SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by Registrant X
Filed by Party other than the Registrant
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only(as permitted by Rule
14-6(e)(2)
X Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Sec. 240.14a-11(c) or 240.14a-12
Level 3 Communications, Inc.
Payment of Filing Fee (Check the appropriate box):
X No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11(Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
o Fee paid previously with preliminary materials
o Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing by registration for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[Logo]
LEVEL 3 COMMUNICATIONS, INC.
1025 Eldorado Boulevard
Broomfield, CO 80021
April 17, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Level 3 Communications, Inc. ("Level 3") to be held at 9:00 a.m. on May 22,
2000, at The Omaha Civic Auditorium Music Hall, 1804 Capitol Avenue, Omaha,
Nebraska 68102.
At the Annual Meeting you will be asked to consider and act upon the
following matters:
o the reelection to the Level 3 Board of Directors of three Class III
Directors for a three-year term until the 2003 Annual Meeting of
Stockholders; and
o the transaction of such other business as may properly come before the
Annual Meeting.
The Level 3 Board of Directors recommends that its stockholders reelect
three Class III directors for a three-year term until the 2003 Annual Meeting of
Stockholders. See "REELECTION OF CLASS III DIRECTORS PROPOSAL."
Information concerning the matters to be considered and voted upon at the
Annual Meeting is set forth in the attached Notice of Annual Meeting and Proxy
Statement. It is important that your shares be represented at the Annual
Meeting, regardless of the number you hold. Therefore, whether or not you plan
to attend the Annual Meeting, please either deliver your proxy by calling the
toll free telephone number or by accessing the Internet, as described in the
enclosed telephone and Internet voting instructions as soon as possible. In
addition to these convenient methods of voting, you can sign, date and return
your proxy card in the envelope that has been provided. This will not prevent
you from voting your shares in person if you subsequently choose to attend the
Annual Meeting. Please note that if you hold your shares of Level 3 through your
broker, you will not be able to vote in person at the meeting.
Sincerely,
/s/ Walter Scott, Jr.
Walter Scott, Jr.
Chairman of the Board
<PAGE>
[Logo]
LEVEL 3 COMMUNICATIONS, INC.
1025 Eldorado Boulevard
Broomfield, CO 80021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 22, 2000
To the Stockholders of Level 3 Communications, Inc.:
The Annual Meeting of Stockholders of Level 3 Communications, Inc., a
Delaware corporation ("Level 3"), will be held at The Omaha Civic Auditorium
Music Hall, 1804 Capitol Avenue, Omaha, Nebraska 68102 at 9:00 a.m. on May 22,
2000 for the following purposes:
1. To reelect the three class III Directors to the Board of Directors of Level
3 for a three-year term until the 2003 Annual Meeting of Stockholders; and
2. To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 31, 2000 as
the record date for the determination of the holders of the common stock, par
value $.01 per share of Level 3 (the "Level 3 Common Stock") entitled to notice
of, and to vote at, the meeting. Accordingly, only holders of record of Level 3
Common Stock at the close of business on that date will be entitled to notice of
and to vote at the Annual Meeting and any adjournment or postponement thereof.
The three class III Directors will be elected by a plurality of the votes
cast by holders of Level 3 Common Stock present in person or by proxy and
entitled to vote at the Annual Meeting.
The matters to be considered at the Annual Meeting are more fully described
in the accompanying Proxy Statement, which forms a part of this Notice.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A
POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. IN ADDITION, TO ENSURE
YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES BY A)
CALLING THE TOLL FREE TELEPHONE NUMBER OR B) ACCESSING THE INTERNET AS MORE
FULLY EXPLAINED IN THE TELEPHONE AND INTERNET VOTING INSTRUCTIONS. ANY
STOCKHOLDER ATTENDING THE ANNUAL
<PAGE>
MEETING MAY VOTE IN PERSON EVEN IF THAT STOCKHOLDER HAS RETURNED A PROXY.
PLEASE NOTE THAT IF YOU HOLD YOUR SHARES OF LEVEL 3 COMMON STOCK THROUGH
YOUR BROKER AND NOT DIRECTLY IN YOUR NAME, YOU WILL NOT BE ABLE TO VOTE IN
PERSON AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Walter Scott, Jr.
Walter Scott, Jr.
Chairman of the Board
Dated: April 17, 2000
<PAGE>
[Logo]
LEVEL 3 COMMUNICATIONS, INC.
1025 Eldorado Boulevard
Broomfield, CO 80021
Proxy Statement
April 17, 2000
ANNUAL MEETING OF STOCKHOLDERS
May 22, 2000
SOLICITATION AND VOTING
This Proxy Statement ("Proxy Statement") is furnished in connection with
the solicitation of proxies on behalf of the Board of Directors (the "Board") of
Level 3 Communications, Inc. ("Level 3" or the "Company") to be voted at the
Annual Meeting of Stockholders to be held on May 22, 2000, or any adjournment
thereof (the "Annual Meeting"). This Proxy Statement, the Notice of Annual
Meeting and the accompanying Proxy are being mailed to Stockholders on or about
April 17, 2000.
As of March 31, 2000, the record date for the determination of persons
entitled to vote at the Annual Meeting, there were 365,108,117 shares of the
Company's Common Stock, par value $.01 per share (the "Level 3 Common Stock"),
outstanding. Each share of Level 3 Common Stock is entitled to one vote on each
matter to be voted upon by the Stockholders at the Annual Meeting.
The three Class III Directors will be elected by a plurality of the votes
cast by holders of Level 3 Common Stock present in person or by proxy and
entitled to vote at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of Level 3 Common Stock entitled to vote as of the
Record Date is required to constitute a quorum at the Annual Meeting. Under
applicable Delaware law, abstentions and "broker non-votes" (that is, proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
as to a matter with respect to which the brokers or nominees do not have
discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum at the Annual Meeting. If such a quorum
should not be present, the Annual Meeting may be adjourned from time to time
until the necessary quorum is obtained.
