Level 3 Reports First Quarter Results and Updates Projections

Communications Cash Revenue Grows to Record $657 Million



Communications GAAP Revenue Increases 297 Percent to $385 Million

From the First Quarter 2000



Level 3 Reaffirms or Increases EBITDA, Adjusted EBITDA, and Free Cash Flow

Projections and Adjusts Revenue Forecast



North American Intercity Network Now Operational



Apr 18, 2001, 01:00 ET from Level 3 Communications, Inc.

    BROOMFIELD, Colo., April 18 /PRNewswire/ -- Level 3 Communications, Inc.
 (Nasdaq: LVLT) today announced its first quarter 2001 results.  Communications
 cash revenue for the quarter was $657 million.  Consolidated revenue for the
 quarter was $449 million, compared with $177 million for the same period last
 year.  The net loss for the quarter was $535 million, or $1.45 per share.
 Excluding charges for stock-based compensation expenses of $77 million, net
 loss for the quarter was $1.25 per share.
     "It was another strong quarter for us," said James Q. Crowe, CEO of Level
 3.  "Our communications revenue and customer base continues to grow, and we
 are focused on making Level 3 the leading provider of broadband communications
 services.  We are carefully monitoring the macroeconomic and industry
 environments, and while we are not immune to their effects, we are taking
 steps to further strengthen our strong financial position, which remains a
 competitive advantage."
     "It is important to note that despite adjusting our projections for
 revenue, we are reaffirming our previous projections for EBITDA, Adjusted
 EBITDA and free cash flow, based on prudent management of network expenses,
 operating expenses and capital expenditures.  As a result, we continue to
 maintain a position of financial strength and a fully funded plan with an
 adequate cushion," said Crowe.
 
     First Quarter Financial Highlights
     Communications Cash Revenue and GAAP Revenue:
     Communications cash revenue for the first quarter was $657 million.
 Communications cash revenue is defined as communications revenue plus changes
 in cash deferred revenue.  Communications cash revenue reflects upfront cash
 received for dark fiber and other capacity sales that are recognized as GAAP
 revenue over the life of the contract, generally ranging from 5-20 years.
     Communications GAAP revenue for first quarter 2001 was $385 million, a
 297 percent increase over the same period last year.  The increase was a
 result of growth in both existing customers as well as new customer contracts.
     Included in total communications revenue was $193 million of services
 revenue, plus $155 million of non-recurring revenue from dark fiber sales, and
 $37 million attributable to reciprocal compensation.  Excluding revenue from
 reciprocal compensation and the one-time sale of transatlantic capacity during
 the fourth quarter of 2000, quarter over quarter services revenue growth was
 approximately 12 percent.
     With the recent announcement of an agreement with BellSouth
 Telecommunications (NYSE:   BLS), the company has negotiated rates for exchange
 of local and Internet Service Provider (ISP) bound traffic in 34 states.  "Our
 reciprocal compensation agreements now cover nearly all of the areas where
 Level 3 provides local service," said Kevin O'Hara, president and chief
 operating officer of Level 3.  "These agreements provide substantial stability
 and financial predictability concerning an issue over which much of the
 industry is in turmoil.  Pursuant to the Telecommunications Act, the BellSouth
 agreement has been filed with the appropriate state commissions."
     At the end of the quarter, the company had approximately 2,975 customers
 -- an 11 percent increase in the number of customers since the end of the
 fourth quarter 2000.  Approximately 75 percent of the customer base currently
 purchases more than one Level 3 service.
 
     Other Revenue:  Other revenue of $64 million for the first quarter
 included $33 million from (i)Structure and $25 million from coal mining,
 versus (i)Structure revenue of $26 million and coal mining revenue of
 $48 million for the same period last year.
 
     Expenses
     Cost of Revenue:  Consolidated cost of revenue for first quarter 2001 was
 $268 million, representing a 106 percent increase from the first quarter 2000
 and a 14 percent decrease from the fourth quarter 2000.  Gross margin for the
 communications business was 42 percent for the quarter, up from five percent
 for the same period last year.  "Our ability to migrate customer traffic from
 leased facilities to our own network well ahead of schedule is a major reason
 why our gross margins have markedly improved," said O'Hara.
 
     Selling, General and Administrative Expenses (SG&A):  SG&A expenses for
 the quarter were $295 million, compared to $188 million for the same period
 last year.  Total SG&A was three percent higher than fourth quarter 2000,
 including a one-time charge of approximately $10 million during the first
 quarter related to the company's previously announced workforce reduction.
 
     Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
 and Adjusted EBITDA:  Consolidated EBITDA, excluding stock-based compensation
 expense, was negative $114 million for the first quarter, compared to negative
 $141 million for the same period last year.  Consolidated Adjusted EBITDA was
 positive $240 million for the first quarter.  Consolidated Adjusted EBITDA is
 defined as Consolidated EBITDA plus change in cash deferred revenue and
 excluding non-cash cost of goods sold associated with certain capacity sales
 and dark fiber contracts.  "We consider Consolidated Adjusted EBITDA to be a
 material indicator of the company's financial strength," said Sureel Choksi,
 chief financial officer of Level 3.
 
     Stock-Based Compensation Expense:  The company recognized $77 million in
 stock-based compensation expense during the quarter.  The OSO Program
 represents the principal component of the company's stock-based compensation.
 This expense is accounted for in accordance with SFAS No. 123, "Accounting For
 Stock-Based Compensation."  Level 3 expenses the value of OSOs and its other
 stock-based compensation over the respective vesting period.  This approach is
 in contrast to the current practice of most corporations under which
 conventional stock options are not accounted for as an expense on the income
 statement.
     Under Level 3's plan, OSOs are issued quarterly to all employees, with the
 value of the options indexed to the performance of the company's common stock
 relative to the performance of the Standard & Poor's 500 (S&P 500) Index.  The
 company believes that this program better aligns Level 3 employees' and
 stockholders' interests by basing stock option value on the company's ability
 to outperform the S&P 500.  Further, as the OSO awards are granted quarterly
 at the then current market price, the company believes the program continues
 to provide a significant performance incentive, even in an environment where
 the company's stock price is volatile.
 
     Depreciation and Amortization:  Depreciation and amortization expenses for
 the quarter were $239 million, a 172 percent increase over the same period
 last year.  These charges reflect the significant increase in capital spending
 to support the growth of the communications business.
 
     Capital Expenditures:  Capital expenditures for property, plant and
 equipment were $1.2 billion for the quarter, reflecting continuing buildout of
 the company's global network.
 
     Network and Operating Highlights
     North American and European Intercity Network:
     Level 3's intercity network in North America and Europe is now operational
 and the company has migrated approximately 50 percent of the customer traffic
 over to its own network from the existing leased network.
     The company lit over 4,900 miles since the beginning of the year, bringing
 the total lit miles on the North American intercity network to over 14,900,
 which represents more than 93 percent of the total miles.  A fiber network is
 considered to be "lit" when electronics are installed, thereby enabling the
 network to carry customer traffic.
     Level 3's North American intercity network consists of eight rings, all of
 which are lit and operational, with either owned or leased wavelengths.  These
 eight rings include 69 individual segments, of which 65 are currently lit and
 operational on Level 3's own network.
     "We expect to have approximately 95 percent of the customer traffic
 migrated over by the end of May," said O'Hara.  "This shows the substantial
 progress we have made since the completion of our network last quarter, and we
 continue to be ahead of our original schedule.  The benefit of this expense
 reduction is visible in our improving gross margins."
 
     New Markets and Local Fiber Networks in Service:  At the end of the first
 quarter, Level 3 offered services in 65 markets; 54 North American markets,
 nine European markets and two Asian markets.  The five new markets in service
 added during the quarter were Richmond, Charlotte, Raleigh, Pittsburgh and
 Princeton.  At the end of the first quarter, markets with Level 3 local fiber
 networks totaled 33, including 26 in the U.S. and seven in Europe.
     To date, the company has secured approximately 6.1 million square feet of
 data center, transmission and technical space around the world and has
 pre-funded the acquisition of another 400,000 square feet.  Approximately
 3.0 million square feet of this space is built out globally as of the end of
 the first quarter.  The company will continue to build out finished technical
 space in accordance with customer demand.
 
     Business Outlook
     "In light of the continuing weakness in the economy, we have conducted a
 detailed review of the company's backlog of existing business, sales and
 proposal flow, capital expenditures and operating expense projections," said
 Choksi.  "In addition, we have assessed the effects of the current condition
 of the capital markets on our existing customer backlog of revenue and on our
 order flow.  Our revised financial projections are consistent with the more
 difficult environment in which certain of our customers are operating."
 
