Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2012

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

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, other than the 7% Senior Notes due 2020, 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 Operations

For the year ended December 31, 2012

	Level 3 Communications, Inc			Level 3 Financing, Inc			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	2,657		$	3,975		$	(256	)	$	6,376
Costs and Expense:
Cost of Revenue	—			—			996			1,854			(248		)	2,602
Depreciation and Amortization	—			—			260			489			—			749
Selling, General and Administrative	2			1			1,541			880			(8		)	2,416
Restructuring Charges	—			—			18			16			—			34
Total Costs and Expenses	2			1			2,815			3,239			(256		)	5,801
Operating Income (Loss)	(2		)	(1		)	(158		)	736			—			575
Other Income (Expense):
Interest income	—			—			1			1			—			2
Interest expense	(168		)	(535		)	(3		)	(27		)	—			(733		)
Interest income (expense) affiliates, net	976			1,598			(2,233		)	(341		)	—			—
Equity in net earnings (losses) of subsidiaries	(1,188		)	(2,066		)	92			—			3,162			—
Other income (expense), net	(39		)	(184		)	6			(1		)	—			(218		)
Total Other Expense	(419		)	(1,187		)	(2,137		)	(368		)	3,162			(949		)
Income (Loss) before Income Taxes	(421		)	(1,188		)	(2,295		)	368			3,162			(374		)
Income Tax Expense	(1		)	—			(4		)	(43		)	—			(48		)
Net Income (Loss)	(422		)	(1,188		)	(2,299		)	325			3,162			(422		)
Other Comprehensive Income, Net of Income Taxes	106			106			—			16			(122		)	106
Comprehensive Income (Loss)	$	(316	)	$	(1,082	)	$	(2,299	)	$	341		$	3,040		$	(316	)

Condensed Consolidating Statements of Operations

For the year ended December 31, 2011

	Level 3 Communications, Inc			Level 3 Financing, Inc			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	2,367		$	2,196		$	(230	)	$	4,333
Costs and Expense:
Cost of Revenue	—			—			888			1,036			(218		)	1,706
Depreciation and Amortization	—			—			376			429			—			805
Selling, General and Administrative	2			19			1,269			481			(12		)	1,759
Restructuring Charges	—			—			1			10			—			11
Total Costs and Expenses	2			19			2,534			1,956			(230		)	4,281
Operating Income (Loss)	(2		)	(19		)	(167		)	240			—			52
Other Income (Expense):
Interest income	—			—			—			1			—			1
Interest expense	(211		)	(471		)	(3		)	(31		)	—			(716		)
Interest income (expense) affiliates, net	865			1,423			(2,065		)	(223		)	—			—
Equity in net earnings (losses) of subsidiaries	(1,346		)	(2,241		)	122			—			3,465			—
Other income (expense), net	(62		)	(38		)	9			(32		)	—			(123		)
Total Other Expense	(754		)	(1,327		)	(1,937		)	(285		)	3,465			(838		)
Loss before Income Taxes	(756		)	(1,346		)	(2,104		)	(45		)	3,465			(786		)
Income Tax Expense	—			—			(15		)	(26		)	—			(41		)
Loss from Continuing Operations	(756		)	(1,346		)	(2,119		)	(71		)	3,465			(827		)
Income From Discontinued Operations, Net	—			—			—			71			—			71
Net Loss	(756		)	(1,346		)	(2,119		)	—			3,465			(756		)
Other Comprehensive Income (Loss), Net of Income Taxes	18			18			—			—			(18		)	18
Comprehensive Loss	$	(738	)	$	(1,328	)	$	(2,119	)	$	—		$	3,447		$	(738	)

