Leading Distributor of Business Software Had 2001 Revenues
of Approximately $1.1 Billion
Acquisition Strengthens Level 3's Position in
Information Services Industry
BROOMFIELD, Colo., February 25, 2002 – Level 3 Communications, Inc. (Nasdaq:LVLT) today announced it has signed a definitive agreement to acquire CorpSoft, Inc., a major distributor, marketer and reseller of business software, which conducts its business under the name Corporate Software.
Level 3 will pay approximately $89 million in cash to acquire the equity of Corporate Software. At the time of closing, it is anticipated that Corporate Software will have debt obligations, net of cash, of approximately $50 million. The privately held company had 2001 revenues of approximately $1.1 billion. Corporate Software had 2001 EBITDA of approximately $18 million, excluding stock-based compensation expense, one-time restructuring charges and other non-recurring employee costs.
Based in Norwood, MA, Corporate Software is an industry leader in the field of software marketing, procurement and license management. It is a leading distributor of software products from Microsoft, IBM/Lotus, Novell, Sun Microsystems, Computer Associates, Symantec and 200 other software publishers, and serves more than 5,000 business customers in 128 countries. Corporate Software counts half the Fortune 500 among its existing customer base.
"This transaction affords a number of distinct advantages to Level 3," said James Q. Crowe, Level 3's chief executive officer of Level 3. "Through our (i)Structure subsidiary, Level 3 already provides a variety of information technology services to major companies operating in North America. This acquisition will enable (i)Structure to attain scale and to leverage Corporate Software's customer base, worldwide presence and IT professional relationships as it expands its portfolio of services.
"Under Level 3's ownership, Corporate Software will continue to deliver the same high-quality products and services that it currently offers the marketplace, and will leverage its new relationship with us to expand its value proposition to existing and new customers. We also believe that the nature of software distribution will evolve now that broadband communication services are widely available."
Paul Bazley, vice president of U.S. Enterprise and Partner Sales at Microsoft, said, "We are fully supportive of this transaction. Microsoft and Level 3 share a common view on the direction of the broadband and the software distribution industries, and we believe our interests are closely aligned. We value our relationships with both Corporate Software and Level 3 and look forward to working with them in the future."
Commenting further on the transaction, Crowe noted the reputation Corporate Software has built over the years. "Since 1983, Corporate Software has built a global reputation for excellence, the best evidence of which is its impressive list of multi-national customers. We want to capitalize on the knowledge and experience the team at Corporate Software has gained over almost two decades in the software, license procurement, management and distribution business."
Howard Diamond, chairman and chief executive of Corporate Software, commented on the continuing convergence of the broadband and software distribution industries. "For the past few years, the trend in software distribution has been to migrate away from physical distribution via disks or CD-ROMs toward distribution over broadband networks. We believe that the cost structure and operational capabilities of the Level 3 network will prove to be significant advantages to Corporate Software as it expands its software distribution business. Equally important, it will enable us to continue fulfilling our mission of making it exceedingly easy for customers to do business with us around the world, by enhancing our customers' ability to cost-effectively and quickly obtain software."
Corporate Software, which employs approximately 800 people worldwide, will continue to be headquartered in Norwood. The company's existing management team will remain in place after the transaction closes.
The transaction is subject to governmental clearance and customary closing conditions and is expected to close by the end of the first quarter.
Level 3 will hold an investor conference call to discuss the transaction and to provide a financial update at 11 a.m. eastern time today. The dial-in numbers are (651) 291-0900 and (612) 338-1917. Additionally, the conference call will be webcast on Level 3's website, www.Level3.com. A replay of the conference call will be available until Wednesday, February 27, 2002 at (320) 365-3844, access code 629107, as well as on Level 3's Web site, www.Level3.com.
About Corporate Software
Corporate Software is a global leader in improving the way companies acquire, implement and manage software technology. Founded in 1983, Corporate Software delivers a full-service offering that helps more than 5,000 customers in 128 countries achieve maximum return on their software investments through dedicated software licensing experts, comprehensive procurement and license management tools, and product selection consultation on business-critical software, including desktop, storage, security, infrastructure and data management. Corporate Software's industry recognition includes rankings in Software Magazine's and VARBusiness' lists of the world's foremost software and services providers. Based in Norwood, MA, Corporate Software's annual worldwide revenues exceed $1 billion. For more information, visit www.corpsoft.com.
Corporate Software is a registered trademark of CorpSoft, Inc.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
