LEVEL 3 COMMUNICATIONS INC, 10-K filed on 2/26/2013
Annual Report
Document and Entity Information Document (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Feb. 21, 2013
Jun. 30, 2012
Entity Information [Line Items]
 
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
 
Entity Central Index Key
0000794323 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2012 
 
 
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
 
 
$ 2,415 
Entity Common Stock, Shares Outstanding
 
218,852,225 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
FY 
 
 
Consolidated Statements of Operations (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Revenue
$ 6,376 
$ 4,333 
$ 3,591 
Total Costs and Expenses Exclusive of Depreciation and Amortization shown separately below:
 
 
 
Cost of Revenue
2,602 
1,706 
1,434 
Depreciation and Amortization
749 
805 
870 
Selling, General and Administrative
2,416 
1,759 
1,373 
Restructuring Charges
34 
11 
2 
Total Costs and Expenses
5,801 
4,281 
3,679 
Operating Income (Loss)
575 
52 
(88)
Other Income (Expense):
 
 
 
Interest income
2 
1 
1 
Interest expense
(733)
(716)
(586)
Loss on extinguishment of debt, net
(160)
(100)
(59)
Other, net
(58)
(23)
20 
Total Other Expense
(949)
(838)
(624)
Loss Before Income Taxes
(374)
(786)
(712)
Income Tax (Expense) Benefit
(48)
(41)
91 
Loss from Continuing Operations
(422)
(827)
(621)
Income (Loss) from Discontinued Operations, Net
0 
71 
(1)
Net Loss
$ (422)
$ (756)
$ (622)
Loss per Share from Continuing Operations, Basic and Diluted
$ (1.96)
$ (6.03)
$ (5.61)
Income (Loss) per Share from Discontinued Operations, Basic and Diluted
$ 0.00 
$ 0.52 
$ (0.01)
Net Loss per Share, Basic and Diluted
$ (1.96)
$ (5.51)
$ (5.62)
Shares Used to Compute Basic and Diluted Loss per Share (in thousands)
215,356 
137,176 
110,680 
Consolidated Statements of Comprehensive Loss (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Net Loss
$ (422)
$ (756)
$ (622)
Other Comprehensive Income (Loss) Before Income Taxes:
 
 
 
Foreign Currency Translation
17 
(16)
(78)
Holding Gain (Loss) on Interest Rate Swaps, including Reclassification Gains (Losses)
90 
18 
(16)
Other, net
(1)
16 
1 
Other Comprehensive Income (Loss) Before Income Taxes
106 
18 
(93)
Income Tax Related to Items of Other Comprehensive Income (Loss)
0 
0 
0 
Other Comprehensive Income (Loss), Net of Income Taxes
106 
18 
(93)
Comprehensive Loss
$ (316)
$ (738)
$ (715)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Assets
 
 
Cash and cash equivalents
$ 979 
$ 918 
Restricted cash and securities
8 
10 
Receivables, less allowances for doubtful accounts of $31 and $21, respectively
714 
648 
Other
141 
131 
Total Current Assets
1,842 
1,707 
Property, Plant and Equipment, net of accumulated depreciation of $8,359 and $7,678, respectively
8,199 
8,136 
Restricted Cash and Securities
35 
51 
Goodwill
2,565 
2,541 
Other Intangibles, net
268 
358 
Other Assets, net
398 
395 
Total Assets
13,307 
13,188 
Current Liabilities:
 
 
Accounts payable
779 
747 
Current portion of long-term debt
216 
65 
Accrued payroll and employee benefits
211 
209 
Accrued interest
209 
216 
Current portion of deferred revenue
251 
264 
Other
136 
157 
Total Current Liabilities
1,802 
1,658 
Long-Term Debt, less current portion
8,516 
8,385 
Deferred Revenue, less current portion
887 
885 
Other Liabilities
931 
1,067 
Total Liabilities
12,136 
11,995 
Commitments and Contingencies
0 
0 
Stockholders’ Equity:
 
 
Preferred Stock, Value, Issued
0 
0 
Common stock, $.01 par value, authorized 343,333,333 shares at December 31, 2012 and 293,333,333 shares at December 31, 2011: 218,380,070 issued and outstanding at December 31, 2012 and 207,913,428 issued and outstanding at December 31, 2011
2 
2 
Additional paid-in capital
14,000 
13,706 
Accumulated other comprehensive income (loss)
26 
(80)
Accumulated deficit
(12,857)
(12,435)
Total Stockholders’ Equity
1,171 
1,193 
Total Liabilities and Stockholders’ Equity
$ 13,307 
$ 13,188 
Consolidated Balance Sheets Parentheticals (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Allowance for doubtful accounts
$ 31 
$ 21 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
$ 8,359 
$ 7,678 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
343,333,333 
293,333,333 
Common stock, shares issued
218,380,070 
207,913,428 
Common stock, shares outstanding
218,380,070 
207,913,428 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Cash Flows from Operating Activities:
 
 
 
Net Loss
$ (422)
$ (756)
$ (622)
(Income) loss from discontinued operations
0 
(71)
1 
Loss from Continuing Operations
(422)
(827)
(621)
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities of continuing operations:
 
 
 
Depreciation and amortization
749 
805 
870 
Asset retirement obligation adjustment
(47)
0 
0 
Non-cash compensation expense attributable to stock awards
135 
101 
67 
Loss on extinguishment of debt, net
160 
100 
59 
Loss on interest rate swaps
60 
0 
0 
Change in fair value of embedded derivative
0 
0 
(10)
Accretion of debt discount and amortization of debt issuance costs
43 
56 
57 
Accrued interest on long-term debt, net
(5)
82 
6 
Loss on impairment of wireless spectrum licenses
0 
20 
0 
Deferred income taxes
10 
33 
(93)
Loss (gain) on sale of property, plant, and equipment and other assets
(1)
(2)
4 
Other, net
(23)
5 
(9)
Changes in working capital items:
 
 
 
Receivables
(86)
(12)
58 
Other current assets
(5)
(1)
3 
Payables
18 
30 
(33)
Deferred revenue
(10)
(3)
(9)
Other current liabilities
2 
1 
(10)
Net Cash Provided by Operating Activities of Continuing Operations
578 
388 
339 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(743)
(494)
(435)
Decrease (increase) in restricted cash and securities, net
20 
(54)
3 
Proceeds from the sale of property, plant and equipment and other assets
11 
4 
4 
Investment in Global Crossing, net of cash acquired
0 
146 
0 
Payments for other investing activities
(13)
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(725)
(398)
(428)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
4,504 
1,878 
808 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(4,302)
(1,617)
(930)
Proceeds from Stock Options Exercised
5 
0 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
207 
261 
(122)
Discontinued Operations:
 
 
 
Net cash used in operating activities
0 
(4)
0 
Net cash provided by (used in) investing activities
0 
55 
(1)
Net Cash Provided by (Used in) Discontinued Operations
0 
51 
(1)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
0 
(8)
Net Change in Cash and Cash Equivalents
61 
302 
(220)
Cash and Cash Equivalents at Beginning of Year
918 
616 
836 
Cash and Cash Equivalents at End of Year
979 
918 
616 
Supplemental Disclosure of Cash Flow Information:
 
 
 
Cash interest paid
695 
576 
523 
Income taxes paid, net of refunds
32 
7 
(1)
Non-cash Investing and Financing Activities:
 
 
 
Long-term debt issued in exchange transaction
0 
300 
0 
Non Cash Long Term Debt Retired in Exchange Transaction
0 
295 
0 
Conversion of notes into common stock
100 
128 
0 
Non-cash inducement premium on conversion of debt to equity
39 
0 
0 
Non cash accrued interest payment
2 
0 
0 
Long-term debt issued and proceeds placed in escrow
0 
1,200 
0 
Settlement of Global Crossing debt with escrowed securities
$ 0 
$ 1,254 
$ 0 
Consolidated Statements of Changes In Stockholders' Equity (Deficit) (USD $)
In Millions, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated Deficit
Beginning balance at Dec. 31, 2009
$ 491 
$ 16 
$ 11,537 
$ (5)
$ (11,057)
Beginning balance (in shares) at Dec. 31, 2009
 
109,607,751 
 
 
 
Common Stock
 
 
 
 
 
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)
 
1,757,475 
 
 
 
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 
 
 
 
Common Stock
 
 
 
 
 
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 
 
 
 
Common Stock
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
88 
0 
88 
0 
0 
Common stock issued under employee stock benefit plans and other (in shares)
 
5,019,513 
 
 
 
Stock-based compensation expense
67 
0 
67 
0 
0 
Conversion of debt to equity
139 
0 
139 
0 
0 
Conversion of debt to equity (in shares)
 
5,447,129 
 
 
 
Net Loss
(422)
0 
0 
0 
(422)
Other Comprehensive Income (Loss)
106 
0 
0 
106 
0 
Ending balance at Dec. 31, 2012
$ 1,171 
$ 2 
$ 14,000 
$ 26 
$ (12,857)
Ending balance (in shares) at Dec. 31, 2012
218,380,070 
218,380,070 
 
 
 
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 Interest Rate Swaps
Other
Beginning Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2009
$ (5)
$ 133 
$ (92)
$ (46)
Change In Accumulated Other Comprehensive Income
 
 
 
 
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
 
 
 
 
Change
18 
(16)
18 
16 
Ending Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2011
(80)
39 
(90)
(29)
Change In Accumulated Other Comprehensive Income
 
 
 
 
Change
106 
17 
90 
(1)
Ending Balance, Accumulated Other Comprehensive Income (Loss) at Dec. 31, 2012
$ 26 
$ 56 
$ 0 
$ (30)
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.
Until November 2011, the Company also was engaged in coal mining through 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"), which thereby 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 50% 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 businesses 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
Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America. For operations outside the U.S. that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-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 2012, 2011 and 2010. As a result of the 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 income (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 the 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 reported 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 could 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 monthly as the 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. The Company establishes appropriate cost of revenue reserves for disputed supplier billings based on an analysis of historical experience in resolving disputes with its suppliers.
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, gross receipts taxes and certain state regulatory fees. 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 generally records gross receipts taxes and certain state regulatory fees 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 $191 million, $107 million and $77 million for the years ended December 31, 2012, 2011 and 2010, 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 $20 million, $15 million and $8 million for the years ended December 31, 2012, 2011 and 2010, 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 2012, 2011 and 2010 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, 2012 and 2011, 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 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. Restricted cash and securities are stated at cost which approximates fair value as of December 31, 2012 and 2011.
Derivative Financial Instruments
All derivative 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 or when they are no longer effective. 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. 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. The Company recognized bad debt expense, net of recoveries, of approximately $15 million in 2012, $6 million in 2011 and $16 million in 2010.
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 in 2011, 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 and 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 3 to 7 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 3 years.
Capitalized labor and related costs associated with employees and contract labor working on capital projects were approximately $146 million, $87 million and $68 million for the years ended December 31, 2012, 2011 and 2010, 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, the physical condition of the Company's property, plant and equipment, and other relevant factors.
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 prior to the sale of the coal mining business in November 2011. Changes in the liability due to revisions to the amount or timing of 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.
The Company's goodwill impairment review process considers the fair value of each reporting unit relative to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is performed. If the carrying value of the reporting unit exceeds its fair value, then a second step must be performed, and the implied fair value of the reporting unit's goodwill must be determined and compared to the carrying value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then an impairment loss equal to the difference will be recorded. Beginning with the 2011 assessment in accordance with updated accounting guidance, prior to performing the two step evaluation, an assessment of qualitative factors may be performed to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value. If it is determined that it is unlikely that the carrying value exceeds the fair value, the Company is not required to complete the two step goodwill impairment evaluation.
In 2012, the Company's reporting units consist of its three regional operating units in: North America; Europe, the Middle East and Africa ("EMEA"); and Latin America. In 2011, the Company's reporting units were consistent with its reportable segments of Level 3 and Global Crossing, representing the stand-alone operations of each legacy business. In 2010, the Company's reporting units were consistent with its reportable segments of communications and coal mining.
In 2012 and 2011, the Company conducted its assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value. During 2010, the Company 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.
The Company's indefinite-lived intangibles assets impairment review process compares the fair value of the indefinite-lived intangible assets to their respective carrying values. If the fair value of the indefinite-lived intangible assets exceeds their carrying values, then the indefinite-lived intangible assets are not impaired. If the carrying value of the indefinite-lived intangible assets exceeds their fair value, then an impairment loss equal to the difference will be recorded. In accordance with recently issued accounting guidance, an entity may assess 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 the carrying value exceeds the fair value, then the entity is no longer required to complete the two step indefinite-lived intangible assets impairment evaluation.
In 2012, the Company conducted its indefinite-lived intangible assets impairment analysis using the qualitative assessment to determine whether it is more likely than not that the fair value of its indefinite-lived intangible assets exceeds the carrying value. In 2011 and 2010, the Company estimated the fair value of its indefinite-lived intangible assets primarily utilizing an income approach. The Company recognizes an impairment loss when the estimated fair value of the 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 2012, 2011 and 2010 and in each case concluded that its goodwill was not impaired in any of those periods. The Company conducted its indefinite-lived intangible asset impairment analysis at the end of 2012 and 2010 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 4 to 12 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 asset groups 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 2012, 2011 and 2010 and in each case 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. From time to time, 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 17%, 24% and 27% of Level 3's communications revenue for the years ended December 31, 2012, 2011 and 2010, respectively.
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 the Amalgamation with Global Crossing, which 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 a number of shares of Level 3 common stock equal to 16 times (unadjusted for the 1 for 15 reverse stock split completed on October 19, 2011) the number of Global Crossing common shares covered by such Global Crossing options, 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 a number of shares of Level 3 common stock equal to 16 times (unadjusted for the 1 for 15 reverse stock split completed on October 19, 2011) the number of Global Crossing common shares covered by such restricted stock units.

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."). 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, Inc. (the “Notes Assumption”), and the funds were released from the escrow account. The net aggregate proceeds from the Tranche B II Term Loan and 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 of common stock, adjusted for the October 19, 2011, 1 for 15 reverse stock split, 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.

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 determined that the aggregate consideration for acquisition accounting, including assumed debt, approximated $3.4 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 Latin America, Asia and the Pacific region, an improved credit profile and reduced financial leverage attributed to enhanced financial and operational scale, and the opportunity for investment and network expansion. The Company has a comprehensive portfolio of voice, video, and data services, which operates 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. The assets acquired and liabilities assumed of Global Crossing were 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, was completed in October 2012. The following is the final allocation of the purchase price.

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

Property, Plant, and Equipment
3,098

Goodwill
1,123

Identifiable Intangibles
106

Other Assets
651

Total Assets
5,204

 
 
Liabilities:
 
Long-term Debt
(1,554
)
Other Liabilities
(1,688
)
Total Liabilities
(3,242
)
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 could 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.

As a result of refinements to the preliminary purchase price allocation that were made during the nine months ended September 30, 2012, there were changes to the initial amount of goodwill determined in the fourth quarter of 2011, which have been reflected in the above table. The refinements were primarily a result of changes in the purchase price allocation for estimated tax valuation allowances and reserves. These changes are the result of additional information obtained since the filing of the Company's Form 10-K for the year ended December 31, 2011. The effect of the adjustments did not result in a material change to previously reported amounts.

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 January 1, 2010 (dollars in millions, except per share data).

 
Year Ended December 31,
 
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 a net decrease in depreciation and amortization expense due to the Company, in connection with the Amalgamation, increasing the estimated useful lives of the acquired conduit, fiber and certain transmission equipment while increasing the fair value of tangible and intangible assets, decreasing 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 unaudited 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 unaudited 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 and restructuring charges in the Company's consolidated statements of operations during the period that such costs were incurred. Since the acquisition date, Level 3 incurred total acquisition related transaction costs of approximately $49 million through December 31, 2012 which is unchanged from December 31, 2011. In 2012 and 2011, Level 3 incurred total acquisition related integration costs of approximately $81 million and $32 million, respectively.

In April 2011, Level 3 adopted a Stockholder Rights Plan to protect its U.S. federal net operating loss carry forwards from certain Internal Revenue Code Section 382 limitations. On May 24, 2012, the stockholders of the Company ratified such adoption. 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 U.S. federal net operating loss carryforwards 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 based compensation awards and other dilutive securities. No such items were included in the computation of diluted loss per share in 2012, 2011 and 2010 because the Company incurred a loss from continuing operations in each of these periods and the effect of inclusion would have been anti-dilutive.
The effect of approximately 35 million, 39 million and 52 million shares issuable pursuant to the various series of convertible notes outstanding at December 31, 2012, 2011 and 2010, 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 7 million, 4 million and 3 million stock options, outperform stock options, restricted stock units and warrants outstanding at December 31, 2012, 2011 and 2010, 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 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 which was included in the consolidated statements of operations within "Income from Discontinued Operations" in the fourth quarter of 2011. Results for 2011 and 2010, exclusive of the gain on the transaction in 2011, were not significant. The financial results of the coal mining business were included in the Company's consolidated results of operations through the date of sale, and the years ended December 31, 2011 and 2010 have been revised to reflect the presentation within discontinued operations.
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, 2012 and 2011 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2012
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(43
)
 
30

Facility and Leasehold Improvements
 
2,050

 
(1,074
)
 
976

Network Infrastructure
 
8,342

 
(3,058
)
 
5,284

Operating Equipment
 
5,506

 
(3,997
)
 
1,509

Furniture, Fixtures and Office Equipment
 
249

 
(166
)
 
83

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
122

 
—

 
122

 
 
$
16,558

 
$
(8,359
)
 
$
8,199

December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,046

 
(978
)
 
1,068

Network Infrastructure
 
8,189

 
(2,817
)
 
5,372

Operating Equipment
 
4,978

 
(3,680
)
 
1,298

Furniture, Fixtures and Office Equipment
 
228

 
(142
)
 
86

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136


Capitalized business support systems and network construction costs that have not been placed in service have been classified as construction-in-progress.
Depreciation expense was $659 million in 2012, $706 million in 2011 and $775 million in 2010.
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.
As a result of a strategic review of the Company's real estate portfolio in the fourth quarter of 2012, the Company completed an updated analysis and revised its estimated future cash flows of its asset retirement obligations. The analysis required estimating the probability or likelihood that the Company will be required to remove certain of its network infrastructure and restore leased properties, and the timing and amount of eventual costs. The analysis resulted in the downward revision of the Company's asset retirement obligation liability. This change in the estimated cash flows resulted in a non-cash gain of $49 million recorded within selling, general and administrative expense, and depreciation expense, or $0.23 basic and diluted net loss per share.
In conjunction with its review of the ROW obligation, the Company identified an error in its assumptions used to estimated its ROW obligation related to the extension of the useful lives of its conduit assets effective October 1, 2011 (See Note 1 - Organization and Summary of Significant Accounting Policies). The Company recorded a non-cash benefit of approximately $21 million recorded within selling, general and administrative expense, or $0.10 basic and diluted net loss per share during the fourth quarter of 2012 for the change in the ROW term used to estimate its ROW obligation. The reduction in the asset retirement obligations liability includes the change in estimate of the ROW term that arose in prior periods, which 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.
As a result of the total revisions in estimated amount and timing of cash flows for asset retirement obligations, the Company reduced its asset retirement obligations liability by $73 million with an offsetting reduction to property, plant and equipment of $24 million, selling, general and administrative expenses of $47 million and depreciation and amortization of $2 million. The Company first reduced property, plant and equipment to the extent of the carrying amount of the related asset initially recorded when the asset retirement obligations were established. The amount of the remaining reduction to the asset retirement obligations were recorded as a reduction to depreciation expense to the extent of historical deprecation of the related asset and then to selling, general and administrative expenses.
In 2011, the asset retirement obligations for certain leased facilities were primarily increased by liabilities assumed in the Global Crossing acquisition.
The following table provides asset retirement obligation activity for the years ended December 31, 2012 and 2011 (dollars in millions):
 
 
2012
 
2011
Asset retirement obligation at January 1
 
$
121

 
$
74

Accretion expense
 
11

 
9

Liabilities assumed in Global Crossing acquisition
 
—

 
41

Liabilities settled
 
(4
)
 
(2
)
Revision in estimated cash flows
 
(73
)
 
—

Effect of foreign currency rate change
 
—

 
(1
)
Asset retirement obligation at December 31
 
$
55

 
$
121

Goodwill
Goodwill
Goodwill
The changes in the carrying amount of goodwill during the years ended December 31, 2012 and 2011 are as follows (dollars in millions):
 
Total
Balance as of January 1, 2011
$
1,427

Goodwill acquired in Global Crossing acquisition
1,110

Effect of foreign currency rate change
4

Balance as of December 31, 2011
2,541

Goodwill adjustments
24

Balance as of December 31, 2012
$
2,565



The Company conducted its annual goodwill impairment analysis at December 31, 2012 and 2011. As a result of the Company's annual assessment, Level 3 concluded that its goodwill was not impaired in 2012 or 2011.
Acquired Intangible Assets
Acquired Intangible Assets
Acquired Intangible Assets

Identifiable acquisition-related intangible assets as of December 31, 2012 and December 31, 2011 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
December 31, 2012
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
776

 
$
(633
)
 
$
143

Trademarks
55

 
(17
)
 
38

Patents and Developed Technology
158

 
(103
)
 
55

 
989

 
(753
)
 
236

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,021

 
$
(753
)
 
$
268

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



During the fourth quarter of 2012, the Company conducted its long-lived assets and indefinite-lived intangible assets impairment analyses and concluded that there was no impairment.

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.

Acquired finite-lived intangible asset amortization expense was $90 million in 2012, $99 million in 2011 and $95 million in 2010.
At December 31, 2012, the weighted average remaining useful lives of the Company's acquired finite-lived intangible assets was 2.9 years for customer contracts and relationships, 4.0 years for patents and developed technology and 2.8 years for trademarks.
As of December 31, 2012, 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):

2013
$
73

2014
61

2015
45

2016
28

2017
13

Thereafter
16

 
$
236




Restructuring Charges
Restructuring Charges
Restructuring Charges

Employee Separations

Changing economic and business conditions as well as organizational structure optimization efforts have caused the Company to initiate from time to time various workforce reductions resulting in involuntary employee terminations. The Company also has initiated multiple workforce reductions resulting from the integration of previously acquired companies. During 2012 and 2011, the Company initiated workforce reductions primarily as a result of the Amalgamation. During 2010, the Company did not initiate any significant workforce reductions. Restructuring charges totaled $34 million, $11 million and $2 million in 2012, 2011 and 2010, respectively. As of December 31, 2012 and 2011, the Company had $16 million and $5 million, respectively, of employee termination liabilities.

Facility Closings

The Company also has accrued contract termination costs of $35 million and $43 million as of December 31, 2012 and December 31, 2011, 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 charge of approximately $2 million, and a benefit of $3 million and $5 million in 2012, 2011 and 2010, respectively, 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.
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, capital leases, other liabilities, interest rate swaps and long-term debt (including the current portion) as of December 31, 2012 and 2011. The carrying values of cash and cash equivalents, restricted cash and securities, accounts receivable, accounts payable, capital leases and other liabilities approximated their fair values at December 31, 2012 and 2011. The interest rate swaps 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 and premiums, was $8.7 billion and $8.5 billion as of December 31, 2012 and 2011, 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 and disclosures 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— Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2— Unadjusted quoted prices for similar assets or liabilities in active markets, or
unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
inputs other than quoted prices that are observable for the asset or liability.

Level 3— Unobservable inputs for the asset or liability.

The table below presents the fair values for the Company’s interest rate swaps and long-term debt as well as the input levels used to determine these fair values as of December 31, 2012 and 2011:

 
 
 
 
 
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,
2012
 
December 31,
2011
 
December 31,
2012
 
December 31,
2011
 
December 31,
2012
 
December 31,
2011
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
56

 
$
90

 
$
—

 
$
—

 
$
56

 
$
90

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
56

 
$
90

 
$
—

 
$
—

 
$
56

 
$
90

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Term Loans
$
2,603

 
$
2,567

 
$
2,631

 
$
2,518

 
$
—

 
$
—

Senior Notes
5,185

 
4,716

 
5,712

 
4,822

 
—

 
—

Convertible Notes
846

 
939

 
286

 
247

 
748

 
834

Commercial Mortgage
—

 
65

 
—

 
—

 
—

 
73

Capital Leases and Other
98

 
163

 
—

 
—

 
98

 
163

Total Long-term Debt, including the current portion:
$
8,732

 
$
8,450

 
$
8,629

 
$
7,587

 
$
846

 
$
1,070



The Company does not have any assets or liabilities measured using significant unobservable inputs (Level 3).

Derivatives

The fair value of interest rate swaps are estimated 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.

Term Loans

The fair value of the Term Loans referenced above was approximately $2.6 billion and $2.5 billion at December 31, 2012 and 2011, respectively. The fair value of each loan is based on the December 31, 2012 and 2011 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, February 2016, September 2018 and August 2019) and liquidity, among other loan characteristics and relative value across other instruments of similar terms. The interest spread for the Tranche A Term Loan was LIBOR plus 2.25% (aggregate principal value) and is LIBOR plus 4.25% with a LIBOR floor of 1.5% for both the Tranche B II Term Loan and Tranche B III Term Loan. The interest spreads are LIBOR plus 3.25% for the Tranche B 2016 Term Loan and LIBOR plus 3.75% for the Tranche B 2019 Term Loan, with the LIBOR floor set at minimum of 1.5% on both loans. The interest spread is LIBOR plus 3.25% for the Tranche B-II 2019 Term Loan, with the LIBOR floor set at minimum of 1.5%.

The Term Loans are secured by a pledge of the equity interests in certain U.S.-based subsidiaries of Level 3 Financing, Inc.; 65% of the equity interests in each of Level 3 Financing, Inc.’s Canadian subsidiary and its Bermuda subsidiary that indirectly owns Global Crossing's non-U.S. subsidiaries; and liens on the assets of Level 3 Communications, Inc. and certain U.S.-based subsidiaries of Level 3 Financing, Inc. In addition, Level 3 Communications, Inc. and certain U.S.-based subsidiaries of Level 3 Financing, Inc. have provided full and unconditional guarantees of the obligations under the Term Loans.

Senior Notes

The fair value of the Senior Notes referenced above was approximately $5.7 billion and $4.8 billion at December 31, 2012 and 2011, respectively, based on market prices. The fair value of each instrument was based on the December 31, 2012 and 2011 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 3.75% to 11.875%), corporate and security credit ratings, maturity date (ranging from 2014 to 2020) 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 and the 8.875% Senior Notes due 2019 were issued by the Company and are not guaranteed by any of the Company's subsidiaries. The remaining Senior Notes are obligations of Level 3 Financing, Inc. and are all fully and unconditionally guaranteed by Level 3 Communications, Inc. and by Level 3 Communications, LLC.

Convertible Notes

The fair value of the Company’s actively traded 6.5% Convertible Senior Notes due 2016 was approximately $286 million and $247 million at December 31, 2012 and 2011, respectively. The fair value of the Company’s actively traded Convertible Notes referenced above is based on the trading quotes as of December 31, 2012 and 2011 provided by large financial institutions that trade in the Company’s securities. The 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, was approximately $748 million and $834 million at December 31, 2012 and 2011, respectively. A portion of the Company's 15% Convertible Senior Notes due 2013 were exchanged for common stock during the first quarter of 2012, as discussed in Note 12 - Long-Term Debt. 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.

Commercial Mortgage

During the third quarter of 2012, the outstanding principal amount of the Commercial Mortgage was fully repaid (see Note 12 - Long Term Debt). The fair value of the Commercial Mortgage was approximately $73 million at December 31, 2011 as compared to the carrying amount of $65 million. The Commercial Mortgage was not actively traded and its fair value was 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 included the anticipated scheduled mortgage payments and observable market yields on other actively traded debt of similar characteristics and collateral type.

Prior to its repayment, the Commercial Mortgage was a secured obligation of HQ Realty, Inc., a wholly owned subsidiary of the Company. HQ Realty, Inc.’s obligations under the Commercial Mortgage were 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. restricted cash and reserve accounts. Upon repayment, restricted cash and reserve accounts were released.
Derivative Financial Instruments
Derivative Financial Instruments
Derivative Financial Instruments

The Company has floating rate long-term debt (see Note 12 - Long-Term Debt). Such debt exposes 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 uses derivative financial instruments, primarily interest rate swaps, in an attempt 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 does not use derivative financial instruments for speculative purposes.

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

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



On a quarterly basis, the Company evaluated the effectiveness of the hedges by measuring the extent to which the change in the variable portion of the interest rate swaps offsets the changes in interest expense paid due to fluctuations in the LIBOR-based interest rate. Prior to August 6, 2012, these derivatives were deemed effective cash flow hedges and hedge ineffectiveness was not material in any periods presented. As a result, the change in the fair value of the interest rate swap agreements was reflected in AOCI and was subsequently reclassified into earnings through an interest expense yield adjustment in respect of the hedged debt obligation as periodic settlements occurred throughout the term of the swaps by the making of interest payments on such debt.

