Condensed Consolidating Financial Information (Notes)

3 Months Ended

Mar. 31, 2014

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Level 3 Financing, Inc., a wholly owned subsidiary of the Company, has issued senior notes that are unsecured obligations of Level 3 Financing, Inc.; however, they are also fully and unconditionally and jointly and severally guaranteed on an unsecured senior basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.

In conjunction with the registration of the senior notes, the accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 “Financial statements of guarantors and affiliates whose securities collateralize an issue registered or being registered.”

The operating activities of the separate legal entities included in the Company’s consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.

Condensed Consolidating Statements of Comprehensive Income (Loss)

Three Months Ended March 31, 2014



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	737		$	931		$	(59	)	$	1,609
Costs and Expense:
Cost of Revenue	—			—			290			383			(59		)	614
Depreciation and Amortization	—			—			70			114			—			184
Selling, General and Administrative	—			—			325			222			—			547
Total Costs and Expenses	—			—			685			719			(59		)	1,345
Operating Income (Loss)	—			—			52			212			—			264
Other Income (Expense):
Interest expense	(34		)	(112		)	(1		)	(4		)	—			(151		)
Interest income (expense) affiliates, net	288			459			(712		)	(35		)	—			—
Equity in net earnings (losses) of subsidiaries	(142		)	(488		)	178			—			452			—
Other, net							3			3			—			6
Total Other Income (Expense)	112			(141		)	(532		)	(36		)	452			(145		)
Income (Loss) before Income Taxes	112			(141		)	(480		)	176			452			119
Income Tax Expense	—			(1		)	(1		)	(5		)	—			(7		)
Net Income (Loss)	112			(142		)	(481		)	171			452			112
Other Comprehensive Income, Net of Income Taxes	6			—			—			6			(6		)	6
Comprehensive Income (Loss)	$	118		$	(142	)	$	(481	)	$	177		$	446		$	118

Condensed Consolidating Statements of Comprehensive Income (Loss)

Three Months Ended March 31, 2013



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	685		$	956		$	(64	)	$	1,577
Costs and Expense:
Cost of Revenue	—			—			261			432			(64		)	629
Depreciation and Amortization	—			—			71			123			—			194
Selling, General and Administrative	1			—			381			217			—			599
Total Costs and Expenses	1			—			713			772			(64		)	1,422
Operating Income (Loss)	(1		)	—			(28		)	184			—			155
Other Income (Expense):
Interest expense	(39		)	(126		)	(1		)	(3		)	—			(169		)
Interest income (expense) affiliates, net	273			430			(669		)	(34		)	—			—
Equity in net earnings (losses) of subsidiaries	(311		)	(614		)	146			—			779			—
Other, net	—			(1		)	1			(50		)	—			(50		)
Total Other Expense	(77		)	(311		)	(523		)	(87		)	779			(219		)
Income (Loss) before Income Taxes	(78		)	(311		)	(551		)	97			779			(64		)
Income Tax Expense	—			—			(1		)	(13		)	—			(14		)
Net Income (Loss)	(78		)	(311		)	(552		)	84			779			(78		)
Other Comprehensive Income, Net of Income Taxes	(52		)	(52		)	—			(52		)	104			(52		)
Comprehensive Income (Loss)	$	(130	)	$	(363	)	$	(552	)	$	32		$	883		$	(130	)

Condensed Consolidating Balance Sheets

March 31, 2014



	Level 3 Communications, Inc.		Level 3 Financing, Inc.		Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries		Eliminations			Total
	(dollars in millions)
Assets
Current Assets:
Cash and cash equivalents	$	8	$	6	$	356		$	237	$	—		$	607
Restricted cash and securities	—		—		1			6		—			7
Receivables, less allowances for doubtful accounts	—		—		70			629		—			699
Due from affiliates	15,798		17,223		—			—		(33,021		)	—
Other	3		17		59			80		—			159
Total Current Assets	15,809		17,246		486			952		(33,021		)	1,472
Property, Plant, and Equipment, net	—		—		3,055			5,205		—			8,260
Restricted Cash and Securities	3		—		18			1		—			22
Goodwill and Other Intangibles, net	—		—		387			2,374		—			2,761
Investment in Subsidiaries	10,090		8,956		3,738			—		(22,784		)	—
Other Assets, net	9		108		10			247		—			374
Total Assets	$	25,911	$	26,310	$	7,694		$	8,779	$	(55,805	)	$	12,889