Condensed Consolidating Statements of Operations

For the year ended December 31, 2010

	Level 3 Communications, Inc			Level 3 Financing, Inc			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	2,046		$	1,774		$	(229	)	$	3,591
Costs and Expense:
Cost of Revenue	—			—			800			851			(217		)	1,434
Depreciation and Amortization	—			—			429			441			—			870
Selling, General and Administrative	2			—			1,185			198			(12		)	1,373
Restructuring Charges	—			—			1			1			—			2
Total Costs and Expenses	2			—			2,415			1,491			(229		)	3,679
Operating Income (Loss)	(2		)	—			(369		)	283			—			(88		)
Other Income (Expense):
Interest income	—			—			1			—			—			1
Interest expense	(199		)	(377		)	(2		)	(8		)	—			(586		)
Interest income (expense) affiliates, net	795			1,298			(1,891		)	(202		)	—			—
Equity in net earnings (losses) of subsidiaries	(1,221		)	(2,087		)	218			—			3,090			—
Other income (expense), net	5			(55		)	1			10			—			(39		)
Total Other Expense	(620		)	(1,221		)	(1,673		)	(200		)	3,090			(624		)
Income (Loss) before Income Taxes	(622		)	(1,221		)	(2,042		)	83			3,090			(712		)
Income Tax (Expense) Benefit	—			—			(1		)	92			—			91
Income (Loss) from Continuing Operations	(622		)	(1,221		)	(2,043		)	175			3,090			(621		)
Loss From Discontinued Operations, Net	—			—			—			(1		)	—			(1		)
Net Income (Loss)	(622		)	(1,221		)	(2,043		)	174			3,090			(622		)
Other Comprehensive Loss, Net of Income Taxes	(93		)	(93		)	—			(77		)	170			(93		)
Comprehensive Income (Loss)	$	(715	)	$	(1,314	)	$	(2,043	)	$	97		$	3,260		$	(715	)

Condensed Consolidating Balance Sheets

December 31, 2012

	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	$	253		$	5		$	386		$	335	$	—		$	979
Restricted cash and securities	—			—			1			7		—			8
Receivables, less allowances for doubtful accounts	—			—			93			621		—			714
Due from affiliates	14,446			15,709			—			7		(30,162		)	—
Other	3			16			49			73		—			141
Total Current Assets	14,702			15,730			529			1,043		(30,162		)	1,842
Property, Plant, and Equipment, net	—			—			2,926			5,273		—			8,199
Restricted Cash and Securities	12			—			17			6		—			35
Goodwill and Other Intangibles, net	—			—			429			2,404		—			2,833
Investment in Subsidiaries	(11,756		)	(20,470		)	3,242			—		28,984			—
Other Assets, net	16			119			11			252		—			398
Total Assets	$	2,974		$	(4,621	)	$	7,154		$	8,978	$	(1,178	)	$	13,307
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	1		$	2		$	53		$	723	$	—		$	779
Current portion of long-term debt	172			6			6			32		—			216
Accrued payroll and employee benefits	—			—			161			50		—			211
Accrued interest	45			163			—			1		—			209
Current portion of deferred revenue	—			—			109			142		—			251
Due to affiliates	—			—			30,162			—		(30,162		)	—
Other	1			1			29			105		—			136
Total Current Liabilities	219			172			30,520			1,053		(30,162		)	1,802
Long-Term Debt, less current portion	1,570			6,886			20			40		—			8,516
Deferred Revenue, less current portion	—			—			602			285		—			887
Other Liabilities	14			81			75			761		—			931
Commitments and Contingencies
Stockholders' Equity (Deficit)	1,171			(11,760		)	(24,063		)	6,839		28,984			1,171
Total Liabilities and Stockholders' Equity (Deficit)	$	2,974		$	(4,621	)	$	7,154		$	8,978	$	(1,178	)	$	13,307

Condensed Consolidating Balance Sheets

December 31, 2011

	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	$	2		$	6		$	618		$	292	$	—		$	918
Restricted cash and securities	—			—			1			9		—			10
Receivables, less allowances for doubtful accounts	—			—			59			589		—			648
Due from affiliates	13,472			14,584			—			36		(28,092		)	—
Other	3			16			48			64		—			131
Total Current Assets	13,477			14,606			726			990		(28,092		)	1,707
Property, Plant, and Equipment, net	—			—			2,823			5,313		—			8,136
Restricted Cash and Securities	18			—			19			14		—			51
Goodwill and Other Intangibles, net	—			—			481			2,418		—			2,899
Investment in Subsidiaries	(10,718		)	(18,467		)	3,412			—		25,773			—
Other Assets, net	13			109			6			267		—			395
Total Assets	$	2,790		$	(3,752	)	$	7,467		$	9,002	$	(2,319	)	$	13,188
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—		$	—		$	37		$	710	$	—		$	747
Current portion of long-term debt	—			—			2			63		—			65
Accrued payroll and employee benefits	—			—			116			93		—			209
Accrued interest	50			165			—			1		—			216
Current portion of deferred revenue	—			—			107			157		—			264
Due to affiliates	—			—			28,092			—		(28,092		)	—
Other	—			1			52			104		—			157
Total Current Liabilities	50			166			28,406			1,128		(28,092		)	1,658
Long-Term Debt, less current portion	1,533			6,688			22			142		—			8,385
Deferred Revenue, less current portion	—			—			612			273		—			885
Other Liabilities	14			116			146			791		—			1,067
Commitments and Contingencies
Stockholders' Equity (Deficit)	1,193			(10,722		)	(21,719		)	6,668		25,773			1,193
Total Liabilities and Stockholders' Equity (Deficit)	$	2,790		$	(3,752	)	$	7,467		$	9,002	$	(2,319	)	$	13,188

