Hosting Customers and Operations to be Served by Computer Sciences Corporation
BROOMFIELD, Colo., April 4, 2003 – Level 3 Communications, Inc. (Nasdaq:LVLT) announced today that it will exit the managed hosting portion of the business it acquired through its recent transaction with Genuity, Inc.
Level 3 has signed an agreement under which its hosting customers and operations will be served by Computer Sciences Corporation (NYSE:CSC) of El Segundo, California.
CSC will assume certain lease obligations for data centers in Chantilly, Va., and Cambridge, Mass., and service Level 3’s managed hosting customers. As part of the transaction, CSC will also use Level 3’s network services to serve hosting customers. CSC expects to offer employment to approximately 125 of Level 3’s hosting employees. Level 3 and CSC expect the transaction to close by the end of the second quarter of 2003.
Level 3 acquired the managed hosting business as part of its larger transaction with Genuity, Inc., earlier this year. Hosting operations were expected to generate revenues of approximately $40 million, and EBITDA of negative $5 million, for the full year 2003. Hosting operations serve about 2 percent of the approximately 5,000 customer contracts acquired by Level 3 through the Genuity transaction.
“Hosting was not profitable for us, and as a result the agreement we are announcing today will improve Level 3’s cash flow,” said Jack Waters, group vice president of managed services and chief technology officer for Level 3. “Genuity’s hosting operations lack sufficient scale on a stand-alone basis to achieve profitability in an appropriate time frame. Additionally, hosting does not fully leverage the investment we have made in our network infrastructure. Consequently, we sought a partner like CSC that already has the scale required to make this line of business profitable and, importantly, the expertise to ensure a smooth transition for customers.
“Having analyzed all the Genuity lines of business, we believe it makes sense for us to support those Genuity services that do leverage the inherent efficiency and operational capabilities of the Level 3 network; including dedicated Internet access, remote dial access, virtual private networks, and security services.”
About CSC
Founded in 1959, Computer Sciences Corporation is one of the world’s leading information technology (IT) services companies. CSC’s mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.
With approximately 90,000 employees, including more than 26,000 from the company’s March 7, 2003 acquisition of DynCorp, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC’s own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $11.3 billion for the 12 months ended Dec. 27, 2002. For more information, visit the company’s Web site at www.csc.com.
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.
