LEVEL 3 COMMUNICATIONS INC, 10-K filed on 2/28/2012
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Feb. 23, 2012
Jun. 30, 2011
Document And Entity Information [Abstract]
 
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
 
Entity Central Index Key
0000794323 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2011 
 
 
Amendment Flag
false 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 2.99 
Entity Common Stock, Shares Outstanding
 
208,258,103 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
FY 
 
 
Consolidated Statements of Operations (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenue
$ 4,333 
$ 3,591 
$ 3,695 
Total Costs and Expenses Exclusive of Depreciation and Amortization shown separately below:
 
 
 
Cost of Revenue
1,706 
1,434 
1,499 
Depreciation and Amortization
805 
870 
906 
Selling, General and Administrative
1,759 
1,373 
1,337 
Restructuring Charges
11 
2 
9 
Total Costs and Expenses
4,281 
3,679 
3,751 
Operating Income (Loss)
52 
(88)
(56)
Other Income (Expense):
 
 
 
Interest income
1 
1 
2 
Interest expense
(716)
(586)
(595)
Gain (loss) on extinguishment of debt, net
(100)
(59)
14 
Other, net
(23)
20 
12 
Total Other Expense
(838)
(624)
(567)
Loss Before Income Taxes
(786)
(712)
(623)
Income Tax (Expense) Benefit
(41)
91 
(1)
Loss from Continuing Operations
(827)
(621)
(624)
Income (Loss) from Discontinued Operations, Net
71 
(1)
6 
Net Loss
$ (756)
$ (622)
$ (618)
Loss per Share from Continuing Operations, Basic (in dollars per share)
$ (6.03)1
$ (5.61)1
$ (5.73)1
Loss per Share from Continuing Operations, Diluted (in dollars per share)
$ (6.03)1
$ (5.61)1
$ (5.73)1
Income (Loss) per Share from Discontinued Operations, Basic (in dollars per share)
$ 0.52 1
$ (0.01)1
$ 0.05 1
Income (Loss) per Share from Discontinued Operations, Diluted (in dollars per share)
$ 0.52 1
$ (0.01)1
$ 0.05 1
Basic and Diluted Loss per Share (in dollars per share)
$ (5.51)1
$ (5.62)
$ (5.68)1
Shares Used to Compute Basic Loss per Share: (in shares)
137,176,000 1
110,680,000 1
108,870,000 1
Shares Used to Compute Diluted Loss per Share: (in shares)
137,176,000 1
110,680,000 1
108,870,000 1
Consolidated Statements of Comprehensive Loss (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net Loss
$ (756)
$ (622)
$ (618)
Other Comprehensive Income (Loss) Before Income Taxes:
 
 
 
Foreign Currency Translation
(16)
(78)
36 
Unrealized holding gain (loss) on interest rate swaps
18 
(16)
5 
Other, net
16 
1 
5 
Other Comprehensive Income (Loss) Before Income Taxes
18 
(93)
46 
Income Tax Related to Items of Other Comprehensive Income (Loss)
0 
0 
0 
Other Comprehensive Income (Loss), Net of Income Taxes
18 
(93)
46 
Comprehensive Loss
$ (738)
$ (715)
$ (572)
Consolidated Balance Sheets (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Current Assets:
 
 
Cash and cash equivalents
$ 918 
$ 616 
Restricted cash and securities
10 
2 
Receivables, less allowances for doubtful accounts of $18 and $17, respectively
648 
259 
Other
131 
83 
Current Assets of Discontinued Operations
0 
12 
Total Current Assets
1,707 
972 
Property, Plant and Equipment, net of accumulated depreciation of $7,678 and $7,009, respectively
8,136 
5,285 
Restricted Cash and Securities
51 
49 
Goodwill
2,541 
1,427 
Other Intangibles, net
358 
371 
Other Assets, net
395 
161 
Non-Current Assets of Discontinued Operations
0 
90 
Total Assets
13,188 
8,355 
Current Liabilities:
 
 
Accounts payable
747 
326 
Current portion of long-term debt
65 
180 
Accrued payroll and employee benefits
209 
84 
Accrued interest
216 
146 
Current portion of deferred revenue
264 
151 
Other
157 
53 
Current Liabilities of Discontinued Operations
0 
16 
Total Current Liabilities
1,658 
956 
Long-Term Debt, less current portion
8,385 
6,268 
Deferred Revenue, less current portion
885 
736 
Other Liabilities
1,067 
440 
Non-Current Liabilities of Discontinued Operations
0 
112 
Total Liabilities
11,995 
8,512 
Commitments and Contingencies
0 
0 
Stockholders' Equity (Deficit):
 
 
Preferred stock, $.01 par value, authorized 10,000,000 shares: no shares issued or oustanding
   
   
Common stock, $.01 par value, authorized 293,333,333 shares at December 31, 2011 and 193,333,333 shares at December 31, 2010: 207,913,428 issued and outstanding at December 31, 2011 and 111,365,226 issued and outstanding at December 31, 2010
2 1
17 1
Additional paid-in capital
13,706 
11,603 
Accumulated other comprehensive loss
(80)
(98)
Accumulated deficit
(12,435)
(11,679)
Total Stockholders' Equity (Deficit)
1,193 
(157)
Total Liabilities and Stockholders' Equity (Deficit)
$ 13,188 
$ 8,355 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Statement of Financial Position [Abstract]
 
 
Receivables, allowances for doubtful accounts (in dollars)
$ 18 
$ 17 
Property, Plant and Equipment, accumulated depreciation (in dollars)
$ 7,678 
$ 7,009 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, authorized shares
10,000,000 
10,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized shares
293,333,333 
193,333,333 
Common stock, shares issued
207,913,428 
111,365,226 
Common stock, shares outstanding
207,913,428 
111,365,226 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Cash Flows from Operating Activities:
 
 
 
Net Loss
$ (756)
$ (622)
$ (618)
(Income) loss from discontinued operations
(71)
1 
(6)
Net loss from continuing operations
(827)
(621)
(624)
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities of continuing operations:
 
 
 
Depreciation and amortization
805 
870 
906 
Non-cash compensation expense attributable to stock awards
101 
67 
59 
Loss (gain) on extinguishments of debt, net
100 
59 
(14)
Change in fair value of embedded derivative
0 
(10)
(14)
Accretion of debt discount and amortization of debt issuance costs
56 
57 
56 
Accrued interest on long-term debt, net
82 
6 
22 
Loss on impairment of wireless spectrum licenses
20 
0 
0 
Deferred income taxes
33 
(93)
2 
Loss (gain) on sale of property, plant, and equipment and other assets
(2)
4 
0 
Other, net
5 
(9)
(3)
Changes in working capital items:
 
 
 
Receivables
(12)
58 
62 
Other current assets
(1)
3 
(1)
Payables
30 
(33)
(20)
Deferred revenue
(3)
(9)
10 
Other current liabilities
1 
(10)
(95)
Net Cash Provided by Operating Activities of Continuing Operations
388 
339 
346 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(494)
(435)
(308)
Decrease (increase) in restricted cash and securities, net
(54)
3 
5 
Proceeds from the sale of property, plant and equipment and other assets
4 
4 
1 
Investment in Global Crossing, net of cash acquired
146 
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(398)
(428)
(302)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
1,878 
808 
543 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(1,617)
(930)
(527)
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
261 
(122)
16 
Discontinued Operations:
 
 
 
Net cash provided by operating activities
(4)
0 
11 
Net cash provided by (used in) investing activities
55 
(1)
(5)
Net Cash Provided by (Used in) Discontinued Operations
51 
(1)
6 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
(8)
2 
Net Change in Cash and Cash Equivalents
302 
(220)
68 
Cash and Cash Equivalents at Beginning of Year
616 
836 
768 
Cash and Cash Equivalents at End of Year
918 
616 
836 
Supplemental Disclosure of Cash Flow Information:
 
 
 
Cash interest paid
576 
523 
517 
Income taxes paid, net of refunds
7 
(1)
5 
Non-cash Investing and Financing Activities:
 
 
 
Long-term debt issued in exchange transaction
300 
0 
196 
Long-term debt retired in exchange transaction
295 
0 
204 
Conversion of notes into common stock
128 
0 
0 
Long-term debt issued and proceeds placed in escrow
1,200 
0 
0 
Settlement of Global Crossing debt with escrowed securities
$ 1,254 
$ 0 
$ 0 
Consolidated Statements of Changes In Stockholders' Equity (Deficit) (USD $)
In Millions, except Share data, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2008
$ 1,021 
$ 16 
$ 11,495 
$ (51)
$ (10,439)
Beginning balance (in shares) at Dec. 31, 20081
 
107,841,017 
 
 
 
Common Stock [Abstract]
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
15 
0 
15 
0 
0 
Common stock issued under employee stock benefit plans and other (in shares)1
 
1,807,240 
 
 
 
Stock-based compensation expense
30 
0 
30 
0 
0 
Other
(3)
0 
(3)
0 
0 
Other (in shares)1
 
(40,506)
 
 
 
Net Loss
(618)
0 
0 
0 
(618)
Other Comprehensive Income (Loss)
46 
0 
0 
46 
0 
Ending balance at Dec. 31, 2009
491 
16 
11,537 
(5)
(11,057)
Ending balance (in shares) at Dec. 31, 20091
 
109,607,751 
 
 
 
Common Stock [Abstract]
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
22 
1 
21 
0 
0 
Common stock issued under employee stock benefit plans and other (in shares)1
 
1,757,475 
 
 
 
Stock-based compensation expense
29 
0 
29 
0 
0 
Reclassificaiton of Derivative Liability
16 
0 
16 
0 
0 
Net Loss
(622)
0 
0 
0 
(622)
Other Comprehensive Income (Loss)
(93)
0 
0 
(93)
0 
Ending balance at Dec. 31, 2010
(157)
17 
11,603 
(98)
(11,679)
Ending balance (in shares) at Dec. 31, 2010
111,365,226 
111,365,226 1
 
 
 
Common Stock [Abstract]
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
52 
0 
52 
0 
0 
Common stock issued under employee stock benefit plans and other (in shares)
 
3,273,038 
 
 
 
Stock-based compensation expense
32 
0 
32 
0 
0 
Global Crossing acquisition equity consideration
1,881 
13 
1,868 
0 
0 
Global Crossing acquisition equity consideration (in shares)
 
88,535,830 
 
 
 
Reverse stock split
0 
(29)
29 
0 
0 
Conversion of debt to equity
123 
1 
122 
0 
0 
Conversion of debt to equity (in shares)
 
4,739,334 
 
 
 
Net Loss
(756)
0 
0 
0 
(756)
Other Comprehensive Income (Loss)
18 
0 
0 
18 
0 
Ending balance at Dec. 31, 2011
$ 1,193 
$ 2 
$ 13,706 
$ (80)
$ (12,435)
Ending balance (in shares) at Dec. 31, 2011
207,913,428 
207,913,428 1
 
 
 
Supplementary Stockholders' Equity Information Accumulated Other Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
Total
Net Foreign Currency Translation Adjustment
Unrealized Holding Gain (Loss) on Investment and Interest Rate Swap
Other
Beginning Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2008
$ (51)
$ 97 
$ (97)
$ (51)
Change In Accumulated Other Comprehensive Income [Roll Forward]
 
 
 
 
Change
46 
36 
5 
5 
Ending Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2009
(5)
133 
(92)
(46)
Change In Accumulated Other Comprehensive Income [Roll Forward]
 
 
 
 
Change
(93)
(78)
(16)
1 
Ending Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2010
(98)
55 
(108)
(45)
Change In Accumulated Other Comprehensive Income [Roll Forward]
 
 
 
 
Change
18 
(16)
18 
16 
Ending Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2011
$ (80)
$ 39 
$ (90)
$ (29)
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
Description of Business
Level 3 Communications, Inc. and subsidiaries (the "Company" or "Level 3") is a facilities based provider (that is, a provider that owns or leases a substantial portion of the plant, property and equipment necessary to provide its services) of a broad range of integrated communications services. The Company created its communications network by constructing its own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. Level 3's network is an international, facilities based communications network. The Company designed its network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.
The Company also was engaged in coal mining through its two 50% owned joint-venture surface mines, one each in Montana and Wyoming. The Company completed the sale of its coal mining business on November 14, 2011. See Note 4 - Dispositions.

On October 4, 2011, a subsidiary of Level 3 completed its amalgamation with Global Crossing Limited ("Global Crossing"), and became a wholly owned indirect subsidiary of the Company through a tax free, stock for stock transaction (the "Amalgamation"). See Note 2 - Events Associated with the Amalgamation of Global Crossing.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Level 3 Communications, Inc. and subsidiaries in which it has a controlling interest. Prior to the disposition of the coal mining business during the fourth quarter of 2011, the Company's fifty-percent-owned mining joint ventures were consolidated on a pro rata basis. All significant intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
As part of its consolidation policy, the Company considers its controlled subsidiaries, investments in the business in which the Company is not the primary beneficiary or does not have effective control but has the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give the Company rights to economic risks or rewards of a legal entity. The Company does not have variable interests in a variable interest entity where it is required to consolidate the entity as the primary beneficiary or where it has concluded it is not the primary beneficiary.
Effective after the close of trading on October 19, 2011, the Company completed a 1 for 15 reverse stock split as previously approved by the Company's stockholders. Proportional adjustments were made to the Company's outstanding convertible debt, warrants, equity awards and to its equity compensation plans to reflect the reverse stock split. No fractional shares were issued in connection with the reverse stock split, as stockholders who would otherwise hold a fractional share of common stock received a cash payment in lieu of that fractional share. All references herein to common stock and per share data have been retrospectively adjusted to reflect the reverse stock split.
Foreign Currency Translation
Generally, local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America other than those in Brazil. For operations outside the U.S. that prepare financial statements in currencies other than the U.S. dollar, assets and liabilities are translated at year-end exchange rates, and revenue, expenses and cash flows are translated using average exchange rates prevailing during the year. Gains or losses resulting from currency translation are recorded as a component of accumulated other comprehensive loss in stockholders' equity (deficit) and in the consolidated statements of comprehensive loss. A significant portion of the Company's foreign subsidiaries have either the British Pound or the Euro as the functional currency, both of which experienced significant fluctuations against the U.S. dollar during 2011, 2010 and 2009. As a result of the Global Crossing Amalgamation during the fourth quarter of 2011, the Company also is exposed to fluctuations in the Brazilian Real. The Company has experienced significant foreign currency translation adjustments that are recognized as a component of accumulated other comprehensive loss in stockholders' equity (deficit) and in the consolidated statement of comprehensive loss in accordance with accounting guidance for foreign currency translation. The Company considers the majority of its investments in its foreign subsidiaries to be long-term in nature. The Company's foreign exchange transaction gains (losses), including where its investments in its foreign subsidiaries are not considered to be long-term in nature, are included within other income (expense) on the consolidated statement of operations.
Reclassifications
Certain immaterial reclassifications have been made to prior years to conform to the current period's presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The accounting estimates that require management's judgments include revenue recognition, revenue reserves, cost of revenue for communications services, the determination of the useful lives of long-lived assets, the valuation and recognition of stock-based compensation expense, the valuation of long-lived assets, goodwill and acquired indefinite-lived intangible assets, derivative financial instruments, the valuation of asset retirement obligations, the allowance for doubtful accounts, the recognition of the fair value of assets acquired and liabilities assumed in business combinations, accruals for estimated tax and legal liabilities, valuation allowance for deferred tax assets, and valuation of other assets and liabilities measured at fair value. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Revenue and Cost of Revenue for Communications Services
Revenue for communications services is recognized on a monthly basis as these services are provided based on contractual amounts expected to be collected. Management establishes appropriate revenue reserves at the time services are rendered based on an analysis of historical credit activity to address, where significant, situations in which collection is not reasonably assured as a result of credit risk, potential billing disputes or other reasons. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Intercarrier compensation revenue is recognized when an interconnection agreement is in place with another carrier, or if an agreement has expired, when the parties have agreed to continue operating under the previous agreement until a new agreement is negotiated and executed, or at rates mandated by the FCC.
For certain sale and long-term indefeasible right of use, or IRU, contracts involving private line, wavelengths and dark fiber services, the Company may receive up-front payments for services to be delivered for a period of up to 25 years. In these situations, the Company defers the revenue and amortizes it on a straight-line basis to earnings over the term of the contract.
Termination revenue is recognized when a customer discontinues service prior to the end of the contract period for which Level 3 had previously received consideration and for which revenue recognition was deferred. Termination revenue also is recognized when customers are required to make termination penalty payments to Level 3 to settle contractually committed purchase amounts that the customer no longer expects to meet or when a customer and Level 3 renegotiate a contract under which Level 3 is no longer obligated to provide services for consideration previously received and for which revenue recognition has been deferred.
The Company is obligated under dark fiber IRUs and other capacity agreements to maintain its network in efficient working order and in accordance with industry standards. Customers are obligated for the term of the agreement to pay for their allocable share of the costs for operating and maintaining the network. The Company recognizes this revenue monthly as services are provided.
Level 3's customer contracts require the Company to meet certain service level commitments. If Level 3 does not meet the required service levels, it may be obligated to provide credits, usually in the form of free service, for a short period of time. The credits are a reduction to revenue and, to date, have not been material.
Cost of revenue for the communications business includes leased capacity, right-of-way costs, access charges, satellite transponder lease costs and other third party costs directly attributable to the network, but excludes depreciation and amortization and related impairment expenses.
The Company recognizes the cost of network services as they are incurred in accordance with contractual requirements. The Company disputes incorrect billings from its suppliers of network services. The most prevalent types of disputes include disputes for circuits that are not disconnected by the supplier on a timely basis and usage bills with incorrect or inadequate information. Depending on the type and complexity of the issues involved, it may and often does take several quarters to resolve the disputes.
In determining the amount of the cost of network service expenses and related accrued liabilities to reflect in its financial statements, the Company considers the adequacy of documentation of disconnect notices, compliance with prevailing contractual requirements for submitting these disconnect notices and disputes to the provider of the network services, and compliance with its interconnection agreements with these carriers. Judgment is required in estimating the ultimate outcome of the dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Coal Mining
Prior to the sale of its coal mining business in November 2011, the Company sold coal primarily through long-term contracts with public utilities. The long-term contracts for the delivery of coal established the price, volume, and quality requirements of the coal to be delivered. Revenue under these and other contracts was generally recognized when coal was shipped to the customer.
USF and Gross Receipts Taxes
The revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. The Company records Universal Service Fund ("USF") contributions where the Company is the primary obligor for the taxes assessed in each jurisdiction where it does business on a gross basis in its consolidated statements of operations, but records sales, use, value added and excise taxes billed to its customers on a net basis in its consolidated statements of operations. Communications revenue and cost of revenue on the consolidated statements of operations includes USF contributions totaling $107 million, $77 million and $62 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Advertising Costs
The Company expenses the cost of advertising as incurred. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying consolidated statements of operations. Advertising expense was $15 million, $8 million and $7 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Stock-Based Compensation
The Company recognizes the estimated fair value of stock based compensation costs, net of an estimated forfeiture rate, over the requisite service period of the award, which is generally the vesting term or term for restrictions on transfer that lapse, as the case may be. The Company funded a portion of its 2011, 2010 and 2009 discretionary bonus in stock awards that were vested upon issuance. The Company estimates forfeiture rates based on its historical experience for the type of award.
Income Taxes
The Company recognizes deferred tax assets and liabilities for its domestic and foreign operations, for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes interest and penalty expense associated with uncertain tax positions as a component of income tax expense in the consolidated statements of operations.
Cash and Cash Equivalents
The Company classifies investments as cash equivalents if they are readily convertible to cash and have original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist primarily of highly liquid investments in government and government agency securities and money market funds issued or managed by financial institutions in the U.S., Europe and Latin America and commercial paper depending on liquidity requirements. As of December 31, 2011 and 2010, the carrying value of cash and cash equivalents approximates fair value due to the short period of time to maturity.
Restricted Cash and Securities
Restricted cash and securities consists primarily of cash and investments that serve to collateralize outstanding letters of credit, long-term debt and certain performance and operating obligations of the Company. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. The cost and fair value of restricted cash and securities totaled $61 million at December 31, 2011 and $51 million at December 31, 2010.
Derivative Financial Instruments
All derivative instruments, including derivatives embedded in other financial instruments, are measured at fair value and recognized as either assets or liabilities on the Company's consolidated balance sheets. The Company's derivative instruments are valued primarily using models based on readily observable market parameters for all substantial terms of the Company's derivative contracts and thus are classified as Level 2 of the GAAP fair value hierarchy. See Note 10 - Fair Value of Financial Instruments. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.
For derivative instruments designated as cash flow hedges, the effective portion of the derivative's gain (loss) is initially reported as a component of accumulated other comprehensive income (loss) ("AOCI") and is subsequently recognized in earnings in the period the hedged transaction affects earnings. Gains (losses) resulting from hedge ineffectiveness and those resulting from changes in fair values on derivatives not designated as hedging instruments are recognized in other income (expense) in the consolidated statements of operations. See Note 11 - Derivative Financial Instruments.
Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the invoiced amount and can bear interest. The Company establishes an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. The Company determines the allowance for doubtful accounts based on the aging of its accounts receivable balances and an analysis of its historical experience of bad debt write-offs. The Company reviews its allowance for doubtful accounts quarterly. Past-due balances over 60 days and over a specified amount are reviewed individually for collectability. Accounts receivable balances are written off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. All of the Company's allowance for doubtful accounts relates to its communications business. The Company recognized bad debt expense, net of recoveries, of approximately $6 million in 2011, $16 million in 2010 and $14 million in 2009.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation and amortization for the Company's property, plant and equipment are computed on the straight-line method based on the following useful lives:
 
 
 
 
 
 
Facility and Leasehold Improvements
 
10
-
40
years
Network Infrastructure (including fiber and conduit)
 
25
-
50
years
Operating Equipment
 
4
-
15
years
Furniture, Fixtures, Office Equipment and Other
 
2
-
7
years

In connection with the acquisition of Global Crossing, the Company evaluated the estimated useful lives of its fixed assets and determined that the period it expected to use conduit, fiber, and certain transmission equipment was longer than the remaining originally estimated useful lives. The Company revised its estimated useful lives of conduit from its historical estimate of 25 years to a revised estimate of 50 years; of fiber from its historical estimate of 12 years to a revised estimate of 25 years; and of certain transmission equipment from its historical estimate of 7 years to its revised estimate of 15 years. In determining the change in estimated useful lives, the Company, with input from its engineering team, considered its historical usage patterns and retirements, estimates of technological obsolescence, and expected usage and maintenance. The change in the estimated useful lives of certain of the Company’s property, plant and equipment was accounted for as a change in accounting estimate on a prospective basis effective October 1, 2011 under the accounting standard related to changes in accounting estimates. The change in estimated useful lives of certain of the Company’s property, plant and equipment, which has resulted in less depreciation expense than would have otherwise been recorded, resulted in the following decrease for the year ended December 31, 2011 (in millions, except per share amounts):
Net Loss
$
74

Basic and Diluted Net Loss per Share
$
0.54



Leasehold improvements are depreciated over the shorter of their estimated useful lives or lease terms that are reasonably assured.
The Company capitalizes costs directly associated with expansions and improvements of the Company's communications network, customer installations, including employee-related costs, and generally capitalizes costs associated with network construction and provisioning of services. The Company amortizes such costs over an estimated useful life of three to seven years.
In addition, the Company continues to develop business support systems required for its business. The external direct costs of software, materials and services, and payroll and payroll-related expenses for employees directly associated with business support systems projects are capitalized. Upon the completion of a project, the total cost of the business support system is amortized over an estimated useful life of three years.
Capitalized labor and related costs associated with employees and contract labor working on capital projects were approximately $87 million, $68 million and $57 million for the years ended December 31, 2011, 2010 and 2009, respectively.
The Company performs periodic internal reviews to determine depreciable lives of its property, plant and equipment based on input from global network services personnel, actual usage and the physical condition of the Company's property, plant and equipment.
Asset Retirement Obligations
The Company recognizes a liability for the estimated fair value of legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset in the period incurred. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Increases to the asset retirement obligation liability due to the passage of time are recognized as accretion expense and included within selling, general and administrative expenses and within income (loss) from discontinued operations for reclamation associated with the coal mining business on the Company's consolidated statements of operations. Changes in the liability due to revisions to future cash flows are recognized by increasing or decreasing the liability with the offset adjusting the carrying amount of the related long-lived asset. To the extent that the downward revisions exceed the carrying amount of the related long-lived asset initially recorded when the asset retirement obligation liability was established, the Company records the remaining adjustment as a reduction to depreciation expense, to the extent of historical depreciation of the related long-lived asset, and then to selling, general and administrative expense.
Goodwill and Acquired Indefinite-Lived Intangible Assets
Accounting guidance prohibits the amortization of goodwill and purchased intangible assets with indefinite useful lives. The Company reviews goodwill and purchased intangible assets with indefinite lives for impairment annually at the end of the fourth quarter and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. For goodwill, the Company performs a two-step impairment test. In the first step, the Company considers the fair value of each reporting unit relative to its carrying value. The Company's reporting units are consistent with the reportable segments identified in Note 15 - Segment Information. In accordance with recently issued guidance, in 2011 the Company performed an assessment of qualitative factors to determine whether it is more likely than not that the fair value exceeds the carrying value prior to performing the two step evaluation. If it is determined that it is unlikely that the carrying value exceeds the fair value, then the entity is no longer required to complete the two step goodwill impairment evaluation. The Company performed its assessment of qualitative factors and determined that it is not likely that the carrying value exceeded the fair value of goodwill as of December 31, 2011. During 2010 and 2009, the Company also considered the use of multiple valuation techniques in accordance with GAAP Fair Value Measurements and Disclosures guidance to estimate the fair value of its reporting units and had consistently applied a market approach as part of its impairment assessment process. Under the market approach, the Company estimated the fair value using an in-exchange valuation premise based upon the market capitalization of Level 3 using quoted market prices, added an estimated control premium, and then assigned that fair market value to the reporting units. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill was not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeded the fair value of the reporting unit, then a second step was performed and the implied fair value of the reporting unit's goodwill was determined and compared to the carrying value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeded its implied fair value, then an impairment loss equal to the difference was recorded.
GAAP also requires that the fair value of acquired indefinite-lived intangible assets be estimated and compared to their carrying value each year. The Company estimates the fair value of these intangible assets primarily utilizing an income approach. The Company recognizes an impairment loss when the estimated fair value of the acquired indefinite-lived intangible assets is less than the carrying value.
The Company conducted its goodwill and acquired indefinite-lived intangible assets impairment analysis at the end of 2011, 2010 and 2009 and concluded that its goodwill was not impaired in any of those periods. The Company conducted its indefinite-lived acquisition-related intangible asset impairment analysis at the end of 2010 and 2009, and concluded that there was no impairment. During 2011, the Company determined that the carrying value of certain wireless spectrum licenses that it acquired in a prior acquisition was impaired and the Company recognized a $20 million charge in the fourth quarter that was recognized in Other Expense. The Company concluded that its remaining indefinite-lived intangible assets were not impaired as of December 31, 2011.

Long-Lived Assets Including Finite-Lived Purchased Intangible Assets
The Company amortizes acquired intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from four to twelve years.
The Company evaluates long-lived assets, such as property, plant and equipment and acquired intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the assets plus net proceeds expected from disposition of the assets, if any, are less than the carrying value of the assets. If an asset is deemed to be impaired, the amount of the impairment loss is the excess of the asset's carrying value over its estimated fair value.
The Company conducted a long-lived asset impairment analysis in 2011, 2010 and 2009 and concluded that its long-lived assets, including finite-lived acquired intangible assets, were not impaired.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, accounts receivable, restricted cash and securities and derivatives. The Company maintains its cash equivalents, restricted cash and securities and derivatives with various financial institutions. These financial institutions are primarily located in the United States, Europe and Latin America and the Company's policy is to limit exposure with any one institution. As part of its cash and risk management processes, the Company performs periodic evaluations of the relative credit standing of the financial institutions. The Company also has established guidelines relative to financial instrument credit ratings, diversification and maturities that seek to maintain safety and liquidity. The Company's investment strategy generally results in lower yields on investments but reduces the risk to principal in the short term prior to these funds being used in the Company's business. The Company has not experienced any material losses on financial instruments held at financial institutions. The Company utilizes interest rate swap contracts to protect against the effects of interest rate fluctuations. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss.
The Company provides communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe, and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising Level 3's customer base and their dispersion across many different industries and geographical regions. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers, although letters of credit and deposits are required in certain limited circumstances. The Company has from time to time entered into agreements with value-added resellers and other channel partners to reach consumer and enterprise markets for voice services. The Company has policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. The Company maintains an allowance for doubtful accounts based upon the expected collectability of accounts receivable. Due to the Company's credit evaluation and collection process, bad debt expenses have not been significant; however, the Company is not able to predict changes in the financial stability of its customers. Any material change in the financial status of any one or a particular group of customers may cause the Company to adjust its estimate of the recoverability of receivables and could have a material adverse effect on the Company's results of operations. Fair values of accounts receivable approximate cost due to the short period of time to collection.
A relatively small number of customers account for a significant percentage of the Company's revenue. The Company's top ten customers accounted for approximately 24%, 27% and 28% of Level 3's communications revenue for the years ended December 31, 2011, 2010 and 2009, respectively.
Correction of an Immaterial Error in Prior Period Consolidated Financial Statements
During the first quarter of 2011, Level 3 identified an error in the Company’s previously issued consolidated financial statements related to the recognition of deferred tax liabilities attributable to certain indefinite-lived intangible assets with an indeterminate future reversal period that the Company is unable to consider as a source of income for the realization of its deferred tax assets. The Company recorded income tax expense of approximately $26 million during the first quarter of 2011 for taxable temporary differences associated with deferred taxes on certain indefinite-lived intangible assets. The purchased indefinite-lived intangible assets arose in prior periods, and the adjustment did not affect income taxes paid, and did not materially affect any of the Company’s previously reported results of operations or financial condition, or the current period results of operations or financial condition.
Events Associated with the Amalgamation of Global Crossing
Events Associated with the Amalgamation of Global Crossing
Events Associated with the Amalgamation of Global Crossing

On October 4, 2011, a subsidiary of Level 3 completed its amalgamation with Global Crossing, and became a wholly owned indirect subsidiary of the Company through a tax free, stock for stock transaction. As a result of the Amalgamation, (i) each issued and outstanding common share of Global Crossing was exchanged for 16 shares of Level 3 common stock (unadjusted for the 1 for 15 reverse stock split completed on October 19, 2011), including the associated rights under the Company’s Rights Agreement with Wells Fargo Bank, N.A., as rights agent (the “Amalgamation Consideration”) and (ii) each issued and outstanding share of Global Crossing’s 2% cumulative senior convertible preferred stock was exchanged for the Amalgamation Consideration, plus an amount equal to the aggregate accrued and unpaid dividends thereon. In addition, (i) the outstanding vested options to purchase Global Crossing common shares were modified into vested options to purchase Level 3's common stock and (ii) the issued and outstanding restricted stock units covering Global Crossing common shares, to the extent applicable in accordance with their terms, vested and settled for 16 shares of the Company's common stock.

In connection with the closing of the Amalgamation, Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $650 million of borrowings through an additional Tranche (the "Tranche B II Term Loan."). The aggregate net proceeds of Level 3 Financing’s Tranche B II Term Loan issued in October 2011 were used to refinance certain existing indebtedness of Global Crossing in connection with the consummation of the Amalgamation and for general corporate purposes. In addition, the $1.2 billion of proceeds from the initial and additional issuance of 8.125% Senior Notes due 2019 in June and July 2011(see Note 12 — Long-Term Debt) by an indirect wholly owned subsidiary were deposited into an escrow account. On October 4, 2011, following the consummation of the Amalgamation and the satisfaction of certain escrow release conditions, the 8.125% Senior Notes were assumed by Level 3 Financing (the “Notes Assumption”), and the funds were released from the escrow account. The net proceeds from the 8.125% Senior Notes were used to refinance certain existing indebtedness of Global Crossing in connection with the closing of the Amalgamation and for general corporate purposes.
 
As a result of the Amalgamation, the Company issued approximately 88.53 million shares, adjusted for the 1 for 15 reverse stock split on October 19, 2011, of Level 3 common stock to former holders of Global Crossing common shares and Global Crossing’s 2% cumulative senior convertible preferred stock, and Level 3 caused the refinancing of approximately $1.36 billion of Global Crossing's outstanding consolidated debt. Approximately $430 million of Global Crossing (UK) Finance PLC senior secured notes due 2014 were redeemed on November 3, 2011 at the current redemption premiums outlined in its indenture dated December 23, 2004. The entire aggregate principal amount of the $750 million of Global Crossing Limited’s outstanding 12% senior notes due 2015 and all of the outstanding $150 million of 9% senior notes due 2019 were also redeemed in early November 2011. Of the outstanding principal of each of the Global Crossing Limited senior notes, 35 percent was first redeemed on November 3, 2011 as a result of a qualified “Equity Offering” (as defined under the indentures relating to each issue of the Global Crossing Limited senior notes) to its new corporate parent. The remaining 65 percent of the outstanding principal of each issue of the Global Crossing senior notes were redeemed subsequently on November 4, 2011 at “make-whole” prices calculated using the rate of the comparable U.S. Treasury security plus 50 basis points. The shares of Global Crossing Common Stock, which previously traded under the symbol “GLBC,” ceased trading on the NASDAQ Global Select Market (“NASDAQ”) before the open of trading on October 4, 2011 and were delisted from NASDAQ as of October 5, 2011.

Based on (i) the number of Level 3 shares issued (88.53 million as adjusted for the 1 for 15 reverse stock split completed on October 19, 2011), (ii) the closing stock price of Level 3 common stock as of October 3, 2011 ($21.15 as adjusted for the 1 for 15 reverse stock split completed on October 19, 2011), and (iii) the debt of Global Crossing refinanced ($1.36 billion), the Company estimates that the aggregate consideration for acquisition accounting, including assumed debt, approximated $3.40 billion. The restricted stock units covering Global Crossing common shares settled for Level 3 shares of common stock were reduced in settlement of employee income and payroll tax withholding obligations and the corresponding amounts of approximately $81 million were paid in cash. The premium paid by Level 3 in this transaction is attributable to strategic benefits, including a significantly expanded IP/optical network with global reach including South America, Asia and the Pacific, improved credit profile and reduced financial leverage attributed to enhanced financial and operation scale, and opportunity for investment and network expansion. The combined business will have a comprehensive portfolio of voice, video, and data services, which will operate on a unique global services platform anchored by subsea and terrestrial fiber optic networks in North America, Europe, and Latin America. The goodwill associated with this transaction is not expected to be deductible for income tax purposes.

The combined results of operations of Level 3 and Global Crossing are included in the Company's consolidated results of operations beginning in October 2011. Included in the combined financial results is $654 million in revenue attributable to Global Crossing since the completion of the Amalgamation. The assets acquired and liabilities assumed of Global Crossing will be recognized at their acquisition date fair value. The purchase price allocation of acquired assets and assumed liabilities, including the assignment of goodwill to reporting units, will require extensive analysis and is expected to be completed no later than October 4, 2012. The following is a preliminary allocation of purchase price based on information currently available. The final identification of all the intangible assets acquired and determination of the purchase price allocation may be significantly different from the preliminary allocation reflected below.

 
Initial Purchase Price Allocation
 
(dollars in millions)
Assets:
 
  Cash, Cash Equivalents, and Restricted Cash
$
226

  Property, Plant, and Equipment
3,098

  Goodwill
1,110

  Identifiable Intangibles
106

  Other Assets
655

Total Assets
5,195

 
 
Liabilities:
 
  Long-term Debt
(1,554
)
  Other Liabilities
(1,679
)
Total Liabilities
(3,233
)
Total Estimated Consideration
$
1,962



Level 3 entered into certain transactions with Global Crossing prior to completing the Amalgamation, whereby Level 3 received cash for communications services to be provided in the future, which it accounted for as deferred revenue.  As a result of the Amalgamation, Level 3 can no longer amortize this deferred revenue into earnings and accordingly, reduced the purchase price applied to the net assets acquired in the Amalgamation by $77 million, the amount of the unamortized deferred revenue as of the acquisition date.
    

The following unaudited pro forma financial information presents the combined results of Level 3 and Global Crossing as if the completion of the Amalgamation had occurred as of the earliest period presented below (dollars in millions, except per share data).

 
2011
2010
Total Revenue
$
6,335

$
6,111

Net Loss
(727
)
(825
)
Net Loss per share
$
(3.56
)
$
(4.14
)



These results include certain adjustments, primarily due to increases in depreciation and amortization expense due to fair value adjustments of tangible and intangible assets, decreases in interest expense due to Level 3's issuance of incremental debt in order to redeem and refinance Global Crossing debt that had higher interest rates than the incremental financing, and to eliminate historical transactions between Level 3 and Global Crossing. The pro forma financial information is not intended to represent or be indicative of the actual results of operations of Level 3 that would have been reported had the Amalgamation been completed on January 1, 2010, nor is it representative of future operating results of the Company. The pro forma information does not include any operating efficiencies or cost savings that Level 3 may achieve with respect to combining the companies.

Acquisition related costs include transaction costs such as legal, accounting, valuation, and other professional services as well as integration costs such as severance and retention. Acquisition related costs have been recorded in selling, general and administrative expense in the Company's consolidated statements of operations. Level 3 incurred total acquisition related transaction costs of approximately $49 million through December 31, 2011. Level 3 incurred total acquisition related integration costs of approximately $32 million through December 31, 2011. In addition, Level 3 expects to incur additional integration related costs in 2012.

In connection with this transaction, Level 3 signed a voting agreement and stockholder rights agreement with a subsidiary of Singapore Technologies Telemedia Pte Ltd., STT Crossing Ltd. (“STT Crossing ”), the company that owned the majority of Global Crossing's voting stock prior to the Amalgamation, whereby STT Crossing voted in favor of the transaction and was granted the right to designate three members to the Level 3 Board of Directors.

Level 3 also adopted a Stockholder Rights Plan to protect its U.S. federal net operating losses from certain Internal Revenue Code Section 382 limitations.  This plan was designed to deter trading that would result in a change of control (as defined in that Code Section), and therefore protect the Company's ability to use its historical federal net operating losses in the future.
Loss Per Share
Loss Per Share
Loss Per Share
The Company computes basic net loss per share by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period and including the dilutive effect of common stock that would be issued assuming conversion or exercise of outstanding convertible notes, stock options, stock based compensation awards and other dilutive securities. No such items were included in the computation of diluted loss per share in 2011, 2010 and 2009 because the Company incurred a loss from continuing operations in each of these periods and the effect of inclusion would have been anti-dilutive.
Effective after the close of trading on October 19, 2011, the Company completed a 1 for 15 reverse stock split (see Note 1 - Organization and Summary of Significant Accounting Policies). All per share and share data is presented herein on a split adjusted basis. The effect of approximately 39 million, 52 million, and 45 million shares issuable pursuant to the various series of convertible notes outstanding at December 31, 2011, 2010 and 2009, respectively, have not been included in the computation of diluted loss per share because their inclusion would have been anti-dilutive to the computation. In addition, the effect of the approximately 4 million, 3 million, and 3 million outperform stock options, restricted stock units and warrants outstanding at December 31, 2011, 2010 and 2009, respectively, have not been included in the computation of diluted loss per share because their inclusion would have been anti-dilutive to the computation.

Dispositions
Dispositions
Dispositions

Level 3, through its two 50% owned joint-venture surface mines, one each in Montana and Wyoming, sold coal primarily through long-term contracts with public utilities. In November 2011, Level 3 completed the sale of its coal mining business to Ambre Energy Limited as part of its long-term strategy to focus on core business operations. As a result of the transaction, all of the assets and liabilities associated with the coal mining business have been removed from Level 3's balance sheet and the Company recognized a gain on the transaction of approximately $72 million that is included in the consolidated statements of operations within "Income from Discontinued Operations". Results for 2011, exclusive of the gain on the transaction, are not significant. The financial results of the coal mining business are included in the Company's consolidated results of operations through the date of sale, and all periods have been revised to reflect the presentation within discontinued operations.