     Revised Financial Projections
     Communications Cash and GAAP Revenue:  Communications cash revenue is
 expected to grow to approximately $2.3 to $2.4 billion in 2001 versus the
 previous estimate of $2.4 to $2.6 billion, and $3.1 to $3.3 billion in 2002
 versus the previous estimate of $3.4 to $3.6 billion.
     Level 3 expects communications GAAP revenue in 2001 of $1.4 to
 $1.5 billion, an approximate 70 percent increase from last year, down from the
 earlier projection of $1.7 billion.  Of the $1.4 to $1.5 billion,
 approximately $280 million is expected to come from non-recurring dark fiber
 sales and $135 million from reciprocal compensation.  In 2002, communications
 GAAP revenue is expected to be $2.3 to $2.5 billion, down from the previous
 estimate of $2.9 billion.
     In 2001, excluding non-recurring dark fiber sales, transport is expected
 to generate 45-50 percent of communications revenue, IP and colocation
 20-25 percent, and softswitch enabled services -- including reciprocal
 compensation -- 25-30 percent.
     As a result of reduced demand for colocation space, the company expects
 colocation revenues to be lower than previous projections.  This is partially
 offset by continued strong growth in transport services, which as a result
 increases as a percentage of the total.
     Level 3 had backlog of approximately $5.3 billion as of quarter end,
 compared to year-end 2000 backlog of $5.1 billion.  Backlog is defined as
 total communications revenue from signed contracts that have not been
 provisioned, as well as current revenue run-rate.  The company's updated
 revenue projections are based on a detailed assessment of this backlog, taking
 into account changes in customer credit quality and financial condition.
     Level 3 expects communications cash revenue for the second quarter of 2001
 of approximately $575 million and communications GAAP revenue of approximately
 $330 million.  Approximately $235 million of this revenue is expected to come
 from services revenue with the balance from reciprocal compensation and non-
 recurring dark fiber sales.  "It is important to note that recurring services
 revenue growth is expected to accelerate quarter over quarter from 12 percent
 last quarter to approximately 22 percent this coming quarter," said Choksi.
 "At the same time, total communications cash revenue and communications GAAP
 revenue are projected to decline quarter over quarter due to higher
 non-recurring dark fiber revenue during the first quarter versus the second
 quarter."
     Level 3 expects communications GAAP revenue to grow at a compounded annual
 percentage rate in the mid-50s and communications cash revenue to grow at a
 compounded annual percentage rate in the mid-40s between 2000 and 2005.
 
     Information Services and Other Revenue:  Total information services and
 other revenue estimates are unchanged at approximately $220 million for both
 2001 and 2002.
 
     Gross Margin:  The gross margin for the communications business is
 expected to increase to approximately 52 percent for 2001, two percent higher
 than previous estimates and 60 percent for 2002, five percent higher than
 previous estimates.  Consolidated gross margin is expected to be approximately
 49 percent in 2001 and 58 percent in 2002.
 
     Selling, General and Administrative Expenses (SG&A):  Consolidated SG&A
 expenses for the year 2001 are expected to be approximately 69 percent of
 total revenues and decrease to approximately 48 percent of total revenues in
 2002, versus previous projections of 65 percent and 48 percent, respectively.
 
     EBITDA and Adjusted EBITDA:  The company expects to turn consolidated
 EBITDA positive, on a run-rate basis, excluding stock-based compensation,
 during the fourth quarter 2001.  For 2001, the company expects negative EBITDA
 of approximately $330 million and $200 to $250 million of positive EBITDA in
 2002, an increase compared to previous projections.  The company expects
 Consolidated Adjusted EBITDA to be approximately $700 million for the year
 2001, at the high end of the company's previous forecast, and
 $1.0 billion to $1.1 billion for 2002, which is $250 million higher than
 previously forecasted.
 
     Earnings Per Share:  The company expects the net loss in 2001 to be
 approximately $7.25 per share, an improvement of $0.25 per share versus the
 previous projection of $7.50 per share.
 
     Capital Expenditures:  The company expects capital expenditures to be
 $3.3 to $3.4 billion in 2001 versus previous projections of $3.4 billion.
 2002 capital expenditures are expected to be $2.0 to $2.4 billion versus
 previous projections of $2.0 to $2.5 billion.  Capital expenditures estimates
 for 2001 reflect the deferral of certain capital projects, including
 construction of Ring 3 of Level 3's pan-European network, an increase in the
 cost of the North American intercity network due to environmental and
 permitting requirements, other costs as well as an expected decrease in
 success-based capital expenditures.
 
     Free Cash Flow Breakeven:  Taking into account the factors discussed in
 this press release, the company expects to achieve free cash flow breakeven in
 late 2003 versus the previous projection of free cash flow breakeven in the
 first half of 2004; and remains prefunded in accordance with its updated
 business plan.
     "Overall, this has been another strong quarter for us in a difficult
 market," said Crowe.  "We've exceeded our cash and GAAP communications revenue
 projection for the quarter, and feel comfortable with our revised forecast of
 approximately 60 to 75 percent communications revenue growth year over year.
 Moreover, we now expect to reach free cash flow breakeven earlier than
 previously announced.  We continue to analyze the market conditions, and will
 take appropriate and prudent measures to leverage our financial strength and
 competitive position."
 
