Level 3 Communications Reports Third Quarter Results / U.S. and European Network Construction Ahead of Schedule / Continued Strong Customer Demand Across All Pr

BROOMFIELD, Colo. (PROTEXT) - Level 3 Communications, Inc.(Nasdaq: LVLT) today announced third quarter 1999 results.Consolidated revenues for the quarter were $134 million. The netloss for the quarter was $147 million, or $0.43 per share. "The third quarter was positive in several areas," said JamesQ. Crowe, president and chief executive officer of Level 3. "Wemet or exceeded all of our network infrastructure milestones, andmade particularly strong progress in the construction of ourupgradeable intercity networks. In the U.S. we completed, onaverage, over 260 miles a week during the quarter. This is morethan twice as fast, and with five times as many conduits, asother companies' reported rates." "In September, we acquired sufficient capital to substantiallyprefund our business plan through Phase 4," continued Crowe. (SeeAttachment 4 for a summary of the business plan phases.) "And,we continued to experience exceptionally strong demand for all ofour services. During the quarter our roster of customers grew by40 percent, and sales to existing customers grew significantly.We believe that these and many other indicators point to theextremely strong demand for our services created by web-basedcompanies." Third Quarter Financial Highlights Communications and Information Services Revenue:Communications and information services revenue was $69 million,an 86 percent increase over 1998 third quarter revenue of $37million. The year-over-year increase was a result of significantgrowth in the communications business. At the end of the quarter,the company was offering communications services in 26 U.S.markets and four European markets. Other Revenue: Other revenue of $65 million for the thirdquarter includes $60 million from coal mining, a 5 percentdecrease from third quarter 1998 coal mining revenue of $63million. Coal revenue is generally based on set annual shipmentsfrom long-term contracts. As previously disclosed, 1999 coalrevenue is expected to be approximately 10 percent less than 1998annual revenue due to the reduced shipments under those contractsin 1999. Expenses: Cost of Revenue: The cost of revenue for the third quarter1999 was $100 million. This represents a 113 percent increasefrom the third quarter 1998 cost of revenue of $47 million. Thisincrease was primarily due to the continued expansion of thecommunications and information services businesses. Employee Related Expenses: Selling, general and administrative(SG&A) expenses for the quarter were $139 million. Thisrepresents a 65 percent increase from the third quarter 1998 SG&Aexpenses of $84 million. The company added over 650 employees tothe communications business during the quarter. The total numberof all Level 3 employees at the end of the quarter wasapproximately 3,600. The company recognized $39 million in stock based compensationexpense during the quarter. The majority of this expense is dueto Level 3's Outperform Stock Option program (OSO). Under thisplan, OSOs are issued to all employees quarterly, with theexercise price indexed to the performance of the Standard & Poors(S&P) 500 Index. This program directly aligns management's andstockholders' interests by basing stock option value on thecompany's ability to outperform the market in general. This is anon-cash expense, accounted for in accordance with SFAS No. 123,"Accounting For Stock-Based Compensation." Depreciation and Amortization: Depreciation and amortizationexpenses for the quarter were $63 million, a 320 percent increaseover the third quarter 1998 depreciation and amortizationexpenses of $15 million. These charges reflect the significantincrease in capital spending for growth of the communicationsbusiness. Capital Expenditures: Capital expenditures for property, plantand equipment were $939 million for the quarter. The majority ofthe spending was for construction of the U.S. and Europeanintercity networks, certain local networks in both the U.S. andEurope, and the transatlantic cable network. Year-to-date 1999capital expenditures were $2.1 billion. Total capitalexpenditures for 1999 are now expected to approximate $3.0billion, versus a previous projection of $2.5 billion. Thisacceleration in spending is a result of faster than expectedcompletion of network construction. Capital Raising Transactions Prefund Phase 4 of the BusinessPlan: During September 1999, Level 3 completed two capitalacquisition transactions. The company sold through anunderwritten public offering $823 million aggregate principalamount of 6% Convertible Subordinated Notes due 2009, andcompleted the syndication of a $1.375 billion senior securedcredit facility. The net proceeds of the Convertible Noteoffering and the capital available under the senior securedcredit facility substantially prefund Phase 4 of the company'sfive-phase business plan. Operational Highlights for the Quarter U.S. and European Network Construction Substantially Ahead ofSchedule: Progress on Level 3's U.S. network proceeded rapidlyduring the quarter. Approximately 3,500 miles of the multi-conduit intercity network were completed, bringing the totalmiles completed to nearly 6,000, or 150 percent of our previouslyannounced target for the quarter. Approximately 80 percent of thecity to city connections which comprise the U.S. intercitynetwork are now simultaneously under construction. The company has installed approximately 1,400 miles of fiberoptic cable in a single conduit of the completed