All shares of Level 3 Common Stock represented by properly executed proxies
which are returned and not revoked will be voted in accordance with the
instructions, if any, given therein. If no instructions are provided in a proxy,
it will be voted FOR the Board's nominees for Director and in accordance with
the proxy-holders' best judgment as to any other business raised
<PAGE>
at the Annual Meeting. If you elect to deliver your proxy by telephone or the
Internet as described in the enclosed telephone and Internet voting
instructions, your shares will be voted as you direct. Your telephone or
Internet delivery authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
Any Stockholder who delivers, whether by telephone, Internet or through the
mail, a proxy may revoke it at any time before it is voted by delivering to the
Secretary of the Company a written statement revoking the proxy, by executing
and delivering a later dated proxy, by using the telephone voting procedures,
the Internet voting procedures or by voting in person at the Annual Meeting.
Level 3 will bear its own cost of solicitation of proxies. In addition to
the use of the mail, proxies may be solicited by the directors and officers of
Level 3 by personal interview, telephone, telegram or e-mail. Such directors and
officers will not receive additional compensation for such solicitation but may
be reimbursed for out-of-pocket expenses incurred in connection therewith.
Arrangements may also be made with brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of shares of Level 3 Common Stock held of record by such persons, in
which case Level 3 will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in connection
therewith.
<PAGE>
REELECTION OF CLASS III DIRECTORS PROPOSAL
The Level 3 Board of Directors currently consists of 11 directors, divided
into three classes, designated Class I, Class II and Class III. Class I and
Class II consists of four directors and Class III consists of three directors.
Class I currently has one vacancy. All three of the current Class III directors
are standing for reelection. At the Annual Meeting, these Class III Directors
will be reelected to hold office for a three-year term until the 2003 annual
meeting, or until their successors have been elected and qualified. If any
nominee shall, prior to the Annual Meeting, become unavailable for election as a
Director, the persons named in the accompanying form of proxy will, in their
discretion, vote for that nominee, if any as may be recommended by the Level 3
Board of Directors, or the Level 3 Board of Directors may reduce the number of
Directors to eliminate the vacancy.
Information as to Nominees for Election as Class III Directors
The respective ages, positions with Level 3, business experience,
directorships in other companies and Level 3 Board of Directors committee
memberships, of the nominees for election are set forth below.
R. Douglas Bradbury, 49, has been Vice Chairman of the Board of Directors
since February 2000, Executive Vice President and Chief Financial Officer of the
Company since August 1997, and a director of the Company since March 1998. Mr.
Bradbury served as Chief Financial Officer of MFS Communications Company, Inc.
("MFS") from 1992 to 1996, Senior Vice President of MFS from 1992 to 1995, and
Executive Vice President of MFS from 1995 to 1996.
Kenneth E. Stinson, 48, has been a director of the Company since January
1987. Mr. Stinson has been Chairman of the Board and Chief Executive Officer of
Peter Kiewit Sons', Inc. since the Split-off (See the Explanatory Note below).
Prior to the Split-off, Mr. Stinson was Executive Vice President of Level 3 for
more than five years prior to the Split-off. Mr. Stinson is also a director of
ConAgra, Inc. and Valmont Industries, Inc.
Michael B. Yanney, 67, has been a director of the Company since March 31,
1998. He has served as Chairman of the Board, President and Chief Executive
Officer of America First Companies L.L.C. for more than the last five years. Mr.
Yanney is also a director of Burlington Northern Santa Fe Corporation, RCN
Corporation, Forest Oil Corporation and Mid-America Apartment Communities, Inc.
The Board of Directors unanimously recommends a vote FOR the nominees named
above.
Explanatory Note
On March 31, 1998, the Company separated the operations of its construction
business from the diversified or non-construction related portion of its
business into a new corporation (the "Split-off"). In connection with the
Split-off, the Company was renamed "Level 3 Communications, Inc." and the
construction business was renamed "Peter Kiewit Sons', Inc."
<PAGE>
Information presented in this Proxy Statement relating to periods prior to
March 31, 1998, relate to information for the members of the Company's Board of
Directors and executive officers at that time.
Board of Directors' Meetings
The Level 3 Board of Directors had 6 formal meetings in 1999 and acted by
written consent action on 2 occasions. In 1999, Mr. David C. McCourt attended
slightly less than 75% of the meetings of the Board of Directors. No other
director attended less than 75% of the meetings of the Board of Directors and
the committees of which he was a member.
Executive Committee
The Executive Committee exercises, to the maximum extent permitted by law,
all powers of the Board of Directors between board meetings, except those
functions assigned to specific committees.
Audit Committee
The Audit Committee reviews the services provided by Level 3's independent
auditors, consults with the independent auditors and reviews the need for
internal auditing procedures and the adequacy of internal controls. The Company
has designated Arthur Andersen LLP as independent auditors to audit the Level 3
financial statements for the 2000 fiscal year.
Compensation Committee
The Compensation Committee determines the compensation of the Chief
Executive Officer and reviews the compensation and stock option awards of
certain other senior executives.
Compensation Committee Interlocks and Insider Participations
The Compensation Committee of the Company consists of Messrs. Michael B.
Yanney, David C. McCourt, Philip B. Fletcher (effective March 1999) and Richard
R. Jaros, none of whom is an officer or employee of the Company.
Compensation Committee Report
The Compensation Committee (the "Committee") is responsible for determining
the cash and equity compensation of James Q. Crowe, President and Chief
Executive Officer. The Committee reviews and approves the cash compensation of
certain of Level 3's other senior executives based upon the recommendations of
Mr. Crowe.
Level 3 believes that the compensation levels of its executive officers,
who provide leadership and strategic direction, should consist of: (i) fair base
salaries, (ii) significant cash bonus opportunities based on achievement of
objectives established by Level 3 and (iii) ownership of Level 3 Common Stock
and stock options to align management's interests with stockholders' interests,
targeted to provide opportunities that are comparable to other similarly
situated telecommunications and high growth technology companies.
