Condensed Consolidating Financial Information (Notes)

6 Months Ended

Jun. 30, 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 June 30, 2015



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	830		$	1,276		$	(45	)	$	2,061
Costs and Expense:
Network Access Costs	—			—			299			442			(45		)	696
Network Related Expenses	—			—			231			132			—			363
Depreciation and Amortization	—			—			75			213			—			288
Selling, General and Administrative Expenses	1			—			268			95			—			364
Total Costs and Expenses	1			—			873			882			(45		)	1,711
Operating Income (Loss)	(1		)	—			(43		)	394			—			350
Other Income (Expense):
Interest Income	—			—			—			—			—			—
Interest expense	(14		)	(146		)	(1		)	(4		)	—			(165		)
Interest income (expense) affiliates, net	331			496			(769		)	(58		)	—			—
Equity in net earnings (losses) of subsidiaries	(311		)	(516		)	—			—			827			—
Other, net	(18		)	(145		)	(3		)	(14		)	—			(180		)
Total Other Income (Expense)	(12		)	(311		)	(773		)	(76		)	827			(345		)
Income (Loss) before Income Taxes	(13		)	(311		)	(816		)	318			827			5
Income Tax Expense	—			—			—			(18		)	—			(18		)
Net Income (Loss)	(13		)	(311		)	(816		)	300			827			(13		)
Other Comprehensive Income (Loss), Net of Income Taxes	85			—			—			197			(197		)	85
Comprehensive Income (Loss)	$	72		$	(311	)	$	(816	)	$	497		$	630		$	72

Condensed Consolidating Statements of Comprehensive Income (Loss)

Six Months Ended June 30, 2015



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	1,648		$	2,563		$	(97	)	$	4,114
Costs and Expense:
Network Access Costs	—			—			619			897			(97		)	1,419
Network Related Expenses	—			—			461			258			—			719
Depreciation and Amortization	—			—			149			427			—			576
Selling, General and Administrative Expenses	2			—			515			217			—			734
Total Costs and Expenses	2			—			1,744			1,799			(97		)	3,448
Operating Income (Loss)	(2		)	—			(96		)	764			—			666
Other Income (Expense):
Interest Income	—			—			—			1			—			1
Interest expense	(33		)	(301		)	(2		)	(9		)	—			(345		)
Interest income (expense) affiliates, net	664			997			(1,535		)	(126		)	—			—
Equity in net earnings (losses) of subsidiaries	(502		)	(1,052		)	177			—			1,377			—
Other, net	(18		)	(145		)	(1		)	(26		)	—			(190		)
Total Other Income (Expense)	111			(501		)	(1,361		)	(160		)	1,377			(534		)
Income (Loss) before Income Taxes	109			(501		)	(1,457		)	604			1,377			132
Income Tax Expense	—			(1		)	—			(22		)	—			(23		)
Net Income (Loss)	109			(502		)	(1,457		)	582			1,377			109
Other Comprehensive Income (Loss), Net of Income Taxes	(56		)	—			—			56			(56		)	(56		)
Comprehensive Income (Loss)	$	53		$	(502	)	$	(1,457	)	$	638		$	1,321		$	53

Condensed Consolidating Statements of Comprehensive Income (Loss)

Three Months Ended June 30, 2014



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	760		$	918		$	(53	)	$	1,625
Costs and Expense:
Network Access Costs	—			—			288			378			(53		)	613
Network Related Expenses	—			—			190			112			—			302
Depreciation and Amortization	—			—			69			118			—			187
Selling, General and Administrative Expenses	1			1			181			84			—			267
Total Costs and Expenses	1			1			728			692			(53		)	1,369
Operating Income	(1		)	(1		)	32			226			—			256
Other Income (Expense):
Interest expense	(34		)	(113		)	1			(3		)	—			(149		)
Interest income (expense) affiliates, net	303			459			(727		)	(35		)	—			—
Equity in net earnings (losses) of subsidiaries	(217		)	(561		)	162			—			616			—
Other, net	—			—			1			(45		)	—			(44		)
Total Other Expense	52			(215		)	(563		)	(83		)	616			(193		)
Income (Loss) before Income Taxes	51			(216		)	(531		)	143			616			63
Income Tax Expense	—			(1		)	—			(11		)	—			(12		)
Net Income (Loss)	51			(217		)	(531		)	132			616			51
Other Comprehensive Income (Loss), Net of Income Taxes	13			—			—			13			(13		)	13
Comprehensive Income (Loss)	$	64		$	(217	)	$	(531	)	$	145		$	603		$	64

Condensed Consolidating Statements of Comprehensive Income (Loss)