sections of theU.S. intercity network. The company's multi-conduit network isdesigned to allow new generations of fiber cables to be installedin the remaining empty conduits at low incremental cost. The European intercity network build is also ahead ofschedule. Over 300 miles of the planned 1,800 mile Ring 1 --which links London, Amsterdam, Frankfurt, Paris and Brussels --were completed during the quarter. Rights-of-way have beensecured for over 700 miles in Europe. The company remains onschedule to have Ring 1 completed by September of 2000. As previously announced, the company has entered into anagreement with Colt Telecom Group plc (COLT) to shareconstruction costs for their respective European network builds.The agreement calls for COLT to share construction costs of Level3's Ring 1 and for Level 3 to share the construction costs ofCOLT's planned 1,600 mile German intercity network (Ring 2). COLTis expected to report their progress on Ring 2 in early November. Communication Services Offered in 30 Cities Worldwide: The Level 3 local network rollout is proceeding as planned.The company added gateway facilities and began offering servicein five U.S. markets during the quarter -- Baltimore, Miami,Newark, Orlando and Tampa. At the end of the quarter, the companyhad operational gateways in 26 U.S. cites versus a previouslyannounced target of 25 cities. Level 3 gateways are advancedtechnical facilities, which link Level 3's network to othercommunications networks, house the company's own networkequipment and provide space for customer's colocated equipmentand facilities. In addition, Level 3 significantly expanded the total amountof secured technical space in existing markets. During thequarter, the company acquired an additional 560,000 square feetof real estate in New York City and an additional 220,000 squarefeet of real estate in London. At the end of the quarter, thecompany had secured over 3 million square feet of such technicalspace. "During our first year of operation, the demand for Level 3'scolocation services has far exceeded expectations," said KevinO'Hara, executive vice president and chief operating officer ofLevel 3. "We believe that Level 3 has constructed more colocationspace worldwide than any other company. The hundreds of web-centric companies which locate their facilities in our gatewaysrepresent a long term source of rapidly growing demand for ourservices." Multi-conduit, upgradeable local city networks becameoperational in six additional U.S. cities during the quarter --Atlanta, Baltimore, Houston, San Diego, San Jose, and Washington,D.C. Level 3 is now able to offer service over its ownfacilities-based networks in 17 U.S. cities. Construction of multi-conduit, upgradeable local city networksis currently underway in five European cities -- London, Paris,Frankfurt, Amsterdam and Brussels. The company began offeringservices over the first loop of the completed local city networkin London during the quarter. IP (Internet Protocol) Voice Development On Track: Level 3'sIP Voice Service is currently in commercial ("beta") testing.Subject to successful completion of this testing, commerciallaunch of the voice service is expected by the end of 1999. IPVoice Service is the second service that used Level 3'sSoftswitch architecture -- the same system that is uses toprovide the company's unique Managed Modem service. "The Softswitch platform is operating extremely well. OurManaged Modem service is handling about 2 million calls, or over30 million minutes a day," said O'Hara. "And we expect thisnumber to increase significantly during 2000." Softswitches are technically advanced software controlsystems, which Level 3 uses to provide customers with servicesthat combine the innovation and rapidly improving performance ofInternet Protocol based networks with the reliability andubiquity of traditional telephone networks. With its Softswitchtechnology, Level 3 is able to interconnect as a co-carrierwithout the need for a circuit switch. About Level 3 Communications Level 3 Communications, Inc., is a communications andinformation services company that is building the firstupgradeable international network optimized for Internet Protocoltechnology. The Level 3 network combines local, long distance,and undersea networks, connecting customers end-to-end across theU.S. and in Europe and Asia. The company expects to complete itsplanned network construction in phases beginning in the firstquarter of 2001. In the interim, Level 3 is offering service inthe U.S. and Europe using a combination of company ownedfacilities and leased network connections. Level 3's common stockis traded on The Nasdaq National Market (U.S.) under the symbolLVLT. Its World Wide Web address is (http://www.Level3.com). The statements made by Level 3 in this press release may beforward looking in nature. Actual results may differ materiallyfrom those projected in forward looking statements. Level 3believes that its primary risk factors include, but are notlimited to: substantial capital requirements; development ofeffective internal processes and systems; the ability to attractand retain high quality employees; changes in the overalleconomy; technology; the number and size of competitors in itsmarkets; law and regulatory policy; and the mix of products andservices offered in its target markets. Additional informationconcerning these and other potential important factors can befound within Level 3's filings with the U.S. Securities andExchange Commission. Statements in this release should beevaluated in light of these important factors.