<PAGE>
Level 3 considers the following factors (ranked in order of importance)
when determining compensation of executive officers: (i) Level 3's performance
measured by attainment of specific objectives, (ii) the individual performance
of each executive officer, (iii) Level 3's stock price performance, (iv)
comparative industry compensation levels and (v) historical cash and
compensation levels. The comparable industry compensation data is based in part
on public telecommunications companies that are included in the Nasdaq
Telecommunications Stock Index, which was chosen as the peer group for the
Performance Graph, and on the other publicly traded telecommunications and high
growth technology companies with comparable market capitalization.
Determination of the Chief Executive Officer's Compensation
For Fiscal 1999, Level 3's performance objectives included:
o offer services in a total of 27 markets in the United States, complete the
construction of Gateway facilities in a total of 25 major U.S. markets and
four major European markets and continue to expand the development of both
local networks and Level 3's proposed intercity networks;
o secure operating licenses and initiate development in Hong Kong and Tokyo;
o progress on the construction of Level 3's U.S. and European intercity
networks;
o secure 100% of the required rights-of-way for the construction of the U.S.
intercity network and substantially all of the required rights-of-way for
the European intercity network;
o accelerate the development of networks internationally in Europe and Asia;
o attract and retain experienced personnel to enable Level 3 to meet its
tactical and strategic goals;
o complete the commercial launch of softswitch based voice services; and
o continue the acquisition of sufficient capital at an acceptable cost in
order to fund the Level 3 business plan.
These goals were met in fiscal 1999. As of December 31, 1999, Level 3 was
offering services in 27 major U.S. markets and four major European markets, with
gateway facilities located in 25 major U.S. markets. Level 3 has established its
Asian headquarters in Hong Kong and secured required government licenses in both
Hong Kong and Tokyo. Peter Kiewit Sons', Inc., the program manager for the
construction of the Level 3 North American intercity network, has made
significant progress on the installation of the Level 3 U.S. intercity network,
having completed the installation of conduit along approximately 9,300 miles of
the North American intercity network. In addition, significant progress has been
made on the installation of Rings 1 and 2 of the Level 3 intercity network in
Europe, having completed the installation of conduit along approximately 2,100
miles of the European intercity network. At December 31, 1999, Level 3 had
secured 100% of the rights-of-way that are necessary to construct the North
<PAGE>
American intercity network and substantially all of the required rights-of-way
for the first two rings of the intercity network in Europe. In December 1999,
Level 3 began to carry customer traffic between Dallas and Houston on the first
completed and lit segment of the North American intercity network. During 1999,
Level 3 also announced the development of a 1.28 Tbps transatlantic submarine
cable system.
Also during 1999, Level 3 commercially launched (3)Voice, the first
Internet Protocol based long distance service, which uses softswitch technology,
in 10 markets. By the end of 1999, Level 3 had an aggregate of 3,850 employees
in the communications portion of its business. Finally, during 1999, the Company
raised approximately $2.3 billion in gross proceeds from successful common stock
and convertible subordinated note offerings.
Based on the achievement of these goals and for aggressively pursuing the
implementation of Level 3's business plan to expand its information services
business to provide a broad range of communications services over a new
end-to-end network based on Internet Protocol technology, Mr. Crowe was awarded
320,000 Outperform Stock Options in 1999. In addition, Mr. Crowe was awarded a
$1.0 million performance bonus, which was paid to him in the form of a grant of
13,594 additional Outperform Stock Options.
Equity Compensation
The Committee approves all awards made under the Level 3 1995 Stock Plan.
Periodically the Committee approves grants to existing employees and also
approves awards to new employees as an incentive to join Level 3. Awards made to
the Company's named executive officers and certain other key employees are
approved by a subcommittee of the Compensation Committee comprised of Messrs.
Fletcher and Yanney.
The Compensation Committee:
Philip B. Fletcher
Richard R. Jaros
David C. McCourt
Michael B. Yanney, Chairman
For the year ended December 31, 1999
<PAGE>
Executive Compensation
The table below shows the annual compensation of the chief executive
officer and the next four most highly compensated executive officers of the
Company for the 1999 fiscal year (the "Named Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
All Other
Compensation
Name and Principal Position Year Long Term Compensation ($)(5)
Other Securities
Annual Restricted underlying
Compensation Stock Options/SARs
Salary ($) Bonus ($) ($) award(s) (#) (#)(1)
<S> <C> <C> <C> <C> <C> <C> <C>
James Q. Crowe 1999 350,000 1,000,000(2) 1,500,000(3) -- -- 76,416
President and CEO 1998 350,012 300,000 -- -- -- 32,740
1997 144,128 -- -- -- -- --
R. Douglas Bradbury 1999 259,615 350,000 -- -- -- 142,646
Executive Vice President and 1998 249,999 250,000 62,500(3) -- -- 70,704
CFO 1997 102,564 -- -- -- 1,000,000 --
Kevin J. O'Hara 1999 259,615 400,000 -- -- -- 149,646
Executive Vice President and 1998 237,109 250,000 115,579(3) -- -- 70,704
COO 1997 82,051 -- -- -- 500,000 --
Colin V.K. Williams 1999 250,000 350,000 -- -- -- 121,700
Executive Vice President (4) 1998 76,669 120,000 -- 75,082 -- --
Michael D. Jones 1999 249,230 150,000 -- -- -- 4,800
Group Vice President and 1998 151,269 150,000 150,000(6) -- 200,000 4,800
CIO (4)
<FN>
(1) See discussion below regarding Outperform Stock Option grants.
</FN>
<FN>
(2) Approximate value at December 17, 1999. This bonus was paid to Mr. Crowe in
the form of a grant of 13,594 fully vested Outperform Stock Options, which
will expire on the fourth anniversary of the grant.
</FN>
<FN>
(3) Other Annual Compensation means perquisites and other personal benefits
received by each of the Named Executive Officers, if over $50,000. The only
reportable amounts are amounts that represent relocation allowances and the
payment of closing costs relating to the purchase of a new residence in the
Broomfield, Colorado area.
</FN>
<FN>
(4) Messrs. Williams and Jones were not employed by the Company during 1997.