Six Months Ended June 30, 2014



	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	1,497		$	1,849		$	(112	)	$	3,234
Costs and Expense:
Network Access Costs	—			—			578			761			(112		)	1,227
Network Related Expenses	—			—			372			222			—			594
Depreciation and Amortization	—			—			139			232			—			371
Selling, General and Administrative Expenses	1			1			324			196			—			522
Total Costs and Expenses	1			1			1,413			1,411			(112		)	2,714
Operating Income	(1		)	(1		)	84			438			—			520
Other Income (Expense):
Interest expense	(68		)	(225		)	—			(7		)	—			(300		)
Interest income (expense) affiliates, net	591			918			(1,439		)	(70		)	—			—
Equity in net earnings (losses) of subsidiaries	(359		)	(1,049		)	340			—			1,068			—
Other, net	—			—			4			(42		)	—			(38		)
Total Other Expense	164			(356		)	(1,095		)	(119		)	1,068			(338		)
Income (Loss) before Income Taxes	163			(357		)	(1,011		)	319			1,068			182
Income Tax Expense	—			(2		)	(1		)	(16		)	—			(19		)
Net Income (Loss)	163			(359		)	(1,012		)	303			1,068			163
Other Comprehensive Income (Loss), Net of Income Taxes	19			—			—			19			(19		)	19
Comprehensive Income (Loss)	$	182		$	(359	)	$	(1,012	)	$	322		$	1,049		$	182

Condensed Consolidating Balance Sheets

June 30, 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	$	13	$	5	$	289		$	242	$	—		$	549
Restricted cash and securities	—		—		1			7		—			8
Receivables, less allowances for doubtful accounts	—		—		32			724		—			756
Due from affiliates	14,988		22,096		—			—		(37,084		)	—
Other	1		18		77			94		—			190
Total Current Assets	15,002		22,119		399			1,067		(37,084		)	1,503
Property, Plant, and Equipment, net	—		—		3,235			6,665		—			9,900
Restricted Cash and Securities	27		—		15			1		—			43
Goodwill and Other Intangibles, net	—		—		368			8,619		—			8,987
Investment in Subsidiaries	16,716		14,580		3,724			—		(35,020		)	—
Other Assets, net	21		124		11			295		—			451
Total Assets	$	31,766	$	36,823	$	7,752		$	16,647	$	(72,104	)	$	20,884

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	2	$	219		$	416	$	—		$	637
Current portion of long-term debt	—		—		3			14		—			17
Accrued payroll and employee benefits	—		—		165			37		—			202
Accrued interest	11		108		—			6		—			125
Current portion of deferred revenue	—		—		106			174		—			280
Due to affiliates	—		—		35,781			1,303		(37,084		)	—
Other	—		1		86			92		—			179
Total Current Liabilities	11		111		36,360			2,042		(37,084		)	1,440
Long-Term Debt, less current portion	600		10,209		16			176		—			11,001
Deferred Revenue, less current portion	—		—		595			297		—			892
Other Liabilities	15		24		125			570		—			734
Commitments and Contingencies
Stockholders' Equity (Deficit)	31,140		26,479		(29,344		)	13,562		(35,020		)	6,817
Total Liabilities and Stockholders' Equity (Deficit)	$	31,766	$	36,823	$	7,752		$	16,647	$	(72,104	)	$	20,884

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

Six Months Ended June 30, 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	$	(21	)	$	(339	)	$	(22	)	$	1,106		$	—	$	724
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(188		)	(383		)	—		(571		)
(Increase) decrease in restricted cash and securities, net	(25		)	—			1			—			—		(24		)
Proceeds from the sale of property, plant and equipment and other assets	—			—			—			2			—		2
Net Cash Used in Investing Activities	(25		)	—			(187		)	(381		)	—		(593		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			3,948			—			—			—		3,948
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(313		)	(3,780		)	—			(5		)	—		(4,098		)
Increase (decrease) due from/to affiliates, net	365			171			191			(727		)	—		—
Net Cash Provided by (Used in) Financing Activities	52			339			191			(732		)	—		(150		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(12		)	—		(12		)
Net Change in Cash and Cash Equivalents	6			—			(18		)	(19		)	—		(31		)
Cash and Cash Equivalents at Beginning of Period	7			5			307			261			—		580
Cash and Cash Equivalents at End of Period	$	13		$	5		$	289		$	242		$	—	$	549

Condensed Consolidating Statements of Cash Flows

Six Months Ended June 30, 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	$	(66	)	$	(222	)	$	370		$	362		$	—	$	444
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(192		)	(212		)	—		(404		)
Decrease in restricted cash and securities, net	—			—			—			2			—		2
Net Cash Used in Investing Activities	—			—			(192		)	(210		)	—		(402		)
Cash Flows from Financing Activities:
Payments on and repurchases of long-term debt, including current portion and refinancing costs	—			—			—			(6		)	—		(6		)
Increase (decrease) due from/to affiliates, net	66			222			(111		)	(177		)	—		—
Net Cash Provided by (Used in) Financing Activities	66			222			(111		)	(183		)	—		(6		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(30		)	—		(30		)
Net Change in Cash and Cash Equivalents	—			—			67			(61		)	—		6
Cash and Cash Equivalents at Beginning of Period	8			6			347			270			—		631
Cash and Cash Equivalents at End of Period	$	8		$	6		$	414		$	209		$	—	$	637