     About Level 3 Communications
     Level 3 (Nasdaq: LVLT) is a global communications and information services
 company offering a wide selection of services including IP services, broadband
 transport services, colocation services, and the industry's first Softswitch
 based services.  Level 3 offers services primarily to communications intensive
 companies, which deliver their services over the Level 3 Network.  Its Web
 address is www.Level3.com.
 
     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:  substantial capital
 requirements; development of effective internal processes and systems; the
 ability to attract and retain high quality employees; changes in the overall
 economy; technology; the number and size of competitors in its markets; law
 and regulatory policy; and the mix of products and services offered in the
 company's target markets.  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.
 
 
     Attachment 1
 
                          LEVEL 3 COMMUNICATIONS, INC.
                Consolidated Condensed Statements of Operations
                                  (Unaudited)
 
                                                         Three Months Ended
                                                              March 31,
     (dollars in millions)                               2001           2000
     Revenue:
      Communications and Information Services            $418           $123
      Other                                                31             54
       Total Revenue                                      449            177
 
     Costs and Expenses:
      Cost of Revenue                                     268            130
      Depreciation and Amortization                       239             88
      Selling, General and Administrative                 295            188
      Stock-Based Compensation                             77             48
       Total Costs and Expenses                           879            454
 
     Loss from Operations                                (430)          (277)
 
     Other Expense, net                                  (105)            (3)
 
     Loss before Income Taxes                            (535)          (280)
 
     Income Tax Benefit                                    --              9
 
     Net Loss                                           $(535)         $(271)
 
     Loss per Share:
      Net Loss:
       Basic and Diluted                               $(1.45)        $(0.77)
 
     Weighted Average Shares Outstanding
      (in thousands):
       Basic and Diluted                              367,810        350,285
 
 
     Attachment 2
 
                 LEVEL 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
                     Consolidated Condensed Balance Sheets
                                  (unaudited)
 
                                                    March 31,    December 31,
     (dollars in millions)                             2001          2000
 
     Assets
 
     Current Assets
      Cash and cash equivalents                        $1,505         $1,269
      Marketable securities                             2,301          2,742
      Restricted securities                               149            202
      Accounts receivable, less allowances of
       $36 and $33, respectively                          721            617
      Income taxes receivable                              25             67
      Other                                               123            148
     Total Current Assets                               4,824          5,045
 
     Property, Plant and Equipment, net                10,179          9,383
 
     Investments                                          117            146
 
     Other Assets, net                                    336            345
                                                     $ 15,456       $ 14,919
 
     Liabilities and Stockholders' Equity
 
     Current Liabilities:
      Accounts payable                                 $1,558         $1,511
      Current portion of long-term debt                     8              7
      Accrued payroll and employee benefits                99             90
      Accrued interest                                    103            124
      Deferred revenue                                     95             68
      Other                                               158            147
     Total Current Liabilities                          2,021          1,947
 
     Long-Term Debt, less current portion               7,961          7,318
 
     Deferred Revenue                                     977            652
 
     Accrued Reclamation Costs                             94             94
 
     Other Liabilities                                    347            359
 
     Stockholders' Equity                               4,056          4,549
                                                     $ 15,456       $ 14,919
 
 
     Attachment 3
 
           Executive Officer Intended Transfers of Company Securities
 
     The company has a policy that generally requires the members of its board
 of directors and members of senior management that are "executive officers"
 for purposes of the SEC's Section 16 rules to pre-announce their intention to
 make transfers of the company's securities in the permitted period following
 each earnings release, which policy the company reviews annually.  In
 addition, this policy applies only to an intent to transfer shares not
 previously announced, and does not apply to certain transfers for estate
 planning purposes.
     The following schedule shows the individuals that have expressed a current
 intent to transfer, during the period, the maximum number of shares they
 propose to transfer and the percentage of their holdings, that the intended
 transfer amount represents.
     None of the individuals are required to dispose of shares and the listed
 individuals may choose to sell fewer, or none, of the shares described, but
 will not, when combined with shares previously preannounced but not yet
 transferred, sell more during the period.  An individual's ultimate decision
 to transfer shares of common stock will be made in compliance with applicable
 federal securities laws.
 
 
      Name and Title              No. of Shares          Percentage (1)
 
      John F. Waters, Jr.
      Group Vice President        10,000                 3%
 
 
     (1)  The percentage is derived by dividing (a) the number of shares that
          the individual may transfer plus the number of shares previously
          preannounced but not yet transferred by (b) the individual's total
          shares of the Company's common stock held and all other shares that
          may be acquired in the future through the exercise of vested options,
          including outperform stock options.
 