</FN>
<FN>
(5) The amounts in this column represent (i) amounts of salary and bonus
forgone by the Named Executive Officers pursuant to the Level 3
Communications, Inc. 1998 Deferred Stock Purchase Plan (the "ShareWorks
Match Plan"), (ii) Level 3 matching contributions to the ShareWorks Match
Plan on behalf of the Named Executive Officers, and (iii) year-end
contributions to the accounts of the Named Executive Officers pursuant to
the Level 3 Communications, Inc. Employee Stock Bonus Plan (the "ShareWorks
Grant Plan"). These amounts are held in accounts for the Named Executive
Officers as shares or units of Level 3 Common Stock. These amounts
represent the year-end value of such accounts based on the last reported
sale price of the Level 3 Common Stock on December 31, 1998 and December
31, 1999, respectively.
</FN>
<FN>
(6) Mr. Jones received a signing bonus of $150,000, which was paid in the form
of 4,705 shares of Level 3 Common Stock.
</FN>
</TABLE>
<PAGE>
No Named Executive Officer received any stock options (see below for a
description of the grants of Outperform Stock Options to the Named Executive
Officers), stock appreciation rights ("SARs") or long-term incentive performance
("LTIP") payouts for the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
Aggregate Options/SAR Exercises and Fiscal Year End Option/SAR Value Table
Shares Number of Securities Underlying Value of Unexercised
Acquired on Value Realized Unexercised Options/SARs at In-the-money Options/SARs at
Name Exercise ($) FY-End (#) FY-End ($)(1)
Exercisable Unexerciseable Exercisable Unexerciseable
<S> <C> <C> <C> <C> <C> <C>
James Q. Crowe -- -- -- -- -- --
R. Douglas Bradbury -- -- 450,000 550,000 34,402,500 42,047,500
Kevin J. O'Hara -- -- 225,000 275,000 17,201,250 21,023,750
Colin V.K. Williams -- -- -- -- -- --
Michael D. Jones 30,000 2,058,750 170,000 -- 10,943,750 --
<FN>
(1) On December 31, 1999, the last reported sale price for the Level 3 Common
Stock as reported by The Nasdaq Stock Market was $81.875.
</FN>
</TABLE>
Outperform Stock Option Grants
Level 3 has adopted the Outperform Stock Option ("OSO") program, which
differs from long term incentive ("LTI") programs generally adopted by Level 3's
competitors that make employees eligible for conventional non-qualified stock
options ("NQSOs"). While widely adopted, Level 3 believes such NQSO programs
reward eligible employees when company stock price performance is inferior to
investments of similar risks, dilute public stockholders in a manner not
directly proportional to performance and fail to provide a preferred return on
stockholders' invested capital over the return to option holders. Level 3
believes that the OSO program is superior to an NQSO-based program with respect
to these issues while, at the same time, providing eligible employees a
success-based reward balancing the associated risk.
The OSO program was designed by Level 3 so that its stockholders receive a
market related return on their investment before OSO holders receive any return
on their options. Level 3 believes that the OSO program aligns directly
management's and stockholders' interests by basing stock option value on Level
3's ability to outperform the market in general, as measured by the S&P 500
Index. The value received for awards under the OSO plan is based on a formula
involving a multiplier related to how much Level 3 Common Stock outperforms the
S&P 500 Index. Participants in the OSO program do not realize any value from
OSOs unless the Level 3 Common Stock price outperforms the S&P 500 Index. To the
extent that the Level 3 Common Stock outperforms the S&P 500, the value of OSOs
to an option holder may exceed the value of NQSOs.
<PAGE>
The following table summarizes the grant of OSOs to the Named Executive
Officers during 1999. OSOs are granted quarterly during the year. Effective with
the grants made in September 1998, OSOs are granted on the first day of the last
month of a calendar quarter.
<TABLE>
<CAPTION>
OSO Grants in Last Fiscal Year
Total Number of OSOs at FY-End Value of Total Unexercised
Individual Grants (#)(1) In-the-money OSOs at FY-End ($)(2)
Number of OSOs
granted per Expiration
Name Quarter (#) Date Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
James Q. Crowe 80,000 3/1/2003 0 653,594 0 121,141,600
80,000 6/1/2003
80,000 9/1/2003
80,000 12/1/2003
13,594(3) 12/17/2003
R. Douglas Bradbury 33,750 3/1/2003 0 235,000 0 40,620,489
33,750 6/1/2003
33,750 9/1/2003
33,750 12/1/2003
Kevin J. O'Hara 33,750 3/1/2003 0 235,000 0 40,620,489
33,750 6/1/2003
33,750 9/1/2003
33,750 12/1/2003
Colin V.K. Williams 27,500 3/1/2003 0 192,500 0 32,300,375
30,000 6/1/2003
30,000 9/1/2003
30,000 12/1/2003
Michael D. Jones 22,500 3/1/2003 0 160,000 0 28,038,825
22,500 6/1/2003
22,500 9/1/2003
22,500 12/1/2003
<FN>
(1) An OSO award vests in equal quarterly installments over two years. No OSO
award, including a vested OSO award, can be exercised until the second
anniversary of the date of its grant. The OSO awards provide for
acceleration of vesting and the lifting of the two year prohibition on
exercise in the event of a change of control, as defined in the Level 3
1995 Stock Plan (as amended on April 1, 1998).
</FN>
<FN>
(2) OSO value at December 31, 1999 has been computed based upon the OSO formula
and multiplier as of that date. The value of an OSO is subject to change
based upon the performance of the Level 3 Common Stock relative to the
performance of the S&P 500 Index from the time of the grant of the OSO
award until the OSO award has been exercised.
</FN>
<FN>
(3) See footnote 2 to the Summary Compensation Table.
</FN>
</TABLE>
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Messrs. Kevin J. O'Hara and Colin V.K. Williams each did not file on a
timely basis a required Form 4 for sales of Level 3 Common Stock during 1999.
The required Form 4 filings were subsequently filed with the Securities and
Exchange Commission. To Level 3's knowledge, no other person that was a
director, executive officer or beneficial owner of more than 10% of the
outstanding shares of Level 3 Common Stock failed to timely file all reports
required under Section 16(a) of the Securities Exchange Act of 1934.