The following amounts related to the operations of the coal business and were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Consolidated Statements of Operations (in millions):


 
 
Year Ended December 31,
 
 
2010
 
2009
Revenue
 
$
60

 
$
67

 
 
 
 
 
Cost of Revenue
 
56

 
66

Selling, General, and Administrative Costs
 
—

 
1

Depreciation and Amortization
 
6

 
9

Total Operating Expenses
 
62

 
76

 
 
 
 
 
Operating Loss
 
(2
)
 
(9
)
 
 
 
 
 
Other Income
 
1

 
15

Income (Loss) From Discontinued Operations
 
$
(1
)
 
$
6

Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment
The components of the Company's property, plant and equipment as of December 31, 2011 and 2010 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,089

 
(980
)
 
1,109

Network Infrastructure
 
7,931

 
(2,814
)
 
5,117

Operating Equipment
 
5,253

 
(3,684
)
 
1,569

Furniture, Fixtures and Office Equipment
 
167

 
(139
)
 
28

Other
 
22

 
(21
)
 
1

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136

December 31, 2010
 
 
 
 
 
 
Land
 
$
160

 
$
—

 
$
160

Land Improvements
 
73

 
(42
)
 
31

Facility and Leasehold Improvements
 
1,898

 
(887
)
 
1,011

Network Infrastructure
 
5,630

 
(2,544
)
 
3,086

Operating Equipment
 
4,322

 
(3,381
)
 
941

Furniture, Fixtures and Office Equipment
 
145

 
(133
)
 
12

Other
 
22

 
(22
)
 
—

Construction-in-Progress
 
44

 
—

 
44

 
 
$
12,294

 
$
(7,009
)
 
$
5,285

 
 
 
 
 
 
 

Land primarily represents owned assets of the communications business, including land improvements. Capitalized business support systems and network construction costs that have not been placed in service have been classified as construction-in-progress. As noted in Note 1 - Organization and Summary of Significant Accounting Policies, the Company changed its lives associated with certain fixed assets which resulted in a $74 million reduction in depreciation expense during 2011.
Depreciation expense was $706 million in 2011, $775 million in 2010 and $814 million in 2009.
Asset Retirement Obligations
Asset Retirement Obligations
Asset Retirement Obligations
The Company's asset retirement obligations consist of legal requirements to remove certain of its network infrastructure at the expiration of the underlying right-of-way ("ROW") term and restoration requirements for leased facilities. The Company recognizes its estimate of the fair value of its asset retirement obligations in the period incurred in other long-term liabilities. The fair value of the asset retirement obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset.
In 2011, the asset retirement obligations for certain leased facilities were primarily increased by liabilities assumed in the Global Crossing acquisition. In 2010, the asset retirement obligations for certain leased facilities were increased by an insignificant amount due to revised estimates of future obligations.
The following table provides asset retirement obligation activity for the years ended December 31, 2011 and 2010 (dollars in millions):
 
 
2011
 
2010
Asset retirement obligation at January 1
 
$
74

 
$
64

Accretion expense
 
9

 
8

Liabilities assumed in Global Crossing acquisition
 
41

 
—

Liabilities settled
 
(2
)
 
(5
)
Revision in estimated cash flows
 
—

 
7

Effect of foreign currency rate change
 
$
(1
)
 
$
—

Asset retirement obligation at December 31
 
$
121

 
$
74

 
 
 
 
 


The balance as of January 1, 2010, activity for the year ended December 31, 2010, and balance as of December 31, 2010 have been restated to exclude the reclamation liability of the discontinued operations of the coal mining business. At December 31, 2010, the excluded reclamation liability of the discontinued operations of the coal mining business was $105 million.

Goodwill
Goodwill
Goodwill
 
The changes in the carrying amount of goodwill during the years ended December 31, 2011 and 2010 are as follows (dollars in millions):
 
Level 3 Segment
Global Crossing Segment
Total
Balance as of January 1, 2010
$
1,429

$
—

$
1,429

Accumulated Impairment Losses
—

—

—

Effect of foreign currency rate change
(2
)
—

(2
)
Balance as of December 31, 2010
1,427

—

1,427

Goodwill acquired in Global Crossing acquisition
—

1,110

1,110

Accumulated Impairment Losses
—

—

—

Effect of foreign currency rate change
—

4

4

Balance as of December 31, 2011
$
1,427

$
1,114

$
2,541



The Company conducted its annual goodwill impairment analysis at December 31, 2011 and 2010. As a result of the Company's annual assessment, Level 3 concluded that its goodwill was not impaired in 2011 or 2010.
Acquired Intangible Assets
Acquired Intangible Assets
Acquired Intangible Assets
 
Identifiable acquisition-related intangible assets as of December 31, 2011 and December 31, 2010 were as follows (dollars in millions):
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
December 31, 2011
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
776

 
$
(571
)
 
$
205

Trademarks
55

 
(3
)
 
52

Patents and Developed Technology
158

 
(89
)
 
69

 
989

 
(663
)
 
326

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

 
$
1,021

 
$
(663
)
 
$
358

December 31, 2010
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(488
)
 
$
255

Patents and Developed Technology
140

 
(76
)
 
64

 
883

 
(564
)
 
319

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(564
)
 
$
371


 
During the fourth quarter of 2011, the Company conducted its long-lived asset impairment analysis and determined that the carrying value of certain wireless spectrum licenses acquired in a prior acquisition was impaired and recognized a $20 million charge in Other Expense.

During the third quarter of 2010, the Company determined that the useful life of certain customer relationships and developed technology should be reduced based on adverse economic conditions affecting customer attrition associated with these assets, which prospectively increased amortization expense by approximately $2 million during the year ended December 31, 2010.

The gross carrying amount of identifiable acquisition-related intangible assets in the table above is subject to change due to foreign currency fluctuations, as a portion of the Company’s identifiable acquisition-related intangible assets are related to foreign subsidiaries.
 
Acquired finite-lived intangible asset amortization expense was $99 million in 2011, $95 million in 2010, and $92 million in 2009.
At December 31, 2011, the weighted average remaining useful lives of the Company's acquired finite-lived intangible assets was 2.5 years for customer contracts and relationships, 3.6 years for patents and developed technology and 3.8 years for trademarks.
As of December 31, 2011, estimated amortization expense for the Company’s finite-lived acquisition-related intangible assets over the next five years and thereafter is as follows (dollars in millions):
 
2012
$
91

2013
73

2014
61

2015
45

2016
28

Thereafter
28

 
$
326



Restructuring Charges
Restructuring Charges
Restructuring Charges
Changing economic and business conditions as well as organizational structure optimization efforts have caused the Company to initiate various workforce reductions resulting in involuntary employee terminations. The Company also has initiated multiple workforce reductions resulting from the integration of previously acquired companies. Restructuring charges totaled $11 million, $2 million and $9 million in 2011, 2010 and 2009, respectively.
During 2011, as part of the Global Crossing Amalgamation, the Company initiated workforce reductions primarily at the executive level. As a result, the Company incurred a restructuring charge of $10 million.
During 2010, the Company did not initiate any significant new workforce reduction plans.
During 2009, the Company initiated a workforce reduction of approximately 260 employees, or 5% of the Company's total employee base. As a result of the 2009 workforce reduction, the Company incurred a restructuring charge of $9 million, all of which related to the communications business. The workforce reductions related to multiple levels within the organization and across multiple locations within North America. The terms of the workforce reduction, including the involuntary termination benefits to be received by affected employees, were communicated by the Company in 2009. During 2009, the Company paid approximately $21 million of involuntary termination benefits for affected employees in 2009, of which $9 million related to the Company's 2009 restructuring activities and $12 million related to restructuring activities initiated in the fourth quarter of 2008.
As of December 31, 2011, the Company has $5 million of assumed termination benefit liabilities associated with the Global Crossing Amalgamation accounted for as part of the purchase price.
The Company also has accrued contract termination costs of $43 million (including $18 million of costs associated with the Global Crossing Amalgamation) and $30 million as of December 31, 2011 and December 31, 2010, respectively, for facility lease costs, that the Company continues to incur without economic benefit. Accrued contract termination costs are recorded in other liabilities (current and non-current) in the consolidated balance sheets. The Company expects to pay the majority of these costs through 2025. The Company recognized a benefit of approximately $3 million and $5 million in 2011 and 2010, respectively, and incurred charges of $1 million in 2009 as the Company ceased using additional facilities as a result of lease modifications. The Company records charges for contract termination costs within selling, general and administrative expenses in the consolidated statements of operations. The additional contract termination costs associated with the Global Crossing Amalgamation were recorded at their acquisition date fair value.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
Fair Value of Financial Instruments
 
The Company’s financial instruments consist of cash and cash equivalents, restricted cash and securities, accounts receivable, accounts payable, interest rate swaps and long-term debt (including the current portion) as of December 31, 2011 and 2010. The Company also had embedded derivative contracts included in its financial position as of December 31, 2009. The carrying values of cash and cash equivalents, restricted cash and securities, accounts receivable, accounts payable and capital leases and other liabilities approximated their fair values at December 31, 2011 and 2010. The interest rate swaps and embedded derivative contracts are recorded in the consolidated balance sheets at fair value. See Note 11 - Derivative Financial Instruments. The carrying value of the Company’s long-term debt, including the current portion, reflects the original amounts borrowed net of unamortized discounts, premiums and debt discounts and was $8.5 billion and $6.4 billion as of December 31, 2011 and 2010, respectively.

GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
 
Fair Value Hierarchy
 
GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value measurement of each class of assets and liabilities is dependent upon its categorization within the fair value hierarchy, based upon the lowest level of input that is significant to the fair value measurement of each class of asset and liability. GAAP establishes three levels of inputs that may be used to measure fair value:
 
Level 1—Quoted prices in active markets for identical assets or liabilities.
 
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The table below presents the fair values for each class of Level 3’s liabilities measured on a recurring basis as well as the input levels used to determine these fair values as of December 31, 2011 and 2010:
 
 
 
 
 
 
Fair Value Measurement Using
 
Total
Carrying Value
in Consolidated
Balance Sheet
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
December 31,
2011
 
December 31,
2010
 
December 31,
2011
 
December 31,
2010
 
December 31,
2011
 
December 31,
2010
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
90

 
$
108

 
$
—

 
$
—

 
$
90

 
$
108

Embedded Derivatives in Convertible Debt (included in other non-current liabilities)
—

 
—

 
—

 
—

 
—

 
—

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
90

 
$
108

 
$
—

 
$
—

 
$
90

 
$
108

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Senior Notes
$
4,716

 
$
2,885

 
$
4,822

 
$
2,789

 
$
—

 
$
—

Convertible Notes
939

 
1,788

 
247

 
697

 
834

 
1,189

Term Loans
2,567

 
1,679

 
2,518

 
1,632

 
—

 
—

Commercial Mortgage
65

 
67

 
—

 
—

 
73

 
79

Capital Leases and Other
163

 
29

 
—

 
—

 
163

 
29

Total Long-term Debt, including the current portion:
$
8,450

 
$
6,448

 
$
7,587

 
$
5,118

 
$
1,070

 
$
1,297


 
The Company does not have any liabilities measured using significant unobservable (Level 3) inputs.
 
Derivatives
 
The interest rate swaps are measured in accordance with the GAAP Fair Value Measurements and Disclosures guidance using discounted cash flow techniques that use observable market inputs, such as LIBOR-based forward yield curves, forward rates, and the specific swap rate stated in each of the swap agreements. The embedded derivative contracts are priced using inputs that are observable in the market, such as the Company’s stock price, risk-free interest rate and other contractual terms of certain of the Company’s convertible senior notes.
 
Senior Notes
 
The estimated fair value of the Company’s Senior Notes approximated $4.8 billion and $2.8 billion at December 31, 2011 and 2010, respectively, based on market prices. The fair value of each instrument was based on the December 31, 2011 and 2010 trading quotes as provided by large financial institutions that trade in the Company’s securities. The pricing quotes provided by these market participants incorporate spreads to the Treasury curve, security coupon (which ranges from LIBOR plus 2.25% to 11.875%), corporate and security credit ratings, maturity date (ranging from 2014 to 2019) and liquidity, among other security characteristics and relative value at both the borrower entity level and across other securities of similar terms.
 
The 11.875% Senior Notes due 2019 are obligations of the Company and are not guaranteed by its subsidiaries.  The remaining Senior Notes are obligations of Level 3 Financing, Inc. and are fully and unconditionally guaranteed by Level 3 Communications, Inc., and with respect to the 9.375% Senior Notes due 2019, are also fully and unconditionally guaranteed by Level 3 Communications, LLC, which is a first tier, wholly owned subsidiary of Level 3 Financing, Inc.

Convertible Notes
 
The estimated fair value of the Company’s actively traded 6.5% Convertible Senior Notes due 2016 was approximated $247 million at December 31, 2011.  The estimated fair value of the Company’s actively traded Convertible Notes was $697 million at December 31, 2010, including the notes above as well as the 5.25% Convertible Senior Notes due 2011 and the 3.5% Convertible Senior Notes due 2012, which were redeemed in the first and fourth quarters, respectively, of 2011. The fair value of the Company’s actively traded Convertible Notes is based on the trading quotes as of December 31, 2011 and December 31, 2010 provided by large financial institutions that trade in the Company’s securities. The estimated fair value of the Company’s Convertible Notes that are not actively traded, such as the 7% Convertible Senior Notes due 2015, the 7% Convertible Senior Notes due 2015, Series B, and the 15% Convertible Senior Notes due 2013, approximated $834 million at December 31, 2011.  A portion of the Company’s 15% Convertible Senior Notes due 2013 were converted to equity during the third quarter of 2011, as discussed in Note 12 - Long-Term Debt. At December 31, 2010, the estimated fair value of the Company’s Convertible Notes that are not actively traded included the above notes and the 9% Convertible Senior Discount Notes due 2013, which were redeemed in the first quarter of 2011, was $1.2 billion.  To estimate the fair value of the Convertible Notes that are not actively traded, Level 3 used a Black-Scholes valuation model and an income approach using discounted cash flows. The most significant inputs affecting the valuation are the pricing quotes provided by market participants that incorporate spreads to the Treasury curve, security coupon (ranging from 7% to 15%), convertible optionality, corporate and security credit ratings, maturity date (ranging from 2013 to 2015), liquidity, and other equity option inputs, such as the risk-free rate, underlying stock price, strike price of the embedded derivative, estimated volatility and maturity inputs for the option component and for the bond component, among other security characteristics and relative value at both the borrower entity level and across other securities with similar terms. The fair value of each instrument is obtained by adding together the value derived by discounting the security’s coupon or interest payment using a risk-adjusted discount rate and the value calculated from the embedded equity option based on the estimated volatility of the Company’s stock price, conversion rate of the particular Convertible Note, remaining time to maturity, and risk-free rate.
 
The Convertible Notes are unsecured obligations of Level 3 Communications, Inc.  No subsidiary of Level 3 Communications, Inc. has provided a guarantee of the Convertible Notes.
 
Term Loans
 
The fair value of the Term Loans was approximately $2.5 billion and $1.6 billion at December 31, 2011 and 2010, respectively.  The fair value of each loan is based on the December 31, 2011 and 2010 trading quotes as provided by large financial institutions that trade in the Company’s Term Loans. The pricing quotes provided by these market participants incorporate LIBOR curve expectations, interest spread, corporate and loan credit ratings, maturity date (March 2014 and September 2018) and liquidity, among other loan characteristics and relative value across other instruments of similar terms. The interest spread, for the $1.4 billion Tranche A Term Loan is LIBOR plus 2.25% (aggregate principal value), LIBOR plus 4.25% with a LIBOR floor of 1.5% for the Tranche B II and Tranche B III Term Loans, and LIBOR plus 8.5% for the $280 million Tranche B Term Loan (aggregate principal value) with a LIBOR floor of 3.0%, which was pre-paid on November 10, 2011. See Note 12 - Long-Term Debt for details.
 
The Term Loans are secured by a pledge of the equity interests in certain domestic subsidiaries of Level 3 Financing, Inc. and 65% of the equity interest in Level 3 Financing, Inc.’s Canadian subsidiary, Level 3 GC Limited, and liens on the assets of Level 3 Communications, Inc. and certain domestic subsidiaries of Level 3 Financing, Inc.  In addition, Level 3 Communications, Inc. and certain domestic subsidiaries of Level 3 Financing, Inc. have provided full and unconditional guarantees of the obligations under the Term Loans.
 
Commercial Mortgage
 
The fair value of the Commercial Mortgage was approximately $73 million and $79 million at December 31, 2011 and 2010, respectively, as compared to the carrying amounts of $65 million and $67 million, respectively.  The Commercial Mortgage is not actively traded and its fair value is estimated by management using a valuation model based on an income approach.  The significant inputs used to estimate fair value of this debt instrument using discounted cash flows include the anticipated scheduled mortgage payments and observable market yields on other actively traded debt of similar characteristics and collateral type.
 
The Commercial Mortgage is a secured obligation of HQ Realty, Inc., a wholly owned subsidiary of the Company.  HQ Realty, Inc.’s obligations under the Commercial Mortgage are secured by a first priority lien on the Company’s headquarters campus located at 1025 Eldorado Boulevard, Broomfield, Colorado 80021 and certain HQ Realty, Inc. cash and reserve accounts.
 
The assets of HQ Realty, Inc. are not available to satisfy any third party obligations other than those of HQ Realty, Inc. In addition, the assets of the Company and its subsidiaries other than HQ Realty, Inc. are not available to satisfy the obligations of HQ Realty, Inc.
Derivative Financial Instruments
Derivative Financial Instruments
Derivative Financial Instruments
 
The Company uses derivative financial instruments, primarily interest rate swaps, to manage its exposure to fluctuations in interest rate movements. The Company’s primary objective in managing interest rate risk is to decrease the volatility of its earnings and cash flows affected by changes in the underlying rates. To achieve this objective, the Company enters into financial derivatives, primarily interest rate swap agreements, the values of which change in the opposite direction of the anticipated future cash flows.  The Company has floating rate long-term debt (see Note 12 - Long-Term Debt). These obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense also decreases. The Company has designated its interest rate swap agreements as cash flow hedges. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the lives of the agreements without exchange of the underlying notional amount. The change in the fair value of the interest rate swap agreements is reflected in Accumulated Other Comprehensive Income (Loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings, due to the fact that the interest rate swap agreements qualify as effective cash flow hedges. The Company does not use derivative financial instruments for speculative purposes.
 
In March 2007, Level 3 Financing Inc., the Company’s wholly owned subsidiary, entered into two interest rate swap agreements to hedge the interest payments on $1 billion notional amount of floating rate debt. The two interest rate swap agreements are with different counterparties and are for $500 million each. The transactions were effective beginning in April 2007 and mature in January 2014. The Company uses interest rate swaps to convert specific variable rate debt issuances into fixed rate debt.  Under the terms of the interest rate swap transactions, 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 4.92% under the other.  The Company evaluates the effectiveness of the hedges on a quarterly basis. The Company measures effectiveness by offsetting the change in the variable portion of the interest rate swaps with the changes in interest expense paid due to fluctuations in the LIBOR-based interest rate. During the periods presented, these derivatives were used to hedge the variable cash flows associated with existing obligations. The Company recognizes any ineffective portion of the change in fair value of the hedged item in the consolidated statements of operations. All components of the interest rate swaps were included in the assessment of hedge effectiveness. Hedge ineffectiveness for the Company’s cash flow hedges was not material in any period presented.
 
The Company did not have a remaining liability associated with its equity conversion rights as of December 31, 2011 and the fair value of the embedded derivative liability at December 31, 2010 was not significant. Changes in these derivatives resulted in the Company recognizing no gain, a $10 million gain and a $14 million gain for the years ended December 31, 2011, 2010 and 2009, respectively.
 
The Company is exposed to credit related losses in the event of non-performance by counterparties. The counterparties to any of the financial derivatives the Company enters into are major institutions with investment grade credit ratings. The Company evaluates counterparty credit risk before entering into any hedge transaction and continues to closely monitor the financial market and the risk that its counterparties will default on their obligations. This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.
 
Amounts accumulated in AOCI related to derivatives are indirectly recognized in earnings as periodic settlements occur throughout the term of the swaps, when the related interest payments are made on the Company’s variable-rate debt. As of December 31, 2011 and 2010, the Company had the following outstanding derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative
 
Number of
Instruments
 
Notional
(dollars in millions)
Interest rate swaps
 
Two
 
$
1,000

 
 
 
 
 

 
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as follows (dollars in millions):
 
 
 
Liability Derivatives
 
 
December 31, 2011
 
December 31, 2010
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
90

 
Other noncurrent liabilities
 
$
108

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
December 31, 2011
 
December 31, 2010
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Embedded equity conversion rights
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
—


 
 The amount of gains (losses) recognized in Other Comprehensive Loss consists of the following (dollars in millions):
 
 
 
December 31,
Derivatives designated as hedging instruments
 
2011
 
2010
Cash flow hedging contracts
 
$
18

 
$
(16
)

 

The amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions) consists of the following (dollars in millions):
 
 
 
 
 
Year Ended December 31,
Derivatives designated as hedging instruments
 
Income Statement Location
 
2011
 
2010
Cash flow hedging contracts
 
Interest Expense
 
$
46

 
$
46


 
Changes in the fair value of interest rate swaps designated as hedging instruments of the variability of cash flows associated with floating-rate, long-term debt obligations are reported in AOCI. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged debt obligation in the same period in which the related interest on the floating-rate debt obligations affects earnings.  Amounts currently included in AOCI will be reclassified to earnings prior to the settlement of these cash flow hedging contracts in 2014.  The Company estimates that $46 million of net losses on the interest rate swaps (based on the estimated LIBOR curve as of December 31, 2011) will be reclassified into earnings within the next twelve months. The Company’s interest rate swap agreements designated as cash flow hedging contracts qualify as effective hedge relationships, and as a result, hedge ineffectiveness was not material in any of the periods presented.
 
The effect of the Company’s derivatives not designated as hedging instruments on net loss is as follows (dollars in millions):
 
Derivatives not designated as
hedging instruments
 
Location of Gain Recognized in
Income/Loss on Derivative
 
 
 
 
 
 
 
 
2011
 
2010
 
2009
Embedded equity conversion rights
 
Other Income (Expense)—Other, net
 
$
—

 
$
10

 
$
14

Long-Term Debt
Long-Term Debt
Long-Term Debt
 
As of December 31, 2011 and December 31, 2010, long-term debt was as follows:
(dollars in millions)
 
December 31,
2011
 
December 31,
2010
Senior Secured Term Loan*
 
$
2,600

 
$
1,680

Senior Notes due 2014 (9.25%)
 
807

 
1,250

Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
 
300

 
300

Senior Notes due 2017 (8.75%)
 
700

 
700

Senior Notes due 2018 (10.0%)
 
640

 
640

Senior Notes due 2019 (11.875%)
 
605

 
—

Senior Notes due 2019 (9.375%)
 
500

 
—

Senior Notes due 2019 (8.125%)
 
1,200

 
—

Convertible Senior Notes due 2011 (5.25%)
 
—

 
196

Convertible Senior Notes due 2012 (3.5%)
 
—

 
294

Convertible Senior Notes due 2013 (15.0%)
 
272

 
400

Convertible Senior Discount Notes due 2013 (9.0%)
 
—

 
295

Convertible Senior Notes due 2015 (7.0%)
 
200

 
200

Convertible Senior Notes due 2015 Series B (7.0%)
 
275

 
275

Convertible Senior Notes due 2016 (6.5%)
 
201

 
201

Commercial Mortgage due 2015 (9.86%)
 
65

 
67

Capital Leases
 
131

 
29

Other
 
32

 
—

Total Debt Obligations
 
8,528

 
6,527

Unamortized (Discount) Premium:
 
 

 
 

Discount on Senior Secured Term Loan due 2014
 
(33
)
 
(1
)
Premium on Senior Notes due 2014 (9.25%)
 
3

 
7

Discount on Senior Notes due 2018 (10.0%)
 
(11
)
 
(12
)
Discount on Senior Notes due 2019 (11.875%)
 
(10
)
 
—

Discount on Senior Notes due 2019 (9.375%)
 
(9
)
 
—

Discount on Senior Notes due 2019 (8.125%)
 
(9
)
 
—

Discount on Convertible Senior Notes due 2011 (5.25%)
 
—

 
(20
)
Discount on Convertible Senior Notes due 2012 (3.5%)
 
—

 
(29
)
Discount on Convertible Senior Notes due 2015 (7.0%)
 
(2
)
 
(3
)
Discount due to embedded derivative contracts
 
(7
)
 
(21
)
Total Unamortized (Discount) Premium
 
(78
)
 
(79
)
Carrying Value of Debt
 
8,450

 
6,448

Less current portion
 
(65
)
 
(180
)
Long-term Debt, less current portion
 
$
8,385

 
$
6,268

 
* The interest rate after the effect of the interest rate swap was 2.65% and 2.54% for the $1 billion and $400 million tranches of the term loan as of December 31, 2011 and December 31, 2010, respectively. The $280 million Tranche B Term Loan was prepaid in November 2011 and had an interest rate of 11.5% as of December 31, 2010. The $650 million Tranche B II Term Loan due 2018 and $550 million Tranche B III Term Loan due 2018 that were issued in the fourth quarter of 2011 had an interest rate of 5.75% as of December 31, 2011.

    
The major debt obligations of Global Crossing that were outstanding at the time of the Amalgamation were paid during the fourth quarter of 2011. As of December 31, 2011, $32 million of other debt acquired was outstanding, and the average interest rate on the other debt was 9.41%.

2011 Debt Issuance and Related Redemptions

During the fourth quarter of 2011, in connection with the closing of the Amalgamation (See Note 2 - Events Associated with the Amalgamation of Global Crossing), Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $650 million of borrowings through an additional tranche. The Company borrowed the Tranche B II Term Loan from investors at a price of 99% of its principal amount. The net discount of approximately $7 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the Tranche B II Term Loan using the effective interest method. The Tranche B II Term Loan accrues interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The Tranche B II Term Loan will mature on September 1, 2018. The net proceeds from the Tranche B II Term Loan were used to refinance certain existing indebtedness of Global Crossing and for general corporate purposes.

Additionally, during the fourth quarter of 2011, Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $550 million of borrowings through an additional tranche. The Company borrowed the Tranche B III Term Loan from investors at a price of 95% of its principal amount. The net discount of approximately $28 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the Tranche B III Term Loan using the effective interest method. The Tranche B III Term Loan will accrue interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The Tranche B III Term Loan will mature on September 1, 2018. The net proceeds from the Tranche B III Term Loan were used along with cash on hand to refinance the $280 million Tranche B Term Loan that was outstanding under the existing senior secured credit facility and the $274 million aggregate principal amount of Level 3 Communications, Inc.'s 3.5% Convertible Senior Notes due 2012. Debt issuance costs of approximately $14 million and $8 million for the Tranche B II and Tranche B III Term Loans, respectively, were capitalized and are being amortized over the term of these Term Loans using the effective interest rate method.

During the second quarter of 2011, Level 3 Escrow, Inc., an indirect, wholly owned subsidiary of Level 3 Communications, Inc., issued $600 million in aggregate principal amount of its 8.125% Senior Notes due 2019 (the “8.125% Senior Notes”) at a price of 99.264% of their principal amount. The debt issuance discount of approximately $4 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the beginning initial term of the 8.125% Senior Notes using the effective interest method. As a result of certain conditions that could have required Level 3 Escrow, Inc. to redeem the notes on or before April 10, 2012, discussed further below, the initial term of the 8.125% Senior Notes was deemed to be through April 2012. When the contingency was resolved, the Company reclassified these notes into long-term debt and the remaining related debt issuance discount is being amortized as interest expense over the remaining term of the 8.125% Senior Notes.

Additionally, during the third quarter of 2011, Level 3 Escrow, Inc. issued an additional $600 million in aggregate principal amount of its 8.125% Senior Notes due 2019 under the same indenture as the 8.125% Senior Notes, which are treated under that indenture as a single series of notes. The new 8.125% Senior Notes due 2019 were priced to investors at 98.545% of their principal amount, plus accrued interest from June 9, 2011 when the original notes were issued, and will mature on July 1, 2019. The debt issuance discount of approximately $9 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the beginning initial term of the 8.125% Senior Notes using the effective interest method. As a result of certain conditions that could have required Level 3 Escrow, Inc. to redeem the $1.2 billion of 8.125% Senior Notes on or before April 10, 2012, the initial term of these notes was deemed to be through April 2012. When the contingency was resolved in connection with the Amalgamation, the Company reclassified these notes into long-term debt and the remaining related debt issuance discount is being amortized as interest expense over the remaining term of the 8.125% Senior Notes.


The gross proceeds from the offering of the 8.125% Senior Notes were deposited into a segregated escrow account and remained in escrow until the date of the satisfaction of certain escrow conditions including, but not limited to, the substantially concurrent consummation of the Amalgamation and the assumption of the 8.125% Senior Notes by Level 3 Financing, Inc. (the “Notes Assumption”).  In conjunction with the completion of the Amalgamation on October 4, 2011 (see Note 2 - Events Associated with the Amalgamation of Global Crossing), the escrow conditions were satisfied. Debt issuance costs of approximately $32 million were capitalized and are being amortized over the term of the 8.125% Senior Notes using the effective interest rate method.

During the first quarter of 2011, the Company’s wholly owned subsidiary, Level 3 Financing, Inc. issued $500 million aggregate principal amount of its 9.375% Senior Notes due 2019 (the “9.375% Senior Notes”) at a price of 98.001% of their principal amount. The net proceeds from the offering, were used to redeem a portion of Level 3 Financing, Inc.’s outstanding 9.25% Senior Notes due 2014 during the second quarter of 2011. The debt issuance discount of approximately $10 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 9.375% Senior Notes using the effective interest method. Debt issuance costs of approximately $11 million were capitalized and are being amortized over the term of the 9.375% Senior Notes using the effective interest rate method.

Additionally, during the first quarter of 2011, in two separate transactions, Level 3 Communications, Inc. issued a total of $605 million aggregate principal amount of its 11.875% Senior Notes due 2019 (“11.875% Senior Notes”). The Company issued a portion of its 11.875% Senior Notes to investors at a price of 98.173% of their principal amount. The net proceeds from the issuance of the 11.875% Senior Notes, which included an $11 million debt issuance discount, were used to redeem the Company’s 5.25% Convertible Senior Notes due 2011 and exchange the 9% Convertible Senior Discount Notes due 2013 during the first quarter of 2011.  The net discount of approximately $11 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 11.875% Senior Notes using the effective interest method. Debt issuance costs of approximately $8 million were capitalized and are being amortized over the term of the 11.875% Senior Notes using the effective interest rate method.

2011 Debt Redemptions, Exchanges, and Conversions
 
In the fourth quarter of 2011, the Company redeemed the remaining aggregate principal amount of its 3.5% Convertible Senior Notes due 2012 and prepaid the $280 million Tranche B Term Loan under the existing secured credit agreement. The Company recognized a loss on extinguishment of $12 million and $15 million associated with the redemption and prepayment of the 3.5% Senior Convertible Notes due 2012 and the Tranche B Term Loan, respectively.

In the third quarter of 2011, the Company repurchased approximately $20 million of its 3.5% Convertible Senior Notes due 2012 at a price of 98.875% of the principal amount. The Company recognized a loss on extinguishment of less than $1 million.

Additionally, in the third quarter of 2011, certain holders converted approximately $128 million of the Company's 15% Convertible Senior Notes due in 2013 to common equity. Upon conversion, the Company issued an aggregate of approximately 5 million shares of Level 3's common stock on a split adjusted basis, representing the approximately 37 shares per $1,000 note into which the notes were then convertible. The Company also paid an aggregate of approximately $29 million in cash, equivalent to $225 per $1,000 note, representing interest that would have been due from conversion through the maturity date, which was recognized as a loss on inducement and included in the loss on extinguishment of debt. Following the partial conversion of the 15% Convertible Senior Notes, approximately $272 million principal amount of the 15% Convertible Senior Notes due in 2013 remain outstanding. The 15% Convertible Senior Notes due in 2013 are not callable prior to maturity in January 2013.

    
In the second quarter of 2011, in connection with the issuance of the 9.375% Senior Notes due 2019, together with cash on hand, the Company redeemed approximately $443 million aggregate principal amount of its 9.25% Senior Notes due 2014 at a price of 104.625% of the principal amount.  The Company recognized a loss on extinguishment for the portion of the aggregate principal amount of its 9.25% Senior Notes due 2014 retired of approximately $23 million.
 
In the first quarter of 2011, in connection with the issuance of the 11.875% Senior Notes due 2019, the Company redeemed the outstanding $196 million aggregate principal amount of 5.25% Convertible Senior Notes due 2011 at a price of 100.75% of the principal amount and exchanged the outstanding $295 million aggregate principal amount of 9% Convertible Senior Discount Notes due 2013. The Company recognized a loss of $20 million as a result of the redemption of the 5.25% Convertible Senior Notes due 2011 and the exchange of the 9% Convertible Senior Discount Notes due 2013.
 
2010 Debt Issuances
 
During the third quarter of 2010, the Company issued $175 million aggregate principal amount of its 6.5% Convertible Senior Notes due 2016 (the “6.5% Convertible Senior Notes”). The net proceeds from the issuance of the 6.5% Convertible Senior Notes were approximately $170 million after deducting debt issuance costs. In connection with the issuance of the Company’s 6.5% Convertible Senior Notes, the Company granted an overallotment option to the underwriters to purchase up to an additional $26 million aggregate principal amount of these notes less the underwriting discount. The underwriters exercised the overallotment option in full during the fourth quarter of 2010, and the Company received net proceeds of approximately $25.5 million, after deducting underwriting discounts and commissions. The 6.5% Convertible Senior Notes will mature on October 1, 2016 and have an interest rate of 6.5% per annum with interest payable semiannually on April 1 and October 1, beginning April 1, 2011. Debt issuance costs of approximately $6 million were capitalized and are being amortized over the term of the 6.5% Convertible Senior Notes using the effective interest rate method.

During the first quarter of 2010, Level 3 Financing, Inc. issued $640 million in aggregate principal amount of its 10% Senior Notes due 2018 (the “10% Senior Notes”) in a private offering. The net proceeds from the issuance of the 10% Senior Notes were $613 million after deducting a $13 million discount and approximately $14 million of debt issuance costs. The net proceeds were used to fund Level 3 Financing, Inc.’s purchase of its 12.25% Senior Notes due 2013 (the “12.25% Senior Notes”) in a concurrent tender offer and consent solicitation. The 10% Senior Notes will mature on February 1, 2018 and are guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC (see Note 17—Condensed Consolidating Financial Information). Interest on the notes accrues at 10% per year and is payable on February 1 and August 1 of each year, beginning August 1, 2010.
 
The offering of the 10% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement.  In June 2010, all of the originally placed notes were exchanged for a new issue of 10% Senior Notes due 2018 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable.
 
2010 Tender Offer
 
In the first quarter of 2010, Level 3 Financing, Inc. commenced a tender offer to purchase for cash any and all of the outstanding $550 million aggregate principal amount of its 12.25% Senior Notes for a price equal to $1,080 per $1,000 principal amount of the notes, which included $1,050 as the tender offer consideration and $30 as a consent payment (the “12.25% Tender Offer”). In connection with the 12.25% Tender Offer, Level 3 and Level 3 Financing, Inc. solicited consents to certain proposed amendments to the indenture governing the 12.25% Senior Notes to eliminate substantially all of the covenants, certain repurchase rights and certain events of default and related provisions contained in the indenture.
 
Holders of the 12.25% Senior Notes, representing approximately 99.4% of the aggregate principal amount of the outstanding 12.25% Senior Notes, participated in the tender offer. At the expiration of the tender offer, an aggregate principal amount of approximately $547 million of notes had been tendered. The Company redeemed in full the remaining $3 million aggregate principal of the 12.25% Senior Notes, at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest.
 
The Company recognized a loss associated with the 12.25% Tender Offer of approximately $55 million.
 
2010 Debt Repayments and Repurchases
 
In the third quarter of 2010, the Company repaid the $38 million aggregate principal amount of its 2.875% Convertible Senior Notes due 2010 that matured on July 15, 2010.
 
In the second quarter of 2010, the Company redeemed all of the outstanding $172 million aggregate principal amount of its 10% Convertible Senior Notes due 2011 for a price equal to $1,016.70 per $1,000 principal amount of the notes plus accrued and unpaid interest up to, but not including the redemption date.  The Company used cash on hand to fund the redemption of these notes and recognized a loss on extinguishment of approximately $4 million.
 
In the first quarter of 2010, the Company repaid $111 million aggregate principal amount of its 6% Convertible Subordinated Notes due 2010 that matured on March 15, 2010.  In addition, in various transactions during the first quarter of 2010, the Company repurchased $3 million in aggregate principal amount of 5.25% Convertible Senior Notes due 2011, the remaining $3 million of its 10.75% Senior Notes due 2011, and $2 million aggregate principal amount of 2.875% Convertible Senior Notes due 2010.  Repurchases were made at prices to par ranging from 95% to 100%, and the Company recognized a net loss on these repurchases of less than $1 million.
Senior Secured Term Loans due 2014 and 2018
On March 13, 2007, Level 3 Communications, Inc., as guarantor, Level 3 Financing, Inc., as borrower, Merrill Lynch Capital Corporation, as administrative agent and collateral agent, and certain other agents and certain lenders entered into a Credit Agreement, pursuant to which the lenders extended a $1.4 billion senior secured term loan to Level 3 Financing, Inc.. The $1.4 billion senior secured term loan has an interest rate of LIBOR plus an applicable margin of 2.25% per annum. In addition, during the second quarter of 2009, Level 3 Financing, Inc. amended and restated its existing senior secured Credit Agreement to increase the borrowings through the creation of a $280 million Tranche B Term Loan with a current interest rate of LIBOR plus 8.5% per annum, with LIBOR set at a minimum of 3.00%. The senior secured term loan ("Senior Secured Term Loan due 2014") matures on March 13, 2014, with the exception of Tranches B II and B III Term Loans as described below.
The borrower has the option of electing one, two, three or six month LIBOR at the end of each interest period and may elect different options with respect to different portions of the Senior Secured Term Loan due 2014. Interest is payable in cash at the end of each LIBOR period elected in arrears, beginning July 13, 2007, provided that in the case of a six month interest period, interim interest payments are required at the end of the first three months. The interest rate on $1 billion of the Senior Secured Term Loan due 2014 resets quarterly and was 2.65% and 2.54% as of December 31, 2011 and 2010, respectively. The interest rate on $400 million resets quarterly and was 2.65% and 2.54% as of December 31, 2011 and 2010, respectively. The interest rate on the remaining $280 million of the Senior Secured Term Loan due 2014 issued in the second quarter of 2009 and prepaid in November 2011 was 11.5% as of December 31, 2010.
Level 3 Financing, Inc.'s obligations under this term loan are, subject to certain exceptions, secured by certain assets of the Company and certain of the Company's material domestic subsidiaries that are engaged in the telecommunications business.
The Senior Secured Term Loan due 2014 includes certain negative covenants which restrict the ability of the Company, Level 3 Financing, Inc. and any restricted subsidiary to engage in certain activities. The Senior Secured Term Loan due 2014 also contains certain events of default. It does not require the Company or Level 3 Financing, Inc. to maintain specific financial ratios or other financial metrics.
The Company used a portion of the original net proceeds after transaction costs to repay Level 3 Financing, Inc.'s $730 million Senior Secured Term Loan due 2011 under that certain credit agreement dated June 27, 2006. In addition, the Company used a portion of the net proceeds to fund the purchase of certain of its existing debt securities.
Debt issuance costs for the $1.4 billion tranche senior secured term loan of $22 million were capitalized and are being amortized to interest expense over the term of the Senior Secured Term Loan due 2014 using the effective interest method. As a result of amortization, the capitalized debt issuance costs have been reduced to $6 million at December 31, 2011.
On October 4, 2011, in connection with the closing of the Amalgamation (See Note 2 - Events Associated with the Amalgamation of Global Crossing), Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $650 million of borrowings through an additional Tranche. The Company borrowed the Tranche B II Term Loan from investors at a price of 99% of its principal amount. The net discount of approximately $7 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the Tranche B II Term Loan using the effective interest method. The Tranche B II Term Loan accrues interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. Tranche B II Term Loan will mature on September 1, 2018. The net proceeds from the Tranche B II Term Loan were used to refinance certain existing indebtedness of Global Crossing in connection with the consummation of the Amalgamation and for general corporate purposes.

