Exceeds 2000 cash revenue and adjusted EBITDA estimates
Reduces capital expenditure plans and lowers cash revenue guidance for 2001
Vancouver - 360networks has announced record fourth quarter revenue in 2000 of $158 million, an increase of 26% over $125 million in the fourth quarter of 1999. Revenue for the year ended December 31, 2000 climbed to $511 million, an increase of 42% over $360 million in 1999.
Cash revenue reached $217 million in the fourth quarter of 2000 compared with $135 million in the fourth quarter of 1999. Cash revenue was $644 million for the year ended December 31, 2000 compared with $370 million in 1999.
EBITDA was $10 million in the fourth quarter of 2000, compared with $29 million in the fourth quarter of 1999 due to further investments in product development and the global sales force. EBITDA grew 6% to $92 million for the year ended December 31, 2000, compared with $87 million in 1999.
Adjusted EBITDA in the fourth quarter of 2000 climbed to $96 million, an increase of 96% over $49 million in the fourth quarter of 1999. Adjusted EBITDA rose to $255 million for the year ended December 31, 2000, an increase of 138% over $107 million in 1999. Adjusted EBITDA is EBITDA adjusted to reflect changes in deferred revenue and non-cash cost of sales.
360networks believes cash revenue and adjusted EBITDA are the most appropriate metrics to measure the performance of emerging network service providers as they track a company's success in obtaining sales contracts and delivering services to customers.
Gross profit in the fourth quarter of 2000 was $48 million (30% of revenue), compared with $39 million (31% of revenue) for the fourth quarter of 1999. Gross profit for the year totaled $186 million (36% of revenue), up from $109 million (30% of revenue) in 1999.
Selling, general and administration expenses increased to $38 million (24% of revenue) in the fourth quarter of 2000 compared to $10 million (8% of revenue) in the fourth quarter of 1999. For the year ended December 31, 2000, selling, general and administration expenses totaled $94 million (18% of revenue), compared with $22 million (6% of revenue) in 1999. 360networks' selling, general and administration expenses continue to compare favorably with expenses of industry peers.
Net loss was $155 million in the fourth quarter of 2000 (20 cents per share) and $355 million (55 cents per share) for the year ended December 31, 2000. This compares to net income of $11 million in the fourth quarter of 1999 and net income of $24 million for the year ended December 31, 1999.
"360networks had many key successes in the fourth quarter," said Greg Maffei, president and chief executive officer of 360networks. "We extended our network reach and service capabilities by entering into alliances with Alcatel to build a transpacific cable and Telseon to offer metro services, and agreeing to acquire NetRail, a Tier 1 IP service provider."
"We also appointed a COO, filled other key positions and expanded our global sales force. Most importantly, we sold network services to a growing number of industry leaders like Deutsche Telekom, Microsoft, Streaming Media, GiantLoop, PacWest and Q9. Although we are operating in a tough market, there is still strong demand for our global, scalable, portable capacity," Maffei added.
"We achieved record cash revenue, which we believe is the strongest affirmation of customer interest in our network and services," said Larry Olsen, vice-chairman and chief financial officer of 360networks. "And we continued to make great progress on completing and lighting our North American and European networks, as well as 360atlantic and 360americas, on time and under budget."
Revised 2001 financial guidance
"Despite our strong performance in the fourth quarter, we believe that revising our 2001 cash guidance is a prudent step given the current dynamics in the market, and particularly the transatlantic market," said Olsen. "We believe that no one in our sector will be insulated from this market reality."
360networks is reducing capital expenditure plans for 2001 from $3.5-4.5 billion to $3.5-4 billion as this difference reflects the success-based portion of its original capital expenditure plans.
The company is also revising financial estimates for cash revenue and adjusted EBITDA in 2001. The company previously issued guidance of $3.1-3.3 billion for 2001 cash revenue, which it is now lowering to $2.4-2.6 billion due to deferral of forward capacity purchases by major telecommunications carriers and capital constraints within the telecommunications sector. 360networks is consequently revising the estimate for adjusted EBITDA from $2.5-2.6 billion to $1.8-1.9 billion.
"With the credit facilities which are available to us, we remain fully funded to complete our current business plan," Olsen added.
