LEVEL 3 COMMUNICATIONS INC, 10-Q filed on 8/8/2014
Quarterly Report
Document and Entity Information Document
6 Months Ended
Jun. 30, 2014
Aug. 5, 2014
Entity Information [Line Items]
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
Entity Central Index Key
0000794323 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2014 
 
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 Common Stock, Shares Outstanding
 
238,293,573 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
Consolidated Statements of Operations (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenue
$ 1,625 
$ 1,565 
$ 3,234 
$ 3,142 
Costs and Expenses Exclusive of Depreciation and Amortization shown separately below:
 
 
 
 
Cost of Revenue
613 
616 
1,227 
1,245 
Depreciation and Amortization
187 
199 
371 
393 
Selling, General and Administrative
569 
610 
1,116 
1,209 
Total Costs and Expenses
1,369 
1,425 
2,714 
2,847 
Operating Income
256 
140 
520 
295 
Other Income (Expense):
 
 
 
 
Interest expense
(149)
(167)
(300)
(336)
Other, net
(44)
14 
(38)
(36)
Total Other Expense
(193)
(153)
(338)
(372)
Loss Before Income Taxes
63 
(13)
182 
(77)
Income Tax Expense
(12)
(11)
(19)
(25)
Net Income (Loss)
$ 51 
$ (24)
$ 163 
$ (102)
Earnings Per Share, Basic
$ 0.21 
$ (0.11)
$ 0.69 
$ (0.46)
Weighted Average Number of Shares Outstanding, Basic
237,376 
221,609 
236,510 
220,445 
Earnings Per Share, Diluted
$ 0.21 
$ (0.11)
$ 0.68 
$ (0.46)
Weighted Average Number of Shares Outstanding, Diluted
241,406 
221,609 
240,890 
220,445 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Net Loss
$ 51 
$ (24)
$ 163 
$ (102)
Other Comprehensive Income (Loss) Before Income Taxes:
 
 
 
 
Foreign Currency Translation Adjustment
13 
(12)
18 
(56)
Other, net
0 
1 
1 
(7)
Other Comprehensive Income (Loss), Before Income Taxes
13 
(11)
19 
(63)
Income Tax Related to Items of Other Comprehensive Income (Loss)
0 
0 
0 
0 
Other Comprehensive Income (Loss), Net of Income Taxes
13 
(11)
19 
(63)
Comprehensive Income (Loss)
$ 64 
$ (35)
$ 182 
$ (165)
Supplementary Stockholders' Equity Information, Changes in Accumulated Other Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2013
Dec. 31, 2012
Change In Accumulated Other Comprehensive Income (Loss)
 
 
 
 
Balance
$ 55 
$ 36 
$ (37)
$ 26 
Balance
$ 55 
$ 36 
$ (37)
$ 26 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Assets:
 
 
Cash and cash equivalents
$ 637 
$ 631 
Restricted cash and securities
6 
7 
Receivables, less allowances for doubtful accounts of $33 and $31, respectively
722 
673 
Other
174 
143 
Total Current Assets
1,539 
1,454 
Property, Plant and Equipment, net of accumulated depreciation of $8,894 and $8,359, respectively
8,355 
8,240 
Restricted Cash and Securities
23 
23 
Goodwill
2,578 
2,577 
Other Intangibles, net
169 
205 
Other Assets, net
364 
375 
Total Assets
13,028 
12,874 
Liabilities and Stockholders' Equity:
 
 
Accounts payable
613 
625 
Current portion of long-term debt
503 
31 
Accrued payroll and employee benefits
145 
209 
Accrued interest
166 
160 
Current portion of deferred revenue
258 
253 
Other
139 
168 
Total Current Liabilities
1,824 
1,446 
Long-Term Debt, less current portion
7,855 
8,331 
Deferred Revenue, less current portion
885 
906 
Other Liabilities
785 
780 
Total Liabilities
11,349 
11,463 
Commitments and Contingencies
0 
0 
Stockholders’ Equity:
 
 
Preferred stock, $.01 par value, authorized 10,000,000 shares: no shares issued or outstanding
0 
0 
Common stock, $.01 par value, authorized 343,333,333 shares in both periods; 222,838,992 issued and outstanding at September 30, 2013 and 218,380,070 issued and outstanding at December 31, 2012
2 
2 
Additional paid-in capital
14,425 
14,339 
Accumulated other comprehensive income
55 
36 
Accumulated deficit
(12,803)
(12,966)
Total Stockholders’ Equity
1,679 
1,411 
Total Liabilities and Stockholders’ Equity
$ 13,028 
$ 12,874 
Consolidated Balance Sheets Parentheticals (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Allowance for doubtful accounts
$ 35 
$ 32 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
$ 9,412 
$ 9,089 
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 
343,333,333 
Common stock, shares issued
237,457,271 
234,688,063 
Common stock, shares outstanding
237,457,271 
234,688,063 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash Flows from Operating Activities:
 
 
Net Loss
$ 163 
$ (102)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
371 
393 
Non-cash compensation expense attributable to stock awards
26 
85 
Accretion of debt discount and amortization of debt issuance costs
17 
18 
Accrued interest on long-term debt, net
6 
(17)
Non-cash tax adjustment
(4)
0 
Deferred income taxes
14 
(7)
Gain on sale of property, plant and equipment and other assets
(1)
(1)
Other, net
0 
(2)
Changes in working capital items:
 
 
Receivables
(49)
(25)
Other current assets
(30)
(33)
Payables
(18)
(93)
Deferred revenue
(22)
4 
Other current liabilities
(29)
3 
Net Cash Provided by Operating Activities
444 
223 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(404)
(377)
Decrease in restricted cash and securities, net
2 
8 
Net Cash Used in Investing Activities
(402)
(383)
Payments for (Proceeds from) Other Investing Activities
0 
(14)
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(6)
(199)
Net Cash Provided by (Used in) Financing Activities
(6)
(199)
Effect of Exchange Rates on Cash and Cash Equivalents
(30)
(24)
Net Change in Cash and Cash Equivalents
6 
(383)
Cash and Cash Equivalents at Beginning of Period
631 
979 
Cash and Cash Equivalents at End of Period
637 
596 
Supplemental Disclosure of Cash Flow Information:
 
 
Cash interest paid
277 
335 
Income taxes paid, net of refunds
$ 24 
$ 20 
Organization and Summary of Significant Accounting Policies (Notes)
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 an international 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. 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.

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. 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.

The accompanying consolidated balance sheet as of December 31, 2013, which was derived from audited consolidated financial statements, and the unaudited interim consolidated financial statements as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2013. In the opinion of the Company’s management, these financial statements contain all adjustments necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the interim periods presented herein. The results of operations for an interim period are not necessarily indicative of the results of operations expected for a full fiscal year.

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, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates under different assumptions or conditions and such differences could be material.

Property, Plant and Equipment

In connection with its periodic review of the estimated useful lives of property, plant and equipment, the Company determined that the period it expects to use certain assets is longer than the remaining originally estimated useful lives. The Company completed its evaluation in the first quarter 2014 and revised its estimated useful lives for: IP equipment from its historical estimate of four years to a revised estimate of seven years; racks and cabinets from its historical estimate of seven years to a revised estimate of 15 years; and facility equipment from its historical estimate of 10 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 January 1, 2014 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 resulted in less depreciation expense than would have otherwise been recorded and in the following increase in net income for the six months ended June 30, 2014 (in millions, except per share amounts):

Net Income
$
51

Basic Net Income per Share
$
0.22

Diluted Net Income per Share
$
0.21

 
Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions that do not meet the discontinued operations criteria. Under the new guidance, a discontinued operation is defined as a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results. The revised guidance will affect the way entities identify and disclose information about disposal transactions and is effective prospectively for fiscal years beginning after December 15, 2014, and interim periods within those years. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated results of operations or financial condition.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those years. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures and has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
Pending Acquisition of tw telecom (Notes)
Business Combination Disclosure [Text Block]
Pending Acquisition of tw telecom

On June 15, 2014, the Company and two subsidiaries of Level 3 executed the Agreement and Plan of Merger (the “Merger Agreement”) with tw telecom inc. (“tw telecom”) pursuant to which the Company expects to acquire tw telecom in a tax-free, stock and cash transaction (the “Merger”) valued at approximately $7.6 billion, based on Level 3’s closing stock price on June 13, 2014, including the assumption of approximately $1.9 billion of debt as of March 31, 2014. tw telecom stockholders will receive $10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom common stock that is owned at closing. See Note 12 — Subsequent Event for additional information.

