Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of outstanding interest rate derivatives designated as cash flow hedges

In March 2007, Level 3 Financing, Inc. entered into two interest rate swap agreements to hedge the interest payments on $1 billion notional amount of floating rate debt. The Company had designated these interest rate swap agreements as cash flow hedges. The two interest rate swap agreements are with different counterparties and are for $500 million each. The arrangements began in April 2007 and mature in January 2014. Under the terms of these arrangements, the Company receives interest payments based on rolling three month LIBOR terms and pays interest at the fixed rate of 4.93% under one arrangement and approximately 4.92% under the other.

Interest Rate Derivative	Number of Instruments	Notional (dollars in millions)
Interest rate swaps	Two	$	1,000

Schedule of fair value of derivative financial instruments

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets (dollars in millions):

	Liability Derivatives
	June 30, 2013			December 31, 2012
Derivatives not designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swap agreements	Other current liabilities	$	34	Other non-current liabilities	$	56

Schedule of the amount of net gains (losses) recognized in Accumulated Other Comprehensive Income (Loss)

The amount of net gains (losses) recognized in Accumulated Other Comprehensive Income (Loss), including reclassification gains (losses) consists of the following (dollars in millions):

Derivatives designated as hedging instruments	2013		2012
Cash flow hedging contracts
Three Months Ended June 30,	$	—	$	9
Six Months Ended June 30,	$	—	$	16

Schedule of the amount of gains (losses) reclassified from Accumulated Other Comprehensive Income (Loss) to Interest Expense

The amount of gains (losses) reclassified from Accumulated Other Comprehensive Income (Loss) to earnings (effective portions) consists of the following (dollars in millions):

Derivatives designated as hedging instruments	Statement of Operations Location	2013		2012
Cash flow hedging contracts
Three Months Ended June 30,	Interest Expense	$	—	$	(11	)
Six Months Ended June 30,	Interest Expense	$	—	$	(22	)