Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2015

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

Level 3 Financing 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 Level 3 Financing, Inc. 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 statements of operations, balance sheets and statements of 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 Operations

For the year ended December 31, 2015

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
(dollars in millions)
Revenue	$	—		$	—		$	3,325		$	5,077		$	(173	)	$	8,229
Costs and Expenses:
Network access costs	—			—			1,243			1,763			(173		)	2,833
Network related expenses	—			—			947			485			—			1,432
Depreciation and amortization	—			—			309			857			—			1,166
Selling, general and administrative expenses	4			—			1,064			399			—			1,467
Total costs and expenses	4			—			3,563			3,504			(173		)	6,898
Operating Income (Loss)	(4		)	—			(238		)	1,573			—			1,331
Other Income (Expense):
Interest income	—			—			—			1			—			1
Interest expense	(51		)	(574		)	(3		)	(14		)	—			(642		)
Interest income (expense) affiliates, net	1,310			1,984			(3,041		)	(253		)	—			—
Equity in net earnings (losses) of subsidiaries	2,162			(1,693		)	177			—			(646		)	—
Other, net	(18		)	(200		)	3			(192		)	—			(407		)
Total other expense	3,403			(483		)	(2,864		)	(458		)	(646		)	(1,048		)
Income (Loss) before Income Taxes	3,399			(483		)	(3,102		)	1,115			(646		)	283
Income Tax (Expense) Benefit	34			2,645			(1		)	472			—			3,150
Net Income (Loss)	3,433			2,162			(3,103		)	1,587			(646		)	3,433
Other Comprehensive Income (Loss), Net of Income Taxes	(154		)	—			—			154			(154		)	(154		)
Comprehensive Income (Loss)	$	3,279		$	2,162		$	(3,103	)	$	1,741		$	(800	)	$	3,279

Condensed Consolidating Statements of Operations

For the year ended December 31, 2014

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
(dollars in millions)
Revenue	$	—		$	—		$	3,073		$	3,918		$	(214	)	$	6,777
Costs and Expenses:
Network access costs	—			—			1,177			1,566			(214		)	2,529
Network related expenses	—			—			762			484			—			1,246
Depreciation and amortization	—			—			277			531			—			808
Selling, general and administrative expenses	21			2			735			423			—			1,181
Total costs and expenses	21			2			2,951			3,004			(214		)	5,764
Operating Income (Loss)	(21		)	(2		)	122			914			—			1,013
Other Income (Expense):
Interest income	—			—			—			1			—			1
Interest expense	(143		)	(492		)	(2		)	(17		)	—			(654		)
Interest income (expense) affiliates, net	1,227			1,827			(2,890		)	(164		)	—			—
Equity in net earnings (losses) of subsidiaries	(710		)	(2,047		)	663			—			2,094			—
Other, net	(53		)	—			7			(76		)	—			(122		)
Total other expense	321			(712		)	(2,222		)	(256		)	2,094			(775		)
Income (Loss) before Income Taxes	300			(714		)	(2,100		)	658			2,094			238
Income Tax (Expense) Benefit	14			4			(1		)	59			—			76
Net Income (Loss)	314			(710		)	(2,101		)	717			2,094			314
Other Comprehensive Income (Loss), Net of Income Taxes	(183		)	—			—			(183		)	183			(183		)
Comprehensive Income (Loss)	$	131		$	(710	)	$	(2,101	)	$	534		$	2,277		$	131

Condensed Consolidating Statements of Operations

For the year ended December 31, 2013

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
(dollars in millions)
Revenue	$	—		$	—		$	2,825		$	3,734		$	(246	)	$	6,313
Costs and Expenses:
Network access costs	—			—			1,068			1,649			(246		)	2,471
Network related expenses	—			—			753			461			—			1,214
Depreciation and amortization	—			—			289			511			—			800
Selling, general and administrative expenses	3			1			791			367			—			1,162
Total costs and expenses	3			1			2,901			2,988			(246		)	5,647
Operating Income (Loss)	(3		)	(1		)	(76		)	746			—			666
Other Income (Expense):
Interest income	—			—			—			—			—			—
Interest expense	(151		)	(497		)	(3		)	2			—			(649		)
Interest income (expense) affiliates, net	1,091			1,706			(2,679		)	(118		)	—			—
Equity in net earnings (losses) of subsidiaries	(1,039		)	(2,164		)	550			—			2,653			—
Other, net	—			(85		)	4			(7		)	—			(88		)
Total other expense	(99		)	(1,040		)	(2,128		)	(123		)	2,653			(737		)
Income (Loss) before Income Taxes	(102		)	(1,041		)	(2,204		)	623			2,653			(71		)
Income Tax (Expense) Benefit	(7		)	2			—			(33		)	—			(38		)
Net Income (Loss)	(109		)	(1,039		)	(2,204		)	590			2,653			(109		)
Other Comprehensive Income (Loss), Net of Income Taxes	10			10			—			10			(20		)	10
Comprehensive Income (Loss)	$	(99	)	$	(1,029	)	$	(2,204	)	$	600		$	2,633		$	(99	)

