------------------
TOTAL ACCESS LINES 1,072 1,045 1,072 1,045
- ----------------------------------------------------------------------------------------------------
</TABLE>
(Including Global Crossing, Frontier and
Racal Telecom for all periods presented)
