Global Telecom & Technology Reports Fourth Quarter and Year End 2007 Results

Quarterly Revenue Grows 14.7 Percent to $15.5 Million Positive Adjusted EBITDA Increases to $235 Thousand in Fourth Quarter Liquidity Strengthened By Completed Balance Sheet Restructuring and New $2 Million Credit Facility


MCLEAN, Va.--(BUSINESS WIRE)--Global Telecom & Technology, Inc. (“GTT”), (OTCBB:GTLT - News), a global Multi-Network Operator (MNO), today announced results for the fourth quarter and year ended December 31, 2007.
Quarterly revenue grew to $15.5 million, a 14.7 percent increase compared to fourth quarter 2006 non-GAAP combined revenue of $13.5 million, and a 5.3 percent increase over third quarter 2007. Annual revenue grew 10.7 percent to $57.6 million compared to non-GAAP combined revenue of $52.0 million in 2006
Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) for the fourth quarter increased to $235 thousand compared to $157 thousand in the third quarter of 2007 – full year Adjusted EBITDA loss reduced to $(262) thousand compared to non-GAAP combined Adjusted EBITDA of $(936) thousand in 2006
Company completed balance sheet restructuring by raising almost $2 million in additional financing while reducing overall debt by $1.1 million and extending maturities to 2010
New $2 million credit facility agreement with Silicon Valley Bank signed in March 2008
Net income of $1.5 million recorded in the fourth quarter due to the gain on debt restructuring and full year tax benefit of the 2007 net loss
“ We spent the second half of 2007 focusing on customer acquisition and providing exceptional operational and support services to our customers,” said Richard D. Calder, Jr., president and CEO, GTT. “Our fourth quarter results demonstrate our ability to successfully execute on our strategy and grow our business profitably. GTT is well positioned as a leading provider of global network solutions for enterprises and service providers around the world.

“During the fourth quarter we focused on fundamentals. We grew revenue and grew positive Adjusted EBITDA. This progress and a relentless focus on execution have put us on a path to grow profitably going forward.”

Kevin J. Welch, chief financial officer, GTT, added, “Over the past several months we have significantly strengthened our balance sheet. While issuing new debt that provided nearly $2 million in additional liquidity, we were able to lower our total debt balance by $1.1 million through the conversion of debt to equity. We also restructured our existing debt and extended our nearest maturity to December 2010. As a result of these transactions, and in particular our ability to issue equity at a premium to market, we reported positive net income for the quarter. More importantly, the transactions have enabled us to establish a new $2 million credit facility with Silicon Valley Bank, even with the current tight credit market environment. These timely achievements have enhanced GTT’s capital structure and liquidity profile in support of our future growth initiatives.”

Concluding, Mr. Calder commented on GTT’s outlook for 2008. “In 2008 our plan is to continue the momentum generated in the second half of 2007. We plan to have strong revenue growth, maintain gross margins, reduce selling, general and administrative expenses as a percentage of overall revenue, and grow positive Adjusted EBITDA.”


Notes: Prior to its acquisitions of Global Internetworking, Inc. ("GII") and European Telecommunications & Technology Limited ("ETT") in October 2006 (the "Acquisitions"), GTT had no material business or operations. In order to provide investors with useful comparative information regarding GTT's results of operations for the periods presented, GTT is presenting (a) its results of operations prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") for the periods ended 2007 and (b) non-GAAP combined results of operations, for the periods ended 2006, derived from the arithmetic combination of the results of GTT, GII and ETT. For further information and explanation, please see "Annex A: Non-GAAP Financial Information--Non-GAAP Combined Financial Information."

(a) Reflects the arithmetic combination of the revenues and other operating results of GTT, GII and ETT for the three months and twelve months ended December 31, 2006. See "Annex A: Non-GAAP Financial Information--Non-GAAP Combined Financial Information" for more information regarding the computation of these revenues. See the tables attached to this press release for more information regarding the revenues and other operating results, computed under U.S. GAAP, of GTT, GII and ETT for these periods.
(b) See "Annex A: Non-GAAP Financial Information--Adjusted EBITDA" for more information regarding the computation of Adjusted EBITDA.
(c) Net loss for these periods resulted from interest income generated by the trust account established to hold the net proceeds of GTT's initial public offering and the non-cash impact of the loss in derivative value of the outstanding warrants during these periods.


Fourth Quarter

Revenue for the three months ended December 31, 2007 was $15.5 million, representing a 14.7 percent increase over non-GAAP combined revenue of $13.5 million during the fourth quarter of 2006. Revenue growth was driven by increased activity with some of our largest customers as well as penetration of new accounts. Revenue for the fourth quarter of 2007 also benefited from an increased average exchange rate for the British Pound Sterling to the U.S. Dollar of 2.05 as compared to 1.92 in the fourth quarter of 2006.

For the fourth quarter of 2007, gross margin of 29.0 percent was relatively flat compared to the non-GAAP combined gross margin of 29.1 percent for the fourth quarter of 2006 and decreased slightly compared to our high of 31.1 percent in the third quarter of 2007.

Selling, General and Administrative (“SG&A”) costs, excluding non-cash compensation, were $4.2 million and decreased to 27.4 percent of revenue for the fourth quarter 2007, compared to $4.4 million or 30.0 percent of revenue in the third quarter 2007. The decrease in SG&A percentage for the third straight quarter reflects the benefits of the organizational restructuring completed during the first half of 2007.