LEVEL 3 COMMUNICATIONS, INC.

Consolidated Condensed Statements of Operations

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30, (dollars in millions)

1999

1998

1999

1998 Revenue:

Communications and Information

Services

$69 $37 $168 $102

Other

65 69 174 194

Total Revenue

134 106 342 296 Costs and Expenses:

Cost of Revenue

100 47 243 138

Depreciation and Amortization

63 15 155

31

Selling, General and

Administrative

139 84 374 176

Stock-Based Compensation

39 12

86

23

Write-off of In-Process Research

and Development

-- --

--

30

Total Costs and Expenses

341 158 858 398 Loss from Operations

(207) (52) (516) (102) Other Income (Expense), net

(13) (20)

77 (15) Loss before Income Taxes and

Discontinued Operations

(220) (72) (439) (117) Income Tax Benefit

73 23 143

28 Loss from Continuing Operations

(147) (49) (296) (89) Discontinued Operations:

Gain on Separation of

Construction Operations

-- --

-- 608

Energy, net of Income Taxes

-- --

-- 324

Income from Discontinued

Operations

-- --

-- 932 Net Earnings (Loss)

$(147) $(49)

$(296)

$843 Earnings (Loss) per Share:

Continuing Operations:

Basic and Diluted $(0.43) $(0.16) $(0.89) $(0.30)

Net Earnings (Loss):

Basic and Diluted $(0.43) $(0.16) $(0.89)

$2.81

Net Earnings (Loss) Excluding

Gain on Separation of

Construction Operations:

Basic and Diluted $(0.43) $(0.16) $(0.89)

$0.78 Weighted Average Shares

Outstanding (in thousands):

Basic and Diluted 340,298 306,515 332,039 300,151

Performance Metrics - Third Quarter 1999

In order to monitor the progress of the network build, Level3 has developed operating and construction metrics. Thesebenchmarks will be reported every quarter to help Level 3stockholders and the investment community monitor the company'sperformance and anticipate future progress. This set of benchmarks is for Phases 1 through 4, whichincludes 56 U.S. markets, a 16,000 mile U.S. intercity network,14 international city networks, and a 3,375 mile Europeanintercity network. The 3,375 mile European intercity network isbroken out between Rings 1 and 2. Because Level 3 has enteredinto an agreement with Colt Telecom plc for Ring 2, or 1,600miles, of the European intercity network, forward looking metricswill only be provided for Ring 1 which is being built by Level 3.

Definitions:

-- Markets in Service - the number of local markets whereLevel

3 has an operational Gateway facility and products offered

over leased or owned facilities.

-- Markets with Fiber Networks - the number of local markets

where Level 3 is able to offer services over ownednetworks.

-- Intercity Rights-of-Way Miles - the number of intercitymiles

where rights-of-way agreements are secured. Rights-of-way

agreements are required for Level 3 to build the intercity

network.

-- Intercity Route Miles Under Construction and Completed -the

number of intercity miles completed plus the number ofmiles

being constructed. A segment is considered to be "under

construction" when the contractor is mobilized.

-- Intercity Route Miles Completed - the number of intercity

route miles with completed conduits installed.

Construction Rollout Schedule For U.S. Network - Phases 1 through 4

1998

1999

Metric

3rd Q 4th Q 1st Q 2nd Q 3rd Q 4thQ

Actual Actual Actual Actual ActualEst.

