XO Records Impairment Charge in Results

XO Communications Inc. on Friday reported an annual net loss of $405.6 million on revenue of $1.3 billion.

The Reston, Va., national telecommunications carrier said revenue of $369.4 million in the fourth quarter rose 42 percent over the period a year ago, but XO recorded a quarterly loss of $271.4 million.

The loss was due partly to a goodwill impairment charge, which XO said was necessary under accounting standards. XO said its market value in the fourth quarter was less than the fair value of its net assets.

XO revealed in a filing with the Securities and Exchange Commission it did not meet a financial covenant requiring minimum earnings before interest, taxes, depreciation and amortization last year, nor did the company expect to comply with the covenant in 2005. XO has obtained a waiver through Dec. 31.

XO also warned it may not realize all the savings it anticipated through the 2004 acquisition of Allegiance Telecom Inc., which marked one of the biggest mergers in the competitive wireline industry.

If we have not estimated the potential synergies correctly, or if we are not able to integrate the Allegiance assets into our network infrastructure effectively, we may not realize any further network synergies in connection with the acquisition of the Allegiance assets, or such synergies may take longer to realize, the company stated in a filing with the SEC.

XO is among a group of six carriers that have united to oppose pending mergers that would end the independence of AT&T Corp. and MCI Inc. and allow the regional phone companies, SBC Communications Inc. and Verizon Communications Inc., to grow even larger.

Shares of XO closed Friday at $2.77 on the OTC Bulletin Board.

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