 

SOURCE Level 3 Communications, Inc.
    BROOMFIELD, Colo., April 18 /PRNewswire/ -- Level 3 Communications, Inc.
 (Nasdaq: LVLT) today announced its first quarter 2001 results.  Communications
 cash revenue for the quarter was $657 million.  Consolidated revenue for the
 quarter was $449 million, compared with $177 million for the same period last
 year.  The net loss for the quarter was $535 million, or $1.45 per share.
 Excluding charges for stock-based compensation expenses of $77 million, net
 loss for the quarter was $1.25 per share.
     "It was another strong quarter for us," said James Q. Crowe, CEO of Level
 3.  "Our communications revenue and customer base continues to grow, and we
 are focused on making Level 3 the leading provider of broadband communications
 services.  We are carefully monitoring the macroeconomic and industry
 environments, and while we are not immune to their effects, we are taking
 steps to further strengthen our strong financial position, which remains a
 competitive advantage."
     "It is important to note that despite adjusting our projections for
 revenue, we are reaffirming our previous projections for EBITDA, Adjusted
 EBITDA and free cash flow, based on prudent management of network expenses,
 operating expenses and capital expenditures.  As a result, we continue to
 maintain a position of financial strength and a fully funded plan with an
 adequate cushion," said Crowe.
 
     First Quarter Financial Highlights
     Communications Cash Revenue and GAAP Revenue:
     Communications cash revenue for the first quarter was $657 million.
 Communications cash revenue is defined as communications revenue plus changes
 in cash deferred revenue.  Communications cash revenue reflects upfront cash
 received for dark fiber and other capacity sales that are recognized as GAAP
 revenue over the life of the contract, generally ranging from 5-20 years.
     Communications GAAP revenue for first quarter 2001 was $385 million, a
 297 percent increase over the same period last year.  The increase was a
 result of growth in both existing customers as well as new customer contracts.
     Included in total communications revenue was $193 million of services
 revenue, plus $155 million of non-recurring revenue from dark fiber sales, and
 $37 million attributable to reciprocal compensation.  Excluding revenue from
 reciprocal compensation and the one-time sale of transatlantic capacity during
 the fourth quarter of 2000, quarter over quarter services revenue growth was
 approximately 12 percent.
     With the recent announcement of an agreement with BellSouth
 Telecommunications (NYSE:   BLS), the company has negotiated rates for exchange
 of local and Internet Service Provider (ISP) bound traffic in 34 states.  "Our
 reciprocal compensation agreements now cover nearly all of the areas where
 Level 3 provides local service," said Kevin O'Hara, president and chief
 operating officer of Level 3.  "These agreements provide substantial stability
 and financial predictability concerning an issue over which much of the
 industry is in turmoil.  Pursuant to the Telecommunications Act, the BellSouth
 agreement has been filed with the appropriate state commissions."
     At the end of the quarter, the company had approximately 2,975 customers
 -- an 11 percent increase in the number of customers since the end of the
 fourth quarter 2000.  Approximately 75 percent of the customer base currently
 purchases more than one Level 3 service.
 
     Other Revenue:  Other revenue of $64 million for the first quarter
 included $33 million from (i)Structure and $25 million from coal mining,
 versus (i)Structure revenue of $26 million and coal mining revenue of
 $48 million for the same period last year.
 
     Expenses
     Cost of Revenue:  Consolidated cost of revenue for first quarter 2001 was
 $268 million, representing a 106 percent increase from the first quarter 2000
 and a 14 percent decrease from the fourth quarter 2000.  Gross margin for the
 communications business was 42 percent for the quarter, up from five percent
 for the same period last year.  "Our ability to migrate customer traffic from
 leased facilities to our own network well ahead of schedule is a major reason
 why our gross margins have markedly improved," said O'Hara.
 
     Selling, General and Administrative Expenses (SG&A):  SG&A expenses for
 the quarter were $295 million, compared to $188 million for the same period
 last year.  Total SG&A was three percent higher than fourth quarter 2000,
 including a one-time charge of approximately $10 million during the first
 quarter related to the company's previously announced workforce reduction.
 
     Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
 and Adjusted EBITDA:  Consolidated EBITDA, excluding stock-based compensation
 expense, was negative $114 million for the first quarter, compared to negative
 $141 million for the same period last year.  Consolidated Adjusted EBITDA was
 positive $240 million for the first quarter.  Consolidated Adjusted EBITDA is
 defined as Consolidated EBITDA plus change in cash deferred revenue and
 excluding non-cash cost of goods sold associated with certain capacity sales
 and dark fiber contracts.  "We consider Consolidated Adjusted EBITDA to be a
 material indicator of the company's financial strength," said Sureel Choksi,
 chief financial officer of Level 3.
 
