Condensed Consolidating Financial Information (Notes)

9 Months Ended

Sep. 30, 2014

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information (as revised)

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 September 30, 2014

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	781		$	901		$	(53	)	$	1,629
Costs and Expense:
Network Access Costs	—			—			291			369			(53		)	607
Network Related Expenses	—			—			195			112			—			307
Depreciation and Amortization	—			—			70			117			—			187
Selling, General and Administrative Expenses	6			—			181			79			—			266
Total Costs and Expenses	6			—			737			677			(53		)	1,367
Operating Income (Loss)	(6		)	—			44			224			—			262
Other Income (Expense):
Interest Income	—			—			—			1			—			1
Interest expense	(34		)	(112		)	(1		)	(12		)	—			(159		)
Interest income (expense) affiliates, net	314			452			(730		)	(36		)	—			—
Equity in net earnings (losses) of subsidiaries	(189		)	(528		)	162			—			555			—
Other, net	—			—			2			(13		)	—			(11		)
Total Other Income (Expense)	91			(188		)	(567		)	(60		)	555			(169		)
Income (Loss) before Income Taxes	85			(188		)	(523		)	164			555			93
Income Tax Expense	—			(1		)	—			(7		)	—			(8		)
Net Income (Loss)	85			(189		)	(523		)	157			555			85
Other Comprehensive Income, Net of Income Taxes	(137		)	—			—			(137		)	137			(137		)
Comprehensive Income (Loss)	$	(52	)	$	(189	)	$	(523	)	$	20		$	692		$	(52	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

Nine Months EndedSeptember 30, 2014

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	2,278		$	2,750		$	(165	)	$	4,863
Costs and Expense:
Network Access Costs	—			—			869			1,130			(165		)	1,834
Network Related Expenses	—			—			567			334			—			901
Depreciation and Amortization	—			—			209			349			—			558
Selling, General and Administrative Expenses	7			1			505			275			—			788
Total Costs and Expenses	7			1			2,150			2,088			(165		)	4,081
Operating Income (Loss)	(7		)	(1		)	128			662			—			782
Other Income (Expense):
Interest Income	—			—			—			1			—			1
Interest expense	(102		)	(337		)	(1		)	(19		)	—			(459		)
Interest income (expense) affiliates, net	905			1,370			(2,169		)	(106		)	—			—
Equity in net earnings (losses) of subsidiaries	(548		)	(1,577		)	502			—			1,623			—
Other, net	—			—			6			(55		)	—			(49		)
Total Other Expense	255			(544		)	(1,662		)	(179		)	1,623			(507		)
Income (Loss) before Income Taxes	248			(545		)	(1,534		)	483			1,623			275
Income Tax Expense	—			(3		)	(1		)	(23		)	—			(27		)
Net Income (Loss)	248			(548		)	(1,535		)	460			1,623			248
Other Comprehensive Loss, Net of Income Taxes	(118		)	—			—			(118		)	118			(118		)
Comprehensive Income (Loss)	$	130		$	(548	)	$	(1,535	)	$	342		$	1,741		$	130

Condensed Consolidating Statements of Comprehensive Income (Loss)

Three Months Ended September 30, 2013 (as revised)

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	711		$	919		$	(61	)	$	1,569
Costs and Expense:
Network Access Costs							264			405			(61		)	608
Network Related Expenses	—			—			194			120			—			314
Depreciation and Amortization	—			—			73			130			—			203
Selling, General and Administrative Expenses	1			1			191			99			—			292
Total Costs and Expenses	1			1			722			754			(61		)	1,417
Operating Income (Loss)	(1		)	(1		)	(11		)	165			—			152
Other Income (Expense):
Interest expense	(38		)	(123		)	(1		)	(3		)	—			(165		)
Interest income (expense) affiliates, net	274			429			(670		)	(33		)	—			—
Equity in net earnings (losses) of subsidiaries	(255		)	(542		)	122			—			675			—
Other, net	—			(18		)	1			23			—			6
Total Other Expense	(19		)	(254		)	(548		)	(13		)	675			(159		)
Income (Loss) before Income Taxes	(20		)	(255		)	(559		)	152			675			(7		)
Income Tax Expense	(1		)	—			(1		)	(12		)	—			(14		)
Net Income (Loss)	(21		)	(255		)	(560		)	140			675			(21		)
Other Comprehensive Income, Net of Income Taxes	42			42			—			42			(84		)	42
Comprehensive Income (Loss)	$	21		$	(213	)	$	(560	)	$	182		$	591		$	21

