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Condensed Consolidating Financial Information (Tables)
 9 Months Ended
Sep. 30, 2016
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, 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, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
907

 
$
1,160

 
$
(34
)
 
$
2,033

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
330

 
379

 
(34
)
 
675

Network Related Expenses
—

 
—

 
242

 
95

 
—

 
337

Depreciation and Amortization
—

 
—

 
100

 
219

 
—

 
319

Selling, General and Administrative Expenses
1

 
1

 
262

 
84

 
—

 
348

Total Costs and Expenses
1

 
1

 
934

 
777

 
(34
)
 
1,679

Operating Income (Loss)
(1
)
 
(1
)
 
(27
)
 
383

 
—

 
354

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(9
)
 
(124
)
 
(1
)
 
(5
)
 
—

 
(139
)
Interest income (expense) affiliates, net
342

 
526

 
(804
)
 
(64
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(193
)
 
(539
)
 
169

 
—

 
563

 
—

Other, net
—

 
—

 
(1
)
 
2

 
—

 
1

Total Other Income (Expense)
140

 
(137
)
 
(636
)
 
(67
)
 
563

 
(137
)
Income (Loss) before Income Taxes
139

 
(138
)
 
(663
)
 
316

 
563

 
217

Income Tax Benefit (Expense)
4

 
(55
)
 
—

 
(23
)
 
—

 
(74
)
Net Income (Loss)
143

 
(193
)
 
(663
)
 
293

 
563

 
143

Other Comprehensive Income (Loss), Net of Income Taxes
(15
)
 
—

 
—

 
(15
)
 
15

 
(15
)
Comprehensive Income (Loss)
$
128

 
$
(193
)
 
$
(663
)
 
$
278

 
$
578

 
$
128

Condensed Consolidating Statements of Comprehensive Income (Loss)
Nine Months Ended September 30, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
2,652

 
$
3,590

 
$
(102
)
 
$
6,140

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
965

 
1,182

 
(102
)
 
2,045

Network Related Expenses
—

 
—

 
716

 
298

 
—

 
1,014

Depreciation and Amortization
—

 
—

 
280

 
650

 
—

 
930

Selling, General and Administrative Expenses
3

 
4

 
775

 
279

 
—

 
1,061

Total Costs and Expenses
3

 
4

 
2,736

 
2,409

 
(102
)
 
5,050

Operating Income (Loss)
(3
)
 
(4
)
 
(84
)
 
1,181

 
—

 
1,090

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
2

 
1

 
—

 
3

Interest expense
(27
)
 
(380
)
 
(2
)
 
(5
)
 
—

 
(414
)
Interest income (expense) affiliates, net
1,027

 
1,585

 
(2,407
)
 
(205
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(581
)
 
(1,568
)
 
569

 
—

 
1,580

 
—

Other, net
—

 
(39
)
 
2

 
(17
)
 
—

 
(54
)
Total Other Income (Expense)
419

 
(402
)
 
(1,836
)
 
(226
)
 
1,580

 
(465
)
Income (Loss) before Income Taxes
416

 
(406
)
 
(1,920
)
 
955

 
1,580

 
625

Income Tax Benefit (Expense)
11

 
(175
)
 
(2
)
 
(32
)
 
—

 
(198
)
Net Income (Loss)
427

 
(581
)
 
(1,922
)
 
923

 
1,580

 
427

Other Comprehensive Income (Loss), Net of Income Taxes
8

 
—

 
—

 
8

 
(8
)
 
8

Comprehensive Income (Loss)
$
435

 
$
(581
)
 
$
(1,922
)
 
$
931

 
$
1,572

 
$
435

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended September 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

 
$
1,271

 
$
(39
)
 
$
2,062

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network access costs
—

 
—

 
300

 
445

 
(39
)
 
706

Network related expenses
—

 
—

 
252

 
117

 
—

 
369

Depreciation and amortization
—

 
—

 
78

 
218

 
—

 
296

Selling, general and administrative expenses
1

 
—

 
274

 
89

 
—

 
364

Total Costs and Expenses
1

 
—

 
904

 
869

 
(39
)
 
