Broomfield, CO, October 24, 2003. Level 3 Communications, Inc. has announced its third quarter results. Consolidated free cash flow increased to positive $40 million for the third quarter compared to negative $34 million for the second quarter. Consolidated revenue was $874 million for the third quarter compared to a projection of $865 million to $900 million. The net loss for the third quarter was $0.38 per share, or $247 million.
As a result of the company's pending sale of the Midwest Fiber Optic Network, a non-core network asset acquired in the Genuity transaction, those operating results are included in discontinued operations. Consolidated EBITDA was $116 million in the third quarter versus $111 million for the previous quarter and compared to a projection of $97 million to $102 million.
"I am pleased with our cash flow performance this quarter and think it is noteworthy that Level 3 turned free cash flow positive for the first time this quarter," said James Q. Crowe, CEO of Level 3. "In addition, given our recent overall reductions in debt and capital markets activities, we have further strengthened our financial position and credit profile."
The company reports financial information based on three operating segments: communications; information services; and other, which consists primarily of coal mining operations.
During the third quarter, unlevered cash flow was $144 million, versus $62 million for the second quarter. For the nine months ended September 30, 2003, unlevered cash flow was $180 million. Consolidated free cash flow for the third quarter was positive $40 million, versus negative $34 million for the previous quarter.
As of September 30, 2003, the company had cash and cash equivalents of approximately $1.7 billion, which included $400 million of restricted cash held as security under the company's senior secured credit facility and excluded the issuance of $500 million aggregate principal amount of 10.75% Senior Notes due 2011 and the repayment of the company's senior secured credit facility which occurred on October 1, 2003.
"Of significance this quarter is that the company achieved positive consolidated free cash flow for the first time," said Sunit Patel, CFO of Level 3. "The improvement in our cash flow during the quarter is a result of our ongoing efforts to manage expenses and capital expenditures, as well as better than expected working capital performance. While we expect some quarter over quarter volatility in cash flow as a result of working capital changes and the timing of cash interest payments, we expect the positive trend seen over the past several quarters to continue."
Communications revenue for the third quarter was $413 million, versus $430 million for the previous quarter. Total communications revenue for the third quarter consisted of $388 million of communications services revenue and $25 million of reciprocal compensation revenue.
Included in communications services revenue was $10 million and $7 million of settlement and termination revenue for the third and second quarters respectively. Communications services revenue, excluding settlement and termination revenue, decreased by $7 million in the third quarter compared to the previous quarter, primarily due to declines in IP and softswitch revenue partially offset by an increase in transport and infrastructure revenue.
During the quarter, the company announced new agreements with several customers including Hughes Network Systems and SBC. Additionally, Level 3 announced that Sony Electronics had successfully transferred digital video segments over the Level 3 network using the company's new (3)FlexSM Ethernet service.