Condensed Consolidating Statements of Comprehensive Income (Loss)

Nine Months EndedSeptember 30, 2013 (as revised)

	Level 3 Communications, Inc.			Level 3 Financing, Inc.			Level 3 Communications, LLC			Other Non-Guarantor Subsidiaries			Eliminations			Total
	(dollars in millions)
Revenue	$	—		$	—		$	2,090		$	2,803		$	(182	)	$	4,711
Costs and Expense:
Network Access Costs	—			—			781			1,254			(182		)	1,853
Network Related Expenses	—			—			572			344			—			916
Depreciation and Amortization	—			—			215			381			—			596
Selling, General and Administrative Expenses	2			1			606			290			—			899
Total Costs and Expenses	2			1			2,174			2,269			(182		)	4,264
Operating Income (Loss)	(2		)	(1		)	(84		)	534			—			447
Other Income (Expense):
Interest expense	(114		)	(374		)	(2		)	(11		)	—			(501		)
Interest income (expense) affiliates, net	819			1,284			(2,008		)	(95		)	—			—
Equity in net earnings (losses) of subsidiaries	(825		)	(1,715		)	398			—			2,142			—
Other, net	—			(19		)	3			(14		)	—			(30		)
Total Other Expense	(120		)	(824		)	(1,609		)	(120		)	2,142			(531		)
Income (Loss) before Income Taxes	(122		)	(825		)	(1,693		)	414			2,142			(84		)
Income Tax Expense	(1		)	—			(2		)	(36		)	—			(39		)
Net Income (Loss)	(123		)	(825		)	(1,695		)	378			2,142			(123		)
Other Comprehensive Income, Net of Income Taxes	(21		)	(21		)	—			(21		)	42			(21		)
Comprehensive Income (Loss)	$	(144	)	$	(846	)	$	(1,695	)	$	357		$	2,184		$	(144	)

Condensed Consolidating Balance Sheets

September 30, 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	$	524		$	193	$	—		$	729
Restricted cash and securities	—		—		1			1,019		—			1,020
Receivables, less allowances for doubtful accounts	—		—		48			630		—			678
Due from affiliates	16,348		17,921		—			—		(34,269		)	—
Other	3		16		63			91		—			173
Total Current Assets	16,358		17,942		636			1,933		(34,269		)	2,600
Property, Plant, and Equipment, net	—		—		3,112			5,156		—			8,268
Restricted Cash and Securities	3		—		16			2		—			21
Goodwill and Other Intangibles, net	—		—		376			2,348		—			2,724
Investment in Subsidiaries	10,127		8,794		3,731			—		(22,652		)	—
Other Assets, net	8		100		10			252		—			370
Total Assets	$	26,496	$	26,836	$	7,881		$	9,691	$	(56,921	)	$	13,983
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	2	$	—	$	236		$	369	$	—		$	607
Current portion of long-term debt	475		—		2			25		—			502
Accrued payroll and employee benefits	—		—		128			37		—			165
Accrued interest	46		131		—			7		—			184
Current portion of deferred revenue	—		—		124			120		—			244
Due to affiliates	—		—		33,869			400		(34,269		)	—
Other	—		1		67			83		—			151
Total Current Liabilities	523		132		34,426			1,041		(34,269		)	1,853
Long-Term Debt, less current portion	898		6,907		17			1,034		—			8,856
Deferred Revenue, less current portion	—		—		570			307		—			877
Other Liabilities	15		29		119			586		—			749
Commitments and Contingencies										—			—
Stockholders' Equity (Deficit)	25,060		19,768		(27,251		)	6,723		(22,652		)	1,648
Total Liabilities and Stockholders' Equity (Deficit)	$	26,496	$	26,836	$	7,881		$	9,691	$	(56,921	)	$	13,983