1,735

Operating (Loss) Income
(1
)
 
—

 
(74
)
 
402

 
—

 
327

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
—

 
—

 
—

Interest expense
(9
)
 
(135
)
 
—

 
(1
)
 
—

 
(145
)
Interest income (expense) affiliates, net
320

 
498

 
(762
)
 
(56
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(309
)
 
(671
)
 
(186
)
 
—

 
1,166

 
—

Other, net
—

 
—

 
3

 
(168
)
 
—

 
(165
)
Total Other Income (Expense)
2

 
(308
)
 
(945
)
 
(225
)
 
1,166

 
(310
)
Income (Loss) before Income Taxes
1

 
(308
)
 
(1,019
)
 
177

 
1,166

 
17

Income Tax Expense
—

 
(1
)
 
—

 
(15
)
 
—

 
(16
)
Net Income (Loss)
1

 
(309
)
 
(1,019
)
 
162

 
1,166

 
1

Other Comprehensive Income (Loss), Net of Income Taxes
(72
)
 
—

 
—

 
(72
)
 
72

 
(72
)
Comprehensive Income (Loss)
$
(71
)
 
$
(309
)
 
$
(1,019
)
 
$
90

 
$
1,238

 
$
(71
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Nine Months Ended September 30, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
2,480

 
$
3,832

 
$
(136
)
 
$
6,176

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network access costs
—

 
—

 
919

 
1,342

 
(136
)
 
2,125

Network related expenses
—

 
—

 
713

 
375

 
—

 
1,088

Depreciation and amortization
—

 
—

 
227

 
645

 
—

 
872

Selling, general and administrative expenses
3

 
—

 
789

 
306

 
—

 
1,098

Total Costs and Expenses
3

 
—

 
2,648

 
2,668

 
(136
)
 
5,183

Operating (Loss) Income
(3
)
 
—

 
(168
)
 
1,164

 
—

 
993

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(42
)
 
(436
)
 
(2
)
 
(10
)
 
—

 
(490
)
Interest income (expense) affiliates, net
984

 
1,495

 
(2,297
)
 
(182
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(811
)
 
(1,723
)
 
174

 
—

 
2,360

 
—

Other, net
(18
)
 
(145
)
 
2

 
(194
)
 
—

 
(355
)
Total Other Income (Expense)
113

 
(809
)
 
(2,123
)
 
(385
)
 
2,360

 
(844
)
Income (Loss) before Income Taxes
110

 
(809
)
 
(2,291
)
 
779

 
2,360

 
149

Income Tax Expense
—

 
(2
)
 
—

 
(37
)
 
—

 
(39
)
Net Income (Loss)
110

 
(811
)
 
(2,291
)
 
742

 
2,360

 
110

Other Comprehensive Income (Loss), Net of Income Taxes
(128
)
 
—

 
—

 
(128
)
 
128

 
(128
)
Comprehensive Income (Loss)
$
(18
)
 
$
(811
)
 
$
(2,291
)
 
$
614

 
$
2,488

 
$
(18
)
Condensed Consolidating Balance Sheets
September 30, 2016

 
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
$
16

 
$
—

 
$
1,482

 
$
71

 
$
—

 
$
1,569

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
41

 
708

 
—

 
749

Due from affiliates
16,717

 
20,980

 
—

 
2,854

 
(40,551
)
 
—

Other
—

 
—

 
89

 
42

 
—

 
131

Total Current Assets
16,733

 
20,980

 
1,613

 
3,682

 
(40,551
)
 
2,457

Property, Plant, and Equipment, net
—

 
—

 
3,780

 
6,387

 
—

 
10,167

Restricted Cash and Securities
22

 
—

 
9

 
—

 
—

 
31

Goodwill and Other Intangibles, net
—

 
—

 
355

 
8,348

 
—

 
8,703

Investment in Subsidiaries
16,846

 
17,692

 
3,691

 
—

 
(38,229
)
 
—

Deferred Tax Assets
48

 
2,713

 
—

 
578

 
—

 
3,339

Other Assets, net
—

 
—

 
12

 
37

 
—

 
49

Total Assets
$
33,649

 
$
41,385

 
$
9,460

 
$
19,032

 
$
(78,780
)
 