In connection with this transaction, Level 3 also has signed a voting agreement and stockholder rights agreement with a subsidiary of Singapore Technologies Telemedia (“STT”), a stockholder of Level 3, whereby STT has agreed to vote in favor of the transaction.

The acquisition of tw telecom is subject to regulatory approvals and customary closing conditions. The Company continues to expect that the transaction will close before the end of 2014.

In addition, concurrently with the execution of the Merger Agreement, Level 3 Financing, Inc. and the Company entered into a financing commitment letter (the “Commitment Letter”) with the Commitment Parties, as separately defined in the Commitment Letter. The Commitment Letter provides for a senior secured term loan facility in an aggregate amount of up to $2.4 billion (the "senior secured facility"). The Commitment Letter also provides for a senior unsecured facility bridge financing of $600 million (the "unsecured facility"). The unsecured facility portion of the Commitment Letter is reduced by the amount of any senior notes or certain other securities ("debt securities") that are issued in relation to the Merger on or prior to the closing of the Merger. Under certain circumstances, the committed amounts can be allocated from the senior secured facility to the unsecured facility at the option of Level 3. Unless Level 3 or Level 3 Financing, Inc. has obtained an aggregate of $3.0 billion in the capital markets prior to closing, Level 3 and Level 3 Financing retain the ability to draw on the commitments contained in the Commitment Letter pursuant to the terms and conditions as specified in the Commitment Letter. The Company expects the financings, together with cash balances, to be sufficient to provide the financing necessary to consummate the tw telecom transaction and to refinance certain existing indebtedness of tw telecom.
Earnings Per Share (Notes)
Earnings Per Share
Per Share

The Company computes basic earnings per share by dividing net income or loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing the net income or 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 and stock-based compensation awards.

The effect of approximately 18 million and 28 million shares issuable pursuant to the various series of convertible notes outstanding at June 30, 2014 and June 30, 2013, respectively, have not been included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive to the computation. The effect of approximately 5 million stock options, outperform stock appreciation rights ("OSOs"), and restricted stock units ("RSUs") outstanding at June 30, 2014 have been included in the computation of diluted earnings per share. The effect of approximately 6 million stock options, OSOs and RSUs outstanding at June 30, 2013 have not been included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive to the computation.
Acquired Intangible Assets (Notes)
Acquired Intangible Assets
Acquired Intangible Assets

Identifiable acquisition-related intangible assets as of June 30, 2014 and December 31, 2013 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
June 30, 2014
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
786

 
$
(700
)
 
$
86

Trademarks
55

 
(38
)
 
17

Patents and Developed Technology
158

 
(124
)
 
34

 
999

 
(862
)
 
137

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,031

 
$
(862
)
 
$
169

December 31, 2013
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
786

 
$
(678
)
 
$
108

Trademarks
55

 
(31
)
 
24

Patents and Developed Technology
158

 
(117
)
 
41

 
999

 
(826
)
 
173

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,031

 
$
(826
)
 
$
205



Acquired finite-lived intangible asset amortization expense was $17 million and $36 million for the three and six months ended June 30, 2014 and $18 million and $36 million for the three and six months ended June 30, 2013.

At June 30, 2014, the weighted average remaining useful lives of the Company's acquired finite-lived intangible assets was 1.8 years for customer contracts and relationships, 1.3 years for trademarks and 2.5 years for patents and developed technology.

As of June 30, 2014, 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):

2014 (remaining 6 months)
$
27

2015
48

2016
31

2017
15

2018
13

2019
3

Thereafter
—

 
$
137




Fair Value of Financial Instruments (Notes)
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). 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 June 30, 2014 and December 31, 2013. The Company's interest rate swaps, which were extinguished in the first quarter of 2014, had been recorded in the consolidated balance sheets at fair value.

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 interest and foreign exchange rates, transfer restrictions, and risk of non-performance.

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 Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period. There were no transfers within the fair value hierarchy during each of the six months ended June 30, 2014 and June 30, 2013.

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 June 30, 2014 and December 31, 2013:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
June 30,
2014
 
December 31,
2013
 
June 30,
2014
 
December 31,
2013
 
June 30,
2014
 
December 31,
2013
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Swap Liabilities (included in other current liabilities)
 
$
—

 
$
12

 
$
—

 
$
—

 
$
—

 
$
12

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

 
$
12

 
$
—

 
$
—

 
$
—

 
$
12

Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
2,605

 
$
2,604

 
$
2,614

 
$
2,633

 
$
—

 
$
—

Senior Notes
 
5,199

 
5,198

 
5,702

 
5,673

 
—

 
—

Convertible Notes
 
474

 
474

 
—

 
—

 
794

 
647

Capital Leases and Other
 
80

 
86

 
—

 
—

 
80

 
86

Total Long-term Debt, including the current portion
 
$
8,358

 
$
8,362

 
$
8,316

 
$
8,306

 
$
874

 
$
733



The Company does not have any assets or liabilities where the fair value is measured using significant unobservable inputs (Level 3).

Derivatives

The fair value of interest rate swaps was estimated using discounted cash flow techniques that use observable market inputs, such as LIBOR-based forward yield curves, forward rates, non-performance risk adjustment 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 at both June 30, 2014 and December 31, 2013, respectively. The fair value of each loan is based on quoted prices for identical terms and maturities. Each loan tranche is actively traded.
Senior Notes

The fair value of the Senior Notes referenced above was approximately $5.7 billion at both June 30, 2014 and December 31, 2013, respectively, based on quoted prices for identical terms and maturities. Each series of notes is actively traded.

Convertible Notes

The fair value of the Company’s Convertible Notes was approximately $794 million and $647 million at June 30, 2014 and December 31, 2013, respectively. The estimated fair value of the Convertible Notes is based on 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, convertible optionality, corporate and security credit ratings, maturity date, 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.

Capital Leases

The fair value of the Company's capital leases are determined by discounting anticipated future cash flows derived from the contractual terms of the obligations and observable market interest and foreign exchange rates.
Long-Term Debt (Notes)
Long-term Debt
Long-Term Debt

As of June 30, 2014 and December 31, 2013, long-term debt was as follows:
(dollars in millions)
 
June 30,
2014
 
December 31,
2013
Senior Secured Term Loan*
 
$
2,611

 
$
2,611

Floating Rate Senior Notes due 2018 (3.823% as of June 30, 2014 and 3.846% as of December 31, 2013)
 
300

 
300

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

 
300

8.625% Senior Notes due 2020
 
900

 
900

7% Senior Notes due 2020
 
775

 
775

6.125% Senior Notes due 2021
 
640

 
640

7% Convertible Senior Notes due 2015
 
200

 
200

7% Convertible Senior Notes due 2015 Series B
 
275

 
275

Capital Leases
 
68

 
73

Other
 
12

 
13

Total Debt Obligations
 
8,386

 
8,392

Unamortized Discount:
 
 
 
 
Discount on Senior Secured Term Loan
 
(6
)
 
(7
)
Discount on 11.875% Senior Notes due 2019
 
(8
)
 
(8
)
Discount on 9.375% Senior Notes due 2019
 
(7
)
 
(7
)
Discount on 8.125% Senior Notes due 2019
 
(7
)
 
(7
)
Discount on 7% Convertible Senior Notes due 2015
 
—

 
(1
)
Total Unamortized Discount
 
(28
)
 
(30
)
Carrying Value of Debt
 
8,358

 
8,362

Less current portion
 
(503
)
 
(31
)
Long-term Debt, less current portion
 
$
7,855

 
$
8,331


* The $815 million Tranche B-III 2019 Term Loan due 2019 and the $1.796 billion Tranche B 2020 Term Loan due 2020 each had an interest rate of 4.00% as of June 30, 2014 and December 31, 2013.

Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) were as follows as of June 30, 2014 (dollars in millions):

2014 (remaining six months)
$
25

2015
483

2016
7

2017
6

2018
306

2019
3,426

Thereafter
4,133

 
$
8,386

Accumulated Other Comprehensive Income (Notes)
Comprehensive Income (Loss) Note [Text Block]
Accumulated Other Comprehensive Income (Loss)

The accumulated balances for each classification of other comprehensive income (loss) were as follows:

(dollars in millions)
 
Net Foreign Currency Translation Adjustment
 
Defined Benefit Pension Plans
 
Total
Balance at December 31, 2012
 
$
56

 
$
(30
)
 
$
26

Other comprehensive income before reclassifications
 
(56
)
 
(9
)
 
(65
)
Amounts reclassified from accumulated other comprehensive income
 
—

 
2

 
2

Balance at June 30, 2013
 
$
—

 
$
(37
)
 
$
(37
)

Balance at December 31, 2013
 
$
67

 
$
(31
)
 
$
36

Other comprehensive income (loss) before reclassifications
 
18

 
(2
)
 
16

Amounts reclassified from accumulated other comprehensive income (loss)
 
—

 
3

 
3

Balance at June 30, 2014
 
$
85


$
(30
)

$
55

Stock-Based Compensation (Notes)
Stock-Based Compensation
Stock-Based Compensation
The following table summarizes non-cash compensation expense and capitalized non-cash compensation for the three and six months ended June 30, 2014 and 2013 (dollars in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
OSO
$
2

 
$
11

 
$
4

 
$
16

Restricted Stock Units and Shares
6

 
14

 
12

 
21

Performance Restricted Stock Units
3

 
—

 
3

 
—

401(k) Match Expense
5

 
5

 
12

 
13

Restricted Stock Unit Bonus Grant
—

 
14

 
(5
)
 
29

Management Incentive and Retention Plan
—

 
4

 
—

 
6

 
$
16

 
$
48

 
$
26

 
$
85



As of June 30, 2014, there were approximately 2 million OSOs outstanding. As of June 30, 2014, there were approximately 3 million non-vested restricted stock, RSUs and performance restricted stock units ("PRSUs") outstanding. The Company's Management Incentive and Retention Plan was completed in the first quarter 2014. In addition, as of June 30, 2014, there were approximately 9 thousand non-qualified stock options outstanding.
Segment Information (Notes)
Segment Reporting Disclosure [Text Block]
Segment Information

Operating segments are defined under GAAP as components of an enterprise for which separate financial information is available and evaluated regularly by the Company's chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company's reportable segments consist of 1) North America, 2) Europe, the Middle East and Africa (EMEA), 3) and Latin America. Other separate business interests that are not segments include interest, certain corporate assets and overhead costs, and certain other general and administrative costs that are not allocated to any of the operating segments. Historical presentation of segment information has been retrospectively reclassified to conform to the new geographical presentation.

The CODM measures and evaluates segment performance primarily based upon revenue, revenue growth and Adjusted EBITDA. Adjusted EBITDA, as defined by the Company, is equal to net income (loss) from the consolidated statements of operations before (1) income tax benefit (expense), (2) total other income (expense), (3) non-cash impairment charges included within selling, general and administrative expenses, (4) depreciation and amortization expense, and (5) non-cash stock compensation expense included within selling, general and administrative expenses.

Adjusted EBITDA is not a measurement under GAAP and may not be used in the same way by other companies. Management believes that Adjusted EBITDA is an important part of the Company's internal reporting and is a key measure used by management to evaluate profitability and operating performance of the Company and to make resource allocation decisions. Management believes such measurement is especially important in a capital-intensive industry such as telecommunications. Management also uses Adjusted EBITDA to compare the Company's performance to that of its competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period its ability to fund capital expenditures, fund growth, service debt and determine bonuses.

Adjusted EBITDA excludes non-cash impairment charges and non-cash stock compensation expense because of the non-cash nature of these items. Adjusted EBITDA also excludes interest income, interest expense and income tax benefit (expense) because these items are associated with the Company's capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the effect of capital investments which management believes are better evaluated through cash flow measures. Adjusted EBITDA excludes net other income (expense) because these items are not related to the primary operations of the Company.

There are limitations to using non-GAAP financial measures such as Adjusted EBITDA, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from the Company's calculations. Additionally, this financial measure does not include certain significant items such as interest income, interest expense, income tax benefit (expense), depreciation and amortization expense, non-cash impairment charges, non-cash stock compensation expense, and net other income (expense). Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.

Revenue and the related expenses are attributed to regions based on where services are provided. Revenue and costs for services provided in more than one region are allocated ratably between the regions, and the Company does not otherwise charge for services between reportable segments. Therefore, segment results do not include any intercompany revenue. The operating activities of the separate regions along with the activities that are not attributable to a segment are interdependent, and the regional results in the tables below do not include all intercompany charges and allocations that would be necessary to report the regional results on a standalone basis.

Total revenue consists of:

•
Core Network Services revenue from colocation and data center services; transport and fiber; IP and data services; and local and enterprise voice services.

•
Wholesale Voice Services and Other revenue from sales to other carriers of long distance voice services.

Core Network Services revenue represents higher margin services and Wholesale Voice Services and Other revenue represents lower margin services. Core Network Services revenue requires different levels of investment and focus and provides different contributions to the Company's operating results than Wholesale Voice Services and Other revenue. Management of the Company believes that growth in revenue from its Core Network Services is critical to the long-term success of its business. The Company also believes it must continue to effectively manage gross margin contribution from the Wholesale Voice Services component. The Company believes that trends in its communications business are best gauged by analyzing revenue changes in Core Network Services.
The following table presents revenue by segment:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Core Network Services Revenue:
 
 
 
 
 
 
 
 
North America
 
$
1,051

 
$
970

 
$
2,094

 
$
1,937

EMEA
 
229

 
220

 
454

 
443

Latin America
 
199

 
189

 
388

 
371

Total Core Network Services Revenue
 
1,479

 
1,379

 
2,936

 
2,751

 
 
 
 
 
 
 
 
 
Wholesale Voice Services and Other Revenue:
 
 
 
 
 
 
 
 
North America
 
137

 
175

 
282

 
368

EMEA
 
5

 
8

 
10

 
17

Latin America
 
4

 
3

 
6

 
6

Total Wholesale Voice Services and Other Revenue
 
146

 
186

 
298

 
391

 
 
 
 
 
 
 
 
 
Total Consolidated Revenue
 
$
1,625

 
$
1,565

 
$
3,234

 
$
3,142



The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income (loss):

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Adjusted EBITDA:
 
 
 
 
 
 
 
 
North America
 
$
480

 
$
434

 
$
968

 
$
862

EMEA
 
56

 
58

 
110

 
115

Latin America
 
90

 
76

 
172

 
149

Unallocated Corporate Expenses
 
(167
)
 
(181
)
 
(333
)
 
(353
)
Consolidated Adjusted EBITDA
 
459

 
387

 
917

 
773

Income Tax Expense
 
(12
)
 
(11
)
 
(19
)
 
(25
)
Total Other Expense
 
(193
)
 
(153
)
 
(338
)
 
