Broomfield, CO, April 24, 2003. Level 3 Communications, Inc. announced its first quarter 2003 results. The net income for the quarter was positive $119 million, or $0.26 basic earnings per share and $0.22 diluted earnings per share, versus previously announced projections of a net loss of $0.65 basic loss per share. Included in net income was $326 million of revenue associated with customer terminations and settlements, of which $294 million relates to a non-cash settlement with XO Communications and a $70 million gain on the sale of the company's interest in its toll road operations. These two items contributed a net gain of $396 million, or $0.88 basic earnings per share.
Consolidated revenue increased to $1.25 billion in the first quarter 2003, from $945 million in the fourth quarter 2002, primarily due to settlement revenue recognized in the quarter and the inclusion of results generated from the acquisition of substantially all of Genuity Inc.'s assets and operations, effective February 4, 2003. Consolidated EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) increased to $406 million from $118 million for the previous quarter and $51 million for the same period last year.
The significant increase from fourth quarter 2002 was primarily related to a contract settlement for transport services including dark fiber, conduit and associated services. The settlement resulted in recognition of $294 million of revenue, for which cash had been previously received and which the company had been recognizing over the expected contract term. Consolidated Adjusted EBITDA (see attached schedule of non-GAAP metrics for definitions) was $98 million in the first quarter 2003.
Communications revenue for the first quarter 2003 was $708 million, versus $273 million for the previous quarter. Total communications revenue included $667 million of communications services revenue and $41 million attributable to reciprocal compensation revenue. Included in communications services revenue was $326 million of settlement and termination revenue. For comparison purposes, communications services revenue, excluding the effect of settlement and termination revenue, was $341 million during the first quarter 2003, up from $233 million during the fourth quarter 2002, due to the Genuity transaction as well as growth in recurring revenue.
"We have made good progress on the integration of Genuity's operations into Level 3," said O'Hara. "While still early in the overall process, we remain on our anticipated integration timeline. To date, we have begun to close duplicative network capacity and facilities, combine our network operating centers, and migrate customer traffic onto the Level 3 network. In addition, we recently announced that we were exiting the managed web hosting business that we acquired. After concluding that it did not adequately leverage our existing network infrastructure, we determined that managed web hosting would not be a profitable business for us over the long term."
As a result of the Genuity transaction, the company added approximately 1,800 route miles during the first quarter to its North American intercity network and began offering services in five additional North American markets: Columbus, Milwaukee, Minneapolis, Oklahoma City and Tulsa.
For more information, visit www.level3.com .