Additionally, on November 10, 2011, Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $550 million of borrowings through an additional Tranche. The Company borrowed the Tranche B III Term Loan from investors at a price of 95% of its principal amount. The net discount of approximately $28 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the Tranche B III Term Loan using the effective interest method. The Tranche B III Term Loan will accrue interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The Tranche B III Term Loan will mature on September 1, 2018. The net proceeds from the Tranche B III Term Loan were used along with cash on hand to prepay the $280 million Tranche B Term Loan that was outstanding under the existing senior secured credit facility and the $274 million aggregate principal amount of Level 3 Communications, Inc.'s 3.5% Convertible Senior Notes due 2012. Debt issuance costs of approximately $14 million and $8 million for the Tranche B II and Tranche B III Term Loans, respectively, were capitalized and are being amortized over the term of the Term Loans using the effective interest rate method. Capitalized debt issuance costs for the Tranche B II and Tranche B III Term Loans remained at$14 million and $8 million at December 31, 2011, respectively.

As of December 31, 2011, the discounts remaining on the Tranche B II and Tranche B III Term Loans, were $6 million and $27 million, respectively.
Level 3 Financing, Inc.'s obligations under the Tranche B II and Tranche B III Term Loans are, subject to certain exceptions, secured by certain of the assets of (i) the Company and (ii) certain of the Company's material domestic subsidiaries which are engaged in the communications business. The Company and certain of its subsidiaries have also guaranteed the obligations of Level 3 Financing, Inc. under the Tranche B II and III Term Loans.
No changes were implemented to any of the restrictive covenants or events of default contained in the existing senior secured credit facility.
9.25% Senior Notes due 2014
On October 30, 2006, Level 3 Communications, Inc., as guarantor and Level 3 Financing, Inc. as borrower, received $588 million of net proceeds after transaction costs, from a private offering of $600 million aggregate principal amount of its 9.25% Senior Notes due 2014 ("9.25% Senior Notes due 2014") (see Note 17 - Condensed Consolidating Financial Information). On December 13, 2006, Level 3 Communications, Inc., as guarantor and Level 3 Financing, Inc. as borrower, received $661 million of net proceeds after transaction costs and accrued interest, for a second offering of $650 million aggregate principal amount of 9.25% Senior Notes due 2014. These notes together with the $600 million aggregate principal amount of 9.25% Senior Notes due 2014 issued on October 30, 2006 were issued under the same indenture and are treated as a single series of notes. The Company received total net proceeds of $1.239 billion (excluding prepaid interest). The Notes were subsequently registered through a public exchange offer.
The 9.25% Senior Notes due 2014 are senior unsecured obligations of Level 3 Financing, Inc. ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing, Inc. These notes are guaranteed by Level 3 Communications, Inc. The notes will mature on November 1, 2014. Interest on the 9.25% Senior Notes due 2014 accrues at 9.25% interest per year and is payable semi-annually in cash on May 1 and November 1 beginning May 1, 2007. The $600 million of 9.25% Senior Notes due 2014 issued on October 30, 2006 were priced at par. The $650 million of 9.25% Senior Notes due 2014 issued on December 13, 2006 were priced at 101.75% of par plus accrued interest from October 30, 2006, representing an effective yield of 8.86% to the purchasers of these senior notes. The resulting premium of the two issuances of approximately $11 million was reflected as an increase to long-term debt and is being amortized as a reduction to interest expense over the remaining term of the 9.25% Senior Notes due 2014 using the effective interest method. In the second quarter of 2011, the Company redeemed approximately $443 million aggregate principal amount of the 9.25% Senior Notes due 2014 at a price of 104.625% of the principal amount.  The Company recognized a loss on extinguishment of the portion of the aggregate principal amount of the 9.25% Senior Notes due 2014 retired of approximately $23 million. As of December 31, 2011, the premium remaining was $3 million.
The 9.25% Senior Notes due 2014 are subject to redemption at the option of Level 3 Financing, Inc. in whole or in part, at any time or from time to time, on or after November 1, 2010 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning November 1, of the years indicated below:
 
 
Year
Redemption
Price
2011
102.213
%
2012
100.000
%

The 9.25% Senior Notes due 2014 contain certain covenants, which among other things, limit additional indebtedness, dividend payments, certain investments and transactions with affiliates.
Debt issuance costs of approximately $23 million were capitalized and are being amortized over the term of the 9.25% Senior Notes due 2014. As a result of amortization, the capitalized debt issuance costs have been reduced to $7 million at December 31, 2011.
Floating Rate Senior Notes Due 2015 and 8.75% Senior Notes due 2017
On February 14, 2007, Level 3 Financing, Inc. received $982 million of net proceeds after transaction costs, from a private offering of $700 million aggregate principal amount of its 8.75% Senior Notes due 2017 (the "8.75% Senior Notes") and $300 million aggregate principal amount of its Floating Rate Senior Notes due 2015 (the "2015 Floating Rate Senior Notes"). The Notes were subsequently registered through a public exchange offer. The 8.75% Senior Notes and the 2015 Floating Rate Senior Notes are senior unsecured obligations of Level 3 Financing, Inc. ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing, Inc. Level 3 Communications, Inc. and Level 3 Communications, LLC have guaranteed the 8.75% Senior Notes and the 2015 Floating Rate Senior Notes (See Note 17 - Condensed Consolidating Financial Information). Interest on the 8.75% Senior Notes accrues at 8.75% interest per year and is payable semi-annually in cash on February 15th and August 15th beginning August 15, 2007. The principal amount of the 8.75% Senior Notes will be due on February 15, 2017. Interest on the 2015 Floating Rate Senior Notes accrues at LIBOR plus 3.75% per annum, reset semi-annually. The interest rate was 4.202% at December 31, 2011. Interest on the 2015 Floating Rate Senior notes is payable semi-annually in cash on February 15th and August 15th beginning August 15, 2007. The principal amount of the 2015 Floating Rate Senior Notes will be due on February 15, 2015.
At any time prior to February 15, 2012, Level 3 Financing, Inc. may redeem all or a part of the 8.75% Senior Notes upon not less than 30 nor more than 60 days' prior notice, at a redemption price equal to 100% of the principal amount of the 8.75% Senior Notes so redeemed plus the 8.75% Applicable Premium as of, and accrued and unpaid interest thereon (if any) to, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
With respect to the 8.75% Senor Notes, "8.75% Applicable Premium" means on any redemption date, the greater of (1) 1.0% of the principal amount of such 8.75% Senior Notes and (2) the excess, if any, of (a) the present value at such redemption date of (i) 104.375% of the principal amount of such 8.75% Senior Notes plus (ii) all required interest payments due on such 8.75% Senior Notes through February 15, 2012 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate (as defined in the indenture governing the 8.75% Senior Notes) as of such redemption date plus 50 basis points, over (b) the principal amount of such 8.75% Senior Notes.
The 8.75% Senior Notes are subject to redemption at the option of Level 3 Financing, Inc. in whole or in part, at any time or from time to time, on or after February 15, 2012 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning February 15, of the years indicated below:
 
 
Year
Redemption
Price
2012
104.375
%
2013
102.917
%
2014
101.458
%
2015
100.000
%

The Floating Rate Senior Notes are subject to redemption at the option of Level 3 Financing, Inc. in whole or in part, at any time or from time to time, on or after February 15, 2010 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning February 15, of the years indicated below:
 
 
Year
Redemption
Price
2011
100.0
%

The 8.75% Senior Notes and the 2015 Floating Rate Senior Notes contain certain covenants, which among other things, limit additional indebtedness, dividend payments, certain investments and transactions with affiliates.
Debt issuance costs of approximately $16 million were capitalized and are being amortized over the term of the 8.75% Senior Notes due 2017. As a result of amortization, the capitalized debt issuance costs have been reduced to $10 million at December 31, 2011.
Debt issuance costs of approximately $6 million were capitalized and are being amortized over the term of the Floating Rate Senior Notes due 2015. As a result of amortization, the capitalized debt issuance costs have been reduced to $3 million at December 31, 2011.
10% Senior Notes due 2018
On January 20, 2010, Level 3 Financing, Inc. received $613 million proceeds, after deducting a $13 million discount and approximately $14 million of debt issuance costs, from a private offering of $640 million in aggregate principal amount of its 10% Senior Notes due 2018 (the "10% Senior Notes"). The net proceeds were used to fund Level 3 Financing, Inc.'s purchase of its 12.25% Senior Notes due 2013 (the "12.25% Senior Notes") in a concurrent tender offer and consent solicitation. The 10% Senior Notes will mature on February 1, 2018 and are guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC (see Note 17 - Condensed Consolidating Financial Information). Interest on the notes accrues at 10% per year and is payable on February 1 and August 1 of each year, beginning August 1, 2010. As of December 31, 2011, the discount remaining was $11 million.
As a result of amortization, the capitalized debt issuance costs have been reduced to $12 million at December 31, 2011.
The offering of the 10% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement. In June 2010, all of the originally placed notes were exchanged for a new issue of 10% Senior Notes due 2018 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable.
11.875% Senior Notes due 2019 
In January 2011, in two separate transactions, Level 3 Communications, Inc. issued a total of $605 million aggregate principal amount of its 11.875% Senior Notes due 2019 (the "11.875% Senior Notes"). The Company issued a portion of its 11.875% Senior Notes due 2019 to investors at a price of 98.173% of their principal amount. The net proceeds from the issuance of the 11.875% Senior Notes, which included an $11 million debt issuance discount, were used to redeem the Company’s 5.25% Convertible Senior Notes due 2011 and exchange the 9% Convertible Senior Discount Notes due 2013 during the first quarter of 2011.  The net discount of approximately $11 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 11.875% Senior Notes using the effective interest method.  The 11.875% Senior Notes will mature on February 1, 2019 and are not guaranteed by the Company’s subsidiaries. Interest on the notes accrues at 11.875% per year and is payable on April 1 and October 1 of each year, beginning April 1, 2011. Debt issuance costs of approximately $8 million were capitalized and are being amortized over the term of the 11.875% Senior Notes using the effective interest rate method.
As of December 31, 2011, the discount remaining was $10 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $7 million at December 31, 2011.

The 11.875% Senior Notes are subject to redemption at the option of Level 3 Communications, Inc. in whole or in part, at any time or from time to time, prior to February 1, 2015, at 100% of the principal amount of 11.875% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on or after April 1, 2015 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning February 1, of the years indicated below:
 
Year
Redemption
Price
2015
105.938
%
2016
102.969
%
2017
100.000
%


At any time or from time to time on or prior to February 1, 2014, the Company may redeem up to 35% of the original aggregate principal amount of the 11.875% Senior Notes at a redemption price equal to 111.875% of the principal amount of the 11.875% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, with the net cash proceeds contributed to the capital of Level 3 from one or more private placements of Level 3 or underwritten public offerings of common stock of Level 3 resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 65% of the original aggregate principal amount of the 11.875% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.

The offering of the 11.875% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement. In July 2011, all of the originally placed notes were exchanged for a new issue of 11.875% Senior Notes due 2019 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. 
9.375% Senior Notes due 2019
 On March 4, 2011, the Company’s wholly owned subsidiary, Level 3 Financing, Inc., issued $500 million aggregate principal amount of its 9.375% Senior Notes due 2019 (the "9.375% Senior Notes") at a price of 98.001% of their principal amount. The net proceeds from the offering, were used to redeem a portion of Level 3 Financing, Inc.’s outstanding 9.25% Senior Notes due 2014 on April 4, 2011. The debt issuance discount of approximately $10 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 9.375% Senior Notes using the effective interest method.  The 9.375% Senior Notes are senior unsecured obligations of Level 3 Financing, Inc. ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing, Inc. The Company and Level 3 Communications, LLC have guaranteed the 9.375% Senior Notes. The 9.375% Senior Notes will mature on April 1, 2019. Interest on the Notes will be payable on April 1 and October 1 of each year, beginning on October 1, 2011. Debt issuance costs of approximately $11 million were capitalized and are being amortized over the term of the 9.375% Senior Notes using the effective interest rate method.

As of December 31, 2011, the discount remaining was $9 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $10 million at December 31, 2011.
 
The 9.375% Senior Notes Due 2019 are subject to redemption at the option of Level 3 Financing, Inc. in whole or in part, at any time or from time to time, prior to April 1, 2015, at 100% of the principal amount of 9.375% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on or after April 1, 2015 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning April 1, of the years indicated below:
 
Year
Redemption
Price
2015
104.688
%
2016
102.344
%
2017
100.000
%

 
At any time or from time to time on or prior to April 1, 2014, Level 3 Financing, Inc. may redeem up to 35% of the original aggregate principal amount of the 9.375% Senior Notes at a redemption price equal to 109.375% of the principal amount of the 9.375% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, with the net cash proceeds contributed to the capital of Level 3 Financing, Inc. from one or more private placements or underwritten public offerings of common stock of the Company resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 65% of the original aggregate principal amount of the 9.375% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.

The offering of the 9.375% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement. In July 2011, all of the originally placed notes were exchanged for a new issue of 9.375% Senior Notes due 2019 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. 

8.125% Senior Notes due 2019

On June 9, 2011, Level 3 Escrow, Inc., an indirect, wholly owned subsidiary of Level 3 Communications, Inc., issued $600 million in aggregate principal amount of its 8.125% Senior Notes due 2019. Level 3 Escrow, Inc. issued the 8.125% Senior Notes due 2019 to investors at a price of 99.264% of their principal amount. The debt issuance discount of approximately $4 million was reflected as a reduction in long-term debt and was amortized as interest expense over the beginning initial term of the 8.125% Senior Notes using the effective interest method. As a result of certain conditions that could have required Level 3 Escrow, Inc. to redeem the notes on or before April 10, 2012, discussed further below, the initial term of the 8.125% Senior Notes was deemed to be through April 2012. When the contingency was resolved, the Company reclassified these notes into long-term debt and the remaining related debt issuance discount is being amortized as interest expense over the remaining term of the 8.125% Senior Notes. The 8.125% Senior Notes will mature on July 1, 2019 and are not currently guaranteed by any of the Company’s subsidiaries. Interest on the notes accrues at 8.125% per year and is payable on January 1 and July 1, beginning on January 1, 2012.

On July 28, 2011, Level 3 Escrow, Inc. issued an additional $600 million in aggregate principal amount of its 8.125% Senior Notes due 2019 under the same indenture as the 8.125% Senior Notes issued in June 9, 2011, which are treated under that indenture as a single series of notes. The new 8.125% Senior Notes due 2019 were priced to investors at 98.545% of their principal amount, plus accrued interest from June 9, 2011 when the original notes were issued, and will mature on July 1, 2019. The debt issuance discount of approximately $9 million was reflected as a reduction in long-term debt and is being amortized as interest expense over the beginning initial term of the 8.125% Senior Notes using the effective interest method. As a result of certain conditions that could have required Level 3 Escrow, Inc. to redeem the$1.2 billion of 8.125% Senior Notes on or before April 10, 2012, the initial term of these notes was deemed to be through April 2012. When the contingency was resolved in connection with the Amalgamation, the Company reclassified these notes into long-term debt and the remaining related debt issuance discount is being amortized as interest expense over the remaining term of the 8.125% Senior Notes.
 
The gross proceeds from the offering of the 8.125% Senior Notes were deposited into a segregated escrow account and were to remain in escrow until the date of the satisfaction of certain escrow conditions including, but not limited to, the substantially concurrent consummation of the Amalgamation and the assumption of the 8.125% Senior Notes by Level 3 Financing, Inc. (the “Notes Assumption”).  In conjunction with the completion of the Amalgamation on October 4, 2011 (see Note 2 - Events Associated with the Amalgamation of Global Crossing), the escrow conditions were satisfied. Debt issuance costs of approximately $32 million were capitalized and are being amortized over the term of the 8.125% Senior Notes using the effective interest rate method. Level 3 Financing, Inc. assumed the obligations under the 8.125% Senior Notes and the notes were reclassified to long-term debt in the third quarter of 2011. Following the release of the escrowed funds in connection with the Notes Assumption, the escrowed funds were used to refinance certain existing indebtedness of Global Crossing in connection with the closing of the Amalgamation. 

As of December 31, 2011, the discount remaining was $9 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $31 million at December 31, 2011.

The 8.125% Senior Notes will be subject to redemption at the option of Level 3 Financing, Inc., in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days’ prior notice, (i) prior to July 1, 2015, at 100% of the principal amount of 8.125% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on and after April 1, 2015, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, if redeemed during the twelve months beginning April 1, of the years indicated below:
 
Year
Redemption
Price
2015
104.063
%
2016
102.031
%
2017
100.000
%

    
At any time or from time to time after the Notes Assumption and on or prior to April 1, 2014, up to 35% of the original aggregate principal amount of the 8.125% Senior Notes may be redeemed at a redemption price equal to 108.125% of the principal amount of the 8.125% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, with the net cash proceeds contributed from one or more private placements of Level 3 or underwritten public offerings of common stock of Level 3 resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 65% of the original aggregate principal amount of the 8.125% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.
    
The offering of the 8.125% Senior Notes was not registered under the Securities Act of 1933, as amended, and the 8.125% Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  The 8.125% Senior Notes were sold to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended, and non-U.S. persons outside the United States under Regulation S under the Securities Act of 1933, as amended.
In connection with the offering of the 8.125% Senior Notes, the Company entered into registration rights agreements pursuant to which agreed to file a registration statement to exchange the offered notes with new notes that are substantially identical in all material respects, and to use commercially reasonable efforts to cause the registration statement to be declared effective no later than 270 days after October 4, 2011. The maximum consideration that could be transferred to the initial purchasers pursuant to the registration rights agreement in the event of a Registration Default, as defined, is special interest on the principal amount of the Senior Notes not to exceed 1% per annum.
15% Convertible Senior Notes due 2013
On December 24, 2008, Level 3 Communications, Inc. received gross proceeds of $374 million and on December 31, 2008, the Company received gross proceeds of $26 million from the issuance of its $400 million 15% Convertible Senior Notes due 2013 ("15% Convertible Senior Notes"). The proceeds from this issuance were primarily used to repurchase, through tender offers, a portion of the Company's 6% Convertible Subordinated Notes due 2009, 6% Convertible Subordinated Notes due 2010 and 2.875% Convertible Senior Notes due 2010. The 15% Convertible Senior Notes were priced at 100% of the principal amount. The 15% Convertible Senior Notes are unsecured and unsubordinated obligations and will rank equally with all the Company's existing and future unsecured and unsubordinated indebtedness. The 15% Convertible Senior Notes will mature on January 15, 2013. Interest on the notes will accrue from the date of original issuance at a rate of 15% per year and will be payable on January 15 and July 15 of each year, beginning on January 15, 2009. The 15% Convertible Senior Notes contain limited covenants which restrict additional liens on assets of the Company.
The 15% Convertible Senior Notes are convertible by holders into shares of the Company's common stock at a split adjusted conversion price of $27 per share (which is equivalent to a conversion rate of approximately 37 shares of common stock per $1,000 principal amount of the 15% Convertible Senior Notes), subject to adjustment upon certain events, at any time before the close of business on January 15, 2013. If at any time following the date of original issuance of the 15% Convertible Senior Notes and prior to the close of business on January 15, 2013 the closing per share sale price of the Company's common stock exceeds 222.2% of the conversion price then in effect for at least 20 trading days within any 30 consecutive trading day period, the 15% Convertible Senior Notes will automatically convert into shares of Level 3 common stock, plus accrued and unpaid interest (if any) to, but excluding the automatic conversion date, which date will be designated by the Company following such automatic conversion event.
Holders of the 15% Convertible Senior Notes may require the Company to repurchase all or any part of their notes upon the occurrence of a designated event at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but excluding, the repurchase date, if any.
In addition, if a holder elects to convert its 15% Convertible Senior Notes in connection with certain changes in control, the Company could be required to pay a make-whole premium by increasing the number of shares deliverable upon conversion of such notes. Any make whole premium will have the effect of increasing the number of shares due to holders of the 15% Convertible Senior Notes upon conversion.
In the third quarter of 2011, certain holders converted approximately $128 million of the 15% Convertible Senior Notes to common equity. Upon conversion, the Company issued an aggregate of approximately 5 million shares of Level 3's common stock on a split adjusted basis, representing the approximately 37 shares per $1,000 note into which the notes were then convertible. The Company also paid an aggregate of approximately $29 million in cash, equivalent to $225 per $1,000 note, representing interest that would have been due from conversion through the maturity date, which was recognized as a loss on inducement and included in the loss on extinguishment of debt.
Debt issuance costs of $3 million were originally capitalized and are being amortized to interest expense over the term of the 15% Convertible Senior Notes. The unamortized debt issuance costs were less than $1 million at December 31, 2011.
7% Convertible Senior Notes due 2015
On June 26, 2009, Level 3 Communications, Inc. issued $200 million aggregate principal amount of 7% Convertible Notes due 2015 under an indenture between Level 3 and The Bank of New York, as trustee. The 7% Convertible Notes due 2015 were issued in conjunction with the exchange of approximately $142 million aggregate principal amount of the Company's 6% Convertible Subordinated Notes due 2010 and approximately $140 million aggregate principal amount of its 2.875% Convertible Senior Notes due 2010. As part of this exchange, Level 3 also paid $78 million in cash, including accrued and unpaid interest for the notes exchanged.
On October 15, 2009, Level 3 issued $275 million aggregate principal amount of 7% Convertible Senior due 2015, Series B under a second supplemental indenture between Level 3 and The Bank of New York, as trustee. The 7% Convertible Senior Notes due 2015, Series B are substantially similar in all respects to the 7% Convertible Senior Notes due 2015. The 7% Convertible Senior Notes due 2015, together with the 7% Convertible Senior Notes due 2015, Series B are referred to as the "7% Convertible Senior Notes due 2015".
The 7% Convertible Senior Notes due 2015 mature on March 15, 2015 and bear interest at a rate of 7% per annum, payable semiannually in arrears on March 15 and September 15. Interest payments commence for the 7% Convertible Senior Notes due 2015 on September 15, 2009 and on March 15, 2010 for the 7% Convertible Senior Notes due 2015, Series B. The 7% Convertible Senior Notes due 2015 rank equally in right of payment with all other existing and future senior unsecured indebtedness of Level 3 Communications, Inc.
The 7% Convertible Senior Notes due 2015 are convertible into shares of Level 3 common stock, at the option of the holder, at any time prior to maturity, unless previously repurchased or redeemed, or unless Level 3 has caused the conversion rights to expire. The 7% Convertible Senior Notes due 2015 may be converted at the split adjusted rate of approximately 37 shares of common stock per each $1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to a conversion price of approximately $27 per share.
Upon the occurrence of a designated event (a change of control or a termination of trading), holders of the 7% Convertible Senior Notes due 2015 will have the right, subject to certain exceptions and conditions, to require Level 3 to repurchase all or any part of the 7% Convertible Senior Notes due 2015 at a repurchase price equal to 100% of the principal amount plus accrued and unpaid interest thereon (if any) to, but excluding, the designated event purchase date. In addition, if an event treated as a change in control of Level 3 occurs, Level 3 will be obligated, subject to certain conditions, to offer to purchase all of the outstanding 7% Convertible Senior Notes due 2015 at a purchase price of 100% of the principal amount, plus a "make whole" premium, by increasing the conversion rate applicable to such 7% Convertible Senior Notes due 2015.
Debt issuance costs of $4 million were originally capitalized and are being amortized to interest over the term of the 7% Convertible Senior Notes due 2015 using the effective interest method. The unamortized debt issuance costs were $3 million at December 31, 2011.
6.5% Convertible Notes due 2016
On September 20, 2010, Level 3 Communications, Inc. received $170 million of net proceeds after transaction costs, from a public offering of $175 million aggregate principal amount of its 6.5% Convertible Senior Notes due 2016 (the "6.5% Convertible Senior Notes"). On October 5, 2010, in connection with the underwriters' exercise of the $26 million over-allotment option associated with the 6.5% Convertible Senior Notes, the Company received an additional $25.5 million net proceeds after transaction costs of less than $1 million. The 6.5% Convertible Senior Notes are senior unsecured obligations and rank equally in right of payment with all other existing and future unsubordinated indebtedness of Level 3 Communications, Inc. The 6.5% Convertible Senior Notes will mature on October 1, 2016. Interest on the notes accrues at 6.5% per year and is payable semiannually on April 1 and October 1, beginning April 1, 2011.
The 6.5% Convertible Senior Notes are convertible by holders into shares of the Company's common stock at any time prior maturity, unless previously redeemed, repurchased or unless the Company has caused the conversion rights to expire. The split adjusted conversion rate is approximately 54 shares per each $1,000 principal amount of 6.5% Convertible Senior Notes, subject to adjustment in certain circumstances. This is equivalent to a conversion price of approximately $18.525 per share. In addition, if a designated event (a change in control or a termination of trading) occurs, Level 3 will be obligated, subject to certain conditions, to offer to purchase all of the outstanding 6.5% Convertible Senior Notes due 2016 at a purchase price of 100% of the principal amount, plus accrued and unpaid interest thereon. If an event treated as a change in control occurs, the Company will be obligated, subject to certain conditions, to offer to purchase all of the outstanding 6.5% Convertible Senior Notes at a purchase price of 100% of the principal amount plus a "make whole" premium, by increasing the conversion rate applicable to such 6.5% Convertible Senior Notes due 2016.
Debt issuance costs of $6 million were originally capitalized and are being amortized to interest expense over the term of the 6.5% Convertible Senior Notes. The capitalized unamortized debt issuance costs remain $5 million at December 31, 2011.
Commercial Mortgage
In the third quarter of 2005, the HQ Realty, Inc., a wholly owned subsidiary of the Company, completed a refinancing of the mortgage on the Company's corporate headquarters. On September 27, 2005, HQ Realty, Inc. entered into a $70 million loan at an initial fixed rate of 6.86% through October 1, 2010, the initial repayment date as defined in the loan agreement ("Commercial Mortgage"). HQ Realty, Inc. received $66 million of net proceeds after transaction costs. During 2010, at the election of HQ Realty, Inc. the maturity term of the Commercial Mortgage was extended to October 1, 2015 and the interest rate adjusted to 9.86%. HQ Realty, Inc. was required to make interest only payments in the first year and began making monthly principal payments in the second year based on a 30-year amortization schedule. HQ Realty, Inc. has deposited $10 million into restricted cash accounts as of December 31, 2011, for future facility improvements and property taxes.
Debt issuance costs of $1 million were capitalized and are being amortized as interest expense over the term of the Commercial Mortgage. The capitalized debt issuance costs were fully amortized as of December 31, 2010.
The assets of HQ Realty, Inc. are not available to satisfy any third party obligations other than those of HQ Realty, Inc. In addition, the assets of the Company and its subsidiaries other than HQ Realty, Inc. are not available to satisfy the obligations of HQ Realty, Inc.
Capital Leases
As of December 31, 2011, the Company had $131 million of capital leases, including $104 million related to the Global Crossing Amalgamation. The Company leases certain dark fiber facilities and metro fiber under noncancelable IRU agreements that are accounted for as capital leases. Interest rates on these capital leases approximate 8% on average as of December 31, 2011. Additionally, due to the Amalgamation, the Company had property and equipment leases, and interest rates on these capital leases approximated 9.47% on average as of December 31, 2011.
Covenant Compliance
At December 31, 2011 and 2010, the Company was in compliance with the covenants on all outstanding debt issuances.

Long-Term Debt Maturities
 
Aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) were as follows as of December 31, 2011 (dollars in millions):
 
2012
$
65

2013
313

2014
2,232

2015
838

2016
207

Thereafter
4,873

 
$
8,528



See Note 18 - Subsequent Events for additional information.

Employee Benefit Benefits and Stock-Based Compensation
Stock-Based Compensation
Employee Benefits and Stock-Based Compensation

The Company records non-cash compensation expense for its outperform stock appreciation rights that it refers to as outperform stock options ("OSO"), restricted stock units and shares, 401(k) matching contributions, and other stock-based compensation associated with the Company's discretionary bonus grants. Total non-cash compensation expense related to these equity awards was $101 million in 2011, $67 million in 2010 and $59 million in 2009.
The following table summarizes non-cash compensation expense and capitalized non-cash compensation for each of the three years ended December 31, 2011, 2010 and 2009 (dollars in millions):
 
2011
 
2010
 
2009
 
OSO
$
10

 
$
10

 
$
7

 
Restricted Stock Units and Shares
22

 
19

 
23

 
401(k) Match Expense
13

 
11

 
16

 
Restricted Stock Unit Bonus Grant
57

 
28

 
14

 
 
102

 
68

 
60

 
Capitalized Noncash Compensation
(1
)
 
(1
)
 
(1
)
 
 
$
101

 
$
67

 
$
59

 

 
OSOs and restricted stock units and shares are granted under the Level 3 Communications, Inc. Stock Plan, as amended (the "Stock Plan"), which term extends through May 20, 2020. The Stock Plan provides for accelerated vesting of stock awards upon retirement if an employee meets certain age and years of service requirements and certain other requirements. Under the Stock Compensation guidance, if an employee meets the age and years of service requirements under the accelerated vesting provision, the award would be expensed at grant or expensed over the period from the grant date to the date the employee meets the requirements, even if the employee has not actually retired. The Company recognized non-cash compensation expense for employees that met the age and years of service requirements for accelerated vesting at retirement of $12 million, $8 million and $5 million in 2011, 2010 and 2009, respectively.
Effective after the close of trading on October 19, 2011, the Company completed a 1 for 15 reverse stock split (see Note 1 - Organization and Summary of Significant Accounting Policies). All share, option, restricted stock unit, warrant and per share price data is presented herein on a split adjusted basis.
Outperform Stock Options
The Company's OSO program was designed so that the Company's stockholders would receive a market return on their investment before OSO holders receive any return on their OSOs. The Company believes that the OSO program directly aligns management's and stockholders' interests by basing stock option value on the Company's ability to outperform the market in general, as measured by the Standard & Poor's ("S&P") 500 Index. Participants in the OSO program do not realize any value from awards unless the Company's common stock price outperforms the S&P 500® Index during the life of the grant. When the stock price gain is greater than the corresponding gain on the S&P 500® Index, the value received for awards under the OSO plan is based on a formula involving a multiplier related to the level by which the Company's common stock outperforms the S&P 500® Index. To the extent that Level 3's common stock outperforms the S&P 500® Index, the value of OSO units to a holder may exceed the value of non-qualified stock options.
The initial strike price, as determined on the day prior to the OSO grant date, is adjusted over time (the "Adjusted Strike Price"), until the settlement date. The adjustment is an amount equal to the percentage appreciation or depreciation in the value of the S&P 500® Index from the date of grant to the date of exercise. The value of the OSO increases for increasing levels of outperformance. OSO units have a multiplier range from zero to four depending upon the performance of Level 3 common stock relative to the S&P 500® Index as shown in the following table.
 
 
 
If Level 3 Stock Outperforms the S&P 500® Index by:
 
Then the Pre-multiplier Gain Is Multiplied by a Success Multiplier of:
0% or Less
 
—
More than 0% but Less than 11%
 
Outperformance percentage multiplied by 4/11
11% or More
 
4.00


 The Pre-multiplier gain is the Level 3 common stock price minus the Adjusted Strike Price on the date of settlement.
Upon settlement of an OSO, the Company shall deliver or pay to the grantee the difference between the fair market value of a share of Level 3 common stock as of the day prior to the settlement date, less the Adjusted Strike Price (the "Exercise Consideration"). The Exercise Consideration may be paid in cash, Level 3 common stock or any combination of cash or Level 3 common stock at the Company's discretion. The number of shares of Level 3 common stock to be delivered by the Company to the grantee is determined by dividing the Exercise Consideration to be paid in Level 3 common stock by the fair market value of a share of Level 3 common stock as of the date prior to the settlement date. Fair market value is defined in the OSO agreement as the closing price per share of Level 3 common stock on the national securities exchange on which the common stock is traded. Settlement of the OSO units does not require any cash outlay by the employee.
Prior to March 31, 2007, OSO awards vested over two years and had a four-year life. Fifty percent of the awards vested at the end of the first year after grant, with the remaining 50% vested over the second year (12.5% per quarter). As part of a comprehensive review of its long-term compensation program completed in the first quarter of 2007, beginning with awards made on or after April 1, 2007, OSO units were awarded monthly to employees in mid-management level and higher positions, have a three year life, vest 100% and fully settle on the third anniversary of the date of the award and are valued as of the first day of each month. Recipients have no discretion on the timing to exercise OSO units granted on or after April 1, 2007, thus the expected life of all such OSO units is three years. During the first quarter of 2010, the Company revised the eligibility criteria and grant schedule for its non-cash compensation. Effective April 1, 2010, the Company's OSOs are granted quarterly to certain levels of management and its restricted stock units are granted annually on July 1 to certain other eligible employees. There were no changes to the vesting schedule, or any other aspects of the non-cash compensation plans.
As of December 31, 2011, there was $9 million of unamortized compensation expense related to granted OSO units. The weighted average period over which this cost will be recognized is 1.9 years.
The fair value of the OSO units granted is calculated by applying a modified Black-Scholes model with the assumptions identified below. The Company utilized a modified Black-Scholes model due to the additional variables required to calculate the effect of the market conditions and success multiplier of the OSO program. The Company believes that given the relative short life of the OSOs and the other variables used in the model, the modified Black-Scholes model provides a reasonable estimate of the fair value of the OSO units at the time of grant.
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
S&P 500 Expected Dividend Yield Rate
 
1.83
%
 
2.00
%
 
3.00
%
Expected Life
 
3
 years
 
3
 years
 
3
 years
S&P 500 Expected Volatility Rate
 
30
%
 
30
%
 
26
%
Level 3 Common Stock Expected Volatility Rate
 
44
%
 
51
%
 
45
%
Expected S&P 500 Correlation Factor
 
0.39

 
0.40

 
0.46

Calculated Theoretical Value
 
120
%
 
132
%
 
119
%
Estimated Forfeiture Rate
 
20
%
 
20
%
 
20
%

The fair value of each OSO unit equals the calculated theoretical value multiplied by the Level 3 common stock price on the grant date.
As described above, recipients have no discretion on the timing to exercise OSO units granted on or after April 1, 2007, thus the expected life of all such OSO units is three years. The Company estimates the stock price volatility using a combination of historical and implied volatility as Level 3 believes it is consistent with the approach most marketplace participants would consider using all available information to estimate expected volatility. The Company has determined that expected volatility is more reflective of market conditions and provides a more accurate indication of volatility than using solely historical volatility. In reaching this conclusion, the Company has considered many factors including the extent to which its future expectations of volatility over the respective term is likely to differ from historical measures, the absence of actively traded options and the Company's ability to review volatility of its publicly traded convertible debt with similar terms and prices to the securities the Company is valuing.
The fair value for OSO units awarded to participants during the years ended December 31, 2011, 2010 and 2009 was approximately $12 million, $10 million and $8 million, respectively.
Transactions involving OSO units awarded are summarized in the table below. The Option Price Per Unit identified in the table below represents the initial strike price, as determined on the day prior to the OSO grant date for those grants.