360networks is maintaining its 2001 financial estimates of $650-750 million for GAAP-based revenue, and $110-160 million for EBITDA.
* Capital expenditures total $1.2 billion in the fourth quarter and $3 billion for the year ended December 31, 2000.
* 360networks announces an alliance with Alcatel to extend 360networks' global optical network. Combining their respective expertise in the development and implementation of optical networking technologies, the two companies capitalise on their strengths to accelerate the development of 360networks' seamless, optical network infrastructure.
* 360networks becomes the only company in North America to deploy the most advanced and capital-efficient fibre optic conduit and cabling system. This new system by NKF Kabel uses compressed air to jet multiple mini-ducts (containing up to 60 fibre strands) into new or previously installed conduit. The compressed air is used to install the mini-ducts quickly and efficiently over long distances.
* The company deploys the highest performance MPLS-based global IP network, using Cisco's latest MPLS (Multi-protocol Label Switching) technology. MPLS is a technology that brings the engineering capabilities of asynchronous transfer mode (ATM) to packet networks by tagging IP packets with 'labels' that specify a route and priority. By eliminating the need for routers to perform an address lookup for every packet, MPLS speeds packets to their destination with greater efficiency.
* 360networks carries out one of the world's largest deployments of the Nortel Networks OPTera Long Haul 1600 Optical Line System. This dense wave division multiplexing (DWDM) system is capable of delivering up to 1.6 terabits per second of capacity per fibre with up to 160 wavelengths at 10 gigabits per second.
* 360networks completes 34,000 kilometres (21,000 miles) of its 43,000-kilometre (26,700-mile) North American fibre optic network. The company also lights 19,000 kilometres (12,000 miles) of the network. The entire network is scheduled to enter commercial service by mid-2001.
* 360networks provides broadband services on the first seamless coast-to-coast Canadian fibre optic network. Spanning 11,500 route kilometres (7,000 miles), the network connects 13 major cities across Canada.
* 360networks and T-Cubed, the telecommunications subsidiary of Norfolk Southern Corporation, enter into an agreement to jointly install and market fibre optic network infrastructure on Norfolk Southern's eastern United States rights of way.
* 360atlantic, an 11,700-kilometre (7,300-mile) undersea cable system connecting the United States, Canada, the United Kingdom and Ireland is scheduled to enter service by the second quarter of 2001. Cable ships are currently completing the installation of the transatlantic cables. The four cable stations and related infrastructure are complete and are undergoing testing.
* 360networks completes 10,000 kilometres (6,200 miles) of its 20,200-kilometre (12,500-mile) European fibre optic network. The company also lights 6,100 kilometres (3,800 miles) of the network in the United Kingdom, France, Germany and Holland.
* 360networks completes the installation and lighting of 360americas between the United States and Brazil. This is the first fibre optic cable to provide high-speed connectivity between South America and North America. The company also lands 360americas near Caracas, Venezuela. This marks the first direct fibre optic connection between the United States and Venezuela.
* The entire 29,000-kilometre (18,000-mile) terrestrial and undersea cable system connecting the United States, Bermuda, Brazil, Argentina and Venezuela is on schedule to enter service in early 2002.
* 360networks begins development of 360pacific, a 22,700-kilometre (14,100-mile) transpacific cable that will connect the United States, Canada and Japan by mid-2002.
* 360networks agrees to acquire the use of fibre optic strands from C2C, a subsidiary of Singapore Telecommunications, on C2C's cable network. The 16,300-kilometre (10,100-mile) undersea cable system will link Japan, South Korea, Taiwan, the Philippines, Hong Kong, Singapore and mainland China. This system is anticipated to be in service in the fourth quarter of 2001.
Metropolitan network highlights
* 360networks announces plans for metro rings in more than 35 major cities worldwide by mid-2001. The company is developing these metropolitan networks in key cities of North America, Europe and South America through construction projects, as well as network capacity exchanges, purchases and leases with other telecommunications carriers.
Fourth quarter sales highlights
* 360networks announces an agreement to provide Deutsche Telekom - Europe's largest telecommunications company - with network capacity, dark fibre, network and maintenance services totaling an estimated $230 million.
