Level 3 Signs Agreement To Sell (i)Structure Subsidiary
For $81.5 Million
Deal
Expected To Close Fourth Quarter 2005
BROOMFIELD, Colo., October
25, 2005 - Level 3 Communications,
Inc., (Nasdaq:LVLT) today announced that a wholly
owned subsidiary has signed a definitive agreement
to sell (i)Structure, LLC, Level 3's wholly owned
IT infrastructure management outsourcing subsidiary,
to Infocrossing, Inc. (Nasdaq: IFOX), a provider of
selective IT outsourcing and business process outsourcing
solutions.
Under
the terms of the agreement, Level 3 expects to receive
total consideration of $81.5 million, including $1.5
million of Infocrossing common stock, plus reimbursement
of capital expenditures made prior to the closing
date for certain recently signed customer contracts,
an amount that will not exceed $10 million. The purchase
price is subject to a customary working capital and
certain other post-closing adjustments. Infocrossing
intends to utilize a combination of cash on hand and
the proceeds from certain financings to pay for the
acquisition. The sale is subject to regulatory approval
as well as certain other customary closing conditions,
and is expected to close in the fourth quarter of
2005.
(i)Structure
generated approximately $35 million of revenue and
$5 million of Adjusted OIBDA(1) for the six months
ended June 30, 2005.
“We are
pleased that we have reached this agreement with Infocrossing,
and believe both companies and their customers will
benefit,” said Charles C. Miller III, Level 3’s chairman,
Information Services Group. “Both companies bring
IT outsourcing leadership, institutional excellence
and a dedication to customer satisfaction to the industry.
While we have been pleased with the performance of
the (i)Structure subsidiary, the operation is not
a core business for Level 3. Because of the strong
fit with Infocrossing, we believe this combination
makes a lot of sense for both companies.”
“We’re
pleased with the prospect of joining forces with Infocrossing,”
said Michael D. Jones, president and chief executive
officer of (i)Structure. “We believe this transaction
will bring valuable resources, reach and depth to
both companies, and benefit our customers.”
As a result
of the announcement of this transaction, Level 3 is
evaluating the proposed initial public offering of
its wholly owned subsidiary, Technology Spectrum,
Inc., in connection with which it filed a registration
statement on Form S-1 with the Securities and Exchange
Commission in the second quarter of 2005.
About
Level 3 Communications
Level
3 (Nasdaq:LVLT) is an international communications
and information services company. The company operates
one of the largest Internet backbones in the world,
is one of the largest providers of wholesale dial-up
service to ISPs in North America and is the primary
provider of Internet connectivity for millions of
broadband subscribers, through its cable and DSL partners.
The company offers a wide range of communications
services over its 23,000-mile broadband fiber optic
network including Internet Protocol (IP) services,
broadband transport and infrastructure services, colocation
services, and patented softswitch managed modem and
voice services. Its Web address is www.Level3.com.
The company offers information services through its
subsidiaries, Software Spectrum and (i)Structure.
For additional information, visit their respective
Web sites at at www.softwarespectrum.com
and
www.i-structure.com.
The Level 3 logo is a registered
service mark of Level 3 Communications, Inc. in the
United States and/or other countries.
Forward-Looking Statement
Some of the statements made by Level
3 in this press release are forward-looking in nature.
Actual results may differ materially from those projected
in forward-looking statements. Level 3 believes that
its primary risk factors include, but are not limited
to: developing new products and services that meet
customer demands and generate acceptable margins;
increasing the volume of traffic on Level 3's network;
overcoming the softness in the economy given its disproportionate
effect on the telecommunications industry; integrating
strategic acquisitions; attracting and retaining qualified
management and other personnel; successfully completing
commercial testing of new technology and information
systems to support new products and services, including
voice transmission services; ability to meet all of
the terms and conditions of our debt obligations;
overcoming Software Spectrum's reliance on financial
incentives, volume discounts and marketing funds from
software publishers; reducing downward pressure of
Software Spectrum's margins as a result of the use
of volume licensing and maintenance agreements; and
reducing rate of price compression on certain of the
Company’s existing transport and IP services.
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 release should be evaluated in
light of these important factors.
1) Non-GAAP Metrics
Pursuant to Regulation G, the company is hereby providing
a reconciliation of (i)Structure’s non-GAAP
financial metric to the most directly comparable GAAP
measure.
(i)Structure Adjusted OIBDA
is defined as operating income from the statement
of operations, plus depreciation and amortization
plus non-cash impairment charges plus non-cash stock
compensation expense.
(i)Structure Adjusted
OIBDA
Six Months Ended June 30, 2005 ($ in millions) |
(i)Structure |
| Net Earnings/(Loss) |
($1) |
| Plus Other (Income)/Expense |
$-- |
| Operating Income/(Loss) |
($1) |
| Plus Depreciation and Amortization
Expense |
$5 |
Plus Non-Cash Stock Compensation
Expense |
$1 |
| (i)Structure Adjusted OIBDA |
$5 |