(372
)
Depreciation and Amortization
 
(187
)
 
(199
)
 
(371
)
 
(393
)
Non-Cash Stock Compensation
 
(16
)
 
(48
)
 
(26
)
 
(85
)
Total Consolidated Net Income (Loss)
 
$
51

 
$
(24
)
 
$
163

 
$
(102
)


The following table presents capital expenditures by segment and reconciles capital expenditures to consolidated capital expenditures:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Capital Expenditures:
 
 
 
 
 
 
 
 
North America
 
$
105

 
$
101

 
$
202

 
$
200

EMEA
 
29

 
43

 
48

 
69

Latin America
 
43

 
30

 
71

 
53

Unallocated Corporate Capital Expenditures
 
64

 
34

 
83

 
55

Consolidated Capital Expenditures
 
$
241

 
$
208

 
$
404

 
$
377



The following table presents total assets by segment:

(dollars in millions)
 
June 30, 2014
 
December 31, 2013
Assets:
 
 
 
 
North America
 
$
8,239

 
$
8,133

EMEA
 
2,058

 
2,030

Latin America
 
2,477

 
2,445

Other
 
254

 
266

Total Consolidated Assets
 
$
13,028

 
$
12,874

Commitments, Contingencies and Other Items (Notes)
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 $220 million and are included in “Other” current liabilities and “Other Liabilities” in the Company's consolidated balance sheet at June 30, 2014. 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 June 30, 2014. 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 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 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, including payments of claims. 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.

Peruvian Tax Litigation

Beginning in 2005, one of the Company's Peruvian subsidiaries received a number of assessments for tax, penalties 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 $59 million at June 30, 2014.

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 with the Tribunal Fiscal, the highest level of administrative review, which is not part of the Peru judiciary (the "Tribunal"). In October 2011, the Tribunal issued its administrative resolution with respect to the calendar year 2002 tax period 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. During the fourth quarter of 2013, the Company released a reserve of $28 million for tax, penalty and associated interest related to calendar year 2002 due to the expiration of the statute of limitations. In October 2013, the Tribunal notified the Company of its July 2013 administrative resolution with respect to the calendar year 2001 tax period, determining 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 Tribunal in this administrative resolution remain open for reassessment by SUNAT. In December 2013, SUNAT initiated an audit of calendar year 2001. In June 2014, the Company was served with SUNAT’s assessments of the 2001 amounts declared null by the Tribunal. The Company intends to file an appeal of these assessments with SUNAT.

In November 2011, the Tribunal issued an administrative resolution 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 administrative resolution of the withholding tax issue is likely to be final, and the Company expects to win a similar administrative resolution with respect to assessed 2002 withholding tax. However, penalties with respect to withholding tax are not time-barred, and were confirmed in the Tribunal's October 2011 administrative resolution.

The Company has appealed the Tribunal's October 2011 and July 2013 decisions to the judicial court in Peru.

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 $43 million at June 30, 2014.

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 revenue from leasing movable properties (in the case of the December 2004 and March 2009 assessments) and revenue 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 September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and the Company has appealed those decisions to the judicial courts. In October 2012 and June 2014, the Company received favorable rulings from the lower court on the December 2004 and March 2009 assessments regarding equipment leasing, but those rulings are subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the 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 revenue 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 $69 million in excess of the accruals established for these matters as of June 30, 2014.

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 June 30, 2014 and December 31, 2013, Level 3 had outstanding letters of credit or other similar obligations of approximately $28 million and $29 million, respectively, of which $24 million and $25 million are collateralized by cash that is reflected on the consolidated balance sheets as restricted cash. The Company does not believe exposure to loss related to its letters of credit is material.
Condensed Consolidating Financial Information (Notes)
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information

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

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

The operating activities of the separate legal entities included in the Company’s consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2014

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

 
$
—

 
$
760

 
$
918

 
$
(53
)
 
$
1,625

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
288

 
378

 
(53
)
 
613

Depreciation and Amortization
—

 
—

 
69

 
118

 
—

 
187

Selling, General and Administrative
1

 
1

 
371

 
196

 
—

 
569

Total Costs and Expenses
1

 
1

 
728

 
692

 
(53
)
 
1,369

Operating Income (Loss)
(1
)
 
(1
)
 
32

 
226

 
—

 
256

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(34
)
 
(113
)
 
1

 
(3
)
 
—

 
(149
)
Interest income (expense) affiliates, net
303

 
459

 
(727
)
 
(35
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(217
)
 
(561
)
 
162

 
—

 
616

 
—

Other, net
—

 
—

 
1

 
(45
)
 
—

 
(44
)
Total Other Income (Expense)
52

 
(215
)
 
(563
)
 
(83
)
 
616

 
(193
)
Income (Loss) before Income Taxes
51

 
(216
)
 
(531
)
 
143

 
616

 
63

Income Tax Expense
—

 
(1
)
 
—

 
(11
)
 
—

 
(12
)
Net Income (Loss)
51

 
(217
)
 
(531
)
 
132

 
616

 
51

Other Comprehensive Income, Net of Income Taxes
13

 
—

 
—

 
13

 
(13
)
 
13

Comprehensive Income (Loss)
$
64

 
$
(217
)
 
$
(531
)
 
$
145

 
$
603

 
$
64

Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2014

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

 
$
—

 
$
1,497

 
$
1,849

 
$
(112
)
 
$
3,234

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
578

 
761

 
(112
)
 
1,227

Depreciation and Amortization
—

 
—

 
139

 
232

 
—

 
371

Selling, General and Administrative
1

 
1

 
696

 
418

 
—

 
1,116

Total Costs and Expenses
1

 
1

 
1,413

 
1,411

 
(112
)
 
2,714

Operating Income (Loss)
(1
)
 
(1
)
 
84

 
438

 
—

 
520

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(68
)
 
(225
)
 
—

 
(7
)
 
—

 
(300
)
Interest income (expense) affiliates, net
591

 
918

 
(1,439
)
 
(70
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(359
)
 
(1,049
)
 
340

 
—

 
1,068

 
—

Other, net
—

 
—

 
4

 
(42
)
 
—

 
(38
)
Total Other Expense
164

 
(356
)
 
(1,095
)
 
(119
)
 
1,068

 
(338
)
Income (Loss) before Income Taxes
163

 
(357
)
 
(1,011
)
 
319

 
1,068

 
182

Income Tax Expense
—

 
(2
)
 
(1
)
 
(16
)
 
—

 
(19
)
Net Income (Loss)
163

 
(359
)
 
(1,012
)
 
303

 
1,068

 
163

Other Comprehensive Loss, Net of Income Taxes
19

 
—

 
—

 
19

 
(19
)
 
19

Comprehensive Income (Loss)
$
182

 
$
(359
)
 
$
(1,012
)
 
$
322

 
$
1,049

 
$
182

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2013

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

 
$
—

 
$
694

 
$
928

 
$
(57
)
 
$
1,565

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
256

 
417

 
(57
)
 
616

Depreciation and Amortization
—

 
—

 
71

 
128

 
—

 
199

Selling, General and Administrative
—

 
—

 
412

 
198

 
—

 
610

Total Costs and Expenses
—

 
—

 
739

 
743

 
(57
)
 
1,425

Operating Income (Loss)
—

 
—

 
(45
)
 
185

 
—

 
140

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(37
)
 
(125
)
 
—

 
(5
)
 
—

 
(167
)
Interest income (expense) affiliates, net
272

 
425

 
(669
)
 
(28
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(259
)
 
(559
)
 
130

 
—

 
688

 
—

Other, net
—

 
—

 
1

 
13

 
—

 
14

Total Other Expense
(24
)
 
(259
)
 
(538
)
 
(20
)
 
688

 
(153
)
Income (Loss) before Income Taxes
(24
)
 
(259
)
 
(583
)
 
165

 
688

 
(13
)
Income Tax Expense
—

 
—

 
—

 
(11
)
 