     Stock-Based Compensation Expense:  The company recognized $77 million in
 stock-based compensation expense during the quarter.  The OSO Program
 represents the principal component of the company's stock-based compensation.
 This expense is accounted for in accordance with SFAS No. 123, "Accounting For
 Stock-Based Compensation."  Level 3 expenses the value of OSOs and its other
 stock-based compensation over the respective vesting period.  This approach is
 in contrast to the current practice of most corporations under which
 conventional stock options are not accounted for as an expense on the income
 statement.
     Under Level 3's plan, OSOs are issued quarterly to all employees, with the
 value of the options indexed to the performance of the company's common stock
 relative to the performance of the Standard & Poor's 500 (S&P 500) Index.  The
 company believes that this program better aligns Level 3 employees' and
 stockholders' interests by basing stock option value on the company's ability
 to outperform the S&P 500.  Further, as the OSO awards are granted quarterly
 at the then current market price, the company believes the program continues
 to provide a significant performance incentive, even in an environment where
 the company's stock price is volatile.
 
     Depreciation and Amortization:  Depreciation and amortization expenses for
 the quarter were $239 million, a 172 percent increase over the same period
 last year.  These charges reflect the significant increase in capital spending
 to support the growth of the communications business.
 
     Capital Expenditures:  Capital expenditures for property, plant and
 equipment were $1.2 billion for the quarter, reflecting continuing buildout of
 the company's global network.
 
     Network and Operating Highlights
     North American and European Intercity Network:
     Level 3's intercity network in North America and Europe is now operational
 and the company has migrated approximately 50 percent of the customer traffic
 over to its own network from the existing leased network.
     The company lit over 4,900 miles since the beginning of the year, bringing
 the total lit miles on the North American intercity network to over 14,900,
 which represents more than 93 percent of the total miles.  A fiber network is
 considered to be "lit" when electronics are installed, thereby enabling the
 network to carry customer traffic.
     Level 3's North American intercity network consists of eight rings, all of
 which are lit and operational, with either owned or leased wavelengths.  These
 eight rings include 69 individual segments, of which 65 are currently lit and
 operational on Level 3's own network.
     "We expect to have approximately 95 percent of the customer traffic
 migrated over by the end of May," said O'Hara.  "This shows the substantial
 progress we have made since the completion of our network last quarter, and we
 continue to be ahead of our original schedule.  The benefit of this expense
 reduction is visible in our improving gross margins."
 
     New Markets and Local Fiber Networks in Service:  At the end of the first
 quarter, Level 3 offered services in 65 markets; 54 North American markets,
 nine European markets and two Asian markets.  The five new markets in service
 added during the quarter were Richmond, Charlotte, Raleigh, Pittsburgh and
 Princeton.  At the end of the first quarter, markets with Level 3 local fiber
 networks totaled 33, including 26 in the U.S. and seven in Europe.
     To date, the company has secured approximately 6.1 million square feet of
 data center, transmission and technical space around the world and has
 pre-funded the acquisition of another 400,000 square feet.  Approximately
 3.0 million square feet of this space is built out globally as of the end of
 the first quarter.  The company will continue to build out finished technical
 space in accordance with customer demand.
 
     Business Outlook
     "In light of the continuing weakness in the economy, we have conducted a
 detailed review of the company's backlog of existing business, sales and
 proposal flow, capital expenditures and operating expense projections," said
 Choksi.  "In addition, we have assessed the effects of the current condition
 of the capital markets on our existing customer backlog of revenue and on our
 order flow.  Our revised financial projections are consistent with the more
 difficult environment in which certain of our customers are operating."
 