 
 
Units
 
Initial Strike Price Per Unit
 
Weighted
Average
Initial
Strike
Price
 
Aggregate
Intrinsic
Value
 
Weighted
Average
Remaining
Contractual
Term (years)
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
Balance January 1, 2009
 
1,053,818

 
$14.10
-
$91.50
 
$
58.50

 
$
—

 
1.56
Options granted
 
477,835

 
10.50
-
22.65
 
17.25

 
 
 
 
Options forfeited
 
(154,731
)
 
10.50
-
91.50
 
48.75

 
 
 
 
Options expired
 
(320,295
)
 
30.45
-
80.85
 
48.45

 
 
 
 
Options exercised
 
—

 
—
 
—

 
 
 
 
Balance December 31, 2009
 
1,056,627

 
$10.50
-
$91.50
 
$
44.25

 
$
5.2

 
1.55
Options granted
 
511,082

 
14.10
-
24.30
 
19.50

 
 
 
 
Options forfeited
 
(117,362
)
 
10.50
-
91.50
 
25.80

 
 
 
 
Options expired
 
(393,955
)
 
45.45
-
91.50
 
76.95

 
 
 
 
Options exercised
 
—

 
—
 
—

 
 
 
 
Balance December 31, 2010
 
1,056,392

 
$10.50
-
$51.60
 
$
22.05

 
$
—

 
1.73
Options granted
 
498,618

 
14.70
-
36.60
 
23.96

 
 
 
 
Options forfeited
 
(96,174
)
 
10.50
-
51.60
 
22.36

 
 
 
 
Options expired
 
(140,655
)
 
31.80
-
51.60
 
44.64

 
 
 
 
Options exercised
 
(29,469
)
 
14.10
-
15.75
 
14.93

 
 
 
 
Balance December 31, 2011
 
1,288,712

 
$10.50
-
$36.60
 
$
20.51

 
$
1.8

 
1.53
Options exercisable ("vested"):
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2009
 
219,920

 
$66.60
-
$80.85
 
$
75.15

 
$
—

 
 N/A
December 31, 2010
 
—

 
—
—

 
$
—

 
 N/A
December 31, 2011
 
—

 
—
 
—

 
$
—

 
 N/A


N/A—Not Applicable
 
 
 
 
OSO units Outstanding
at December 31, 2011
 
OSO units Exercisable
at December 31, 2011
Range of Exercise Prices
 
Number
Outstanding
 
Weighted
Average
Remaining
Life (years)
 
Weighted
Average
Initial
Strike Price
 
Number
Exercisable
 
Weighted
Average
Initial
Strike Price
$
10.50

-
$
15.00

 
316,013

 
1.42

 
$
14.02

 
—

 
$
—

$
16.05

-
$
23.85

 
739,634

 
1.45

 
$
20.06

 
—

 
$
—

$
24.30

-
$
36.60

 
233,065

 
1.91

 
$
30.73

 
—

 
$
—

 
 
 
 
1,288,712

 
1.53

 
$
20.51

 
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 

In the table above, the weighted average initial strike price represents the values used to calculate the theoretical value of OSO units on the grant date and the intrinsic value represents the value of OSO units that have outperformed the S&P 500® Index as of December 31, 2011. As noted above, all of the outstanding OSO units granted have an expected life of three years. The total intrinsic value of OSOs outstanding and exercisable based on the Company's performance against the S&P 500 Index was zero, zero, and zero, as of December 31, 2011, 2010 and 2009, respectively.
The total realized value of OSO units settled was $0.4 million, zero and zero for the years ended December 31, 2011, 2010 and 2009, respectively. The Company issued 13,742, zero and zero shares of Level 3 common stock upon the exercise of OSO units for the years ended December 31, 2011, 2010 and 2009, respectively. The number of shares of Level 3 stock issued upon settlement of an OSO unit varies based upon the relative performance of Level 3's stock price and the S&P 500® Index between the initial grant date and settlement date of the OSO unit.
As of December 31, 2011, based on the Level 3 common stock price and post-multiplier values, the Company was obligated to issue no shares for vested and exercisable OSO units.
Restricted Stock and Units
Effective April 1, 2010, restricted stock units and shares are annually granted to certain other eligible recipients, including the Board of Directors, at no cost. Restrictions on transfer lapse over one to four year periods. The fair value of restricted stock units and shares awarded totaled $35 million, $21 million and $16 million for the years ended December 31, 2011, 2010 and 2009, respectively. The fair value of these awards was calculated using the value of the Level 3 common stock on the grant date and are being amortized over the periods in which the restrictions lapse. As of December 31, 2011, unamortized compensation cost related to nonvested restricted stock and restricted stock units was $21 million and the weighted average period over which this cost will be recognized is 3.0 years.
The changes in restricted stock and restricted stock units are shown in the following table:
 
 
Number
 
Weighted Average
Grant Date
Fair Value
Nonvested at January 1, 2009
 
1,742,253

 
$
48.90

Stock and units granted
 
907,913

 
17.25

Lapse of restrictions
 
(790,289
)
 
46.65

Stock and units forfeited
 
(264,632
)
 
41.10

Nonvested at December 31, 2009
 
1,595,245

 
$
33.30

Stock and units granted
 
1,182,353

 
17.55

Lapse of restrictions
 
(594,580
)
 
38.70

Stock and units forfeited
 
(161,311
)
 
26.55

Nonvested at December 31, 2010
 
2,021,707

 
$
22.95

Stock and units granted
 
1,030,676

 
33.99

Lapse of restrictions
 
(845,717
)
 
27.79

Stock and units forfeited
 
(175,883
)
 
27.06

Nonvested at December 31, 2011
 
2,030,783

 
$
26.25

 
 
 
 
 

The total fair value of restricted stock and restricted stock units whose restrictions lapsed in the years ended December 31, 2011, 2010 and 2009 was $24 million, $23 million and $37 million, respectively.
Warrants
As of December 31, 2011, there were warrants to purchase 45,593 shares of Level 3 common stock outstanding with an exercise price of $73.50, expiring in January 2013. All of the warrants are fully vested and compensation expense had been fully recognized in the consolidated statements of operations.
In connection with a prior acquisition, warrants were converted into warrants to purchase shares of Level 3 common stock. The majority of the warrants were exercised during 2007 and the remaining warrants expired in the fourth quarter of 2010.
Defined Contribution Plans
The Company sponsors a number of defined contribution plans. The principal defined contribution plans are discussed individually below. Other defined contribution plans are not individually significant and therefore have been summarized in aggregate below.
The Company and its subsidiaries offer their qualified employees the opportunity to participate in a defined contribution retirement plan qualifying under the provisions of Section 401(k) of the Internal Revenue Code ("401(k) Plan"). Each employee is eligible to contribute, on a tax deferred basis, a portion of annual earnings generally not to exceed $16,500 in 2011 and $17,000 in 2012. Effective January 1, 2012, the Company matches 100% of employee contributions up to 4% of eligible earnings or applicable regulatory limits. Between March 6, 2009 and December 31, 2011, the Company matched 100% of employee contributions up to 3% of eligible earnings or applicable regulatory limits. Prior to March 6, 2009, the Company matched 100% of employee contributions up to 7% of eligible earnings or applicable regulatory limits.
The Company's matching contributions are made with Level 3 common stock based on the closing stock price on each pay date. The Company's matching contributions are made through units in the Level 3 Stock Fund, which represent shares of Level 3 common stock. The Level 3 Stock Fund is the mechanism that is used for Level 3 to make employer matching and other contributions to employees through the Level 3 401(k) plan. Employees are not able to purchase units in the Level 3 Stock Fund. Employees are able to diversify the Company's matching contribution as soon as it is made, even if they are not fully vested, subject to insider trading rules and regulations. The Company's matching contributions will vest ratably over the first three years of service or over such shorter period until the employee has completed three years of service at such time the employee is then 100% vested in all Company matching contributions, including future contributions. The Company made 401(k) Plan matching contributions of $13 million, $11 million and $16 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Company's matching contributions are recorded as non-cash compensation and included in selling, general and administrative expenses.
The Global Crossing Limited Employees' Retirement Savings Plan ("Global Crossing 401(k) Plan") provided 100% matching cash contributions up to the first 1% of eligible compensation and 50% matching contributions up to the next 5% of eligible compensation during the fourth quarter 2011. The Company's contributions to the Global Crossing 401(k) Plan vest immediately. Expenses recorded by the Company relating to the Global Crossing 401(k) Plan for the quarter ended December 31, 2011 were approximately $1 million. Former Global Crossing employees are eligible to participate in the Level 3 401(k) plan starting January 1, 2012.

Other Global Crossing defined contribution plans sponsored by the Company are individually not significant. On an aggregate basis the expenses recorded by the Company relating to these plans was approximately $2 million for the quarter ended December 31, 2011.

Non-Qualified Stock Options ("NQ Options")
On October 4, 2011, as part of the Amalgamation with Global Crossing, the issued and outstanding options to purchase Global Crossing common shares were modified into options to purchase Level 3's common stock. There was no unrecognized compensation expense for NQ Options at the time of the Amalgamation and no additional NQ Options were granted during the period.
Information regarding NQ Options outstanding for the reporting period between October 4, 2011 and December 31, 2011 is summarized below:
 
Number Outstanding
Weighted Average Exercise Price
Balance at October 4, 2011
765,585

$
10.82

Exercised
(167,395
)
$
10.93

Balance at December 31, 2011
598,190

$
10.79


The following table summarized information concerning outstanding and exercisable NQ Options at December 31, 2011:
 
 
 
 
Options Outstanding and Exercisable
Exercise Prices
 
Number Outstanding
 
Weighted Average Remaining Contractual Life (in years)
 
Weighted Average Exercise Price per Share
$
9.53

 
444,384

 
1.9

 
$
9.53

$
14.43

 
153,806

 
3.0

 
$
14.43

Total
 
598,190

 
2.2

 
$
10.79


The weighted average remaining contractual term was 2.2 years for NQ Options exercisable as of December 31, 2011. The total intrinsic value of NQ Options outstanding and exercisable was approximately $4 million as of December 31, 2011. The total intrinsic value of NQ Options exercised between October 4, 2011 and December 31, 2011 was $1 million and Level 3 received $2 million for the exercise of these options.
Defined Benefit Plans
The Company has certain contributory and non-contributory employee pension plans, which are not significant to the financial position or operating results of Level 3. The Company recognizes in its statement of financial condition the funded status of its defined benefit post-retirement plans, which is measured as the difference between the fair value of the plan assets and the benefit obligation. The Company is also required to recognize changes in the funded status within accumulated other comprehensive income, net of tax to the extent such changes are not recognized in earnings as components of periodic net benefit cost. The fair value of the plan assets was $137 million and $39 million as of December 31, 2011 and 2010, respectively. The total benefit obligation was $152 million and $57 million as of December 31, 2011 and 2010, respectively. One of the Company's pension plans split the costs 60%/40% between the Company and the employees, respectively. Therefore, the total funded status was an obligation of $15 million, $10 million attributable to the Company and $5 million attributable to employees, as of December 31, 2011. The total funded status was an obligation of $18 million as of December 31, 2010.
Annual Discretionary Bonus Grant
The Company's annual discretionary bonus program is intended to retain and motivate employees to achieve the Company's financial and business goals. Each participant is provided a target award expressed as a percentage of base salary. Actual awards under the program are based on corporate results as well as achievement of specific individual performance criteria during the bonus plan period, and may be paid in cash, restricted stock units, or a combination of the two, at the sole discretion of the Compensation Committee of the Board of Directors.
As of December 31, 2011, $136 million, including $32 million for the pre-Amalgamation Global Crossing bonus, had been accrued in other current liabilities for this bonus plan, including employer liability for payroll taxes and charges. The Company generally expects to pay out 40% in cash in the first quarter of 2012.
As of December 31, 2010, $59 million had been accrued in other current liabilities for this bonus plan, including employer liability for payroll taxes and charges. The Company paid out $29 million cash and 1.7 million shares in 2011 for this plan.
As of December 31, 2009, $32 million had been accrued in other current liabilities for this bonus plan, including employer liability for payroll taxes and charges. The Company paid out $19 million cash and 0.7 million shares in 2010 for this plan.
Income Taxes
Income Taxes
Income Taxes
An analysis of the income tax benefit (provision) attributable to loss from continuing operations before income taxes for each of the years in the three year period ended December 31, 2011 follows:

 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
Current:
 
 
 
 
 
 
United States federal
 
$
—

 
$
—

 
$
—

State
 
—

 
(1
)
 
—

Foreign
 
(8
)
 
—

 
—

 
 
(8
)
 
(1
)
 
—

Deferred, net of changes in valuation allowances:
 
 
 
 
 
 
United States federal
 
(30
)
 
—

 
—

State
 
(1
)
 
—

 
(1
)
Foreign
 
(2
)
 
92

 
—

Income tax benefit (provision)
 
$
(41
)
 
$
91

 
$
(1
)
 
 
 
 
 
 
 

The United States and foreign components of loss from continuing operations before income taxes are as follows:

 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
United States
 
$
(692
)
 
$
(542
)
 
$
(519
)
Foreign
 
(94
)
 
(170
)
 
(104
)
 
 
$
(786
)
 
$
(712
)
 
$
(623
)
 
 
 
 
 
 
 

A reconciliation of the actual income tax benefit (provision) and the tax computed by applying the U.S. federal rate (35%) to the loss before income taxes for each of the years in the three-year period ended December 31, 2011 follows:
 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
Computed tax benefit at statutory rate
 
$
275

 
$
250

 
$
218

Effect of earnings in jurisdictions outside of US
 
(13
)
 
(13
)
 
—

Foreign branch tax benefit
 
17

 
21

 
—

State income tax benefit
 
24

 
24

 
20

Change in valuation allowance
 
(198
)
 
(175
)
 
(255
)
Permanent items
 
(44
)
 
(16
)
 
(4
)
Non-cash compensation excess deductions
 
(18
)
 
—

 
—

Indefinite-lived assets
 
(26
)
 
—

 
—

NOL expiration
 
(38
)
 
—

 
—

Other, net
 
(20
)
 
—

 
20

Income tax benefit (provision)
 
$
(41
)
 
$
91

 
$
(1
)
 
 
 
 
 
 
 


The components of the net deferred tax assets (liabilities) as of December 31, 2011 and 2010 were as follows:
 
 
2011
 
2010
 
 
(dollars in millions)
Deferred Tax Assets:
 
 
 
 
Accrued payroll and related benefits
 
$
101

 
$
77

Deferred revenue
 
276

 
285

Unutilized tax net operating loss carry forwards
 
3,996

 
2,713

Fixed assets and intangible assets
 
157

 
38

Intercompany loss
 
164

 
—

Other
 
193

 
100

Total Deferred Tax Assets
 
4,887

 
3,213

Deferred Tax Liabilities:
 
 
 
 
Fixed assets and intangible assets
 
(542
)
 
(79
)
Deferred revenue
 
(93
)
 
—

Other
 
(51
)
 
(29
)
Foreign branch income
 
(40
)
 
(40
)
Total Deferred Tax Liabilities
 
(726
)
 
(148
)
Net Deferred Tax Assets before valuation allowance
 
4,161

 
3,065

Valuation Allowance
 
(4,252
)
 
(2,978
)
Net Deferred Tax (Liability) Asset after Valuation Allowance
 
$
(91
)
 
$
87

Balance sheet classification of deferred taxes:
 
 
 
 
Net current deferred income tax asset
 
$
12

 
$
—

Net current deferred income tax liability
 
(3
)
 
—

Net non-current deferred income tax asset
 
246

 
87

Net non-current deferred income tax liability
 
(346
)
 
—

Net Deferred Tax (Liability) Asset after Valuation Allowance
 
$
(91
)
 
$
87

 
 
 
 
 

For the year ended December 31, 2011, the Company recorded certain immaterial corrections of errors in prior year presentation that resulted in income tax expense of approximately $26 million during the first quarter of 2011 for taxable temporary differences associated with deferred taxes on certain indefinite-lived intangible assets. See Note 1 - Organization and Summary of Significant Accounting Policies, Correction of an Immaterial Error in Prior Consolidated Financial Statements.
As a result of the Global Crossing Amalgamation, the Company recorded net deferred tax assets of $1.5 billion and deferred tax liabilities of $560 million before valuation allowance. $1.1 billion of the deferred tax asset balance is comprised of carry forward net operating losses. The deferred tax liability balance is comprised primarily of $419 million related to temporary differences created by the additional financial reporting basis of identifiable intangibles and fixed assets. Simultaneously, the Company evaluated the valuation allowance position of the combined entity. The valuation allowance determination involves weighing positive and negative evidence concerning the realizability of the Company's deferred tax assets in each tax jurisdiction. After considering such evidence as the quality and consistency of positive financial results, projections of future taxable income, country-specific economic and political considerations, expiration or limitations of carry forwards, and sources of future taxable income, management concluded that valuation allowances for deferred tax assets of many Global Crossing South American entities and certain Global Crossing European entities are not required. A valuation allowance was retained against U.S. and other foreign jurisdiction deferred tax assets that the Company has concluded under relevant accounting standards that it is not more likely than not that the deferred tax assets are realizable.

As of December 31, 2011, the Company had net operating loss carry forwards of approximately $6.5 billion for U.S. federal income tax purposes without considering the net operating loss carry forwards associated with Global Crossing. While the Company believes the acquisition of Global Crossing did not trigger an ownership change event for the Company, additional transactions that the Company enters into, as well as transactions by existing 5% stockholders and transactions by holders that become new 5% stockholders that the Company does not participate in, could cause the Company to incur a greater than 50 percentage point ownership change by 5% stockholders and, if the Company triggers the above noted Code imposed limitations, such transactions would prevent the Company from fully utilizing NOL carry forwards and certain current deductions to reduce the Company's U.S. federal income taxes.
  
The valuation allowance for deferred tax assets was approximately $4.2 billion as of December 31, 2011 and $3.0 billion as of December 31, 2010. The net change in the valuation allowance for the year ended December 31, 2010 was approximately $1.3 billion. The change in the valuation allowance from December 31, 2010 to December 31, 2011 is primarily due to the inclusion of the Global Crossing deferred tax assets, additional U.S. federal and state tax NOL resulting from continued operational tax losses, offset by the establishment of fixed asset and intangible deferred tax liabilities related to the step-up in basis, the release of valuation allowance of certain Global Crossing entities in foreign jurisdictions, and the loss carryfoward limitation and forfeiture of Global Crossing tax losses in the U.S. and Germany respectively. The adjustments related to the acquisition of Global Crossing are based on information currently available. The final identification of deferred taxes and the final determination of the purchase price allocation may be significantly different from the preliminary amounts reflected above.
The U.S. federal tax loss carry forwards expire in future years through 2031 and are subject to examination by the tax authorities until three years after the carry forwards are utilized. The U.S. federal tax loss carry forwards expire as follows (dollars in millions):
 
 
Expiring December 31,
Amount
2024
$
533

2025
1,186

2026
1,029

2027
1,508

2028
445

2029
700

2030
703

2031
687

 
 
 
$
6,791

 
 


The Company has approximately $4.3 billion of foreign jurisdiction tax loss carry forwards for controlled foreign corporations at December 31, 2011. In addition, the Company has $2.4 billion of foreign jurisdiction tax loss carry forwards associated with foreign corporations that it has elected to disregard for US tax purposes. The majority of these foreign jurisdiction tax loss carry forwards have no expiration period. Finally, the Company has approximately $5.4 billion of gross state tax loss carry forwards with various expiration periods through 2030.
Historically, the majority of the Company's foreign assets and operations are owned by entities that have elected to be treated for U.S. tax purposes as unincorporated branches of a U.S. holding company and, as a result, the taxable income or loss and other tax attributes of such entities are included in the Company's U.S. federal consolidated income tax return. However, all of the foreign assets and operations acquired as part of the Global Crossing Amalgamation are treated for U.S. tax purposes as controlled foreign corporations. With respect to such controlled foreign corporations, the Company provides for United States income taxes on the undistributed earnings and the other outside basis temporary differences of foreign corporations unless they are considered indefinitely reinvested outside the United States. The amount of temporary differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which United States income taxes have not been provided was immaterial.
The Company's liability for uncertain tax positions totaled $15 million at December 31, 2011 and $6 million at December 31, 2010. The Company does not expect that the liability for uncertain tax positions will change significantly during the twelve months ended December 31, 2012; however, actual changes in the liability for uncertain tax positions could be different than currently expected. A reconciliation of the beginning and ending balance of unrecognized tax benefits follows:

 
 
(dollars in millions)
Amount
Balance as of December 31, 2008
$
7

Gross increases—tax positions prior to 2009
—

Gross decreases—settlements with taxing authorities
(2
)
Balance as of December 31, 2009
5

Gross increases—tax position prior to 2010
1

Balance as of December 31, 2010
6

Gross increases—Global Crossing tax positions of prior years
11

Gross decreases - tax positions of prior years
(1
)
Gross decreases - settlement with taxing authorities
(1
)
Balance as of December 31, 2011
$
15


The Company, or at least one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carry forwards are available.
The unrecognized tax benefits in the table above do not include accrued interest and penalties of $20 million, $12 million, and $10 million as of December 31, 2011, 2010 and 2009, respectively. The Company's policy is to record interest and penalties related to uncertain tax positions in income tax expense. The Company recognized accrued interest and penalties related to uncertain tax positions in income tax expense in its consolidated statements of operations of approximately zero, $2 million and $1 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Segment Information
Segment Information
Segment Information
 
Accounting guidance for the disclosures about segments of an enterprise defines operating segments as components of an enterprise for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company’s operating segments are managed separately and represent separate strategic business units that offer different products or services and serve different markets. The Company’s reportable segments previously included its communications and coal mining business (see Note 1 — Organization and Summary of Significant Accounting Policies). In connection with the Global Crossing Amalgamation (see Note 2 - Events Associated with the Amalgamation of Global Crossing) and sale of the coal business during the fourth quarter of 2011, the Company reorganized its management reporting structure to reflect the way in which it allocates resources and assesses performance. As a result of these changes, the Company is now comprised of two reportable segments for financial reporting purposes, Level 3 and Global Crossing, representing the stand-alone operations of each legacy business. Other business interests, which are not reportable segments, include corporate assets and overhead costs that are not attributable to a specific segment, and the results of discontinued operations which include the coal mining business (see Note 4 - Dispositions). The prior year reportable segment information has been revised to conform with this presentation.
 
The Company evaluates performance based upon Adjusted EBITDA, as defined by the Company, as net income (loss) from the consolidated statements of operations before (1) income tax benefit (expense), (2) total other income (expense), (3) non-cash impairment charges included within restructuring and impairment charges, (4) depreciation and amortization expense, (5) non-cash stock compensation expense included within selling, general and administrative expenses and (6) discontinued operations.
The data presented in the following tables includes information for the years ended December 31, 2011, 2010 and 2009 for all statement of operations and cash flow information presented, and as of December 31, 2011 and 2010 for all balance sheet information presented. Information related to the acquired business is included from the date of acquisition, and information related to dispositions is included through the date of sale. Revenue and the related expenses are attributed to countries based on where services are provided.
Segment information for the Company's Level 3 and Global Crossing businesses are summarized as follows (in millions):

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Revenue from external customers:
 
 
 
 
 
 
Level 3
 
$
3,679

 
$
3,591

 
$
3,695

Global Crossing
 
654

 
—

 
—

 
 
$
4,333

 
$
3,591

 
$
3,695

Adjusted EBITDA:
 
 
 
 
 
 
Level 3
 
$
911

 
$
849

 
$
910

Global Crossing
 
47

 
—

 
—

 
 
$
958

 
$
849

 
$
910

 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
Level 3
 
$
443

 
$
435

 
$
308

Global Crossing
 
51

 
—

 
—

 
 
$
494

 
$
435

 
$
308

Depreciation and amortization:
 
 
 
 
 
 
Level 3
 
$
741

 
$
870

 
$
906

Global Crossing
 
64

 
—

 
—

 
 
$
805

 
$
870

 
$
906

Total assets:
 
 
 
 
 
 
Level 3
 
$
8,029

 
$
8,355

 
 

 Global Crossing
 
5,159

 
—

 
 

 
 
$
13,188

 
$
8,355

 
 

 
 
 
 
 
 
 

 
The following is a summary of geographical information (in millions):

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Revenue from external customers:
 
 
 
 
 
 
North America
 
$
3,669

 
$
3,275

 
$
3,369

Europe:
 
 
 
 
 
 
United Kingdom
 
267

 
131

 
134

Germany
 
72

 
62

 
73

Other European Countries
 
163

 
123

 
119

Total Europe
 
502

 
316

 
326

Latin America:
 
 
 
 
 
 
Brazil
 
68

 
-
 
-
Argentina
 
23

 
-
 
-
Colombia
 
23

 
-
 
-
Other Latin American Countries
 
44

 
-
 
-
Total Latin America
 
158

 
—

 
—

Other
 
4

 
 
 
 
 
 
$
4,333

 
$
3,591

 
$
3,695

Long-lived assets:
 
 
 
 
 
 
North America
 
$
5,338

 
$
5,239

 
 

Europe:
 
 
 
 
 
 
United Kingdom
 
613

 
114

 
 

Germany
 
348

 
318

 
 

Other European Countries
 
596

 
285

 
 

Total Europe
 
1,557

 
717

 
 

Latin America:
 


 


 
 
Brazil
 
434

 
-
 
 
Argentina
 
387

 
-
 
 
Colombia
 
247

 
-
 
 
Other Latin American Countries
 
465

 
-
 
 
Total Latin America
 
1,533

 
—

 
 
Other
 
512

 
-
 
 
 
 
$
8,940

 
$
5,956

 
 

 
 
 
 
 
 
 

The majority of North American revenue consists of services delivered within the United States. The majority of European revenue consists of services delivered within the United Kingdom and Germany. The majority of Latin American revenue consists of services delivered within Brazil, Argentina and Colombia. Level 3 revenue from transoceanic services is allocated to Europe and transoceanic revenue from Global Crossing is allocated to Other.
The Company includes all non-current assets, except for goodwill, in its long-lived assets.
Total Level 3 revenue consists of:
 
1)
Core Network Services includes revenue from transport, infrastructure, data, and local and enterprise voice services.
 
2)  
Wholesale Voice Services includes revenue from long distance voice services, including domestic voice termination, international voice termination and toll free services.
 
3)
Other Communications Services includes revenue from managed modem and its related intercarrier compensation services and SBC Contract Services, which includes revenue from the SBC Master Services Agreement, which was obtained in the December 2005 acquisition of WilTel.

Total Global Crossing revenue consists of:

1)
Invest and Grow services include revenues from the provision of transport, infrastructure, IP and data, voice, and collaboration services to carrier and enterprise customers. These services are sold to those customers directly through business relationships with other carriers, sales agents and system integrators.


2)
Wholesale Voice Services and Other services includes revenue from predominantly United States domestic and international long distance voice services to carrier customers.

Level 3 Total Revenue:
 
Core Network Services
 
Wholesale Voice Services
 
Other Communications Services
 
Total
2011
 
 
 
 
 
 
 
 
North America
 
$
2,677

 
$
578

 
$
69

 
$
3,324

   Europe
 
325

 
30

 
—

 
355

 
 
$
3,002

 
$
608

 
$
69

 
$
3,679

2010
 
 
 
 
 
 
 
 
North America
 
$
2,536

 
$
625

 
$
114

 
$
3,275

   Europe
 
291

 
25

 
—

 
316

 
 
$
2,827

 
$
650

 
$
114

 
$
3,591

2009
 
 
 
 
 
 
 
 
North America
 
$
2,548

 
$
629

 
$
192

 
$
3,369

   Europe
 
292

 
34

 
—

 
326

 
 
$
2,840

 
$
663

 
$
192

 
$
3,695

 
 
 
 
 
 
 
 
 
Global Crossing Total Revenue:
 
Invest and Grow
 
Wholesale Voice and Other
 
Total
 
 
2011
 
 
 
 
 
 
 
 
   North America
 
$
276

 
$
61

 
$
337

 
 
   Europe
 
147

 
2

 
149

 
 
   Latin America
 
167

 
1

 
168

 
 
 
 
$
590

 
$
64

 
$
654

 
 
 
 
 
 
 
 
 
 
 


The following information provides a reconciliation of Net Income (Loss) to Adjusted EBITDA by reportable segment, as defined by the Company, for the years ended December 31, 2011, 2010 and 2009 (in millions):

2011
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(769
)
 
$
(58
)
Income Tax Expense
33

 
8

Total Other Expense
808

 
30

Depreciation and Amortization Expense
741

 
64

Non-cash Compensation Expense
98

 
3

Adjusted EBITDA
$
911

 
$
47

Total Net Loss for Reportable Segments
 

 
$
(827
)
Unallocated Corporate Expense
 

 
—

Discontinued Operations of Coal Mining Business
 
 
71

Consolidated Net Loss
 

 
$
(756
)
 
 
2010
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(617
)
 
$
—

Income Tax Expense
(91
)
 
—

Total Other Expense
620

 
—

Depreciation and Amortization Expense
870

 
—

Non-cash Compensation Expense
67

 
—

Adjusted EBITDA
$
849

 
$
—

Total Net Loss for Reportable Segments
 

 
$
(617
)
Unallocated Corporate Expense
 

 
(4
)
Discontinued Operations of Coal Mining Business
 
 
(1
)
Consolidated Net Loss
 

 
$
(622
)
 
2009
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(605
)
 
$
—

Income Tax Expense
—

 
—

Total Other Expense
550

 
—

Depreciation and Amortization Expense
906

 
—

Non-cash Compensation Expense
59

 
—

Adjusted EBITDA
$
910

 
$
—

Total Net Loss for Reportable Segments
 

 
$
(605
)
Unallocated Corporate Expense
 

 
(19
)
Discontinued Operations of Coal Mining Business
 
 
6

Consolidated Net Loss
 

 
$
(618
)


As the Company continues to integrate the Global Crossing business into its operations as a result of the Amalgamation completed on October 4, 2011, it may need to modify the manner in which components of the Company are evaluated for performance and resource allocation, which in turn, may affect the Company's reportable operating segments in future periods.

Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items
The Company is subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect its financial condition, future results of operations or cash flows. Amounts accrued for such contingencies aggregate $312 million and are included in “Other” current liabilities and “Other Liabilities” in the Company's consolidated balance sheet as at December 31, 2011. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued may have no effect on the Company's results of operations but could materially adversely affect its cash flows for the affected period.
In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. In addition, adjustments to the accruals established for Global Crossing's contingent liabilities may be made in connection with the purchase price allocation of acquired assets and assumed liabilities under acquisition accounting, which is expected to be completed no later than October 4, 2012. Any such accrual adjustments would generally not affect results of operations but rather would result in an increase or decrease to goodwill associated with the Global Crossing acquisition.
Below is a description of material legal proceedings and other contingencies pending at December 31, 2011. Although the Company believes it has accrued for these matters in accordance with the accounting guidance for contingencies, contingencies are inherently unpredictable and it is possible that results of operations or cash flows could be materially and adversely affected in any particular period by unfavorable developments in, or resolution or disposition of, one or more of these matters. For those contingencies in respect of which the Company believes that it is reasonably possible that a loss may result that is materially in excess of the accrual (if any) established for the matter, the Company has below either provided an estimate of such possible loss or range of loss or included a statement that such an estimate cannot be made. In addition to the contingencies described below, the Company is party to many other legal proceedings and contingencies the resolution of which is not expected to materially affect its financial condition or future results of operations beyond the amounts accrued.

Rights-of-Way Litigation
The Company is party to a number of purported class action lawsuits involving its right to install fiber optic cable network in railroad right-of-ways adjacent to plaintiffs' land. In general, the Company obtained the rights to construct its networks from railroads, utilities, and others, and has installed its networks along the rights-of-way so granted. Plaintiffs in the purported class actions assert that they are the owners of lands over which the its fiber optic cable networks pass, and that the railroads, utilities, and others who granted the Company the right to construct and maintain its network did not have the legal authority to do so. The complaints seek damages on theories of trespass, unjust enrichment and slander of title and property, as well as punitive damages. The Company has also received, and may in the future receive, claims and demands related to rights-of-way issues similar to the issues in these cases that may be based on similar or different legal theories. The Company has defeated motions for class certification in a number of these actions but expects that, absent settlement of these actions, plaintiffs in the pending lawsuits will continue to seek certification of statewide or multi-state classes. The only lawsuit in which a class was certified against the Company, absent an agreed upon settlement, occurred in Koyle, et. al. v. Level 3 Communications, Inc., et. al., a purported two state class action filed in the United States District Court for the District of Idaho. The Koyle lawsuit has been dismissed pursuant to a settlement reached in November, 2010 as described further below.
 
The Company negotiated a series of class settlements affecting all persons who own or owned land next to or near railroad rights of way in which it has installed its fiber optic cable networks. The United States District Court for the District of Massachusetts in  Kingsborough v. Sprint Communications Co. L.P.  granted preliminary approval of the proposed settlement; however, on September 10, 2009, the court denied a motion for final approval of the settlement on the basis that the court lacked subject matter jurisdiction and dismissed the case.
 
In November 2010, the Company negotiated revised settlement terms for a series of state class settlements affecting all persons who own or owned land next to or near railroad rights of way in which the Company has installed its fiber optic cable networks. The Company is currently pursuing presentment of the settlement in applicable jurisdictions. The settlements affecting current and former landowners in the states of Idaho, Illinois, and Alabama have received final court approval and the parties are engaged in the claims process for those states.  The settlement has been presented to federal courts in several additional states for approval.
 
Management believes that the Company has substantial defenses to the claims asserted in all of these actions and intends to defend them vigorously if a satisfactory settlement is not ultimately approved for all affected landowners.

Securities Litigation, Derivative Actions and Related Cases
 
In February 2009, Level 3 Communications, Inc., certain of its current officers and a former officer were named as defendants in purported class action lawsuits filed in the United States District Court for the District of Colorado, which have been consolidated as In re Level 3 Communications, Inc. Securities Litigation (Civil Case No. 09-cv-00200-PAB-CBS). The plaintiffs in each complaint allege, in general, that throughout the purported class period specified in the complaint that the defendants failed to disclose material adverse facts about the Company's integration activities, business and operations. The complaints seek damages based on purported violations of Section 10(b) of the Securities Exchange Act of 1934, Securities and Exchange Commission Rule 10b-5 promulgated thereunder and Section 20(a) of the Securities Exchange Act of 1934. On May 4, 2009, the Court appointed a lead plaintiff in the case, and on September 29, 2009, the lead plaintiff filed a Consolidated Class Action Complaint (the “Complaint”). A motion to dismiss the Complaint was filed by the Company and the other named defendants. While the motion to dismiss the Complaint was pending, the court granted the lead plaintiff's motion to further amend the Complaint (the “Amended Compliant”). Thereafter, the Company and the other defendants named in the Amended Complaint filed a motion to dismiss the Amended Complaint with prejudice. The court granted this motion to dismiss with prejudice, and the plaintiff has appealed the decision to the Tenth Circuit Court of Appeals. The decision was affirmed by the Tenth Circuit Court of Appeals in Appellate Case No. 11-1029 on February 6, 2012. Although the plaintiff could seek to further appeal this decision before the U.S. Supreme Court, management believes that the Company would likely prevail in any such appeal.

 
In March 2009, Level 3 Communications, Inc., as a nominal defendant, certain of its directors and its current officers, and a former officer, were named as defendants in purported stockholder derivative actions in the District Court, Broomfield County, Colorado, which have been consolidated as In  re Level 3 Communications, Inc. Derivative Litigation (Lead Case No. 2009CV59) (the “State Derivative Action”). On December 11, 2009, Level 3 Communications, Inc., as a nominal defendant, certain of its directors and current officers, and a former officer, were named as defendants in a purported stockholder derivative action in the United States District Court for the District of Colorado in Iron Workers District Council Of Tennessee Valley & Vicinity Pension Plan v. Level 3 Communications, Inc., et. al. (Civil Case No. 09cv02914) (the “Federal Derivative Action”). The plaintiffs in both actions allege that during the period specified in the complaints the named defendants failed to disclose material adverse facts about the Company's integration activities, business and operations. The complaints seek damages on behalf of the Company based on purported breaches of fiduciary duties for disseminating false and misleading statements and failing to maintain internal controls; unjust enrichment; abuse of control; gross mismanagement; waste of corporate assets; and, with respect to certain defendants, breach of fiduciary duties in connection with the resignation of Kevin O'Hara. The parties in the State Derivative Action have agreed to a temporary stay of all activities pending the outcome of the motion to dismiss or other relevant time periods in the securities litigation described above. Plaintiff Iron Workers has sought leave to voluntarily dismiss the Federal Derivative Action and, on February 2, 2012, the parties filed an Unopposed Joint Motion for Voluntary Dismissal of the Federal Derivative Action which the court preliminarily approved on February 3, 2012. The dismissal sought would be with prejudice as to Plaintiff Iron Workers only, and would have no effect on the State Derivative Action. Management believes that the complaints have numerous deficiencies, including that each plaintiff failed to make a demand on the Company's Board of Directors before filing the suit, and intends to defend these actions vigorously.
 
In March 2009, late April 2009 and early May 2009, Level 3 Communications, Inc., the Level 3 Communications, Inc. 401(k) Plan Committee and certain current and former officers and directors of Level 3 Communications, Inc. were named as defendants in purported class action lawsuits filed in the U.S. District Court for the District of Colorado. These cases have been consolidated as  Walter v. Level 3 Communications, Inc., et. al., ( Civil Case No. 09cv00658).  The complaint alleges breaches of fiduciary and other duties under the Employee Retirement Income Security Act (“ERISA”) with respect to investments in the Company's common stock held in individual participant accounts in the Level 3 Communications, Inc. 401(k) Plan. The complaint claims that those investments were imprudent for reasons that are similar to those alleged in the securities and derivative actions described above.
 
The parties have negotiated a proposed settlement in the amount of $3.2 million, to be paid by the Company's insurance carrier. The proposed settlement was preliminarily approved by the court on December 13, 2011 and a fairness hearing to consider plaintiff's motion for final approval is scheduled for March 23, 2012. Management believes that the Company has substantial defenses to the claims asserted in this action and intends to defend it vigorously if the settlement is not approved.
 
Global Crossing Contingencies

As a result of the Global Crossing acquisition, the Company is now exposed to various legal proceedings to which certain Global Crossing subsidiaries are party. The following is a description of Global Crossing's material legal proceedings and other contingencies.
- Peruvian Tax Litigation     
Beginning in 2005, one of Global Crossing's Peruvian subsidiaries received a number of assessments for tax, penalty and interest for calendar years 2001 and 2002. Peruvian tax authorities (SUNAT) took the position that Global Crossing incorrectly documented its importations resulting in additional income tax withholding and value-added taxes (VAT). The total amount of the asserted claims, including potential interest and penalties, was $26 million, consisting of $3 million for income tax withholding in connection with the import of services for calendar years 2001 and 2002, $7 million in connection with VAT in connection with the import of services for calendar years 2001 and 2002, and $16 million in connection with the disallowance of VAT credits for periods beginning in 2005. Due to accrued interest and foreign exchange effects, and taking into account the developments described below, the total assessments have increased to $86 million.
Global Crossing challenged the tax assessments during 2005 by filing administrative claims before SUNAT. During August 2006 and June 2007 SUNAT rejected Global Crossing's administrative claims, thereby confirming the assessments. Appeals were filed in September 2006 and July 2007 in the Tax Court, which is the highest administrative authority. In October 2011, the Tax Court issued a ruling regarding VAT, associated penalties and penalties associated with withholding taxes, adjudicating the central issue underlying the assessments in the government's favor, while confirming the assessment in part and denying a portion of the assessment on procedural grounds. Other than an immaterial amount, all assessed items dismissed by the Tax Court in this ruling remain open for reassessment by SUNAT. While this Tax Court ruling applies only to 2002, the Company believes the Tax Court will issue a similar ruling with respect to 2001, and all material amounts likely to be waived due to procedural defects similarly remain open for reassessment.
In November 2011, the Tax Court issued a ruling with respect to assessed 2001 withholding tax, holding that the statute of limitations had run prior to assessment by SUNAT. The Company believes that this adjudication of the withholding tax issue is likely to be final, and the Company expects to win a similar verdict with respect to assessed 2002 withholding tax. Penalties with respect to withholding tax, however, are not time-barred, and were confirmed in the Tax Court's October 2011 ruling.
The Company intends to appeal the Tax Court's October 2011 decision to the judicial court in Peru. The Company has not received Tax Court rulings for all periods, but it has received adjudications of each substantive issue for at least one period. As a result, the Company expects decisions for the remaining open periods to be consistent with decisions already rendered. The Company intends to appeal any Tax Court verdict with respect to 2001 to the extent consistent with the October 2011 decision in the government's favor, and will protest any reassessment of amounts dismissed by the Tax Court on procedural grounds.
- Employee Severance and Contractor Termination Disputes
A number of former employees and third-party contractors have asserted a variety of claims in litigation against certain Latin American subsidiaries of Global Crossing for separation pay, severance, commissions, pension benefits, unpaid vacation pay, breach of employment contracts, unpaid performance bonuses, property damages, moral damages and related statutory penalties, fines, costs and expenses (including accrued interest, attorneys fees and statutorily mandated inflation adjustments) as a result of their separation from the Company or termination of service relationships. Global Crossing is vigorously defending itself against the asserted claims, which aggregate approximately $43 million.
- Brazilian Tax Claims
In December 2004, March 2009 and April 2009, the São Paulo state tax authorities issued tax assessments against one of Global Crossing's Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenues from leasing movable properties (in the case of the December 2004 and March 2009 assessments) and revenues from the provision of internet access services (in the case of the April 2009 assessment), by treating such activities as the provision of communications services, to which the ICMS tax applies. In September 2002 and July 2009, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on identical issues. Global Crossing has filed objections to these assessments, arguing that the lease of assets and the provision of internet access are not communication services subject to ICMS. The objections to the December 2004 and September 2002 assessments have been rejected by the respective state administrative courts, and Global Crossing has appealed those decisions to the judicial courts. The objections to the March, April and July 2009 assessments are still pending final administrative decisions.
The Company is vigorously contesting all such assessments in both states, and in particular, views the assessment of ICMS on revenues from leasing movable properties to be without merit. Nevertheless, the Company believes that it is reasonably possible that these assessments could result in a loss of up to $55 million in excess of the accruals established for these matters.
- Customer Bankruptcy Claim
During 2007 one of Global Crossing's U.S. subsidiaries commenced default and disconnect procedures against a customer for breach of a sales contract for termination of international and domestic wireless and wireline phone service based on the nature of the customer's traffic, which rendered the contract highly unprofitable to Global Crossing. After the process was begun, the customer filed for bankruptcy protection, thereby barring Global Crossing from taking further disconnection actions against it. Global Crossing commenced an adversary proceeding in the bankruptcy court, asserting a claim for damages for the customer's alleged breaches of the contract and for a declaration that, as a result of these breaches, the customer was prohibited from assuming the contract in its reorganization proceedings.
The customer filed several counterclaims against Global Crossing alleging various breaches of contract for attempting improperly to terminate service, for improperly blocking international traffic, for violations of the Communications Act of 1934 and for related tort-based claims. Global Crossing notified the customer that Global Crossing would be raising its rates for certain of the services and filed a motion with the bankruptcy court seeking additional adequate assurance for the rate change, or an order allowing Global Crossing to terminate the customer's service. The customer amended its counter claims to assert claims for breach of contract based upon the rate increase. On July 3, 2008, the Court issued an opinion holding that the agreement did not permit Global Crossing to increase the rates in the manner it did and that Global Crossing: (a) breached the sales contract in so doing; and (b) was therefore not entitled to additional adequate assurance or an order terminating service. The Court did, however, permit Global Crossing to amend its complaint to plead a rescission claim (which was filed on July 14, 2008) and to assert other defenses.
The Court dismissed the customer's bankruptcy case by order dated November 25, 2009, and retained the adversary proceeding (including the customer's counterclaim), which is still pending. On December 26, 2009, Global Crossing terminated service to the customer. Global Crossing amended its complaint to include allegations relating to the manipulation of traffic data, so called “ANI stripping,” and the customer filed an amended answer, affirmative defenses and counterclaims.
On January 14, 2011, Global Crossing filed a motion for summary judgment asserting that the customer is not entitled to recover any damages (other than those based on rescission-type theories) by reason of a limitation of liability provision in the contract and applicable law. On July 22, 2011, the Court issued its decision on the motion. Although the Court held that the limitation of liability provision of the contract was valid and enforceable and barred the customer from pursuing all forms of lost profit damages, the Court refused to exclude the customer's claim for general damages at this point, and is permitting that issue to proceed.
Discovery in the action is now concluded and the Court ordered trial to proceed in three separate phases. Trial of the first set of issues commenced on November 14, 2011. After the Court heard testimony from four witnesses, the matter was adjourned until January 23, 2012 and further testimony was taken for three days. The trial will be continued sometime in the first quarter 2012. The customer's most recent damage estimate ranges from approximately $150 million to approximately $450 million. While the final outcome of this matter is uncertain, the Company believes Global Crossing has good defenses to limit substantially the amount of damages recoverable by the customer, including defenses based upon the limitation of liability provisions in the contract. However, the precise impact of the application of these defenses is unclear and the Company therefore cannot provide an estimate of the possible loss or range of loss in excess of the accrual that has been established for this matter.
 