$
24,746

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
367

 
$
361

 
$
—

 
$
728

Current portion of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accrued payroll and employee benefits
—

 
—

 
160

 
34

 
—

 
194

Accrued interest
3

 
124

 
—

 
8

 
—

 
135

Current portion of deferred revenue
—

 
—

 
113

 
150

 
—

 
263

Due to affiliates
—

 
—

 
40,551

 
—

 
(40,551
)
 
—

Other
—

 
—

 
138

 
42

 
—

 
180

Total Current Liabilities
3

 
124

 
41,331

 
600

 
(40,551
)
 
1,507

Long-Term Debt, less current portion
592

 
10,103

 
13

 
167

 
—

 
10,875

Deferred Revenue, less current portion
—

 
—

 
724

 
286

 
—

 
1,010

Other Liabilities
15

 
—

 
148

 
467

 
—

 
630

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
33,039

 
31,158

 
(32,756
)
 
17,512

 
(38,229
)
 
10,724

Total Liabilities and Stockholders' Equity (Deficit)
$
33,649

 
$
41,385

 
$
9,460

 
$
19,032

 
$
(78,780
)
 
$
24,746

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
—

 
—

 
56

 
55

 
—

 
111

Total Current Assets
12,427

 
22,765

 
831

 
3,697

 
(37,990
)
 
1,730

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
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

 
 
 
 
 
 
 
 
 
 
 
 
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
591

 
10,092

 
15

 
168

 
—

 
10,866

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)
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 30, 2016

 
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
$
(35
)
 
$
(332
)
 
$
489

 
$
1,664

 
$
—

 
$
1,786

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(537
)
 
(491
)
 
—

 
(1,028
)
Decrease in restricted cash and securities, net
5

 
—

 
6

 
—

 
—

 
11

Proceeds from the sale of property, plant and equipment and other assets
—

 
—

 
—

 
1

 
—

 
1

Net Cash Provided by (Used in) Investing Activities
5

 
—

 
(531
)
 
(490
)
 
—

 
(1,016
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
764

 
—

 
—

 
—

 
764

Payments on and repurchases of long-term debt and capital leases
—

 
(806
)
 
(1
)
 
(11
)
 
—

 
(818
)
Increase (decrease) due from/to affiliates, net
34

 
368

 
798

 
(1,200
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
34

 
326

 
797

 
(1,211
)
 
—

 
(54
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Net Change in Cash and Cash Equivalents
4

 
(6
)
 
755

 
(38
)
 
—

 
715

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
16

 
$
—

 
$
1,482

 
$
71

 
$
—

 
$
1,569

Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 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
$
(39
)
 
$
(447
)
 
$
57

 
$
1,728

 
$
—

 
$
1,299

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(307
)
 
(592
)
 
—

 
(899
)
Cash related to deconsolidated Venezuela operations
—

 
—

 
—

 
(83
)
 
 
 
(83
)
(Increase) decrease in restricted cash and securities, net
(25
)
 
—

 
1

 
—

 
—

 
(24
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
—

 
3

 
—

 
3

Other
—

 
—

 
(14
)
 
—

 
—

 
(14
)
Net Cash Used in Investing Activities
(25
)
 
—

 
(320
)
 
(672
)
 
—

 
(1,017
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
3,947

 
—

 
—

 
—

 
3,947

Payments on and repurchases of long-term debt and capital leases
(313
)
 
(3,780
)
 
(1
)
 
(8
)
 
—

 
(4,102
)
Increase (decrease) due from/to affiliates, net
383

 
281

 
516

 
(1,180
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
70

 
448

 
515

 
(1,188
)
 
—

 
(155
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(16
)
 
—

 
(16
)
Net Change in Cash and Cash Equivalents
6

 
1

 
252

 
(148
)
 
—

 
111

Cash and Cash Equivalents at Beginning of Period
7

 
5

 
307

 
261

 
—

 
580

Cash and Cash Equivalents at End of Period
$
13

 
$
6

 
$
559

 
$
113

 
$
—

 
$
691
Schedule of Condensed Consolidating Statements of Comprehensive Income (Loss)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended September 30, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
907