     Revised Financial Projections
     Communications Cash and GAAP Revenue:  Communications cash revenue is
 expected to grow to approximately $2.3 to $2.4 billion in 2001 versus the
 previous estimate of $2.4 to $2.6 billion, and $3.1 to $3.3 billion in 2002
 versus the previous estimate of $3.4 to $3.6 billion.
     Level 3 expects communications GAAP revenue in 2001 of $1.4 to
 $1.5 billion, an approximate 70 percent increase from last year, down from the
 earlier projection of $1.7 billion.  Of the $1.4 to $1.5 billion,
 approximately $280 million is expected to come from non-recurring dark fiber
 sales and $135 million from reciprocal compensation.  In 2002, communications
 GAAP revenue is expected to be $2.3 to $2.5 billion, down from the previous
 estimate of $2.9 billion.
     In 2001, excluding non-recurring dark fiber sales, transport is expected
 to generate 45-50 percent of communications revenue, IP and colocation
 20-25 percent, and softswitch enabled services -- including reciprocal
 compensation -- 25-30 percent.
     As a result of reduced demand for colocation space, the company expects
 colocation revenues to be lower than previous projections.  This is partially
 offset by continued strong growth in transport services, which as a result
 increases as a percentage of the total.
     Level 3 had backlog of approximately $5.3 billion as of quarter end,
 compared to year-end 2000 backlog of $5.1 billion.  Backlog is defined as
 total communications revenue from signed contracts that have not been
 provisioned, as well as current revenue run-rate.  The company's updated
 revenue projections are based on a detailed assessment of this backlog, taking
 into account changes in customer credit quality and financial condition.
     Level 3 expects communications cash revenue for the second quarter of 2001
 of approximately $575 million and communications GAAP revenue of approximately
 $330 million.  Approximately $235 million of this revenue is expected to come
 from services revenue with the balance from reciprocal compensation and non-
 recurring dark fiber sales.  "It is important to note that recurring services
 revenue growth is expected to accelerate quarter over quarter from 12 percent
 last quarter to approximately 22 percent this coming quarter," said Choksi.
 "At the same time, total communications cash revenue and communications GAAP
 revenue are projected to decline quarter over quarter due to higher
 non-recurring dark fiber revenue during the first quarter versus the second
 quarter."
     Level 3 expects communications GAAP revenue to grow at a compounded annual
 percentage rate in the mid-50s and communications cash revenue to grow at a
 compounded annual percentage rate in the mid-40s between 2000 and 2005.
 
     Information Services and Other Revenue:  Total information services and
 other revenue estimates are unchanged at approximately $220 million for both
 2001 and 2002.
 
     Gross Margin:  The gross margin for the communications business is
 expected to increase to approximately 52 percent for 2001, two percent higher
 than previous estimates and 60 percent for 2002, five percent higher than
 previous estimates.  Consolidated gross margin is expected to be approximately
 49 percent in 2001 and 58 percent in 2002.
 
     Selling, General and Administrative Expenses (SG&A):  Consolidated SG&A
 expenses for the year 2001 are expected to be approximately 69 percent of
 total revenues and decrease to approximately 48 percent of total revenues in
 2002, versus previous projections of 65 percent and 48 percent, respectively.
 
     EBITDA and Adjusted EBITDA:  The company expects to turn consolidated
 EBITDA positive, on a run-rate basis, excluding stock-based compensation,
 during the fourth quarter 2001.  For 2001, the company expects negative EBITDA
 of approximately $330 million and $200 to $250 million of positive EBITDA in
 2002, an increase compared to previous projections.  The company expects
 Consolidated Adjusted EBITDA to be approximately $700 million for the year
 2001, at the high end of the company's previous forecast, and
 $1.0 billion to $1.1 billion for 2002, which is $250 million higher than
 previously forecasted.
 
     Earnings Per Share:  The company expects the net loss in 2001 to be
 approximately $7.25 per share, an improvement of $0.25 per share versus the
 previous projection of $7.50 per share.
 
     Capital Expenditures:  The company expects capital expenditures to be
 $3.3 to $3.4 billion in 2001 versus previous projections of $3.4 billion.
 2002 capital expenditures are expected to be $2.0 to $2.4 billion versus
 previous projections of $2.0 to $2.5 billion.  Capital expenditures estimates
 for 2001 reflect the deferral of certain capital projects, including
 construction of Ring 3 of Level 3's pan-European network, an increase in the
 cost of the North American intercity network due to environmental and
 permitting requirements, other costs as well as an expected decrease in
 success-based capital expenditures.
 
     Free Cash Flow Breakeven:  Taking into account the factors discussed in
 this press release, the company expects to achieve free cash flow breakeven in
 late 2003 versus the previous projection of free cash flow breakeven in the
 first half of 2004; and remains prefunded in accordance with its updated
 business plan.
     "Overall, this has been another strong quarter for us in a difficult
 market," said Crowe.  "We've exceeded our cash and GAAP communications revenue
 projection for the quarter, and feel comfortable with our revised forecast of
 approximately 60 to 75 percent communications revenue growth year over year.
 Moreover, we now expect to reach free cash flow breakeven earlier than
 previously announced.  We continue to analyze the market conditions, and will
 take appropriate and prudent measures to leverage our financial strength and
 competitive position."
 