As a result of the refinancing of the Tranche A Term Loan on August 6, 2012, the two interest rate swap agreements maturing in early 2014 that had effectively hedged changes in the interest rate on a portion of the Tranche A Term Loan were deemed "ineffective" under GAAP. The Company recognized a non-cash loss on the agreements of approximately $60 million (excluding accrued interest) in the third quarter of 2012, which represented the cumulative loss recorded in AOCI at the date the instruments ceased to qualify as hedges (see Note 12 - Long-Term Debt). After August 6, 2012, the Company will reflect the change in the fair value of the swaps in Other Income in its Consolidated Statement of Operations until maturity of the swaps in early 2014. For the year ended December 31, 2012, the Company recognized a loss of $4 million in Other, net in the Company's Consolidated Statement of Operations.

The Company also issued certain equity conversion rights associated with debt instruments, which were not designated as hedging instruments, but were considered derivative instruments. The Company did not have a remaining liability associated with its equity conversion rights as of December 31, 2012 and 2011. Changes in these derivatives resulted in the Company recognizing no gains for the years ended December 31, 2012 and 2011 and a gain of $10 million for the year ended December 31, 2010.

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, 2012
 
December 31, 2011
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
90

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
December 31, 2012
 
December 31, 2011
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Interest rate swap agreements
 
Other noncurrent liabilities
 
$
56

 
Other noncurrent liabilities
 
$
—



The amount of gains (losses) recognized in Other Comprehensive Income (Loss) consists of the following (dollars in millions):

 
 
Year Ended December 31,
Derivatives designated as hedging instruments
 
2012
 
2011
 
2010
Cash flow hedging contracts
 
$
90

 
$
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
 
2012
 
2011
Cash flow hedging contracts
 
Interest Expense
 
$
(26
)
 
$
(46
)


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/Loss recognized in
Income/Loss on Derivative
 
 
 
 
 
 
 
 
2012
 
2011
 
2010
Embedded equity conversion rights
 
Other Income (Expense)—Other, net
 
$
—

 
$
—

 
$
10

Interest rate swap agreements
 
Other Income (Expense)—Other, net
 
(64
)
 
—

 
—



The Company is exposed to credit related losses in the event of non-performance by counterparties. The counterparties to the financial derivatives the Company has entered 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.
Long-Term Debt
Long-Term Debt
Long-Term Debt

As of December 31, 2012 and December 31, 2011, long-term debt was as follows:
(dollars in millions)
 
December 31,
2012
 
December 31,
2011
Senior Secured Term Loan*
 
$
2,614

 
$
2,600

9.25% Senior Notes due 2014
 
—

 
807

Floating Rate Senior Notes due 2015 (4.469% as of December 31, 2012 and 4.202% as of December 31, 2011)
 
300

 
300

8.75% Senior Notes due 2017
 
—

 
700

10% Senior Notes due 2018
 
640

 
640

11.875% Senior Notes due 2019
 
605

 
605

9.375% Senior Notes due 2019
 
500

 
500

8.125% Senior Notes due 2019
 
1,200

 
1,200

8.875% Senior Notes due 2019
 
300

 
—

8.625% Senior Notes due 2020
 
900

 
—

7% Senior Notes due 2020
 
775

 
—

15% Convertible Senior Notes due 2013
 
172

 
272

7% Convertible Senior Notes due 2015
 
200

 
200

7% Convertible Senior Notes due 2015 Series B
 
275

 
275

6.5% Convertible Senior Notes due 2016
 
201

 
201

9.86% Commercial Mortgage due 2015
 
—

 
65

Capital Leases
 
86

 
131

Other
 
12

 
32

Total Debt Obligations
 
8,780

 
8,528

Unamortized (Discount) Premium:
 
 
 
 
Discount on Senior Secured Term Loan
 
(11
)
 
(33
)
Premium on 9.25% Senior Notes due 2014
 
—

 
3

Discount on 10% Senior Notes due 2018
 
(10
)
 
(11
)
Discount on 11.875%Senior Notes due 2019
 
(9
)
 
(10
)
Discount on 9.375% Senior Notes due 2019
 
(8
)
 
(9
)
Discount on 8.125% Senior Notes due 2019
 
(8
)
 
(9
)
Discount on 7% Convertible Senior Notes due 2015
 
(2
)
 
(2
)
Discount due to embedded derivative contracts
 
—

 
(7
)
Total Unamortized (Discount) Premium
 
(48
)
 
(78
)
Carrying Value of Debt
 
8,732

 
8,450

Less current portion
 
(216
)
 
(65
)
Long-term Debt, less current portion
 
$
8,516

 
$
8,385


* The $599 million Tranche B 2016 Term Loan due 2016, the $815 million Tranche B 2019 Term Loan due 2019 and the $1.2 billion Tranche B-II 2019 Term Loan due 2019 had interest rates of 4.75%, 5.25% and 4.75% as of December 31, 2012, respectively. The $1.4 billion Tranche A Term Loan due 2014, that was prepaid in 2012, had an effective interest rate of 2.65% as of December 31, 2011, excluding the effect of the $1 billion notional amount interest rate swaps. The $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan due 2018, that were prepaid in 2012, had interest rates of 5.75% as of December 31, 2011.

2012 Debt Issuances, Redemptions, Exchanges and Registrations

During the fourth quarter of 2012, Level 3 Financing, Inc., a direct wholly owned subsidiary of Level 3 Communications, Inc. ("Level 3 Financing") refinanced its existing $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan under its existing senior secured credit facility through the creation of a new term loan in the aggregate principal amount of $1.2 billion. The new term loan was borrowed pursuant to an amended and restated credit agreement. The new term loan consists of a $1.2 billion senior secured term loan which matures on August 1, 2019 (the "Tranche B-II 2019 Term Loan"). The interest rate on the loan is LIBOR plus 3.25%, with LIBOR set at a minimum of 1.5%. The Tranche B-II 2019 Term Loan was priced at par. Debt issuance costs of approximately $13 million, were capitalized and are being amortized over the term of the Tranche B-II 2019 Term Loan as interest expense using the effective interest method. The Company recognized a loss on extinguishment of debt of $50 million as a result this transaction.

During the third quarter of 2012, Level 3 Financing refinanced its existing $1.4 billion Tranche A Term Loan under its existing senior secured credit facility through the creation of new term loans in the aggregate principal amount of $1.415 billion (the "New Term Loans") and cash on hand. The New Term Loans were borrowed pursuant to an amended and restated credit agreement. The New Term Loans consist of: (a) $600 million senior secured term loan which matures on February 1, 2016 (the “Tranche B 2016 Term Loan”), and (b) $815 million senior secured term loan which matures on August 1, 2019 (the “Tranche B 2019 Term Loan”). The interest rates on the loans are LIBOR plus 3.25% for the Tranche B 2016 Term Loan and LIBOR plus 3.75% for the Tranche B 2019 Term Loan, with LIBOR set at a minimum of 1.5% on both loans. The Tranche B 2016 Term Loan and the Tranche B 2019 Term Loan were priced at 99.5% and 99.0% of par, respectively. Debt issuance discounts of approximately $3 million and $8 million were reflected as a reduction in long-term debt and are being amortized as interest expense over the term of the Tranche B 2016 Term Loan and Tranche B 2019 Term Loan, respectively, using the effective interest method. The Company used the remaining net proceeds to repay $15 million in principal amount plus a premium for existing vendor financing obligations. Debt issuance costs of approximately $9 million and $12 million were capitalized and are being amortized over terms of the Tranche B 2016 Term Loan and Tranche B 2019 Term Loan, respectively, as interest expense using the effective interest method. The Company recognized a loss on extinguishment of debt of $9 million as a result of this transaction. In connection with the refinancing of the Tranche A Term Loan, the Company recognized a $60 million non-cash loss on two interest rate swap agreements that had previously hedged changes in the interest rate on $1 billion notional amount of floating rate debt.

Also during the third quarter of 2012, Level 3 Financing completed the offering of $775 million aggregate principal amount of its 7% Senior Notes due 2020 (the "7% Senior Notes"). The net proceeds from the offering of the notes, along with cash on hand were used to redeem all of the outstanding 8.75% Senior Notes due 2017 issued by Level 3 Financing, including the payment of accrued interest and applicable premiums, and in connection with that redemption, the indenture relating to the 8.75% Senior Notes due 2017 was discharged. Level 3 Financing redeemed its 8.75% Senior Notes due 2017 at a price of 104.375% of the principal amount and recognized a loss on extinguishment of debt of $40 million. The 7% Senior Notes were priced at 100% of their principal amount and will mature on June 1, 2020. Interest on the notes accrues from August 6, 2012 and will be payable on June 1 and December 1 of each year, beginning on December 1, 2012. Debt issuance costs of approximately $15 million, were capitalized and are being amortized over the term of the 7% Senior Notes as interest expense using the effective interest method. The 7% Senior Notes are not registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The 7% Senior Notes became fully and unconditionally guaranteed by Level 3 Communications, LLC during the fourth quarter of 2012.

Additionally during the third quarter of 2012, Level 3 Communications, Inc. completed the offering of $300 million aggregate principal amount of its 8.875% Senior Notes due 2019 (the "8.875% Senior Notes"). The net proceeds from the offering of the notes are being used for general corporate purposes, including the potential repurchase, redemption, repayment or refinancing of the Company's and its subsidiaries' existing indebtedness from time to time. The 8.875% Senior Notes were priced at 100% of their principal amount and will mature on June 1, 2019. Interest on the notes accrues from August 1, 2012 and will be payable on June 1 and December 1 of each year, beginning on December 1, 2012. Debt issuance costs of approximately $7 million were capitalized and are being amortized over the term of the 8.875% Senior Notes as interest expense using the effective interest method. The 8.875% Senior Notes are not registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws.

Also in the third quarter of 2012, the outstanding principal amount of the Commercial Mortgage due 2015 was fully repaid along with accrued interest.

During the second quarter of 2012, all of the originally placed 8.125% Senior Notes due 2019 were exchanged for a new issue of 8.125% 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. The 8.125% Senior Notes due 2019 became fully and unconditionally guaranteed by Level 3 Communications, LLC during the first quarter of 2012.

During the first quarter of 2012, Level 3 Financing completed the offering of $900 million aggregate principal amount of its 8.625% Senior Notes due 2020 (the "8.625% Senior Notes"). 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. Level 3 Financing redeemed its 9.25% Senior Notes due 2014 at a price of 102.313% of the principal amount and recognized a loss on extinguishment of debt of $22 million. The remaining net proceeds constituted purchase money indebtedness under the existing senior secured credit agreement and indentures of the Company and Level 3 Financing and were 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). The 8.625% Senior Notes will mature on July 15, 2020. Interest on the notes accrues from January 13, 2012 and will be payable on January 15 and July 15 of each year, beginning on July 15, 2012. Debt issuance costs of approximately $20 million were capitalized and are being amortized over the term of the 8.625% Senior Notes as interest expense using the effective interest method. During the second quarter of 2012, all of the originally placed notes were exchanged for a new issue of 8.625% Senior Notes due 2020 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. The 8.625% Senior Notes became fully and unconditionally guaranteed by Level 3 Communications, LLC during the second quarter of 2012.

Also in the first quarter of 2012, the Company entered into an exchange agreement for a portion of its 15% Convertible Senior Notes due 2013. Pursuant to the agreement, approximately $100 million aggregate principal amount of Level 3's outstanding 15% Convertible Senior Notes due 2013 was exchanged for approximately 3.7 million shares of Level 3 common stock into which the notes were convertible plus an additional 1.7 million shares for a total of approximately 5.4 million shares. The consideration was based on the market price for these notes which included an inducement premium and included a payment for accrued and unpaid interest from January 15, 2012 through March 15, 2012 of approximately $2 million. This transaction did not include the payment by the Company of any cash. The Company recognized a loss on inducement included in loss on extinguishment of debt of $39 million.

2011 Debt Issuances, Redemptions, Exchanges and Conversions

In the fourth quarter of 2011, the major debt obligations of Global Crossing that were outstanding at the time of the Amalgamation were repaid.

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 amended its existing credit agreement to incur an additional $650 million of borrowings through an additional tranche (the "Tranche B II Term Loan"). The Company borrowed the Tranche B II Term Loan from investors at a price of 99% of its principal amount. Debt issuance discount of approximately $7 million was reflected as a reduction in long-term debt. The Tranche B II Term Loan accrued interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. 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. The Tranche B II Term Loan which was to mature on September 1, 2018 was prepaid in the fourth quarter of 2012.

Also during the fourth quarter of 2011, Level 3 Financing amended its existing credit agreement to incur an additional $550 million of borrowings through an additional tranche (the "Tranche B III Term Loan"). The Company borrowed the Tranche B III Term Loan from investors at a price of 95% of its principal amount. Debt issuance discount of approximately $28 million was reflected as a reduction in long-term debt. The Tranche B III Term Loan accrued interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. 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. The Company recognized a loss on extinguishment of debt of $12 million and $15 million associated with the redemption and prepayment of the 3.5% Convertible Senior Notes due 2012 and the Tranche B Term Loan, respectively. The Tranche B III Term Loan which was to mature on September 1, 2018 was prepaid in the fourth quarter of 2012.

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 and recognized a loss on extinguishment of debt of less than $1 million.

Also in the third quarter of 2011, certain holders converted approximately $128 million of the Company's 15% Convertible Senior Notes due 2013 to common equity. Upon conversion, the Company issued an aggregate of approximately 5 million shares of Level 3 common stock, 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. The remaining 15% Convertible Senior Notes due 2013 were repaid at maturity on January 15, 2013.

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. 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 using the effective interest method.

Further in 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. 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 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 using the effective interest method.

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 (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 as interest expense using the effective interest method.

During the first quarter of 2011, Level 3 Financing 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. 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 as interest expense using the effective interest method. The net proceeds from the offering, were used to redeem a portion of Level 3 Financing’s outstanding 9.25% Senior Notes due 2014 during the second quarter of 2011. Level 3 Financing 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 of debt for the portion of the aggregate principal amount of the 9.25% Senior Notes due 2014 retired of approximately $23 million.

Also 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 (the “11.875% Senior Notes”). The Company issued its 11.875% Senior Notes to investors at a price of 98.173% of their principal amount. Debt issuance 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 as interest expense using the effective interest method. The net proceeds from the issuance of the 11.875% Senior Notes were used to redeem the Company’s 5.25% Convertible Senior Notes due 2011 and exchange the 9% Convertible Senior Discount Notes due 2013. As a result of the Company's redemption of 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 exchange of the outstanding $295 million aggregate principal amount of 9% Convertible Senior Discount Notes due 2013, the Company recognized a loss on extinguishment of debt of $20 million.

Senior Secured Term Loans

On March 13, 2007, Level 3 Communications, Inc., as guarantor, Level 3 Financing, 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. The $1.4 billion senior secured term loan (the "Tranche A Term Loan") had 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 amended and restated its existing senior secured Credit Agreement to increase the borrowings through the creation of a $280 million Tranche B Term Loan (the "Tranche B Term Loan") and had an interest rate of LIBOR plus 8.5% per annum, with LIBOR set at a minimum of 3.00%. The Tranche A Term Loan and Tranche B Term Loan which were to mature on March 13, 2014 were prepaid in August 2012 and November 2011, respectively. The $1.4 billion Tranche A Term Loan had an effective interest rate of 2.65% as of December 31, 2011, excluding the effect of the $1 billion notional amount interest rate swaps. As of December 31, 2011, the capitalized unamortized debt issuance costs remaining on the Tranche A Term Loan was $6 million.

The Company used a portion of the original net proceeds after transaction costs to repay Level 3 Financing'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.

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 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. Debt issuance discount of approximately $7 million was reflected as a reduction in long-term debt. The Tranche B II Term Loan accrued interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The Tranche B II Term Loan which was to mature on September 1, 2018 was prepaid in October 2012. 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 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. Debt issuance discount of approximately $28 million was reflected as a reduction in long-term debt. The Tranche B III Term Loan accrued interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The Tranche B III Term Loan which was to mature on September 1, 2018 was prepaid in October 2012. 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.

As of December 31, 2011, debt issuance discounts on the Tranche B II Term Loan and Tranche B III Term Loan, were $6 million and $27 million, respectively. The capitalized unamortized debt issuance costs for the Tranche B II Term Loan and Tranche B III Term Loan were $14 million and $8 million at December 31, 2011, respectively.

On August 6, 2012, Level 3 Financing refinanced its existing $1.4 billion Tranche A Term Loan under its existing senior secured credit facility through the creation of new term loans in the aggregate principal amount of $1.415 billion. The New Term Loans were borrowed pursuant to an amended and restated Credit Agreement, which reflects the amendments approved by the lenders. The New Term Loans consist of: (a) $600 million senior secured term loan which matures on February 1, 2016, and (b) $815 million senior secured term loan which matures on August 1, 2019. The Tranche B 2016 Term Loan requires repayment of 0.25% of the aggregate principal amount on the last day of each March, June, September and December, beginning with December 31, 2012 and ending with such last day to occur prior to maturity. The interest rates on the loans are LIBOR plus 3.25% for the Tranche B 2016 Term Loan and LIBOR plus 3.75% for the Tranche B 2019 Term Loan, with LIBOR set at a minimum of 1.5% on both loans. The Tranche B 2016 Term Loan and the Tranche B 2019 Term Loan were priced at 99.5% and 99.0% of par, respectively. Debt issuance discounts of approximately $3 million and $8 million were reflected as a reduction in long-term debt and are being amortized as interest expense over the term of the Tranche B 2016 Term Loan and Tranche B 2019 Term Loan, respectively, using the effective interest method. The Company used the net proceeds from the New Term Loans, along with cash on hand, to prepay Level 3 Financing's $1.4 billion Tranche A Term Loan under the existing Credit Agreement which was to mature in March 2014 and used remaining net proceeds to repay $15 million in principal amount plus premium for existing vendor financing obligations. Debt issuance costs for the Tranche B 2016 Term Loan and the Tranche B 2019 Term Loan of approximately $9 million and $12 million, respectively, were capitalized and are being amortized over the respective terms of those term loans as interest expense using the effective interest method.

As of December 31, 2012, debt issuance discounts on the Tranche B 2016 Term Loan and Tranche B 2019 Term Loan, were $3 million and $8 million, respectively. The capitalized unamortized debt issuance costs for the Tranche B 2016 Term Loan and Tranche B 2019 Term Loan were $8 million and $11 million at December 31, 2012, respectively.

On October 4, 2012, Level 3 Financing refinanced its existing $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan under its existing senior secured credit facility through the creation of a new term loan in the aggregate principal amount of $1.2 billion. The Tranche B-II 2019 Term Loan was borrowed pursuant to an amended and restated Credit Agreement. The Tranche B-II 2019 Term Loan consists of a $1.2 billion senior secured term loan which matures on August 1, 2019. The interest rate on the loan is LIBOR plus 3.25%, with LIBOR set at a minimum of 1.5%. The Tranche B-II 2019 Term Loan was priced at par. The Company used the net proceeds from the Tranche B-II 2019 Term Loan, along with cash on hand, to prepay Level 3 Financing's $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan under the existing Credit Agreement which were to mature in September 2018. Debt issuance costs of approximately $13 million were capitalized and are being amortized over the term of the Tranche B-II 2019 Term Loan as interest expense using the effective interest method. As a result of amortization, the capitalized debt issuance costs have been reduced to $13 million at December 31, 2012.

Level 3 Financing 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. Interest is payable in cash at the end of each LIBOR period elected in arrears, provided that in the case of a six month interest period, interim interest payments are required at the end of the first three months.

Level 3 Financing'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 includes certain negative covenants which restrict the ability of the Company, Level 3 Financing and any restricted subsidiary to engage in certain activities. The Senior Secured Term Loan also contains certain events of default. It does not require the Company or Level 3 Financing to maintain specific financial ratios or other financial metrics.

Floating Rate Senior Notes due 2015 and the redeemed 8.75% Senior Notes due 2017

On February 14, 2007, Level 3 Financing 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 were redeemed at a price of 104.375% of the principal amount in the third quarter of 2012.

The 2015 Floating Rate Senior Notes are senior unsecured, unsubordinated obligations of Level 3 Financing ranking equal in right of payment with all other senior unsecured, unsubordinated obligations of Level 3 Financing. Level 3 Communications, Inc. and Level 3 Communications, LLC have guaranteed the 2015 Floating Rate Senior Notes (see Note 17 - Condensed Consolidating Financial Information). Interest on the 2015 Floating Rate Senior Notes accrues at LIBOR plus 3.75% per annum, reset semiannually. The interest rate was 4.469% at December 31, 2012. Interest on the 2015 Floating Rate Senior Notes is payable semiannually in cash on February 15 and August 15 beginning August 15, 2007. The principal amount of the 2015 Floating Rate Senior Notes will be due on February 15, 2015. Level 3 Financing may redeem the 2015 Floating Rate Notes, in whole or in part, at any time, without the payment of a premium. 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 $6 million were capitalized and are being amortized over the term of the Floating Rate Senior Notes due 2015 as interest expense using the effective interest method. As a result of amortization, the capitalized debt issuance costs have been reduced to $2 million at December 31, 2012.

10% Senior Notes due 2018

On January 20, 2010, Level 3 Financing received $613 million proceeds, after deducting a $13 million debt issuance 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's purchase of its 12.25% Senior Notes due 2013 in a concurrent tender offer and consent solicitation. The 10% Senior Notes will mature on February 1, 2018 and are senior unsecured, unsubordinated obligations of Level 3 Financing ranking equal in right of payment with all other senior unsecured, unsubordinated obligations of Level 3 Financing. The 10% Senior Notes 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, 2012, debt issuance discount remaining was $10 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $10 million at December 31, 2012.

The 10% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before February 1, 2014, at a redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. Level 3 Financing may redeem the 10% Senior Notes, in whole or in part, at any time on or after February 1, 2014. If a redemption occurs before February 1, of the years indicated below:
Year
Redemption
Price
2014
105.000
%
2015
102.500
%
2016
100.000
%


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 Company issued 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. Debt issuance 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 as interest expense using the effective interest method.

As of December 31, 2012, debt issuance discount remaining was $9 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $7 million at December 31, 2012.

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 February 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, Level 3 Financing issued $500 million aggregate principal amount of its 9.375% Senior Notes due 2019 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’s outstanding 9.25% Senior Notes due 2014 on April 4, 2011. 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 ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing. 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 as interest expense using the effective interest method.

As of December 31, 2012, debt issuance discount remaining was $8 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $9 million at December 31, 2012.

The 9.375% Senior Notes Due 2019 are subject to redemption at the option of Level 3 Financing 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 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 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 to investors at a price of 99.264% of their principal amount. 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 using the effective interest method. The 8.125% Senior Notes will mature on July 1, 2019 and are unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 and Level 3 Communications LLC. 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 ("Series B") 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. 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 using the effective interest method.

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 (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 method. Level 3 Financing assumed the obligations under the8.125% 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, 2012, debt issuance discount remaining was $8 million. As a result of amortization, the capitalized debt issuance costs have been reduced to $29 million at December 31, 2012.

The 8.125% Senior Notes will be subject to redemption at the option of Level 3 Financing, 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 July 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 July 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 July 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 originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement. In April 2012, all of the originally placed notes were exchanged for a new issue of 8.125% 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.

8.875% Senior Notes due 2019

On August 1, 2012, Level 3 Communications, Inc. completed the offering of $300 million aggregate principal amount of its 8.875% Senior Notes due 2019. Debt issuance costs of approximately $7 million were capitalized and are being amortized over the term of the 8.875% Senior Notes as interest expense using the effective interest method. The net proceeds from the offering of the notes are being used for general corporate purposes, including the potential repurchase, redemption, repayment or refinancing of the Company's and its subsidiaries' existing indebtedness from time to time. The 8.875% Senior Notes were priced at 100% of their principal amount and will mature on June 1, 2019. Interest on the notes accrues from August 1, 2012 and will be payable on June 1 and December 1 of each year, beginning on December 1, 2012. The notes are senior unsecured obligations of Level 3 Communications, Inc., ranking equal in right of payment with all other senior unsecured obligations of Level 3. The notes will not be guaranteed by any of the Company's subsidiaries.

As a result of amortization, the capitalized debt issuance costs have been reduced to $6 million at December 31, 2012.

The 8.875% Senior Notes are subject to redemption at the option of Level 3 in whole or in part, at any time before June 1, 2015 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On and after June 1, 2015, Level 3 may redeem all or part of the 8.875% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning June 1, of the years indicated below:
Year
Redemption
Price
2015
104.438
%
2016
102.219
%
2017
100.000
%


In addition, at any time or from time to time on or prior to June 1, 2015, Level 3 may redeem up to 35% of the original aggregate principal amount of the 8.875% Senior Notes (including any additional 8.875% Senior Notes) at a redemption price equal to 108.875% of the principal amount of the 8.875% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 8.875% Senior Notes (including any additional 8.875% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice.

The 8.875% Senior Notes are not registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. In connection with the offering, Level 3 entered into a registration rights agreement pursuant to which Level 3 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 the issuance of the offered notes.

8.625% Senior Notes due 2020

On January 13, 2012, Level 3 Financing completed the offering of $900 million aggregate principal amount of its 8.625% Senior Notes due 2020. Debt issuance costs of approximately $20 million were capitalized and are being amortized over the term of the 8.625% Senior Notes as interest expense using the effective interest method. 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 net proceeds constituted purchase money indebtedness under the existing senior secured credit agreement and indentures of the Company and Level 3 Financing and were 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).

The 8.625% Senior Notes will mature on July 15, 2020. Interest on the notes accrues from January 13, 2012 and will be payable on January 15 and July 15 of each year, beginning on July 15, 2012. The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by the Company and became fully and unconditionally guaranteed by Level 3 Communications, LLC in the second quarter of 2012. The notes are unsecured, unsubordinated obligations of Level 3 Financing ranking equal in right of payment with all existing and future unsubordinated indebtedness of Level 3 Financing and are senior in right of payment to all existing and future indebtedness of Level 3 Financing expressly subordinated in right of payment to the notes.

As a result of amortization, the capitalized debt issuance costs have been reduced to $18 million at December 31, 2012.

The 8.625% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before January 15, 2016 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On and after January 15, 2016, Level 3 Financing may redeem all or part of the 8.625% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning January 15, of the years indicated below:
Year
Redemption
Price
2016
104.313
%
2017
102.156
%
2018
100.000
%


In addition, at any time or from time to time on or prior to January 15, 2015, Level 3 Financing may redeem up to 35% of the original aggregate principal amount of the 8.625% Senior Notes (including any additional 8.625% Senior Notes) at a redemption price equal to 108.625% of the principal amount of the 8.625% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 Financing of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 8.625% Senior Notes (including any additional 8.625% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice. The 8.625% Senior Notes due 2020 issued by Level 3 Financing were not originally registered under the Securities Act of 1933, as amended.

During the second quarter of 2012, all of the originally placed notes were exchanged for a new issue of 8.625% Senior Notes due 2020 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. The 8.625% Senior Notes became fully and unconditionally guaranteed by Level 3 Communications, LLC during the second quarter of 2012.

7% Senior Notes due 2020

On August 6, 2012, Level 3 Financing completed the offering of $775 million aggregate principal amount of its 7% Senior Notes due 2020. Debt issuance costs of approximately $15 million were capitalized and are being amortized over the term of the 7% Senior Notes as interest using the effective interest method. The net proceeds from the offering of the notes, along with cash on hand were used to redeem all of the outstanding 8.75% Senior Notes due 2017 issued by Level 3 Financing, including the payment of accrued interest and applicable premiums, and in connection with that redemption, the indenture relating to the 8.75% Senior Notes due 2017 was discharged. The 7% Senior Notes were priced at 100% of their principal amount and will mature on June 1, 2020. Interest on the notes accrues from August 6, 2012 and will be payable on June 1 and December 1 of each year, beginning on December 1, 2012. The notes are senior unsecured obligations of Level 3 Financing, ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing. The 7% Senior Notes are guaranteed on an unsecured basis by Level 3 Communications, Inc. and by Level 3 Communications, LLC.

As a result of amortization, the capitalized debt issuance costs have been reduced to $14 million at December 31, 2012.

The 7% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before June 1, 2016 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On or after June 1, 2016, Level 3 Financing may redeem all or part of the 7% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning June 1, of the years indicated below:
Year
Redemption
Price
2016
103.500
%
2017
101.750
%
2018
100.000
%


In addition, at any time or from time to time on or prior to June 1, 2015, Level 3 Financing may redeem up to 35% of the original aggregate principal amount of the 7% Senior Notes (including any additional 7% Senior Notes) at a redemption price equal to 107% of the principal amount of the 7% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 Financing of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 7% Senior Notes (including any additional 7% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice.

The 7% Senior Notes are not registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. In connection with the offering, the Company and Level 3 Financing entered into a registration rights agreement pursuant to which Level 3 and Level 3 Financing 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 the issuance of the 7% Senior Notes.

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 (the "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 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.

On July 6, 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 common stock, 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.

On March 13, 2012, the Company entered into an exchange agreement for a portion of its 15% Convertible Senior Notes due 2013. Pursuant to the agreement, approximately $100 million aggregate principal amount of Level 3's outstanding 15% Convertible Senior Notes due 2013 was exchanged for approximately 3.7 million shares of Level 3 common stock into which the notes were convertible plus an additional 1.7 million shares for a total of approximately 5.4 million shares. The consideration was based on the market price for these notes which included an inducement premium and included a payment for accrued and unpaid interest from January 15, 2012 through March 15, 2012 of approximately $2 million. This transaction did not include the payment by the Company of any cash.

On January 15, 2013, the Company repaid at maturity approximately $172 million of its 15% Convertible Senior Notes.