—

 
(11
)
Net Income (Loss)
(24
)
 
(259
)
 
(583
)
 
154

 
688

 
(24
)
Other Comprehensive Income, Net of Income Taxes
(11
)
 
(11
)
 
—

 
(11
)
 
22

 
(11
)
Comprehensive Income (Loss)
$
(35
)
 
$
(270
)
 
$
(583
)
 
$
143

 
$
710

 
$
(35
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2013

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

 
$
—

 
$
1,379

 
$
1,884

 
$
(121
)
 
$
3,142

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
517

 
849

 
(121
)
 
1,245

Depreciation and Amortization
—

 
—

 
142

 
251

 
—

 
393

Selling, General and Administrative
1

 
—

 
793

 
415

 
—

 
1,209

Total Costs and Expenses
1

 
—

 
1,452

 
1,515

 
(121
)
 
2,847

Operating Income (Loss)
(1
)
 
—

 
(73
)
 
369

 
—

 
295

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(76
)
 
(251
)
 
(1
)
 
(8
)
 
—

 
(336
)
Interest income (expense) affiliates, net
545

 
855

 
(1,338
)
 
(62
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(570
)
 
(1,173
)
 
276

 
—

 
1,467

 
—

Other, net
—

 
(1
)
 
2

 
(37
)
 
—

 
(36
)
Total Other Expense
(101
)
 
(570
)
 
(1,061
)
 
(107
)
 
1,467

 
(372
)
Income (Loss) before Income Taxes
(102
)
 
(570
)
 
(1,134
)
 
262

 
1,467

 
(77
)
Income Tax Expense
—

 
—

 
(1
)
 
(24
)
 
—

 
(25
)
Net Income (Loss)
(102
)
 
(570
)
 
(1,135
)
 
238

 
1,467

 
(102
)
Other Comprehensive Income, Net of Income Taxes
(63
)
 
(63
)
 
—

 
(63
)
 
126

 
(63
)
Comprehensive Income (Loss)
$
(165
)
 
$
(633
)
 
$
(1,135
)
 
$
175

 
$
1,593

 
$
(165
)
Condensed Consolidating Balance Sheets
June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637

Restricted cash and securities
—

 
—

 
1

 
5

 
—

 
6

Receivables, less allowances for doubtful accounts
—

 
—

 
85

 
637

 
—

 
722

Due from affiliates
16,060

 
17,582

 
(32,979
)
 
(663
)
 
—

 
—

Other
4

 
16

 
68

 
86

 
—

 
174

Total Current Assets
16,072

 
17,604

 
(32,411
)
 
274

 
—

 
1,539

Property, Plant, and Equipment, net
—

 
—

 
3,084

 
5,271

 
—

 
8,355

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
380

 
2,367

 
—

 
2,747

Investment in Subsidiaries
10,099

 
8,959

 
3,734

 
—

 
(22,792
)
 
—

Other Assets, net
8

 
105

 
9

 
242

 
—

 
364

Total Assets
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

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

 
$
1

 
$
284

 
$
328

 
$
—

 
$
613

Current portion of long-term debt
474

 
—

 
2

 
27

 
—

 
503

Accrued payroll and employee benefits
—

 
—

 
104

 
41

 
—

 
145

Accrued interest
30

 
136

 
—

 
—

 
—

 
166

Current portion of deferred revenue
—

 
—

 
120

 
138

 
—

 
258

Due to affiliates
—

 
—

 
—

 
—

 
—

 
—

Other
—

 
2

 
71

 
66

 
—

 
139

Total Current Liabilities
504

 
139

 
581

 
600

 
—

 
1,824

Long-Term Debt, less current portion
898

 
6,906

 
16

 
35

 
—

 
7,855

Deferred Revenue, less current portion
—

 
—

 
573

 
312

 
—

 
885

Other Liabilities
15

 
29

 
125

 
616

 
—

 
785

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,765

 
19,594

 
(26,481
)
 
6,593

 
(22,792
)
 
1,679

Total Liabilities and Stockholders' Equity (Deficit)
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

Condensed Consolidating Balance Sheets
December 31, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
347

 
$
270

 
$
—

 
$
631

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
79

 
594

 
—

 
673

Due from affiliates
15,507

 
16,886

 
—

 
—

 
(32,393
)
 
—

Other
2

 
15

 
47

 
79

 
—

 
143

Total Current Assets
15,517

 
16,907

 
474

 
949

 
(32,393
)
 
1,454

Property, Plant, and Equipment, net
—

 
—

 
3,028

 
5,212

 
—

 
8,240

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
395

 
2,387

 
—

 
2,782

Investment in Subsidiaries
10,039

 
27,014

 
3,735

 
—

 
(40,788
)
 
—

Other Assets, net
10

 
113

 
11

 
241

 
—

 
375

Total Assets
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

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

 
$
2

 
$
42

 
$
581

 
$
—

 
$
625

Current portion of long-term debt
—

 
—

 
3

 
28

 
—

 
31

Accrued payroll and employee benefits
—

 
—

 
171

 
38

 
—

 
209

Accrued interest
30

 
129

 
—

 
1

 
—

 
160

Current portion of deferred revenue
—

 
—

 
131

 
122

 
—

 
253

Due to affiliates
—

 
—

 
32,165

 
228

 
(32,393
)
 
—

Other
—

 
13

 
74

 
81

 
—

 
168

Total Current Liabilities
30

 
144

 
32,586

 
1,079

 
(32,393
)
 
1,446

Long-Term Debt, less current portion
1,370

 
6,905

 
17

 
39

 
—

 
8,331

Deferred Revenue, less current portion
—

 
—

 
603

 
303

 
—

 
906

Other Liabilities
15

 
27

 
135

 
603

 
—

 
780

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,154

 
36,958

 
(25,680
)
 
6,767

 
(40,788
)
 
1,411

Total Liabilities and Stockholders' Equity (Deficit)
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(66
)
 
$
(222
)
 
$
370

 
$
362

 
$
—

 
$
444

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(192
)
 
(212
)
 
—

 
(404
)
Decrease in restricted cash and securities, net
—

 
—

 
—

 
2

 
—

 
2

Net Cash Provided by (Used in) Investing Activities
—

 
—

 
(192
)
 
(210
)
 
—

 
(402
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
—

 
—

 
—

 
(6
)
 
—

 
(6
)
Increase (decrease) due from/to affiliates, net
66

 
222

 
(111
)
 
(177
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
66

 
222

 
(111
)
 
(183
)
 
—

 
(6
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(30
)
 
—

 
(30
)
Net Change in Cash and Cash Equivalents
—

 
—

 
67

 
(61
)
 
—

 
6

Cash and Cash Equivalents at Beginning of Period
8

 
6

 
347

 
270

 
—

 
631

Cash and Cash Equivalents at End of Period
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(86
)
 
$
(269
)
 
$
74

 
$
504

 
$
—

 
$
223

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(218
)
 
—

 
(377
)
Decrease in restricted cash and securities, net
5

 
—

 
—

 
3

 
—

 
8

Other
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Net Cash Provided by (Used in) Investing Activities
5

 
—

 
(159
)
 
(229
)
 
—

 
(383
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(172
)
 
(3
)
 
(4
)
 
(20
)
 
—

 
(199
)
Increase (decrease) due from/to affiliates, net
9

 
272

 
60

 
(341
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
(163
)
 
269

 
56

 
(361
)
 
—

 
(199
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(24
)
 
—

 
(24
)
Net Change in Cash and Cash Equivalents
(244
)
 
—

 
(29
)
 
(110
)
 
—

 
(383
)
Cash and Cash Equivalents at Beginning of Period
253

 
5

 
386

 
335

 
—

 
979

Cash and Cash Equivalents at End of Period
$
9

 
$
5

 
$
357

 
$
225

 
$
—

 
$
596

Subsequent Events (Notes)
Subsequent Events [Text Block]
Subsequent Event

In July 2014, Level 3 Escrow II, Inc. ("Level 3 Escrow"), a newly formed, direct, wholly owned, unrestricted subsidiary of Level 3 Financing, Inc. agreed to sell $1.0 billion aggregate principal amount of 5.375% Senior Notes due 2022 (the "Notes") in a private offering. The offering is expected to be completed on August 12, 2014, subject to the satisfaction or waiver of customary closing conditions.  The Notes will pay interest on May 15 and November 15 of each year beginning on November 15, 2014 and mature on August 15, 2022. Level 3 Financing, Inc. will assume the obligations of Level 3 Escrow under the Notes if certain escrow conditions are met.