 
$
1,160

 
$
(34
)
 
$
2,033

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
330

 
379

 
(34
)
 
675

Network Related Expenses
—

 
—

 
242

 
95

 
—

 
337

Depreciation and Amortization
—

 
—

 
100

 
219

 
—

 
319

Selling, General and Administrative Expenses
1

 
1

 
262

 
84

 
—

 
348

Total Costs and Expenses
1

 
1

 
934

 
777

 
(34
)
 
1,679

Operating Income (Loss)
(1
)
 
(1
)
 
(27
)
 
383

 
—

 
354

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(9
)
 
(124
)
 
(1
)
 
(5
)
 
—

 
(139
)
Interest income (expense) affiliates, net
342

 
526

 
(804
)
 
(64
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(193
)
 
(539
)
 
169

 
—

 
563

 
—

Other, net
—

 
—

 
(1
)
 
2

 
—

 
1

Total Other Income (Expense)
140

 
(137
)
 
(636
)
 
(67
)
 
563

 
(137
)
Income (Loss) before Income Taxes
139

 
(138
)
 
(663
)
 
316

 
563

 
217

Income Tax Benefit (Expense)
4

 
(55
)
 
—

 
(23
)
 
—

 
(74
)
Net Income (Loss)
143

 
(193
)
 
(663
)
 
293

 
563

 
143

Other Comprehensive Income (Loss), Net of Income Taxes
(15
)
 
—

 
—

 
(15
)
 
15

 
(15
)
Comprehensive Income (Loss)
$
128

 
$
(193
)
 
$
(663
)
 
$
278

 
$
578

 
$
128

Condensed Consolidating Statements of Comprehensive Income (Loss)
Nine Months Ended September 30, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
2,652

 
$
3,590

 
$
(102
)
 
$
6,140

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
965

 
1,182

 
(102
)
 
2,045

Network Related Expenses
—

 
—

 
716

 
298

 
—

 
1,014

Depreciation and Amortization
—

 
—

 
280

 
650

 
—

 
930

Selling, General and Administrative Expenses
3

 
4

 
775

 
279

 
—

 
1,061

Total Costs and Expenses
3

 
4

 
2,736

 
2,409

 
(102
)
 
5,050

Operating Income (Loss)
(3
)
 
(4
)
 
(84
)
 
1,181

 
—

 
1,090

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
2

 
1

 
—

 
3

Interest expense
(27
)
 
(380
)
 
(2
)
 
(5
)
 
—

 
(414
)
Interest income (expense) affiliates, net
1,027

 
1,585

 
(2,407
)
 
(205
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(581
)
 
(1,568
)
 
569

 
—

 
1,580

 
—

Other, net
—

 
(39
)
 
2

 
(17
)
 
—

 
(54
)
Total Other Income (Expense)
419

 
(402
)
 
(1,836
)
 
(226
)
 
1,580

 
(465
)
Income (Loss) before Income Taxes
416

 
(406
)
 
(1,920
)
 
955

 
1,580

 
625

Income Tax Benefit (Expense)
11

 
(175
)
 
(2
)
 
(32
)
 
—

 
(198
)
Net Income (Loss)
427

 
(581
)
 
(1,922
)
 
923

 
1,580

 
427

Other Comprehensive Income (Loss), Net of Income Taxes
8

 
—

 
—

 
8

 
(8
)
 
8

Comprehensive Income (Loss)
$
435

 
$
(581
)
 
$
(1,922
)
 
$
931

 
$
1,572

 
$
435

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended September 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

 
$
1,271

 
$
(39
)
 
$
2,062

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network access costs
—

 
—

 
300

 
445

 
(39
)
 
706

Network related expenses
—

 
—

 
252

 
117

 
—

 
369

Depreciation and amortization
—

 
—

 
78

 
218

 
—

 
296

Selling, general and administrative expenses
1

 
—

 
274

 
89

 
—

 
364

Total Costs and Expenses
1

 
—

 
904

 
869

 
(39
)
 
1,735

Operating (Loss) Income
(1
)
 
—

 
(74
)
 