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, 2012.

7% Convertible Senior Notes due 2015

On June 26, 2009, Level 3 Communications, Inc. issued $200 million aggregate principal amount of 7% Convertible Senior Notes due 2015 under an indenture between Level 3 and The Bank of New York, as trustee. The 7% Convertible Senior 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 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 over the term of the 7% Convertible Senior Notes due 2015 as interest expense using the effective interest method. The capitalized unamortized debt issuance costs were $2 million at December 31, 2012.

6.5% Convertible Senior 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 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 over the term of the 6.5% Convertible Senior Notes as interest expense using the effective interest method. The capitalized unamortized debt issuance costs were $4 million at December 31, 2012.

Capital Leases

As of December 31, 2012, the Company had $86 million of capital leases. The Company leases property, equipment, certain dark fiber facilities and metro fiber under noncancelable IRU agreements that are accounted for as capital leases. Interest rates on these capital leases approximated 9.2% on average as of December 31, 2012.

Other Debt

As of December 31, 2012, the Company had $12 million of other debt with an average interest rate of 5.7%.

Covenant Compliance

At December 31, 2012 and 2011, 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 discounts and fair value adjustments) were as follows as of December 31, 2012 (dollars in millions):

2013
$
216

2014
23

2015
788

2016
788

2017
6

Thereafter
6,959

 
$
8,780





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 $135 million in 2012, $101 million in 2011 and $67 million in 2010.
The following table summarizes non-cash compensation expense and capitalized non-cash compensation for each of the three years ended December 31, 2012, 2011 and 2010 (dollars in millions):
 
2012
 
2011
 
2010
OSO
$
14

 
$
10

 
$
10

Restricted Stock Units and Shares
40

 
22

 
19

401(k) Match Expense
23

 
13

 
11

Restricted Stock Unit Bonus Grant
46

 
57

 
28

Management Incentive and Retention Plan
13

 
—

 
—

 
136

 
102

 
68

Capitalized Non-Cash Compensation
(1
)
 
(1
)
 
(1
)
 
$
135

 
$
101

 
$
67


The Company capitalizes non-cash compensation for those employees directly involved in the construction of the network, installation of services for customers or the development of business support systems.
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 $9 million, $12 million and $8 million in 2012, 2011 and 2010, respectively.
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.
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. There were no changes to the vesting schedule, or any other aspects of the non-cash compensation plans.
As of December 31, 2012, there was $21 million of unamortized compensation expense related to granted OSO units. The weighted average period over which this cost will be recognized is 2.16 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,
 
 
2012
 
2011
 
2010
S&P 500 Expected Dividend Yield Rate
 
2.05%
 
1.83%
 
2.00%
Expected Life
 
3 years
 
3 years
 
3 years
S&P 500 Expected Volatility Rate
 
23%
 
30%
 
30%
Level 3 Common Stock Expected Volatility Rate
 
39%
 
44%
 
51%
Expected S&P 500 Correlation Factor
 
0.32
 
0.39
 
0.40
Calculated Theoretical Value
 
110%
 
120%
 
132%
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. 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, 2012, 2011 and 2010 was approximately $29 million, $12 million and $10 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, 2010
 
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 granted
 
1,195,452

 
16.99

-
27.53

 
24.65

 
 
 
 
Options forfeited
 
(72,335
)
 
12.00

-
36.60

 
21.80

 
 
 
 
Options expired
 
(278,111
)
 
15.00

-
22.65

 
18.45

 
 
 
 
Options exercised
 
(67,299
)
 
10.50

-
13.80

 
12.48

 
 
 
 
Balance December 31, 2012
 
2,066,419

 
$
14.10

-
$
36.60

 
$
23.40

 
$
6.6

 
1.73



 
 
 
 
OSO units Outstanding
at December 31, 2012
 
OSO units Exercisable
at December 31, 2012
Range of Exercise Prices
 
Number
Outstanding
 
Weighted
Average
Remaining
Life (years)
 
Weighted
Average
Initial
Strike Price
 
Number
Exercisable
 
Weighted
Average
Initial
Strike Price
$
14.10

-
$
20.85

 
496,213

 
1.04
 
$
15.95

 
—

 
$
—

$
22.05

-
$
24.30

 
793,617

 
1.76
 
$
22.68

 
—

 
$
—

$
27.53

-
$
36.60

 
776,589

 
2.14
 
$
28.89

 
—

 
$
—

 
 
 
 
2,066,419

 
1.73
 
$
23.40

 
—

 
$
—


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, 2012. As noted above, all of the outstanding OSO units granted have an expected life of three years. The total intrinsic value of OSOs outstanding based on the Company's performance against the S&P 500® Index was zero, zero, and zero, as of December 31, 2012, 2011 and 2010, respectively.
The total realized value of OSO units settled was $0.8 million, $0.4 million and zero for the years ended December 31, 2012, 2011 and 2010, respectively. The Company issued zero, 13,742 and zero shares of Level 3 common stock upon the exercise of OSO units for the years ended December 31, 2012, 2011 and 2010, respectively. The Company paid cash in lieu of shares of Level 3 common stock for the realized value of OSO units settled for the year ended December 31, 2012. The number of shares of Level 3 common stock issued upon settlement of an OSO unit varies based upon the relative performance of Level 3 stock price and the S&P 500® Index between the initial grant date and settlement date of the OSO unit.
As of December 31, 2012, 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. As of December 31, 2012, there were no exercisable OSO units.
Restricted Stock and Units
Effective April 1, 2010, restricted stock units and shares are annually granted on July 1 to certain 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 $69 million, $35 million and $21 million for the years ended December 31, 2012, 2011 and 2010, 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, 2012, unamortized compensation cost related to nonvested restricted stock and restricted stock units was $43 million and the weighted average period over which this cost will be recognized is 2.8 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, 2010
 
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

Stock and units granted
 
2,869,584

 
24.13

Lapse of restrictions
 
(1,048,757
)
 
26.06

Stock and units forfeited
 
(214,634
)
 
24.92

Nonvested at December 31, 2012
 
3,636,976

 
$
24.71


The total fair value of restricted stock and restricted stock units whose restrictions lapsed in the years ended December 31, 2012, 2011 and 2010 was $27 million, $24 million and $23 million, respectively.
Management Incentive and Retention Plan
Effective March 2012, the Company adopted a Management Incentive and Retention Plan ("MIRP") as a means of encouraging key management personnel to remain employed with the Company or one of its subsidiaries and to reward the achievement of established performance criteria. The MIRP provides an opportunity to receive two types of awards: a retention award and an incentive award. Participants' retention and incentive awards can have a cash component only or a cash component and an equity component. The equity component is granted in the form of restricted stock units under the Stock Plan.
A summary of the retention restricted stock units granted under the MIRP is shown in the following table:
 
 
Number
 
Weighted Average
Grant Date
Fair Value
Nonvested at January 1, 2012
 
—

 
$
—

Stock and units granted
 
465,000

 
25.92

Lapse of restrictions
 
—

 
—

Stock and units forfeited
 
—

 
—

Nonvested at December 31, 2012
 
465,000

 
$
25.92


In addition, the number of restricted stock units that would be granted under the incentive portion of the MIRP based on expected performance would be 418,500 as of December 31, 2012.
The total fair value of retention and incentive restricted stock units awarded during the period ended December 31, 2012 under the MIRP, assuming performance attained against the performance benchmark, was $23 million.
As of December 31, 2012, unamortized compensation cost related to the MIRP was $10 million and the weighted average period over which this cost will be recognized is 1 year.
As of December 31, 2012, $11 million had been accrued in other current liabilities for the cash component of the MIRP.

Warrants
As of December 31, 2012, there were warrants to purchase 45,593 shares of Level 3 common stock outstanding with an exercise price of $73.50, which expired in January 2013. All of the warrants were fully vested and compensation expense had been fully recognized in the consolidated statements of operations.
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 $17,000 in 2012 and $17,500 in 2013. 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.
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 $23 million, $13 million and $11 million for the years ended December 31, 2012, 2011 and 2010, respectively. The Company's matching contributions are recorded as non-cash compensation and included in selling, general and administrative expenses. Former U.S.-based Global Crossing employees became eligible to participate in the Level 3 401(k) plan starting January 1, 2012.
Other 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 $7 million for the year ended December 31, 2012 and $2 million for the year ended December 31, 2011.
Non-Qualified Stock Options ("NQ Options")
On October 4, 2011, as part of the Amalgamation, the issued and outstanding options to purchase Global Crossing common shares were modified into options to purchase Level 3 common stock. There was no unrecognized compensation expense for NQ Options at the time of the Amalgamation and no additional NQ Options have been granted since the Amalgamation date.
Information regarding NQ Options outstanding 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

Exercised
(533,717
)
 
$
10.61

Forfeited
(2,149
)
 
$
14.39

Balance at December 31, 2012
62,324

 
$
12.18



The following table summarizes information concerning outstanding and exercisable NQ Options at December 31, 2012:
 
 
 
 
Options Outstanding and Exercisable
Exercise Prices
 
Number Outstanding
 
Weighted Average Remaining Contractual Life (in years)
 
Weighted Average Exercise Price per Share
$
9.53

 
28,549

 
0.9
 
$
9.53

$
14.43

 
33,775

 
2.0
 
$
14.43

Total
 
62,324

 
1.5
 
$
12.18


The weighted average remaining contractual term was 1.5 years for NQ Options exercisable as of December 31, 2012. The total intrinsic value of NQ Options outstanding and exercisable was approximately $1 million as of December 31, 2012. The total intrinsic value of NQ Options exercised between January 1, 2012 and December 31, 2012 was $6 million and Level 3 received $5 million for the exercise of these options. 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 balance sheet 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 $146 million and $137 million as of December 31, 2012 and 2011, respectively. The total benefit obligation was $166 million and $152 million as of December 31, 2012 and 2011, 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 $20 million, $12 million attributable to the Company and $8 million attributable to employees, as of December 31, 2012. The total funded status was an obligation of $15 million as of December 31, 2011.
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, 2012, $103 million, 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 and 60% in immediately-vested restricted stock units and shares of Level 3 common stock in the first quarter of 2013.
As of December 31, 2011, $136 million had been accrued in other current liabilities for this bonus plan, including employer liability for payroll taxes and charges. The Company paid out $72 million cash and 2.4 million immediately-vested restricted stock units in 2012 for this plan.
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 immediately-vested restricted stock units in 2011 for this plan.
Income Taxes
Income Taxes
Income Taxes
The following table summarizes the income tax benefit (provision) attributable to loss from continuing operations before income taxes for each of the three years ended December 31, 2012, 2011 and 2010:
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Current:
 
 
 
 
 
 
United States federal
 
$
—

 
$
—

 
$
—

State
 
(2
)
 
—

 
(1
)
Foreign
 
(36
)
 
(8
)
 
—

 
 
(38
)
 
(8
)
 
(1
)
Deferred, net of changes in valuation allowances:
 
 
 
 
 
 
United States federal
 
(3
)
 
(30
)
 
—

State
 
—

 
(1
)
 
—

Foreign
 
(7
)
 
(2
)
 
92

Income tax benefit (provision)
 
$
(48
)
 
$
(41
)
 
$
91


The United States and foreign components of income (loss) from continuing operations before income taxes for each of the three years ended December 31, 2012, 2011 and 2010 are as follows:

 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
United States
 
$
(434
)
 
$
(692
)
 
$
(542
)
Foreign
 
60

 
(94
)
 
(170
)
 
 
$
(374
)
 
$
(786
)
 
$
(712
)

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 three years ended December 31, 2012, 2011 and 2010 is shown in the following table:
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Computed tax benefit at statutory rate
 
$
131

 
$
275

 
$
250

Effect of earnings in jurisdictions outside of US
 
25

 
(13
)
 
(13
)
Change in valuation allowance
 
(145
)
 
(213
)
 
(130
)
Permanent items
 
(48
)
 
(44
)
 
(16
)
Indefinite-lived assets
 
(3
)
 
(26
)
 
—

Other, net
 
(8
)
 
(20
)
 
—

Income tax benefit (provision)
 
$
(48
)
 
$
(41
)
 
$
91


The components of the net deferred tax assets (liabilities) as of December 31, 2012 and 2011 are as follows:
 
 
2012
 
2011
 
 
(dollars in millions)
Deferred Tax Assets:
 
 
 
 
Accrued payroll and related benefits
 
$
119

 
$
101

Deferred revenue
 
271

 
276

Unutilized tax net operating loss carry forwards
 
4,611

 
3,996

Fixed assets and intangible assets
 
134

 
157

Intercompany loss
 
148

 
164

Other
 
162

 
193

Total Deferred Tax Assets
 
5,445

 
4,887

Deferred Tax Liabilities:
 
 
 
 
Fixed assets and intangible assets
 
(702
)
 
(542
)
Deferred revenue
 
(87
)
 
(93
)
Other
 
(45
)
 
(51
)
Foreign branch income
 
(37
)
 
(40
)
Total Deferred Tax Liabilities
 
(871
)
 
(726
)
Net Deferred Tax Assets before valuation allowance
 
4,574

 
4,161

Valuation Allowance
 
(4,697
)
 
(4,252
)
Net Deferred Tax (Liability) after Valuation Allowance
 
$
(123
)
 
$
(91
)
Balance sheet classification of deferred taxes:
 
 
 
 
Net current deferred income tax asset
 
$
9

 
$
12

Net current deferred income tax liability
 
(3
)
 
(3
)
Net non-current deferred income tax asset
 
219

 
246

Net non-current deferred income tax liability
 
(348
)
 
(346
)
Net Deferred Tax (Liability) after Valuation Allowance
 
$
(123
)
 
$
(91
)


During the twelve months ended December 31, 2012, the Company completed an extensive analysis of the Company's Internal Revenue Code ("IRC") Section 382 limitation that resulted in an increase of the amount of net operating loss carry forwards as of December 31, 2011 by approximately $1.0 billion on a pre-tax basis. There was no financial impact in the consolidated statement of operations associated with this increase as a full valuation allowance has been recorded against the additional deferred tax asset. Under the rules prescribed by U.S. IRC Section 382 and applicable regulations, if certain transactions occur with respect to an entity's capital stock that result in a cumulative ownership shift of more than 50 percentage points by 5% stockholders over a testing period, annual limitations are imposed with respect to the entity's ability to utilize its net operating loss carry forwards and certain current deductions against any taxable income the entity achieves in future periods.
As of December 31, 2012, the Company had net operating loss carry forwards of approximately $8.5 billion (net of IRC Section 382 limitation) for U.S. federal income tax purposes. These loss carry forwards expire in future years through 2032 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
2023
$
254

2024
1,302

2025
1,186

2026
1,029

2027
1,501

2028
445

2029
700

2030
703

2031
711

2032
$
695

 
$
8,526


As of December 31, 2012 the Company had state net operating loss carry forwards of approximately $7.3 billion which are subject to limitations on their utilization and have various expiration periods through 2032. The Company had approximately $6.4 billion of foreign jurisdiction net operating loss carry forwards which are subject to limitations on their utilization. The majority of these foreign jurisdiction tax loss carry forwards have no expiration period.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. A valuation allowance has been recorded against U.S. and certain 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.

The valuation allowance for deferred tax assets was approximately $4.7 billion as of December 31, 2012 and $4.3 billion as of December 31, 2011. The change in the valuation allowance from December 31, 2011 to December 31, 2012 is primarily due to the increase in the U.S. federal and state net operating loss carry forwards associated with a revision to the Company's prior IRC Section 382 limitation calculation, an increase to the U.S. federal and state tax NOL resulting from continued operational tax losses, offset by additional U.S. deferred tax liabilities from U.S. fixed assets and intangibles and the sale of net operating loss carry forward attributes in Sweden.
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 $18 million at December 31, 2012 and $15 million at December 31, 2011. If the remaining balance of $18 million of unrecognized tax benefits as of December 31, 2012 ($15 million as of December 31, 2011) were realized in a future period, it would result in a tax benefit of $18 million ($15 million as of December 31, 2011) and a reduction in the effective tax rate. The Company expects that the liability for uncertain tax positions will decrease by approximately $5 million (plus $4 million of associated interest and penalty) during the twelve months ended December 31, 2013. A reconciliation of the beginning and ending balance of unrecognized tax benefits follows (dollars in millions):
 
Amount
Balance as of January 1, 2010
$
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

Gross increases - tax positions of prior years
4

Gross increases - tax positions during 2012
1

Gross decreases - lapse of statute of limitations
(1
)
Gross decreases - settlement with taxing authorities
(1
)
Balance as of December 31, 2012
$
18


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 $22 million, $20 million and $12 million as of December 31, 2012, 2011 and 2010, 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 $3 million, zero and $2 million for the years ended December 31, 2012, 2011 and 2010, 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. As a result of the integration of Global Crossing (see Note 2 - Events Associated with the Amalgamation of Global Crossing) and the sale of the coal business during the fourth quarter of 2011, the Company reorganized its management reporting structure in 2012 to reflect the way in which it allocates resources and assesses performance. As a result of these changes, the Company is now comprised of one reportable segment for financial reporting purposes, representing its communications services 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 data presented in the following tables includes information for the years ended December 31, 2012, 2011 and 2010 for all statement of operations and cash flow information presented, and as of December 31, 2012 and 2011 for all balance sheet information presented. Information related to an acquired business is included from the date of acquisition, and information related to dispositions is included through the date of sale as discontinued operations. Revenue and the related expenses are attributed to countries based on where services are provided.
Segment information for the communications services business is summarized as follows:
 
 
Year Ended December 31,
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Revenue from external customers
 
$
6,376

 
$
4,333

 
$
3,591

 
 
 
 
 
 
 
Capital expenditures
 
$
743

 
$
494

 
$
435

 
 
 
 
 
 
 
Depreciation and amortization
 
$
749

 
$
805

 
$
870

 
 
 
 
 
 
 
Total assets
 
$
13,307

 
$
13,188

 
 

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

 
 
Year Ended December 31,
 
 
2012
 
2011
 
2010
Revenue from external customers:
 
 
 
 
 
 
North America
 
$
4,803

 
$
3,669

 
$
3,275

Europe:
 
 
 
 
 
 
United Kingdom
 
628

 
267

 
131

Germany
 
79

 
72

 
62

Other European Countries
 
196

 
163

 
123

Total Europe
 
903

 
502

 
316

Latin America:
 
 
 
 
 
 
Brazil
 
267

 
68

 
—

Argentina
 
101

 
23

 
—

Colombia
 
104

 
23

 
—

Other Latin American Countries
 
192

 
44

 
—

Total Latin America
 
664

 
158

 
—

Other
 
6

 
4

 
—

 
 
$
6,376

 
$
4,333

 
$
3,591

Long-lived assets:
 
 
 
 
 
 
North America
 
$
5,375

 
$
5,338

 
 
Europe:
 
 
 
 
 
 
United Kingdom
 
694

 
613

 
 
Germany
 
346

 
348

 
 
Other European Countries
 
530

 
596

 
 
Total Europe
 
1,570

 
1,557

 
 
Latin America:
 
 
 
 
 
 
Brazil
 
428

 
434

 
 
Argentina
 
377

 
387

 
 
Colombia
 
252

 
247

 
 
Other Latin American Countries
 
473

 
465

 
 
Total Latin America
 
1,530

 
1,533

 
 
Other
 
425

 
512

 
 
 
 
$
8,900

 
$
8,940

 
 

The Company includes all non-current assets, except for goodwill, in its long-lived assets.

Total revenue consists of:

1)
Core Network Services revenue from colocation and data center services, transport and fiber, IP and data services and voice services.

2)  
Wholesale Voice Services and Other revenue from long distance voice services, revenue from managed modem and its related intercarrier compensation services and revenue from the "SBC Master Services Agreement", which was obtained through an acquisition in 2005.

The following table provides revenue by service offering (dollars in millions):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Core Network Services
$
5,587

 
$
3,599

 
$
2,827

Wholesale Voice Services and Other
789

 
734

 
764

 
$
6,376

 
$
4,333

 
$
3,591



The prior year's revenue by service offering has been revised to conform to the current year's presentation.

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 to $277 million and are included in “Other” current liabilities and “Other Liabilities” in the Company's consolidated balance sheet as at December 31, 2012. 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.
Below is a description of material legal proceedings and other contingencies pending at December 31, 2012. 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 have received final federal court approval in multiple states and the parties are engaged in the claims process for those states. The settlement has also been presented to federal courts in additional states and approval is pending.

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.

Derivative Action

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 were consolidated as In  re Level 3 Communications, Inc. Derivative Litigation (Lead Case No. 2009CV59) (the “State Derivative Action”). The plaintiffs in the action alleged 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 complaint sought 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 plaintiffs undertook further assessment of the State Derivative Action following the final dismissal of a related securities class action lawsuit which was based upon similar allegations, and determined not to pursue the action further. The plaintiffs filed a motion for voluntary dismissal and the action was dismissed by the court on June 26, 2012.

Peruvian Tax Litigation
Beginning in 2005, one of the Company'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 the Peruvian subsidiary 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 for 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 amount of exposure has increased to $97 million.
The Company challenged the tax assessments during 2005 by filing administrative claims before SUNAT. During August 2006 and June 2007, SUNAT rejected the Company'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. However, penalties with respect to withholding tax are not time-barred, and were confirmed in the Tax Court's October 2011 ruling.
The Company has appealed 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 the Company 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. The Company is vigorously defending itself against the asserted claims, which aggregate to approximately $42 million.
Brazilian Tax Claims
In December 2004, March 2009 and April 2009, the São Paulo state tax authorities issued tax assessments against one of the Company'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, July 2009 and May 2012, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on similar issues. The Company 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 were rejected by the respective state administrative courts, and the Company has appealed those decisions to the judicial courts. In October 2012, the Company received a favorable ruling from the lower court on the December 2004 assessment regarding equipment leasing, but that ruling is subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the March, April and July 2009 and May 2012 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 $58 million in excess of the accruals established for these matters.
Customer Bankruptcy Claim
During 2007, one of the Company'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 the Company. After the process was begun, the customer filed for bankruptcy protection, thereby barring the Company from taking further disconnection actions against it. The Company 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 the Company 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. The Company notified the customer that the Company 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 the Company 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 the Company to increase the rates in the manner it did and that the Company: (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 the Company 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). On December 26, 2009, the Company terminated service to the customer. The Company 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, the Company 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 that point, and permitted that issue to proceed.
After discovery in the action concluded, 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, at which time further testimony was taken for three days. The customer's most recent damage estimate ranged from approximately $150 million to approximately $450 million. While the final outcome of this matter was uncertain, the Company believed it had good defenses that would have limited substantially the amount of damages recoverable by the customer, including defenses based upon the limitation of liability provisions in the contract. However, the precise effect of the application of these defenses was unclear, and the Company therefore elected to settle the case for an amount approximately equal to the accrual that the Company had established for the matter. The settlement agreement was entered into by the parties effective on April 11, 2012, and the parties filed a stipulation with the Court on April 13, 2012, pursuant to which the case was dismissed with prejudice and payment was rendered during the second quarter of 2012.

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, 2012 and December 31, 2011, Level 3 had outstanding letters of credit of approximately $31 million and $33 million, respectively, of which $29 million and $29 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 $172 million in 2012, $135 million in 2011 and $127 million in 2010.
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 $308 million in 2012, $232 million in 2011 and $203 million in 2010.
Certain non-cancelable right of way agreements provide for automatic renewal on a periodic basis. The Company includes payments due during these automatic renewal periods given the significant cost to relocate the Company's network and other facilities.
Future minimum payments for the next five years and thereafter 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, 2012 (dollars in millions):
 
 
Right-of-Way
Agreements
 
Facilities and Other Assets
 
Total
 
Future Minimum Sublease Receipts
2013
 
$
115

 
$
255

 
$
370

 
$
16

2014
 
60

 
214

 
274

 
13

2015
 
52

 
187

 
239

 
9

2016
 
48

 
145

 
193

 
8

2017
 
44

 
128

 
172

 
6

Thereafter
 
386

 
498

 
884

 
11

Total
 
$
705

 
$
1,427

 
$
2,132

 
$
63


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, 2013, 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, 2012 (dollars in millions):
 
 
Total
 
Less than
1 Year
 
2 - 3
Years
 
4 - 5
Years
 
After 5
Years
Cost of Access Services
 
$
390

 
$
276

 
$
100

 
$
13

 
$
1

Third-Party Maintenance Services
 
273

 
60

 
52

 
43

 
118

Total
 
$
663

 
$
336

 
$
152

 
$
56

 
$
119

Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information

Level 3 Financing, Inc. a wholly owned subsidiary of the Company, has issued Senior Notes that are unsecured obligations of Level 3 Financing, Inc.; however, they are also fully and unconditionally and jointly and severally guaranteed on an unsecured senior basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.

In conjunction with the registration of the Senior Notes, other than the 7% Senior Notes due 2020, the accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 “Financial statements of guarantors and affiliates whose securities collateralize an issue registered or being registered.”