The gross proceeds from the Notes will be deposited into a segregated escrow account until the date on which certain escrow conditions are met, which include the substantially concurrent closing of the tw telecom acquisition. The Notes reduce the commitment under the senior secured facility from $2.4 billion to $2.0 billion. Upon assumption of the Notes, Level 3 Financing, Inc. intends to use the gross proceeds of this offering to finance the cash portion of the merger consideration payable to tw telecom's stockholders under the Merger Agreement and to refinance certain existing indebtedness of tw telecom. See Note 2 — Pending Acquisition of tw telecom for additional information.
Organization and Summary of Significant Accounting Policies (Policies)
Principles of Consolidation and Basis of Presentation
Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Level 3 Communications, Inc. and subsidiaries in which it has a controlling interest. 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.
Acquired Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 
Identifiable acquisition-related intangible assets as of June 30, 2014 and December 31, 2013 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
June 30, 2014
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
786

 
$
(700
)
 
$
86

Trademarks
55

 
(38
)
 
17

Patents and Developed Technology
158

 
(124
)
 
34

 
999

 
(862
)
 
137

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,031

 
$
(862
)
 
$
169

December 31, 2013
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
786

 
$
(678
)
 
$
108

Trademarks
55

 
(31
)
 
24

Patents and Developed Technology
158

 
(117
)
 
41

 
999

 
(826
)
 
173

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Vyvx Trade Name
32

 
—

 
32

 
$
1,031

 
$
(826
)
 
$
205

Schedule of estimated amortization expense of finite-lived acquisition-related intangible assets 
As of June 30, 2014, 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):

2014 (remaining 6 months)
$
27

2015
48

2016
31

2017
15

2018
13

2019
3

Thereafter
—

 
$
137

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 June 30, 2014 and December 31, 2013:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
June 30,
2014
 
December 31,
2013
 
June 30,
2014
 
December 31,
2013
 
June 30,
2014
 
December 31,
2013
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Swap Liabilities (included in other current liabilities)
 
$
—

 
$
12

 
$
—

 
$
—

 
$
—

 
$
12

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

 
$
12

 
$
—

 
$
—

 
$
—

 
$
12

Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
2,605

 
$
2,604

 
$
2,614

 
$
2,633

 
$
—

 
$
—

Senior Notes
 
5,199

 
5,198

 
5,702

 
5,673

 
—

 
—

Convertible Notes
 
474

 
474

 
—

 
—

 
794

 
647

Capital Leases and Other
 
80

 
86

 
—

 
—

 
80

 
86

Total Long-term Debt, including the current portion
 
$
8,358

 
$
8,362

 
$
8,316

 
$
8,306

 
$
874

 
$
733



The Company does not have any assets or liabilities where the fair value is measured using significant unobservable inputs (Level 3).
Long-Term Debt (Tables)
Schedule of long-term debt 
As of June 30, 2014 and December 31, 2013, long-term debt was as follows:
(dollars in millions)
 
June 30,
2014
 
December 31,
2013
Senior Secured Term Loan*
 
$
2,611

 
$
2,611

Floating Rate Senior Notes due 2018 (3.823% as of June 30, 2014 and 3.846% as of December 31, 2013)
 
300

 
300

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

 
300

8.625% Senior Notes due 2020
 
900

 
900

7% Senior Notes due 2020
 
775

 
775

6.125% Senior Notes due 2021
 
640

 
640

7% Convertible Senior Notes due 2015
 
200

 
200

7% Convertible Senior Notes due 2015 Series B
 
275

 
275

Capital Leases
 
68

 
73

Other
 
12

 
13

Total Debt Obligations
 
8,386

 
8,392

Unamortized Discount:
 
 
 
 
Discount on Senior Secured Term Loan
 
(6
)
 
(7
)
Discount on 11.875% Senior Notes due 2019
 
(8
)
 
(8
)
Discount on 9.375% Senior Notes due 2019
 
(7
)
 
(7
)
Discount on 8.125% Senior Notes due 2019
 
(7
)
 
(7
)
Discount on 7% Convertible Senior Notes due 2015
 
—

 
(1
)
Total Unamortized Discount
 
(28
)
 
(30
)
Carrying Value of Debt
 
8,358

 
8,362

Less current portion
 
(503
)
 
(31
)
Long-term Debt, less current portion
 
$
7,855

 
$
8,331


* The $815 million Tranche B-III 2019 Term Loan due 2019 and the $1.796 billion Tranche B 2020 Term Loan due 2020 each had an interest rate of 4.00% as of June 30, 2014 and December 31, 2013.

Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) 
Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) were as follows as of June 30, 2014 (dollars in millions):

2014 (remaining six months)
$
25

2015
483

2016
7

2017
6

2018
306

2019
3,426

Thereafter
4,133

 
$
8,386

Accumulated Other Comprehensive Income (Tables)
Comprehensive Income (Loss) Note [Text Block] 
Accumulated Other Comprehensive Income (Loss)

The accumulated balances for each classification of other comprehensive income (loss) were as follows:

(dollars in millions)
 
Net Foreign Currency Translation Adjustment
 
Defined Benefit Pension Plans
 
Total
Balance at December 31, 2012
 
$
56

 
$
(30
)
 
$
26

Other comprehensive income before reclassifications
 
(56
)
 
(9
)
 
(65
)
Amounts reclassified from accumulated other comprehensive income
 
—

 
2

 
2

Balance at June 30, 2013
 
$
—

 
$
(37
)
 
$
(37
)

Balance at December 31, 2013
 
$
67

 
$
(31
)
 
$
36

Other comprehensive income (loss) before reclassifications
 
18

 
(2
)
 
16

Amounts reclassified from accumulated other comprehensive income (loss)
 
—

 
3

 
3

Balance at June 30, 2014
 
$
85


$
(30
)

$
55

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] 
The accumulated balances for each classification of other comprehensive income (loss) were as follows:

(dollars in millions)
 
Net Foreign Currency Translation Adjustment
 
Defined Benefit Pension Plans
 
Total
Balance at December 31, 2012
 
$
56

 
$
(30
)
 
$
26

Other comprehensive income before reclassifications
 
(56
)
 
(9
)
 
(65
)
Amounts reclassified from accumulated other comprehensive income
 
—

 
2

 
2

Balance at June 30, 2013
 
$
—

 
$
(37
)
 
$
(37
)

Balance at December 31, 2013
 
$
67

 
$
(31
)
 
$
36

Other comprehensive income (loss) before reclassifications
 
18

 
(2
)
 
16

Amounts reclassified from accumulated other comprehensive income (loss)
 
—

 
3

 
3

Balance at June 30, 2014
 
$
85


$
(30
)

$
55

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 the three and six months ended June 30, 2014 and 2013 (dollars in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
OSO
$
2

 
$
11

 
$
4

 
$
16

Restricted Stock Units and Shares
6

 
14

 
12

 
21

Performance Restricted Stock Units
3

 
—

 
3

 
—

401(k) Match Expense
5

 
5

 
12

 
13

Restricted Stock Unit Bonus Grant
—

 
14

 
(5
)
 