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	1	$	246		$	314	$	—		$	561
Current portion of long-term debt	474		—		3			26		—			503
Accrued payroll and employee benefits	—		—		71			43		—			114
Accrued interest	46		126		—			2		—			174
Current portion of deferred revenue	—		—		123			139		—			262
Due to affiliates	—		—		32,229			792		(33,021		)	—
Other	—		3		70			69		—			142
Total Current Liabilities	520		130		32,742			1,385		(33,021		)	1,756
Long-Term Debt, less current portion	897		6,905		17			37		—			7,856
Deferred Revenue, less current portion	—		—		588			313		—			901
Other Liabilities	15		29		132			602		—			778
Commitments and Contingencies	—		—		—			—		—			—
Stockholders' Equity (Deficit)	24,479		19,246		(25,785		)	6,442		(22,784		)	1,598
Total Liabilities and Stockholders' Equity (Deficit)	$	25,911	$	26,310	$	7,694		$	8,779	$	(55,805	)	$	12,889

Condensed Consolidating Balance Sheets

December 31, 2013



	Level 3 Communications, Inc.		Level 3 Financing, Inc.		Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries		Eliminations			Total
	(dollars in millions)
Assets
Current Assets:
Cash and cash equivalents	$	8	$	6	$	347		$	270	$	—		$	631
Restricted cash and securities	—		—		1			6		—			7
Receivables, less allowances for doubtful accounts	—		—		79			594		—			673
Due from affiliates	15,507		16,886		—			—		(32,393		)	—
Other	2		15		47			79		—			143
Total Current Assets	15,517		16,907		474			949		(32,393		)	1,454
Property, Plant, and Equipment, net	—		—		3,028			5,212		—			8,240
Restricted Cash and Securities	3		—		18			2		—			23
Goodwill and Other Intangibles, net	—		—		395			2,387		—			2,782
Investment in Subsidiaries	10,039		27,014		3,735			—		(40,788		)	—
Other Assets, net	10		113		11			241		—			375
Total Assets	$	25,569	$	44,034	$	7,661		$	8,791	$	(73,181	)	$	12,874

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	2	$	42		$	581	$	—		$	625
Current portion of long-term debt	—		—		3			28		—			31
Accrued payroll and employee benefits	—		—		171			38		—			209
Accrued interest	30		129		—			1		—			160
Current portion of deferred revenue	—		—		131			122		—			253
Due to affiliates	—		—		32,165			228		(32,393		)	—
Other	—		13		74			81		—			168
Total Current Liabilities	30		144		32,586			1,079		(32,393		)	1,446
Long-Term Debt, less current portion	1,370		6,905		17			39		—			8,331
Deferred Revenue, less current portion	—		—		603			303		—			906
Other Liabilities	15		27		135			603		—			780
Commitments and Contingencies	—		—		—			—		—			—
Stockholders' Equity (Deficit)	24,154		36,958		(25,680		)	6,767		(40,788		)	1,411
Total Liabilities and Stockholders' Equity (Deficit)	$	25,569	$	44,034	$	7,661		$	8,791	$	(73,181	)	$	12,874

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2014



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations		Total
	(dollars in millions)
Net Cash Provided by (Used in) Operating Activities	$	(16	)	$	(125	)	$	183		$	99		$	—	$	141
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(74		)	(89		)	—		(163		)
Decrease in restricted cash and securities, net	—			—			—			1			—		1
Net Cash Provided by (Used in) Investing Activities	—			—			(74		)	(88		)	—		(162		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			—			—			—			—		—
Payments on and repurchases of long-term debt, including current portion and refinancing costs	—			—			—			(3		)	—		(3		)
Increase (decrease) due from/to affiliates, net	16			125			(100		)	(41		)	—		—
Net Cash Provided by (Used in) Financing Activities	16			125			(100		)	(44		)	—		(3		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			—			—		—
Net Change in Cash and Cash Equivalents	—			—			9			(33		)	—		(24		)
Cash and Cash Equivalents at Beginning of Period	8			6			347			270			—		631
Cash and Cash Equivalents at End of Period	$	8		$	6		$	356		$	237		$	—	$	607

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2013



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations		Total
	(dollars in millions)
Net Cash Provided by (Used in) Operating Activities	$	(30	)	$	(169	)	$	(15	)	$	221		$	—	$	7
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(74		)	(95		)	—		(169		)
Decrease in restricted cash and securities, net	—			—			—			3			—		3
Net Cash Provided by (Used in) Investing Activities	—			—			(74		)	(92		)	—		(166		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			—			—			—			—		—
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(172		)	(2		)	(4		)	(8		)	—		(186		)
Increase (decrease) due from/to affiliates, net	1			171			35			(207		)	—		—
Net Cash Provided by (Used in) Financing Activities	(171		)	169			31			(215		)	—		(186		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(24		)	—		(24		)
Net Change in Cash and Cash Equivalents	(201		)	—			(58		)	(110		)	—		(369		)
Cash and Cash Equivalents at Beginning of Period	253			5			386			335			—		979
Cash and Cash Equivalents at End of Period	$	52		$	5		$	328		$	225		$	—	$	610