The operating activities of the separate legal entities included in the Company’s consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.
Condensed Consolidating Statements of Operations
For the year ended December 31, 2012

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

 
$
—

 
$
2,657

 
$
3,975

 
$
(256
)
 
$
6,376

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
996

 
1,854

 
(248
)
 
2,602

Depreciation and Amortization
—

 
—

 
260

 
489

 
—

 
749

Selling, General and Administrative
2

 
1

 
1,541

 
880

 
(8
)
 
2,416

Restructuring Charges
—

 
—

 
18

 
16

 
—

 
34

Total Costs and Expenses
2

 
1

 
2,815

 
3,239

 
(256
)
 
5,801

Operating Income (Loss)
(2
)
 
(1
)
 
(158
)
 
736

 
—

 
575

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
1

 
—

 
2

Interest expense
(168
)
 
(535
)
 
(3
)
 
(27
)
 
—

 
(733
)
Interest income (expense) affiliates, net
976

 
1,598

 
(2,233
)
 
(341
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,188
)
 
(2,066
)
 
92

 
—

 
3,162

 
—

Other income (expense), net
(39
)
 
(184
)
 
6

 
(1
)
 
—

 
(218
)
Total Other Expense
(419
)
 
(1,187
)
 
(2,137
)
 
(368
)
 
3,162

 
(949
)
Income (Loss) before Income Taxes
(421
)
 
(1,188
)
 
(2,295
)
 
368

 
3,162

 
(374
)
Income Tax Expense
(1
)
 
—

 
(4
)
 
(43
)
 
—

 
(48
)
Net Income (Loss)
(422
)
 
(1,188
)
 
(2,299
)
 
325

 
3,162

 
(422
)
Other Comprehensive Income, Net of Income Taxes
106

 
106

 
—

 
16

 
(122
)
 
106

Comprehensive Income (Loss)
$
(316
)
 
$
(1,082
)
 
$
(2,299
)
 
$
341

 
$
3,040

 
$
(316
)


Condensed Consolidating Statements of Operations
For the year ended December 31, 2011

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

 
$
—

 
$
2,367

 
$
2,196

 
$
(230
)
 
$
4,333

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
888

 
1,036

 
(218
)
 
1,706

Depreciation and Amortization
—

 
—

 
376

 
429

 
—

 
805

Selling, General and Administrative
2

 
19

 
1,269

 
481

 
(12
)
 
1,759

Restructuring Charges
—

 
—

 
1

 
10

 
—

 
11

Total Costs and Expenses
2

 
19

 
2,534

 
1,956

 
(230
)
 
4,281

Operating Income (Loss)
(2
)
 
(19
)
 
(167
)
 
240

 
—

 
52

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(211
)
 
(471
)
 
(3
)
 
(31
)
 
—

 
(716
)
Interest income (expense) affiliates, net
865

 
1,423

 
(2,065
)
 
(223
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,346
)
 
(2,241
)
 
122

 
—

 
3,465

 
—

Other income (expense), net
(62
)
 
(38
)
 
9

 
(32
)
 
—

 
(123
)
Total Other Expense
(754
)
 
(1,327
)
 
(1,937
)
 
(285
)
 
3,465

 
(838
)
Loss before Income Taxes
(756
)
 
(1,346
)
 
(2,104
)
 
(45
)
 
3,465

 
(786
)
Income Tax Expense
—

 
—

 
(15
)
 
(26
)
 
—

 
(41
)
Loss from Continuing Operations
(756
)
 
(1,346
)
 
(2,119
)
 
(71
)
 
3,465

 
(827
)
Income From Discontinued Operations, Net
—

 
—

 
—

 
71

 
—

 
71

Net Loss
(756
)
 
(1,346
)
 
(2,119
)
 
—

 
3,465

 
(756
)
Other Comprehensive Income (Loss), Net of Income Taxes
18

 
18

 
—

 
—

 
(18
)
 
18

Comprehensive Loss
$
(738
)
 
$
(1,328
)
 
$
(2,119
)
 
$
—

 
$
3,447

 
$
(738
)
Condensed Consolidating Statements of Operations
For the year ended December 31, 2010

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

 
$
—

 
$
2,046

 
$
1,774

 
$
(229
)
 
$
3,591

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
800

 
851

 
(217
)
 
1,434

Depreciation and Amortization
—

 
—

 
429

 
441

 
—

 
870

Selling, General and Administrative
2

 
—

 
1,185

 
198

 
(12
)
 
1,373

Restructuring Charges
—

 
—

 
1

 
1

 
—

 
2

Total Costs and Expenses
2

 
—

 
2,415

 
1,491

 
(229
)
 
3,679

Operating Income (Loss)
(2
)
 
—

 
(369
)
 
283

 
—

 
(88
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(199
)
 
(377
)
 
(2
)
 
(8
)
 
—

 
(586
)
Interest income (expense) affiliates, net
795

 
1,298

 
(1,891
)
 
(202
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,221
)
 
(2,087
)
 
218

 
—

 
3,090

 
—

Other income (expense), net
5

 
(55
)
 
1

 
10

 
—

 
(39
)
Total Other Expense
(620
)
 
(1,221
)
 
(1,673
)
 
(200
)
 
3,090

 
(624
)
Income (Loss) before Income Taxes
(622
)
 
(1,221
)
 
(2,042
)
 
83

 
3,090

 
(712
)
Income Tax (Expense) Benefit
—

 
—

 
(1
)
 
92

 
—

 
91

Income (Loss) from Continuing Operations
(622
)
 
(1,221
)
 
(2,043
)
 
175

 
3,090

 
(621
)
Loss From Discontinued Operations, Net
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Net Income (Loss)
(622
)
 
(1,221
)
 
(2,043
)
 
174

 
3,090

 
(622
)
Other Comprehensive Loss, Net of Income Taxes
(93
)
 
(93
)
 
—

 
(77
)
 
170

 
(93
)
Comprehensive Income (Loss)
$
(715
)
 
$
(1,314
)
 
$
(2,043
)
 
$
97

 
$
3,260

 
$
(715
)
Condensed Consolidating Balance Sheets
December 31, 2012

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
253

 
$
5

 
$
386

 
$
335

 
$
—

 
$
979

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
93

 
621

 
—

 
714

Due from affiliates
14,446

 
15,709

 
—

 
7

 
(30,162
)
 
—

Other
3

 
16

 
49

 
73

 
—

 
141

Total Current Assets
14,702

 
15,730

 
529

 
1,043

 
(30,162
)
 
1,842

Property, Plant, and Equipment, net
—

 
—

 
2,926

 
5,273

 
—

 
8,199

Restricted Cash and Securities
12

 
—

 
17

 
6

 
—

 
35

Goodwill and Other Intangibles, net
—

 
—

 
429

 
2,404

 
—

 
2,833

Investment in Subsidiaries
(11,756
)
 
(20,470
)
 
3,242

 
—

 
28,984

 
—

Other Assets, net
16

 
119

 
11

 
252

 
—

 
398

Total Assets
$
2,974

 
$
(4,621
)
 
$
7,154

 
$
8,978

 
$
(1,178
)
 
$
13,307

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

 
$
2

 
$
53

 
$
723

 
$
—

 
$
779

Current portion of long-term debt
172

 
6

 
6

 
32

 
—

 
216

Accrued payroll and employee benefits
—

 
—

 
161

 
50

 
—

 
211

Accrued interest
45

 
163

 
—

 
1

 
—

 
209

Current portion of deferred revenue
—

 
—

 
109

 
142

 
—

 
251

Due to affiliates
—

 
—

 
30,162

 
—

 
(30,162
)
 
—

Other
1

 
1

 
29

 
105

 
—

 
136

Total Current Liabilities
219

 
172

 
30,520

 
1,053

 
(30,162
)
 
1,802

Long-Term Debt, less current portion
1,570

 
6,886

 
20

 
40

 
—

 
8,516

Deferred Revenue, less current portion
—

 
—

 
602

 
285

 
—

 
887

Other Liabilities
14

 
81

 
75

 
761

 
—

 
931

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
1,171

 
(11,760
)
 
(24,063
)
 
6,839

 
28,984

 
1,171

Total Liabilities and Stockholders' Equity (Deficit)
$
2,974

 
$
(4,621
)
 
$
7,154

 
$
8,978

 
$
(1,178
)
 
$
13,307

Condensed Consolidating Balance Sheets
December 31, 2011

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
2

 
$
6

 
$
618

 
$
292

 
$
—

 
$
918

Restricted cash and securities
—

 
—

 
1

 
9

 
—

 
10

Receivables, less allowances for doubtful accounts
—

 
—

 
59

 
589

 
—

 
648

Due from affiliates
13,472

 
14,584

 
—

 
36

 
(28,092
)
 
—

Other
3

 
16

 
48

 
64

 
—

 
131

Total Current Assets
13,477

 
14,606

 
726

 
990

 
(28,092
)
 
1,707

Property, Plant, and Equipment, net
—

 
—

 
2,823

 
5,313

 
—

 
8,136

Restricted Cash and Securities
18

 
—

 
19

 
14

 
—

 
51

Goodwill and Other Intangibles, net
—

 
—

 
481

 
2,418

 
—

 
2,899

Investment in Subsidiaries
(10,718
)
 
(18,467
)
 
3,412

 
—

 
25,773

 
—

Other Assets, net
13

 
109

 
6

 
267

 
—

 
395

Total Assets
$
2,790

 
$
(3,752
)
 
$
7,467

 
$
9,002

 
$
(2,319
)
 
$
13,188

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

 
$
—

 
$
37

 
$
710

 
$
—

 
$
747

Current portion of long-term debt
—

 
—

 
2

 
63

 
—

 
65

Accrued payroll and employee benefits
—

 
—

 
116

 
93

 
—

 
209

Accrued interest
50

 
165

 
—

 
1

 
—

 
216

Current portion of deferred revenue
—

 
—

 
107

 
157

 
—

 
264

Due to affiliates
—

 
—

 
28,092

 
—

 
(28,092
)
 
—

Other
—

 
1

 
52

 
104

 
—

 
157

Total Current Liabilities
50

 
166

 
28,406

 
1,128

 
(28,092
)
 
1,658

Long-Term Debt, less current portion
1,533

 
6,688

 
22

 
142

 
—

 
8,385

Deferred Revenue, less current portion
—

 
—

 
612

 
273

 
—

 
885

Other Liabilities
14

 
116

 
146

 
791

 
—

 
1,067

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
1,193

 
(10,722
)
 
(21,719
)
 
6,668

 
25,773

 
1,193

Total Liabilities and Stockholders' Equity (Deficit)
$
2,790

 
$
(3,752
)
 
$
7,467

 
$
9,002

 
$
(2,319
)
 
$
13,188

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2012

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(165
)
 
$
(520
)
 
$
140

 
$
1,123

 
$
—

 
$
578

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(276
)
 
(467
)
 
—

 
(743
)
Decrease in restricted cash and securities, net
6

 
—

 
2

 
12

 
—

 
20

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

 
—

 
—

 
11

 
—

 
11

Other
—

 
—

 
—

 
(13
)
 
—

 
(13
)
Net Cash Provided by (Used in) Investing Activities
6

 
—

 
(274
)
 
(457
)
 
—

 
(725
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
293

 
4,211

 
—

 
—

 
—

 
4,504

Payments on and repurchases of long-term debt, including current portion and refinancing costs
—

 
(4,161
)
 
—

 
(141
)
 
—

 
(4,302
)
Proceeds from stock options exercised
5

 
—

 
—

 
—

 
—

 
5

Increase (decrease) due from affiliates, net
112

 
469

 
(98
)
 
(483
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
410

 
519

 
(98
)
 
(624
)
 
—

 
207

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
251

 
(1
)
 
(232
)
 
43

 
—

 
61

Cash and Cash Equivalents at Beginning of Year
2

 
6

 
618

 
292

 
—

 
918

Cash and Cash Equivalents at End of Year
$
253

 
$
5

 
$
386

 
$
335

 
$
—

 
$
979


Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2011

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(176
)
 
$
(428
)
 
$
293

 
$
699

 
$
—

 
$
388

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(197
)
 
(297
)
 
—

 
(494
)
Decrease (increase) in restricted cash and securities, net
—

 
—

 
3

 
(57
)
 
—

 
(54
)
Proceeds from sale of property, plant, and equipment and other assets
—

 
—

 
1

 
3

 
—

 
4

Investments in Global Crossing. net of cash acquired
—

 
—

 
—

 
146

 
—

 
146

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(193
)
 
(205
)
 
—

 
(398
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
292

 
1,586

 
—

 
—

 
—

 
1,878

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(521
)
 
(755
)
 
—

 
(341
)
 
—

 
(1,617
)
Increase (decrease) due from affiliates, net
234

 
(404
)
 
168

 
2

 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
5

 
427

 
168

 
(339
)
 
—

 
261

Net Cash Provided by Discontinued Operations
—

 
—

 
—

 
51

 
—

 
51

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
—

 
—

Net Change in Cash and Cash Equivalents
(171
)
 
(1
)
 
268

 
206

 
—

 
302

Cash and Cash Equivalents at Beginning of Year
173

 
7

 
350

 
86

 
—

 
616

Cash and Cash Equivalents at End of Year
$
2

 
$
6

 
$
618

 
$
292

 
$
—

 
$
918

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2010

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(156
)
 
$
(362
)
 
$
76

 
$
781

 
$
—

 
$
339

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(161
)
 
(274
)
 
—

 
(435
)
Decrease in restricted cash and securities, net
—

 
—

 
3

 
—

 
—

 
3

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

 
—

 
2

 
2

 
—

 
4

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(156
)
 
(272
)
 
—

 
(428
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
195

 
613

 
—

 
—

 
—

 
808

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(328
)
 
(599
)
 
(1
)
 
(2
)
 
—

 
(930
)
Increase (decrease) due from affiliates, net
226

 
347

 
—

 
(573
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
93

 
361

 
(1
)
 
(575
)
 
—

 
(122
)
Net Cash Used in Discontinued Operations
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(8
)
 
—

 
(8
)
Net Change in Cash and Cash Equivalents
(63
)
 
(1
)
 
(81
)
 
(75
)
 
—

 
(220
)
Cash and Cash Equivalents at Beginning of Year
236

 
8

 
431

 
161

 
—

 
836

Cash and Cash Equivalents at End of Year
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Subsequent Events
Subsequent Events
Subsequent Events

Debt Repayment

On January 15, 2013, the Company repaid at maturity approximately $172 million of its 15% Convertible Senior Notes (see Note 12 - Long Term Debt).

Venezuelan Bolivar Devaluation

Effective February 13, 2013, the Venezuelan government devalued the Venezuelan bolivar by increasing the official rate from 4.30 Venezuelan bolivares to the U.S. Dollar to 6.30 Venezuelan bolivares to the U.S. Dollar, except for a limited set of goods and services deemed “essential” that will temporarily continue to attract the 4.30 rate. If enacted prior to December 31, 2012, this devaluation would have reduced the Company's net monetary assets by $20 million, including unrestricted cash and cash equivalents of $22 million, based on the bolivar balances as of December 31, 2012. The devaluation of the Company's net monetary assets will result in a charge which will be recognized in other expense, net in the consolidated statement of operations in the first quarter of 2013. Based on the bolivar balances as of December 31, 2012, the charge would be $20 million.
Unaudited Quarterly Financial Data
Unaudited Quarterly Financial Data
Unaudited Quarterly Financial Data
 
 
Three Months Ended
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
 
(dollars in millions except per share data)
Revenue
 
$
1,586

 
$
914

 
$
1,586

 
$
913

 
$
1,590

 
$
927

 
$
1,614

 
$
1,579

Gross Margin
 
929

 
557

 
938

 
566

 
948

 
585

 
959

 
919

Operating Income (Loss)
 
116

 
(3
)
 
133

 
3

 
138

 
7

 
188

 
45

Net Loss
 
(138
)
 
(205
)
 
(62
)
 
(181
)
 
(166
)
 
(207
)
 
(56
)
 
(163
)
Loss per share (Basic and Diluted)
 
$
(0.66
)
 
$
(1.83
)
 
$
(0.29
)
 
$
(1.59
)
 
$
(0.76
)
 
$
(1.75
)
 
$
(0.26
)
 
$
(0.80
)

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.
During the fourth quarter of 2012, the Company recognized a loss on extinguishment of debt of $50 million in connection with the refinancing of the $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan. Additionally in the fourth quarter of 2012, the Company recognized $20 million of restructuring charges.
During the fourth quarter of 2012, the Company completed an updated analysis and revised its estimated future cash flows of its asset retirement obligations as a result of a strategic review of the Company's real estate portfolio. As a result, the Company reduced its asset retirement obligations liability by $73 million with an offsetting reduction to property, plant and equipment of $24 million, selling, general and administrative expenses of $47 million and depreciation and amortization of $2 million. (see Note 6 - Asset Retirement Obligations).
During the third quarter of 2012, the Company recognized a loss on extinguishment of debt of $49 million, including $9 million related to the refinancing of the $1.4 billion Tranche A Term Loan and the repayment of existing vendor financing obligations and $40 million as a result of the redemption of the 8.75% Senior Notes due 2017. Also in the third quarter of 2012, the Company recognized a non-cash loss in “other, net” of $60 million on interest rate swap agreements that were deemed "ineffective" under GAAP in connection with the refinancing of the $1.4 billion Tranche A Term Loan.
During the first quarter of 2012, the Company recognized a loss on extinguishment of debt of $61 million, including $22 million related to the redemption of the 9.25% Senior Notes due 2014 and $39 million as a result of the exchange of a portion of the 15% Convertible Senior Notes due 2013 for approximately 5.4 million shares of Level 3 common stock.
In the fourth quarter of 2011, the Company completed the Amalgamation and the disposition of its coal mining business. Operating results have been included through the respective dates of acquisition and sale. 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. Additionally in the fourth quarter of 2011, the Company recognized a loss on extinguishment of debt of $27 million related to the redemption of the 3.5% Convertible Senior Notes due 2012 and prepayment of the Tranche B Term Loan that was outstanding under the existing Senior Secured Term Loan.
In the third quarter of 2011, the Company recognized a loss on extinguishment of debt of $30 million related to the conversion of the 15% Convertible Senior Notes due 2013 and the repurchase of the 3.5% Convertible Senior Notes due 2012.
During the second quarter of 2011, the Company recognized a loss on extinguishment of debt of $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 on extinguishment of debt of $20 million related to the redemption of the 5.25% Convertible Senior Notes due 2011 and the exchange of the 9.0% Convertible Senior Discount Notes due 2013.
Organization and Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2012
Accounting Policies [Abstract]
 
Principles of Consolidation and Basis of Presentation
Text Block 
Foreign Currency Translation
Text Block 
Reclassifications
Text Block 
Use of Estimates
Text Block 
Revenue and Cost of Revenue for Communications Services
Text Block 
Coal Mining
Text Block 
USF and Gross Receipts Taxes
Text Block 
Advertising Costs
Text Block 
Share-Based Compensation
Text Block 
Income Taxes
Text Block 
Cash and Cash Equivalents
Text Block 
Restricted Cash and Securities
Text Block 
Derivatives Financial Instruments
Text Block 
Allowance for Doubtful Accounts
Allowance for Doubtful AccountsTrade 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. 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. The Company recognized bad debt expense, net of recoveries, of approximately $15 million in 2012, $6 million in 2011 and $16 million in 2010. 
Property, Plant and Equipment
Text Block 
Asset Retirement Obligations
Text Block 
Goodwill and Acquired Indefinite-Lived Intangible Assets
Text Block 
Long-Lived Assets Including Finte-Lived Purchased Intangible Assets
Text Block 
Impairment of Finite Lived Intangible Assets and Property Plant and Equipment
Text Block 
Concentration of Credit Risk
Text Block 
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 50% 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 businesses 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
Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America. For operations outside the U.S. that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-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 2012, 2011 and 2010. As a result of the 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 income (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 the 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 reported 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 could 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 monthly as the 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. The Company establishes appropriate cost of revenue reserves for disputed supplier billings based on an analysis of historical experience in resolving disputes with its suppliers.
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, gross receipts taxes and certain state regulatory fees. 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 generally records gross receipts taxes and certain state regulatory fees 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 $191 million, $107 million and $77 million for the years ended December 31, 2012, 2011 and 2010, 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. Advertising expense was $20 million, $15 million and $8 million for the years ended December 31, 2012, 2011 and 2010, respectively.
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 2012, 2011 and 2010 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. As of December 31, 2012 and 2011, 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
Restricted cash and securities consists primarily of cash and investments that serve to collateralize outstanding letters of credit 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. Restricted cash and securities are stated at cost which approximates fair value as of December 31, 2012 and 2011.
Derivatives Financial Instruments 
Derivative Financial Instruments
All derivative 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 or when they are no longer effective. 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).

Property, Plant and Equipment 
In connection with the acquisition of Global Crossing in 2011, 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.
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 and 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 3 to 7 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 3 years.
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 prior to the sale of the coal mining business in November 2011. Changes in the liability due to revisions to the amount or timing of 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.
The Company's goodwill impairment review process considers the fair value of each reporting unit relative to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is performed. If the carrying value of the reporting unit exceeds its fair value, then a second step must be performed, and the implied fair value of the reporting unit's goodwill must be determined and compared to the carrying value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then an impairment loss equal to the difference will be recorded. Beginning with the 2011 assessment in accordance with updated accounting guidance, prior to performing the two step evaluation, an assessment of qualitative factors may be performed to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value. If it is determined that it is unlikely that the carrying value exceeds the fair value, the Company is not required to complete the two step goodwill impairment evaluation.
In 2012, the Company's reporting units consist of its three regional operating units in: North America; Europe, the Middle East and Africa ("EMEA"); and Latin America. In 2011, the Company's reporting units were consistent with its reportable segments of Level 3 and Global Crossing, representing the stand-alone operations of each legacy business. In 2010, the Company's reporting units were consistent with its reportable segments of communications and coal mining.
In 2012 and 2011, the Company conducted its assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value. During 2010, the Company 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.
The Company's indefinite-lived intangibles assets impairment review process compares the fair value of the indefinite-lived intangible assets to their respective carrying values. If the fair value of the indefinite-lived intangible assets exceeds their carrying values, then the indefinite-lived intangible assets are not impaired. If the carrying value of the indefinite-lived intangible assets exceeds their fair value, then an impairment loss equal to the difference will be recorded. In accordance with recently issued accounting guidance, an entity may assess 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 the carrying value exceeds the fair value, then the entity is no longer required to complete the two step indefinite-lived intangible assets impairment evaluation.
In 2012, the Company conducted its indefinite-lived intangible assets impairment analysis using the qualitative assessment to determine whether it is more likely than not that the fair value of its indefinite-lived intangible assets exceeds the carrying value. In 2011 and 2010, the Company estimated the fair value of its indefinite-lived intangible assets primarily utilizing an income approach. The Company recognizes an impairment loss when the estimated fair value of the 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 2012, 2011 and 2010 and in each case concluded that its goodwill was not impaired in any of those periods. The Company conducted its indefinite-lived intangible asset impairment analysis at the end of 2012 and 2010 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 4 to 12 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 asset groups 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. From time to time, 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, 2012 and 2011 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2012
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(43
)
 
30

Facility and Leasehold Improvements
 
2,050

 
(1,074
)
 
976

Network Infrastructure
 
8,342

 
(3,058
)
 
5,284

Operating Equipment
 
5,506

 
(3,997
)
 
1,509

Furniture, Fixtures and Office Equipment
 
249

 
(166
)
 
83

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
122

 
—

 
122

 
 
$
16,558

 
$
(8,359
)
 
$
8,199

December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,046

 
(978
)
 
1,068

Network Infrastructure
 
8,189

 
(2,817
)
 
5,372

Operating Equipment
 
4,978

 
(3,680
)
 
1,298

Furniture, Fixtures and Office Equipment
 
228

 
(142
)
 
86

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136

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 the Final Purchase Price Allocation 
The following is the final allocation of the purchase price.

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

Property, Plant, and Equipment
3,098

Goodwill
1,123

Identifiable Intangibles
106

Other Assets
651

Total Assets
5,204

 
 
Liabilities:
 
Long-term Debt
(1,554
)
Other Liabilities
(1,688
)
Total Liabilities
(3,242
)
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 January 1, 2010 (dollars in millions, except per share data).

 
Year Ended December 31,
 
2011
 
2010
Total Revenue
$
6,335

 
$
6,111

Net Loss
(727
)
 
(825
)
Net Loss per share
$
(3.56
)
 
$
(4.14
)
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, 2012 and 2011 are as follows (dollars in millions):
 
 
Cost
 
Accumulated
Depreciation
 
Net
December 31, 2012
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(43
)
 
30

Facility and Leasehold Improvements
 
2,050

 
(1,074
)
 
976

Network Infrastructure
 
8,342

 
(3,058
)
 
5,284

Operating Equipment
 
5,506

 
(3,997
)
 
1,509

Furniture, Fixtures and Office Equipment
 
249

 
(166
)
 
83

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
122

 
—

 
122

 
 
$
16,558

 
$
(8,359
)
 
$
8,199

December 31, 2011
 
 
 
 
 
 
Land
 
$
195

 
$
—

 
$
195

Land Improvements
 
73

 
(40
)
 
33

Facility and Leasehold Improvements
 
2,046

 
(978
)
 
1,068

Network Infrastructure
 
8,189

 
(2,817
)
 
5,372

Operating Equipment
 
4,978

 
(3,680
)
 
1,298

Furniture, Fixtures and Office Equipment
 
228

 
(142
)
 
86

Other
 
21

 
(21
)
 
—

Construction-in-Progress
 
84

 
—

 
84

 
 
$
15,814

 
$
(7,678
)
 
$
8,136

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, 2012 and 2011 (dollars in millions):
 
 
2012
 
2011
Asset retirement obligation at January 1
 
$
121

 
$
74

Accretion expense
 
11

 
9

Liabilities assumed in Global Crossing acquisition
 
—

 
41

Liabilities settled
 
(4
)
 
(2
)
Revision in estimated cash flows
 
(73
)
 
—

Effect of foreign currency rate change
 
—

 
(1
)
Asset retirement obligation at December 31
 
$
55

 
$
121

Goodwill (Tables)
Schedule of changes in carrying amount of goodwill
The changes in the carrying amount of goodwill during the years ended December 31, 2012 and 2011 are as follows (dollars in millions):
 
Total
Balance as of January 1, 2011
$
1,427

Goodwill acquired in Global Crossing acquisition
1,110

Effect of foreign currency rate change
4

Balance as of December 31, 2011
2,541

Goodwill adjustments
24

Balance as of December 31, 2012
$
2,565

Acquired Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 
Identifiable acquisition-related intangible assets as of December 31, 2012 and December 31, 2011 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
December 31, 2012
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
776

 
$
(633
)
 
$
143

Trademarks
55

 
(17
)
 
38

Patents and Developed Technology
158

 
(103
)
 
55

 
989

 
(753
)
 
236

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,021

 
$
(753
)
 
$
268

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

Schedule of estimated amortization expense of acquired finite-lived intangible asset 
As of December 31, 2012, 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):

2013
$
73

2014
61

2015
45

2016
28

2017
13

Thereafter
16

 
$
236

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 the Company’s interest rate swaps and long-term debt as well as the input levels used to determine these fair values as of December 31, 2012 and 2011:

 
 
 
 
 
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,
2012
 
December 31,
2011
 
December 31,
2012
 
December 31,
2011
 
December 31,
2012
 
December 31,
2011
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
56

 
$
90

 
$
—

 
$
—

 
$
56

 
$
90

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
56

 
$
90

 
$
—

 
$
—

 
$
56

 
$
90

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Term Loans
$
2,603

 
$
2,567

 
$
2,631

 
$
2,518

 
$
—

 
$
—

Senior Notes
5,185

 
4,716

 
5,712

 
4,822

 
—

 
—

Convertible Notes
846

 
939

 
286

 
247

 
748

 
834

Commercial Mortgage
—

 
65

 
—

 
—

 
—

 
73

Capital Leases and Other
98

 
163

 
—

 
—

 
98

 
163

Total Long-term Debt, including the current portion:
$
8,732

 
$
8,450

 
$
8,629

 
$
7,587

 
$
846

 
$
1,070



The Company does not have any assets or liabilities measured using significant unobservable inputs (Level 3).
Derivative Financial Instruments (Tables)
Schedule of outstanding interest rate derivatives designated as cash flow hedges 
In March 2007, Level 3 Financing, Inc. entered into two interest rate swap agreements to hedge the interest payments on $1 billion notional amount of floating rate debt. The Company had designated these interest rate swap agreements as cash flow hedges. The two interest rate swap agreements are with different counterparties and are for $500 million each. The arrangements began in April 2007 and mature in January 2014. Under the terms of these arrangements, the Company receives interest payments based on rolling three month LIBOR terms and pays interest at the fixed rate of 4.93% under one arrangement and approximately 4.92% under the other.

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

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

 
 
Liability Derivatives
 
 
December 31, 2012
 
December 31, 2011
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
90

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
December 31, 2012
 
December 31, 2011
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Interest rate swap agreements
 
Other noncurrent liabilities
 
$
56

 
Other noncurrent liabilities
 
$
—

Schedule of the amount of gains (losses) recognized in Other Comprehensive Loss 
The amount of gains (losses) recognized in Other Comprehensive Income (Loss) consists of the following (dollars in millions):

 
 
Year Ended December 31,
Derivatives designated as hedging instruments
 
2012
 
2011
 
2010
Cash flow hedging contracts
 
$
90

 
$
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
 
2012
 
2011
Cash flow hedging contracts
 
Interest Expense
 
$
(26
)
 
$
(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/Loss recognized in
Income/Loss on Derivative
 
 
 
 
 
 
 
 
2012
 
2011
 
2010
Embedded equity conversion rights
 
Other Income (Expense)—Other, net
 
$
—

 
$
—

 
$
10

Interest rate swap agreements
 
Other Income (Expense)—Other, net
 
(64
)
 
—

 
—

Long-Term Debt (Tables)
Schedule of long-term debt 
As of December 31, 2012 and December 31, 2011, long-term debt was as follows:
(dollars in millions)
 
December 31,
2012
 
December 31,
2011
Senior Secured Term Loan*
 
$
2,614

 
$
2,600

9.25% Senior Notes due 2014
 
—

 
807

Floating Rate Senior Notes due 2015 (4.469% as of December 31, 2012 and 4.202% as of December 31, 2011)
 
300

 
300

8.75% Senior Notes due 2017
 
—

 
700

10% Senior Notes due 2018
 
640

 
640

11.875% Senior Notes due 2019
 
605

 
605

9.375% Senior Notes due 2019
 
500

 
500

8.125% Senior Notes due 2019
 
1,200

 
1,200

8.875% Senior Notes due 2019
 
300

 
—

8.625% Senior Notes due 2020
 
900

 
—

7% Senior Notes due 2020
 
775

 
—

15% Convertible Senior Notes due 2013
 
172

 
272

7% Convertible Senior Notes due 2015
 
200

 
200

7% Convertible Senior Notes due 2015 Series B
 
275

 
275

6.5% Convertible Senior Notes due 2016
 
201

 
201

9.86% Commercial Mortgage due 2015
 
—

 
65

Capital Leases
 
86

 
131

Other
 
12

 
32

Total Debt Obligations
 
8,780

 
8,528

Unamortized (Discount) Premium:
 
 
 
 
Discount on Senior Secured Term Loan
 
(11
)
 
(33
)
Premium on 9.25% Senior Notes due 2014
 
—

 
3

Discount on 10% Senior Notes due 2018
 
(10
)
 
(11
)
Discount on 11.875%Senior Notes due 2019
 
(9
)
 
(10
)
Discount on 9.375% Senior Notes due 2019
 
(8
)
 
(9
)
Discount on 8.125% Senior Notes due 2019
 
(8
)
 
(9
)
Discount on 7% Convertible Senior Notes due 2015
 
(2
)
 
(2
)
Discount due to embedded derivative contracts
 
—

 
(7
)
Total Unamortized (Discount) Premium
 
(48
)
 
(78
)
Carrying Value of Debt
 
8,732

 
8,450

Less current portion
 
(216
)
 
(65
)
Long-term Debt, less current portion
 
$
8,516

 
$
8,385


* The $599 million Tranche B 2016 Term Loan due 2016, the $815 million Tranche B 2019 Term Loan due 2019 and the $1.2 billion Tranche B-II 2019 Term Loan due 2019 had interest rates of 4.75%, 5.25% and 4.75% as of December 31, 2012, respectively. The $1.4 billion Tranche A Term Loan due 2014, that was prepaid in 2012, had an effective interest rate of 2.65% as of December 31, 2011, excluding the effect of the $1 billion notional amount interest rate swaps. The $650 million Tranche B II Term Loan and $550 million Tranche B III Term Loan due 2018, that were prepaid in 2012, had interest rates of 5.75% as of December 31, 2011.
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts and fair value adjustments) 
Long-Term Debt Maturities

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

2013
$
216

2014
23

2015
788

2016
788

2017
6

Thereafter
6,959

 
$
8,780

Schedule of redemption prices of Senior Notes 
The 10% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before February 1, 2014, at a redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. Level 3 Financing may redeem the 10% Senior Notes, in whole or in part, at any time on or after February 1, 2014. If a redemption occurs before February 1, of the years indicated below:
Year
Redemption
Price
2014
105.000
%
2015
102.500
%
2016
100.000
%
Schedule of redemption prices of Senior Notes 
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 February 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.
Schedule of redemption prices of Senior Notes 
The 9.375% Senior Notes Due 2019 are subject to redemption at the option of Level 3 Financing 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 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 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.
Schedule of redemption prices of Senior Notes 
The 8.125% Senior Notes will be subject to redemption at the option of Level 3 Financing, 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 July 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 July 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 July 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.
Schedule of redemption prices of Senior Notes 
The 8.875% Senior Notes are subject to redemption at the option of Level 3 in whole or in part, at any time before June 1, 2015 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On and after June 1, 2015, Level 3 may redeem all or part of the 8.875% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning June 1, of the years indicated below:
Year
Redemption
Price
2015
104.438
%
2016
102.219
%
2017
100.000
%