* Streaming Media Corporation becomes the first company to beta test 360networks' IP transit service, which provides high-speed, high-capacity access to the Internet. SMC uses the new 360networks service to deliver high-quality streaming video and audio directly to broadband users in Los Angeles, Toronto and Vancouver.
* 360networks sells to EPIK Communications dark fibre that spans more than 6,000 kilometres (3,700 miles) on routes connecting major cities in North America.
* Backlog sales revenue totals approximately $1.4 billion.
* 360networks and GiantLoop Network Inc. announce an alliance in which 360networks will be GiantLoop's preferred provider of North American and transatlantic broadband network services.
* 360networks enters into an agreement with Telseon that will increase significantly the reach and availability of instantly scalable IP and Ethernet-based data network services in U.S. metropolitan markets. Under the agreement, 360networks will have access to Telseon's optical Ethernet services in metropolitan areas, enabling 360networks to extend its IP transit, IP transport and backbone services to its customers colocated in points of presence (POPs) on the Telseon network. Additionally, Telseon will be a preferred provider of GigE metropolitan access services to 360networks, and 360networks will be a preferred provider of dark fibre and long-haul capacity to Telseon.
* The U.S. Securities and Exchange Commission declares effective a shelf registration statement filed by 360networks regarding the potential offering of up to $3 billion of debt securities, preferred shares, subordinate voting shares and warrants.
* 360networks agrees to acquire NetRail, a Tier 1 wholesale IP service provider, in an all-stock transaction. This acquisition will accelerate 360networks' entry into the IP services market due to NetRail's established peering arrangements with all other Tier 1 Internet backbones and a talented group of IP network engineers.
* The company announces it will provide high-speed optical services to Verio, the world's largest Web hosting company, a leading Internet services provider and a subsidiary of NTT Communications, Asia's largest telecommunications company. 360networks will provide these services over the next three years on routes in North America and Europe as well as on 360atlantic.
360networks (NASDAQ: TSIX and TSE: TSX) offers network services to telecommunications and data-centric organisations. 360networks is developing one of the largest and most technologically advanced fibre optic mesh networks in the world. By mid-2002, the planned network will span 143,000 kilometres (89,000 miles) and link more than 100 major cities with terrestrial routes and undersea cable systems joining North America, Europe, South America and Asia. 360networks is also developing nearly 3.7 million square feet of network facilities. More information is available at http://www.360.net
This document may contain forward-looking statements that involve a number of risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to vary from the results, performance or achievements expressed or implied by our forward-looking statements. These factors include, but are not limited to, general economic and business conditions, both nationally and in the markets in which we operate or will operate; competition; existing government regulations and changes in, or the failure to comply with, government regulations; the loss of any significant number of customers; changes in business strategy or development plans; technological developments; the ability to attract and retain qualified personnel; our ability to access markets, design effective fibre optic routes, install cable and facilities, and obtain rights-of-way, building access rights and any required governmental authorisations, franchises and permits, all in a timely manner, at reasonable costs and on satisfactory terms and conditions and demographic change. For such statements, we claim the safe harbor for "forward looking statements" within the meaning of the Private Securities Litigation Reform of 1995.
360networks held a conference call to discuss these results on March 1. You can listen to the call on a Webcast at http://www.360.net
For more information, please contact:
Director of corporate communications
The Weber Group
0207 240 6189
Selected Income Statement Information
In millions of U.S. dollars
Three months ended December 31, 2000
Three months ended December 31, 1999
December 31, 2000
December 31, 1999
Adjusted EBITDA (1)
Selling, general and administration expenses
Provision for income taxes
Net income (loss) for the period
(1) EBITDA represents earnings before interest, taxes, depreciation, amortisation, stock-based compensation and minority interest. Adjusted EBITDA is EBITDA adjusted to reflect changes in deferred revenue and non-cash cost of sales.
Selected Balance Sheet Information
In millions of U.S. dollars
December 31, 2000
December 31, 1999
Other current assets
Other capital accounts
(2) Cash includes cash, cash equivalents and restricted cash.
All figures in U.S. dollars
Prepared in accordance with U.S. generally accepted accounting principles.
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