Letters of Credit
 
It is customary for Level 3 to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on behalf of Level 3 in accordance with specified terms and conditions. As of December 31, 2011 and December 31, 2010, Level 3 had outstanding letters of credit of approximately $33 million and $22 million, respectively, of which $29 million and $22 million, are collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash. The Company does not believe it is reasonable to estimate the fair value of the letters of credit and does not believe exposure to loss is reasonably possible nor material.
Operating Leases
The Company is leasing rights-of-way, facilities and other assets under various operating leases which, in addition to rental payments, may require payments for insurance, maintenance, property taxes and other executory costs related to the lease. Certain leases provide for adjustments in lease cost based upon adjustments in various price indexes and increases in the landlord's management costs.
The right-of-way agreements have various expiration dates through 2088. Payments under these right-of-way agreements were $135 million in 2011, $127 million in 2010 and $118 million in 2009.
The Company has obligations under non-cancelable operating leases for certain colocation, office facilities and other assets, including lease obligations for which facility related restructuring charges have been recorded. The lease agreements have various expiration dates through 2119. Rent expense, including common area maintenance, under non-cancelable lease agreements was $232 million in 2011, $203 million in 2010 and $198 million in 2009.
For those leases involving communications colocation and right-of-way agreements, the Company anticipates that it will renew these leases under option provisions contained in the lease agreements given the significant cost to relocate the Company's network and other facilities.
Future minimum payments for the next five years under network and related right-of-way agreements and non-cancelable operating leases for facilities and other assets consist of the following as of December 31, 2011 (dollars in millions):
 
 
Right-of-Way
Agreements
 
Facilities and Other Assets
 
Total
 
Future Minimum Sublease Receipts
2012
 
$
142

 
$
268

 
$
410

 
$
13

2013
 
74

 
228

 
302

 
12

2014
 
69

 
204

 
273

 
8

2015
 
64

 
179

 
243

 
7

2016
 
59

 
134

 
193

 
6

Thereafter
 
354

 
611

 
965

 
16

Total
 
$
762

 
$
1,624

 
$
2,386

 
$
62


Certain right of way agreements include provisions for increases in payments in future periods based on the rate of inflation as measured by various price indexes. The Company has not included estimates for these increases in future periods in the amounts included above.
Certain other right of way agreements are cancelable or can be terminated under certain conditions by the Company. The Company includes the payments under such cancelable right of way agreements in the table above for a period of 1 year from January 1, 2012, if the Company does not consider it likely that it will cancel the right of way agreement within the next year. 
Cost of Access and Third Party Maintenance
In addition, the Company has purchase commitments with third-party access vendors that require it to make payments to purchase network services, capacity and telecommunications equipment. Some of these access vendor commitments require the Company to maintain minimum monthly and/or annual billings, in certain cases based on usage. In addition, the Company has purchase commitments with third parties that require it to make payments for maintenance services for certain portions of its network.
 
The following table summarizes the Company's purchase commitments at December 31, 2011 (dollars in millions):
 
 
Total
 
Less than
1 Year
 
2 - 3
Years
 
4 - 5
Years
 
After 5
Years
Cost of Access Services
 
$
222

 
$
122

 
$
93

 
$
6

 
$
1

Third-Party Maintenance Services
 
224

 
28

 
43

 
40

 
113

Total
 
$
446

 
$
150

 
$
136

 
$
46

 
$
114

Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
 
Level 3 Financing, a wholly owned subsidiary of the Company, has issued Senior Notes that are unsecured obligations of Level 3 Financing; however, they are also jointly and severally and fully and unconditionally guaranteed on an unsecured senior basis by Level 3 Communications, Inc. and Level 3 Communications, LLC. Level 3 Communications, LLC will, subject to the receipt of regulatory approval, provide a guarantee of the 8.125% Senior Notes due 2019. See Note 12 — Long-Term Debt, for additional information.
 
 
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 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
)


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
)
Condensed Consolidating Statements of Operations
For the year ended December 31, 2009

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

 
$
—

 
$
1,642

 
$
—

 
$
2,283

 
$
(230
)
 
$
3,695

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
737

 
—

 
981

 
(219
)
 
1,499

Depreciation and Amortization
—

 
—

 
412

 
—

 
494

 
—

 
906

Selling, General and Administrative
2

 
—

 
1,108

 
—

 
238

 
(11
)
 
1,337

Restructuring Charges
—

 
—

 
9

 
—

 
—

 
—

 
9

Total Costs and Expenses
2

 
—

 
2,266

 
—

 
1,713

 
(230
)
 
3,751

Operating Income (Loss)
(2
)
 
—

 
(624
)
 
—

 
570

 
—

 
(56
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
1

 
—

 
2

Interest expense
(211
)
 
(374
)
 
(2
)
 
(1
)
 
(7
)
 
—

 
(595
)
Interest income (expense) affiliates, net
795

 
1,180

 
(2,057
)
 
—

 
82

 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,242
)
 
(2,048
)
 
387

 
—

 
—

 
2,903

 
—

Other income (expense), net
42

 
—

 
4

 
—

 
(20
)
 
—

 
26

Total Other Income (Expense)
(616
)
 
(1,242
)
 
(1,667
)
 
(1
)
 
56

 
2,903

 
(567
)
Income (Loss) before Income Taxes
(618
)
 
(1,242
)
 
(2,291
)
 
(1
)
 
626

 
2,903

 
(623
)
Income Tax (Expense) Benefit
—

 
—

 
2

 
—

 
(3
)
 
—

 
(1
)
Income (Loss) from Continuing Operations
(618
)
 
(1,242
)
 
(2,289
)
 
(1
)
 
623

 
2,903

 
(624
)
Income From Discontinued Operations, Net
—

 
—

 
—

 
—

 
6

 
—

 
6

Net Income (Loss)
$
(618
)
 
$
(1,242
)
 
$
(2,289
)
 
$
(1
)
 
$
629

 
$
2,903

 
$
(618
)
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 (to) affiliates
13,472

 
14,584

 
(28,092
)
 
36

 
—

 
—

Other
3

 
16

 
48

 
64

 
—

 
131

Total Current Assets
13,477

 
14,606

 
(27,366
)
 
990

 
—

 
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
)
 
$
(20,625
)
 
$
9,002

 
$
25,773

 
$
13,188

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's 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

Other
—

 
1

 
52

 
104

 
—

 
157

Total Current Liabilities
50

 
166

 
314

 
1,128

 
—

 
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 Stockholder's Equity (Deficit)
$
2,790

 
$
(3,752
)
 
$
(20,625
)
 
$
9,002

 
$
25,773

 
$
13,188

Condensed Consolidating Balance Sheets
December 31, 2010

 
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
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Restricted cash and securities
—

 
—

 
1

 
1

 
—

 
2

Receivables, less allowances for doubtful accounts
—

 
—

 
46

 
213

 
—

 
259

Due from (to) affiliates
11,927

 
11,424

 
(26,113
)
 
2,762

 
—

 
—

Other
4

 
10

 
41

 
28

 
—

 
83

Current assets of discontinued operations
—

 
—

 
—

 
12

 
—

 
12

Total Current Assets
12,104

 
11,441

 
(25,675
)
 
3,102

 
—

 
972

Property, Plant, and Equipment, net
—

 
—

 
2,937

 
2,348

 
—

 
5,285

Restricted Cash and Securities
18

 
—

 
21

 
10

 
—

 
49

Goodwill and Other Intangibles, net
—

 
—

 
543

 
1,255

 
—

 
1,798

Investment in Subsidiaries
(10,437
)
 
(17,176
)
 
3,575

 
—

 
24,038

 
—

Other Assets, net
9

 
65

 
6

 
81

 
—

 
161

NonCurrent assets of discontinued operations
—

 
—

 
—

 
90

 
—

 
90

Total Assets
$
1,694

 
$
(5,670
)
 
$
(18,593
)
 
$
6,886

 
$
24,038

 
$
8,355

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 Accounts payable
$
1

 
$
—

 
$
57

 
$
268

 
$
—

 
$
326

Current portion of long-term debt
176

 
—

 
2

 
2

 
—

 
180

Accrued payroll and employee benefits
—

 
—

 
78

 
6

 
—

 
84

Accrued interest
47

 
99

 
—

 
—

 
—

 
146

Current portion of deferred revenue
—

 
—

 
115

 
36

 
—

 
151

Other
—

 
1

 
45

 
7

 
—

 
53

Current liabilities of discontinued operations
—

 
—

 
—

 
16

 
—

 
16

Total Current Liabilities
224

 
100

 
297

 
335

 
—

 
956

Long-Term Debt, less current portion
1,612

 
4,564

 
24

 
68

 
—

 
6,268

Deferred Revenue, less current portion
—

 
—

 
673

 
63

 
—

 
736

Other Liabilities
15

 
107

 
154

 
164

 
—

 
440

NonCurrent Liabilities of Discontinued Operations
—

 
—

 
—

 
112

 
—

 
112

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
(157
)
 
(10,441
)
 
(19,741
)
 
6,144

 
24,038

 
(157
)
Total Liabilities and Stockholder's Equity (Deficit)
$
1,694

 
$
(5,670
)
 
$
(18,593
)
 
$
6,886

 
$
24,038

 
$
8,355

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

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2009

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Broadwing Financial Services, Inc.
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(142
)
 
$
(369
)
 
$
(154
)
 
$
—

 
$
1,011

 
$
—

 
$
346

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(121
)
 
—

 
(187
)
 
—

 
(308
)
Decrease in restricted cash and securities, net
—

 
—

 
2

 
—

 
3

 
—

 
5

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

 
—

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(119
)
 
—

 
(183
)
 
—

 
(302
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
269

 
274

 
—

 
—

 
—

 
—

 
543

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(518
)
 
(6
)
 
(1
)
 
—

 
(2
)
 
—

 
(527
)
Increase (decrease) due from affiliates, net
560

 
99

 
150

 
—

 
(809
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
311

 
367

 
149

 
—

 
(811
)
 
—

 
16

Net Cash Provided by Discontinued Operations
—

 
—

 
—

 
—

 
6

 
—

 
6

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
2

 
—

 
2

Net Change in Cash and Cash Equivalents
169

 
(2
)
 
(124
)
 
—

 
25

 
—

 
68

Cash and Cash Equivalents at Beginning of Year
67

 
10

 
555

 
—

 
136

 
—

 
768

Cash and Cash Equivalents at End of Year
$
236

 
$
8

 
$
431

 
$
—

 
$
161

 
$
—

 
$
836

Subsequent Events
Subsequent Events
Subsequent Events

In January 2012, Level 3 Financing, Inc. completed the offering of $900 million aggregate principal of its 8.625% Senior Notes due 2020 (8.625% Senior Notes.) The offering of the 8.625% Senior Notes was not registered under the Securities Act of 1933, as amended, and the 8.625% Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  The 8.625% Senior Notes were sold to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended, and non-U.S. persons outside the United States under Regulation S under the Securities Act of 1933, as amended.

In February 2012, a portion of the net proceeds from the offering of the 8.625% Senior Notes were used to redeem all of Level 3 Financing's outstanding 9.25% Senior Notes due 2014 in aggregate principal amount of $807 million. The remaining proceeds constitute purchase money indebtedness under the existing indentures of the Company and will be used solely to fund the cost of construction, installation, acquisition, lease, development or improvement of any Telecommunications/IS assets (as defined in the existing senior secured credit agreement and indentures of Level 3), including cash purchase price of any past, pending or future acquisitions.
Unaudited Quarterly Financial Data
Unaudited Quarterly Financial Data
Unaudited Quarterly Financial Data
 
 
Three Months Ended
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in millions except per share data)
Revenue
 
$
914

 
$
900

 
$
913

 
$
892

 
$
927

 
$
895

 
$
1,579

 
$
904

Gross Margin
 
557

 
529

 
566

 
534

 
585

 
542

 
919

 
552

Operating Income (Loss)
 
(3
)
 
(38
)
 
3

 
(27
)
 
7

 
(18
)
 
45

 
(5
)
Net Loss
 
(204
)
 
(236
)
 
(180
)
 
(168
)
 
(208
)
 
(164
)
 
(164
)
 
(55
)
Loss per share (Basic and Diluted)
 
$
(1.82
)
 
$
(2.15
)
 
$
(1.58
)
 
$
(1.52
)
 
$
(1.76
)
 
$
(1.48
)
 
$
(0.80
)
 
$
(0.49
)

Loss per share for each quarter is computed using the weighted-average number of shares outstanding during that quarter, while loss per share for the year is computed using the weighted-average number of shares outstanding during the year. Thus, the sum of the loss per share for each of the four quarters may not equal the loss per share for the year.
In the fourth quarter of 2011, the Company completed the Amalgamation of Global Crossing through a tax free, stock for stock transaction and the disposition of its coal mining business. Operating results have been included through the respective dates of acquisition and sale. The Company recognized a loss of of $27 million related to the redemption of the 3.5% Convertible Senior Notes due in June 2012 and prepayment of the Tranche B Term Loan that was outstanding under the existing Senior Secured Term Loan. As a result of a change in the estimated useful lives of certain of the Company’s property, plant and equipment, the Company had a reduction in depreciation expense of approximately $74 million, which was accounted for as a change in accounting estimate on a prospective basis effective October 1, 2011. The Company also recognized $11 million of restructuring charges, and $20 million associated with the impairment of certain wireless spectrum licenses.
In the third quarter of 2011, the Company recognized a loss of approximately $30 million related to the conversion of the 15 Convertible Senior Notes due 2013 and the repurchase of the 3.5% Senior Notes due 2012.
During the second quarter of 2011, the Company recognized a loss of approximately $23 million related to the retirement of its 9.25% Senior Notes due 2014.
During the first quarter of 2011, the Company recognized a loss of approximately $20 million related to the redemption of the 5.25% Convertible Senior Notes due 2011 in February 2011 and exchange of the 9.0% Convertible Senior Discount Notes due 2013. 
In the first quarter of 2010, the Company recognized a $55 million loss on the early extinguishment of debt associated with the tender offer to repurchase the outstanding 12.25% Senior Notes. The Company also recognized a $4 million loss during the second quarter of 2010 as a result of the redemption of its 10% Convertible Senior Notes due 2011.
In fourth quarter of 2010, the Company recognized a $93 million tax benefit primarily as a result of releasing valuation allowances associated with net operating loss carryforwards from its foreign subsidiaries.

Organization and Summary of Significant Accounting Policies (Policies)
Principles of Consolidation and Basis of Presentation 
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Level 3 Communications, Inc. and subsidiaries in which it has a controlling interest. Prior to the disposition of the coal mining business during the fourth quarter of 2011, the Company's fifty-percent-owned mining joint ventures were consolidated on a pro rata basis. All significant intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
As part of its consolidation policy, the Company considers its controlled subsidiaries, investments in the business in which the Company is not the primary beneficiary or does not have effective control but has the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give the Company rights to economic risks or rewards of a legal entity. The Company does not have variable interests in a variable interest entity where it is required to consolidate the entity as the primary beneficiary or where it has concluded it is not the primary beneficiary.
Foreign Currency Translation 
Foreign Currency Translation
Generally, local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America other than those in Brazil. For operations outside the U.S. that prepare financial statements in currencies other than the U.S. dollar, assets and liabilities are translated at year-end exchange rates, and revenue, expenses and cash flows are translated using average exchange rates prevailing during the year. Gains or losses resulting from currency translation are recorded as a component of accumulated other comprehensive loss in stockholders' equity (deficit) and in the consolidated statements of comprehensive loss. A significant portion of the Company's foreign subsidiaries have either the British Pound or the Euro as the functional currency, both of which experienced significant fluctuations against the U.S. dollar during 2011, 2010 and 2009. As a result of the Global Crossing Amalgamation during the fourth quarter of 2011, the Company also is exposed to fluctuations in the Brazilian Real. The Company has experienced significant foreign currency translation adjustments that are recognized as a component of accumulated other comprehensive loss in stockholders' equity (deficit) and in the consolidated statement of comprehensive loss in accordance with accounting guidance for foreign currency translation. The Company considers the majority of its investments in its foreign subsidiaries to be long-term in nature. The Company's foreign exchange transaction gains (losses), including where its investments in its foreign subsidiaries are not considered to be long-term in nature, are included within other income (expense) on the consolidated statement of operations.
Reclassifications 
Reclassifications
Certain immaterial reclassifications have been made to prior years to conform to the current period's presentation.
Use of Estimates 
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The accounting estimates that require management's judgments include revenue recognition, revenue reserves, cost of revenue for communications services, the determination of the useful lives of long-lived assets, the valuation and recognition of stock-based compensation expense, the valuation of long-lived assets, goodwill and acquired indefinite-lived intangible assets, derivative financial instruments, the valuation of asset retirement obligations, the allowance for doubtful accounts, the recognition of the fair value of assets acquired and liabilities assumed in business combinations, accruals for estimated tax and legal liabilities, valuation allowance for deferred tax assets, and valuation of other assets and liabilities measured at fair value. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Revenue and Cost of Revenue for Communications Services 
Revenue and Cost of Revenue for Communications Services
Revenue for communications services is recognized on a monthly basis as these services are provided based on contractual amounts expected to be collected. Management establishes appropriate revenue reserves at the time services are rendered based on an analysis of historical credit activity to address, where significant, situations in which collection is not reasonably assured as a result of credit risk, potential billing disputes or other reasons. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Intercarrier compensation revenue is recognized when an interconnection agreement is in place with another carrier, or if an agreement has expired, when the parties have agreed to continue operating under the previous agreement until a new agreement is negotiated and executed, or at rates mandated by the FCC.
For certain sale and long-term indefeasible right of use, or IRU, contracts involving private line, wavelengths and dark fiber services, the Company may receive up-front payments for services to be delivered for a period of up to 25 years. In these situations, the Company defers the revenue and amortizes it on a straight-line basis to earnings over the term of the contract.
Termination revenue is recognized when a customer discontinues service prior to the end of the contract period for which Level 3 had previously received consideration and for which revenue recognition was deferred. Termination revenue also is recognized when customers are required to make termination penalty payments to Level 3 to settle contractually committed purchase amounts that the customer no longer expects to meet or when a customer and Level 3 renegotiate a contract under which Level 3 is no longer obligated to provide services for consideration previously received and for which revenue recognition has been deferred.
The Company is obligated under dark fiber IRUs and other capacity agreements to maintain its network in efficient working order and in accordance with industry standards. Customers are obligated for the term of the agreement to pay for their allocable share of the costs for operating and maintaining the network. The Company recognizes this revenue monthly as services are provided.
Level 3's customer contracts require the Company to meet certain service level commitments. If Level 3 does not meet the required service levels, it may be obligated to provide credits, usually in the form of free service, for a short period of time. The credits are a reduction to revenue and, to date, have not been material.
Cost of revenue for the communications business includes leased capacity, right-of-way costs, access charges, satellite transponder lease costs and other third party costs directly attributable to the network, but excludes depreciation and amortization and related impairment expenses.
The Company recognizes the cost of network services as they are incurred in accordance with contractual requirements. The Company disputes incorrect billings from its suppliers of network services. The most prevalent types of disputes include disputes for circuits that are not disconnected by the supplier on a timely basis and usage bills with incorrect or inadequate information. Depending on the type and complexity of the issues involved, it may and often does take several quarters to resolve the disputes.
In determining the amount of the cost of network service expenses and related accrued liabilities to reflect in its financial statements, the Company considers the adequacy of documentation of disconnect notices, compliance with prevailing contractual requirements for submitting these disconnect notices and disputes to the provider of the network services, and compliance with its interconnection agreements with these carriers. Judgment is required in estimating the ultimate outcome of the dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.
Coal Mining 
Coal Mining
Prior to the sale of its coal mining business in November 2011, the Company sold coal primarily through long-term contracts with public utilities. The long-term contracts for the delivery of coal established the price, volume, and quality requirements of the coal to be delivered. Revenue under these and other contracts was generally recognized when coal was shipped to the customer.
USF and Gross Receipts Taxes 
USF and Gross Receipts Taxes
The revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. The Company records Universal Service Fund ("USF") contributions where the Company is the primary obligor for the taxes assessed in each jurisdiction where it does business on a gross basis in its consolidated statements of operations, but records sales, use, value added and excise taxes billed to its customers on a net basis in its consolidated statements of operations. Communications revenue and cost of revenue on the consolidated statements of operations includes USF contributions totaling $107 million, $77 million and $62 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Advertising Costs 
Advertising Costs
The Company expenses the cost of advertising as incurred. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying consolidated statements of operations.
Share-Based Compensation 
Stock-Based Compensation
The Company recognizes the estimated fair value of stock based compensation costs, net of an estimated forfeiture rate, over the requisite service period of the award, which is generally the vesting term or term for restrictions on transfer that lapse, as the case may be. The Company funded a portion of its 2011, 2010 and 2009 discretionary bonus in stock awards that were vested upon issuance. The Company estimates forfeiture rates based on its historical experience for the type of award.
Income Taxes 
Income Taxes
The Company recognizes deferred tax assets and liabilities for its domestic and foreign operations, for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes interest and penalty expense associated with uncertain tax positions as a component of income tax expense in the consolidated statements of operations.
Cash and Cash Equivalents 
Cash and Cash Equivalents
The Company classifies investments as cash equivalents if they are readily convertible to cash and have original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist primarily of highly liquid investments in government and government agency securities and money market funds issued or managed by financial institutions in the U.S., Europe and Latin America and commercial paper depending on liquidity requirements.
Restricted Cash and Securities 
Restricted Cash and Securities
Restricted cash and securities consists primarily of cash and investments that serve to collateralize outstanding letters of credit, long-term debt and certain performance and operating obligations of the Company. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists.
Derivatives Financial Instruments 
Derivative Financial Instruments
All derivative instruments, including derivatives embedded in other financial instruments, are measured at fair value and recognized as either assets or liabilities on the Company's consolidated balance sheets. The Company's derivative instruments are valued primarily using models based on readily observable market parameters for all substantial terms of the Company's derivative contracts and thus are classified as Level 2 of the GAAP fair value hierarchy. See Note 10 - Fair Value of Financial Instruments. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.
For derivative instruments designated as cash flow hedges, the effective portion of the derivative's gain (loss) is initially reported as a component of accumulated other comprehensive income (loss) ("AOCI") and is subsequently recognized in earnings in the period the hedged transaction affects earnings. Gains (losses) resulting from hedge ineffectiveness and those resulting from changes in fair values on derivatives not designated as hedging instruments are recognized in other income (expense) in the consolidated statements of operations. See Note 11 - Derivative Financial Instruments.
Allowance for Doubtful Accounts 
Allowance for Doubtful Accounts
Trade accounts receivable are recorded at the invoiced amount and can bear interest. The Company establishes an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. The Company determines the allowance for doubtful accounts based on the aging of its accounts receivable balances and an analysis of its historical experience of bad debt write-offs. The Company reviews its allowance for doubtful accounts quarterly. Past-due balances over 60 days and over a specified amount are reviewed individually for collectability. Accounts receivable balances are written off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. All of the Company's allowance for doubtful accounts relates to its communications business.
Property, Plant and Equipment 
Property, Plant and Equipment
Property, plant and equipment are recorded at cost.
Leasehold improvements are depreciated over the shorter of their estimated useful lives or lease terms that are reasonably assured.
The Company capitalizes costs directly associated with expansions and improvements of the Company's communications network, customer installations, including employee-related costs, and generally capitalizes costs associated with network construction and provisioning of services. The Company amortizes such costs over an estimated useful life of three to seven years.
In addition, the Company continues to develop business support systems required for its business. The external direct costs of software, materials and services, and payroll and payroll-related expenses for employees directly associated with business support systems projects are capitalized. Upon the completion of a project, the total cost of the business support system is amortized over an estimated useful life of three years.
In connection with the acquisition of Global Crossing, the Company evaluated the estimated useful lives of its fixed assets and determined that the period it expected to use conduit, fiber, and certain transmission equipment was longer than the remaining originally estimated useful lives. The Company revised its estimated useful lives of conduit from its historical estimate of 25 years to a revised estimate of 50 years; of fiber from its historical estimate of 12 years to a revised estimate of 25 years; and of certain transmission equipment from its historical estimate of 7 years to its revised estimate of 15 years. In determining the change in estimated useful lives, the Company, with input from its engineering team, considered its historical usage patterns and retirements, estimates of technological obsolescence, and expected usage and maintenance.
Asset Retirement Obligations 
Asset Retirement Obligations
The Company recognizes a liability for the estimated fair value of legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset in the period incurred. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Increases to the asset retirement obligation liability due to the passage of time are recognized as accretion expense and included within selling, general and administrative expenses and within income (loss) from discontinued operations for reclamation associated with the coal mining business on the Company's consolidated statements of operations. Changes in the liability due to revisions to future cash flows are recognized by increasing or decreasing the liability with the offset adjusting the carrying amount of the related long-lived asset. To the extent that the downward revisions exceed the carrying amount of the related long-lived asset initially recorded when the asset retirement obligation liability was established, the Company records the remaining adjustment as a reduction to depreciation expense, to the extent of historical depreciation of the related long-lived asset, and then to selling, general and administrative expense.
Goodwill and Acquired Indefinite-Lived Intangible Assets 
Goodwill and Acquired Indefinite-Lived Intangible Assets
Accounting guidance prohibits the amortization of goodwill and purchased intangible assets with indefinite useful lives. The Company reviews goodwill and purchased intangible assets with indefinite lives for impairment annually at the end of the fourth quarter and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. For goodwill, the Company performs a two-step impairment test. In the first step, the Company considers the fair value of each reporting unit relative to its carrying value. The Company's reporting units are consistent with the reportable segments identified in Note 15 - Segment Information. In accordance with recently issued guidance, in 2011 the Company performed an assessment of qualitative factors to determine whether it is more likely than not that the fair value exceeds the carrying value prior to performing the two step evaluation. If it is determined that it is unlikely that the carrying value exceeds the fair value, then the entity is no longer required to complete the two step goodwill impairment evaluation. The Company performed its assessment of qualitative factors and determined that it is not likely that the carrying value exceeded the fair value of goodwill as of December 31, 2011. During 2010 and 2009, the Company also considered the use of multiple valuation techniques in accordance with GAAP Fair Value Measurements and Disclosures guidance to estimate the fair value of its reporting units and had consistently applied a market approach as part of its impairment assessment process. Under the market approach, the Company estimated the fair value using an in-exchange valuation premise based upon the market capitalization of Level 3 using quoted market prices, added an estimated control premium, and then assigned that fair market value to the reporting units. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill was not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeded the fair value of the reporting unit, then a second step was performed and the implied fair value of the reporting unit's goodwill was determined and compared to the carrying value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeded its implied fair value, then an impairment loss equal to the difference was recorded.
GAAP also requires that the fair value of acquired indefinite-lived intangible assets be estimated and compared to their carrying value each year. The Company estimates the fair value of these intangible assets primarily utilizing an income approach. The Company recognizes an impairment loss when the estimated fair value of the acquired indefinite-lived intangible assets is less than the carrying value.
The Company conducted its goodwill and acquired indefinite-lived intangible assets impairment analysis at the end of 2011, 2010 and 2009 and concluded that its goodwill was not impaired in any of those periods. The Company conducted its indefinite-lived acquisition-related intangible asset impairment analysis at the end of 2010 and 2009, and concluded that there was no impairment. During 2011, the Company determined that the carrying value of certain wireless spectrum licenses that it acquired in a prior acquisition was impaired and the Company recognized a $20 million charge in the fourth quarter that was recognized in Other Expense. The Company concluded that its remaining indefinite-lived intangible assets were not impaired as of December 31, 2011.
Long-Lived Assets Including Finte-Lived Purchased Intangible Assets 
Long-Lived Assets Including Finite-Lived Purchased Intangible Assets
The Company amortizes acquired intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from four to twelve years.
Impairment of Finite Lived Intangible Assets and Property Plant and Equipment 
The Company evaluates long-lived assets, such as property, plant and equipment and acquired intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the assets plus net proceeds expected from disposition of the assets, if any, are less than the carrying value of the assets. If an asset is deemed to be impaired, the amount of the impairment loss is the excess of the asset's carrying value over its estimated fair value.
Concentration of Credit Risk 
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, accounts receivable, restricted cash and securities and derivatives. The Company maintains its cash equivalents, restricted cash and securities and derivatives with various financial institutions. These financial institutions are primarily located in the United States, Europe and Latin America and the Company's policy is to limit exposure with any one institution. As part of its cash and risk management processes, the Company performs periodic evaluations of the relative credit standing of the financial institutions. The Company also has established guidelines relative to financial instrument credit ratings, diversification and maturities that seek to maintain safety and liquidity. The Company's investment strategy generally results in lower yields on investments but reduces the risk to principal in the short term prior to these funds being used in the Company's business. The Company has not experienced any material losses on financial instruments held at financial institutions. The Company utilizes interest rate swap contracts to protect against the effects of interest rate fluctuations. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss.
The Company provides communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe, and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising Level 3's customer base and their dispersion across many different industries and geographical regions. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers, although letters of credit and deposits are required in certain limited circumstances. The Company has from time to time entered into agreements with value-added resellers and other channel partners to reach consumer and enterprise markets for voice services. The Company has policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. The Company maintains an allowance for doubtful accounts based upon the expected collectability of accounts receivable. Due to the Company's credit evaluation and collection process, bad debt expenses have not been significant; however, the Company is not able to predict changes in the financial stability of its customers. Any material change in the financial status of any one or a particular group of customers may cause the Company to adjust its estimate of the recoverability of receivables and could have a material adverse effect on the Company's results of operations. Fair values of accounts receivable approximate cost due to the short period of time to collection.
Organization and Summary of Significant Accounting Policies (Tables)
Property, Plant and Equipment 
Depreciation and amortization for the Company's property, plant and equipment are computed on the straight-line method based on the following useful lives:
 
 
 
 
 
 
Facility and Leasehold Improvements
 
10
-
40
years
Network Infrastructure (including fiber and conduit)
 
25
-
50
years
Operating Equipment
 
4
-
15
years
Furniture, Fixtures, Office Equipment and Other
 
2
-
7
years
The components of the Company's property, plant and equipment as of December 31, 2011 and 2010 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,089

 
(980
)
 
1,109

Network Infrastructure
 
7,931

 
(2,814
)
 
5,117

Operating Equipment
 
5,253

 
(3,684
)
 
1,569

Furniture, Fixtures and Office Equipment
 
167

 
(139
)
 
28

Other
 
22

 
(21
)
 
1

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136

December 31, 2010
 
 
 
 
 
 
Land
 
$
160

 
$
—

 
$
160

Land Improvements
 
73

 
(42
)
 
31

Facility and Leasehold Improvements
 
1,898

 
(887
)
 
1,011

Network Infrastructure
 
5,630

 
(2,544
)
 
3,086

Operating Equipment
 
4,322

 
(3,381
)
 
941

Furniture, Fixtures and Office Equipment
 
145

 
(133
)
 
12

Other
 
22

 
(22
)
 
—

Construction-in-Progress
 
44

 
—

 
44

 
 
$
12,294

 
$
(7,009
)
 
$
5,285

 
 
 
 
 
 
 
Change in Accounting Estimate 
The change in estimated useful lives of certain of the Company’s property, plant and equipment, which has resulted in less depreciation expense than would have otherwise been recorded, resulted in the following decrease for the year ended December 31, 2011 (in millions, except per share amounts):
Net Loss
$
74

Basic and Diluted Net Loss per Share
$
0.54

Events Associated with the Amalgamation of Global Crossing (Tables)
Schedule of preliminary purchase price allocation 
The following is a preliminary allocation of purchase price based on information currently available. The final identification of all the intangible assets acquired and determination of the purchase price allocation may be significantly different from the preliminary allocation reflected below.

 
Initial Purchase Price Allocation
 
(dollars in millions)
Assets:
 
  Cash, Cash Equivalents, and Restricted Cash
$
226

  Property, Plant, and Equipment
3,098

  Goodwill
1,110

  Identifiable Intangibles
106

  Other Assets
655

Total Assets
5,195

 
 
Liabilities:
 
  Long-term Debt
(1,554
)
  Other Liabilities
(1,679
)
Total Liabilities
(3,233
)
Total Estimated Consideration
$
1,962

Schedule of unaudited pro forma financial information for the amalgamation 
The following unaudited pro forma financial information presents the combined results of Level 3 and Global Crossing as if the completion of the Amalgamation had occurred as of the earliest period presented below (dollars in millions, except per share data).

 
2011
2010
Total Revenue
$
6,335

$
6,111

Net Loss
(727
)
(825
)
Net Loss per share
$
(3.56
)
$
(4.14
)
Dispositions (Tables)
Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures
The following amounts related to the operations of the coal business and were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Consolidated Statements of Operations (in millions):


 
 
Year Ended December 31,
 
 
2010
 
2009
Revenue
 
$
60

 
$
67

 
 
 
 
 
Cost of Revenue
 
56

 
66

Selling, General, and Administrative Costs
 
—

 
1

Depreciation and Amortization
 
6

 
9

Total Operating Expenses
 
62

 
76

 
 
 
 
 
Operating Loss
 
(2
)
 
(9
)
 
 
 
 
 
Other Income
 
1

 
15

Income (Loss) From Discontinued Operations
 
$
(1
)
 
$
6

Property, Plant and Equipment (Tables)
Property, Plant and Equipment
Depreciation and amortization for the Company's property, plant and equipment are computed on the straight-line method based on the following useful lives:
 
 
 
 
 
 
Facility and Leasehold Improvements
 
10
-
40
years
Network Infrastructure (including fiber and conduit)
 
25
-
50
years
Operating Equipment
 
4
-
15
years
Furniture, Fixtures, Office Equipment and Other
 
2
-
7
years
The components of the Company's property, plant and equipment as of December 31, 2011 and 2010 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,089

 
(980
)
 
1,109

Network Infrastructure
 
7,931

 
(2,814
)
 
5,117

Operating Equipment
 
5,253

 
(3,684
)
 
1,569

Furniture, Fixtures and Office Equipment
 
167

 
(139
)
 
28

Other
 
22

 
(21
)
 
1

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136

December 31, 2010
 
 
 
 
 
 
Land
 
$
160

 
$
—

 
$
160

Land Improvements
 
73

 
(42
)
 
31

Facility and Leasehold Improvements
 
1,898

 
(887
)
 
1,011

Network Infrastructure
 
5,630

 
(2,544
)
 
3,086

Operating Equipment
 
4,322

 
(3,381
)
 
941

Furniture, Fixtures and Office Equipment
 
145

 
(133
)
 
12

Other
 
22

 
(22
)
 
—

Construction-in-Progress
 
44

 
—

 
44

 
 
$
12,294

 
$
(7,009
)
 
$
5,285

 
 
 
 
 
 
 
Asset Retirement Obligations (Tables)
Schedule of Asset Retirement Obligations [Table Text Block]
The following table provides asset retirement obligation activity for the years ended December 31, 2011 and 2010 (dollars in millions):
 
 
2011
 
2010
Asset retirement obligation at January 1
 
$
74

 
$
64

Accretion expense
 
9

 
8

Liabilities assumed in Global Crossing acquisition
 
41

 
—

Liabilities settled
 
(2
)
 
(5
)
Revision in estimated cash flows
 
—

 
7

Effect of foreign currency rate change
 
$
(1
)
 
$
—

Asset retirement obligation at December 31
 
$
121

 
$
74

 
 
 
 
 
Goodwill (Tables)
Schedule of changes in carrying amount of goodwill
The changes in the carrying amount of goodwill during the years ended December 31, 2011 and 2010 are as follows (dollars in millions):
 
Level 3 Segment
Global Crossing Segment
Total
Balance as of January 1, 2010
$
1,429

$
—

$
1,429

Accumulated Impairment Losses
—

—

—

Effect of foreign currency rate change
(2
)
—

(2
)
Balance as of December 31, 2010
1,427

—

1,427

Goodwill acquired in Global Crossing acquisition
—

1,110

1,110

Accumulated Impairment Losses
—

—

—

Effect of foreign currency rate change
—

4

4

Balance as of December 31, 2011
$
1,427

$
1,114

$
2,541

Acquired Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 
Identifiable acquisition-related intangible assets as of December 31, 2011 and December 31, 2010 were as follows (dollars in millions):
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
December 31, 2011
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
776

 
$
(571
)
 
$
205

Trademarks
55

 
(3
)
 
52

Patents and Developed Technology
158

 
(89
)
 
69

 
989

 
(663
)
 
326

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

 
$
1,021

 
$
(663
)
 
$
358

December 31, 2010
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(488
)
 
$
255

Patents and Developed Technology
140

 
(76
)
 
64

 
883

 
(564
)
 
319

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(564
)
 
$
371

Schedule of estimated amortization expense of acquired finite-lived intangible asset 
As of December 31, 2011, estimated amortization expense for the Company’s finite-lived acquisition-related intangible assets over the next five years and thereafter is as follows (dollars in millions):
 
2012
$
91

2013
73

2014
61

2015
45

2016
28

Thereafter
28

 
$
326

Fair Value of Financial Instruments (Tables)
Schedule of fair value of liabilities measured on a recurring basis
The table below presents the fair values for each class of Level 3’s liabilities measured on a recurring basis as well as the input levels used to determine these fair values as of December 31, 2011 and 2010:
 
 
 
 
 
 
Fair Value Measurement Using
 
Total
Carrying Value
in Consolidated
Balance Sheet
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
December 31,
2011
 
December 31,
2010
 
December 31,
2011
 
December 31,
2010
 
December 31,
2011
 
December 31,
2010
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
90

 
$
108

 
$
—

 
$
—

 
$
90

 
$
108

Embedded Derivatives in Convertible Debt (included in other non-current liabilities)
—

 
—

 
—

 
—

 
—

 
—

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
90

 
$
108

 
$
—

 
$
—

 
$
90

 
$
108

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Senior Notes
$
4,716

 
$
2,885

 
$
4,822

 
$
2,789

 
$
—

 
$
—

Convertible Notes
939

 
1,788

 
247

 
697

 
834

 
1,189

Term Loans
2,567

 
1,679

 
2,518

 
1,632

 
—

 
—

Commercial Mortgage
65

 
67

 
—

 
—

 
73

 
79

Capital Leases and Other
163

 
29

 
—

 
—

 
163

 
29

Total Long-term Debt, including the current portion:
$
8,450

 
$
6,448

 
$
7,587

 
$
5,118

 
$
1,070

 
$
1,297

Derivative Financial Instruments (Tables)
Schedule of outstanding interest rate derivatives designated as cash flow hedges 
As of December 31, 2011 and 2010, the Company had the following outstanding derivatives that were designated as cash flow hedges of interest rate risk:
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 as follows (dollars in millions):
 
 
 
Liability Derivatives
 
 
December 31, 2011
 
December 31, 2010
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
90

 
Other noncurrent liabilities
 
$
108

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
December 31, 2011
 
December 31, 2010
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Embedded equity conversion rights
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
—

Schedule of the amount of gains (losses) recognized in Other Comprehensive Loss 
The amount of gains (losses) recognized in Other Comprehensive Loss consists of the following (dollars in millions):
 
 
 
December 31,
Derivatives designated as hedging instruments
 
2011
 
2010
Cash flow hedging contracts
 
$
18

 
$
(16
)
Schedule of the amount of gains (losses) reclassified from AOCI to Income/Loss 
The amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions) consists of the following (dollars in millions):
 
 
 
 
 
Year Ended December 31,
Derivatives designated as hedging instruments
 
Income Statement Location
 
2011
 
2010
Cash flow hedging contracts
 
Interest Expense
 
$
46

 
$
46

Schedule of effect of derivatives not designated as hedging instruments on net loss 
The effect of the Company’s derivatives not designated as hedging instruments on net loss is as follows (dollars in millions):
 
Derivatives not designated as
hedging instruments
 
Location of Gain Recognized in
Income/Loss on Derivative
 
 
 
 
 
 
 
 
2011
 
2010
 
2009
Embedded equity conversion rights
 
Other Income (Expense)—Other, net
 
$
—

 
$
10

 
$
14

Long-Term Debt (Tables)
Schedule of long-term debt 
As of December 31, 2011 and December 31, 2010, long-term debt was as follows:
(dollars in millions)
 
December 31,
2011
 
December 31,
2010
Senior Secured Term Loan*
 
$
2,600

 
$
1,680

Senior Notes due 2014 (9.25%)
 
807

 
1,250

Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
 
300

 
300

Senior Notes due 2017 (8.75%)
 
700

 
700

Senior Notes due 2018 (10.0%)
 
640

 
640

Senior Notes due 2019 (11.875%)
 
605

 
—

Senior Notes due 2019 (9.375%)
 
500

 
—

Senior Notes due 2019 (8.125%)
 
1,200

 
—

Convertible Senior Notes due 2011 (5.25%)
 
—

 
196

Convertible Senior Notes due 2012 (3.5%)
 
—

 
294

Convertible Senior Notes due 2013 (15.0%)
 
272

 
400

Convertible Senior Discount Notes due 2013 (9.0%)
 
—

 
295

Convertible Senior Notes due 2015 (7.0%)
 
200

 
200

Convertible Senior Notes due 2015 Series B (7.0%)
 
275

 
275

Convertible Senior Notes due 2016 (6.5%)
 
201

 
201

Commercial Mortgage due 2015 (9.86%)
 
65

 
67

Capital Leases
 
131

 
29

Other
 
32

 
—

Total Debt Obligations
 
8,528

 
6,527

Unamortized (Discount) Premium:
 
 

 
 

Discount on Senior Secured Term Loan due 2014
 
(33
)
 
(1
)
Premium on Senior Notes due 2014 (9.25%)
 
3

 
7

Discount on Senior Notes due 2018 (10.0%)
 
(11
)
 
(12
)
Discount on Senior Notes due 2019 (11.875%)
 
(10
)
 
—

Discount on Senior Notes due 2019 (9.375%)
 
(9
)
 
—

Discount on Senior Notes due 2019 (8.125%)
 
(9
)
 
—

Discount on Convertible Senior Notes due 2011 (5.25%)
 
—

 
(20
)
Discount on Convertible Senior Notes due 2012 (3.5%)
 
—

 
(29
)
Discount on Convertible Senior Notes due 2015 (7.0%)
 
(2
)
 
(3
)
Discount due to embedded derivative contracts
 
(7
)
 
(21
)
Total Unamortized (Discount) Premium
 
(78
)
 
(79
)
Carrying Value of Debt
 
8,450

 
6,448

Less current portion
 
(65
)
 
(180
)
Long-term Debt, less current portion
 
$
8,385

 
$
6,268

 
* The interest rate after the effect of the interest rate swap was 2.65% and 2.54% for the $1 billion and $400 million tranches of the term loan as of December 31, 2011 and December 31, 2010, respectively. The $280 million Tranche B Term Loan was prepaid in November 2011 and had an interest rate of 11.5% as of December 31, 2010. The $650 million Tranche B II Term Loan due 2018 and $550 million Tranche B III Term Loan due 2018 that were issued in the fourth quarter of 2011 had an interest rate of 5.75% as of December 31, 2011.