In addition, at any time or from time to time on or prior to June 1, 2015, Level 3 may redeem up to 35% of the original aggregate principal amount of the 8.875% Senior Notes (including any additional 8.875% Senior Notes) at a redemption price equal to 108.875% of the principal amount of the 8.875% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 8.875% Senior Notes (including any additional 8.875% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice.
Schedule of redemption prices of Senior Notes 
The 8.625% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before January 15, 2016 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On and after January 15, 2016, Level 3 Financing may redeem all or part of the 8.625% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning January 15, of the years indicated below:
Year
Redemption
Price
2016
104.313
%
2017
102.156
%
2018
100.000
%


In addition, at any time or from time to time on or prior to January 15, 2015, Level 3 Financing may redeem up to 35% of the original aggregate principal amount of the 8.625% Senior Notes (including any additional 8.625% Senior Notes) at a redemption price equal to 108.625% of the principal amount of the 8.625% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 Financing of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 8.625% Senior Notes (including any additional 8.625% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice.
Schedule of redemption prices of Senior Notes 
The 7% Senior Notes are subject to redemption at the option of Level 3 Financing in whole or in part, at any time before June 1, 2016 at the redemption price equal to 100% of their principal amount, plus a make-whole premium and accrued and unpaid interest. On or after June 1, 2016, Level 3 Financing may redeem all or part of the 7% Senior Notes, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) to, but not including, 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), if redeemed during the twelve months beginning June 1, of the years indicated below:
Year
Redemption
Price
2016
103.500
%
2017
101.750
%
2018
100.000
%


In addition, at any time or from time to time on or prior to June 1, 2015, Level 3 Financing may redeem up to 35% of the original aggregate principal amount of the 7% Senior Notes (including any additional 7% Senior Notes) at a redemption price equal to 107% of the principal amount of the 7% Senior Notes so redeemed, plus 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 the net cash proceeds contributed to the capital of Level 3 Financing of one or more private placements to persons other than affiliates 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 aggregate; provided, however, that at least 65% of the original aggregate principal amount of the 7% Senior Notes (including any additional 7% Senior Notes) would remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days of such private placement or public offering upon not less than 30 nor more than 60 days' prior notice.
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, 2012, 2011 and 2010 (dollars in millions):
 
2012
 
2011
 
2010
OSO
$
14

 
$
10

 
$
10

Restricted Stock Units and Shares
40

 
22

 
19

401(k) Match Expense
23

 
13

 
11

Restricted Stock Unit Bonus Grant
46

 
57

 
28

Management Incentive and Retention Plan
13

 
—

 
—

 
136

 
102

 
68

Capitalized Non-Cash Compensation
(1
)
 
(1
)
 
(1
)
 
$
135

 
$
101

 
$
67

Schedule of performance benchmark 
ility 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 duri
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,
 
 
2012
 
2011
 
2010
S&P 500 Expected Dividend Yield Rate
 
2.05%
 
1.83%
 
2.00%
Expected Life
 
3 years
 
3 years
 
3 years
S&P 500 Expected Volatility Rate
 
23%
 
30%
 
30%
Level 3 Common Stock Expected Volatility Rate
 
39%
 
44%
 
51%
Expected S&P 500 Correlation Factor
 
0.32
 
0.39
 
0.40
Calculated Theoretical Value
 
110%
 
120%
 
132%
Estimated Forfeiture Rate
 
20%
 
20%
 
20%
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, 2010
 
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

Stock and units granted
 
2,869,584

 
24.13

Lapse of restrictions
 
(1,048,757
)
 
26.06

Stock and units forfeited
 
(214,634
)
 
24.92

Nonvested at December 31, 2012
 
3,636,976

 
$
24.71

Schedule OSO activity 
Information regarding NQ Options outstanding 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

Exercised
(533,717
)
 
$
10.61

Forfeited
(2,149
)
 
$
14.39

Balance at December 31, 2012
62,324

 
$
12.18

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, 2010
 
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 granted
 
1,195,452

 
16.99

-
27.53

 
24.65

 
 
 
 
Options forfeited
 
(72,335
)
 
12.00

-
36.60

 
21.80

 
 
 
 
Options expired
 
(278,111
)
 
15.00

-
22.65

 
18.45

 
 
 
 
Options exercised
 
(67,299
)
 
10.50

-
13.80

 
12.48

 
 
 
 
Balance December 31, 2012
 
2,066,419

 
$
14.10

-
$
36.60

 
$
23.40

 
$
6.6

 
1.73
Schedule of OSO by exercise price range 
The following table summarizes information concerning outstanding and exercisable NQ Options at December 31, 2012:
 
 
 
 
Options Outstanding and Exercisable
Exercise Prices
 
Number Outstanding
 
Weighted Average Remaining Contractual Life (in years)
 
Weighted Average Exercise Price per Share
$
9.53

 
28,549

 
0.9
 
$
9.53

$
14.43

 
33,775

 
2.0
 
$
14.43

Total
 
62,324

 
1.5
 
$
12.18

 
 
 
 
OSO units Outstanding
at December 31, 2012
 
OSO units Exercisable
at December 31, 2012
Range of Exercise Prices
 
Number
Outstanding
 
Weighted
Average
Remaining
Life (years)
 
Weighted
Average
Initial
Strike Price
 
Number
Exercisable
 
Weighted
Average
Initial
Strike Price
$
14.10

-
$
20.85

 
496,213

 
1.04
 
$
15.95

 
—

 
$
—

$
22.05

-
$
24.30

 
793,617

 
1.76
 
$
22.68

 
—

 
$
—

$
27.53

-
$
36.60

 
776,589

 
2.14
 
$
28.89

 
—

 
$
—

 
 
 
 
2,066,419

 
1.73
 
$
23.40

 
—

 
$
—

Schedule of restricted stock and restricted stock units 
A summary of the retention restricted stock units granted under the MIRP is shown in the following table:
 
 
Number
 
Weighted Average
Grant Date
Fair Value
Nonvested at January 1, 2012
 
—

 
$
—

Stock and units granted
 
465,000

 
25.92

Lapse of restrictions
 
—

 
—

Stock and units forfeited
 
—

 
—

Nonvested at December 31, 2012
 
465,000

 
$
25.92

Income Taxes (Tables)
Components of income tax expense (benefit) 
The following table summarizes the income tax benefit (provision) attributable to loss from continuing operations before income taxes for each of the three years ended December 31, 2012, 2011 and 2010:
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Current:
 
 
 
 
 
 
United States federal
 
$
—

 
$
—

 
$
—

State
 
(2
)
 
—

 
(1
)
Foreign
 
(36
)
 
(8
)
 
—

 
 
(38
)
 
(8
)
 
(1
)
Deferred, net of changes in valuation allowances:
 
 
 
 
 
 
United States federal
 
(3
)
 
(30
)
 
—

State
 
—

 
(1
)
 
—

Foreign
 
(7
)
 
(2
)
 
92

Income tax benefit (provision)
 
$
(48
)
 
$
(41
)
 
$
91

Schedule of income before income tax, domestic and foreign 
The United States and foreign components of income (loss) from continuing operations before income taxes for each of the three years ended December 31, 2012, 2011 and 2010 are as follows:

 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
United States
 
$
(434
)
 
$
(692
)
 
$
(542
)
Foreign
 
60

 
(94
)
 
(170
)
 
 
$
(374
)
 
$
(786
)
 
$
(712
)
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 three years ended December 31, 2012, 2011 and 2010 is shown in the following table:
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Computed tax benefit at statutory rate
 
$
131

 
$
275

 
$
250

Effect of earnings in jurisdictions outside of US
 
25

 
(13
)
 
(13
)
Change in valuation allowance
 
(145
)
 
(213
)
 
(130
)
Permanent items
 
(48
)
 
(44
)
 
(16
)
Indefinite-lived assets
 
(3
)
 
(26
)
 
—

Other, net
 
(8
)
 
(20
)
 
—

Income tax benefit (provision)
 
$
(48
)
 
$
(41
)
 
$
91

Deferred tax assets and liabilities 
The components of the net deferred tax assets (liabilities) as of December 31, 2012 and 2011 are as follows:
 
 
2012
 
2011
 
 
(dollars in millions)
Deferred Tax Assets:
 
 
 
 
Accrued payroll and related benefits
 
$
119

 
$
101

Deferred revenue
 
271

 
276

Unutilized tax net operating loss carry forwards
 
4,611

 
3,996

Fixed assets and intangible assets
 
134

 
157

Intercompany loss
 
148

 
164

Other
 
162

 
193

Total Deferred Tax Assets
 
5,445

 
4,887

Deferred Tax Liabilities:
 
 
 
 
Fixed assets and intangible assets
 
(702
)
 
(542
)
Deferred revenue
 
(87
)
 
(93
)
Other
 
(45
)
 
(51
)
Foreign branch income
 
(37
)
 
(40
)
Total Deferred Tax Liabilities
 
(871
)
 
(726
)
Net Deferred Tax Assets before valuation allowance
 
4,574

 
4,161

Valuation Allowance
 
(4,697
)
 
(4,252
)
Net Deferred Tax (Liability) after Valuation Allowance
 
$
(123
)
 
$
(91
)
Balance sheet classification of deferred taxes:
 
 
 
 
Net current deferred income tax asset
 
$
9

 
$
12

Net current deferred income tax liability
 
(3
)
 
(3
)
Net non-current deferred income tax asset
 
219

 
246

Net non-current deferred income tax liability
 
(348
)
 
(346
)
Net Deferred Tax (Liability) after Valuation Allowance
 
$
(123
)
 
$
(91
)
Operating loss carryforwards 
As of December 31, 2012, the Company had net operating loss carry forwards of approximately $8.5 billion (net of IRC Section 382 limitation) for U.S. federal income tax purposes. These loss carry forwards expire in future years through 2032 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
2023
$
254

2024
1,302

2025
1,186

2026
1,029

2027
1,501

2028
445

2029
700

2030
703

2031
711

2032
$
695

 
$
8,526

Uncertain tax benefits 
A reconciliation of the beginning and ending balance of unrecognized tax benefits follows (dollars in millions):
 
Amount
Balance as of January 1, 2010
$
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

Gross increases - tax positions of prior years
4

Gross increases - tax positions during 2012
1

Gross decreases - lapse of statute of limitations
(1
)
Gross decreases - settlement with taxing authorities
(1
)
Balance as of December 31, 2012
$
18

Segment Information (Tables)
Summary of segment information 
Segment information for the communications services business is summarized as follows:
 
 
Year Ended December 31,
 
 
2012
 
2011
 
2010
 
 
(dollars in millions)
Revenue from external customers
 
$
6,376

 
$
4,333

 
$
3,591

 
 
 
 
 
 
 
Capital expenditures
 
$
743

 
$
494

 
$
435

 
 
 
 
 
 
 
Depreciation and amortization
 
$
749

 
$
805

 
$
870

 
 
 
 
 
 
 
Total assets
 
$
13,307

 
$
13,188

 
 
Schedule of revenue from external customers and long-lived assets, by geographical areas 
 
 
Year Ended December 31,
 
 
2012
 
2011
 
2010
Revenue from external customers:
 
 
 
 
 
 
North America
 
$
4,803

 
$
3,669

 
$
3,275

Europe:
 
 
 
 
 
 
United Kingdom
 
628

 
267

 
131

Germany
 
79

 
72

 
62

Other European Countries
 
196

 
163

 
123

Total Europe
 
903

 
502

 
316

Latin America:
 
 
 
 
 
 
Brazil
 
267

 
68

 
—

Argentina
 
101

 
23

 
—

Colombia
 
104

 
23

 
—

Other Latin American Countries
 
192

 
44

 
—

Total Latin America
 
664

 
158

 
—

Other
 
6

 
4

 
—

 
 
$
6,376

 
$
4,333

 
$
3,591

Long-lived assets:
 
 
 
 
 
 
North America
 
$
5,375

 
$
5,338

 
 
Europe:
 
 
 
 
 
 
United Kingdom
 
694

 
613

 
 
Germany
 
346

 
348

 
 
Other European Countries
 
530

 
596

 
 
Total Europe
 
1,570

 
1,557

 
 
Latin America:
 
 
 
 
 
 
Brazil
 
428

 
434

 
 
Argentina
 
377

 
387

 
 
Colombia
 
252

 
247

 
 
Other Latin American Countries
 
473

 
465

 
 
Total Latin America
 
1,530

 
1,533

 
 
Other
 
425

 
512

 
 
 
 
$
8,900

 
$
8,940

 
 
Revenue from External Customers by Products and Services 
The following table provides revenue by service offering (dollars in millions):
 
Year Ended December 31,
 
2012
 
2011
 
2010
Core Network Services
$
5,587

 
$
3,599

 
$
2,827

Wholesale Voice Services and Other
789

 
734

 
764

 
$
6,376

 
$
4,333

 
$
3,591

Commitments, Contingencies and Other Items (Tables)
Schedule of Operating Leases, Future Minimum Payments Due and Unrecorded Unconditional Purchase Obligation 
Future minimum payments for the next five years and thereafter 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, 2012 (dollars in millions):
 
 
Right-of-Way
Agreements
 
Facilities and Other Assets
 
Total
 
Future Minimum Sublease Receipts
2013
 
$
115

 
$
255

 
$
370

 
$
16

2014
 
60

 
214

 
274

 
13

2015
 
52

 
187

 
239

 
9

2016
 
48

 
145

 
193

 
8

2017
 
44

 
128

 
172

 
6

Thereafter
 
386

 
498

 
884

 
11

Total
 
$
705

 
$
1,427

 
$
2,132

 
$
63

Schedule of long-term purchase commitments 
The following table summarizes the Company's purchase commitments at December 31, 2012 (dollars in millions):
 
 
Total
 
Less than
1 Year
 
2 - 3
Years
 
4 - 5
Years
 
After 5
Years
Cost of Access Services
 
$
390

 
$
276

 
$
100

 
$
13

 
$
1

Third-Party Maintenance Services
 
273

 
60

 
52

 
43

 
118

Total
 
$
663

 
$
336

 
$
152

 
$
56

 
$
119

Condensed Consolidating Financial Information (Tables)
Schedule of Condensed Consolidating Statements of Operations 
Condensed Consolidating Statements of Operations
For the year ended December 31, 2012

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

 
$
—

 
$
2,657

 
$
3,975

 
$
(256
)
 
$
6,376

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
996

 
1,854

 
(248
)
 
2,602

Depreciation and Amortization
—

 
—

 
260

 
489

 
—

 
749

Selling, General and Administrative
2

 
1

 
1,541

 
880

 
(8
)
 
2,416

Restructuring Charges
—

 
—

 
18

 
16

 
—

 
34

Total Costs and Expenses
2

 
1

 
2,815

 
3,239

 
(256
)
 
5,801

Operating Income (Loss)
(2
)
 
(1
)
 
(158
)
 
736

 
—

 
575

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
1

 
—

 
2

Interest expense
(168
)
 
(535
)
 
(3
)
 
(27
)
 
—

 
(733
)
Interest income (expense) affiliates, net
976

 
1,598

 
(2,233
)
 
(341
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,188
)
 
(2,066
)
 
92

 
—

 
3,162

 
—

Other income (expense), net
(39
)
 
(184
)
 
6

 
(1
)
 
—

 
(218
)
Total Other Expense
(419
)
 
(1,187
)
 
(2,137
)
 
(368
)
 
3,162

 
(949
)
Income (Loss) before Income Taxes
(421
)
 
(1,188
)
 
(2,295
)
 
368

 
3,162

 
(374
)
Income Tax Expense
(1
)
 
—

 
(4
)
 
(43
)
 
—

 
(48
)
Net Income (Loss)
(422
)
 
(1,188
)
 
(2,299
)
 
325

 
3,162

 
(422
)
Other Comprehensive Income, Net of Income Taxes
106

 
106

 
—

 
16

 
(122
)
 
106

Comprehensive Income (Loss)
$
(316
)
 
$
(1,082
)
 
$
(2,299
)
 
$
341

 
$
3,040

 
$
(316
)
Condensed Consolidating Statements of Operations
For the year ended December 31, 2011

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

 
$
—

 
$
2,367

 
$
2,196

 
$
(230
)
 
$
4,333

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
888

 
1,036

 
(218
)
 
1,706

Depreciation and Amortization
—

 
—

 
376

 
429

 
—

 
805

Selling, General and Administrative
2

 
19

 
1,269

 
481

 
(12
)
 
1,759

Restructuring Charges
—

 
—

 
1

 
10

 
—

 
11

Total Costs and Expenses
2

 
19

 
2,534

 
1,956

 
(230
)
 
4,281

Operating Income (Loss)
(2
)
 
(19
)
 
(167
)
 
240

 
—

 
52

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(211
)
 
(471
)
 
(3
)
 
(31
)
 
—

 
(716
)
Interest income (expense) affiliates, net
865

 
1,423

 
(2,065
)
 
(223
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,346
)
 
(2,241
)
 
122

 
—

 
3,465

 
—

Other income (expense), net
(62
)
 
(38
)
 
9

 
(32
)
 
—

 
(123
)
Total Other Expense
(754
)
 
(1,327
)
 
(1,937
)
 
(285
)
 
3,465

 
(838
)
Loss before Income Taxes
(756
)
 
(1,346
)
 
(2,104
)
 
(45
)
 
3,465

 
(786
)
Income Tax Expense
—

 
—

 
(15
)
 
(26
)
 
—

 
(41
)
Loss from Continuing Operations
(756
)
 
(1,346
)
 
(2,119
)
 
(71
)
 
3,465

 
(827
)
Income From Discontinued Operations, Net
—

 
—

 
—

 
71

 
—

 
71

Net Loss
(756
)
 
(1,346
)
 
(2,119
)
 
—

 
3,465

 
(756
)
Other Comprehensive Income (Loss), Net of Income Taxes
18

 
18

 
—

 
—

 
(18
)
 
18

Comprehensive Loss
$
(738
)
 
$
(1,328
)
 
$
(2,119
)
 
$
—

 
$
3,447

 
$
(738
)
Condensed Consolidating Statements of Operations
For the year ended December 31, 2010

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

 
$
—

 
$
2,046

 
$
1,774

 
$
(229
)
 
$
3,591

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
800

 
851

 
(217
)
 
1,434

Depreciation and Amortization
—

 
—

 
429

 
441

 
—

 
870

Selling, General and Administrative
2

 
—

 
1,185

 
198

 
(12
)
 
1,373

Restructuring Charges
—

 
—

 
1

 
1

 
—

 
2

Total Costs and Expenses
2

 
—

 
2,415

 
1,491

 
(229
)
 
3,679

Operating Income (Loss)
(2
)
 
—

 
(369
)
 
283

 
—

 
(88
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(199
)
 
(377
)
 
(2
)
 
(8
)
 
—

 
(586
)
Interest income (expense) affiliates, net
795

 
1,298

 
(1,891
)
 
(202
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,221
)
 
(2,087
)
 
218

 
—

 
3,090

 
—

Other income (expense), net
5

 
(55
)
 
1

 
10

 
—

 
(39
)
Total Other Expense
(620
)
 
(1,221
)
 
(1,673
)
 
(200
)
 
3,090

 
(624
)
Income (Loss) before Income Taxes
(622
)
 
(1,221
)
 
(2,042
)
 
83

 
3,090

 
(712
)
Income Tax (Expense) Benefit
—

 
—

 
(1
)
 
92

 
—

 
91

Income (Loss) from Continuing Operations
(622
)
 
(1,221
)
 
(2,043
)
 
175

 
3,090

 
(621
)
Loss From Discontinued Operations, Net
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Net Income (Loss)
(622
)
 
(1,221
)
 
(2,043
)
 
174

 
3,090

 
(622
)
Other Comprehensive Loss, Net of Income Taxes
(93
)
 
(93
)
 
—

 
(77
)
 
170

 
(93
)
Comprehensive Income (Loss)
$
(715
)
 
$
(1,314
)
 
$
(2,043
)
 
$
97

 
$
3,260

 
$
(715
)


Schedule of Condensed Consolidating Balance Sheets 
Condensed Consolidating Balance Sheets
December 31, 2012

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
253

 
$
5

 
$
386

 
$
335

 
$
—

 
$
979

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
93

 
621

 
—

 
714

Due from affiliates
14,446

 
15,709

 
—

 
7

 
(30,162
)
 
—

Other
3

 
16

 
49

 
73

 
—

 
141

Total Current Assets
14,702

 
15,730

 
529

 
1,043

 
(30,162
)
 
1,842

Property, Plant, and Equipment, net
—

 
—

 
2,926

 
5,273

 
—

 
8,199

Restricted Cash and Securities
12

 
—

 
17

 
6

 
—

 
35

Goodwill and Other Intangibles, net
—

 
—

 
429

 
2,404

 
—

 
2,833

Investment in Subsidiaries
(11,756
)
 
(20,470
)
 
3,242

 
—

 
28,984

 
—

Other Assets, net
16

 
119

 
11

 
252

 
—

 
398

Total Assets
$
2,974

 
$
(4,621
)
 
$
7,154

 
$
8,978

 
$
(1,178
)
 
$
13,307

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

 
$
2

 
$
53

 
$
723

 
$
—

 
$
779

Current portion of long-term debt
172

 
6

 
6

 
32

 
—

 
216

Accrued payroll and employee benefits
—

 
—

 
161

 
50

 
—

 
211

Accrued interest
45

 
163

 
—

 
1

 
—

 
209

Current portion of deferred revenue
—

 
—

 
109

 
142

 
—

 
251

Due to affiliates
—

 
—

 
30,162

 
—

 
(30,162
)
 
—

Other
1

 
1

 
29

 
105

 
—

 
136

Total Current Liabilities
219

 
172

 
30,520

 
1,053

 
(30,162
)
 
1,802

Long-Term Debt, less current portion
1,570

 
6,886

 
20

 
40

 
—

 
8,516

Deferred Revenue, less current portion
—

 
—

 
602

 
285

 
—

 
887

Other Liabilities
14

 
81

 
75

 
761

 
—

 
931

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
1,171

 
(11,760
)
 
(24,063
)
 
6,839

 
28,984

 
1,171

Total Liabilities and Stockholders' Equity (Deficit)
$
2,974

 
$
(4,621
)
 
$
7,154

 
$
8,978

 
$
(1,178
)
 
$
13,307

Condensed Consolidating Balance Sheets
December 31, 2011

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
2

 
$
6

 
$
618

 
$
292

 
$
—

 
$
918

Restricted cash and securities
—

 
—

 
1

 
9

 
—

 
10

Receivables, less allowances for doubtful accounts
—

 
—

 
59

 
589

 
—

 
648

Due from affiliates
13,472

 
14,584

 
—

 
36

 
(28,092
)
 
—

Other
3

 
16

 
48

 
64

 
—

 
131

Total Current Assets
13,477

 
14,606

 
726

 
990

 
(28,092
)
 
1,707

Property, Plant, and Equipment, net
—

 
—

 
2,823

 
5,313

 
—

 
8,136

Restricted Cash and Securities
18

 
—

 
19

 
14

 
—

 
51

Goodwill and Other Intangibles, net
—

 
—

 
481

 
2,418

 
—

 
2,899

Investment in Subsidiaries
(10,718
)
 
(18,467
)
 
3,412

 
—

 
25,773

 
—

Other Assets, net
13

 
109

 
6

 
267

 
—

 
395

Total Assets
$
2,790

 
$
(3,752
)
 
$
7,467

 
$
9,002

 
$
(2,319
)
 
$
13,188

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

 
$
—

 
$
37

 
$
710

 
$
—

 
$
747

Current portion of long-term debt
—

 
—

 
2

 
63

 
—

 
65

Accrued payroll and employee benefits
—

 
—

 
116

 
93

 
—

 
209

Accrued interest
50

 
165

 
—

 
1

 
—

 
216

Current portion of deferred revenue
—

 
—

 
107

 
157

 
—

 
264

Due to affiliates
—

 
—

 
28,092

 
—

 
(28,092
)
 
—

Other
—

 
1

 
52

 
104

 
—

 
157

Total Current Liabilities
50

 
166

 
28,406

 
1,128

 
(28,092
)
 
1,658

Long-Term Debt, less current portion
1,533

 
6,688

 
22

 
142

 
—

 
8,385

Deferred Revenue, less current portion
—

 
—

 
612

 
273

 
—

 
885

Other Liabilities
14

 
116

 
146

 
791

 
—

 
1,067

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (Deficit)
1,193

 
(10,722
)
 
(21,719
)
 
6,668

 
25,773

 
1,193

Total Liabilities and Stockholders' Equity (Deficit)
$
2,790

 
$
(3,752
)
 
$
7,467

 
$
9,002

 
$
(2,319
)
 
$
13,188

Schedule of Condensed Consolidating Statements of Cash Flows 
Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2012

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(165
)
 
$
(520
)
 
$
140

 
$
1,123

 
$
—

 
$
578

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(276
)
 
(467
)
 
—

 
(743
)
Decrease in restricted cash and securities, net
6

 
—

 
2

 
12

 
—

 
20

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

 
—

 
—

 
11

 
—

 
11

Other
—

 
—

 
—

 
(13
)
 
—

 
(13
)
Net Cash Provided by (Used in) Investing Activities
6

 
—

 
(274
)
 
(457
)
 
—

 
(725
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
293

 
4,211

 
—

 
—

 
—

 
4,504

Payments on and repurchases of long-term debt, including current portion and refinancing costs
—

 
(4,161
)
 
—

 
(141
)
 
—

 
(4,302
)
Proceeds from stock options exercised
5

 
—

 
—

 
—

 
—

 
5

Increase (decrease) due from affiliates, net
112

 
469

 
(98
)
 
(483
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
410

 
519

 
(98
)
 
(624
)
 
—

 
207

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
251

 
(1
)
 
(232
)
 
43

 
—

 
61

Cash and Cash Equivalents at Beginning of Year
2

 
6

 
618

 
292

 
—

 
918

Cash and Cash Equivalents at End of Year
$
253

 
$
5

 
$
386

 
$
335

 
$
—

 
$
979


Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2011

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(176
)
 
$
(428
)
 
$
293

 
$
699

 
$
—

 
$
388

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(197
)
 
(297
)
 
—

 
(494
)
Decrease (increase) in restricted cash and securities, net
—

 
—

 
3

 
(57
)
 
—

 
(54
)
Proceeds from sale of property, plant, and equipment and other assets
—

 
—

 
1

 
3

 
—

 
4

Investments in Global Crossing. net of cash acquired
—

 
—

 
—

 
146

 
—

 
146

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(193
)
 
(205
)
 
—

 
(398
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
292

 
1,586

 
—

 
—

 
—

 
1,878

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(521
)
 
(755
)
 
—

 
(341
)
 
—

 
(1,617
)
Increase (decrease) due from affiliates, net
234

 
(404
)
 
168

 
2

 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
5

 
427

 
168

 
(339
)
 
—

 
261

Net Cash Provided by Discontinued Operations
—

 
—

 
—

 
51

 
—

 
51

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
—

 
—

Net Change in Cash and Cash Equivalents
(171
)
 
(1
)
 
268

 
206

 
—

 
302

Cash and Cash Equivalents at Beginning of Year
173

 
7

 
350

 
86

 
—

 
616

Cash and Cash Equivalents at End of Year
$
2

 
$
6

 
$
618

 
$
292

 
$
—

 
$
918

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2010

 
Level 3 Communications, Inc
 
Level 3 Financing, Inc
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$
(156
)
 
$
(362
)
 
$
76

 
$
781

 
$
—

 
$
339

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(161
)
 
(274
)
 
—

 
(435
)
Decrease in restricted cash and securities, net
—

 
—

 
3

 
—

 
—

 
3

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

 
—

 
2

 
2

 
—

 
4

Net Cash Used in Investing Activities of Continuing Operations
—

 
—

 
(156
)
 
(272
)
 
—

 
(428
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
195

 
613

 
—

 
—

 
—

 
808

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(328
)
 
(599
)
 
(1
)
 
(2
)
 
—

 
(930
)
Increase (decrease) due from affiliates, net
226

 
347

 
—

 
(573
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities of Continuing Operations
93

 
361

 
(1
)
 
(575
)
 
—

 
(122
)
Net Cash Used in Discontinued Operations
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(8
)
 
—

 
(8
)
Net Change in Cash and Cash Equivalents
(63
)
 
(1
)
 
(81
)
 
(75
)
 
—

 
(220
)
Cash and Cash Equivalents at Beginning of Year
236

 
8

 
431

 
161

 
—

 
836

Cash and Cash Equivalents at End of Year
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Unaudited Quarterly Financial Data (Tables)
Unaudited Quarterly Financial Data
 
 
Three Months Ended
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
 
 
(dollars in millions except per share data)
Revenue
 
$
1,586

 
$
914

 
$
1,586

 
$
913

 
$
1,590

 
$
927

 
$
1,614

 
$
1,579

Gross Margin
 
929

 
557

 
938

 
566

 
948

 
585

 
959

 
919

Operating Income (Loss)
 