402

 
—

 
327

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
—

 
—

 
—

Interest expense
(9
)
 
(135
)
 
—

 
(1
)
 
—

 
(145
)
Interest income (expense) affiliates, net
320

 
498

 
(762
)
 
(56
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(309
)
 
(671
)
 
(186
)
 
—

 
1,166

 
—

Other, net
—

 
—

 
3

 
(168
)
 
—

 
(165
)
Total Other Income (Expense)
2

 
(308
)
 
(945
)
 
(225
)
 
1,166

 
(310
)
Income (Loss) before Income Taxes
1

 
(308
)
 
(1,019
)
 
177

 
1,166

 
17

Income Tax Expense
—

 
(1
)
 
—

 
(15
)
 
—

 
(16
)
Net Income (Loss)
1

 
(309
)
 
(1,019
)
 
162

 
1,166

 
1

Other Comprehensive Income (Loss), Net of Income Taxes
(72
)
 
—

 
—

 
(72
)
 
72

 
(72
)
Comprehensive Income (Loss)
$
(71
)
 
$
(309
)
 
$
(1,019
)
 
$
90

 
$
1,238

 
$
(71
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Nine Months Ended September 30, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
2,480

 
$
3,832

 
$
(136
)
 
$
6,176

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network access costs
—

 
—

 
919

 
1,342

 
(136
)
 
2,125

Network related expenses
—

 
—

 
713

 
375

 
—

 
1,088

Depreciation and amortization
—

 
—

 
227

 
645

 
—

 
872

Selling, general and administrative expenses
3

 
—

 
789

 
306

 
—

 
1,098

Total Costs and Expenses
3

 
—

 
2,648

 
2,668

 
(136
)
 
5,183

Operating (Loss) Income
(3
)
 
—

 
(168
)
 
1,164

 
—

 
993

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(42
)
 
(436
)
 
(2
)
 
(10
)
 
—

 
(490
)
Interest income (expense) affiliates, net
984

 
1,495

 
(2,297
)
 
(182
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(811
)
 
(1,723
)
 
174

 
—

 
2,360

 
—

Other, net
(18
)
 
(145
)
 
2

 
(194
)
 
—

 
(355
)
Total Other Income (Expense)
113

 
(809
)
 
(2,123
)
 
(385
)
 
2,360

 
(844
)
Income (Loss) before Income Taxes
110

 
(809
)
 
(2,291
)
 
779

 
2,360

 
149

Income Tax Expense
—

 
(2
)
 
—

 
(37
)
 
—

 
(39
)
Net Income (Loss)
110

 
(811
)
 
(2,291
)
 
742

 
2,360

 
110

Other Comprehensive Income (Loss), Net of Income Taxes
(128
)
 
—

 
—

 
(128
)
 
128

 
(128
)
Comprehensive Income (Loss)
$
(18
)
 
$
(811
)
 
$
(2,291
)
 
$
614

 
$
2,488

 
$
(18
)
Schedule of Condensed Consolidating Balance Sheets
Condensed Consolidating Balance Sheets
September 30, 2016

 
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
$
16

 
$
—

 
$
1,482

 
$
71

 
$
—

 
$
1,569

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
41

 
708

 
—

 
749

Due from affiliates
16,717

 
20,980

 
—

 
2,854

 
(40,551
)
 
—

Other
—

 
—

 
89

 
42

 
—

 
131

Total Current Assets
16,733

 
20,980

 
1,613

 
3,682

 
(40,551
)
 
2,457

Property, Plant, and Equipment, net
—

 
—

 
3,780

 
6,387

 
—

 
10,167

Restricted Cash and Securities
22

 
—

 
9

 
—

 
—

 
31

Goodwill and Other Intangibles, net
—

 
—

 
355

 
8,348

 
—

 
8,703

Investment in Subsidiaries
16,846

 
17,692

 
3,691

 
—

 
(38,229
)
 
—

Deferred Tax Assets
48

 
2,713

 
—

 
578

 
—

 
3,339

Other Assets, net
—

 
—

 
12

 
37

 
—

 
49

Total Assets
$
33,649

 
$
41,385

 
$
9,460

 
$
19,032

 
$
(78,780
)
 