Markets

In Service

10

17

17

21

2627

[25]

Markets with

Fiber Networks

0

0

7

11

1720

[17]

Intercity Rights-

Of-Way Miles

10,500 14,400 15,200 15,920 16,00016,000

Intercity Route

Miles Under

Construction

+ Completed

175 1,234 4,054

9,270 13,31314,000

[11,000]

Intercity Route

Miles Completed

0

410 1,355

2,495

5,9548,000

[4,000][6,500]

Construction Rollout Schedule For U.S. Network - Phases 1 through 4 Cont.

2000

2001

Metric

1st Half 2nd Half 1st Half

Est.

Est.

Est.

Markets

In Service

35

49

56

Markets with

Fiber Networks

23

26

26

Intercity Rights-

Of-Way Miles

16,000

16,000 16,000

Intercity Route

Miles Under

Construction

+ Completed

15,000

16,000 16,000

Intercity Route

Miles Completed 12,000

15,000 16,000

[9,500] [14,000]

Construction Rollout Schedule For European and Asian Networks-

Phases 1 through 4

1999

Metric

1st Q 2nd Q 3rd Q 4th Q

Actual Actual Actual Est. (1)

Markets In

Service

1

4

4

4

[5]

Markets With

Fiber Networks

0

0

1

3

Intercity Route Miles

Under Construction

& Completed

0

0

600

1700

[500]

Intercity Route

Miles Completed

0

0

308

700

[125]

Construction Rollout Schedule For European and Asian Networks-

Phases 1 through 4 Cont.

2000

2001

Metric

1st Half

2nd Half

1st Half

Est. (1)

Est.

Est.

Markets In

Service

5

9

13

[6]

Markets With

Fiber Networks

5

6

10

Intercity Route Miles

Under Construction

& Completed

1800

1800

1800

Intercity Route

Miles Completed

1600

1800

1800

(Numbers in brackets [ ] represent the previously announcedschedule.)

(1) The rollout dates for two European Gateway locations havebeen pushed back a quarter due to planned facility changes in oneGateway and a substantial expansion of the build out ofcolocation space in the second Gateway.

The Company has a policy that generally requires members ofthe Company's board of directors and members of senior managementthat are "executive officers" for purposes of the SEC's Section16 rules to pre-announce their intention to make transfers of theCompany's securities in the permitted period following eachearnings release. The following schedule shows the individualswho have expressed a current intent to transfer securities, bysale or otherwise, during the coming period, including themaximum number of shares they propose to transfer and thepercentage of their holdings that the intended transfer amountrepresents. None of the individuals are required to dispose of shares andthe listed individuals may choose to transfer fewer, or none, ofthe shares described, but will not transfer more during theperiod. An individual's ultimate decision to transfer shares ofcommon stock will be made in compliance with applicable federalsecurities laws.

Name and Title No. of Shares

Percentage of Holdings [1]

R. Douglas Bradbury

Executive Vice President

& CFO

50,000 [2]

2%

Colin V. K. Williams

Executive Vice President

20,000

5%

Michael B. Yanney

Director

5,875

5%

[1]The percentage is derived by dividing (a) the number ofshares that the individual may transfer by (b) the individual'stotal shares of the Company's common stock held and all othershares that may be acquired in the future through the exercise ofvested options that are currently exercisable.

[2]At the end of the second quarter, Mr. Bradburypreannounced his intention to transfer an aggregate of 150,000shares of Level 3 Common Stock during the third quarter, however,Mr. Bradbury transferred only an aggregate of 100,000 shares. Asa result, Mr. Bradbury is preannouncing his continued intentionto transfer the remaining 50,000 shares, which is included in thechart above. If Mr. Bradbury transfers this remaining 50,000shares, his aggregate transfers will equal 150,000.

Currently Planned Phases

Cumulative Statistics

Phase

U.S.

International U.S. Intercity International Intercity

Cities

Cities Network (miles)

Network (miles) 1

15

--

9,000

-- 2

26

5

15,800

1,750 3

26

14

15,800

3,375 4

56

14

15,800

3,375 5

56

23

15,800

4,750ots Original Text Service: Level 3 Communications, Inc. Internet:http://www.newsaktuell.de Contact: Media: Josh Howell, 720-888-2517, or Steve Ingish, 720-888-2521, Investors: Julie Stangl,720-888-2500, all of Level 3 Communications, Inc. Photo:NewsCom: http://www.newscom.com/cgi-bin/prnh/19990721/LVLTLOGOPRN Photo Desk, 888-776-6555 or 201-369-3467 Web site:http://www.level3.com

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