    
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) 
Aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) were as follows as of December 31, 2011 (dollars in millions):
 
2012
$
65

2013
313

2014
2,232

2015
838

2016
207

Thereafter
4,873

 
$
8,528

Schedule of redemption prices of Senior Notes 
 
 
Year
Redemption
Price
2011
102.213
%
2012
100.000
%
Schedule of redemption prices of Senior Notes 
Year
Redemption
Price
2015
104.063
%
2016
102.031
%
2017
100.000
%
Schedule of redemption prices of Senior Notes 
Year
Redemption
Price
2015
105.938
%
2016
102.969
%
2017
100.000
%
Schedule of redemption prices of Senior Notes 
Year
Redemption
Price
2015
104.688
%
2016
102.344
%
2017
100.000
%
Schedule of redemption prices of Senior Notes 
 
 
Year
Redemption
Price
2012
104.375
%
2013
102.917
%
2014
101.458
%
2015
100.000
%
 
 
Year
Redemption
Price
2011
100.0
%
Employee Benefit Benefits and Stock-Based Compensation (Tables)
Schedule of non-cash compensation expense and capitalized non-cash compensation 
The following table summarizes non-cash compensation expense and capitalized non-cash compensation for each of the three years ended December 31, 2011, 2010 and 2009 (dollars in millions):
 
2011
 
2010
 
2009
 
OSO
$
10

 
$
10

 
$
7

 
Restricted Stock Units and Shares
22

 
19

 
23

 
401(k) Match Expense
13

 
11

 
16

 
Restricted Stock Unit Bonus Grant
57

 
28

 
14

 
 
102

 
68

 
60

 
Capitalized Noncash Compensation
(1
)
 
(1
)
 
(1
)
 
 
$
101

 
$
67

 
$
59

 
Schedule of performance benchmark 
The value of the OSO increases for increasing levels of outperformance. OSO units have a multiplier range from zero to four depending upon the performance of Level 3 common stock relative to the S&P 500® Index as shown in the following table.
 
 
 
If Level 3 Stock Outperforms the S&P 500® Index by:
 
Then the Pre-multiplier Gain Is Multiplied by a Success Multiplier of:
0% or Less
 
—
More than 0% but Less than 11%
 
Outperformance percentage multiplied by 4/11
11% or More
 
4.00
Schedule of OSO valuation assumptions 
The Company believes that given the relative short life of the OSOs and the other variables used in the model, the modified Black-Scholes model provides a reasonable estimate of the fair value of the OSO units at the time of grant.
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
S&P 500 Expected Dividend Yield Rate
 
1.83
%
 
2.00
%
 
3.00
%
Expected Life
 
3
 years
 
3
 years
 
3
 years
S&P 500 Expected Volatility Rate
 
30
%
 
30
%
 
26
%
Level 3 Common Stock Expected Volatility Rate
 
44
%
 
51
%
 
45
%
Expected S&P 500 Correlation Factor
 
0.39

 
0.40

 
0.46

Calculated Theoretical Value
 
120
%
 
132
%
 
119
%
Estimated Forfeiture Rate
 
20
%
 
20
%
 
20
%
Schedule OSO activity 
Transactions involving OSO units awarded are summarized in the table below. The Option Price Per Unit identified in the table below represents the initial strike price, as determined on the day prior to the OSO grant date for those grants.

 
 
Units
 
Initial Strike Price Per Unit
 
Weighted
Average
Initial
Strike
Price
 
Aggregate
Intrinsic
Value
 
Weighted
Average
Remaining
Contractual
Term (years)
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
Balance January 1, 2009
 
1,053,818

 
$14.10
-
$91.50
 
$
58.50

 
$
—

 
1.56
Options granted
 
477,835

 
10.50
-
22.65
 
17.25

 
 
 
 
Options forfeited
 
(154,731
)
 
10.50
-
91.50
 
48.75

 
 
 
 
Options expired
 
(320,295
)
 
30.45
-
80.85
 
48.45

 
 
 
 
Options exercised
 
—

 
—
 
—

 
 
 
 
Balance December 31, 2009
 
1,056,627

 
$10.50
-
$91.50
 
$
44.25

 
$
5.2

 
1.55
Options granted
 
511,082

 
14.10
-
24.30
 
19.50

 
 
 
 
Options forfeited
 
(117,362
)
 
10.50
-
91.50
 
25.80

 
 
 
 
Options expired
 
(393,955
)
 
45.45
-
91.50
 
76.95

 
 
 
 
Options exercised
 
—

 
—
 
—

 
 
 
 
Balance December 31, 2010
 
1,056,392

 
$10.50
-
$51.60
 
$
22.05

 
$
—

 
1.73
Options granted
 
498,618

 
14.70
-
36.60
 
23.96

 
 
 
 
Options forfeited
 
(96,174
)
 
10.50
-
51.60
 
22.36

 
 
 
 
Options expired
 
(140,655
)
 
31.80
-
51.60
 
44.64

 
 
 
 
Options exercised
 
(29,469
)
 
14.10
-
15.75
 
14.93

 
 
 
 
Balance December 31, 2011
 
1,288,712

 
$10.50
-
$36.60
 
$
20.51

 
$
1.8

 
1.53
Options exercisable ("vested"):
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2009
 
219,920

 
$66.60
-
$80.85
 
$
75.15

 
$
—

 
 N/A
December 31, 2010
 
—

 
—
—

 
$
—

 
 N/A
December 31, 2011
 
—

 
—
 
—

 
$
—

 
 N/A
Information regarding NQ Options outstanding for the reporting period between October 4, 2011 and December 31, 2011 is summarized below:
 
Number Outstanding
Weighted Average Exercise Price
Balance at October 4, 2011
765,585

$
10.82

Exercised
(167,395
)
$
10.93

Balance at December 31, 2011
598,190

$
10.79

Schedule of OSO by exercise price range 
The following table summarized information concerning outstanding and exercisable NQ Options at December 31, 2011:
 
 
 
 
Options Outstanding and Exercisable
Exercise Prices
 
Number Outstanding
 
Weighted Average Remaining Contractual Life (in years)
 
Weighted Average Exercise Price per Share
$
9.53

 
444,384

 
1.9

 
$
9.53

$
14.43

 
153,806

 
3.0

 
$
14.43

Total
 
598,190

 
2.2

 
$
10.79

 
 
 
 
OSO units Outstanding
at December 31, 2011
 
OSO units Exercisable
at December 31, 2011
Range of Exercise Prices
 
Number
Outstanding
 
Weighted
Average
Remaining
Life (years)
 
Weighted
Average
Initial
Strike Price
 
Number
Exercisable
 
Weighted
Average
Initial
Strike Price
$
10.50

-
$
15.00

 
316,013

 
1.42

 
$
14.02

 
—

 
$
—

$
16.05

-
$
23.85

 
739,634

 
1.45

 
$
20.06

 
—

 
$
—

$
24.30

-
$
36.60

 
233,065

 
1.91

 
$
30.73

 
—

 
$
—

 
 
 
 
1,288,712

 
1.53

 
$
20.51

 
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule of restricted stock and restricted stock units 
The changes in restricted stock and restricted stock units are shown in the following table:
 
 
Number
 
Weighted Average
Grant Date
Fair Value
Nonvested at January 1, 2009
 
1,742,253

 
$
48.90

Stock and units granted
 
907,913

 
17.25

Lapse of restrictions
 
(790,289
)
 
46.65

Stock and units forfeited
 
(264,632
)
 
41.10

Nonvested at December 31, 2009
 
1,595,245

 
$
33.30

Stock and units granted
 
1,182,353

 
17.55

Lapse of restrictions
 
(594,580
)
 
38.70

Stock and units forfeited
 
(161,311
)
 
26.55

Nonvested at December 31, 2010
 
2,021,707

 
$
22.95

Stock and units granted
 
1,030,676

 
33.99

Lapse of restrictions
 
(845,717
)
 
27.79

Stock and units forfeited
 
(175,883
)
 
27.06

Nonvested at December 31, 2011
 
2,030,783

 
$
26.25

 
 
 
 
 
Income Taxes (Tables)
Components of income tax expense (benefit) 
An analysis of the income tax benefit (provision) attributable to loss from continuing operations before income taxes for each of the years in the three year period ended December 31, 2011 follows:

 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
Current:
 
 
 
 
 
 
United States federal
 
$
—

 
$
—

 
$
—

State
 
—

 
(1
)
 
—

Foreign
 
(8
)
 
—

 
—

 
 
(8
)
 
(1
)
 
—

Deferred, net of changes in valuation allowances:
 
 
 
 
 
 
United States federal
 
(30
)
 
—

 
—

State
 
(1
)
 
—

 
(1
)
Foreign
 
(2
)
 
92

 
—

Income tax benefit (provision)
 
$
(41
)
 
$
91

 
$
(1
)
 
 
 
 
 
 
 
Schedule of income before income tax, domestic and foreign 
The United States and foreign components of loss from continuing operations before income taxes are as follows:

 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
United States
 
$
(692
)
 
$
(542
)
 
$
(519
)
Foreign
 
(94
)
 
(170
)
 
(104
)
 
 
$
(786
)
 
$
(712
)
 
$
(623
)
 
 
 
 
 
 
 
Schedule of effective income tax rate reconciliation 
A reconciliation of the actual income tax benefit (provision) and the tax computed by applying the U.S. federal rate (35%) to the loss before income taxes for each of the years in the three-year period ended December 31, 2011 follows:
 
 
2011
 
2010
 
2009
 
 
(dollars in millions)
Computed tax benefit at statutory rate
 
$
275

 
$
250

 
$
218

Effect of earnings in jurisdictions outside of US
 
(13
)
 
(13
)
 
—

Foreign branch tax benefit
 
17

 
21

 
—

State income tax benefit
 
24

 
24

 
20

Change in valuation allowance
 
(198
)
 
(175
)
 
(255
)
Permanent items
 
(44
)
 
(16
)
 
(4
)
Non-cash compensation excess deductions
 
(18
)
 
—

 
—

Indefinite-lived assets
 
(26
)
 
—

 
—

NOL expiration
 
(38
)
 
—

 
—

Other, net
 
(20
)
 
—

 
20

Income tax benefit (provision)
 
$
(41
)
 
$
91

 
$
(1
)
 
 
 
 
 
 
 
Deferred tax assets and liabilities 
The components of the net deferred tax assets (liabilities) as of December 31, 2011 and 2010 were as follows:
 
 
2011
 
2010
 
 
(dollars in millions)
Deferred Tax Assets:
 
 
 
 
Accrued payroll and related benefits
 
$
101

 
$
77

Deferred revenue
 
276

 
285

Unutilized tax net operating loss carry forwards
 
3,996

 
2,713

Fixed assets and intangible assets
 
157

 
38

Intercompany loss
 
164

 
—

Other
 
193

 
100

Total Deferred Tax Assets
 
4,887

 
3,213

Deferred Tax Liabilities:
 
 
 
 
Fixed assets and intangible assets
 
(542
)
 
(79
)
Deferred revenue
 
(93
)
 
—

Other
 
(51
)
 
(29
)
Foreign branch income
 
(40
)
 
(40
)
Total Deferred Tax Liabilities
 
(726
)
 
(148
)
Net Deferred Tax Assets before valuation allowance
 
4,161

 
3,065

Valuation Allowance
 
(4,252
)
 
(2,978
)
Net Deferred Tax (Liability) Asset after Valuation Allowance
 
$
(91
)
 
$
87

Balance sheet classification of deferred taxes:
 
 
 
 
Net current deferred income tax asset
 
$
12

 
$
—

Net current deferred income tax liability
 
(3
)
 
—

Net non-current deferred income tax asset
 
246

 
87

Net non-current deferred income tax liability
 
(346
)
 
—

Net Deferred Tax (Liability) Asset after Valuation Allowance
 
$
(91
)
 
$
87

 
 
 
 
 
Operating loss carryforwards 
The U.S. federal tax loss carry forwards expire as follows (dollars in millions):
 
 
Expiring December 31,
Amount
2024
$
533

2025
1,186

2026
1,029

2027
1,508

2028
445

2029
700

2030
703

2031
687

 
 
 
$
6,791

 
 

Uncertain tax benefits 
A reconciliation of the beginning and ending balance of unrecognized tax benefits follows:

 
 
(dollars in millions)
Amount
Balance as of December 31, 2008
$
7

Gross increases—tax positions prior to 2009
—

Gross decreases—settlements with taxing authorities
(2
)
Balance as of December 31, 2009
5

Gross increases—tax position prior to 2010
1

Balance as of December 31, 2010
6

Gross increases—Global Crossing tax positions of prior years
11

Gross decreases - tax positions of prior years
(1
)
Gross decreases - settlement with taxing authorities
(1
)
Balance as of December 31, 2011
$
15

Segment Information (Tables)
Summary of segment information 
Segment information for the Company's Level 3 and Global Crossing businesses are summarized as follows (in millions):

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Revenue from external customers:
 
 
 
 
 
 
Level 3
 
$
3,679

 
$
3,591

 
$
3,695

Global Crossing
 
654

 
—

 
—

 
 
$
4,333

 
$
3,591

 
$
3,695

Adjusted EBITDA:
 
 
 
 
 
 
Level 3
 
$
911

 
$
849

 
$
910

Global Crossing
 
47

 
—

 
—

 
 
$
958

 
$
849

 
$
910

 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
Level 3
 
$
443

 
$
435

 
$
308

Global Crossing
 
51

 
—

 
—

 
 
$
494

 
$
435

 
$
308

Depreciation and amortization:
 
 
 
 
 
 
Level 3
 
$
741

 
$
870

 
$
906

Global Crossing
 
64

 
—

 
—

 
 
$
805

 
$
870

 
$
906

Total assets:
 
 
 
 
 
 
Level 3
 
$
8,029

 
$
8,355

 
 

 Global Crossing
 
5,159

 
—

 
 

 
 
$
13,188

 
$
8,355

 
 

 
 
 
 
 
 
 
Schedule of revenue from external customers and long-lived assets, by geographical areas 
The following is a summary of geographical information (in millions):

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Revenue from external customers:
 
 
 
 
 
 
North America
 
$
3,669

 
$
3,275

 
$
3,369

Europe:
 
 
 
 
 
 
United Kingdom
 
267

 
131

 
134

Germany
 
72

 
62

 
73

Other European Countries
 
163

 
123

 
119

Total Europe
 
502

 
316

 
326

Latin America:
 
 
 
 
 
 
Brazil
 
68

 
-
 
-
Argentina
 
23

 
-
 
-
Colombia
 
23

 
-
 
-
Other Latin American Countries
 
44

 
-
 
-
Total Latin America
 
158

 
—

 
—

Other
 
4

 
 
 
 
 
 
$
4,333

 
$
3,591

 
$
3,695

Long-lived assets:
 
 
 
 
 
 
North America
 
$
5,338

 
$
5,239

 
 

Europe:
 
 
 
 
 
 
United Kingdom
 
613

 
114

 
 

Germany
 
348

 
318

 
 

Other European Countries
 
596

 
285

 
 

Total Europe
 
1,557

 
717

 
 

Latin America:
 


 


 
 
Brazil
 
434

 
-
 
 
Argentina
 
387

 
-
 
 
Colombia
 
247

 
-
 
 
Other Latin American Countries
 
465

 
-
 
 
Total Latin America
 
1,533

 
—

 
 
Other
 
512

 
-
 
 
 
 
$
8,940

 
$
5,956

 
 

 
 
 
 
 
 
 
Schedule of breakout of Communications segment revenue by service 
Level 3 Total Revenue:
 
Core Network Services
 
Wholesale Voice Services
 
Other Communications Services
 
Total
2011
 
 
 
 
 
 
 
 
North America
 
$
2,677

 
$
578

 
$
69

 
$
3,324

   Europe
 
325

 
30

 
—

 
355

 
 
$
3,002

 
$
608

 
$
69

 
$
3,679

2010
 
 
 
 
 
 
 
 
North America
 
$
2,536

 
$
625

 
$
114

 
$
3,275

   Europe
 
291

 
25

 
—

 
316

 
 
$
2,827

 
$
650

 
$
114

 
$
3,591

2009
 
 
 
 
 
 
 
 
North America
 
$
2,548

 
$
629

 
$
192

 
$
3,369

   Europe
 
292

 
34

 
—

 
326

 
 
$
2,840

 
$
663

 
$
192

 
$
3,695

 
 
 
 
 
 
 
 
 
Global Crossing Total Revenue:
 
Invest and Grow
 
Wholesale Voice and Other
 
Total
 
 
2011
 
 
 
 
 
 
 
 
   North America
 
$
276

 
$
61

 
$
337

 
 
   Europe
 
147

 
2

 
149

 
 
   Latin America
 
167

 
1

 
168

 
 
 
 
$
590

 
$
64

 
$
654

 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net loss to Adjusted EBITDA by operating segment 
The following information provides a reconciliation of Net Income (Loss) to Adjusted EBITDA by reportable segment, as defined by the Company, for the years ended December 31, 2011, 2010 and 2009 (in millions):

2011
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(769
)
 
$
(58
)
Income Tax Expense
33

 
8

Total Other Expense
808

 
30

Depreciation and Amortization Expense
741

 
64

Non-cash Compensation Expense
98

 
3

Adjusted EBITDA
$
911

 
$
47

Total Net Loss for Reportable Segments
 

 
$
(827
)
Unallocated Corporate Expense
 

 
—

Discontinued Operations of Coal Mining Business
 
 
71

Consolidated Net Loss
 

 
$
(756
)
 
 
2010
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(617
)
 
$
—

Income Tax Expense
(91
)
 
—

Total Other Expense
620

 
—

Depreciation and Amortization Expense
870

 
—

Non-cash Compensation Expense
67

 
—

Adjusted EBITDA
$
849

 
$
—

Total Net Loss for Reportable Segments
 

 
$
(617
)
Unallocated Corporate Expense
 

 
(4
)
Discontinued Operations of Coal Mining Business
 
 
(1
)
Consolidated Net Loss
 

 
$
(622
)
 
2009
Level 3
 
Global Crossing
Net (Loss) from Continuing Operations
$
(605
)
 
$
—

Income Tax Expense
—

 
—

Total Other Expense
550

 
—

Depreciation and Amortization Expense
906

 
—

Non-cash Compensation Expense
59

 
—

Adjusted EBITDA
$
910

 
$
—

Total Net Loss for Reportable Segments
 

 
$
(605
)
Unallocated Corporate Expense
 

 
(19
)
Discontinued Operations of Coal Mining Business
 
 
6

Consolidated Net Loss
 

 
$
(618
)
Commitments, Contingencies and Other Items (Tables)
Schedule of Operating Leases, Future Minimum Payments Due and Unrecorded Unconditional Purchase Obligation [Table Text Block] 
Future minimum payments for the next five years under network and related right-of-way agreements and non-cancelable operating leases for facilities and other assets consist of the following as of December 31, 2011 (dollars in millions):
 
 
Right-of-Way
Agreements
 
Facilities and Other Assets
 
Total
 
Future Minimum Sublease Receipts
2012
 
$
142

 
$
268

 
$
410

 
$
13

2013
 
74

 
228

 
302

 
12

2014
 
69

 
204

 
273

 
8

2015
 
64

 
179

 
243

 
7

2016
 
59

 
134

 
193

 
6

Thereafter
 
354

 
611

 
965

 
16

Total
 
$
762

 
$
1,624

 
$
2,386

 
$
62

Schedule of long-term purchase commitments 
The following table summarizes the Company's purchase commitments at December 31, 2011 (dollars in millions):
 
 
Total
 
Less than
1 Year
 
2 - 3
Years
 
4 - 5
Years
 
After 5
Years
Cost of Access Services
 
$
222

 
$
122

 
$
93

 
$
6

 
$
1

Third-Party Maintenance Services
 
224

 
28

 
43

 
40

 
113

Total
 
$
446

 
$
150

 
$
136

 
$
46

 
$
114

Condensed Consolidating Financial Information (Tables)
Schedule of Condensed Consolidating Statements of Operations 
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
)
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
)
Condensed Consolidating Statements of Operations
For the year ended December 31, 2009

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

 
$
—

 
$
1,642

 
$
—

 
$
2,283

 
$
(230
)
 
$
3,695

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
737

 
—

 
981

 
(219
)
 
1,499

Depreciation and Amortization
—

 
—

 
412

 
—

 
494

 
—

 
906

Selling, General and Administrative
2

 
—

 
1,108

 
—

 
238

 
(11
)
 
1,337

Restructuring Charges
—

 
—

 
9

 
—

 
—

 
—

 
9

Total Costs and Expenses
2

 
—

 
2,266

 
—

 
1,713

 
(230
)
 
3,751

Operating Income (Loss)
(2
)
 
—

 
(624
)
 
—

 
570

 
—

 
(56
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
1

 
—

 
2

Interest expense
(211
)
 
(374
)
 
(2
)
 
(1
)
 
(7
)
 
—

 
(595
)
Interest income (expense) affiliates, net
795

 
1,180

 
(2,057
)
 
—

 
82

 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,242
)
 
(2,048
)
 
387

 
—

 
—

 
2,903

 
—

Other income (expense), net
42

 
—

 
4

 
—

 
(20
)
 
—

 
26

Total Other Income (Expense)
(616
)
 
(1,242
)
 
(1,667
)
 
(1
)
 
56

 
2,903

 
(567
)
Income (Loss) before Income Taxes
(618
)
 
(1,242
)
 
(2,291
)
 
(1
)
 
626

 
2,903

 
(623
)
Income Tax (Expense) Benefit
—

 
—

 
2

 
—

 
(3
)
 
—

 
(1
)
Income (Loss) from Continuing Operations
(618
)
 
(1,242
)
 
(2,289
)
 
(1
)
 
623

 
2,903

 
(624
)
Income From Discontinued Operations, Net
—

 
—

 
—

 
—

 
6

 
—

 
6

Net Income (Loss)
$
(618
)
 
$
(1,242
)
 
$
(2,289
)
 
$
(1
)
 
$
629

 
$
2,903

 
$
(618
)


Schedule of Condensed Consolidating Balance Sheets 
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 (to) affiliates
13,472

 
14,584

 
(28,092
)
 
36

 
—

 
—

Other
3

 
16

 
48

 
64

 
—

 
131

Total Current Assets
13,477

 
14,606

 
(27,366
)
 
990

 
—

 
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
)
 
$
(20,625
)
 
$
9,002

 
$
25,773

 
$
13,188

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's 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

Other
—

 
1

 
52

 
104

 
—

 
157

Total Current Liabilities
50

 
166

 
314

 
1,128

 
—

 
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 Stockholder's Equity (Deficit)
$
2,790

 
$
(3,752
)
 
$
(20,625
)
 
$
9,002

 
$
25,773

 
$
13,188

Condensed Consolidating Balance Sheets
December 31, 2010

 
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
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Restricted cash and securities
—

 
—

 
1

 
1

 
—

 
2

Receivables, less allowances for doubtful accounts
—

 
—

 
46

 
213

 
—

 
259

Due from (to) affiliates
11,927

 
11,424

 
(26,113
)
 
2,762

 
—

 
—

Other
4

 
10

 
41

 
28

 
—

 
83

Current assets of discontinued operations
—

 
—

 
—

 
12

 
—

 
12

Total Current Assets
12,104

 
11,441

 
(25,675
)
 
3,102

 
—

 
972

Property, Plant, and Equipment, net
—

 
—

 
2,937

 
2,348

 
—

 
5,285

Restricted Cash and Securities
18

 
—

 
21

 
10

 
—

 
49

Goodwill and Other Intangibles, net
—

 
—

 
543

 
1,255

 
—

 
1,798

Investment in Subsidiaries
(10,437
)
 
(17,176
)
 
3,575

 
—

 
24,038

 
—

Other Assets, net
9

 
65

 
6

 
81

 
—

 
161

NonCurrent assets of discontinued operations
—

 
—

 
—

 
90

 
—

 
90

Total Assets
$
1,694

 
$
(5,670
)
 
$
(18,593
)
 
$
6,886

 
$
24,038

 
$
8,355

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 Accounts payable
$
1

 
$
—

 
$
57

 
$
268

 
$
—

 
$
326

Current portion of long-term debt
176

 
—

 
2

 
2

 
—

 
180

Accrued payroll and employee benefits
—

 
—

 
78

 
6

 
—

 
84

Accrued interest
47

 
99

 
—

 
—

 
—

 
146

Current portion of deferred revenue
—

 
—

 
115

 
36

 
—

 
151

Other
—

 
1

 
45

 
7

 
—

 
53

Current liabilities of discontinued operations
—

 
—

 
—

 
16

 
—

 
16

Total Current Liabilities
224

 
100

 
297

 
335

 
—

 
956

Long-Term Debt, less current portion
1,612

 
4,564

 
24

 
68

 
—

 
6,268

Deferred Revenue, less current portion
—

 
—

 
673

 
63

 
—

 
736

Other Liabilities
15

 
107

 
154

 
164

 
—

 
440

NonCurrent Liabilities of Discontinued Operations
—

 
—

 
—

 
112

 
—

 
112

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
(157
)
 
(10,441
)
 
(19,741
)
 
6,144

 
24,038

 
(157
)
Total Liabilities and Stockholder's Equity (Deficit)
$
1,694

 
$
(5,670
)
 
$
(18,593
)
 
$
6,886

 
$
24,038

 
$
8,355

Schedule of Condensed Consolidating Statements of Cash Flows 
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

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2009

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Broadwing Financial Services, Inc.
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(142
)
 
$
(369
)
 
$
(154
)
 
$
—

 
$
1,011

 
$
—

 
$
346

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(121
)
 
—

 
(187
)
 
—

 
(308
)
Decrease in restricted cash and securities, net
—

 
—

 
2

 
—

 
3

 
—

 
5

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

 
—

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(119
)
 
—

 
(183
)
 
—

 
(302
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
269

 
274

 
—

 
—

 
—

 
—

 
543

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(518
)
 
(6
)
 
(1
)
 
—

 
(2
)
 
—

 
(527
)
Increase (decrease) due from affiliates, net
560

 
99

 
150

 
—

 
(809
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
311

 
367

 
149

 
—

 
(811
)
 
—

 
16

Net Cash Provided by Discontinued Operations
—

 
—

 
—

 
—

 
6

 
—

 
6

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
2

 
—

 
2

Net Change in Cash and Cash Equivalents
169

 
(2
)
 
(124
)
 
—

 
25

 
—

 
68

Cash and Cash Equivalents at Beginning of Year
67

 
10

 
555

 
—

 
136

 
—

 
768

Cash and Cash Equivalents at End of Year
$
236

 
$
8

 
$
431

 
$
—

 
$
161

 
$
—

 
$
836

Unaudited Quarterly Financial Data (Tables)
Unaudited Quarterly Financial Data
 
 
Three Months Ended
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
2011
 
2010
 
 
(dollars in millions except per share data)
Revenue
 
$
914

 
$
900

 
$
913

 
$
892

 
$
927

 
$
895

 
$
1,579

 
$
904

Gross Margin
 
557

 
529

 
566

 
534

 
585

 
542

 
919

 
552

Operating Income (Loss)
 
(3
)
 
(38
)
 
3

 
(27
)
 
7

 
(18
)
 
45

 
(5
)
Net Loss
 
(204
)
 
(236
)
 
(180
)
 
(168
)
 
(208
)
 
(164
)
 
(164
)
 
(55
)
Loss per share (Basic and Diluted)
 
$
(1.82
)
 
$
(2.15
)
 
$
(1.58
)
 
$
(1.52
)
 
$
(1.76
)
 
$
(1.48
)
 
$
(0.80
)
 
$
(0.49
)
Organization and Summary of Significant Accounting Policies (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended
Nov. 14, 2011
jointventures
Oct. 19, 2011
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
year
Dec. 31, 2010
Dec. 31, 2009
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
2 
 
 
 
 
 
 
 
 
 
 
 
 
Reverse stock split ratio (in shares)
 
15 
 
 
 
 
 
 
 
 
 
 
 
Period company may receive up front payments for services to be provided in the future (in years)
 
 
 
 
 
 
 
 
 
 
25 
 
 
USF contributions
 
 
 
 
 
 
 
 
 
 
$ 107 
$ 77 
$ 62 
Advertising expense
 
 
 
 
 
 
 
 
 
 
15 
8 
7 
Restricted cash and securities
 
 
61 
 
 
 
51 
 
 
 
61 
51 
 
Bad debt expense
 
 
 
 
 
 
 
 
 
 
6 
16 
14 
Net Loss
 
 
(164)
(208)
(180)
(204)
(55)
(164)
(168)
(236)
(756)
(622)
(618)
Basic and Diluted Loss per Share (in dollars per share)
 
 
$ (0.80)
$ (1.76)
$ (1.58)
$ (1.82)
$ (0.49)
$ (1.48)
$ (1.52)
$ (2.15)
$ (5.51)1
$ (5.62)
$ (5.68)1
Capitalized labor and related costs associated with employee and contract labor working on capital projects
 
 
 
 
 
 
 
 
 
 
87 
68 
57 
Impairment of Intangible Assets (Excluding Goodwill)
 
 
20 
 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
4 
 
 
Finite-lived intangible assets, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
12 
 
 
Deferred taxes on certain indefinite-lived intangible assets
 
 
 
 
 
 
 
 
 
 
41 
(91)
1 
Deferred Income Tax Asset, Correction Related to Indefinite Lived Intangible Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred taxes on certain indefinite-lived intangible assets
 
 
 
 
 
26 
 
 
 
 
 
 
 
Sales Revenue |
Customer Concentration Risk
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of communications revenue from top ten customers
 
 
24.00% 
 
 
 
27.00% 
 
 
 
24.00% 
27.00% 
28.00% 
Facility and Leasehold Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
10 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
40 
 
 
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
25 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
50 
 
 
Operating Equipment
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
4 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
15 
 
 
Furniture, Fixutres, Office Equipment and Other
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
2 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
7 
 
 
Expansion and improvements of communications network and customer installations
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
3 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
7 
 
 
Software development
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, average (in years)
 
 
 
 
 
 
 
 
 
 
3 
 
 
Montana
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
1 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ownership of common stock in a joint-venture (as a percent)
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Wyoming
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
1 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ownership of common stock in a joint-venture (as a percent)
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Service Life
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
 
 
 
 
 
 
 
 
 
$ 74 
 
 
Basic and Diluted Loss per Share (in dollars per share)
 
 
 
 
 
 
 
 
 
 
$ 0.54 
 
 
Service Life |
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
 
25 
12 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
50 
25 
 
Service Life |
Operating Equipment
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, maximum (in years)
 
 
 
 
 
 
 
 
 
 
15 
7 
 
Events Associated with the Amalgamation of Global Crossing (Details) (USD $)
1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 0 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended 0 Months Ended
Oct. 19, 2011
Dec. 31, 2011
Dec. 31, 2010
Oct. 4, 2011
Oct. 3, 2011
Oct. 31, 2011
Senior Secured Term Loan
Tranche B II Term Loan
Dec. 31, 2011
Senior Notes due 2019 (8.125%)
Oct. 4, 2011
Common stock
Oct. 31, 2011
Common stock
Nov. 30, 2011
Global Crossing
Dec. 31, 2011
Global Crossing
members
Nov. 4, 2011
Global Crossing
Nov. 3, 2011
Global Crossing
Oct. 4, 2011
Global Crossing
Nov. 4, 2011
Global Crossing
Amalgamation
Nov. 30, 2011
Global Crossing
12% Senior Notes due 2015
Nov. 30, 2011
Global Crossing
9% Senior Notes due 2019
Oct. 4, 2011
Global Crossing
2% Cumulative convertible preferred stock
Nov. 3, 2011
Global Crossing (UK) Finance PLC
Senior Secured Notes due 2014
Pending Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amalgamation stock exchange ratio (in shares)
 
 
 
 
 
 
 
16 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividend rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.00% 
 
Additional principal amount of debt issued
 
 
 
 
 
$ 650,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of 8.125% Senior Notes due 2019 in June and July 2011
 
 
 
 
 
 
1,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
8.125% 
 
 
 
 
 
 
 
 
12.00% 
9.00% 
 
 
Shares issued in Amalgamation transaction (in shares)
 
 
 
 
 
 
 
 
88,530,000 
 
 
 
 
 
 
 
 
 
 
Reverse stock split ratio (in shares)
15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of outstanding debt redeemed and refinanced
 
 
 
 
 
 
 
 
 
1,360,000,000 
 
 
 
 
 
 
 
 
 
Principal amount of debt redeemed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
750,000,000 
150,000,000 
 
430,000,000 
Percentage of outstanding principal redeemed (as a percent)
 
 
 
 
 
 
 
 
 
 
 
65.00% 
35.00% 
 
 
 
 
 
 
Basis spread on comparable U.S. Treasury security used to calculate make-whole prices for debt redemption
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.50% 
 
 
 
 
Closing stock price
 
 
 
 
$ 21.15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated total Amalgamation transaction consideration
 
3,400,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Paid for Employee Income and Payroll Tax Witholdings
81,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual
 
 
 
 
 
 
 
 
 
 
654,000,000 
 
 
 
 
 
 
 
 
Initial Purchase Price Allocation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, Cash Equivalents, and Restricted Cash
 
 
 
226,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, Plant, and Equipment
 
 
 
3,098,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
1,110,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Identifiable Intangibles
 
 
 
106,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Assets
 
 
 
655,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
 
 
 
5,195,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt
 
 
 
(1,554,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Liabilities
 
 
 
(1,679,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities
 
 
 
(3,233,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Estimated Consideration
 
 
 
1,962,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisition, Purchase Price Allocation, Reduction Due to Un Amortizable Deferred Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
77,000,000 
 
 
 
 
 
Pro Forma Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
6,335,000,000 
6,111,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
(727,000,000)
(825,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss per share (in dollars per share)
 
$ (3.56)
$ (4.14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related costs incurred
 
49,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related integration costs
 
$ 32,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Board members designated by ST Telemedia
 
 
 
 
 
 
 
 
 
 
3 
 
 
 
 
 
 
 
 
Loss Per Share (Details)
1 Months Ended 12 Months Ended
Oct. 19, 2011
Dec. 31, 2011
Convertible notes
Dec. 31, 2010
Convertible notes
Dec. 31, 2009
Convertible notes
Dec. 31, 2011
Stock options, restricted stock units and warrants
Dec. 31, 2010
Stock options, restricted stock units and warrants
Dec. 31, 2009
Stock options, restricted stock units and warrants
Loss per share
 
 
 
 
 
 
 
Reverse stock split ratio (in shares)
15 
 
 
 
 
 
 
Securities not included in computation of diluted loss per share (in shares)
 
39,000,000 
52,000,000 
45,000,000 
4,000,000 
3,000,000 
3,000,000 
Dispositions (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Ownership Interest in Joint Venture Surface Mines
Dec. 31, 2010
Ownership Interest in Joint Venture Surface Mines
Dec. 31, 2009
Ownership Interest in Joint Venture Surface Mines
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
 
 
 
 
 
 
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax
 
 
 
$ 72 
 
 
Revenue
 
 
 
 
60 
67 
Cost of Revenue
 
 
 
 
56 
66 
Selling, General, and Administrative Costs
 
 
 
 
0 
1 
Depreciation and Amortization
 
 
 
 
6 
9 
Total Operating Expenses
 
 
 
 
62 
76 
Operating Loss
 
 
 
 
(2)
(9)
Other Income
 
 
 