Condensed Consolidating Balance Sheets

December 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	$	12	$	6	$	727		$	109	$	—		$	854
Restricted cash and securities	—		—		1			7		—			8
Receivables, less allowances for doubtful accounts	—		—		47			710		—			757
Due from affiliates	12,415		22,759		—			2,816		(37,990		)	—
Other	1		18		56			55		—			130
Total Current Assets	12,428		22,783		831			3,697		(37,990		)	1,749
Property, Plant, and Equipment, net	—		—		3,423			6,455		—			9,878
Restricted Cash and Securities	27		—		14			1		—			42
Goodwill and Other Intangibles, net	—		—		363			8,513		—			8,876
Investment in Subsidiaries	16,772		17,714		3,734			—		(38,220		)	—
Deferred Tax Assets	38		2,847		—			556		—			3,441
Other Assets, net	8		100		12			39		—			159
Total Assets	$	29,273	$	43,444	$	8,377		$	19,261	$	(76,210	)	$	24,145
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	1	$	195		$	433	$	—		$	629
Current portion of long-term debt	—		—		2			13		—			15
Accrued payroll and employee benefits	—		—		186			32		—			218
Accrued interest	11		90		—			7		—			108
Current portion of deferred revenue	—		—		119			148		—			267
Due to affiliates	—		—		37,990			—		(37,990		)	—
Other	—		—		115			64		—			179
Total Current Liabilities	11		91		38,607			697		(37,990		)	1,416
Long-Term Debt, less current portion	600		10,210		15			169		—			10,994
Deferred Revenue, less current portion	—		—		680			297		—			977
Other Liabilities	15		—		133			484		—			632
Commitments and Contingencies
Stockholders' Equity (Deficit)	28,647		33,143		(31,058		)	17,614		(38,220		)	10,126
Total Liabilities and Stockholders' Equity (Deficit)	$	29,273	$	43,444	$	8,377		$	19,261	$	(76,210	)	$	24,145

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			89		—			157
Total Current Assets	14,531		21,296		387			1,059		(35,792		)	1,481
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		)	—
Deferred Tax Assets	—		—		—			300		—			300
Other Assets, net	28		129		9			17		—			183
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			95		—			159
Total Current Liabilities	345		160		34,973			2,220		(35,792		)	1,906
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			608		—			773
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

For the year ended December 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	$	(40	)	$	(617	)	$	193		$	2,319		$	—	$	1,855
Cash Flows from Investing Activities:
Capital expenditures	—			—			(453		)	(776		)	—		(1,229		)
Cash related to deconsolidated Venezuela operations	—			—			—			(83		)	—		(83		)
Change in restricted cash and securities, net	(25		)	—			3			—			—		(22		)
Proceeds from sale of property, plant and equipment and other assets	—			—			—			4			—		4
Other	—			—			(14		)	—			—		(14		)
Net Cash Provided by (Used in) Investing Activities	(25		)	—			(464		)	(855		)	—		(1,344		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			4,832			—			—			—		4,832
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(313		)	(4,725		)	(2		)	(11		)	—		(5,051		)
Increase (decrease) due from/to affiliates, net	383			511			693			(1,587		)	—		—
Net Cash Provided by (Used in) Financing Activities	70			618			691			(1,598		)	—		(219		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(18		)	—		(18		)
Net Change in Cash and Cash Equivalents	5			1			420			(152		)	—		274
Cash and Cash Equivalents at Beginning of Year	7			5			307			261			—		580
Cash and Cash Equivalents at End of Year	$	12		$	6		$	727		$	109		$	—	$	854

Condensed Consolidating Statements of Cash Flows

For the year ended December 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	$	(178	)	$	(458	)	$	625		$	1,172		$	—	$	1,161
Cash Flows from Investing Activities:
Capital expenditures	—			—			(362		)	(548		)	—		(910		)
Change in restricted cash and securities, net	—			—			2			(12		)	—		(10		)
Proceeds from sale of property, plant and equipment and other assets	—			—			—			3			—		3
Investment in tw telecom, net of cash acquired	(474		)	—			—			307			—		(167		)
Other	—			—			—			(2		)	—		(2		)
Net Cash Provided by (Used in) Investing Activities	(474		)	—			(360		)	(252		)	—		(1,086		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	590			—			—			(1		)	—		589
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(647		)	—			—			(24		)	—		(671		)
Increase (decrease) due from/to affiliates, net	708			457			(305		)	(860		)	—		—
Net Cash Provided by (Used in) Financing Activities	651			457			(305		)	(885		)	—		(82		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(44		)	—		(44		)
Net Change in Cash and Cash Equivalents	(1		)	(1		)	(40		)	(9		)	—		(51		)
Cash and Cash Equivalents at Beginning of Year	8			6			347			270			—		631
Cash and Cash Equivalents at End of Year	$	7		$	5		$	307		$	261		$	—	$	580

Condensed Consolidating Statements of Cash Flows

For the year ended December 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	$	(169	)	$	(557	)	$	710		$	729		$	—	$	713
Cash Flows from Investing Activities:
Capital expenditures	—			—			(312		)	(448		)	—		(760		)
Change in restricted cash and securities, net	9			—			(1		)	5			—		13
Other	—			—			1			1			—		2
Net Cash Provided by (Used in) Investing Activities	9			—			(312		)	(442		)	—		(745		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			1,502			—			—			—		1,502
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(173		)	(1,586		)	(4		)	(33		)	—		(1,796		)
Increase (decrease) due from affiliates, net	88			642			(433		)	(297		)	—		—
Net Cash Provided by (Used in) Financing Activities	(85		)	558			(437		)	(330		)	—		(294		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(22		)	—		(22		)
Net Change in Cash and Cash Equivalents	(245		)	1			(39		)	(65		)	—		(348		)
Cash and Cash Equivalents at Beginning of Year	253			5			386			335			—		979
Cash and Cash Equivalents at End of Year	$	8		$	6		$	347		$	270		$	—	$	631