Director's Compensation
During 1999, each of the directors of the Company who were not employed by
the Company during 1999 received directors fees consisting of an annual retainer
of $150,000. Messers. Yanney and Julian received an annual retainer of $160,000,
which includes additional fees for serving as chairman of the Compensation
Committee and Audit Committee, respectively. These fees have been paid to these
directors in the form of grants of Level 3's Outperform Stock Options.
Certain Relationships and Related Transactions
All share information has been adjusted to reflect the Company's 2-for-1
stock split, effected as a stock dividend in August 1998.
In connection with his retention as Chief Executive Officer of the Company,
Mr. Crowe entered into an engagement agreement (the "Engagement Agreement") with
the Company. Under the Engagement Agreement, the Company acquired from Mr.
Crowe, Mr. Bradbury and an additional individual, Broadband Capital Group,
L.L.C., a company formed to develop investment opportunities, for a purchase
price of $68,523, the owners' cash investment in that company. Pursuant to the
Engagement Agreement, the Company sold 10,000,000 shares of the Company's former
Class D Diversified Group Convertible Exchangeable Common Stock, par value
$.0625 per share (the "Class D Stock") to Mr. Crowe and 2,500,000 shares of
Class D Stock to Mr. Bradbury, in each case at $5.425 per share. The Engagement
Agreement also provided that the Company would make available for sale, from
time to time prior to the consummation of the Split-off, to certain employees of
the Company designated by Mr. Crowe in connection with the implementation of the
Business Plan, up to an aggregate of 10,500,000 shares of Class D Stock.
During 1999, Mr. Crowe entered into an agreement for the period October
1999 to October 2000 to purchase personal use of the Company's aircraft. Mr.
Crowe has agreed that the Company will charge him the cost to operate the
aircraft as allowed by Part 91 of the U.S. Federal Aviation Administration
regulations for personal use of corporate aircraft. The Company expects that the
amount to be paid by Mr. Crowe for the one-year period will be approximately
$100,000.
Pursuant to an agreement with the Company, Mr. Crowe paid the Company an
aggregate of $74,905 for personal use of the Company's aircraft during the
period from October 1998 through October 1999. This payment was calculated based
upon the cost to operate the aircraft
<PAGE>
as set forth in U.S. Federal Aviation Administration regulations for this type
of use as adjusted pursuant to Internal Revenue Service regulations.
In January 1999, the Company repurchased a portion of the stock of the
C-TEC Holding Company held by David C. McCourt, a director of the Company, for a
total purchase price of approximately $5.6 million. Concurrently with this
repurchase, a portion of the Company's interest in the C-TEC Holding Company was
redeemed so that Mr. McCourt's percentage ownership of the outstanding C- TEC
Holding Company common stock remains at 10%. The C-TEC Holding Company is Level
3's subsidiary, which holds Level 3's interests in both RCN and Commonwealth
Telephone.
On September 30, 1999, a subsidiary of the Company entered into an
agreement to purchase a 15% interest in a Falcon 900 aircraft from Elk Mountain
Ventures, Inc., a company owned by Walter Scott, Jr., the Company's Chairman.
The purchase price paid for the interest in the aircraft was $2.7 million.
On July 1, 1998, the Company issued 187,706 shares of its common stock to
Mr. Colin V.K. Williams, an Executive Vice President of the Company, in
connection with the Company's acquisition of UltraLine (Bermuda) Limited, a
company owned by Mr. Williams. The value of the transaction, based upon the
trading price of its common stock on that date, was approximately $5 million.
On June 18, 1998, Level 3 entered into a contract with Peter Kiewit Sons',
Inc. ("PKS") for the construction of Level 3's nearly 16,000 mile North American
intercity network. Construction of the North American intercity network is
currently expected to cost an estimated $3 billion and be completed by the end
of the year 2000. Level 3 has also entered into various other agreements with
PKS including agreements for construction activities relating to its local
networks, gateway facilities and headquarters facility in Broomfield, Colorado.
For the year ended December 31, 1999, the Company incurred the following
expenses under these agreements to PKS: $918 million relating to construction of
intercity and local networks as well as gateway construction; $102 million for
construction of the Company's headquarters facility; and $4 million for
miscellaneous construction projects. PKS has the opportunity to earn a
significant award fee with respect to the construction of the intercity network,
the amount of which will be based on cost and speed of construction, quality,
safety and program management. The award fee will be determined by Level 3's
assessment of PKS' performance in each of these areas. In 1999, the Company
accrued approximately $35 million toward the award fee, which is included in the
$918 million indicated above.
Level 3 and a subsidiary of PKS are parties to various aircraft operating
agreements pursuant to which the PKS subsidiary provides Level 3 with aircraft
maintenance, operations, management and related services. During 1999, Level 3
made payments under these aircraft agreements aggregating approximately $1.7
million. These agreements have been terminated for periods subsequent to 1999.
In connection with the Split-off, Level 3 and PKS entered into various
agreements intended to implement the Split-off, including a separation agreement
and a tax-sharing agreement.
<PAGE>
Separation Agreement. Level 3 and PKS entered into a separation agreement
(the "Separation Agreement") relating to the allocation of certain risks and
responsibilities between PKS and Level 3 after the Split-off and certain other
matters. The Separation Agreement provides that each of PKS and Level 3 will
indemnify the other with respect to the activities of its subsidiary business
groups, except as specifically provided under other agreements between the
companies. The cross-indemnities are intended to allocate financial
responsibility to PKS for liabilities arising out of the construction businesses
formerly conducted by Level 3, and to allocate to Level 3 financial
responsibility for liabilities arising out of the non-construction businesses
conducted by Level 3. The Separation Agreement also allocates between PKS and
Level 3 certain corporate-level risk exposures not readily allocable to either
the construction businesses or the non-construction businesses.
The Separation Agreement provides that each of Level 3 and PKS will be
granted access to certain records and information in the possession of the other
company, and requires that each of Level 3 and PKS retain all such information
in its possession for a period of ten years following the Split- off. Under the
Separation Agreement, each company is required to give the other company prior
notice of any intention to dispose of any such information.