Condensed Consolidating Balance Sheets

December 31, 2013

	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	$	8	$	6	$	347		$	270	$	—		$	631
Restricted cash and securities	—		—		1			6		—			7
Receivables, less allowances for doubtful accounts	—		—		79			594		—			673
Due from affiliates	15,507		16,886		—			—		(32,393		)	—
Other	2		15		47			79		—			143
Total Current Assets	15,517		16,907		474			949		(32,393		)	1,454
Property, Plant, and Equipment, net	—		—		3,028			5,212		—			8,240
Restricted Cash and Securities	3		—		18			2		—			23
Goodwill and Other Intangibles, net	—		—		395			2,387		—			2,782
Investment in Subsidiaries	10,039		27,014		3,735			—		(40,788		)	—
Other Assets, net	10		113		11			241		—			375
Total Assets	$	25,569	$	44,034	$	7,661		$	8,791	$	(73,181	)	$	12,874
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable	$	—	$	2	$	42		$	581	$	—		$	625
Current portion of long-term debt	—		—		3			28		—			31
Accrued payroll and employee benefits	—		—		171			38		—			209
Accrued interest	30		129		—			1		—			160
Current portion of deferred revenue	—		—		131			122		—			253
Due to affiliates	—		—		32,165			228		(32,393		)	—
Other	—		13		74			81		—			168
Total Current Liabilities	30		144		32,586			1,079		(32,393		)	1,446
Long-Term Debt, less current portion	1,370		6,905		17			39		—			8,331
Deferred Revenue, less current portion	—		—		603			303		—			906
Other Liabilities	15		27		135			603		—			780
Commitments and Contingencies	—		—		—			—		—			—
Stockholders' Equity (Deficit)	24,154		36,958		(25,680		)	6,767		(40,788		)	1,411
Total Liabilities and Stockholders' Equity (Deficit)	$	25,569	$	44,034	$	7,661		$	8,791	$	(73,181	)	$	12,874

Condensed Consolidating Statements of Cash Flows

Nine Months EndedSeptember 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	$	(91	)	$	(336	)	$	443		$	749		$	—	$	765
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(261		)	(347		)	—		(608		)
Increase in restricted cash and securities, net	—			—			1			(11		)	—		(10		)
Proceeds from the sale of property, plant and equipment and other assets	—			—			—			3			—		3
Other	—			—			—			(2		)	—		(2		)
Net Cash Provided by (Used in) Investing Activities	—			—			(260		)	(357		)	—		(617		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			—			—			(1		)	—		(1		)
Payments on and repurchases of long-term debt, including current portion and refinancing costs	—			—			—			(8		)	—		(8		)
Increase (decrease) due from/to affiliates, net	90			335			(6		)	(419		)	—		—
Net Cash Provided by (Used in) Financing Activities	90			335			(6		)	(428		)	—		(9		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(41		)	—		(41		)
Net Change in Cash and Cash Equivalents	(1		)	(1		)	177			(77		)	—		98
Cash and Cash Equivalents at Beginning of Period	8			6			347			270			—		631
Cash and Cash Equivalents at End of Period	$	7		$	5		$	524		$	193		$	—	$	729

Condensed Consolidating Statements of Cash Flows

Nine Months EndedSeptember 30, 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	$	(105	)	$	(441	)	$	298		$	575		$	—	$	327
Cash Flows from Investing Activities:
Capital Expenditures	—			—			(235		)	(336		)	—		(571		)
Decrease in restricted cash and securities, net	9			—			—			4			—		13
Proceeds from sale of property, plant and equipment and other assets	—			—			—			16			—		16
Other	—			—			—			(14		)	—		(14		)
Net Cash Provided by (Used in) Investing Activities	9			—			(235		)	(330		)	—		(556		)
Cash Flows from Financing Activities:
Long-term debt borrowings, net of issuance costs	—			590			—			—			—		590
Payments on and repurchases of long-term debt, including current portion and refinancing costs	(172		)	(607		)	(4		)	(27		)	—		(810		)
Increase (decrease) due from/to affiliates, net	24			459			(156		)	(327		)	—		—
Net Cash Provided by (Used in) Financing Activities	(148		)	442			(160		)	(354		)	—		(220		)
Effect of Exchange Rates on Cash and Cash Equivalents	—			—			—			(23		)	—		(23		)
Net Change in Cash and Cash Equivalents	(244		)	1			(97		)	(132		)	—		(472		)
Cash and Cash Equivalents at Beginning of Period	253			5			386			335			—		979
Cash and Cash Equivalents at End of Period	$	9		$	6		$	289		$	203		$	—	$	507