Action Expected To Result In Operational Savings Of
Approximately $60 Million To $70 Million Per Year
BROOMFIELD, Colo., January 12, 2005 – Level 3 Communications, Inc. (Nasdaq:LVLT) announced today that its operating subsidiaries will initiate a work force reduction of approximately 500 to 600 employees. The reduction, which is expected to result in operational savings of approximately $60 million to $70 million per year, will take place before the end of January 2005.
“We remain pleased with the volume of sales we’ve seen in recent quarters related to IP, transport, voice and other strategic services, and we continue to invest in areas where we see growing opportunities,” said James Q. Crowe, Level 3’s chief executive officer. “We expect to meet or exceed our previously issued guidance for communications revenue for the fourth quarter of 2004, and we are focused on converting new sales to revenue and on maximizing our ability to scale in response to market demand.
“In particular, contract activity for consumer-oriented Voice-over-IP services has been strong. However, as previously discussed, it is difficult to predict revenue growth in that area with certainty because it depends on sales to end users by our service provider customers.
“As such, we need to ensure our financial and organizational resources are properly allocated and aligned to take advantage of demand as it develops in consumer-oriented voice and other growth areas. In addition, we are committed to accelerating Level 3’s achievement of positive free cash flow. We believe this action is appropriate in view of these important objectives.”
Level 3 will provide additional information on its fourth quarter earnings conference call. As a result of the planned reduction, Level 3 expects to incur severance charges of approximately $20 million to $25 million in the fourth quarter of 2004 or the first quarter of 2005.
Level 3’s fourth-quarter earnings call will take place on Tuesday, February 8, 2005, at 10 a.m. Eastern time. The call will be broadcast live on Level 3’s Web site at www.Level3.com. Those unable to join the call via the Web can access the call at 651-291-0900 and can also e-mail questions to Investor.Relations@Level3.com
The call will be archived and available on the Level 3 Web site at www.Level3.com; an audio replay will also be available until 11:59 p.m. Eastern time on February 10, 2005, by dialing 320-365-3844 access code 765003. For additional information, please call 720-888-2502.
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.