The Separation Agreement provides that, except as otherwise set forth
therein or in any related agreement, costs and expenses in connection with the
Split-off will be paid 82.5% by Level 3 and 17.5% by PKS. On March 18, 1998,
Level 3 and PKS entered into an amendment to the Separation Agreement that
provides that PKS will bear substantially all of those expenses if the Level 3
Board determined to force conversion of all outstanding Class R Stock of Level 3
on or before July 15, 1998 (a "Forced Conversion Determination").
The Level 3 Board made such a determination and, accordingly, substantially
all of those expenses will be borne by PKS.
Tax Sharing Agreement. Level 3 and PKS have entered into a tax sharing
agreement (the "Tax Sharing Agreement") that defines each company's rights and
obligations with respect to deficiencies and refunds of federal, state and other
taxes relating to operations for tax years (or portions thereof) ending prior to
the Split-off and with respect to certain tax attributes of Level 3 and PKS
after the Split-off. Under the Tax Sharing Agreement, with respect to periods
(or portions thereof) ending on or before the Split-off, Level 3 and PKS
generally will be responsible for paying the taxes relating to such returns
(including any subsequent adjustments resulting from the redetermination of such
tax liabilities by the applicable taxing authorities) that are allocable to the
non-construction business and the construction business, respectively.
The Tax Sharing Agreement also provides that Level 3 and PKS will indemnify
the other from certain taxes and expenses that would be assessed on PKS and
Level 3, respectively, if the Split-off were determined to be taxable, but
solely to the extent that such determination arose out of the breach by Level 3
or PKS, respectively, of certain representations made to the Internal Revenue
Service in connection with the private letter ruling issued with respect to the
Split-off. Under the Tax Sharing Agreement, if the Split-off were determined to
be taxable for any other reason, those taxes and certain other taxes associated
with the Split-off (together, "Split-off Taxes") would be allocated 82.5% to
Level 3 and 17.5% to PKS. The Tax Sharing Agreement, however, provides that
Split-off Taxes will be allocated one-half to each of Level 3 and PKS if a
<PAGE>
Forced Conversion Determination is made. As a result of the Forced Conversion
Determination, the Split-off Taxes would be so allocated. Finally, the Tax
Sharing Agreement provides, under certain circumstances, for certain liquidated
damage payments from Level 3 to PKS if the Split-off were determined to be
taxable, which are intended to compensate stockholders of PKS indirectly for
taxes assessed upon them in that event. Those liquidated damage payments,
however, are reduced because of the Forced Conversion Determination.
Mine Management Agreement. In 1992, PKS and Level 3 entered into a mine
management agreement (the "Mine Management Agreement") pursuant to which a
subsidiary of PKS, Kiewit Mining Group Inc. ("KMG"), provides mine management
and related services for Level 3's coal mining properties. In consideration of
the provision of such services, KMG receives a fee equal to 30% of the adjusted
operating income of the coal mining properties. Level 3 incurred expenses for
services provided by KMG under the Mine Management Agreement of $33 million for
the year ended December 31, 1999. The term of the Mine Management Agreement
expires on January 1, 2016.
In connection with the Split-off, the Mine Management Agreement was amended
to provide KMG with a right of offer in the event that Level 3 were to determine
to sell any or all of its coal mining properties. Under the right of offer,
Level 3 would be required to offer to sell those properties to KMG at the price
that Level 3 would seek to sell the properties to a third party. If KMG were to
decline to purchase the properties at that price, Level 3 would be free to sell
them to a third party for an amount greater than or equal to that price. If
Level 3 were to sell the properties to a third party, thus terminating the Mine
Management Agreement, it would be required to pay KMG an amount equal to the
discounted present value to KMG of the Mine Management Agreement, determined, if
necessary, by an appraisal process.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to the
beneficial ownership of Level 3 Common Stock, as of February 1, 2000, by Level
3's directors, the Named Executive Officers, and directors and executive
officers as a group, and each person known by the Company to beneficially own
more than 5% of the outstanding Level 3 Common Stock. The Percent of Common
Stock Beneficially Owned has been calculated to reflect the February 2000 sale
of 23.0 million shares of Level 3 Common Stock.
<TABLE>
<CAPTION>
Number of Shares Percent of Common Stock
Name of Common Stock+ Beneficially Owned
<S> <C> <C>
Walter Scott, Jr. (1) ........................... 33,333,958 9.2%
James Q. Crowe (2) .............................. 11,006,382 3.0
R. Douglas Bradbury (3) ......................... 3,276,055 *
Kevin J. O'Hara (4) ............................. 1,977,025 *
Colin V.K. Williams ............................. 409,344 *
Michael D. Jones (5) ............................ 259,311 *
Philip B. Fletcher .............................. 5,000 *
William L. Grewcock (6).......................... 11,530,166 3.2
Richard R. Jaros (7) ............................ 3,502,236 1.0
Robert E. Julian (8) ............................ 3,998,434 1.1
David C. McCourt (9)............................. 119,738 *
Kenneth E. Stinson (10).......................... 729,231 *
Michael B. Yanney (11) .......................... 105,314 *
Directors and Executive Officers
as a Group (17 persons) (12) ................. 70,724,099 19.4
Donald L. Sturm (13) ............................ 18,373,750 5.1
<FN>
* Less than 1%.
</FN>
<FN>
+ Included in this table are the number of shares of common stock issuable
upon exercise of Outperform Stock Options, which are exercisable within 60
days. The value of the Outperform Stock Options is dependent upon the
extent to which the Company's common stock has outperformed the results of
the S&P 500. The number of shares of common stock issuable upon exercise of
an Outperform Stock Option has been calculated based upon the closing price
of the Company's common stock on February 1, 2000. The number of shares
issuable upon exercise of an Outperform Stock Option is therefore subject
to changes in the extent to which the Company's common stock has
outperformed the results of the S&P 500 and the Company's common stock
closing price.