Continuing the trend of sequential quarterly improvement, Adjusted EBITDA for the fourth quarter of 2007 increased to $235 thousand compared to $157 thousand in the third quarter of 2007. Revenue growth and the effective management of SG&A expense continued to drive the improved Adjusted EBITDA performance.

Full Year

Revenue of $57.6 million for the full-year ended December 31, 2007 increased 10.7 percent over non-GAAP combined revenue of $52.0 million in 2006. This growth in revenue was driven by the strong revenue performance during the second half of 2007 following the completion of the company’s restructuring and the determined efforts of the sales team to acquire new customers and to develop key relationships within the existing customer base. Revenue also benefited from an increased average exchange rate for the British Pound Sterling to the U.S. Dollar of 2.00 in 2007, as compared to 1.84 in 2006.

Gross margin for the full-year ended December 31, 2007 was 30.3 percent of revenue, an increase from non-GAAP combined gross margin of 29.1 percent in 2006.

For the full year 2007, SG&A expenses, excluding non-cash compensation and employee termination cost and non-recurring items, of $17.5 million increased from the non-GAAP combined amount of $16.3 million in 2006, due in part to the incremental public company costs that began following the completion of the Acquisitions. However, as a percentage of revenue, SG&A expenses, excluding non-cash compensation and employee termination cost and non-recurring items, of 30.3 percent in 2007 decreased from the non-GAAP combined 31.3 percent in 2006 as a result of the company’s revenue growth, restructuring efforts and continued management of expenses.

Balance Sheet

In March 2008, the company signed a new $2.0 million senior secured credit facility agreement with Silicon Valley Bank. The facility’s borrowing capacity is based upon company accounts receivables and cash collections, has a 364 day term and contains no restrictive financial covenants. GTT does not currently have any outstanding borrowings under the facility.

As previously announced, during the fourth quarter, GTT completed the restructuring of its debt. Of the $5.9 million in principal and $0.5 million in accrued interest due on the company’s previously-issued promissory notes with an April 2008 maturity date, $3.5 million was converted into common stock at $1.37 per share (for 2.6 million shares) and the remaining $2.9 million was exchanged for a convertible debt security with a maturity date of December 31, 2010. The convertible debt security carries a 10 percent interest rate and can be converted into common shares, at the holder’s option, at a conversion price of $1.70 per share. GTT has the ability to require the debt to convert to common stock if the closing price of the company’s common stock trading price is $2.64 or more for fifteen consecutive business days.

In addition, the company’s $4.0 million in notes previously due December 2008 were amended to extend the maturity date by two years to December 31, 2010. The interest rate on the debt remains at 6 percent until January 2009 when the interest rate will increase to 10 percent.

The company also issued an additional $1.9 million in convertible debt under the same terms as the convertible debt due December 2010.

In aggregate, the balance sheet restructuring activity reduced GTT’s total debt by $1.1 million, extended the nearest maturities to 2010 and significantly improved liquidity.

Conference Call Information

GTT will discuss its results on its quarterly conference call scheduled for Thursday, March 20, 2008, at 8:30 a.m. Eastern Time (5:30 a.m. PT). To hear the conference call live, interested parties may dial 1.877.741.4244 or +1.719.325.4834 and enter passcode 4132944. A simultaneous live Webcast of the call will be available over the Internet at www.gt-t.net, under the Investor Relations section of the site. A replay of the call will be available through April 20, 2008. Interested parties can access the call replay by dialing 1.888.203.1112 or +1.719.457.0820 and using the passcode 4132944. In addition, a replay of the Webcast will be available on GTT’s Web site at www.gt-t.net.



About GTT
Global Telecom & Technology, Inc. is a new type of service provider -- a Multi-Network Operator. GTT designs solutions based on its customer’s requirements, using a combination of multiple telecommunications networks and technologies. Unlike traditional network centric carriers, GTT provides best-of-breed solutions by procuring, integrating and managing components of these various networks on its customers’ behalf. GTT has taken the inherent advantages of the Multi-Network Operator approach to a new level through a combination of powerful network design and pricing tools; a global service footprint; a deep and broad set of strategic vendor relationships; and above all, an expert team committed to delivering outstanding end-to-end customer service. Headquartered in McLean, Virginia and with offices in London, Paris, Dusseldorf, and New York, GTT provides a global service footprint covering more than 70 countries, and it has more than 200 customers and in excess of 100 carrier partnerships around the world. For more information visit the GTT web site: www.gt-t.net


Forward-Looking Statement
Some of the statements made by GTT in this press release, including without limitation statements regarding GTT’s anticipated future growth and potential mergers and acquisitions activity, are forward-looking in nature. GTT intends that any forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall be covered by the safe harbor provisions for such statements contained in Section 21E of the Exchange Act. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “predicts,” “potential,” “continues” and similar expressions are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. GTT believes that these risks include, but are not limited to: GTT’s ability to develop and market new products and services that meet customer demands and generate acceptable margins; GTT’s reliance on several large customers; GTT’s ability to negotiate and enter into acceptable contract terms with its suppliers; GTT’s ability to attract and retain qualified management and other personnel; failure of the third-party communications networks on which GTT depends; and competition and other risks associated with the communications sector in general and the multi-network operator sector in particular. Additional information concerning these and other important factors can be found under the heading “Risk Factors” in GTT’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission in November 2006, and in GTT’s other annual and quarterly reports filed from time to time with the Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors.


Media Inquiries:
JD Darby
+1.703.442.5530
jd.darby@gt-t.net


Investor Inquiries:
Mike Bauer
+1.703.442.5503
mike.bauer@gt-t.net