     About Level 3 Communications
     Level 3 (Nasdaq: LVLT) is a global communications and information services
 company offering a wide selection of services including IP services, broadband
 transport services, colocation services, and the industry's first Softswitch
 based services.  Level 3 offers services primarily to communications intensive
 companies, which deliver their services over the Level 3 Network.  Its Web
 address is www.Level3.com.
 
     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:  substantial capital
 requirements; development of effective internal processes and systems; the
 ability to attract and retain high quality employees; changes in the overall
 economy; technology; the number and size of competitors in its markets; law
 and regulatory policy; and the mix of products and services offered in the
 company's target markets.  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.
 
 
     Attachment 1
 
                          LEVEL 3 COMMUNICATIONS, INC.
                Consolidated Condensed Statements of Operations
                                  (Unaudited)
 
                                                         Three Months Ended
                                                              March 31,
     (dollars in millions)                               2001           2000
     Revenue:
      Communications and Information Services            $418           $123
      Other                                                31             54
       Total Revenue                                      449            177
 
     Costs and Expenses:
      Cost of Revenue                                     268            130
      Depreciation and Amortization                       239             88
      Selling, General and Administrative                 295            188
      Stock-Based Compensation                             77             48
       Total Costs and Expenses                           879            454
 
     Loss from Operations                                (430)          (277)
 
     Other Expense, net                                  (105)            (3)
 
     Loss before Income Taxes                            (535)          (280)
 
     Income Tax Benefit                                    --              9
 
     Net Loss                                           $(535)         $(271)
 
     Loss per Share:
      Net Loss:
       Basic and Diluted                               $(1.45)        $(0.77)
 
     Weighted Average Shares Outstanding
      (in thousands):
       Basic and Diluted                              367,810        350,285
 
 
     Attachment 2
 
                 LEVEL 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
                     Consolidated Condensed Balance Sheets
                                  (unaudited)
 
                                                    March 31,    December 31,
     (dollars in millions)                             2001          2000
 
     Assets
 
     Current Assets
      Cash and cash equivalents                        $1,505         $1,269
      Marketable securities                             2,301          2,742
      Restricted securities                               149            202
      Accounts receivable, less allowances of
       $36 and $33, respectively                          721            617
      Income taxes receivable                              25             67
      Other                                               123            148
     Total Current Assets                               4,824          5,045
 
     Property, Plant and Equipment, net                10,179          9,383
 
     Investments                                          117            146
 
     Other Assets, net                                    336            345
                                                     $ 15,456       $ 14,919
 
     Liabilities and Stockholders' Equity
 
     Current Liabilities:
      Accounts payable                                 $1,558         $1,511
      Current portion of long-term debt                     8              7
      Accrued payroll and employee benefits                99             90
      Accrued interest                                    103            124
      Deferred revenue                                     95             68
      Other                                               158            147
     Total Current Liabilities                          2,021          1,947
 
     Long-Term Debt, less current portion               7,961          7,318
 
     Deferred Revenue                                     977            652
 
     Accrued Reclamation Costs                             94             94
 
     Other Liabilities                                    347            359
 
     Stockholders' Equity                               4,056          4,549
                                                     $ 15,456       $ 14,919
 
 
     Attachment 3
 
           Executive Officer Intended Transfers of Company Securities
 
     The company has a policy that generally requires the members of its board
 of directors and members of senior management that are "executive officers"
 for purposes of the SEC's Section 16 rules to pre-announce their intention to
 make transfers of the company's securities in the permitted period following
 each earnings release, which policy the company reviews annually.  In
 addition, this policy applies only to an intent to transfer shares not
 previously announced, and does not apply to certain transfers for estate
 planning purposes.
     The following schedule shows the individuals that have expressed a current
 intent to transfer, during the period, the maximum number of shares they
 propose to transfer and the percentage of their holdings, that the intended
 transfer amount represents.
     None of the individuals are required to dispose of shares and the listed
 individuals may choose to sell fewer, or none, of the shares described, but
 will not, when combined with shares previously preannounced but not yet
 transferred, sell more during the period.  An individual's ultimate decision
 to transfer shares of common stock will be made in compliance with applicable
 federal securities laws.
 
 
      Name and Title              No. of Shares          Percentage (1)
 
      John F. Waters, Jr.
      Group Vice President        10,000                 3%
 
 
     (1)  The percentage is derived by dividing (a) the number of shares that
          the individual may transfer plus the number of shares previously
          preannounced but not yet transferred by (b) the individual's total
          shares of the Company's common stock held and all other shares that
          may be acquired in the future through the exercise of vested options,
          including outperform stock options.
 
 SOURCE  Level 3 Communications, Inc.