29

Management Incentive and Retention Plan
—

 
4

 
—

 
6

 
$
16

 
$
48

 
$
26

 
$
85

Segment Information (Tables)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] 
The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income (loss):

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Adjusted EBITDA:
 
 
 
 
 
 
 
 
North America
 
$
480

 
$
434

 
$
968

 
$
862

EMEA
 
56

 
58

 
110

 
115

Latin America
 
90

 
76

 
172

 
149

Unallocated Corporate Expenses
 
(167
)
 
(181
)
 
(333
)
 
(353
)
Consolidated Adjusted EBITDA
 
459

 
387

 
917

 
773

Income Tax Expense
 
(12
)
 
(11
)
 
(19
)
 
(25
)
Total Other Expense
 
(193
)
 
(153
)
 
(338
)
 
(372
)
Depreciation and Amortization
 
(187
)
 
(199
)
 
(371
)
 
(393
)
Non-Cash Stock Compensation
 
(16
)
 
(48
)
 
(26
)
 
(85
)
Total Consolidated Net Income (Loss)
 
$
51

 
$
(24
)
 
$
163

 
$
(102
)
Schedule of Segment Reporting Information, by Segment [Table Text Block] 
The following table presents capital expenditures by segment and reconciles capital expenditures to consolidated capital expenditures:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Capital Expenditures:
 
 
 
 
 
 
 
 
North America
 
$
105

 
$
101

 
$
202

 
$
200

EMEA
 
29

 
43

 
48

 
69

Latin America
 
43

 
30

 
71

 
53

Unallocated Corporate Capital Expenditures
 
64

 
34

 
83

 
55

Consolidated Capital Expenditures
 
$
241

 
$
208

 
$
404

 
$
377

Segment Reporting Disclosure [Text Block] 
Segment Information

Operating segments are defined under GAAP as components of an enterprise for which separate financial information is available and evaluated regularly by the Company's chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company's reportable segments consist of 1) North America, 2) Europe, the Middle East and Africa (EMEA), 3) and Latin America. Other separate business interests that are not segments include interest, certain corporate assets and overhead costs, and certain other general and administrative costs that are not allocated to any of the operating segments. Historical presentation of segment information has been retrospectively reclassified to conform to the new geographical presentation.

The CODM measures and evaluates segment performance primarily based upon revenue, revenue growth and Adjusted EBITDA. Adjusted EBITDA, as defined by the Company, is equal to net income (loss) from the consolidated statements of operations before (1) income tax benefit (expense), (2) total other income (expense), (3) non-cash impairment charges included within selling, general and administrative expenses, (4) depreciation and amortization expense, and (5) non-cash stock compensation expense included within selling, general and administrative expenses.

Adjusted EBITDA is not a measurement under GAAP and may not be used in the same way by other companies. Management believes that Adjusted EBITDA is an important part of the Company's internal reporting and is a key measure used by management to evaluate profitability and operating performance of the Company and to make resource allocation decisions. Management believes such measurement is especially important in a capital-intensive industry such as telecommunications. Management also uses Adjusted EBITDA to compare the Company's performance to that of its competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period its ability to fund capital expenditures, fund growth, service debt and determine bonuses.

Adjusted EBITDA excludes non-cash impairment charges and non-cash stock compensation expense because of the non-cash nature of these items. Adjusted EBITDA also excludes interest income, interest expense and income tax benefit (expense) because these items are associated with the Company's capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the effect of capital investments which management believes are better evaluated through cash flow measures. Adjusted EBITDA excludes net other income (expense) because these items are not related to the primary operations of the Company.

There are limitations to using non-GAAP financial measures such as Adjusted EBITDA, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from the Company's calculations. Additionally, this financial measure does not include certain significant items such as interest income, interest expense, income tax benefit (expense), depreciation and amortization expense, non-cash impairment charges, non-cash stock compensation expense, and net other income (expense). Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.

Revenue and the related expenses are attributed to regions based on where services are provided. Revenue and costs for services provided in more than one region are allocated ratably between the regions, and the Company does not otherwise charge for services between reportable segments. Therefore, segment results do not include any intercompany revenue. The operating activities of the separate regions along with the activities that are not attributable to a segment are interdependent, and the regional results in the tables below do not include all intercompany charges and allocations that would be necessary to report the regional results on a standalone basis.

Total revenue consists of:

•
Core Network Services revenue from colocation and data center services; transport and fiber; IP and data services; and local and enterprise voice services.

•
Wholesale Voice Services and Other revenue from sales to other carriers of long distance voice services.

Core Network Services revenue represents higher margin services and Wholesale Voice Services and Other revenue represents lower margin services. Core Network Services revenue requires different levels of investment and focus and provides different contributions to the Company's operating results than Wholesale Voice Services and Other revenue. Management of the Company believes that growth in revenue from its Core Network Services is critical to the long-term success of its business. The Company also believes it must continue to effectively manage gross margin contribution from the Wholesale Voice Services component. The Company believes that trends in its communications business are best gauged by analyzing revenue changes in Core Network Services.
The following table presents revenue by segment:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Core Network Services Revenue:
 
 
 
 
 
 
 
 
North America
 
$
1,051

 
$
970

 
$
2,094

 
$
1,937

EMEA
 
229

 
220

 
454

 
443

Latin America
 
199

 
189

 
388

 
371

Total Core Network Services Revenue
 
1,479

 
1,379

 
2,936

 
2,751

 
 
 
 
 
 
 
 
 
Wholesale Voice Services and Other Revenue:
 
 
 
 
 
 
 
 
North America
 
137

 
175

 
282

 
368

EMEA
 
5

 
8

 
10

 
17

Latin America
 
4

 
3

 
6

 
6

Total Wholesale Voice Services and Other Revenue
 
146

 
186

 
298

 
391

 
 
 
 
 
 
 
 
 
Total Consolidated Revenue
 
$
1,625

 
$
1,565

 
$
3,234

 
$
3,142



The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income (loss):

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Adjusted EBITDA:
 
 
 
 
 
 
 
 
North America
 
$
480

 
$
434

 
$
968

 
$
862

EMEA
 
56

 
58

 
110

 
115

Latin America
 
90

 
76

 
172

 
149

Unallocated Corporate Expenses
 
(167
)
 
(181
)
 
(333
)
 
(353
)
Consolidated Adjusted EBITDA
 
459

 
387

 
917

 
773

Income Tax Expense
 
(12
)
 
(11
)
 
(19
)
 
(25
)
Total Other Expense
 
(193
)
 
(153
)
 
(338
)
 
(372
)
Depreciation and Amortization
 
(187
)
 
(199
)
 
(371
)
 
(393
)
Non-Cash Stock Compensation
 
(16
)
 
(48
)
 
(26
)
 
(85
)
Total Consolidated Net Income (Loss)
 
$
51

 
$
(24
)
 
$
163

 
$
(102
)


The following table presents capital expenditures by segment and reconciles capital expenditures to consolidated capital expenditures:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Capital Expenditures:
 
 
 
 
 
 
 
 
North America
 
$
105

 
$
101

 
$
202

 
$
200

EMEA
 
29

 
43

 
48

 
69

Latin America
 
43

 
30

 
71

 
53

Unallocated Corporate Capital Expenditures
 
64

 
34

 
83

 
55

Consolidated Capital Expenditures
 
$
241

 
$
208

 
$
404

 
$
377



The following table presents total assets by segment:

(dollars in millions)
 
June 30, 2014
 
December 31, 2013
Assets:
 
 
 
 
North America
 
$
8,239

 
$
8,133

EMEA
 
2,058

 
2,030

Latin America
 
2,477

 
2,445

Other
 
254

 
266

Total Consolidated Assets
 
$
13,028

 
$
12,874

Reconciliation of Revenue from Segments to Consolidated [Table Text Block] 
The following table presents revenue by segment:

 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Core Network Services Revenue:
 