116

 
(3
)
 
133

 
3

 
138

 
7

 
188

 
45

Net Loss
 
(138
)
 
(205
)
 
(62
)
 
(181
)
 
(166
)
 
(207
)
 
(56
)
 
(163
)
Loss per share (Basic and Diluted)
 
$
(0.66
)
 
$
(1.83
)
 
$
(0.29
)
 
$
(1.59
)
 
$
(0.76
)
 
$
(1.75
)
 
$
(0.26
)
 
$
(0.80
)
Organization and Summary of Significant Accounting Policies (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
0 Months Ended 3 Months Ended 12 Months Ended
Nov. 14, 2011
jointventures
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
2 
 
 
 
 
 
 
 
 
 
 
 
Period company may receive up front payments for services to be provided in the future (in years)
 
 
 
 
 
 
 
 
 
25 
 
 
USF contributions
 
 
 
 
 
 
 
 
 
$ 191 
$ 107 
$ 77 
Advertising expense
 
 
 
 
 
 
 
 
 
20 
15 
8 
Bad debt expense
 
 
 
 
 
 
 
 
 
15 
6 
16 
Net Loss
 
(56)
(166)
(62)
(138)
(163)
(207)
(181)
(205)
(422)
(756)
(622)
Net Loss per Share, Basic and Diluted
 
$ (0.26)
$ (0.76)
$ (0.29)
$ (0.66)
$ (0.80)
$ (1.75)
$ (1.59)
$ (1.83)
$ (1.96)
$ (5.51)
$ (5.62)
Capitalized labor and related costs associated with employee and contract labor working on capital projects
 
 
 
 
 
 
 
 
 
146 
87 
68 
Impairment of Intangible Assets (Excluding Goodwill)
 
 
 
 
 
20 
 
 
 
 
20 
 
Deferred taxes on certain indefinite-lived intangible assets
 
 
 
 
 
 
 
 
 
48 
41 
(91)
Sales Revenue |
Customer Concentration Risk
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of communications revenue from top ten customers
 
 
 
 
 
 
 
 
 
17.00% 
24.00% 
27.00% 
Montana
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
1 
 
 
 
 
 
 
 
 
 
 
 
Investments in Joint Venture, Percentage
50.00% 
 
 
 
 
 
 
 
 
 
 
 
Wyoming
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Number of joint-venture surface mines
1 
 
 
 
 
 
 
 
 
 
 
 
Investments in Joint Venture, Percentage
50.00% 
 
 
 
 
 
 
 
 
 
 
 
Service Life
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
 
 
 
 
 
 
 
 
 
$ 74 
 
Net Loss per Share, Basic and Diluted
 
 
 
 
 
 
 
 
 
 
$ 0.54 
 
Minimum [Member]
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
4 years 
 
 
Minimum [Member] |
Facility and Leasehold Improvements
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
10 years 
 
 
Minimum [Member] |
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
25 years 
 
12 years 
Minimum [Member] |
Operating Equipment
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
4 years 
 
 
Minimum [Member] |
Furniture, Fixutres, Office Equipment and Other
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
2 years 
 
 
Minimum [Member] |
Expansion and improvements of communications network and customer installations
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
3 years 
 
 
Minimum [Member] |
Service Life |
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
25 years 
 
 
Maximum
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
12 years 
 
 
Maximum |
Facility and Leasehold Improvements
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
40 years 
 
 
Maximum |
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
50 years 
 
25 years 
Maximum |
Operating Equipment
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
15 years 
 
 
Maximum |
Furniture, Fixutres, Office Equipment and Other
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
7 years 
 
 
Maximum |
Expansion and improvements of communications network and customer installations
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
7 years 
 
 
Maximum |
Software development
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
3 years 
 
 
Maximum |
Service Life |
Network infrastructure (including fiber and conduit)
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
50 years 
 
 
Maximum |
Service Life |
Operating Equipment
 
 
 
 
 
 
 
 
 
 
 
 
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, useful life, minimum (in years)
 
 
 
 
 
 
 
 
 
15 years 
 
7 years 
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 0 Months Ended
Oct. 19, 2011
Dec. 31, 2012
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%)
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Oct. 4, 2011
Common stock
Oct. 31, 2011
Common stock
Nov. 30, 2011
Global Crossing
Oct. 4, 2011
Global Crossing
Oct. 4, 2011
Global Crossing
2% Cumulative convertible preferred stock
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% 
8.125% 
 
 
 
 
 
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 
 
 
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 
 
 
 
 
 
 
 
 
 
 
 
 
 
Final Purchase Price Allocation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, Cash Equivalents, and Restricted Cash
 
 
 
 
226,000,000 
 
 
 
 
 
 
 
 
 
Property, Plant, and Equipment
 
 
 
 
3,098,000,000 
 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
1,123,000,000 
 
 
 
 
 
 
 
 
 
Identifiable Intangibles
 
 
 
 
106,000,000 
 
 
 
 
 
 
 
 
 
Other Assets
 
 
 
 
651,000,000 
 
 
 
 
 
 
 
 
 
Total Assets
 
 
 
 
5,204,000,000 
 
 
 
 
 
 
 
 
 
Long-term Debt
 
 
 
 
(1,554,000,000)
 
 
 
 
 
 
 
 
 
Other Liabilities
 
 
 
 
(1,688,000,000)
 
 
 
 
 
 
 
 
 
Total Liabilities
 
 
 
 
(3,242,000,000)
 
 
 
 
 
 
 
 
 
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
 
$ 81,000,000 
$ 32,000,000 
 
 
 
 
 
 
 
 
 
 
 
Loss Per Share (Details)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Convertible Senior Notes
 
 
 
Loss per share
 
 
 
Securities not included in computation of diluted loss per share (in millions of shares)
35 
39 
52 
Stock options, restricted stock units and warrants
 
 
 
Loss per share
 
 
 
Securities not included in computation of diluted loss per share (in millions of shares)
7 
4 
3 
Dispositions (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 3 Months Ended
Nov. 14, 2011
jointventures
Nov. 14, 2011
Wyoming
jointventures
Nov. 14, 2011
Montana
jointventures
Dec. 31, 2011
Ownership Interest in Joint Venture Surface Mines
Consolidated Statement of Operations, Including Discontinued Operations
 
 
 
 
Number of joint-venture surface mines
2 
1 
1 
 
Investments in Joint Venture, Percentage
 
50.00% 
50.00% 
 
Discontinued Operation, Gain on Disposal of Discontinued Operation, Net of Tax
 
 
 
$ 72 
Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
$ 16,558 
$ 15,814 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(8,359)
(7,678)
 
Net
8,199 
8,136 
 
Depreciation expense
659 
706 
775 
Land
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
195 
195 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
0 
0 
 
Net
195 
195 
 
Land Improvements
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
73 
73 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(43)
(40)
 
Net
30 
33 
 
Facility and Leasehold Improvements
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
2,050 
2,046 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(1,074)
(978)
 
Net
976 
1,068 
 
Network infrastructure
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
8,342 
8,189 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(3,058)
(2,817)
 
Net
5,284 
5,372 
 
Operating Equipment
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
5,506 
4,978 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(3,997)
(3,680)
 
Net
1,509 
1,298 
 
Furniture, Fixtures and Office Equipment
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
249 
228 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(166)
(142)
 
Net
83 
86 
 
Other
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
21 
21 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
(21)
(21)
 
Net
0 
0 
 
Construction-in-Progress
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, Plant and Equipment, Gross
122 
84 
 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
0 
0 
 
Net
$ 122 
$ 84 
 
Asset Retirement Obligations (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Asset Retirement Obligation, Change in Accounting Estimate
 
 
 
 
Property, Plant and Equipment, Gross
$ 16,558 
$ 16,558 
$ 15,814 
 
Selling, General and Administrative and Depreciation Expense
 
5,801 
4,281 
3,679 
Selling, General and Administrative
 
2,416 
1,759 
1,373 
Depreciation and Amortization
 
749 
805 
870 
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
 
 
 
 
Asset retirement obligation, beginning balance
 
121 
74 
 
Accretion expense
 
11 
9 
 
Liabilities assumed in Global Crossing acquisition
 
0 
41 
 
Liabilities settled
 
(4)
(2)
 
Asset Retirement Obligation, Revision of Estimate
(73)
(73)
0 
 
Effect of foreign currency rate change
 
0 
(1)
 
Asset retirement obligation, ending balance
55 
55 
121 
74 
Asset Retirement Obligation Change in Estimate
 
 
 
 
Asset Retirement Obligation, Change in Accounting Estimate
 
 
 
 
Property, Plant and Equipment, Gross
(24)
(24)
 
 
Selling, General and Administrative and Depreciation Expense
 
(49)
 
 
Selling, General and Administrative
(47)
(47)
 
 
Depreciation and Amortization
(2)
(2)
 
 
Earnings Per Share, Basic and Diluted Changes in Accounting Estimates
 
$ 0.23 
 
 
Asset Retirement Obligation, Change in Estimate Right-of-way
 
 
 
 
Asset Retirement Obligation, Change in Accounting Estimate
 
 
 
 
Selling, General and Administrative
 
$ (21)
 
 
Earnings Per Share, Basic and Diluted Changes in Accounting Estimates
 
$ 0.10 
 
 
Goodwill (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Changes in carrying amount of goodwill
 
 
Balance at the beginning of the period
$ 2,541 
$ 1,427 
Goodwill acquired in Global Crossing acquisition
 
1,110 
Effect of foreign currency rate change
 
4 
Goodwill adjustments
24 
 
Balance at the end of the period
$ 2,565 
$ 2,541 
Acquired Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 989 
$ 989 
$ 989 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(663)
(753)
(663)
 
Finite-Lived Intangible Assets, Net
326 
236 
326 
 
Impairment of Intangible Assets (Excluding Goodwill)
20 
 
20 
 
Finite-Lived Intangible Assets Increase in Amortization Expense
 
 
 
2 
Acquired finite-lived intangible asset amortization expense
 
90 
99 
95 
Total Acquired Intangible Assets
 
 
 
 
Total Intangible assets, Gross Carrying Amount
1,021 
1,021 
1,021 
 
Total intangible assets, Net
358 
268 
358 
 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
2013
 
73 
 
 
2014
 
61 
 
 
2015
 
45 
 
 
2016
 
28 
 
 
2017
 
13 
 
 
Thereafter
 
16 
 
 
Finite-Lived Intangible Assets, Net
326 
236 
326 
 
Vyvx Trade Name
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
Indefinite-Lived Intangible Assets, Net
32 
32 
32 
 
Customer Contracts and Relationships
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
776 
776 
776 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(571)
(633)
(571)
 
Finite-Lived Intangible Assets, Net
205 
143 
205 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
2 years 11 months 
 
 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
Finite-Lived Intangible Assets, Net
205 
143 
205 
 
Trademarks
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
55 
55 
55 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(3)
(17)
(3)
 
Finite-Lived Intangible Assets, Net
52 
38 
52 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
2 years 10 months 
 
 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
Finite-Lived Intangible Assets, Net
52 
38 
52 
 
Patents and Developed Technology
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
158 
158 
158 
 
Finite-Lived Intangible Assets, Accumulated Amortization
(89)
(103)
(89)
 
Finite-Lived Intangible Assets, Net
69 
55 
69 
 
Acquired finite-lived intangible assets, amortization period (in years)
 
4 years 
 
 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
Finite-Lived Intangible Assets, Net
$ 69 
$ 55 
$ 69 
 
Restructuring Charges (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Restructuring charge and reserve
 
 
 
 
 
Restructuring charges
$ 20 
$ 11 
$ 34 
$ 11 
$ 2 
Employee Separations
 
 
 
 
 
Restructuring charge and reserve
 
 
 
 
 
Restructuring reserve
16 
5 
16 
5 
 
Restructuring charges
 
 
34 
11 
2 
Facility Closings
 
 
 
 
 
Restructuring charge and reserve
 
 
 
 
 
Restructuring reserve
35 
43 
35 
43 
 
Benefit (loss) recognized as a result of lease modification
 
 
$ (2)
$ 3 
$ 5 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Fair Value Disclosures [Abstract]
 
 
Carrying value of long-term debt, including current portion
$ 8,732 
$ 8,450 
Fair Value, Measurements, Recurring |
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)
56 
90 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
56 
90 
Long-term Debt, including the current portion:
 
 
Term Loans
2,603 
2,567 
Senior Notes
5,185 
4,716 
Convertible Notes
846 
939 
Commercial Mortgage
0 
65 
Capital Leases and Other
98 
163 
Total Long-term Debt, including the current portion:
8,732 
8,450 
Fair Value, Measurements, Recurring |
Unadjusted quoted prices in active markets for identical assets or liabilities (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:
 
 
Term Loans
2,631 
2,518 
Senior Notes
5,712 
4,822 
Convertible Notes
286 
247 
Commercial Mortgage
0 
0 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
8,629 
7,587 
Fair Value, Measurements, Recurring |
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)
56 
90 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
56 
90 
Long-term Debt, including the current portion:
 
 
Term Loans
0 
0 
Senior Notes
0 
0 
Convertible Notes
748 
834 
Commercial Mortgage
0 
73 
Capital Leases and Other
98 
163 
Total Long-term Debt, including the current portion:
$ 846 
$ 1,070 
Fair Value of Financial Instruments - Liabilities, Non Recurring (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2012
Term Loans
Dec. 31, 2012
Tranche B-II 2019 Term Loan
Dec. 31, 2012
Tranche B 2019 Term Loan
Dec. 31, 2012
Tranche B 2016 Term Loan
Dec. 31, 2011
Tranche B III Term Loan
Dec. 31, 2011
Tranche B II Term Loan
Dec. 31, 2011
Tranche A Term Loan
Dec. 31, 2012
Senior Notes
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Dec. 31, 2012
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2012
Not actively traded convertible notes
Dec. 31, 2012
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2012
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Mar. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Commercial Mortgages
Dec. 31, 2012
Estimate of Fair Value, Fair Value Disclosure
Term Loans
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Term Loans
Dec. 31, 2012
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Dec. 31, 2012
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure
Commercial Mortgages
Dec. 31, 2012
Fair Value, Measurements, Recurring
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Dec. 31, 2011
Fair Value, Measurements, Recurring
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Liabilities measured on a recurring basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,600 
$ 2,500 
 
 
 
 
 
 
 
Basis of interest rate on debt
 
LIBOR 
LIBOR 
LIBOR 
LIBOR 
LIBOR 
LIBOR 
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, Interest spread on debt (as percent)
 
3.25% 
3.75% 
3.25% 
4.25% 
4.25% 
2.25% 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, basis floor (as percent)
 
1.50% 
1.50% 
1.50% 
1.50% 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateral for debt, Equity interest in Level 3 Financing, Inc's Canadian subsidiary (as a percent)
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,700 
4,800 
Interest spread on debt, low end of range
 
 
 
 
 
 
 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest spread on debt, high end of range
 
 
 
 
 
 
 
11.875% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Notes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
286 
247 
748 
834 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
 
11.875% 
11.875% 
8.875% 
6.50% 
6.50% 
 
7.00% 
7.00% 
7.00% 
7.00% 
15.00% 
15.00% 
15.00% 
15.00% 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, lowest interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
7.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, highest interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of commercial mortgage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
73 
 
 
Carrying value of long term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 65 
 
 
 
 
 
 
 
 
 
Derivative Financial Instruments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Interest Rate Swap
Sep. 30, 2012
Interest Rate Swap
Mar. 31, 2007
Level 3 Financing Inc.
derivatives
Dec. 31, 2012
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
Dec. 31, 2012
Interest Expense
Dec. 31, 2011
Interest Expense
Dec. 31, 2012
Other Noncurrent Liabilities
Dec. 31, 2011
Other Noncurrent Liabilities
Derivative
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps, number of instruments
 
 
 
 
 
2 
2 
 
 
 
 
 
 
Interest rate swaps, notional amount
 
 
 
 
 
$ 1,000 
$ 1,000 
$ 500 
$ 500 
 
 
 
 
Basis of interest payment
 
 
 
 
 
three month LIBOR 
three month LIBOR 
three month LIBOR 
three month LIBOR 
 
 
 
 
Fixed interest rate paid under agreement (as a percent)
 
 
 
 
 
 
 
4.93% 
4.92% 
 
 
 
 
Cash flow hedging contracts - Other noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
 
0 
90 
Interest rate swap agreements - Other noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
 
56 
0 
Cash flow hedging contracts, gains (losses) recognized in Other Comprehensive Income (Loss)
90 
18 
(16)
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts, amount of gains (losses) reclassified from AOCI to Interest Expense
 
 
 
 
 
 
 
 
 
26 
46 
 
 
Embedded equity conversion rights located in Other Income (Expense) - Other, net
0 
0 
10 
 
 
 
 
 
 
 
 
 
 
Gain (Loss) on interest rate swap agreements not designated as hedging instruments
$ (64)
$ 0 
$ 0 
$ (4)
$ (60)
 
 
 
 
 
 
 
 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Long-term debt
 
 
Total Debt Obligations
$ 8,780 
$ 8,528 
Total Unamortized (Discount) Premium
(48)
(78)
Carrying Value of Debt
8,732 
8,450 
Less current portion
(216)
(65)
Long-Term Debt, less current portion
8,516 
8,385 
Term Loans
 
 
Long-term debt
 
 
Total Debt Obligations
2,614 1
2,600 1
Total Unamortized (Discount) Premium
(11)
(33)
Senior Notes due 2014 (9.25%)
 
 
Long-term debt
 
 
Total Debt Obligations
0 
807 
Total Unamortized (Discount) Premium
0 
3 
Floating Rate Senior Notes due 2015
 
 
Long-term debt
 
 
Total Debt Obligations
300 
300 
Senior Notes due 2017 (8.75%)
 
 
Long-term debt
 
 
Total Debt Obligations
0 
700 
Senior Notes due 2018 (10.0%)
 
 
Long-term debt
 
 
Total Debt Obligations
640 
640 
Total Unamortized (Discount) Premium
(10)
(11)
Senior Notes due 2019 (11.875%)
 
 
Long-term debt
 
 
Total Debt Obligations
605 
605 
Total Unamortized (Discount) Premium
(9)
(10)
Senior Notes due 2019 (9.375%)
 
 
Long-term debt
 
 
Total Debt Obligations
500 
500 
Total Unamortized (Discount) Premium
(8)
(9)
Senior Notes due 2019 (8.125%)
 
 
Long-term debt
 
 
Total Debt Obligations
1,200 
1,200 
Total Unamortized (Discount) Premium
(8)
(9)
Senior Notes due 2019 (8.875%)
 
 
Long-term debt
 
 
Total Debt Obligations
300 
0 
Senior Notes due 2020 (8.625%)
 
 
Long-term debt
 
 
Total Debt Obligations
900 
0 
Senior Notes due 2020 (7.0%)
 
 
Long-term debt
 
 
Total Debt Obligations
775 
0 
Convertible Senior Notes due 2013 (15.0%)
 
 
Long-term debt
 
 
Total Debt Obligations
172 
272 
Total Unamortized (Discount) Premium
0 
(7)
Convertible Senior Notes due 2015 (7.0%)
 
 
Long-term debt
 
 
Total Debt Obligations
200 
200 
Total Unamortized (Discount) Premium
(2)
(2)
Convertible Senior Notes due 2015 Series B (7.0%)
 
 
Long-term debt
 
 
Total Debt Obligations
275 
275 
Convertible Senior Notes due 2016 (6.5%)
 
 
Long-term debt
 
 
Total Debt Obligations
201 
201 
Commercial Mortgage due 2015 (9.86%)
 
 
Long-term debt
 
 
Total Debt Obligations
0 
65 
Capital Leases
 
 
Long-term debt
 
 
Total Debt Obligations
86 
131 
Other
 
 
Long-term debt
 
 
Total Debt Obligations
$ 12 
$ 32 
Long-Term Debt - Textuals (Details) (USD $)
3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 1 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 0 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 1 Months Ended
Sep. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Jun. 26, 2009
Level 3 Communications, Inc.
Dec. 31, 2008
Level 3 Communications, Inc.
Mar. 31, 2012
Level 3 Communications, Inc.
Dec. 31, 2012
Level 3 Communications, Inc.
Dec. 31, 2011
Level 3 Communications, Inc.
Dec. 31, 2010
Level 3 Communications, Inc.
Mar. 13, 2012
Level 3 Communications, Inc.
Shares issued upon conversion of debt instrument face amount
Mar. 13, 2012
Level 3 Communications, Inc.
Shares issued upon conversion of debt instrument premium
Feb. 14, 2007
Level 3 Financing Inc.
Sep. 30, 2012
Level 3 Financing Inc.
Dec. 31, 2012
Level 3 Financing Inc.
Mar. 31, 2007
Level 3 Financing Inc.
Jun. 30, 2009
Senior Secured Term Loan 2011
Level 3 Financing Inc.
Sep. 30, 2012
Tranche A Term Loan
Dec. 31, 2011
Tranche A Term Loan
Sep. 30, 2012
Tranche A Term Loan
Level 3 Financing Inc.
Dec. 31, 2011
Tranche A Term Loan
Level 3 Financing Inc.
Mar. 13, 2007
Tranche A Term Loan
Level 3 Financing Inc.
Dec. 31, 2011
Tranche B Term Loan
Dec. 31, 2011
Tranche B Term Loan
Level 3 Financing Inc.
Jun. 30, 2009
Tranche B Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B II Term Loan
Dec. 31, 2011
Tranche B II Term Loan
Dec. 31, 2011
Tranche B II Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B II Term Loan
Level 3 Financing Inc.
Oct. 4, 2011
Tranche B II Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B III Term Loan
Dec. 31, 2011
Tranche B III Term Loan
Dec. 31, 2011
Tranche B III Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B III Term Loan
Level 3 Financing Inc.
Nov. 10, 2011
Tranche B III Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B II and Tranche B III Term Loans
Dec. 31, 2011
Tranche B II and Tranche B III Term Loans
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B 2016 Term Loan
Aug. 31, 2012
Tranche B 2016 Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B 2016 Term Loan
Level 3 Financing Inc.
Sep. 30, 2012
Tranche B 2016 Term Loan
Level 3 Financing Inc.
Aug. 6, 2012
Tranche B 2016 Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B 2019 Term Loan
Aug. 31, 2012
Tranche B 2019 Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B 2019 Term Loan
Level 3 Financing Inc.
Sep. 30, 2012
Tranche B 2019 Term Loan
Level 3 Financing Inc.
Aug. 6, 2012
Tranche B 2019 Term Loan
Level 3 Financing Inc.
Sep. 30, 2012
Tranche B 2016 Term Loan and Tranche B 2019 Term Loan
Level 3 Financing Inc.
Aug. 6, 2012
Tranche B 2016 Term Loan and Tranche B 2019 Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Tranche B-II 2019 Term Loan
Dec. 31, 2012
Tranche B-II 2019 Term Loan
Level 3 Financing Inc.
Oct. 4, 2012
Tranche B-II 2019 Term Loan
Level 3 Financing Inc.
Aug. 6, 2012
Tranche B-II 2019 Term Loan
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes
Mar. 31, 2012
Senior Notes due 2014 (9.25%)
Jun. 30, 2011
Senior Notes due 2014 (9.25%)
Dec. 31, 2011
Senior Notes due 2014 (9.25%)
Feb. 28, 2012
Senior Notes due 2014 (9.25%)
Level 3 Financing Inc.
Mar. 31, 2012
Senior Notes due 2014 (9.25%)
Level 3 Financing Inc.
Jun. 30, 2011
Senior Notes due 2014 (9.25%)
Level 3 Financing Inc.
Dec. 31, 2011
Senior Notes due 2014 (9.25%)
Level 3 Financing Inc.
Dec. 31, 2012
Floating Rate Senior Notes due 2015
Dec. 31, 2011
Floating Rate Senior Notes due 2015
Dec. 31, 2012
Floating Rate Senior Notes due 2015
Level 3 Financing Inc.
Feb. 14, 2007
Floating Rate Senior Notes due 2015
Level 3 Financing Inc.
Sep. 30, 2012
Senior Notes due 2017 (8.75%)
Dec. 31, 2011
Senior Notes due 2017 (8.75%)
Sep. 30, 2012
Senior Notes due 2017 (8.75%)
Level 3 Financing Inc.
Feb. 14, 2007
Senior Notes due 2017 (8.75%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Dec. 31, 2011
Senior Notes due 2018 (10.0%)
Jan. 20, 2010
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Dec. 31, 2011
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Twelve Months Beginning February 1, 2014
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Twelve Months Beginning February 1, 2015
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Twelve Months Beginning February 1, 2016
Dec. 31, 2012
Senior Notes due 2018 (10.0%)
Level 3 Financing Inc.
Prior to February 2014
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Dec. 31, 2011
Senior Notes due 2019 (11.875%)
Jan. 31, 2011
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Twelve Months Beginning February 1, 2015
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Twelve Months Beginning February 1, 2016
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Twelve Months Beginning February 1, 2017
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Prior to February 2014
days
Dec. 31, 2012
Senior Notes due 2019 (11.875%)
Level 3 Communications, Inc.
Prior to February 2015
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Dec. 31, 2011
Senior Notes due 2019 (9.375%)
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Mar. 4, 2011
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Twelve Months Beginning April 1, 2015
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Twelve Months Beginning April 1, 2016
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Twelve Months Beginning April 1, 2017
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Prior to April 2014
days
Dec. 31, 2012
Senior Notes due 2019 (9.375%)
Level 3 Financing Inc.
Prior to April 2015
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Dec. 31, 2011
Senior Notes due 2019 (8.125%)
Jul. 31, 2011
Senior Notes due 2019 (8.125%)
Level 3 Escrow Inc [Member]
Jun. 30, 2011
Senior Notes due 2019 (8.125%)
Level 3 Escrow Inc [Member]
Apr. 10, 2012
Senior Notes due 2019 (8.125%)
Level 3 Escrow Inc [Member]
Jun. 9, 2011
Senior Notes due 2019 (8.125%)
Level 3 Escrow Inc [Member]
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Apr. 10, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Oct. 4, 2011
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Twelve Months Beginning July 1, 2015
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Twelve Months Beginning July 1, 2016
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Twelve Months Beginning July 1, 2017
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Prior to July 2014
days
offering
Dec. 31, 2012
Senior Notes due 2019 (8.125%)
Level 3 Financing Inc.
Prior to July 2015
days
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Aug. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Jul. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Twelve Months Beginning June 1, 2015
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Twelve Months Beginning June 1, 2016
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Twelve Months Beginning June 1, 2017
Dec. 31, 2012
Senior Notes due 2019 (8.875%)
Level 3 Communications, Inc.
Prior to June 2015
days
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Jan. 13, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Twelve Months Beginning January 15, 2016
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Twelve Months Beginning January 15, 2017
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Twelve Months Beginning January 15, 2018
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Prior to January 2015
days
Dec. 31, 2012
Senior Notes due 2020 (8.625%)
Level 3 Financing Inc.
Prior to January 2016
days
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Aug. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Aug. 6, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Twelve Months Beginning June 1, 2016
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Twelve Months Beginning June 1, 2017
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Twelve Months Beginning June 1, 2018
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Prior to June 2015
days
Dec. 31, 2012
Senior Notes due 2020 (7.0%)
Level 3 Financing Inc.
Prior to June 2016
days
Mar. 31, 2010
Senior Notes due 2013 (12.25%)
Level 3 Financing Inc.
Mar. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Mar. 13, 2012
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 31, 2008
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 24, 2008
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 31, 2008
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Mar. 31, 2013
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
days
Jan. 15, 2013
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Mar. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 31, 2009
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Level 3 Communications, Inc.
Maximum
Dec. 31, 2012
Convertible Senior Notes due 2015 (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 (7.0%)
Oct. 15, 2009
Convertible Senior Notes due 2015 (7.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2015 (7.0%)
Level 3 Communications, Inc.
Jun. 26, 2009
Convertible Senior Notes due 2015 (7.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Dec. 31, 2012
Convertible Senior Notes due 2015 Series B (7.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Sep. 20, 2010
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Dec. 31, 2010
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Sep. 30, 2010
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Dec. 31, 2011
Convertible Senior Notes due 2016 (6.5%)
Level 3 Communications, Inc.
Maximum
Dec. 24, 2008
Convertible Subordinated Notes due 2009 (6.0%)
Level 3 Communications, Inc.
Jun. 26, 2009
Convertible Subordinated Notes due 2010 (6.0%)
Level 3 Communications, Inc.
Dec. 24, 2008
Convertible Subordinated Notes due 2010 (6.0%)
Level 3 Communications, Inc.
Jun. 26, 2009
Convertible Senior Notes due 2010 (2.875%)
Level 3 Communications, Inc.
Dec. 24, 2008
Convertible Senior Notes due 2010 (2.875%)
Level 3 Communications, Inc.
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%) and Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Level 3 Communications, Inc.
Mar. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Dec. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Maximum
Dec. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
Level 3 Communications, Inc.
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Notes due 2012 (3.5%)
Level 3 Communications, Inc.
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Level 3 Communications, Inc.
Dec. 31, 2012
Convertible Senior Discount Notes due 2013 (9.0%)
Level 3 Communications, Inc.
Dec. 31, 2011
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2012
Capital Leases
Dec. 31, 2012
Other
Aug. 31, 2012
Other
Level 3 Financing Inc.
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,400,000,000 
 