</FN>
<FN>
(1) Includes 99,700 shares of common stock held by the Suzanne Scott
Irrevocable Trust as to which Mr. Scott shares voting and investment powers
and 383,502 shares of common stock issuable upon conversion of $25 million
in principal amount of our 6% convertible subordinated notes that Mr. Scott
holds.
</FN>
<FN>
(2) In May 1999, Mr. Crowe announced that he had contributed 1,000,000 shares
of common stock to a trust of which he is the sole beneficiary and that,
beginning on May 10, 1999, the trust would sell
<PAGE>
4,000 shares each trading day until all the shares held by the trust were sold.
The information in the above table includes the remaining 292,000 shares of
common stock held by that trust as of February 1, 2000. Includes 386,768 shares
of common stock subject to vested Outperform Stock Options.
</FN>
<FN>
(3) Includes 500,000 shares of common stock subject to vested non-qualified
stock options and 120,865 shares of common stock subject to vested
Outperform Stock Options.
</FN>
<FN>
(4) Includes 46,000 shares of common stock held by Kevin J. O'Hara Family LTD
Partnership. Includes 250,000 shares of common stock subject to vested
non-qualified stock options and 120,865 shares of common stock subject to
vested Outperform Stock Options.
</FN>
<FN>
(5) Includes 170,000 shares of common stock subject to vested non-qualified
stock options and 84,606 shares of common stock subject to vested
Outperform Stock Options.
</FN>
<FN>
(6) Includes 1,154,640 shares of common stock held by Grewcock Family Limited
Partnership. Includes 351,230 shares of common stock held by the Bill &
Berniece Grewcock Foundation as to which Mr. Grewcock shares voting and
investment powers. Includes 4,738 shares of common stock subject to vested
Outperform Stock Options.
</FN>
<FN>
(7) Includes 370,000 shares of common stock held by the Jaros Family Limited
Partnership. Includes 4,738 shares of common stock subject to vested
Outperform Stock Options. Includes 1,351,500 shares of common stock subject
to vested non-qualified stock options held by Mr. Jaros and 648,500 shares
of common stock subject to vested non-qualified stock options held by a
grantor trust, of which Mr. Jaros is the residual beneficiary.
</FN>
<FN>
(8) Includes 4,854 shares of common stock subject to vested Outperform Stock
Options.
</FN>
<FN>
(9) Includes 4,738 shares of common stock subject to vested Outperform Stock
Options.
</FN>
<FN>
(10) Includes 4,738 shares of common stock subject to vested Outperform Stock
Options.
</FN>
<FN>
(11) Includes 4,854 shares of common stock subject to vested Outperform Stock
Options.
</FN>
<FN>
(12) Includes 771,971 shares of common stock subject to vested non-qualified
stock options and 661,100 shares of common stock subject to vested
Outperform Stock Options.
</FN>
<FN>
(13) Mr. Sturm's business address is 3033 East First Avenue, Denver, Colorado
80206. Based solely on Mr. Sturm's Schedule 13D dated May 5, 1998, adjusted
for a subsequent stock dividend, Mr. Sturm owns 15,610,310 shares of common
stock, and has voting and investment power with respect to 2,613,440 shares
held by trusts and partnerships established for family members and
beneficially owns 150,000 shares as a member of the board of directors of
the University of Denver.
</FN>
</TABLE>
<PAGE>
Performance Graph
The following performance graph shall not be deemed to be incorporated by
reference by means of any general statement incorporating by reference this
Proxy Statement into any filing under the Securities Act of 1933, as amended or
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates such information by reference, and shall not otherwise
be deemed filed under such acts.
The graph below compares the cumulative total return (stock appreciation
plus reinvested dividends) of the Company's common stock with three indexes of
publicly traded stocks. Prior to the Split-off, the Company had two classes of
common stock, Class C Construction & Mining Group Restricted Convertible
Exchangeable Common Stock, par value $.0625 per share (the "Class C Stock") and
Class D Stock. For substantially all of the periods presented the Company's
stock was not publicly traded. Beginning in the fourth quarter 1997, the
Company's Class D Stock commenced trading on the over-the-counter market of the
National Association of Securities Dealers, Inc. During the fourth quarter, the
only quarter during which trading occurred, the range of the high and low bid
information for the Class D Stock was $20.41 to $29.00. The Level 3 Common Stock
now trades on The Nasdaq National Market under the symbol "LVLT." Because the
Split-off occurred during 1998, no performance graph information is presented
for the Class C Stock. For performance graph information regarding the Class C
Stock, please see the proxy materials of PKS.
Pursuant to the terms of the Company's Restated Certificate of
Incorporation for all periods presented, other than for the last three quarters
of 1998, the Company's stock was valued by a formula contained in the Restated
Certificate of Incorporation. Company stock was valued at the end of the
Company's fiscal year and the formula value was reduced as dividends are
declared during the following year. For purposes of the graphs, it has been
assumed that dividends were immediately reinvested in additional shares of Level
3 Common Stock, although such reinvestment was not permitted in actual practice.
Although for fiscal years prior to 1998, the Company's fiscal year ended on the
last Saturday in December, its stock is compared against indexes which assume a
fiscal year ending December 31.
Because of two corporate restructuring events during the last five years,
further assumptions about total return are required. The Company's stock was
reclassified on January 8, 1992. Each old share of Class C Stock was exchanged
for one new share of Class C Stock and one share of Class D Stock. The five year
cumulative total return is shown as if the change occurred on January 1, 1992.
On September 30, 1995, the Company distributed to its Class D stockholders
by way of a tax free dividend its stock holdings in MFS Communications Company,
Inc. ("MFS"). For each share of Class D Stock, 1.741 shares of MFS common stock
and .651 share of MFS preferred stock were distributed. On the distribution
date, 1.741 shares of MFS common stock had a public market value of $76.17 and
.651 share of MFS preferred stock had a value of $.65 (together, a "distribution
unit" of $76.82). For purposes of the graph below, it is assumed that each
distribution unit was immediately sold for $76.82 and the proceeds reinvested in
additional shares of Class D Stock, which then had the reduced formula price of
$40.40 per share.
