Condensed Consolidating Financial Information (Notes)

3 Months Ended

Mar. 31, 2015

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, 2015



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	818		$	1,287		$	(52	)	$	2,053
Costs and Expense:
Network Access Costs	—			—			320			455			(52		)	723
Network Related Expenses	—			—			230			126			—			356
Depreciation and Amortization	—			—			74			214			—			288
Selling, General and Administrative Expenses	1			—			247			122			—			370
Total Costs and Expenses	1			—			871			917			(52		)	1,737
Operating Income (Loss)	(1		)	—			(53		)	370			—			316
Other Income (Expense):
Interest Income	—			—			—			1			—			1
Interest expense	(19		)	(155		)	(1		)	(5		)	—			(180		)
Interest income (expense) affiliates, net	333			501			(766		)	(68		)	—			—
Equity in net earnings (losses) of subsidiaries	(191		)	(536		)	177			—			550			—
Other, net	—			—			2			(12		)	—			(10		)
Total Other Income (Expense)	123			(190		)	(588		)	(84		)	550			(189		)
Income (Loss) before Income Taxes	122			(190		)	(641		)	286			550			127
Income Tax Expense	—			(1		)	—			(4		)	—			(5		)
Net Income (Loss)	122			(191		)	(641		)	282			550			122
Other Comprehensive Income (Loss), Net of Income Taxes	(141		)	—			—			(141		)	141			(141		)
Comprehensive Income (Loss)	$	(19	)	$	(191	)	$	(641	)	$	141		$	691		$	(19	)

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:
Network Access Costs	—			—			290			383			(59		)	614
Network Related Expenses	—			—			182			110			—			292
Depreciation and Amortization	—			—			70			114			—			184
Selling, General and Administrative Expenses	—			—			143			112			—			255
Total Costs and Expenses	—			—			685			719			(59		)	1,345
Operating Income	—			—			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 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 Balance Sheets

March 31, 2015



	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	$	14	$	5	$	841		$	254	$	—		$	1,114
Restricted cash and securities	—		—		1			6		—			7
Receivables, less allowances for doubtful accounts	—		—		41			702		—			743
Due from affiliates	14,987		22,125		—			—		(37,112		)	—
Other	2		27		70			89		—			188
Total Current Assets	15,003		22,157		953			1,051		(37,112		)	2,052
Property, Plant, and Equipment, net	—		—		3,181			6,563		—			9,744
Restricted Cash and Securities	3		—		15			1		—			19
Goodwill and Other Intangibles, net	—		—		371			8,667		—			9,038
Investment in Subsidiaries	16,700		14,342		3,726			—		(34,768		)	—
Other Assets, net	25		126		9			290		—			450
Total Assets	$	31,731	$	36,625	$	8,255		$	16,572	$	(71,880	)	$	21,303

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	—	$	225		$	404	$	—		$	629
Current portion of long-term debt	—		494		3			13		—			510
Accrued payroll and employee benefits	—		—		135			42		—			177
Accrued interest	12		170		—			5		—			187
Current portion of deferred revenue	—		—		114			186		—			300
Due to affiliates	—		—		35,463			1,649		(37,112		)	—
Other	—		2		82			66		—			150
Total Current Liabilities	12		666		36,022			2,365		(37,112		)	1,953
Long-Term Debt, less current portion	900		9,900		16			174		—			10,990
Deferred Revenue, less current portion	—		—		599			296		—			895
Other Liabilities	15		24		127			582		—			748
Commitments and Contingencies
Stockholders' Equity (Deficit)	30,804		26,035		(28,509		)	13,155		(34,768		)	6,717
Total Liabilities and Stockholders' Equity (Deficit)	$	31,731	$	36,625	$	8,255		$	16,572	$	(71,880	)	$	21,303

Condensed Consolidating Balance Sheets

December 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	$	7	$	5	$	307		$	261	$	—		$	580
Restricted cash and securities	—		—		1			6		—			7
Receivables, less allowances for doubtful accounts	—		—		34			703		—			737
Due from affiliates	14,522		21,270		—			—		(35,792		)	—
Other	2		21		45			97		—			165
Total Current Assets	14,531		21,296		387			1,067		(35,792		)	1,489
Property, Plant, and Equipment, net	—		—		3,152			6,708		—			9,860
Restricted Cash and Securities	3		—		16			1		—			20
Goodwill and Other Intangibles, net	—		—		373			8,730		—			9,103
Investment in Subsidiaries	16,686		14,777		3,729			—		(35,192		)	—
Other Assets, net	28		129		9			309		—			475
Total Assets	$	31,248	$	36,202	$	7,666		$	16,815	$	(70,984	)	$	20,947

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	—	$	215		$	449	$	—		$	664
Current portion of long-term debt	333		—		3			13		—			349
Accrued payroll and employee benefits	—		—		174			99		—			273
Accrued interest	12		158		—			4		—			174
Current portion of deferred revenue	—		—		118			169		—			287
Due to affiliates	—		—		34,401			1,391		(35,792		)	—
Other	—		2		62			103		—			167
Total Current Liabilities	345		160		34,973			2,228		(35,792		)	1,914
Long-Term Debt, less current portion	900		9,893		16			175		—			10,984
Deferred Revenue, less current portion	—		—		617			304		—			921
Other Liabilities	16		24		125			600		—			765
Commitments and Contingencies
Stockholders' Equity (Deficit)	29,987		26,125		(28,065		)	13,508		(35,192		)	6,363
Total Liabilities and Stockholders' Equity (Deficit)	$	31,248	$	36,202	$	7,666		$	16,815	$	(70,984	)	$	20,947

Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31, 2015



	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	$	(7	)	$	(137	)	$	(82	)	$	531		$	—	$	305
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(77		)	(177		)	—		(254		)
Decrease in restricted cash and securities, net	—			—			1			—			—		1
Proceeds from the sale of property, plant and equipment and other assets	—			—			—			1			—		1
Other	—			—			—			—			—		—
Net Cash Used in Investing Activities	—			—			(76		)	(176		)	—		(252		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			492			—			—			—		492
Payments on and repurchases of long-term debt, including current portion and refinancing costs	—			—			—			(2		)	—		(2		)
Increase (decrease) due from/to affiliates, net	14			(355		)	692			(351		)	—		—
Net Cash Provided by (Used in) Financing Activities	14			137			692			(353		)	—		490
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(9		)	—		(9		)
Net Change in Cash and Cash Equivalents	7			—			534			(7		)	—		534
Cash and Cash Equivalents at Beginning of Period	7			5			307			261			—		580
Cash and Cash Equivalents at End of Period	$	14		$	5		$	841		$	254		$	—	$	1,114

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
Proceeds from sale of property, plant and equipment and other assets	—			—			—			1			—		1
Other	—			—			—			(1		)	—		(1		)
Net Cash 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