 
1 
15 
Income (Loss) From Discontinued Operations
$ 71 
$ (1)
$ 6 
 
$ (1)
$ 6 
Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Land
Dec. 31, 2010
Land
Dec. 31, 2011
Land Improvements
Dec. 31, 2010
Land Improvements
Dec. 31, 2011
Facility and Leasehold Improvements
Dec. 31, 2010
Facility and Leasehold Improvements
Dec. 31, 2011
Network infrastructure
Dec. 31, 2010
Network infrastructure
Dec. 31, 2011
Operating Equipment
Dec. 31, 2010
Operating Equipment
Dec. 31, 2011
Furniture, Fixtures and Office Equipment
Dec. 31, 2010
Furniture, Fixtures and Office Equipment
Dec. 31, 2011
Other
Dec. 31, 2010
Other
Dec. 31, 2011
Construction-in-Progress
Dec. 31, 2010
Construction-in-Progress
Dec. 31, 2011
Service Life
Dec. 31, 2011
Service Life
Property, Plant and Equipment, Net [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost
$ 15,814 
$ 12,294 
 
$ 195 
$ 160 
$ 73 
$ 73 
$ 2,089 
$ 1,898 
$ 7,931 
$ 5,630 
$ 5,253 
$ 4,322 
$ 167 
$ 145 
$ 22 
$ 22 
$ 84 
$ 44 
 
 
Accumulated Depreciation
(7,678)
(7,009)
 
0 
0 
(40)
(42)
(980)
(887)
(2,814)
(2,544)
(3,684)
(3,381)
(139)
(133)
(21)
(22)
0 
0 
 
 
Net
8,136 
5,285 
 
195 
160 
33 
31 
1,109 
1,011 
5,117 
3,086 
1,569 
941 
28 
12 
1 
0 
84 
44 
 
 
Depreciation expense
$ 706 
$ 775 
$ 814 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ (74)
$ (74)
Asset Retirement Obligations (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
 
 
Asset retirement obligation, beginning balance
$ 74 
$ 64 
Accretion expense
9 
8 
Liabilities assumed in Global Crossing acquisition
41 
0 
Liabilities settled
(2)
(5)
Revision in estimated cash flows
0 
7 
Effect of foreign currency rate change
(1)
0 
Asset retirement obligation, ending balance
121 
74 
Ownership Interest in Joint Venture Surface Mines
 
 
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
 
 
Mine Reclamation and Closing Liability
 
$ 105 
Goodwill (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Changes in carrying amount of goodwill
 
 
Balance at the beginning of the period
$ 1,427 
$ 1,429 
Goodwill acquired in Global Crossing acquisition
1,110 
 
Accumulated Impairment Losses
0 
0 
Effect of foreign currency rate change
4 
(2)
Balance at the end of the period
2,541 
1,427 
Level 3 Segment
 
 
Changes in carrying amount of goodwill
 
 
Balance at the beginning of the period
1,427 
1,429 
Goodwill acquired in Global Crossing acquisition
0 
 
Accumulated Impairment Losses
0 
0 
Effect of foreign currency rate change
0 
(2)
Balance at the end of the period
1,427 
1,427 
Global Crossing Segment
 
 
Changes in carrying amount of goodwill
 
 
Balance at the beginning of the period
0 
0 
Goodwill acquired in Global Crossing acquisition
1,110 
 
Accumulated Impairment Losses
0 
0 
Effect of foreign currency rate change
4 
0 
Balance at the end of the period
$ 1,114 
$ 0 
Acquired Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 989 
$ 989 
$ 883 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(663)
(663)
(564)
 
Finite-Lived Intangible Assets, Net
326 
326 
319 
 
Increase in amortization expense due to reduction in useful life as a result of adverse economic conditions
20 
 
 
 
Finite-Lived Intangible Assets Increase in Amortization Expense
 
 
2 
 
Acquired finite-lived intangible asset amortization expense
 
99 
95 
92 
Total Acquired Intangible Assets
 
 
 
 
Total Intangible assets, Gross Carrying Amount
1,021 
1,021 
935 
 
Total intangible assets, Net
358 
358 
371 
 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
2012
 
91 
 
 
2013
 
73 
 
 
2014
 
61 
 
 
2015
 
45 
 
 
2016
 
28 
 
 
Thereafter
 
28 
 
 
Total
 
326 
 
 
Vyvx Trade Name
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
Indefinite-Lived Intangible Assets, Net
32 
32 
32 
 
Wireless Licenses
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
Indefinite-Lived Intangible Assets, Net
 
 
20 
 
Customer Contracts and Relationships
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
776 
776 
743 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(571)
(571)
(488)
 
Finite-Lived Intangible Assets, Net
205 
205 
255 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
2.5 
 
 
Trademarks
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
55 
55 
 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(3)
(3)
 
 
Finite-Lived Intangible Assets, Net
52 
52 
 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
3.8 
 
 
Patents and Developed Technology
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
158 
158 
140 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(89)
(89)
(76)
 
Finite-Lived Intangible Assets, Net
$ 69 
$ 69 
$ 64 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
3.6 
 
 
Restructuring Charges (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2008
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
employees
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring charges
$ 12 
$ 11 
$ 2 
$ 9 
Approximate workforce reduction (in employees)
 
 
 
260 
Approximate workforce reduction as a percentage of Company's total employee base
 
 
 
5.00% 
Benefit (loss) recognized as a result of lease modification
 
3 
5 
(1)
Employee Severance
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring charges
 
10 
 
9 
Payments for restructuring
 
 
 
21 
Accrued contract termination costs
 
5 
 
 
Contract Termination
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Accrued contract termination costs
 
43 
30 
 
Global Crossing |
Contract Termination
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Accrued contract termination costs
 
$ 18 
 
 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Fair Value Disclosures [Abstract]
 
 
Carrying value of long-term debt, including current portion
$ 8,450 
$ 6,448 
Recurring basis |
Total Carrying Value in Consolidated Balance Sheet
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
90 
108 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
90 
108 
Long-term Debt, including the current portion:
 
 
Senior Notes
4,716 
2,885 
Convertible Notes
939 
1,788 
Term Loans
2,567 
1,679 
Commercial Mortgage
65 
67 
Capital Leases and Other
163 
29 
Total Long-term Debt, including the current portion:
8,450 
6,448 
Recurring basis |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
0 
0 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
0 
0 
Long-term Debt, including the current portion:
 
 
Senior Notes
4,822 
2,789 
Convertible Notes
247 
697 
Term Loans
2,518 
1,632 
Commercial Mortgage
0 
0 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
7,587 
5,118 
Recurring basis |
Significant Other Observable Inputs (Level 2)
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
90 
108 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
90 
108 
Long-term Debt, including the current portion:
 
 
Senior Notes
0 
0 
Convertible Notes
834 
1,189 
Term Loans
0 
0 
Commercial Mortgage
73 
79 
Capital Leases and Other
163 
29 
Total Long-term Debt, including the current portion:
$ 1,070 
$ 1,297 
Fair Value of Financial Instruments - Liabilities, Non Recurring (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2011
Senior Notes
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2011
Not actively traded convertible notes
Dec. 31, 2011
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2011
Term Loans
Dec. 31, 2011
Tranche A Term Loan
Dec. 31, 2011
Tranche B Term Loan
Dec. 31, 2011
Tranche B II Term Loan
Dec. 31, 2011
Tranche B III Term Loan
Dec. 31, 2011
Commercial Mortgages
Dec. 31, 2010
Commercial Mortgages
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Term Loans
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Term Loans
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Commercial Mortgages
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Commercial Mortgages
Dec. 31, 2011
Fair Value, Measurements, Recurring [Member]
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Dec. 31, 2010
Fair Value, Measurements, Recurring [Member]
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Liabilities measured on a recurring basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 4,800 
$ 2,800 
Basis of interest rate on debt
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
LIBOR 
LIBOR 
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
Interest spread on debt, low end of range
2.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest spread on debt, high end of range
11.875% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400 
280 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of commercial mortgage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
73 
79 
 
 
Carrying value of long term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65 
67 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, lowest interest rate
 
 
 
 
 
 
 
 
7.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, highest interest rate
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,500 
1,600 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
11.875% 
9.375% 
3.50% 
6.50% 
5.25% 
5.25% 
5.25% 
 
7.00% 
7.00% 
15.00% 
9.00% 
9.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 247 
$ 697 
$ 834 
$ 1,200 
 
 
 
 
 
 
Interest spread on debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.25% 
8.50% 
4.25% 
4.25% 
 
 
 
 
 
 
 
 
 
 
 
 
Basis floor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
1.50% 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
Collateral for debt, Equity interest in Level 3 Financing, Inc's Canadian subsidiary (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 1 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Cash Flow Hedging
Dec. 31, 2011
Other noncurrent liabilities
Dec. 31, 2010
Other noncurrent liabilities
Dec. 31, 2011
Interest Expense
Dec. 31, 2010
Interest Expense
Dec. 31, 2011
Interest Rate Swap
Mar. 31, 2007
Level 3 Financing, Inc.
derivatives
Mar. 31, 2007
Level 3 Financing, Inc.
Interest Rate Swap, Agreement One
Mar. 31, 2007
Level 3 Financing, Inc.
Interest Rate Swap, Agreement Two
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Notional Amount of Interest Rate Cash Flow Hedge Derivatives
$ 1,000 
 
 
 
 
 
 
 
 
$ 1,000 
$ 500 
$ 500 
Basis of interest payment
 
 
 
 
 
 
 
 
 
LIBOR 
three month LIBOR 
three month LIBOR 
Fixed interest rate paid under agreement (as a percent)
 
 
 
 
 
 
 
 
 
 
4.93% 
4.92% 
Interest Rate Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps, Number of Instruments
 
 
 
2 
 
 
 
 
 
2 
 
 
Fair value, Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts
 
 
 
 
90 
108 
 
 
 
 
 
 
Amount of gains (losses) recognized in Other Comprehensive Loss, Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts
18 
(16)
 
 
 
 
 
 
 
 
 
 
Amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions), Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts - Interest Expense
 
 
 
 
 
 
46 
46 
 
 
 
 
Net losses on the interest rate swaps that will be reclassified into earnings during the next twelve months
 
 
 
 
 
 
 
 
46 
 
 
 
Embedded equity conversion rights located in Other Income (Expense) - Other, net
$ 0 
$ 10 
$ 14 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Senior Secured Term Loan
Tranche-B III Term Loan Five Hundred Fifty Million Dollars
Dec. 31, 2011
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Other
Dec. 31, 2010
Other
Dec. 31, 2011
Embedded derivative contracts
Dec. 31, 2010
Embedded derivative contracts
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-A Term Loan One Billion Dollars
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche-A Term Loan One Billion Dollars
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche A Term Loan ($400 million)
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche A Term Loan ($400 million)
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-B II Term Loan Six Hundred Fifty Million Dollars
Oct. 4, 2011
Term Loans
Senior Secured Term Loan
Tranche-B II Term Loan Six Hundred Fifty Million Dollars
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-B III Term Loan Five Hundred Fifty Million Dollars
Dec. 31, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2010
Senior Notes
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2011
Senior Notes
Senior Notes due 2017 (8.75%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2017 (8.75%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2018 (10.0%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2018 (10.0%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (11.875%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (9.375%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (8.125%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2011
Convertible Senior Notes
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2010
Convertible Senior Notes
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2010
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Sep. 30, 2005
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2011
Capital Leases
Dec. 31, 2010
Capital Leases
Dec. 31, 2011
Global Crossing
Dec. 31, 2011
Global Crossing
Capital Leases
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
$ 8,528 
$ 6,527 
 
 
 
 
 
 
 
 
 
 
 
$ 272 
 
 
 
 
 
$ 32 
$ 0 
 
 
$ 2,600 1
$ 1,680 1
$ 1,000 
 
$ 400 
 
$ 280 
 
$ 650 
 
$ 550 
$ 807 
$ 1,250 
 
$ 300 
$ 300 
$ 700 
$ 700 
$ 640 
$ 640 
$ 605 
$ 0 
$ 500 
$ 0 
$ 1,200 
$ 0 
$ 0 
$ 196 
$ 0 
$ 294 
$ 272 
$ 400 
$ 0 
$ 295 
$ 200 
$ 200 
$ 275 
$ 275 
$ 201 
$ 201 
$ 65 
$ 67 
 
$ 131 
$ 29 
$ 32 
$ 104 
Total Unamortized (Discount) Premium
(78)
(79)
(28)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7)
(21)
(33)
(1)
 
 
 
 
 
 
 
(7)
 
3 
7 
11 
 
 
 
 
(11)
(12)
(10)
0 
(9)
0 
(9)
0 
0 
(20)
0 
(29)
 
 
 
 
(2)
(3)
 
 
 
 
 
 
 
 
 
 
 
Carrying Value of Debt
8,450 
6,448 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current portion
(65)
(180)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt, less current portion
$ 8,385 
$ 6,268 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
9.25% 
 
11.875% 
9.375% 
8.125% 
5.25% 
5.25% 
5.25% 
3.50% 
15.00% 
 
9.00% 
9.00% 
7.00% 
7.00% 
6.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.25% 
 
 
 
 
8.75% 
 
10.00% 
 
11.875% 
 
9.375% 
 
8.125% 
 
5.25% 
 
3.50% 
 
15.00% 
 
9.00% 
 
7.00% 
 
7.00% 
 
6.50% 
 
9.86% 
 
6.86% 
 
 
 
 
Debt instrument, effective interest rate at end of period (as a percent)
 
 
 
 
4.202% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.65% 
2.54% 
 
2.54% 
 
11.50% 
5.75% 
 
5.75% 
 
 
 
4.202% 
4.344% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate During Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.41% 
 
Long-Term Debt - Textuals (Details) (USD $)
0 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended
Jun. 26, 2009
Dec. 31, 2008
Feb. 14, 2007
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Senior Secured Term Loan
Jun. 30, 2009
Senior Secured Term Loan
Mar. 13, 2007
Senior Secured Term Loan
Tranche A Term Loan
Dec. 31, 2011
Senior Secured Term Loan
Tranche-A Term Loan One Billion Dollars
Dec. 31, 2011
Senior Secured Term Loan
Tranche A Term Loan ($400 million)
Dec. 31, 2011
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2010
Senior Secured Term Loan
Tranche B Term Loan
Jun. 30, 2009
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2011
Senior Secured Term Loan
Tranche-B II Term Loan Six Hundred Fifty Million Dollars
Dec. 31, 2011
Senior Secured Term Loan
Tranche-B III Term Loan Five Hundred Fifty Million Dollars
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Mar. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Senior Notes due 2019 (8.125%)
days
Oct. 4, 2011
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
days
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2015
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2016
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2017
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Prior To February 2015
Mar. 31, 2011
Convertible Senior Notes (5.25%) and Convertible Senior Discount Notes (9.0%)
Dec. 31, 2008
Convertible Senior Notes due 2013 (15.0%)
Dec. 24, 2008
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2008
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
days
Sep. 20, 2010
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2010
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2010
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Jan. 20, 2010
Senior Notes due 2018 (10.0%)
Dec. 31, 2011
Senior Notes due 2018 (10.0%)
Jun. 26, 2009
2.875% Convertible Senior Notes due 2010
Sep. 30, 2010
2.875% Convertible Senior Notes due 2010
Mar. 31, 2010
2.875% Convertible Senior Notes due 2010
Jun. 30, 2010
10% Convertible Senior Notes due 2011
Jun. 26, 2009
6% Convertible Subordinated Notes due 2010
Mar. 31, 2010
6% Convertible Subordinated Notes due 2010
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
10.75% Senior Notes due 2011
Mar. 31, 2010
Convertible Senior Notes (5.25%), Senior Notes (10.75%), and Convertible Senior Notes (2.875%)
Jun. 30, 2011
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes due 2014 (9.25%)
Jun. 30, 2009
Senior Secured Term Loan 2011 [Member]
Dec. 31, 2011
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Oct. 15, 2009
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 (7.0%)
Jun. 26, 2009
Convertible Senior Notes due 2015 (7.0%)
Jul. 31, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
Jun. 30, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
days
offering
Dec. 31, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2015
Dec. 31, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2016
Dec. 31, 2011
Level 3 Escrow Inc [Member]
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2017
Dec. 31, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (9.375%)
Mar. 4, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (9.375%)
Jan. 31, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (11.875%)
Feb. 14, 2007
Company and its subsidiary, Level 3 Financing Inc.
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Feb. 14, 2007
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2017 (8.75%)
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (8.125%)
days
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (8.125%)
Prior To July 2015
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (8.125%)
Prior to February 15, 2012
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (9.375%)
days
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (9.375%)
Twelve Months Beginning April 1, 2015
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (9.375%)
Twelve Months Beginning April 1, 2016
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (9.375%)
Twelve Months Beginning April 1, 2017
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2019 (9.375%)
Prior to April 2015
Mar. 31, 2010
Level 3 Financing, Inc.
Senior Notes due 2018 (10.0%)
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2018 (10.0%)
Mar. 31, 2010
Level 3 Financing, Inc.
12.25% Senior Notes
Dec. 31, 2011
Level 3 Financing, Inc.
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Feb. 14, 2007
Level 3 Financing, Inc.
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Sep. 30, 2011
Level 3 Financing, Inc.
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Twelve Months Beginning February 15, 2011
Dec. 31, 2011
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
days
Feb. 14, 2007
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
Sep. 30, 2011
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
Twelve Months Beginning February 15, 2012
Sep. 30, 2011
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
Twelve Months Beginning February 15, 2013
Sep. 30, 2011
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
Twelve Months Beginning February 15, 2014
Sep. 30, 2011
Level 3 Financing, Inc.
Senior Notes due 2017 (8.75%)
Twelve Months Beginning February 15, 2015
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-A Term Loan One Billion Dollars
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche-A Term Loan One Billion Dollars
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche A Term Loan ($400 million)
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche A Term Loan ($400 million)
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2010
Term Loans
Senior Secured Term Loan
Tranche B Term Loan
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-B II Term Loan Six Hundred Fifty Million Dollars
Oct. 4, 2011
Term Loans
Senior Secured Term Loan
Tranche-B II Term Loan Six Hundred Fifty Million Dollars
Dec. 31, 2011
Term Loans
Senior Secured Term Loan
Tranche-B III Term Loan Five Hundred Fifty Million Dollars
Dec. 31, 2011
Convertible notes
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2010
Convertible notes
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible notes
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2010
Convertible notes
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible notes
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2010
Convertible notes
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Convertible notes
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2010
Convertible notes
Convertible Senior Notes due 2011 (5.25%)
Dec. 31, 2011
Convertible notes
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2010
Convertible notes
Convertible Senior Discount Notes due 2013 (9.0%)
Dec. 31, 2011
Convertible notes
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2010
Convertible notes
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (8.125%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (9.375%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2019 (11.875%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2018 (10.0%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2018 (10.0%)
Dec. 13, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Oct. 30, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Twelve Months Beginning November 1, 2011
Dec. 31, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Twelve Months Beginning November 1, 2012
Dec. 31, 2011
Senior Notes
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2010
Senior Notes
Floating Rate Senior Notes due 2015 (4.202% as of December 31, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2011
Senior Notes
Senior Notes due 2017 (8.75%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2017 (8.75%)
Sep. 30, 2005
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2011
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2010
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2011
Capital Leases
Dec. 31, 2010
Capital Leases
Sep. 30, 2011
Maximum
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Maximum
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2010
Maximum
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Global Crossing
Dec. 31, 2011
Global Crossing
Capital Leases
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt, Weighted Average Interest Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.00% 
 
 
 
 
 
9.47% 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.50% 
8.125% 
 
9.375% 
11.875% 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
6.50% 
 
 
 
2.875% 
2.875% 
10.00% 
 
6.00% 
5.25% 
5.25% 
5.25% 
10.75% 
 
 
9.25% 
 
 
9.00% 
9.00% 
 
7.00% 
 
 
 
 
 
 
 
9.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.00% 
12.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.50% 
 
15.00% 
 
6.50% 
 
5.25% 
 
9.00% 
 
7.00% 
 
8.125% 
 
9.375% 
 
11.875% 
 
10.00% 
 
 
 
 
9.25% 
 
 
 
 
 
8.75% 
 
6.86% 
9.86% 
 
 
 
 
 
 
 
 
Additional principal amount of debt issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 550,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 400,000,000 
 
 
 
 
$ 175,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 275,000,000 
 
 
$ 600,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 650,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price of debt instrument (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
95.00% 
98.875% 
 
 
 
 
 
 
105.938% 
102.969% 
100.00% 
100.00% 
 
 
 
100.00% 
 
100.00% 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
100.75% 
 
 
 
 
104.625% 
 
 
 
 
 
 
100.00% 
 
98.545% 
99.264% 
 
104.063% 
102.031% 
100.00% 
 
 
98.173% 
 
 
 
100.00% 
100.00% 
 
104.688% 
102.344% 
100.00% 
100.00% 
 
 
106.125% 
 
 
100.00% 
 
 
104.375% 
102.917% 
101.458% 
100.00% 
 
 
 
 
 
 
 
 
99.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102.213% 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount on long-term debt
 
 
 
(78,000,000)
 
 
 
 
 
(78,000,000)
(79,000,000)
 
 
 
 
 
 
 
 
 
 
(28,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(9,000,000)
(4,000,000)
 
 
 
 
 
(10,000,000)
(11,000,000)
 
 
 
 
 
 
 
 
 
 
(13,000,000)
 
 
 
 
 
 
 
 
 
 
 
(33,000,000)
(1,000,000)
 
 
 
 
 
 
 
(7,000,000)
 
0 
(29,000,000)
 
 
 
 
0 
(20,000,000)
 
 
(2,000,000)
(3,000,000)
(9,000,000)
0 
(9,000,000)
0 
(10,000,000)
0 
(11,000,000)
(12,000,000)
 
 
11,000,000 
3,000,000 
7,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest spread on debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.25% 
 
 
 
 
8.50% 
4.25% 
4.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, effective interest rate at end of period (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.202% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.65% 
2.54% 
 
2.54% 
 
11.50% 
5.75% 
 
5.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.202% 
4.344% 
 
 
 
 
 
 
 
 
 
 
 
 
Basis floor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
1.50% 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of Long-term Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
730,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
280,000,000 
 
 
 
 
274,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
22,000,000 
 
 
 
 
 
 
 
 
 
 
 
31,000,000 
32,000,000 
 
7,000,000 
 
 
 
 
 
3,000,000 
 
3,000,000 
 
 
6,000,000 
 
6,000,000 
5,000,000 
 
12,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
4,000,000 
 
 
 
 
 
 
10,000,000 
11,000,000 
8,000,000 
 
 
 
 
 
 
 
 
 
 
14,000,000 
 
 
3,000,000 
6,000,000 
 
10,000,000 
16,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
14,000,000 
 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,000,000 
 
7,000,000 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
1,000,000 
 
 
 
Principal amount of notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400,000,000 
1,000,000,000 
400,000,000 
280,000,000 
 
280,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,000,000 
 
 
640,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
200,000,000 
 
600,000,000 
 
 
 
 
 
500,000,000 
605,000,000 
300,000,000 
700,000,000 
 
 
 
 
 
 
 
 
640,000,000 
 
550,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
650,000,000 
600,000,000 
 
 
 
 
 
 
 
 
 
70,000,000 
 
 
 
 
 
 
 
 
 
Number of separate debt issuance transactions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishments of debt, net
 
 
 
(27,000,000)
(30,000,000)
(23,000,000)
(20,000,000)
4,000,000 
55,000,000 
100,000,000 
59,000,000 
(14,000,000)
 
 
 
 
 
 
 
 
 
 
 
12,000,000 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,000,000 
 
 
 
 
 
 
 
23,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
Principal amount of debt extinguished
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000,000 
172,000,000 
 
 
196,000,000 
3,000,000 
 
3,000,000 
 
443,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt retired in exchange transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
128,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
295,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued upon conversion (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares converted for each $1000 principal amount (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37 
 
37 
37 
 
54 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount used for conversion of debt instrument
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
1,000 
1,000 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment of interest expense from conversion till maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expenses paid for each $1000 principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, Gross
 
 
 
8,528,000,000 
 
 
 
 
 
8,528,000,000 
6,527,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
272,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,600,000,000 1
1,680,000,000 1
1,000,000,000 
 
400,000,000 
 
280,000,000 
 
650,000,000 
 
550,000,000 
0 
294,000,000 
272,000,000 
400,000,000 
201,000,000 
201,000,000 
0 
196,000,000 
0 
295,000,000 
200,000,000 
200,000,000 
1,200,000,000 
0 
500,000,000 
0 
605,000,000 
0 
640,000,000 
640,000,000 
 
 
 
807,000,000 
1,250,000,000 
 
 
300,000,000 
300,000,000 
700,000,000 
700,000,000 
 
65,000,000 
67,000,000 
131,000,000 
29,000,000 
 
 
 
32,000,000 
104,000,000 
Net proceeds from issuance of notes after deducting debt issuance costs
 
 
982,000,000 
 
 
 
 
 
 
1,878,000,000 
808,000,000 
543,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,000,000 
374,000,000 
 
 
 
 
25,500,000 
170,000,000 
 
613,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
613,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
661,000,000 
588,000,000 
1,239,000,000 
 
 
 
 
 
 
 
 
66,000,000 
 
 
 
 
 
 
 
 
 
Debt Instrument, Transaction Costs from Issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
Redemption price of debt instrument for each $1000 principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,016.70 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,080 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount used for ratio of debt instrument redemption price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portion of redemption price for each $1000 principal amount of debt instrument offered as consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,050 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portion of redemption price for each $1000 principal amount of debt instrument offered as a consent payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of the holders which participated in the tender offer as a percentage of the debt instrument's aggregate principal amount outstanding (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99.40% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of debt extinguished through tender offer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
547,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt repayments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38,000,000 
 
 
 
111,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price, low end of range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
95.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price, high end of range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on repurchase of debt instrument, less than
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Applicable Premium, Percent of Principal Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Applicable Premium, Percent of Principal Amount Used to Calculate Present Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
104.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Unamortized Discount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000 
 
 
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,000,000 
11,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
27,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments of Debt Issuance Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Applicable Premium, Basis Spread Adjustment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum percentage of the principal amount of the debt instrument which the entity may redeem with the proceeds from certain equity offerings on or prior to April 1, 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price of the debt instrument if redeemed with the proceeds of certain equity offerings on or prior to 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111.875% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108.125% 
 
 
 
 
 
 
 
 
 
 
 
109.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum aggregate gross proceeds received from equity offering necessary to be used for redemption of debt instrument
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum percentage of the principal amount of the debt instrument which must remain outstanding after the entity has redeemed a portion of the debt instrument with the proceeds from certain equity offerings on or prior to April 1, 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum redemption period for the entity to redeem the debt instrument following the receipt of cash proceeds from certain equity offerings on or prior to April 1, 2014 (in number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum number of days' notice that the entity must provide for the redemption of the debt instrument (in number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
30 
 
 
30 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of days' notice that the entity must provide for the redemption of the debt instrument (in number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
60 
 
 
60 
 
 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument issuance price as a percentage of the principal amount (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98.001% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Effective Yield
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.86% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum number of private placement equity offerings necessary for proceeds to be used for debt redemption
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of days following issuance of debt for declaration of registration statement to be declared effective (in days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
270 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum special interest on principal amount that could be transferred to the initial purchasers in the event of a Registration Default (percent per annum)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Convertible, Conversion Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 27 
 
$ 27 
 
 
 
 
 
$ 18.525 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 27.00 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Minimum Number of Days Stock Exceeds Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Convertible, Common Stock Ratio Triggering Debt Conversion
 
2.222 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Period Used to Determine if Conversion is to Occur
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Increase (Decrease), Other, Net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
140,000,000 
 
 
 
142,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of Convertible Debt
78,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Cash and Cash Equivalents, Current
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,000,000 
 
 
 
 
 
 
 
 
Future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
 
 
65,000,000 
 
 
 
 
 
65,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
313,000,000 
 
 
 
 
 
313,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
2,232,000,000 
 
 
 
 
 
2,232,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
838,000,000 
 
 
 
 
 
838,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
207,000,000 
 
 
 
 
 
207,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
4,873,000,000 
 
 
 
 
 
4,873,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
 
 
 
8,528,000,000 
 
 
 
 
 
8,528,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net carrying amount of liability component
 
 
 
$ 8,450,000,000 
 
 
 
 
 
$ 8,450,000,000 
$ 6,448,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Benefit Benefits and Stock-Based Compensation - Non-cash compensation expensed and capitalized (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Stock-based compensation expense
 
 
 
Stock- based compensation expense
$ 102 
$ 68 
$ 60 
Capitalized Noncash Compensation
(1)
(1)
(1)
Non-cash compensation expense
101 
67 
59 
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost
12 
8 
5 
Outperform Stock Options
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
10 
10 
7 
Restricted Stock Units and Shares
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
22 
19 
23 
401(k) Match Expense
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
13 
11 
16 
Restricted Stock Unit Bonus Grant
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
$ 57 
$ 28 
$ 14 
Employee Benefit Benefits and Stock-Based Compensation - Outperform Stock Options (Details) (USD $)
12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2011
Outperform Stock Options
year
Dec. 31, 2010
Outperform Stock Options
year
Dec. 31, 2009
Outperform Stock Options
year
Dec. 31, 2011
Outperform Stock Options
Dec. 31, 2011
Non Qualified Stock Options
year
Dec. 31, 2010
Non Qualified Stock Options
Dec. 31, 2011
0% of Less
Outperform Stock Options
Dec. 31, 2011
More than 0% but Less than 11%
Outperform Stock Options
Dec. 31, 2011
11% or More
Outperform Stock Options
Dec. 31, 2011
S and P 500 Index
Outperform Stock Options
Dec. 31, 2010
S and P 500 Index
Outperform Stock Options
Dec. 31, 2009
S and P 500 Index
Outperform Stock Options
Dec. 31, 2011
Level 3 Communications, Inc.
Outperform Stock Options
Dec. 31, 2010
Level 3 Communications, Inc.
Outperform Stock Options
Dec. 31, 2009
Level 3 Communications, Inc.
Outperform Stock Options
Mar. 31, 2007
Prior to March 31, 2007
Outperform Stock Options
Dec. 31, 2011
Prior to March 31, 2007
Outperform Stock Options
Dec. 31, 2011
On or After April 1, 2007
Outperform Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OSO units Outstanding, Weighted Average Remaining Life (in years)
 
 
 
 
2.2 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Qualifier to S&P 500, Minimum
 
 
 
 
 
 
 
0.00% 
11.00% 
 
 
 
 
 
 
 
 
 
Performance Qualifier to S&P 500, Maximum
 
 
 
 
 
 
0.00% 
11.00% 
 
 
 
 
 
 
 
 
 
 
Multiplier of Performance Qualifer to S&P 500
 
 
 
 
 
 
 
0.36 
 
 
 
 
 
 
 
 
 
 
Success multiplier
 
 
 
 
 
 
0.00 
 
4.00 
 
 
 
 
 
 
 
 
 
Award vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 years 
3 years 
Life of award
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
3 years 
Percent vested after one year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
50.00% 
 
Percent vested during second year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
Quarterly vesting percent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.50% 
12.50% 
 
Percent vested after three years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
Unamortized compensation expense
$ 9,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average period over which unamortized compensation cost will be recognized (in years)
1.9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected Dividend Yield Rate
1.83% 
2.00% 
3.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected Life (in years)
3 
3 
3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected volatility rate
 
 
 
 
 
 
 
 
 
30.00% 
30.00% 
26.00% 
44.00% 
51.00% 
45.00% 
 
 
 
Expected Correlation Factor
39.00% 
40.00% 
46.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Theoretical Value
120.00% 
132.00% 
119.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Forfeiture Rate
20.00% 
20.00% 
20.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of OSO units awarded
12,000,000 
10,000,000 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding, beginning (in shares)
1,056,392 
1,056,627 
1,053,818 
 
765,585 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options granted (in shares)
498,618 
511,082 
477,835 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options forfeited (in shares)
(96,174)
(117,362)
(154,731)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options expired (in shares)
(140,655)
(393,955)
(320,295)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised (in shares)
(29,469)
 
 
 
(167,395)
 
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding, ending (in shares)
1,288,712 
1,056,392 
1,056,627 
 
598,190 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Beginning, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 10.50 
$ 10.50 
$ 14.10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Beginning, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 51.60 
$ 91.50 
$ 91.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Beginning, Weighted Average Initial Strike Price (in dollars per share)
$ 22.05 
$ 44.25 
$ 58.50 
 
$ 10.82 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Beginning, Aggregate Intrinsic Value
0 
5,200,000 
0 
1,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Beginning, Average Remaining Contractual Term (in years)
1.73 
1.55 
1.56 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options granted, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 14.70 
$ 14.10 
$ 10.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options granted, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 36.60 
$ 24.30 
$ 22.65 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options granted, Weighted Average Initial Strike Price (in dollars per share)
$ 23.96 
$ 19.50 
$ 17.25 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options forfeited, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 10.50 
$ 10.50 
$ 10.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options forfeited, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 51.60 
$ 91.50 
$ 91.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options forfeited, Weighted Average Initial Strike Price (in dollars per share)
$ 22.36 
$ 25.80 
$ 48.75 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options expired, Initial Strke Price Per Unit, Minimum (in dollars per share)
$ 31.80 
$ 45.45 
$ 30.45 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options expired, Initial Strke Price Per Unit, Maximum (in dollars per share)
$ 51.60 
$ 91.50 
$ 80.85 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options expired, Weighted Average Initial Strike Price (in dollars per share)
$ 44.64 
$ 76.95 
$ 48.45 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 14.10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 15.75 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised, Weighted Average Initial Strike Price (in dollars per share)
$ 14.93 
 
 
 
$ 10.93 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Ending, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 10.50 
$ 10.50 
$ 10.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Ending, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 36.60 
$ 51.60 
$ 91.50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Ending, Weighted Average Initial Strike Price (in dollars per share)
$ 20.51 
$ 22.05 
$ 44.25 
 
$ 10.79 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options, Ending, Average Remaining Contractual Term (in years)
1.53 
1.73 
1.55 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable, Outstanding (in shares)
0 
 
219,920 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable, Initial Strike Price Per Unit, Minimum (in dollars per share)
 
 
$ 66.60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable, Initial Strike Price Per Unit, Maximum (in dollars per share)
 
 
$ 80.85 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable, Weighted Average Initial Strike Price (in dollars per share)
$ 0.00 
$ 0.00 
$ 75.15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value
0 
0.00 
0.00 
 
4,000,000 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Total realized value of OSO units
400,000 
0 
0 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued upon exercise of OSO units
13,742 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Service Share-based Compensation, Cash Received from Exercise of Stock Options
 
 
 
 
$ 2,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Benefit Benefits and Stock-Based Compensation - Range of OSO Exercise Prices (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Outperform Stock Options
year
Dec. 31, 2010
Outperform Stock Options
year
Dec. 31, 2009
Outperform Stock Options
year
Dec. 31, 2008
Outperform Stock Options
year
Dec. 31, 2011
Outperform Stock Options
Range, 10.50 to $15.00
year
Dec. 31, 2011
Outperform Stock Options
Range, $16.05 to $23.85
year
Dec. 31, 2011
Outperform Stock Options
Range, $24.30 to $36.60
year
Dec. 31, 2011
Non Qualified Stock Options
year
Oct. 4, 2011
Non Qualified Stock Options
Dec. 31, 2011
Non Qualified Stock Options
Range, $9.53
year
Dec. 31, 2011
Non Qualified Stock Options
Range, $14.43
year
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Shares to Be Issued
0 
 
 
 
 
 
 
 
 
 
 
OSO units Outstanding, Range of Exercise Prices, Minimum (in dollars per share)
 
 
 
 
$ 10.50 
$ 16.05 
$ 24.30 
 
 
 
 
OSO units Outstanding, Range of Exercise Prices, Maximum (in dollars per share)
 
 
 
 
$ 15.00 
$ 23.85 
$ 36.60 
 
 
 
 
OSO units Outstanding, Number Outstanding (in shares)
1,288,712 
 
 
 
316,013 
739,634 
233,065 
598,190 
 
444,384 
153,806 
OSO units Outstanding, Average Remaining Contractual Term
1.53 
1.73 
1.55 
1.56 
 
 
 
 
 
 
 
OSO units Outstanding, Weighted Average Initial Strike Price (in dollars per share)
$ 20.51 
$ 22.05 
$ 44.25 
$ 58.50 
 
 
 
$ 10.79 
$ 10.82 
 
 
OSO units Outstanding, Weighted Average Remaining Life (in years)
 
 
 
 
1.42 
1.45 
1.91 
2.2 
 
1.9 
3.0 
OSO units Outstanding, Weighted Average Initial Strike Price (in dollars per share)
 
 
 
 
$ 14.02 
$ 20.06 
$ 30.73 
$ 10.79 
 
$ 9.53 
$ 14.43 
OSO units Exercisable, Number Exercisable (in shares)
0 
 
 
 
0 
0 
0 
598,190 
 
444,384 
153,806 
OSO units Exercisable, Weighted Average Initial Strike Price (in dollars per share)
 
 
 
 
$ 0.00 
$ 0.00 
$ 0.00 
$ 10.79 
 
$ 9.53 
$ 14.43 
Employee Benefit Benefits and Stock-Based Compensation - Restricted Stock and Units (Details) (Restricted Stock Units and Shares, USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
year
Dec. 31, 2010
Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Restrictions on transfer lapse, minimum (in years)
1 
 
 
Restrictions on transfer lapse, maximum (in years)
4 
 
 
Fair value of units and shares awarded
$ 35 
$ 21 
$ 16 
Unamortized compensation expense
21 
 
 
Weighted average period over which unamortized compensation cost will be recognized (in years)
3.00 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
 
 
 
Nonvested, Beginning balance (in shares)
2,021,707 
1,595,245 
1,742,253 
Stock and units granted (in shares)
1,030,676 
1,182,353 
907,913 
Lapse of restrictions (in shares)
(845,717)
(594,580)
(790,289)
Stock and units forfeited (in shares)
(175,883)
(161,311)
(264,632)
Nonvested, Ending balance (in shares)
2,030,783 
2,021,707 
1,595,245 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
 
 
 
Nonvested, Beginning balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 22.95 
$ 33.30 
$ 48.90 
Stock and units granted, Weighted Average Grant Date Fair Value (in dollars per share)
$ 33.99 
$ 17.55 
$ 17.25 
Lapse of restrictions, Weighted Average Grant Date Fair Value (in dollars per share)
$ 27.79 
$ 38.70 
$ 46.65 
Stock and units forfeited, Weighted Average Grant Date Fair Value (in dollars per share)
$ 27.06 
$ 26.55 
$ 41.10 
Nonvested, Ending balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 26.25 
$ 22.95 
$ 33.30 
Total fair value of restricted stock and restricted stock units whose restriction lapsed
$ 24 
$ 23 
$ 37 
Restricted Stock Unit Bonus Grant
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
 
 
 
Restricted stock units and shares that have been or will be award in first quarter of subsequent fiscal year (in shares)
 
2,000,000 
1,000,000 
Employee Benefit Benefits and Stock-Based Compensation - Warrants (Details) (USD $)
Dec. 31, 2011
Class of Warrant or Right [Line Items]
 
Warrants outstanding (in shares)
45,593 
Warrants outstanding, exercise price (in dollars per share)
$ 73.50 
Employee Benefit Benefits and Stock-Based Compensation - Defined Contribution (Details) (401(k) Match Expense, USD $)
12 Months Ended 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
year
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Prior to March 6, 2009
Dec. 31, 2011
After March 6, 2009
Dec. 31, 2011
After January 1, 2012
Dec. 31, 2011
Global Crossing Limited Employees' Retirement Savings Plan
Global Crossing
Dec. 31, 2011
All Other Defined Contribution
Global Crossing
Dec. 31, 2011
First One Percent
Global Crossing Limited Employees' Retirement Savings Plan
Global Crossing
Dec. 31, 2011
Next Five Percent
Global Crossing Limited Employees' Retirement Savings Plan
Global Crossing
Schedule of Defined Contribution Plans Disclosures [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Defined Contribution Plan, Maximum Annual Contribution Per Employee
$ 17,000 
$ 16,500 
 