$
24,746

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
367

 
$
361

 
$
—

 
$
728

Current portion of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accrued payroll and employee benefits
—

 
—

 
160

 
34

 
—

 
194

Accrued interest
3

 
124

 
—

 
8

 
—

 
135

Current portion of deferred revenue
—

 
—

 
113

 
150

 
—

 
263

Due to affiliates
—

 
—

 
40,551

 
—

 
(40,551
)
 
—

Other
—

 
—

 
138

 
42

 
—

 
180

Total Current Liabilities
3

 
124

 
41,331

 
600

 
(40,551
)
 
1,507

Long-Term Debt, less current portion
592

 
10,103

 
13

 
167

 
—

 
10,875

Deferred Revenue, less current portion
—

 
—

 
724

 
286

 
—

 
1,010

Other Liabilities
15

 
—

 
148

 
467

 
—

 
630

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
33,039

 
31,158

 
(32,756
)
 
17,512

 
(38,229
)
 
10,724

Total Liabilities and Stockholders' Equity (Deficit)
$
33,649

 
$
41,385

 
$
9,460

 
$
19,032

 
$
(78,780
)
 
$
24,746

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
—

 
—

 
56

 
55

 
—

 
111

Total Current Assets
12,427

 
22,765

 
831

 
3,697

 
(37,990
)
 
1,730

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
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

 
 
 
 
 
 
 
 
 
 
 
 
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
591

 
10,092

 
15

 
168

 
—

 
10,866

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)
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017
Schedule of Condensed Consolidating Statements of Cash Flows
Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 30, 2016

 
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
$
(35
)
 
$
(332
)
 
$
489

 
$
1,664

 
$
—

 
$
1,786

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(537
)
 
(491
)
 
—

 
(1,028
)
Decrease in restricted cash and securities, net
5

 
—

 
6

 
—

 
—

 
11

Proceeds from the sale of property, plant and equipment and other assets
—

 
—

 
—

 
1

 
—

 
1

Net Cash Provided by (Used in) Investing Activities
5

 
—

 
(531
)
 
(490
)
 
—

 
(1,016
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
764

 
—

 
—

 
—

 
764

Payments on and repurchases of long-term debt and capital leases
—

 
(806
)
 
(1
)
 
(11
)
 
—

 
(818
)
Increase (decrease) due from/to affiliates, net
34

 
368

 
798

 
(1,200
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
34

 
326

 
797

 
(1,211
)
 
—

 
(54
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Net Change in Cash and Cash Equivalents
4

 
(6
)
 
755

 
(38
)
 
—

 
715

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
16

 
$
—

 
$
1,482

 
$
71

 
$
—

 
$
1,569



Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 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
$
(39
)
 
$
(447
)
 
$
57

 
$
1,728

 
$
—

 
$
1,299

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(307
)
 
(592
)
 
—

 
(899
)
Cash related to deconsolidated Venezuela operations
—

 
—

 
—

 
(83
)
 
 
 
(83
)
(Increase) decrease in restricted cash and securities, net
(25
)
 
—

 
1

 
—

 
—

 
(24
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
—

 
3

 
—

 
3

Other
—

 
—

 
(14
)
 
—

 
—

 
(14
)
Net Cash Used in Investing Activities
(25
)
 
—

 
(320
)
 
(672
)
 
—

 
(1,017
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
3,947

 
—

 
—

 
—

 
3,947

Payments on and repurchases of long-term debt and capital leases
(313
)
 
(3,780
)
 
(1
)
 
(8
)
 
—

 
(4,102
)
Increase (decrease) due from/to affiliates, net
383

 
281

 
516

 
(1,180
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
70

 
448

 
515

 
(1,188
)
 
—

 
(155
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(16
)
 
—

 
(16
)
Net Change in Cash and Cash Equivalents
6

 
1

 
252

 
(148
)
 
—

 
111

Cash and Cash Equivalents at Beginning of Period
7

 
5

 
307

 
261

 
—

 
580

Cash and Cash Equivalents at End of Period
$
13

 
$
6

 
$
559

 
$
113

 
$
—

 
$
691