$ 1,400,000,000 
 
$ 1,400,000,000 
 
 
$ 280,000,000 
$ 650,000,000 
 
 
$ 650,000,000 
 
$ 550,000,000 
 
 
$ 550,000,000 
 
 
 
 
 
$ 599,000,000 
 
$ 600,000,000 
 
 
 
 
$ 815,000,000 
 
$ 1,415,000,000 
 
$ 1,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 300,000,000 
 
 
 
$ 700,000,000 
 
 
$ 640,000,000 
 
 
 
 
 
 
 
 
$ 605,000,000 
 
 
 
 
 
 
 
 
 
$ 500,000,000 
 
 
 
 
 
 
 
 
 
$ 1,200,000,000 
$ 600,000,000 
 
$ 1,200,000,000 
 
 
 
 
 
 
 
 
 
$ 300,000,000 
 
 
 
 
 
 
$ 900,000,000 
 
 
 
 
 
 
 
 
$ 775,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 200,000,000 
 
 
 
 
 
 
 
 
 
$ 175,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Additional Borrowings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
650,000,000 
 
 
 
 
550,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400,000,000 
 
 
 
 
 
 
 
 
 
275,000,000 
 
 
 
 
 
 
 
 
26,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.25% 
9.25% 
9.25% 
 
9.25% 
 
9.25% 
4.469% 
4.202% 
 
 
8.75% 
8.75% 
8.75% 
 
10.00% 
10.00% 
 
 
10.00% 
 
 
 
 
11.875% 
11.875% 
 
11.875% 
 
 
 
 
 
9.375% 
9.375% 
9.375% 
 
 
 
 
 
 
8.125% 
8.125% 
 
 
8.125% 
8.125% 
8.125% 
 
 
 
 
 
 
 
8.875% 
 
8.875% 
 
 
 
 
 
8.625% 
8.625% 
 
 
 
 
 
 
7.00% 
 
7.00% 
 
 
 
 
 
 
12.25% 
15.00% 
15.00% 
15.00% 
15.00% 
 
 
 
 
 
 
15.00% 
15.00% 
15.00% 
 
 
7.00% 
7.00% 
 
7.00% 
 
7.00% 
7.00% 
7.00% 
6.50% 
6.50% 
 
 
 
6.50% 
 
 
6.00% 
6.00% 
6.00% 
2.875% 
2.875% 
 
5.25% 
5.25% 
 
3.50% 
3.50% 
 
 
 
3.50% 
9.00% 
9.00% 
9.00% 
9.86% 
 
 
 
Debt instrument, basis floor (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
 
1.50% 
 
1.50% 
 
 
1.50% 
 
1.50% 
 
 
 
1.50% 
 
 
 
 
1.50% 
 
 
 
 
1.50% 
 
1.50% 
 
1.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, Interest spread on debt (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.25% 
 
 
2.25% 
 
 
8.50% 
 
4.25% 
 
4.25% 
 
 
4.25% 
 
4.25% 
 
 
 
3.25% 
 
 
3.25% 
 
3.75% 
 
 
3.75% 
 
 
 
3.25% 
 
3.25% 
 
3.75% 
 
 
 
 
 
 
 
 
 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, weighted average interest rate (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.20% 
5.70% 
 
Debt Instrument, Unamortized Discount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
7,000,000 
 
 
 
27,000,000 
28,000,000 
 
 
 
 
3,000,000 
 
3,000,000 
 
 
8,000,000 
 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,000,000 
10,000,000 
 
 
 
 
 
 
 
11,000,000 
9,000,000 
 
 
 
 
 
 
 
8,000,000 
10,000,000 
 
 
 
 
 
 
 
9,000,000 
 
 
4,000,000 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Unamortized Debt Issuance Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
 
 
 
 
14,000,000 
 
 
 
 
8,000,000 
 
 
 
 
 
8,000,000 
 
9,000,000 
 
 
11,000,000 
 
12,000,000 
 
 
 
13,000,000 
 
13,000,000 
 
 
 
 
 
 
 
 
 
 
2,000,000 
6,000,000 
 
 
 
 
 
 
14,000,000 
10,000,000 
 
 
 
 
 
 
 
8,000,000 
7,000,000 
 
 
 
 
 
 
 
9,000,000 
11,000,000 
 
 
 
 
 
 
 
 
 
 
 
29,000,000 
 
32,000,000 
 
 
 
 
 
 
 
6,000,000 
7,000,000 
 
 
 
 
 
18,000,000 
20,000,000 
 
 
 
 
 
 
 
14,000,000 
15,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
1,000,000 
 
 
 
2,000,000 
4,000,000 
 
 
 
 
 
6,000,000 
 
 
4,000,000 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Net Proceeds
 
 
 
 
4,504,000,000 
1,878,000,000 
808,000,000 
 
 
 
293,000,000 
292,000,000 
195,000,000 
 
 
982,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
613,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,000,000 
374,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,500,000 
170,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of Long-term Debt
 
 
 
 
 
 
 
78,000,000 
 
 
 
 
 
 
 
 
 
 
 
730,000,000 
 
 
 
 
 
 
280,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
807,000,000 
 
443,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
196,000,000 
 
 
 
 
274,000,000 
20,000,000 
 
 
 
 
 
 
 
15,000,000 
Debt Conversion, Original Debt, Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
128,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
295,000,000 
 
 
 
 
 
Debt Instrument, Principal amount exchanged
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
142,000,000 
 
140,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Principal amount used for conversion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
1,000 
 
 
 
 
1,000 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, Convertible interest expense paid (per principal amount)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non cash accrued interest payment
 
 
 
 
2,000,000 
0 
0 
 
 
2,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Extinguishment of Debt, Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
172,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps, notional amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000,000 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
(49,000,000)
(61,000,000)
(27,000,000)
(30,000,000)
(160,000,000)
(100,000,000)
(59,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
(9,000,000)
 
 
 
 
(15,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
(50,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(22,000,000)
(23,000,000)
 
 
 
 
 
 
 
 
 
(40,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(39,000,000)
 
 
 
 
 
 
 
 
(29,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(20,000,000)
 
 
(12,000,000)
 
 
(1,000,000)
 
 
 
 
 
 
 
 
 
 
Loss on Cash Flow Hedge Ineffectiveness
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,000,000 
 
 
 
60,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption price of principal amount (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99.00% 
 
 
 
 
95.00% 
 
 
 
 
 
99.50% 
 
 
 
 
99.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102.313% 
104.625% 
 
 
 
 
 
 
 
104.375% 
 
 
 
 
 
 
105.00% 
102.50% 
100.00% 
100.00% 
 
 
98.173% 
 
105.938% 
102.969% 
100.00% 
 
100.00% 
 
 
 
 
104.688% 
102.344% 
100.00% 
 
100.00% 
 
 
98.545% 
99.264% 
 
 
 
 
 
104.063% 
102.031% 
100.00% 
 
100.00% 
 
100.00% 
 
 
104.438% 
102.219% 
100.00% 
100.00% 
 
 
 
104.313% 
102.156% 
100.00% 
 
100.00% 
 
100.00% 
 
 
103.50% 
101.75% 
100.00% 
 
100.00% 
 
 
 
 
 
 
 
 
100.00% 
 
 
100.00% 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
100.00% 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
100.75% 
 
 
 
 
 
98.875% 
 
 
 
 
 
 
 
 
Debt instrument, redemption minimum gross proceeds from equity offering ($100 million)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument issuance price as a percentage of the principal amount (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
98.001% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, Trance B 2016 Term Loan annual repayment (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, effective interest rate at end of period (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.65% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.75% 
 
 
4.75% 
 
 
 
 
5.25% 
 
 
 
 
 
4.75% 
 
 
 
 
 
 
 
 
 
 
 
 
4.469% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption with net proceeds from equity offerings of original principal (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption price with net proceeds from equity offerings of original principal (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111.875% 
 
 
 
 
 
 
 
 
109.375% 
 
 
 
 
 
 
 
 
 
 
 
 
 
108.125% 
 
 
 
 
 
 
 
 
108.875% 
 
 
 
 
 
 
108.625% 
 
 
 
 
 
 
 
 
107.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, minimum percentage of original principal amount outstanding after redemption from equity offerings (as percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, convertible, conversion (price per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 27 
 
 
 
 
$ 27 
 
 
 
 
 
 
 
 
 
$ 18.525 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt conversion, shares issued upon conversion (in shares)
 
5,400,000 
 
 
 
 
 
 
 
5,400,000 
 
 
 
3,700,000 
1,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, number of shares converted for each $1000 principal amount (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37 
 
37 
 
 
 
 
37 
 
 
 
 
 
 
54 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, issuance transactions (number)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption period maximum following receipt of proceeds from equity offerings (number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption period notice minimum (number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
30 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
30 
30 
 
 
 
 
 
 
 
30 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption period notice maximum (number of days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
60 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
60 
60 
 
 
 
 
 
 
 
60 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption from proceeds from equity offering minimum (number) of private placements equity offerings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, minimum (number of days) stock exceeds ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, (period) used to determine if conversion is to occur
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, convertible, common stock (ratio) triggering debt conversion
 
 
 
 
 
 
 
 
2.222 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
216,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
 
 
 
23,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
788,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
788,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
6,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
 
 
 
6,959,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
 
 
 
 
$ 8,780,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 86,000,000 
$ 12,000,000 
 
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, 2012
Dec. 31, 2011
Dec. 31, 2010
Stock-based compensation expense
 
 
 
Stock- based compensation expense
$ 136 
$ 102 
$ 68 
Capitalized Noncash Compensation
(1)
(1)
(1)
Non-cash compensation expense
135 
101 
67 
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost
9 
12 
8 
Outperform Stock Options
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
14 
10 
10 
Restricted Stock Units and Shares
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
40 
22 
19 
401(k) Match Expense
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
23 
13 
11 
Restricted Stock Unit Bonus Grant
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
46 
57 
28 
Management Incentive and Retention Plan
 
 
 
Stock-based compensation expense
 
 
 
Stock- based compensation expense
$ 13 
$ 0 
$ 0 
Employee Benefit Benefits and Stock-Based Compensation - Outperform Stock Options (Details) (Outperform Stock Options, USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Unamortized compensation expense
$ 21 
 
 
 
 
Weighted average period over which unamortized compensation cost will be recognized (in years)
2 years 1 month 28 days 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
 
 
 
 
 
Expected Dividend Yield Rate
2.05% 
1.83% 
2.00% 
 
 
Expected Life (in years)
3 years 
3 years 
3 years 
 
 
Expected Correlation Factor
0.32 
0.39 
0.40 
 
 
Theoretical Value
110.00% 
120.00% 
132.00% 
 
 
Estimated Forfeiture Rate
20.00% 
20.00% 
20.00% 
 
 
Fair value of OSO units awarded
29 
12 
10 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding
 
 
 
 
 
Options outstanding, beginning (in shares)
1,288,712 
1,056,392 
1,056,627 
 
 
Options granted (in shares)
1,195,452 
498,618 
511,082 
 
 
Options forfeited (in shares)
(72,335)
(96,174)
(117,362)
 
 
Options expired (in shares)
(278,111)
(140,655)
(393,955)
 
 
Options exercised (in shares)
(67,299)
(29,469)
0 
 
 
Options outstanding, ending (in shares)
2,066,419 
1,288,712 
1,056,392 
1,056,627 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures
 
 
 
 
 
Options, Beginning, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 10.50 
$ 10.50 
$ 10.50 
 
 
Options, Beginning, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 36.60 
$ 51.60 
$ 91.50 
 
 
Options, Beginning, Weighted Average Initial Strike Price (in dollars per share)
$ 20.51 
$ 22.05 
$ 44.25 
 
 
Options, Beginning, Aggregate Intrinsic Value
$ 1.8 
$ 0 
$ 5.2 
 
$ 6.6 
Options, Beginning, Average Remaining Contractual Term (in years)
1 year 8 months 23 days 
1 year 6 months 11 days 
1 year 8 months 23 days 
1 year 6 months 18 days 
 
Options granted, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 16.99 
$ 14.70 
$ 14.10 
 
 
Options granted, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 27.53 
$ 36.60 
$ 24.30 
 
 
Options granted, Weighted Average Initial Strike Price (in dollars per share)
$ 24.65 
$ 23.96 
$ 19.50 
 
 
Options forfeited, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 12 
$ 10.50 
$ 10.50 
 
 
Options forfeited, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 36.60 
$ 51.60 
$ 91.50 
 
 
Options forfeited, Weighted Average Initial Strike Price (in dollars per share)
$ 21.80 
$ 22.36 
$ 25.80 
 
 
Options expired, Initial Strke Price Per Unit, Minimum (in dollars per share)
$ 15 
$ 31.80 
$ 45.45 
 
 
Options expired, Initial Strke Price Per Unit, Maximum (in dollars per share)
$ 22.65 
$ 51.60 
$ 91.50 
 
 
Options expired, Weighted Average Initial Strike Price (in dollars per share)
$ 18.45 
$ 44.64 
$ 76.95 
 
 
Options exercised, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 10.50 
$ 14.10 
$ 0 
 
 
Options exercised, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 13.80 
$ 15.75 
$ 0 
 
 
Options exercised, Weighted Average Initial Strike Price (in dollars per share)
$ 12.48 
$ 14.93 
$ 0.00 
 
 
Options, Ending, Initial Strike Price Per Unit, Minimum (in dollars per share)
$ 14.10 
$ 10.50 
$ 10.50 
$ 10.50 
 
Options, Ending, Initial Strike Price Per Unit, Maximum (in dollars per share)
$ 36.60 
$ 36.60 
$ 51.60 
$ 91.50 
 
Options, Ending, Weighted Average Initial Strike Price (in dollars per share)
$ 23.40 
$ 20.51 
$ 22.05 
$ 44.25 
 
Options, Ending, Average Remaining Contractual Term (in years)
1 year 8 months 23 days 
1 year 6 months 11 days 
1 year 8 months 23 days 
1 year 6 months 18 days 
 
Prior to March 31, 2007
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Life of Award
3 years 
 
 
 
 
On or After April 1, 2007
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Life of Award
3 years 
 
 
 
 
Percent vested after three years
100.00% 
 
 
 
 
S and P 500 Index
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
 
 
 
 
 
Expected volatility rate
23.00% 
30.00% 
30.00% 
 
 
Level 3 Communications, Inc.
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
 
 
 
 
 
Expected volatility rate
39.00% 
44.00% 
51.00% 
 
 
Performance Range 1
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Performance Qualifier to Index, Maximum
0.00% 
 
 
 
0.00% 
Share-based Compensation Arrangement by Share-based Payment Award, Success Multiplier of Pre Multiplier Gain
0.00 
 
 
 
0.00 
Performance Range 2
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Performance Qualifier to Index, Minimum
0.00% 
 
 
 
0.00% 
Share-based Compensation Arrangement by Share-based Payment Award, Performance Qualifier to Index, Maximum
11.00% 
 
 
 
11.00% 
Share-based Compensation Arrangement by Share-based Payment Award, Success Multiplier of Pre Multiplier Gain
0.36 
 
 
 
0.36 
Performance Range 3
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Performance Qualifier to Index, Minimum
11.00% 
 
 
 
11.00% 
Share-based Compensation Arrangement by Share-based Payment Award, Success Multiplier of Pre Multiplier Gain
4.00 
 
 
 
4.00 
Employee Benefit Benefits and Stock-Based Compensation - Range of OSO Exercise Prices (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2012
Outperform Stock Options
Dec. 31, 2011
Outperform Stock Options
Dec. 31, 2010
Outperform Stock Options
Dec. 31, 2009
Outperform Stock Options
Dec. 31, 2012
Outperform Stock Options
Range, 14.10 to $20.85
Dec. 31, 2012
Outperform Stock Options
Range, $22.05 to $24.30
Dec. 31, 2012
Outperform Stock Options
Range, $27.53 to $36.60
Dec. 31, 2011
Non Qualified Stock Options
Dec. 31, 2012
Non Qualified Stock Options
Oct. 4, 2011
Non Qualified Stock Options
Dec. 31, 2012
Non Qualified Stock Options
Range, $9.53
Dec. 31, 2012
Non Qualified Stock Options
Range, $14.43
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised, Weighted Average Initial Strike Price (in dollars per share)
$ 12.48 
$ 14.93 
$ 0.00 
 
 
 
 
$ 10.93 
$ 10.61 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number
2,066,419 
1,288,712 
1,056,392 
1,056,627 
 
 
 
598,190 
62,324 
765,585 
 
 
Total realized value of OSO units
$ 0.8 
$ 0.4 
$ 0 
 
 
 
 
$ 1.0 
$ 6.0 
 
 
 
Employee Service Share-based Compensation, Cash Received from Exercise of Stock Options
 
 
 
 
 
 
 
2 
5 
 
 
 
OSO units Outstanding, Range of Exercise Prices, Minimum (in dollars per share)
 
 
 
 
$ 14.10 
$ 22.05 
$ 27.53 
 
 
 
 
 
OSO units Outstanding, Range of Exercise Prices, Maximum (in dollars per share)
 
 
 
 
$ 20.85 
$ 24.30 
$ 36.60 
 
 
 
 
 
OSO units Outstanding, Number Outstanding (in shares)
2,066,419 
 
 
 
496,213 
793,617 
776,589 
 
62,324 
 
28,549 
33,775 
OSO units Outstanding, Average Remaining Contractual Term
1 year 8 months 23 days 
1 year 6 months 11 days 
1 year 8 months 23 days 
1 year 6 months 18 days 
 
 
 
 
 
 
 
 
OSO units Outstanding, Weighted Average Initial Strike Price (in dollars per share)
$ 23.40 
$ 20.51 
$ 22.05 
$ 44.25 
 
 
 
$ 10.79 
$ 12.18 
$ 10.82 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
67,299 
29,469 
0 
 
 
 
 
167,395 
533,717 
 
 
 
OSO units Outstanding, Weighted Average Remaining Life (in years)
 
 
 
 
1 year 14 days 
1 year 9 months 4 days 
2 years 1 month 21 days 
 
1 year 5 months 27 days 
 
11 months 9 days 
1 year 11 months 16 days 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value
$ 0 
$ 0 
$ 0 
 
 
 
 
 
$ 1 
 
 
 
OSO units Outstanding, Weighted Average Initial Strike Price (in dollars per share)
 
 
 
 
$ 15.95 
$ 22.68 
$ 28.89 
 
$ 12.18 
 
$ 9.53 
$ 14.43 
OSO units Exercisable, Number Exercisable (in shares)
0 
 
 
 
0 
0 
0 
 
 
 
 
 
OSO units Exercisable, Weighted Average Initial Strike Price (in dollars per share)
$ 0.00 
 
 
 
$ 0.00 
$ 0.00 
$ 0.00 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period
72,335 
96,174 
117,362 
 
 
 
 
 
2,149 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price
 
 
 
 
 
 
 
 
$ 14.39 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period
0 
0 
0 
 
 
 
 
 
 
 
 
 
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, 2012
year
Dec. 31, 2011
Dec. 31, 2010
Restricted Stock Units and Shares
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
Restrictions on transfer lapse, minimum (in years)
1 
 
 
Restrictions on transfer lapse, maximum (in years)
4 
 
 
Fair value of units and shares awarded
$ 69 
$ 35 
$ 21 
Unamortized compensation expense
43 
 
 
Weighted average period over which unamortized compensation cost will be recognized (in years)
2 years 9 months 15 days 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
 
 
 
Nonvested, Beginning balance (in shares)
2,030,783 
2,021,707 
1,595,245 
Stock and units granted (in shares)
2,869,584 
1,030,676 
1,182,353 
Lapse of restrictions (in shares)
(1,048,757)
(845,717)
(594,580)
Stock and units forfeited (in shares)
(214,634)
(175,883)
(161,311)
Nonvested, Ending balance (in shares)
3,636,976 
2,030,783 
2,021,707 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures
 
 
 
Nonvested, Beginning balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 26.25 
$ 22.95 
$ 33.30 
Stock and units granted, Weighted Average Grant Date Fair Value (in dollars per share)
$ 24.13 
$ 33.99 
$ 17.55 
Lapse of restrictions, Weighted Average Grant Date Fair Value (in dollars per share)
$ 26.06 
$ 27.79 
$ 38.70 
Stock and units forfeited, Weighted Average Grant Date Fair Value (in dollars per share)
$ 24.92 
$ 27.06 
$ 26.55 
Nonvested, Ending balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 24.71 
$ 26.25 
$ 22.95 
Total fair value of restricted stock and restricted stock units whose restriction lapsed
$ 27 
$ 24 
$ 23 
Employee Benefit Benefits and Stock-Based Compensation - MIRP Stock and Units (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Management Incentive and Retention Plan
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
 
Nonvested, Beginning balance (in shares)
0 
Stock and units granted (in shares)
465,000 
Lapse of restrictions (in shares)
0 
Stock and units forfeited (in shares)
0 
Nonvested, Ending balance (in shares)
465,000 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures
 
Nonvested, Beginning balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 0.00 
Stock and units granted, Weighted Average Grant Date Fair Value (in dollars per share)
$ 25.92 
Lapse of restrictions, Weighted Average Grant Date Fair Value (in dollars per share)
$ 0.00 
Stock and units forfeited, Weighted Average Grant Date Fair Value (in dollars per share)
$ 0.00 
Nonvested, Ending balance, Weighted Average Grant Date Fair Value (in dollars per share)
$ 25.92 
Total fair value of restricted stock and restricted stock units whose restriction lapsed
$ 23 
Unamortized compensation expense
10 
Weighted average period over which unamortized compensation cost will be recognized (in years)
1 year 
Cash Component of MIRP in Other Current Liabilities
$ 11 
Management Incentive and Retention Plan - Incentive Portion
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
 
Stock and units granted (in shares)
418,500 
Employee Benefit Benefits and Stock-Based Compensation - Warrants (Details)
Dec. 31, 2012
Class of Warrant or Right
 
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
Dec. 31, 2013
Dec. 31, 2012
year
Dec. 31, 2011
Dec. 31, 2010
Schedule of Defined Contribution Plans Disclosures
 
 
 
 
Defined Contribution Plan, Maximum Annual Contribution Per Employee
$ 17,500 
$ 17,000 
 
 
Defined Contribution Plan, Vesting Period (in years)
 
3 
 
 
Defined Contribution Plan, Vesting Percentage After Vesting Period
 
100.00% 
 
 
Defined Contribution Plan, Cost Recognized
 
23,000,000 
13,000,000 
11,000,000 
After March 6, 2009
 
 
 
 
Schedule of Defined Contribution Plans Disclosures
 
 
 
 
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percentage
 
100.00% 
 
 
Defined Contribution Plan, Employer Matching Contribution, Percentage
 
3.00% 
 
 
After January 1, 2012
 
 
 
 
Schedule of Defined Contribution Plans Disclosures
 
 
 
 
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percentage
 
100.00% 
 
 
Defined Contribution Plan, Employer Matching Contribution, Percentage
 
4.00% 
 
 
All Other Defined Contribution
 
 
 
 
Schedule of Defined Contribution Plans Disclosures
 
 
 
 
Defined Contribution Plan, Cost Recognized
 
$ 7,000,000 
$ 2,000,000 
 
Employee Benefit Benefits and Stock-Based Compensation - Defined Benefits (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Defined Benefit Plan Disclosure
 
 
Defined Benefit Plan, Fair Value of Plan Assets
$ 146 
$ 137 
Defined Benefit Plan, Benefit Obligation
166 
152 
Defined Benefit Plan, Funded Status of Plan
20 
15 
Attributable to Company
 
 
Defined Benefit Plan Disclosure
 
 
Defined Benefit Plan, Allocation of Pension Costs
60.00% 
 
Defined Benefit Plan, Funded Status of Plan
12 
 
Attributable to Employees
 
 
Defined Benefit Plan Disclosure
 
 
Defined Benefit Plan, Allocation of Pension Costs
40.00% 
 
Defined Benefit Plan, Funded Status of Plan
$ 8 
 
Employee Benefit Benefits and Stock-Based Compensation - Annual Discretionary Bonus Grant (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2012
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits
 
 
 
Accrued Bonuses, Current
$ 136 
$ 59 
$ 103 
Cash Payments for Employee Bonus
$ 72 
$ 29 
 
Expected Percent Of Bonus Paid In Stock
 
 
60.00% 
Expected Percent of Bonus Paid in Cash
 
 
40.00% 
Restricted Stock Unit Bonus Grant |
Restricted Stock Units and Shares
 
 
 
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Granted or Expected to Be Granted in Next Fiscal Period
2.4 
1.7 
 
Income Taxes - Income Tax Expense (Benefit) by Current and Deferred (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Current:
 
 
 
United States federal
$ 0 
$ 0 
$ 0 
State
2 
0 
1 
Foreign
36 
8 
0 
Current income tax provision (benefit)
38 
8 
1 
Deferred, net of changes in valuation allowances:
 
 
 
United States federal
3 
30 
0 
State
0 
1 
0 
Deferred foreign income tax expense (benefit)
7 
2 
(92)
Income tax provision (benefit)
$ 48 
$ 41 
$ (91)
Income Taxes - Income (Loss) by Geographic Region (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
 
 
 
United States
$ (434)
$ (692)
$ (542)
Foreign
60 
(94)
(170)
Loss Before Income Taxes
$ (374)
$ (786)
$ (712)
Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
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
$ (131)
$ (275)
$ (250)
Effects of earnings in jurisdictions outside of U.S.
(25)
13 
13 
Change in valuation allowance
145 
213 
130 
Permanent Items
48 
44 
16 
Indefinite-lived assets
3 
26 
0 
Other, net
8 
20 
0 
Income tax provision (benefit)
$ 48 
$ 41 
$ (91)
Income Taxes - Deferred Tax Assets (Liabilities) (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
U.S. Internal Revenue Service (IRS)
Deferred Tax Assets:
 
 
 
Accrued payroll and related benefits
$ 119,000,000 
$ 101,000,000 
 
Deferred revenue
271,000,000 
276,000,000 
 
Unutilized tax net operating loss carry forwards
4,611,000,000 
3,996,000,000 
 
Fixed assets and intangible assets
134,000,000 
157,000,000 
 
Intercompany loss
148,000,000 
164,000,000 
 
Other
162,000,000 
193,000,000 
 
Total Deferred Tax Assets
5,445,000,000 
4,887,000,000 
 
Deferred Tax Liabilities:
 
 
 
Fixed assets and intangible assets
(702,000,000)
(542,000,000)
 
Deferred revenue
(87,000,000)
(93,000,000)
 
Other
(45,000,000)
(51,000,000)
 
Foreign branch income
(37,000,000)
(40,000,000)
 
Total Deferred Tax Liabilities
(871,000,000)
(726,000,000)
 
Net Deferred Tax Assets before valuation allowance
4,574,000,000 
4,161,000,000 
 
Valuation Allowance
(4,697,000,000)
(4,252,000,000)
 
Net Deferred Tax (Liability) Asset after Valuation Allowance
123,000,000 
91,000,000 
 
Net current deferred income tax asset
9,000,000 
12,000,000 
 
Net current deferred income tax liability
(3,000,000)
(3,000,000)
 
Net non-current deferred income tax asset
219,000,000 
246,000,000 
 
Net non-current deferred income tax liability
(348,000,000)
(346,000,000)
 
Operating Loss Carryforwards, increase
 
 
1,000,000,000 
Internal Revenue Code 382, Cumulative Ownership Shift Benchmark
 
 
50.00% 
Internal Revenue Code 382, Cumulative Ownership Shift Period Change
 
 
5.00% 
Operating Loss Carryforwards
 
 
$ 8,526,000,000 
Income Taxes - Operating Loss Carryforward (Details) (USD $)
Dec. 31, 2012
U.S. Internal Revenue Service (IRS)
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
$ 8,526,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2023
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
254,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2024
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
1,302,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2025
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
1,186,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2026
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
1,029,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2027
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
1,501,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2028
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
445,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2029
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
700,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2030
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
703,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2031
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
711,000,000 
U.S. Internal Revenue Service (IRS) |
Expiring, 2032
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
695,000,000 
Foreign jurisdiction
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforward, Disregarded for Domestic Country Tax Purposes
6,400,000,000 
State jurisdiction
 
Operating Loss Carryforwards [Line Items]
 
Operating Loss Carryforwards
$ 7,300,000,000 
Income Taxes - Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
 
Unrecognized tax benefits, Beginning balance
$ 18 
$ 15 
$ 6 
$ 5 
Gross increases - prior period tax positions
 
4 
11 
1 
Gross increases - tax positions during 2012
 
1 
 
 
Gross decreases - tax positions of prior years
(5)
 
(1)
 
Gross decreases - lapse of statue of limitations
 
(1)
 
 
Gross decreases - settlements with taxing authorities
 
(1)
(1)
 
Unrecognized tax benefits, Ending Balance
 
18 
15 
6 
Accrued interest and penalties in the Company's liability for uncertain tax positions
4 
(22)
(20)
(12)
Accrued interest and penalties related to uncertain tax positions in income tax expense in its consolidated statements of operation
 
$ 3 
$ 0 
$ 2 
Segment Information Summarized Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Segment Reporting Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,614 
$ 1,590 
$ 1,586 
$ 1,586 
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 6,376 
$ 4,333 
$ 3,591 
Capital expenditures
 