Condensed Consolidating Statements of Cash Flows

For the year ended December 31, 2012

	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	$	(165	)	$	(520	)	$	140		$	1,123		$	—	$	578
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(276		)	(467		)	—		(743		)
Decrease in restricted cash and securities, net	6			—			2			12			—		20
Proceeds from sale of property, plant, and equipment and other assets	—			—			—			11			—		11
Other	—			—			—			(13		)	—		(13		)
Net Cash Provided by (Used in) Investing Activities	6			—			(274		)	(457		)	—		(725		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	293			4,211			—			—			—		4,504
Payments on and repurchases of long-term debt, including current portion and refinancing costs	—			(4,161		)	—			(141		)	—		(4,302		)
Proceeds from stock options exercised	5			—			—			—			—		5
Increase (decrease) due from affiliates, net	112			469			(98		)	(483		)	—		—
Net Cash Provided by (Used in) Financing Activities	410			519			(98		)	(624		)	—		207
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			1			—		1
Net Change in Cash and Cash Equivalents	251			(1		)	(232		)	43			—		61
Cash and Cash Equivalents at Beginning of Year	2			6			618			292			—		918
Cash and Cash Equivalents at End of Year	$	253		$	5		$	386		$	335		$	—	$	979

Condensed Consolidating Statements of Cash Flows

For the year ended December 31, 2011

	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 of Continuing Operations	$	(176	)	$	(428	)	$	293		$	699		$	—	$	388
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(197		)	(297		)	—		(494		)
Decrease (increase) in restricted cash and securities, net	—			—			3			(57		)	—		(54		)
Proceeds from sale of property, plant, and equipment and other assets	—			—			1			3			—		4
Investments in Global Crossing. net of cash acquired	—			—			—			146			—		146
Net Cash Used in Investing Activities of Continuing Operations	—			—			(193		)	(205		)	—		(398		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	292			1,586			—			—			—		1,878
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(521		)	(755		)	—			(341		)	—		(1,617		)
Increase (decrease) due from affiliates, net	234			(404		)	168			2			—		—
Net Cash Provided by (Used in) Financing Activities of Continuing Operations	5			427			168			(339		)	—		261
Net Cash Provided by Discontinued Operations	—			—			—			51			—		51
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			—			—		—
Net Change in Cash and Cash Equivalents	(171		)	(1		)	268			206			—		302
Cash and Cash Equivalents at Beginning of Year	173			7			350			86			—		616
Cash and Cash Equivalents at End of Year	$	2		$	6		$	618		$	292		$	—	$	918

Condensed Consolidating Statements of Cash Flows

For the year ended December 31, 2010

	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 of Continuing Operations	$	(156	)	$	(362	)	$	76		$	781		$	—	$	339
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(161		)	(274		)	—		(435		)
Decrease in restricted cash and securities, net	—			—			3			—			—		3
Proceeds from sale of property, plant, and equipment and other assets	—			—			2			2			—		4
Net Cash Used in Investing Activities of Continuing Operations	—			—			(156		)	(272		)	—		(428		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	195			613			—			—			—		808
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(328		)	(599		)	(1		)	(2		)	—		(930		)
Increase (decrease) due from affiliates, net	226			347			—			(573		)	—		—
Net Cash Provided by (Used in) Financing Activities of Continuing Operations	93			361			(1		)	(575		)	—		(122		)
Net Cash Used in Discontinued Operations	—			—			—			(1		)	—		(1		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(8		)	—		(8		)
Net Change in Cash and Cash Equivalents	(63		)	(1		)	(81		)	(75		)	—		(220		)
Cash and Cash Equivalents at Beginning of Year	236			8			431			161			—		836
Cash and Cash Equivalents at End of Year	$	173		$	7		$	350		$	86		$	—	$	616