360networks Shares Bad News

Gross loss was $168M for the first nine months of 2001, compared with a gross profit of $138M for the same period in 2000

December 3, 2001

3 Min Read

VANCOUVER -- 360networks, a fiber optic network services provider that is restructuring under creditor protection in Canada and the United States, today announced its financial results for the periods ended September 30, 2001.

Revenue for the first nine months of 2001 was $48 million, compared with $353 million for the same period in 2000. Revenue for the three months ended September 30, 2001 was $31 million, compared with $119 million for the same period in 2000.The decrease in revenue is a result of the renegotiation of existing contracts in the second quarter of 2001, the continued downturn in the sector and customers’ reluctance to make purchase commitments during the company’s restructuring process.Gross loss was $168 million for the first nine months of 2001, compared with a gross profit of $138 million for the same period in 2000. Gross loss was $14 million for the third quarter of 2001, compared with a gross profit of $51 million in the third quarter of 2000.Selling, general and administrative expenses were $129 million for the first nine months of 2001, compared with $56 million for the same period in 2000. The increase is due primarily to the addition of sales, product and network services personnel in late 2000 and early 2001 as the company’ s business shifted from constructing networks and selling dark fiber to providing network and other services. Sales, general and administrative expenses were $17 million for the third quarter of 2001, compared with $20 million for the same period in 2000.Earnings before interest, taxes, depreciation, amortization, stock-based compensation and minority interest (EBITDA) was a loss of $464 million for the first nine months of 2001, compared with a gain of $82 million for the same period in 2000. EBITDA for the third quarter of 2001 was a loss of $35 million, compared with a gain of $31 million in the third quarter of 2000.Net loss was $5.3 billion ($6.50 per share) for the first nine months of 2001, compared with $200 million ($0.34 per share) for the same period in 2000. The higher loss in 2001 is due primarily to an asset impairment provision, lower sales, the renegotiation of revenue contracts, bad debt allowances and reorganization costs. Net loss was $164 million ($0.22 pershare) for the third quarter of 2001, compared with $51 million ($0.06 pershare) in the third quarter of 2000.“During the restructuring period, we have revised our business plan, reduced our cash needs and accelerated our progress toward cash flow break even,” said Vanessa Wittman, chief financial officer of 360networks. “Our cash balance on November 23 exceeded $165 million, compared with our initial projected budget of less than $85 million for the companies under creditor protection.”“Working closely with our creditors and advisors, we continue to make progress on our reorganization,” Wittman noted. “We are currently negotiating with several potential acquirers and investors, and have developed a stand-alone plan that requires no additional investment. Based on these developments, we expect to make a recommendation to our key creditors by early next year.”“Given that any potential transaction or reorganization would not occur before early 2002, we intend to seek a six-month extension to the orders providing us creditor protection in Canada and the United States, which are scheduled to expire in late December. We believe our lenders will support the extension applications,” Wittman added.360networks Inc.

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