 
 
 
 
 
 
 
743 
494 
435 
Depreciation and amortization
 
 
 
 
 
 
 
 
749 
805 
870 
Total Assets
13,307 
 
 
 
13,188 
 
 
 
13,307 
13,188 
 
Segment Reporting Information
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
6,376 
4,333 
3,591 
Capital expenditures
 
 
 
 
 
 
 
 
743 
494 
435 
Depreciation and amortization
 
 
 
 
 
 
 
 
749 
805 
870 
Total Assets
$ 13,307 
 
 
 
$ 13,188 
 
 
 
$ 13,307 
$ 13,188 
 
Segment Information Revenue From External Customers (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
$ 1,614 
$ 1,590 
$ 1,586 
$ 1,586 
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 6,376 
$ 4,333 
$ 3,591 
Long-Lived Assets
8,900 
 
 
 
8,940 
 
 
 
8,900 
8,940 
 
North America
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
4,803 
3,669 
3,275 
Long-Lived Assets
5,375 
 
 
 
5,338 
 
 
 
5,375 
5,338 
 
Europe
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
903 
502 
316 
Long-Lived Assets
1,570 
 
 
 
1,557 
 
 
 
1,570 
1,557 
 
United Kingdom
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
628 
267 
131 
Long-Lived Assets
694 
 
 
 
613 
 
 
 
694 
613 
 
Germany
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
79 
72 
62 
Long-Lived Assets
346 
 
 
 
348 
 
 
 
346 
348 
 
Other European Countries
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
196 
163 
123 
Long-Lived Assets
530 
 
 
 
596 
 
 
 
530 
596 
 
Latin America
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
664 
158 
0 
Long-Lived Assets
1,530 
 
 
 
1,533 
 
 
 
1,530 
1,533 
 
Brazil
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
267 
68 
0 
Long-Lived Assets
428 
 
 
 
434 
 
 
 
428 
434 
 
Argentina
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
101 
23 
0 
Long-Lived Assets
377 
 
 
 
387 
 
 
 
377 
387 
 
Colombia
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
104 
23 
0 
Long-Lived Assets
252 
 
 
 
247 
 
 
 
252 
247 
 
Other Latin American Countries
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
192 
44 
0 
Long-Lived Assets
473 
 
 
 
465 
 
 
 
473 
465 
 
Other Countries
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
Revenue from external customers
 
 
 
 
 
 
 
 
6 
4 
0 
Long-Lived Assets
$ 425 
 
 
 
$ 512 
 
 
 
$ 425 
$ 512 
 
Segment Information Revenue By Service Offering (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Revenue from External Customer
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,614 
$ 1,590 
$ 1,586 
$ 1,586 
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 6,376 
$ 4,333 
$ 3,591 
Core Network Service
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
5,587 
3,599 
2,827 
Wholesale Voice Services and Other
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
$ 789 
$ 734 
$ 764 
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Loss Contingencies
 
Estimated Litigation Liability
$ 277 
Peruvian Tax Litigation |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
97 
Peruvian Tax Litigation, Before Interest |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
26 
Peruvian Tax Litigation, Income Taxwitholding 2001 and 2002 |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
3 
Peruvian Tax Litigation, Disallowance of VAT in 2005 |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
16 
Peruvian Tax Litigation, Vat for 2001 and 2002 |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
7 
Employee Severance and Contractor Termination Disputes |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Asserted Claim
42 
Customer Bankruptcy Claim |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Range of Possible Loss, Minimum
150 
Loss Contingency, Range of Possible Loss, Maximum
450 
Maximum |
Brazilian Tax Claims |
Pending Litigation
 
Loss Contingencies
 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
$ 58 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
year
Dec. 31, 2011
Dec. 31, 2010
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Amount outstanding under letters of credit
$ 31 
$ 33 
 
Collateralized Financings
29 
29 
 
Payments under these right-of-way agreements
172 
135 
127 
Rent expense, including common area maintenance, under non-cancelable lease agreements
308 
232 
203 
Right-of-Way Agreements
 
 
 
Right-of-Way Agreements, 2013
115 
 
 
Right-of-Way Agreements, 2014
60 
 
 
Right-of-Way Agreements, 2015
52 
 
 
Right-of-Way Agreements, 2016
48 
 
 
Right-of-Way Agreements, 2017
44 
 
 
Right-of-Way Agreements, Thereafter
386 
 
 
Right-of-Way Agreements, Total
705 
 
 
Facilities
 
 
 
Facilities, 2013
255 
 
 
Facilities, 2014
214 
 
 
Facilities, 2015
187 
 
 
Facilities, 2016
145 
 
 
Facilities, 2017
128 
 
 
Facilities, Thereafter
498 
 
 
Facilities, Total
1,427 
 
 
Total
 
 
 
Right-of-Way Agreements and Facilities, 2013
370 
 
 
Right-of-Way Agreements and Facilities, 2014
274 
 
 
Right-of-Way Agreements and Facilities, 2015
239 
 
 
Right-of-Way Agreements and Facilities, 2016
193 
 
 
Right-of-Way Agreements and Facilities, 2017
172 
 
 
Right-of-Way Agreements and Facilities, Thereafter
884 
 
 
Right-of-Way Agreements and Facilities, Total
2,132 
 
 
Future Minimum Sublease Receipts
 
 
 
2013
16 
 
 
2014
13 
 
 
2015
9 
 
 
2016
8 
 
 
2017
6 
 
 
Thereafter
11 
 
 
Total
$ 63 
 
 
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, 2012
Long-term Purchase Commitment
 
Total
$ 663 
Less than 1 Year
336 
2 - 3 Years
152 
4 - 5 Years
56 
After 5 Years
119 
Cost of Access Services
 
Long-term Purchase Commitment
 
Total
390 
Less than 1 Year
276 
2 - 3 Years
100 
4 - 5 Years
13 
After 5 Years
1 
Third Party Maintenance Services
 
Long-term Purchase Commitment
 
Total
273 
Less than 1 Year
60 
2 - 3 Years
52 
4 - 5 Years
43 
After 5 Years
$ 118 
Condensed Consolidating Financial Information - Narrative (Details) (Senior Notes due 2020 (7.0%))
Dec. 31, 2012
Long-term debt
 
Debt instrument, stated interest rate (as a percent)
7.00% 
Level 3 Financing Inc.
 
Long-term debt
 
Debt instrument, stated interest rate (as a percent)
7.00% 
Condensed Consolidating Financial Information - Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,614 
$ 1,590 
$ 1,586 
$ 1,586 
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 6,376 
$ 4,333 
$ 3,591 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
2,602 
1,706 
1,434 
Depreciation and Amortization
 
 
 
 
 
 
 
 
749 
805 
870 
Selling, General and Administrative
 
 
 
 
 
 
 
 
2,416 
1,759 
1,373 
Restructuring Charges
20 
 
 
 
11 
 
 
 
34 
11 
2 
Total Costs and Expenses
 
 
 
 
 
 
 
 
5,801 
4,281 
3,679 
Operating Income (Loss)
188 
138 
133 
116 
45 
7 
3 
(3)
575 
52 
(88)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
2 
1 
1 
Interest expense
 
 
 
 
 
 
 
 
(733)
(716)
(586)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
0 
0 
0 
Other income (expense), net
 
 
 
 
 
 
 
 
(218)
(123)
(39)
Total Other Expense
 
 
 
 
 
 
 
 
(949)
(838)
(624)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
(374)
(786)
(712)
Income Tax Expense
 
 
 
 
 
 
 
 
(48)
(41)
91 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
(422)
(827)
(621)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
0 
71 
(1)
Net Loss
(56)
(166)
(62)
(138)
(163)
(207)
(181)
(205)
(422)
(756)
(622)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
106 
18 
(93)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
(316)
(738)
(715)
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
 
 
 
 
 
 
 
 
(168)
(211)
(199)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
976 
865 
795 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
(1,188)
(1,346)
(1,221)
Other income (expense), net
 
 
 
 
 
 
 
 
(39)
(62)
5 
Total Other Expense
 
 
 
 
 
 
 
 
(419)
(754)
(620)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
(421)
(756)
(622)
Income Tax Expense
 
 
 
 
 
 
 
 
(1)
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(756)
(622)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
(422)
(756)
(622)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
106 
18 
(93)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
(316)
(738)
(715)
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
 
 
 
 
 
 
 
 
1 
19 
0 
Restructuring Charges
 
 
 
 
 
 
 
 
0 
0 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
1 
19 
0 
Operating Income (Loss)
 
 
 
 
 
 
 
 
(1)
(19)
0 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
0 
0 
0 
Interest expense
 
 
 
 
 
 
 
 
(535)
(471)
(377)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
1,598 
1,423 
1,298 
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
(2,066)
(2,241)
(2,087)
Other income (expense), net
 
 
 
 
 
 
 
 
(184)
(38)
(55)
Total Other Expense
 
 
 
 
 
 
 
 
(1,187)
(1,327)
(1,221)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
(1,188)
(1,346)
(1,221)
Income Tax Expense
 
 
 
 
 
 
 
 
0 
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(1,346)
(1,221)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
(1,188)
(1,346)
(1,221)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
106 
18 
(93)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
(1,082)
(1,328)
(1,314)
Level 3 Communications, LLC
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
2,657 
2,367 
2,046 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
996 
888 
800 
Depreciation and Amortization
 
 
 
 
 
 
 
 
260 
376 
429 
Selling, General and Administrative
 
 
 
 
 
 
 
 
1,541 
1,269 
1,185 
Restructuring Charges
 
 
 
 
 
 
 
 
18 
1 
1 
Total Costs and Expenses
 
 
 
 
 
 
 
 
2,815 
2,534 
2,415 
Operating Income (Loss)
 
 
 
 
 
 
 
 
(158)
(167)
(369)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
1 
0 
1 
Interest expense
 
 
 
 
 
 
 
 
(3)
(3)
(2)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
(2,233)
(2,065)
(1,891)
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
92 
122 
218 
Other income (expense), net
 
 
 
 
 
 
 
 
6 
9 
1 
Total Other Expense
 
 
 
 
 
 
 
 
(2,137)
(1,937)
(1,673)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
(2,295)
(2,104)
(2,042)
Income Tax Expense
 
 
 
 
 
 
 
 
(4)
(15)
(1)
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(2,119)
(2,043)
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
(2,299)
(2,119)
(2,043)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
0 
0 
0 
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
(2,299)
(2,119)
(2,043)
Other Non-Guarantor Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
3,975 
2,196 
1,774 
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
1,854 
1,036 
851 
Depreciation and Amortization
 
 
 
 
 
 
 
 
489 
429 
441 
Selling, General and Administrative
 
 
 
 
 
 
 
 
880 
481 
198 
Restructuring Charges
 
 
 
 
 
 
 
 
16 
10 
1 
Total Costs and Expenses
 
 
 
 
 
 
 
 
3,239 
1,956 
1,491 
Operating Income (Loss)
 
 
 
 
 
 
 
 
736 
240 
283 
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
 
 
 
 
 
 
 
 
1 
1 
0 
Interest expense
 
 
 
 
 
 
 
 
(27)
(31)
(8)
Interest income (expense) affiliates, net
 
 
 
 
 
 
 
 
(341)
(223)
(202)
Equity in net earnings (losses) of subsidiaries
 
 
 
 
 
 
 
 
0 
0 
0 
Other income (expense), net
 
 
 
 
 
 
 
 
(1)
(32)
10 
Total Other Expense
 
 
 
 
 
 
 
 
(368)
(285)
(200)
Loss Before Income Taxes
 
 
 
 
 
 
 
 
368 
(45)
83 
Income Tax Expense
 
 
 
 
 
 
 
 
(43)
(26)
92 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
(71)
175 
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
71 
(1)
Net Loss
 
 
 
 
 
 
 
 
325 
0 
174 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
16 
0 
(77)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
341 
0 
97 
Eliminations
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
(256)
(230)
(229)
Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
 
 
 
 
 
 
 
 
(248)
(218)
(217)
Depreciation and Amortization
 
 
 
 
 
 
 
 
0 
0 
0 
Selling, General and Administrative
 
 
 
 
 
 
 
 
(8)
(12)
(12)
Restructuring Charges
 
 
 
 
 
 
 
 
0 
0 
0 
Total Costs and Expenses
 
 
 
 
 
 
 
 
(256)
(230)
(229)
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
 
 
 
 
 
 
 
 
3,162 
3,465 
3,090 
Other income (expense), net
 
 
 
 
 
 
 
 
0 
0 
0 
Total Other Expense
 
 
 
 
 
 
 
 
3,162 
3,465 
3,090 
Loss Before Income Taxes
 
 
 
 
 
 
 
 
3,162 
3,465 
3,090 
Income Tax Expense
 
 
 
 
 
 
 
 
0 
0 
0 
Loss from Continuing Operations
 
 
 
 
 
 
 
 
 
3,465 
3,090 
Income (Loss) from Discontinued Operations, Net
 
 
 
 
 
 
 
 
 
0 
0 
Net Loss
 
 
 
 
 
 
 
 
3,162 
3,465 
3,090 
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent
 
 
 
 
 
 
 
 
(122)
(18)
170 
Comprehensive Income (Loss), Net of Tax, Attributable to Parent
 
 
 
 
 
 
 
 
$ 3,040 
$ 3,447 
$ 3,260 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 979 
$ 918 
$ 616 
$ 836 
Restricted cash and securities
8 
10 
 
 
Receivables, less allowances for doubtful accounts
714 
648 
 
 
Due from affiliates
0 
0 
 
 
Other
141 
131 
 
 
Total Current Assets
1,842 
1,707 
 
 
Property, Plant and Equipment, net
8,199 
8,136 
 
 
Restricted Cash and Securities
35 
51 
 
 
Goodwill and Other Intangibles Assets, net
2,833 
2,899 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
398 
395 
 
 
Total Assets
13,307 
13,188 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
779 
747 
 
 
Current portion of long-term debt
216 
65 
 
 
Accrued payroll and employee benefits
211 
209 
 
 
Accrued interest
209 
216 
 
 
Current portion of deferred revenue
251 
264 
 
 
Due to affiliates
0 
0 
 
 
Other
136 
157 
 
 
Total Current Liabilities
1,802 
1,658 
 
 
Long-Term Debt, less current portion
8,516 
8,385 
 
 
Deferred Revenue, less current portion
887 
885 
 
 
Other Liabilities
931 
1,067 
 
 
Commitments and Contingencies
0 
0 
 
 
Stockholders' Equity (Deficit)
1,171 
1,193 
(157)
491 
Total Liabilities and Stockholders’ Equity
13,307 
13,188 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
253 
2 
173 
236 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
14,446 
13,472 
 
 
Other
3 
3 
 
 
Total Current Assets
14,702 
13,477 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
12 
18 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(11,756)
(10,718)
 
 
Other Assets, net
16 
13 
 
 
Total Assets
2,974 
2,790 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
1 
0 
 
 
Current portion of long-term debt
172 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
45 
50 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
1 
0 
 
 
Total Current Liabilities
219 
50 
 
 
Long-Term Debt, less current portion
1,570 
1,533 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
14 
14 
 
 
Stockholders' Equity (Deficit)
1,171 
1,193 
 
 
Total Liabilities and Stockholders’ Equity
2,974 
2,790 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
5 
6 
7 
8 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
15,709 
14,584 
 
 
Other
16 
16 
 
 
Total Current Assets
15,730 
14,606 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(20,470)
(18,467)
 
 
Other Assets, net
119 
109 
 
 
Total Assets
(4,621)
(3,752)
 
 
Current Liabilities:
 
 
 
 
Accounts payable
2 
0 
 
 
Current portion of long-term debt
6 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
163 
165 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
1 
1 
 
 
Total Current Liabilities
172 
166 
 
 
Long-Term Debt, less current portion
6,886 
6,688 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
81 
116 
 
 
Stockholders' Equity (Deficit)
(11,760)
(10,722)
 
 
Total Liabilities and Stockholders’ Equity
(4,621)
(3,752)
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
386 
618 
350 
431 
Restricted cash and securities
1 
1 
 
 
Receivables, less allowances for doubtful accounts
93 
59 
 
 
Due from affiliates
0 
0 
 
 
Other
49 
48 
 
 
Total Current Assets
529 
726 
 
 
Property, Plant and Equipment, net
2,926 
2,823 
 
 
Restricted Cash and Securities
17 
19 
 
 
Goodwill and Other Intangibles Assets, net
429 
481 
 
 
Investment in Subsidiaries
3,242 
3,412 
 
 
Other Assets, net
11 
6 
 
 
Total Assets
7,154 
7,467 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
53 
37 
 
 
Current portion of long-term debt
6 
2 
 
 
Accrued payroll and employee benefits
161 
116 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
109 
107 
 
 
Due to affiliates
30,162 
28,092 
 
 
Other
29 
52 
 
 
Total Current Liabilities
30,520 
28,406 
 
 
Long-Term Debt, less current portion
20 
22 
 
 
Deferred Revenue, less current portion
602 
612 
 
 
Other Liabilities
75 
146 
 
 
Stockholders' Equity (Deficit)
(24,063)
(21,719)
 
 
Total Liabilities and Stockholders’ Equity
7,154 
7,467 
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
335 
292 
86 
161 
Restricted cash and securities
7 
9 
 
 
Receivables, less allowances for doubtful accounts
621 
589 
 
 
Due from affiliates
7 
36 
 
 
Other
73 
64 
 
 
Total Current Assets
1,043 
990 
 
 
Property, Plant and Equipment, net
5,273 
5,313 
 
 
Restricted Cash and Securities
6 
14 
 
 
Goodwill and Other Intangibles Assets, net
2,404 
2,418 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
252 
267 
 
 
Total Assets
8,978 
9,002 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
723 
710 
 
 
Current portion of long-term debt
32 
63 
 
 
Accrued payroll and employee benefits
50 
93 
 
 
Accrued interest
1 
1 
 
 
Current portion of deferred revenue
142 
157 
 
 
Due to affiliates
0 
0 
 
 
Other
105 
104 
 
 
Total Current Liabilities
1,053 
1,128 
 
 
Long-Term Debt, less current portion
40 
142 
 
 
Deferred Revenue, less current portion
285 
273 
 
 
Other Liabilities
761 
791 
 
 
Stockholders' Equity (Deficit)
6,839 
6,668 
 
 
Total Liabilities and Stockholders’ Equity
8,978 
9,002 
 
 
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 affiliates
(30,162)
(28,092)
 
 
Other
0 
0 
 
 
Total Current Assets
(30,162)
(28,092)
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
28,984 
25,773 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
(1,178)
(2,319)
 
 
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 
 
 
Due to affiliates
(30,162)
(28,092)
 
 
Other
0 
0 
 
 
Total Current Liabilities
(30,162)
(28,092)
 
 
Long-Term Debt, less current portion
0 
0 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Stockholders' Equity (Deficit)
28,984 
25,773 
 
 
Total Liabilities and Stockholders’ Equity
$ (1,178)
$ (2,319)
 
 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
$ 578 
$ 388 
$ 339 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(743)
(494)
(435)
(Increase) Decrease in restricted cash and securities, net
20 
(54)
3 
Proceeds from the sale of property, plant and equipment and other assets
11 
4 
4 
Investment in Global Crossing, net of cash acquired
0 
146 
0 
Payments for other investing activities
(13)
0 
0 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(725)
(398)
(428)
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
4,504.0 
1,878.0 
808.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(4,302)
(1,617)
(930)
Proceeds from Stock Options Exercised
5 
0 
0 
Increase (decrease) due from affiliates, net
0 
0 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
207 
261 
(122)
Net Cash Provided by (Used in) Discontinued Operations
0 
51 
(1)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
0 
(8)
Net Change in Cash and Cash Equivalents
61 
302 
(220)
Cash and Cash Equivalents at Beginning of Year
918 
616 
836 
Cash and Cash Equivalents at End of Year
979 
918 
616 
Level 3 Communications, Inc.
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
(165)
(176)
(156)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
0 
0 
0 
(Increase) Decrease in restricted cash and securities, net
6 
0 
0 
Proceeds from the sale of property, plant and equipment and other assets
0 
0 
0 
Investment in Global Crossing, net of cash acquired
 
0 
 
Payments for other investing activities
0 
 
 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
6 
0 
0 
Cash Flows from Financing Activities:
 
 
 
Long-term debt borrowings, net of issuance costs
293.0 
292.0 
195.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(521)
(328)
Proceeds from Stock Options Exercised
5 
 
 
Increase (decrease) due from affiliates, net
112 
234 
226 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
410 
5 
93 
Net Cash Provided by (Used in) Discontinued Operations
 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
251 
(171)
(63)
Cash and Cash Equivalents at Beginning of Year
2 
173 
236 
Cash and Cash Equivalents at End of Year
253 
2 
173 
Level 3 Financing, Inc.
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
(520)
(428)
(362)
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 
Investment in Global Crossing, net of cash acquired
 
0 
 
Payments for other investing activities
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
4,211.0 
1,586.0 
613.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(4,161)
(755)
(599)
Proceeds from Stock Options Exercised
0 
 
 
Increase (decrease) due from affiliates, net
469 
(404)
347 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
519 
427 
361 
Net Cash Provided by (Used in) Discontinued Operations
 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
(1)
(1)
(1)
Cash and Cash Equivalents at Beginning of Year
6 
7 
8 
Cash and Cash Equivalents at End of Year
5 
6 
7 
Level 3 Communications, LLC
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
140 
293 
76 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(276)
(197)
(161)
(Increase) Decrease in restricted cash and securities, net
2 
3 
3 
Proceeds from the sale of property, plant and equipment and other assets
0 
1 
2 
Investment in Global Crossing, net of cash acquired
 
0 
 
Payments for other investing activities
0 
 
 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(274)
(193)
(156)
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 
(1)
Proceeds from Stock Options Exercised
0 
 
 
Increase (decrease) due from affiliates, net
(98)
168 
0 
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
(98)
168 
(1)
Net Cash Provided by (Used in) Discontinued Operations
 
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
0 
Net Change in Cash and Cash Equivalents
(232)
268 
(81)
Cash and Cash Equivalents at Beginning of Year
618 
350 
431 
Cash and Cash Equivalents at End of Year
386 
618 
350 
Other Non-Guarantor Subsidiaries
 
 
 
Condensed Consolidating Financial Information
 
 
 
Net Cash Provided by (Used in) Operating Activities of Continuing Operations
1,123 
699 
781 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures
(467)
(297)
(274)
(Increase) Decrease in restricted cash and securities, net
12 
(57)
0 
Proceeds from the sale of property, plant and equipment and other assets
11 
3 
2 
Investment in Global Crossing, net of cash acquired
 
146 
 
Payments for other investing activities
(13)
 
 
Net Cash Used in Investing Activities in Investing Activities of Continuing Operations
(457)
(205)
(272)
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
(141)
(341)
(2)
Proceeds from Stock Options Exercised
0 
 
 
Increase (decrease) due from affiliates, net
(483)
2 
(573)
Net Cash Provided by (Used in) Financing Activities of Continuing Operations
(624)
(339)
(575)
Net Cash Provided by (Used in) Discontinued Operations
 
51 
(1)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
0 
(8)
Net Change in Cash and Cash Equivalents
43 
206 
(75)
Cash and Cash Equivalents at Beginning of Year
292 
86 
161 
Cash and Cash Equivalents at End of Year
335 
292 
86 
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 
Investment in Global Crossing, net of cash acquired
 
0 
 
Payments for other investing activities
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 
Proceeds from Stock Options Exercised
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 
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
12 Months Ended 3 Months Ended 3 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Mar. 31, 2012
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Mar. 31, 2013
Venezuela official fixed exchange rate (VEF)
Feb. 13, 2013
Venezuela official fixed exchange rate (VEF)
Dec. 31, 2012
Venezuela official fixed exchange rate (VEF)
Dec. 31, 2012
Level 3 Communications, Inc.
Dec. 31, 2011
Level 3 Communications, Inc.
Dec. 31, 2010
Level 3 Communications, Inc.
Dec. 31, 2009
Level 3 Communications, Inc.
Mar. 31, 2013
Level 3 Communications, Inc.
Convertible Senior Notes due 2013 (15.0%)
Jan. 15, 2013
Level 3 Communications, Inc.
Convertible Senior Notes due 2013 (15.0%)
Dec. 31, 2012
Level 3 Communications, Inc.
Convertible Senior Notes due 2013 (15.0%)
Mar. 31, 2012
Level 3 Communications, Inc.
Convertible Senior Notes due 2013 (15.0%)
Subsequent Events
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Extinguishment of Debt, Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 172 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
15.00% 
15.00% 
15.00% 
15.00% 
 
 
 
 
 
 
 
 
15.00% 
15.00% 
15.00% 
Foreign currency exchange rate, translation
 
 
 
 
 
 
 
 
 
6.30 
4.30 
 
 
 
 
 
 
 
 
Cash and cash equivalents
979 
918 
616 
836 
 
 
 
 
 
 
(22)
253 
2 
173 
236 
 
 
 
 
Net monetary assets subject to foreign currency restrictions
 
 
 
 
 
 
 
 
 
 
(20)
 
 
 
 
 
 
 
 
Other, net
$ (58)
$ (23)
$ 20 
 
 
 
 
 
$ (20)
 
 
 
 
 
 
 
 
 
 
Unaudited Quarterly Financial Data (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 1,614 
$ 1,590 
$ 1,586 
$ 1,586 
$ 1,579 
$ 927 
$ 913 
$ 914 
$ 6,376 
$ 4,333 
$ 3,591 
Gross Margin
959 
948 
938 
929 
919 
585 
566 
557 
 
 
 
Operating Income (Loss)
188 
138 
133 
116 
45 
7 
3 
(3)
575 
52 
(88)
Net Loss
(56)
(166)
(62)
(138)
(163)
(207)
(181)
(205)
(422)
(756)
(622)
Net Loss per Share, Basic and Diluted
$ (0.26)
$ (0.76)
$ (0.29)
$ (0.66)
$ (0.80)
$ (1.75)
$ (1.59)
$ (1.83)
$ (1.96)
$ (5.51)
$ (5.62)
Selling, General and Administrative
 
 
 
 
 
 
 
 
2,416 
1,759 
1,373 
Restructuring Charges
20 
 
 
 
11 
 
 
 
34 
11 
2 
Depreciation expense
 
 
 
 
 
 
 
 
659 
706 
775 
Depreciation and Amortization
 
 
 
 
 
 
 
 
749 
805 
870 
Impairment of Intangible Assets (Excluding Goodwill)
 
 
 
 
20 
 
 
 
 
20 
 
Loss on extinguishment of debt
 
(49)
 
(61)
(27)
(30)
 
 
(160)
(100)
(59)
Property, Plant and Equipment, Gross
16,558 
 
 
 
15,814 
 
 
 
16,558 
15,814 
 
Long-term Debt, Gross
8,780 
 
 
 
8,528 
 
 
 
8,780 
8,528 
 
Asset Retirement Obligation, Revision of Estimate
(73)
 
 
 
 
 
 
 
(73)
0 
 
Debt conversion, shares issued upon conversion (in shares)
 
 
 
5.4 
 
 
 
 
 
 
 
Tranche A Term Loan
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
(9)
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
1,400 
 
 
 
 
 
 
 
 
 
Loss on Cash Flow Hedge Ineffectiveness
 
60 
 
 
 
 
 
 
 
 
 
Tranche B II and Tranche B III Term Loans
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
(50)
 
 
 
 
 
 
 
 
 
 
Tranche B II Term Loan
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
650 
 
 
 
 
 
 
 
650 
 
 
Tranche B III Term Loan
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
550 
 
 
 
 
 
 
 
550 
 
 
Senior Notes due 2017 (8.75%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
(40)
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
8.75% 
 
 
8.75% 
 
 
 
 
8.75% 
 
Long-term Debt, Gross
0 
 
 
 
700 
 
 
 
0 
700 
 
Convertible Senior Notes due 2013 (15.0%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
(39)
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
15.00% 
 
 
15.00% 
15.00% 
15.00% 
 
 
15.00% 
15.00% 
 
Long-term Debt, Gross
172 
 
 
 
272 
 
 
 
172 
272 
 
Convertible Senior Notes due 2012 (3.5%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
(12)
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
3.50% 
3.50% 
 
 
 
3.50% 
 
Senior Notes due 2014 (9.25%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
(22)
 
 
(23)
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
9.25% 
9.25% 
 
9.25% 
 
 
9.25% 
 
Long-term Debt, Gross
0 
 
 
 
807 
 
 
 
0 
807 
 
Convertible Senior Notes due 2011 (5.25%) and Convertible Senior Discount Notes due 2013 (9.0%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
(20)
 
 
 
Convertible Senior Notes due 2011 (5.25%)
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
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% 
 
 
 
Asset Retirement Obligation Change in Estimate
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Selling, General and Administrative
(47)
 
 
 
 
 
 
 
(47)
 
 
Depreciation and Amortization
(2)
 
 
 
 
 
 
 
(2)
 
 
Property, Plant and Equipment, Gross
(24)
 
 
 
 
 
 
 
(24)
 
 
Service Life
 
 
 
 
 
 
 
 
 
 
 
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net Loss
 
 
 
 
 
 
 
 
 
74 
 
Net Loss per Share, Basic and Diluted
 
 
 
 
 
 
 
 
 
$ 0.54 
 
Depreciation expense
 
 
 
 
$ (74)