<PAGE>
The formula value of the Class D Stock was linked to the performance of the
Company's Diversified Group (which are the operations that remained in the
Company after the Split-off), which is primarily engaged in communications,
information services and coal mining businesses.
The graph compares the cumulative total return of the Level 3 Common Stock
(formerly Class D Stock) for the five year period 1995 - 1999 with the S&P 500
Index, the Dow Jones Coal Index and the Nasdaq Telecommunications Index. The
graph assumes that the value of the investment was $100 on December 31, 1994,
and that all dividends and other distributions were reinvested. In addition, all
stock prices and dividends reflect a dividend of four shares of Class D Stock
for each outstanding share of Class D Stock that was effective December 1997 and
a dividend of one share of Level 3 Common Stock (formerly Class D Stock) for
each outstanding share of Level 3 Common Stock effective August 1998.
Comparison of 5 Year Cumulative Total Return
Among the Level 3 Common Stock, the S&P 500 Index,
the Nasdaq Telecommunications Index and the Dow Jones Coal Index
[Performance Graph]
1994 1995 1996 1997 1998 1999
Common Stock 100 241 266 286 2,117 4,019
S&P 500 Index 100 138 169 226 290 351
NASDAQ Telecommunications Index 100 131 134 195 324 572
Dow Jones Coal Index 100 106 115 99 82 52
<PAGE>
OTHER MATTERS
It is not anticipated that any matters other than those described in this
Proxy Statement will be brought before the Annual Meeting. If any other matters
are presented, however, it is the intention of the persons named in the proxy to
vote the proxy in accordance with the discretion of the persons named in the
proxy.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the 2001 Annual
Meeting must be received by Level 3 on or before March 23, 2001, but no earlier
than February 22, 2001 to be included in the proxy material of Level 3 relating
to such meeting. In addition, such proposal must also include a brief
description of the business to be brought before the annual meeting, the
stockholder's name and record address, the number of shares of Level 3 Common
Stock which are owned beneficially or of record by such stockholder, a
description of any arrangements or understandings between the stockholder and
any other person in connection with such proposal and any material interest of
such stockholder in such proposal and a representation that the stockholder
intends to appear in person or by proxy at the Annual Meeting. If the
stockholder wishes to nominate one or more persons for election as a director,
such stockholder's notice must comply with additional provisions as set forth in
the Level 3 By-laws, including certain information with respect to the persons
nominated for election as directors and any information relating to the
stockholder that would be required to be disclosed in a Proxy Filing. Any such
proposals should be directed to the Secretary, Level 3 Communications, Inc.,
1025 Eldorado Boulevard, Broomfield, Colorado, 80021.
<PAGE>
[Logo]
LEVEL 3 COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MONDAY, MAY 22, 2000
9:00 A.M.
THE OMAHA CIVIC AUDITORIUM MUSIC HALL
1804 CAPITOL AVENUE
OMAHA, NEBRASKA 68102
[Logo] LEVEL 3 COMMUNICATIONS, INC.
1025 ELDORADO BOULEVARD, BROOMFIELD, CO 80021 REVOCABLE PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 22, 2000.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1 AND 2.
By signing the proxy, you revoke all prior proxies and appoint Thomas C. Stortz
and Neil J. Eckstein, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments as described in the
Notice of Annual Meeting and Proxy Statement dated April 17, 2000, receipt of
which is hereby acknowledged.
SEE REVERSE FOR VOTING INSTRUCTIONS.
TO BE SIGNED ON REVERSE SIDE.
<PAGE>
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK --- EASY --- IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/LVLT/ -- QUICK -- EASY -- IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Level 3 Communications, Inc., c/o Shareowner
Services-, P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors: 01 R. Douglas Bradbury [ ] Vote FOR [ ] Vote
02 Kenneth E. Stinson all nominees WITHHELD
03 Michael B. Yanney from all
nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, WRITE
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments or
postponements thereof.
[ ]For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below:
Date -------------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy. If held in joint tenancy,
all persons must sign. Trustees, administrators, etc., should include title and
authority. Corporations should provide full name of corporation and title of
authorized officer signing the proxy.
<PAGE>
[Logo]
3rd Annual Stockholder Meeting
Voting Alternatives
Although you received your proxy materials by mail this year, you can still vote
your shares conveniently by telephone or by the Internet. It's fast, convenient
and your vote is immediately confirmed and posted. Please see below for
instructions:
Vote by Internet Vote by Telephone
www.proxyvote.com
Follow the 4 easy steps: Follow the 4 easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Voting Instruction Statement and Voting Instruction
form. form.
2. Go to web site: www.proxyvote.com 2. Using a touch-tone telephone,
3. Enter your 12-digit control number call the toll-free number
located in the gray shaded box on located in the gray shaded box
the right side of your Voting on the upper left side of your
Instruction form. Voting Instructionh form.
4. Follow the simple instructions. 3. Enter your 12-digit control
number located in the gray
shaded box on the right side of
your Voting Instruction form.
4. Follow the simple instructions.
Remember - if you vote by Internet or Telephone do not mail
your Voting Card.
<PAGE>
[Logo]
3rd Annual Stockholder Meeting
Voting Alternatives
Although you received your proxy materials by mail this year, you can still vote
your shares conveniently by telephone or by the Internet. It's fast, convenient
and your vote is immediately confirmed and posted. Please see below for
instructions:
Vote by Internet Vote by Telephone
www.eproxy.com/lvlt/
Follow these 5 easy steps: Follow these 5 easy steps:
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy
and Voting Instruction form. Statement and Voting Instruction
2. Go to web site: www.eproxy.com/lvlt/ form.
3. Enter your 3-digit company number 2. Using a touch-tone telephone,
located in the upper right-hand side call the toll-free number
of your proxy card. indicated on the proxy card.
4. Enter the 7-digit control number 3. Enter the 3-digit company number
located in the upper right-hand located in the upper right-hand
side of your proxy card. side of your proxy card.
5. Follow the simple instructions. 4. Enter the 7-digit control number
located in the upper right-hand
side of your proxy card.
5. Follow the simple instructions.
Remember - if you vote by Internet or Telephone do not mail
your Voting Card.