 
 
 
 
 
 
 
 
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percentage
 
 
 
 
100.00% 
100.00% 
100.00% 
 
 
100.00% 
50.00% 
Defined Contribution Plan, Employer Matching Contribution, Percentage
 
 
 
 
7.00% 
3.00% 
4.00% 
 
 
1.00% 
5.00% 
Defined Contribution Plan, Vesting Period (in years)
 
3 
 
 
 
 
 
 
 
 
 
Defined Contribution Plan, Vesting Percentage After Vesting Period
 
100.00% 
 
 
 
 
 
 
 
 
 
Defined Contribution Plan, Cost Recognized
 
$ 13,000,000 
$ 11,000,000 
$ 16,000,000 
 
 
 
$ 1,000,000 
$ 2,000,000 
 
 
Employee Benefit Benefits and Stock-Based Compensation - Pension Benefits (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
 
 
Defined Benefit Plan, Fair Value of Plan Assets
$ 137 
$ 39 
Defined Benefit Plan, Benefit Obligation
152 
57 
Defined Benefit Plan, Funded Status of Plan
15 
18 
Attributable to Company
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Defined Benefit Plan, Allocation of Pension Costs
60.00% 
 
Defined Benefit Plan, Funded Status of Plan
10 
 
Attributable to Employees
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Defined Benefit Plan, Allocation of Pension Costs
40.00% 
 
Defined Benefit Plan, Funded Status of Plan
$ 5 
 
Employee Benefit Benefits and Stock-Based Compensation - Annual Discretionary Bonus Grant (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
 
 
 
Accrued Bonuses, Current
$ 59 
$ 32 
$ 136 
Expected Percent of Bonus Paid in Cash
 
 
40.00% 
Cash Payments for Employee Bonus
29 
19 
 
Global Crossing
 
 
 
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
 
 
 
Accrued Bonuses, Current
 
 
$ 32 
Income Taxes - Income Tax Expense (Benefit) by Current and Deferred (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Current:
 
 
 
United States federal
$ 0 
$ 0 
$ 0 
State
0 
(1)
0 
Foreign
(8)
0 
0 
Current income tax benefit (provision)
(8)
(1)
0 
Deferred, net of changes in valuation allowances:
 
 
 
United States federal
(30)
0 
0 
State
(1)
0 
(1)
Foreign
(2)
92 
0 
Income tax benefit (provision)
$ (41)
$ 91 
$ (1)
Income Taxes - Income (Loss) by Geographic Region (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income Tax Disclosure [Abstract]
 
 
 
United States
$ (692)
$ (542)
$ (519)
Foreign
(94)
(170)
(104)
Loss Before Income Taxes
$ (786)
$ (712)
$ (623)
Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Mar. 31, 2011
Deferred Income Tax Asset, Correction Related to Indefinite Lived Intangible Assets
Income Tax Reconciliation [Line Items]
 
 
 
 
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate
35.00% 
35.00% 
35.00% 
 
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
 
 
 
 
Computed tax benefit at statutory rate
$ 275 
$ 250 
$ 218 
 
Effect of earnings in jurisdictions outside of US
(13)
(13)
0 
 
Foreign branch tax benefit
17 
21 
0 
 
State income tax benefit
24 
24 
20 
 
Change in valuation allowance
(198)
(175)
(255)
 
Permanent Items
(44)
(16)
(4)
 
Non-cash compensation excess deductions
(18)
0 
0 
 
Indefinite-lived assets
(26)
0 
0 
 
NOL expiration
(38)
0 
0 
 
Other, net
(20)
0 
20 
 
Income tax benefit (provision)
(41)
91 
(1)
 
Income tax expense
$ 41 
$ (91)
$ 1 
$ 26 
Income Taxes - Deferred Tax Assets (Liabilities) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Deferred Tax Assets:
 
 
 
Accrued payroll and related benefits
$ 101,000,000 
$ 77,000,000 
 
Deferred revenue
276,000,000 
285,000,000 
 
Unutilized tax net operating loss carry forwards
3,996,000,000 
2,713,000,000 
 
Fixed assets and intangible assets
157,000,000 
38,000,000 
 
Intercompany loss
164,000,000 
0 
 
Other
193,000,000 
100,000,000 
 
Total Deferred Tax Assets
4,887,000,000 
3,213,000,000 
 
Deferred Tax Liabilities:
 
 
 
Fixed assets and intangible assets
(542,000,000)
(79,000,000)
 
Deferred revenue
(93,000,000)
0 
 
Other
(51,000,000)
(29,000,000)
 
Foreign branch income
(40,000,000)
(40,000,000)
 
Total Deferred Tax Liabilities
(726,000,000)
(148,000,000)
 
Net Deferred Tax Assets before valuation allowance
4,161,000,000 
3,065,000,000 
 
Valuation Allowance
(4,252,000,000)
(2,978,000,000)
 
Net Deferred Tax (Liability) Asset after Valuation Allowance
(91,000,000)
87,000,000 
 
Net current deferred income tax asset
12,000,000 
0 
 
Net current deferred income tax liability
(3,000,000)
0 
 
Net non-current deferred income tax asset
246,000,000 
87,000,000 
 
Net non-current deferred income tax liability
(346,000,000)
0 
 
Deferred foreign income tax expense (benefit)
(2,000,000)
92,000,000 
0 
Net change in valuation allowance
1,300,000,000 
 
 
Global Crossing
 
 
 
Deferred Tax Assets:
 
 
 
Unutilized tax net operating loss carry forwards
1,100,000,000 
 
 
Total Deferred Tax Assets
1,500,000,000 
 
 
Deferred Tax Liabilities:
 
 
 
Fixed assets and intangible assets
419,000,000 
 
 
Total Deferred Tax Liabilities
$ 560,000,000 
 
 
Foreign jurisdiction
 
 
 
Deferred Tax Assets (Liabilities) [Line Items]
 
 
 
German Change of Control Rules Benchmark, Transactions Result in a Cumulative Ownership Shift
25.00% 
 
 
U.S. Internal Revenue Service (IRS)
 
 
 
Deferred Tax Assets (Liabilities) [Line Items]
 
 
 
Internal Revenue Code 382, Cumulative Ownership Shift Period Change
5.00% 
 
 
Income Taxes - Operating Loss Carryforward (Details) (USD $)
Dec. 31, 2011
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
$ 6,791,000,000 
Internal Revenue Code 382, Cumulative Ownership Shift Benchmark
50.00% 
Internal Revenue Code 382, Cumulative Ownership Shift Period Change
5.00% 
Foreign jurisdiction
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
4,300,000,000 
Operating Loss Carryforward, Disregarded for Domestic Country Tax Purposes
2,400,000,000 
German Change of Control Rules Benchmark, Transactions Result in a Cumulative Ownership Shift
25.00% 
State jurisdiction
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
5,400,000,000 
Expiring, 2024 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
533,000,000 
Expiring, 2025 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
1,186,000,000 
Expiring, 2026 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
1,029,000,000 
Expiring, 2027 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
1,508,000,000 
Expiring, 2028 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
445,000,000 
Expiring, 2029 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
700,000,000 
Expiring, 2030 |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
703,000,000 
Operating Loss Expiring, 2031 [Member] |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
687,000,000 
Level 3 Segment |
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating loss carryforwards
$ 6,500,000,000 
Income Taxes - Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Unrecognized tax benefits, Beginning balance
$ 6 
$ 5 
$ 7 
Gross increases - prior period tax positions
11 
1 
0 
Gross decreases - tax positions of prior years
(1)
 
 
Gross decreases - settlements with taxing authorities
(1)
 
(2)
Unrecognized tax benefits, Ending Balance
15 
6 
5 
Accrued interest and penalties in The Company's liability for uncertain tax positions
20 
12 
10 
Accrued interest and penalties related to uncertain tax positions in income tax expense in its consolidated statements of operation
$ 0 
$ 2 
$ 1 
Segment Information - Revenue From External Customers And Adjusted EBITDA (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 904 
$ 895 
$ 892 
$ 900 
$ 4,333 
$ 3,591 
$ 3,695 
Adjusted EBITDA
 
 
 
 
 
 
 
 
958 
849 
910 
Capital expenditures
 
 
 
 
 
 
 
 
(494)
(435)
(308)
Depreciation and amortization
 
 
 
 
 
 
 
 
805 
870 
906 
Assets
13,188 
 
 
 
8,355 
 
 
 
13,188 
8,355 
 
Long-Lived Assets
8,940 
 
 
 
5,956 
 
 
 
8,940 
5,956 
 
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
3,679 
3,591 
3,695 
Adjusted EBITDA
 
 
 
 
 
 
 
 
911 
849 
910 
Capital expenditures
 
 
 
 
 
 
 
 
(443)
(435)
(308)
Depreciation and amortization
 
 
 
 
 
 
 
 
741 
870 
906 
Assets
8,029 
 
 
 
8,355 
 
 
 
8,029 
8,355 
 
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
654 
0 
0 
Adjusted EBITDA
 
 
 
 
 
 
 
 
47 
0 
0 
Capital expenditures
 
 
 
 
 
 
 
 
(51)
0 
0 
Depreciation and amortization
 
 
 
 
 
 
 
 
64 
0 
0 
Assets
5,159 
 
 
 
0 
 
 
 
5,159 
0 
 
Core Network Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
3,002 
2,827 
2,840 
Wholesale Voice Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
608 
650 
663 
Other Communications Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
69 
114 
192 
Invest and Grow |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
590 
 
 
Wholesale Voice and Other |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
64 
 
 
North America
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
3,669 
3,275 
3,369 
Long-Lived Assets
5,338 
 
 
 
5,239 
 
 
 
5,338 
5,239 
 
North America |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
3,324 
3,275 
3,369 
North America |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
337 
 
 
North America |
Core Network Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
2,677 
2,536 
2,548 
North America |
Wholesale Voice Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
578 
625 
629 
North America |
Other Communications Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
69 
114 
192 
North America |
Invest and Grow |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
276 
 
 
North America |
Wholesale Voice and Other |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
61 
 
 
Europe
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
502 
316 
326 
Long-Lived Assets
1,557 
 
 
 
717 
 
 
 
1,557 
717 
 
Europe |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
355 
316 
326 
Europe |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
149 
 
 
Europe |
Core Network Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
325 
291 
292 
Europe |
Wholesale Voice Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
30 
25 
34 
Europe |
Other Communications Services |
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
0 
0 
0 
Europe |
Invest and Grow |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
147 
 
 
Europe |
Wholesale Voice and Other |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
2 
 
 
UNITED KINGDOM
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
267 
131 
134 
Long-Lived Assets
613 
 
 
 
114 
 
 
 
613 
114 
 
GERMANY
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
72 
62 
73 
Long-Lived Assets
348 
 
 
 
318 
 
 
 
348 
318 
 
Other European Countries [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
163 
123 
119 
Long-Lived Assets
596 
 
 
 
285 
 
 
 
596 
285 
 
Latin America
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
158 
0 
0 
Long-Lived Assets
1,533 
 
 
 
0 
 
 
 
1,533 
0 
 
Latin America |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
168 
 
 
Latin America |
Invest and Grow |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
167 
 
 
Latin America |
Wholesale Voice and Other |
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
1 
 
 
BRAZIL
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
68 
 
 
Long-Lived Assets
434 
 
 
 
 
 
 
 
434 
 
 
ARGENTINA
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
23 
 
 
Long-Lived Assets
387 
 
 
 
 
 
 
 
387 
 
 
COLOMBIA
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
23 
 
 
Long-Lived Assets
247 
 
 
 
 
 
 
 
247 
 
 
Other Latin American Countries
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
44 
 
 
Long-Lived Assets
465 
 
 
 
 
 
 
 
465 
 
 
Other Countries
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
4 
 
 
Long-Lived Assets
$ 512 
 
 
 
 
 
 
 
$ 512 
 
 
Segment Information - Calculation of EBITDA (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Segment information
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) from Continuing Operations
$ (164)
$ (208)
$ (180)
$ (204)
$ (55)
$ (164)
$ (168)
$ (236)
$ (756)
$ (622)
$ (618)
Income tax expense
 
 
 
 
 
 
 
 
41 
(91)
1 
Depreciation and Amortization Expense
 
 
 
 
 
 
 
 
805 
870 
906 
Non-cash Compensation Expense
 
 
 
 
 
 
 
 
101 
67 
59 
Adjusted EBITDA
 
 
 
 
 
 
 
 
958 
849 
910 
Discontinued Operations of Coal Mining Business
 
 
 
 
 
 
 
 
71 
(1)
6 
Reportable segments
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) from Continuing Operations
 
 
 
 
 
 
 
 
(827)
(617)
(605)
Level 3 Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) from Continuing Operations
 
 
 
 
 
 
 
 
(769)
(617)
(605)
Income tax expense
 
 
 
 
 
 
 
 
33 
(91)
0 
Total Other Expense
 
 
 
 
 
 
 
 
808 
620 
550 
Depreciation and Amortization Expense
 
 
 
 
 
 
 
 
741 
870 
906 
Non-cash Compensation Expense
 
 
 
 
 
 
 
 
98 
67 
59 
Adjusted EBITDA
 
 
 
 
 
 
 
 
911 
849 
910 
Global Crossing Segment
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) from Continuing Operations
 
 
 
 
 
 
 
 
(58)
0 
0 
Income tax expense
 
 
 
 
 
 
 
 
8 
0 
0 
Total Other Expense
 
 
 
 
 
 
 
 
30 
0 
0 
Depreciation and Amortization Expense
 
 
 
 
 
 
 
 
64 
0 
0 
Non-cash Compensation Expense
 
 
 
 
 
 
 
 
3 
0 
0 
Adjusted EBITDA
 
 
 
 
 
 
 
 
47 
0 
0 
Unallocated corporate expense
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) from Continuing Operations
 
 
 
 
 
 
 
 
$ 0 
$ (4)
$ (19)
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Loss Contingencies [Line Items]
 
Estimated Litigation Liability
$ 312 
Proposed settlement
3.2 
Peruvian Tax Litigation |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
86 
Peruvian Tax Litigation, Before Interest |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
26 
Peruvian Tax Litigation, Income Taxwitholding 2001 and 2002 |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
3 
Peruvian Tax Litigation, Disallowance of VAT in 2005 |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
16 
Peruvian Tax Litigation, Vat for 2001 and 2002 |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
7 
Employee Severance and Contractor Termination Disputes |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Asserted Claim
43 
Customer Bankruptcy Claim |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Range of Possible Loss, Minimum
150 
Loss Contingency, Range of Possible Loss, Maximum
450 
Maximum |
Brazilian Tax Claims |
Pending or Threatened Litigation
 
Loss Contingencies [Line Items]
 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
$ 55 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
year
Dec. 31, 2010
Dec. 31, 2009
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Amount outstanding under letters of credit
$ 33 
$ 22 
 
Collateralized Financings
29 
22 
 
Payments under these right-of-way agreements
135 
127 
118 
Rent expense, including common area maintenance, under non-cancelable lease agreements
232 
203 
198 
Right-of-Way Agreements [Abstract]
 
 
 
Right-of-Way Agreements, 2012
142 
 
 
Right-of-Way Agreements, 2013
74 
 
 
Right-of-Way Agreements, 2014
69 
 
 
Right-of-Way Agreements, 2015
64 
 
 
Right-of-Way Agreements, 2016
59 
 
 
Right-of-Way Agreements, Thereafter
354 
 
 
Right-of-Way Agreements, Total
762 
 
 
Facilities [Abstract]
 
 
 
Facilities, 2012
268 
 
 
Facilities, 2013
228 
 
 
Facilities, 2014
204 
 
 
Facilities, 2015
179 
 
 
Facilities, 2016
134 
 
 
Facilities, Thereafter
611 
 
 
Facilities, Total
1,624 
 
 
Total [Abstract]
 
 
 
Right-of-Way Agreements and Facilities, 2012
410 
 
 
Right-of-Way Agreements and Facilities, 2013
302 
 
 
Right-of-Way Agreements and Facilities, 2014
273 
 
 
Right-of-Way Agreements and Facilities, 2015
243 
 
 
Right-of-Way Agreements and Facilities, 2016
193 
 
 
Right-of-Way Agreements and Facilities, Thereafter
965 
 
 
Right-of-Way Agreements and Facilities, Total
2,386 
 
 
Future Minimum Sublease Receipts [Abstract]
 
 
 
2012
13 
 
 
2013
12 
 
 
2014
8 
 
 
2015
7 
 
 
2016
6 
 
 
Thereafter
16 
 
 
Total
$ 62 
 
 
Period of Right-of-Way Agreements with cancelable agreements (in years)
1 
 
 
Commitments, Contingencies and Other Items - Purchase Commitments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Long-term Purchase Commitment [Line Items]
 
Total
$ 446 
Less than 1 Year
150 
2 - 3 Years
136 
4 - 5 Years
46 
After 5 Years
114 
Cost of Access Services
 
Long-term Purchase Commitment [Line Items]
 
Total
222 
Less than 1 Year
122 
2 - 3 Years
93 
4 - 5 Years
6 
After 5 Years
1 
Third Party Maintenance Services
 
Long-term Purchase Commitment [Line Items]
 
Total
224 
Less than 1 Year
28 
2 - 3 Years
43 
4 - 5 Years
40 
After 5 Years
$ 113 
Condensed Consolidating Financial Information - Narrative (Details) (Senior Notes due 2019 (9.375%))
Dec. 31, 2011
Senior Notes due 2019 (9.375%)
 
Long-term debt
 
Debt instrument, stated interest rate (as a percent)
9.375% 
Condensed Consolidating Financial Information - Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2008
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 904 
$ 895 
$ 892 
$ 900 
 
$ 4,333 
$ 3,591 
$ 3,695 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
1,706 
1,434 
1,499 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
805 
870 
906 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
1,759 
1,373 
1,337 
Restructuring Charges
 
 
 
 
 
 
 
 
12 
11 
2 
9 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
4,281 
3,679 
3,751 
Operating Income (Loss)
45 
7 
3 
(3)
(5)
(18)
(27)
(38)
 
52 
(88)
(56)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
1 
1 
2 
Interest expense
 
 
 
 
 
 
 
 
 
(716)
(586)
(595)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
0 
0 
0 
Other income (expense), net
 
 
 
 
 
 
 
 
 
(123)
(39)
26 
Total Other Expense
 
 
 
 
 
 
 
 
 
(838)
(624)
(567)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
(786)
(712)
(623)
Income Tax Expense
 
 
 
 
 
 
 
 
 
(41)
91 
(1)
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(827)
(621)
(624)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
71 
(1)
6 
Net Loss
(164)
(208)
(180)
(204)
(55)
(164)
(168)
(236)
 
(756)
(622)
(618)
Level 3 Communications, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
0 
0 
0 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
0 
0 
0 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
0 
0 
0 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
2 
2 
2 
Restructuring Charges
 
 
 
 
 
 
 
 
 
0 
0 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
2 
2 
2 
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
(2)
(2)
(2)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
0 
0 
0 
Interest expense
 
 
 
 
 
 
 
 
 
(211)
(199)
(211)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
865 
795 
795 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
(1,346)
(1,221)
(1,242)
Other income (expense), net
 
 
 
 
 
 
 
 
 
(62)
5 
42 
Total Other Expense
 
 
 
 
 
 
 
 
 
(754)
(620)
(616)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
(756)
(622)
(618)
Income Tax Expense
 
 
 
 
 
 
 
 
 
0 
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(756)
(622)
(618)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
 
(756)
(622)
(618)
Level 3 Financing, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
0 
0 
0 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
0 
0 
0 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
0 
0 
0 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
19 
0 
0 
Restructuring Charges
 
 
 
 
 
 
 
 
 
0 
0 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
19 
0 
0 
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
(19)
0 
0 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
0 
0 
0 
Interest expense
 
 
 
 
 
 
 
 
 
(471)
(377)
(374)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
1,423 
1,298 
1,180 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
(2,241)
(2,087)
(2,048)
Other income (expense), net
 
 
 
 
 
 
 
 
 
(38)
(55)
0 
Total Other Expense
 
 
 
 
 
 
 
 
 
(1,327)
(1,221)
(1,242)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
(1,346)
(1,221)
(1,242)
Income Tax Expense
 
 
 
 
 
 
 
 
 
0 
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(1,346)
(1,221)
(1,242)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
 
(1,346)
(1,221)
(1,242)
Level 3 Communications, LLC
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
2,367 
2,046 
1,642 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
888 
800 
737 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
376 
429 
412 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
1,269 
1,185 
1,108 
Restructuring Charges
 
 
 
 
 
 
 
 
 
1 
1 
9 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
2,534 
2,415 
2,266 
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
(167)
(369)
(624)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
0 
1 
1 
Interest expense
 
 
 
 
 
 
 
 
 
(3)
(2)
(2)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
(2,065)
(1,891)
(2,057)
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
122 
218 
387 
Other income (expense), net
 
 
 
 
 
 
 
 
 
9 
1 
4 
Total Other Expense
 
 
 
 
 
 
 
 
 
(1,937)
(1,673)
(1,667)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
(2,104)
(2,042)
(2,291)
Income Tax Expense
 
 
 
 
 
 
 
 
 
(15)
(1)
2 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(2,119)
(2,043)
(2,289)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
 
(2,119)
(2,043)
(2,289)
Broadwing
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
0 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
 
 
0 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
 
 
0 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
 
 
0 
Restructuring Charges
 
 
 
 
 
 
 
 
 
 
 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
0 
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
0 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
 
 
0 
Interest expense
 
 
 
 
 
 
 
 
 
 
 
(1)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
 
 
0 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
 
 
0 
Other income (expense), net
 
 
 
 
 
 
 
 
 
 
 
0 
Total Other Expense
 
 
 
 
 
 
 
 
 
 
 
(1)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
 
 
(1)
Income Tax Expense
 
 
 
 
 
 
 
 
 
 
 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
 
 
(1)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
 
 
0 
Net Loss
 
 
 
 
 
 
 
 
 
 
 
(1)
Other Non-Guarantor Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
2,196 
1,774 
2,283 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
1,036 
851 
981 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
429 
441 
494 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
481 
198 
238 
Restructuring Charges
 
 
 
 
 
 
 
 
 
10 
1 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
1,956 
1,491 
1,713 
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
240 
283 
570 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
1 
0 
1 
Interest expense
 
 
 
 
 
 
 
 
 
(31)
(8)
(7)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
(223)
(202)
82 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
0 
0 
0 
Other income (expense), net
 
 
 
 
 
 
 
 
 
(32)
10 
(20)
Total Other Expense
 
 
 
 
 
 
 
 
 
(285)
(200)
56 
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
(45)
83 
626 
Income Tax Expense
 
 
 
 
 
 
 
 
 
(26)
92 
(3)
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(71)
175 
623 
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
71 
(1)
6 
Net Loss
 
 
 
 
 
 
 
 
 
0 
174 
629 
Eliminations
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
(230)
(229)
(230)
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
 
(218)
(217)
(219)
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
0 
0 
0 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
(12)
(12)
(11)
Restructuring Charges
 
 
 
 
 
 
 
 
 
0 
0 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
 
(230)
(229)
(230)
Operating Income (Loss)
 
 
 
 
 
 
 
 
 
0 
0 
0 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
 
0 
0 
0 
Interest expense
 
 
 
 
 
 
 
 
 
0 
0 
0 
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
 
3,465 
3,090 
2,903 
Other income (expense), net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Total Other Expense
 
 
 
 
 
 
 
 
 
3,465 
3,090 
2,903 
Loss Before Income Taxes
 
 
 
 
 
 
 
 
 
3,465 
3,090 
2,903 
Income Tax Expense
 
 
 
 
 
 
 
 
 
0 
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
3,465 
3,090 
2,903 
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
 
$ 3,465 
$ 3,090 
$ 2,903 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 918 
$ 616 
$ 836 
$ 768 
Restricted cash and securities
10 
2 
 
 
Receivables, less allowances for doubtful accounts
648 
259 
 
 
Due from (to) affiliates
0 
0 
 
 
Other
131 
83 
 
 
Current assets of discontinued operations
0 
12 
 
 
Total Current Assets
1,707 
972 
 
 
Property, Plant and Equipment, net
8,136 
5,285 
 
 
Restricted Cash and Securities
51 
49 
 
 
Goodwill and Other Intangibles Assets, net
2,899 
1,798 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
395 
161 
 
 
NonCurrent assets of discontinued operations
0 
90 
 
 
Total Assets
13,188 
8,355 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
747 
326 
 
 
Current portion of long-term debt
65 
180 
 
 
Accrued payroll and employee benefits
209 
84 
 
 
Accrued interest
216 
146 
 
 
Current portion of deferred revenue
264 
151 
 
 
Other
157 
53 
 
 
Current liabilities of discontinued operations
0 
16 
 
 
Total Current Liabilities
1,658 
956 
 
 
Long-Term Debt, less current portion
8,385 
6,268 
 
 
Deferred Revenue, less current portion
885 
736 
 
 
Other Liabilities
1,067 
440 
 
 
NonCurrent Liabilities of Discontinued Operations
0 
112 
 
 
Commitments and Contingencies
0 
0 
 
 
Stockholders' Equity (Deficit)
1,193 
(157)
491 
1,021 
Total Liabilities and Stockholders' Equity (Deficit)
13,188 
8,355 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
2 
173 
236 
67 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from (to) affiliates
13,472 
11,927 
 
 
Other
3 
4 
 
 
Current assets of discontinued operations
 
0 
 
 
Total Current Assets
13,477 
12,104 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
18 
18 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(10,718)
(10,437)
 
 
Other Assets, net
13 
9 
 
 
NonCurrent assets of discontinued operations
 
0 
 
 
Total Assets
2,790 
1,694 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
0 
1 
 
 
Current portion of long-term debt
0 
176 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
50 
47 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
0 
0 
 
 
Current liabilities of discontinued operations
 
0 
 
 
Total Current Liabilities
50 
224 
 
 
Long-Term Debt, less current portion
1,533 
1,612 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
14 
15 
 
 
NonCurrent Liabilities of Discontinued Operations
 
0 
 
 
Stockholders' Equity (Deficit)
1,193 
(157)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
2,790 
1,694 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
6 
7 
8 
10 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from (to) affiliates
14,584 
11,424 
 
 
Other
16 
10 
 
 
Current assets of discontinued operations
 
0 
 
 
Total Current Assets
14,606 
11,441 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(18,467)
(17,176)
 
 
Other Assets, net
109 
65 
 
 
NonCurrent assets of discontinued operations
 
0 
 
 
Total Assets
(3,752)
(5,670)
 
 
Current Liabilities:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
165 
99 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
1 
1 
 
 
Current liabilities of discontinued operations
 
0 
 
 
Total Current Liabilities
166 
100 
 
 
Long-Term Debt, less current portion
6,688 
4,564 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
116 
107 
 
 
NonCurrent Liabilities of Discontinued Operations
 
0 
 
 
Stockholders' Equity (Deficit)
(10,722)
(10,441)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
(3,752)
(5,670)
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
618 
350 
431 
555 
Restricted cash and securities
1 
1 
 
 
Receivables, less allowances for doubtful accounts
59 
46 
 
 
Due from (to) affiliates
(28,092)
(26,113)
 
 
Other
48 
41 
 
 
Current assets of discontinued operations
 
0 
 
 
Total Current Assets
(27,366)
(25,675)
 
 
Property, Plant and Equipment, net
2,823 
2,937 
 
 
Restricted Cash and Securities
19 
21 
 
 
Goodwill and Other Intangibles Assets, net
481 
543 
 
 
Investment in Subsidiaries
3,412 
3,575 
 
 
Other Assets, net
6 
6 
 
 
NonCurrent assets of discontinued operations
 
0 
 
 
Total Assets
(20,625)
(18,593)
 
 
Current Liabilities:
 
 
 
 
Accounts payable
37 
57 
 
 
Current portion of long-term debt
2 
2 
 
 
Accrued payroll and employee benefits
116 
78 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
107 
115 
 
 
Other
52 
45 
 
 
Current liabilities of discontinued operations
 
0 
 
 
Total Current Liabilities
314 
297 
 
 
Long-Term Debt, less current portion
22 
24 
 
 
Deferred Revenue, less current portion
612 
673 
 
 
Other Liabilities
146 
154 
 
 
NonCurrent Liabilities of Discontinued Operations
 
0 
 
 
Stockholders' Equity (Deficit)
(21,719)
(19,741)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
(20,625)
(18,593)
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
292 
86 
161 
136 
Restricted cash and securities
9 
1 
 
 
Receivables, less allowances for doubtful accounts
589 
213 
 
 
Due from (to) affiliates
36 
2,762 
 
 
Other
64 
28 
 
 
Current assets of discontinued operations
 
12 
 
 
Total Current Assets
990 
3,102 
 
 
Property, Plant and Equipment, net
5,313 
2,348 
 
 
Restricted Cash and Securities
14 
10 
 
 
Goodwill and Other Intangibles Assets, net
2,418 
1,255 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
267 
81 
 
 
NonCurrent assets of discontinued operations
 
90 
 
 
Total Assets
9,002 
6,886 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
710 
268 
 
 
Current portion of long-term debt
63 
2 
 
 
Accrued payroll and employee benefits
93 
6 
 
 
Accrued interest
1 
0 
 
 
Current portion of deferred revenue
157 
36 
 
 
Other
104 
7 
 
 
Current liabilities of discontinued operations
 
16 
 
 
Total Current Liabilities
1,128 
335 
 
 
Long-Term Debt, less current portion
142 
68 
 
 
Deferred Revenue, less current portion
273 
63 
 
 
Other Liabilities
791 
164 
 
 
NonCurrent Liabilities of Discontinued Operations
 
112 
 
 
Stockholders' Equity (Deficit)
6,668 
6,144 
 
 
Total Liabilities and Stockholders' Equity (Deficit)
9,002 
6,886 
 
 
Eliminations
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
0 
0 
0 
0 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from (to) affiliates
0 
0 
 
 
Other
0 
0 
 
 
Current assets of discontinued operations
 
0 
 
 
Total Current Assets
0 
0 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
25,773 
24,038 
 
 
Other Assets, net
0 
0 
 
 
NonCurrent assets of discontinued operations
 
0 
 
 
Total Assets
25,773 
24,038 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
0 
0 
 
 
Current liabilities of discontinued operations
 
0 
 
 
Total Current Liabilities
0 
0 
 
 
Long-Term Debt, less current portion
0 
0 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
NonCurrent Liabilities of Discontinued Operations
 
0 
 
 
Stockholders' Equity (Deficit)
25,773 
24,038 
 
 
Total Liabilities and Stockholders' Equity (Deficit)
$ 25,773 
$ 24,038 
 
 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$ 388 
$ 339 
$ 346 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(494)
(435)
(308)
(Increase) Decrease in restricted cash and securities, net
(54)
3 
5 
Proceeds from the sale of property, plant and equipment and other assets
4 
4 
1 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(398)
(428)
(302)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
1,878.0 
808.0 
543.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(1,617)
(930)
(527)
Increase (decrease) due from affiliates, net
0 
0 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
261 
(122)
16 
Net Cash Provided by (Used in) Discontinued Operations
51 
(1)
6 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
(8)
2 
Net Change in Cash and Cash Equivalents
302 
(220)
68 
Cash and Cash Equivalents at Beginning of Year
616 
836 
768 
Cash and Cash Equivalents at End of Year
918 
616 
836 
Level 3 Communications, Inc.
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
(176)
(156)
(142)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
0 
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
0 
Proceeds from the sale of property, plant and equipment and other assets
0 
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
0 
0 
0 
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
292.0 
195.0 
269.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(521)
(328)
(518)
Increase (decrease) due from affiliates, net
234 
226 
560 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
5 
93 
311 
Net Cash Provided by (Used in) Discontinued Operations
0 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
(171)
(63)
169 
Cash and Cash Equivalents at Beginning of Year
173 
236 
67 
Cash and Cash Equivalents at End of Year
2 
173 
236 
Level 3 Financing, Inc.
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
(428)
(362)
(369)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
0 
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
0 
Proceeds from the sale of property, plant and equipment and other assets
0 
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
0 
0 
0 
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
1,586.0 
613.0 
274.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(755)
(599)
(6)
Increase (decrease) due from affiliates, net
(404)
347 
99 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
427 
361 
367 
Net Cash Provided by (Used in) Discontinued Operations
0 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
(1)
(1)
(2)
Cash and Cash Equivalents at Beginning of Year
7 
8 
10 
Cash and Cash Equivalents at End of Year
6 
7 
8 
Level 3 Communications, LLC
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
293 
76 
(154)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(197)
(161)
(121)
(Increase) Decrease in restricted cash and securities, net
3 
3 
2 
Proceeds from the sale of property, plant and equipment and other assets
1 
2 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(193)
(156)
(119)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(1)
(1)
Increase (decrease) due from affiliates, net
168 
0 
150 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
168 
(1)
149 
Net Cash Provided by (Used in) Discontinued Operations
0 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
268 
(81)
(124)
Cash and Cash Equivalents at Beginning of Year
350 
431 
555 
Cash and Cash Equivalents at End of Year
618 
350 
431 
Broadwing
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
 
 
0 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
 
 
0 
(Increase) Decrease in restricted cash and securities, net
 
 
0 
Proceeds from the sale of property, plant and equipment and other assets
 
 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
 
 
0 
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
 
 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
 
 
0 
Increase (decrease) due from affiliates, net
 
 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
 
 
0 
Net Cash Provided by (Used in) Discontinued Operations
 
 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
 
 
0 
Net Change in Cash and Cash Equivalents
 
 
0 
Cash and Cash Equivalents at Beginning of Year
 
 
0 
Cash and Cash Equivalents at End of Year
 
 
0 
Other Non-Guarantor Subsidiaries
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
699 
781 
1,011 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(297)
(274)
(187)
(Increase) Decrease in restricted cash and securities, net
(57)
0 
3 
Proceeds from the sale of property, plant and equipment and other assets
3 
2 
1 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(205)
(272)
(183)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(341)
(2)
(2)
Increase (decrease) due from affiliates, net
2 
(573)
(809)
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
(339)
(575)
(811)
Net Cash Provided by (Used in) Discontinued Operations
51 
(1)
6 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
(8)
2 
Net Change in Cash and Cash Equivalents
206 
(75)
25 
Cash and Cash Equivalents at Beginning of Year
86 
161 
136 
Cash and Cash Equivalents at End of Year
292 
86 
161 
Eliminations
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
0 
0 
0 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
0 
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
0 
Proceeds from the sale of property, plant and equipment and other assets
0 
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
0 
0 
0 
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
0 
0 
Increase (decrease) due from affiliates, net
0 
0 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
0 
0 
0 
Net Cash Provided by (Used in) Discontinued Operations
0 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
0 
0 
0 
Cash and Cash Equivalents at Beginning of Year
0 
0 
0 
Cash and Cash Equivalents at End of Year
$ 0 
$ 0 
$ 0 
Subsequent Events (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended
Dec. 31, 2011
Senior Notes due 2014 (9.25%)
Jan. 31, 2012
Issuance of debt
Senior Notes due 2020 (8.625%)
Feb. 28, 2012
Repayment of debt
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 13, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Oct. 30, 2006
Senior Notes
Senior Notes due 2014 (9.25%)
Subsequent Events
 
 
 
 
 
 
Principal amount of notes
 
$ 900 
 
 
$ 650 
$ 600 
Debt instrument, stated interest rate (as a percent)
9.25% 
8.625% 
 
9.25% 
 
 
Redemption of the aggregate principal amount
 
 
$ 807 
 
 
 
Unaudited Quarterly Financial Data (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2008
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 904 
$ 895 
$ 892 
$ 900 
 
$ 4,333 
$ 3,591 
$ 3,695 
Gross Margin
919 
585 
566 
557 
552 
542 
534 
529 
 
 
 
 
Operating Income (Loss)
45 
7 
3 
(3)
(5)
(18)
(27)
(38)
 
52 
(88)
(56)
Net Loss
(164)
(208)
(180)
(204)
(55)
(164)
(168)
(236)
 
(756)
(622)
(618)
Loss per share (Basic and Diluted) (in dollars per share)
$ (0.80)
$ (1.76)
$ (1.58)
$ (1.82)
$ (0.49)
$ (1.48)
$ (1.52)
$ (2.15)
 
$ (5.51)1
$ (5.62)
$ (5.68)1
Depreciation expense
 
 
 
 
 
 
 
 
 
706 
775 
814 
Losses on early extinguishment of debt
(27)
(30)
(23)
(20)
 
 
4 
55 
 
100 
59 
(14)
Restructuring Charges
 
 
 
 
 
 
 
 
12 
11 
2 
9 
Impairment of Intangible Assets (Excluding Goodwill)
20 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit primarily as a result of releasing valuation allowances
 
 
 
 
 
 
 
 
 
2 
(92)
0 
Deferred Tax Assets, Operating Loss Carryforwards, Foreign
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit primarily as a result of releasing valuation allowances
 
 
 
 
93 
 
 
 
 
 
 
 
Service Life
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
 
 
 
 
 
 
 
 
74 
 
 
Loss per share (Basic and Diluted) (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 0.54 
 
 
Depreciation expense
(74)
 
 
 
 
 
 
 
 
(74)
 
 
Convertible Senior Notes due 2013 (15.0%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
15.00% 
 
 
 
 
 
 
 
 
15.00% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
15.00% 
 
 
 
 
 
 
 
 
15.00% 
 
 
Convertible Senior Notes due 2012 (3.5%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Losses on early extinguishment of debt
 
 
 
12 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
3.50% 
 
 
 
 
 
 
 
 
3.50% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
3.50% 
 
 
 
 
 
 
 
 
3.50% 
 
 
Senior Notes due 2014 (9.25%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Losses on early extinguishment of debt
 
 
23 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
9.25% 
 
 
 
 
 
 
 
 
9.25% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
9.25% 
 
 
 
 
 
 
 
 
9.25% 
 
 
Convertible Senior Notes due 2011 (5.25%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
5.25% 
 
 
5.25% 
 
 
 
5.25% 
 
5.25% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.25% 
 
 
5.25% 
 
 
 
5.25% 
 
5.25% 
 
 
Convertible Senior Discount Notes due 2013 (9.0%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
9.00% 
 
 
9.00% 
 
 
 
 
 
9.00% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
9.00% 
 
 
9.00% 
 
 
 
 
 
9.00% 
 
 
10% Convertible Senior Notes due 2011
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Losses on early extinguishment of debt
 
 
 
 
 
 
$ 4 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
10.00% 
 
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
 
 
10.00% 
 
 
 
 
 
Convertible notes |
Convertible Senior Notes due 2013 (15.0%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
15.00% 
 
 
 
 
 
 
 
 
15.00% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
15.00% 
 
 
 
 
 
 
 
 
15.00% 
 
 
Convertible notes |
Convertible Senior Notes due 2012 (3.5%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
3.50% 
 
 
 
 
 
 
 
 
3.50% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
3.50% 
 
 
 
 
 
 
 
 
3.50% 
 
 
Convertible notes |
Convertible Senior Notes due 2011 (5.25%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
5.25% 
 
 
 
 
 
 
 
 
5.25% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.25% 
 
 
 
 
 
 
 
 
5.25% 
 
 
Convertible notes |
Convertible Senior Discount Notes due 2013 (9.0%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
9.00% 
 
 
 
 
 
 
 
 
9.00% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
9.00% 
 
 
 
 
 
 
 
 
9.00% 
 
 
Senior Notes |
Senior Notes due 2014 (9.25%)
 
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
9.25% 
 
 
 
 
 
 
 
 
9.25% 
 
 
Debt Instrument, Interest Rate, Stated Percentage
9.25% 
 
 
 
 
 
 
 
 
9.25%