 
 
 
 
 
 
 
North America
 
$
1,051

 
$
970

 
$
2,094

 
$
1,937

EMEA
 
229

 
220

 
454

 
443

Latin America
 
199

 
189

 
388

 
371

Total Core Network Services Revenue
 
1,479

 
1,379

 
2,936

 
2,751

 
 
 
 
 
 
 
 
 
Wholesale Voice Services and Other Revenue:
 
 
 
 
 
 
 
 
North America
 
137

 
175

 
282

 
368

EMEA
 
5

 
8

 
10

 
17

Latin America
 
4

 
3

 
6

 
6

Total Wholesale Voice Services and Other Revenue
 
146

 
186

 
298

 
391

 
 
 
 
 
 
 
 
 
Total Consolidated Revenue
 
$
1,625

 
$
1,565

 
$
3,234

 
$
3,142

Condensed Consolidating Financial Information (Tables)
Condensed Consolidating Financial Information 
Condensed Consolidating Financial Information

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

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

The operating activities of the separate legal entities included in the Company’s consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2014

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

 
$
—

 
$
760

 
$
918

 
$
(53
)
 
$
1,625

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
288

 
378

 
(53
)
 
613

Depreciation and Amortization
—

 
—

 
69

 
118

 
—

 
187

Selling, General and Administrative
1

 
1

 
371

 
196

 
—

 
569

Total Costs and Expenses
1

 
1

 
728

 
692

 
(53
)
 
1,369

Operating Income (Loss)
(1
)
 
(1
)
 
32

 
226

 
—

 
256

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(34
)
 
(113
)
 
1

 
(3
)
 
—

 
(149
)
Interest income (expense) affiliates, net
303

 
459

 
(727
)
 
(35
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(217
)
 
(561
)
 
162

 
—

 
616

 
—

Other, net
—

 
—

 
1

 
(45
)
 
—

 
(44
)
Total Other Income (Expense)
52

 
(215
)
 
(563
)
 
(83
)
 
616

 
(193
)
Income (Loss) before Income Taxes
51

 
(216
)
 
(531
)
 
143

 
616

 
63

Income Tax Expense
—

 
(1
)
 
—

 
(11
)
 
—

 
(12
)
Net Income (Loss)
51

 
(217
)
 
(531
)
 
132

 
616

 
51

Other Comprehensive Income, Net of Income Taxes
13

 
—

 
—

 
13

 
(13
)
 
13

Comprehensive Income (Loss)
$
64

 
$
(217
)
 
$
(531
)
 
$
145

 
$
603

 
$
64

Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2014

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

 
$
—

 
$
1,497

 
$
1,849

 
$
(112
)
 
$
3,234

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
578

 
761

 
(112
)
 
1,227

Depreciation and Amortization
—

 
—

 
139

 
232

 
—

 
371

Selling, General and Administrative
1

 
1

 
696

 
418

 
—

 
1,116

Total Costs and Expenses
1

 
1

 
1,413

 
1,411

 
(112
)
 
2,714

Operating Income (Loss)
(1
)
 
(1
)
 
84

 
438

 
—

 
520

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(68
)
 
(225
)
 
—

 
(7
)
 
—

 
(300
)
Interest income (expense) affiliates, net
591

 
918

 
(1,439
)
 
(70
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(359
)
 
(1,049
)
 
340

 
—

 
1,068

 
—

Other, net
—

 
—

 
4

 
(42
)
 
—

 
(38
)
Total Other Expense
164

 
(356
)
 
(1,095
)
 
(119
)
 
1,068

 
(338
)
Income (Loss) before Income Taxes
163

 
(357
)
 
(1,011
)
 
319

 
1,068

 
182

Income Tax Expense
—

 
(2
)
 
(1
)
 
(16
)
 
—

 
(19
)
Net Income (Loss)
163

 
(359
)
 
(1,012
)
 
303

 
1,068

 
163

Other Comprehensive Loss, Net of Income Taxes
19

 
—

 
—

 
19

 
(19
)
 
19

Comprehensive Income (Loss)
$
182

 
$
(359
)
 
$
(1,012
)
 
$
322

 
$
1,049

 
$
182

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2013

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

 
$
—

 
$
694

 
$
928

 
$
(57
)
 
$
1,565

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
256

 
417

 
(57
)
 
616

Depreciation and Amortization
—

 
—

 
71

 
128

 
—

 
199

Selling, General and Administrative
—

 
—

 
412

 
198

 
—

 
610

Total Costs and Expenses
—

 
—

 
739

 
743

 
(57
)
 
1,425

Operating Income (Loss)
—

 
—

 
(45
)
 
185

 
—

 
140

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(37
)
 
(125
)
 
—

 
(5
)
 
—

 
(167
)
Interest income (expense) affiliates, net
272

 
425

 
(669
)
 
(28
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(259
)
 
(559
)
 
130

 
—

 
688

 
—

Other, net
—

 
—

 
1

 
13

 
—

 
14

Total Other Expense
(24
)
 
(259
)
 
(538
)
 
(20
)
 
688

 
(153
)
Income (Loss) before Income Taxes
(24
)
 
(259
)
 
(583
)
 
165

 
688

 
(13
)
Income Tax Expense
—

 
—

 
—

 
(11
)
 
—

 
(11
)
Net Income (Loss)
(24
)
 
(259
)
 
(583
)
 
154

 
688

 
(24
)
Other Comprehensive Income, Net of Income Taxes
(11
)
 
(11
)
 
—

 
(11
)
 
22

 
(11
)
Comprehensive Income (Loss)
$
(35
)
 
$
(270
)
 
$
(583
)
 
$
143

 
$
710

 
$
(35
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2013

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

 
$
—

 
$
1,379

 
$
1,884

 
$
(121
)
 
$
3,142

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
517

 
849

 
(121
)
 
1,245

Depreciation and Amortization
—

 
—

 
142

 
251

 
—

 
393

Selling, General and Administrative
1

 
—

 
793

 
415

 
—

 
1,209

Total Costs and Expenses
1

 
—

 
1,452

 
1,515

 
(121
)
 
2,847

Operating Income (Loss)
(1
)
 
—

 
(73
)
 
369

 
—

 
295

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(76
)
 
(251
)
 
(1
)
 
(8
)
 
—

 
(336
)
Interest income (expense) affiliates, net
545

 
855

 
(1,338
)
 
(62
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(570
)
 
(1,173
)
 
276

 
—

 
1,467

 
—

Other, net
—

 
(1
)
 
2

 
(37
)
 
—

 
(36
)
Total Other Expense
(101
)
 
(570
)
 
(1,061
)
 
(107
)
 
1,467

 
(372
)
Income (Loss) before Income Taxes
(102
)
 
(570
)
 
(1,134
)
 
262

 
1,467

 
(77
)
Income Tax Expense
—

 
—

 
(1
)
 
(24
)
 
—

 
(25
)
Net Income (Loss)
(102
)
 
(570
)
 
(1,135
)
 
238

 
1,467

 
(102
)
Other Comprehensive Income, Net of Income Taxes
(63
)
 
(63
)
 
—

 
(63
)
 
126

 
(63
)
Comprehensive Income (Loss)
$
(165
)
 
$
(633
)
 
$
(1,135
)
 
$
175

 
$
1,593

 
$
(165
)
Condensed Consolidating Balance Sheets
June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637

Restricted cash and securities
—

 
—

 
1

 
5

 
—

 
6

Receivables, less allowances for doubtful accounts
—

 
—

 
85

 
637

 
—

 
722

Due from affiliates
16,060

 
17,582

 
(32,979
)
 
(663
)
 
—

 
—

Other
4

 
16

 
68

 
86

 
—

 
174

Total Current Assets
16,072

 
17,604

 
(32,411
)
 
274

 
—

 
1,539

Property, Plant, and Equipment, net
—

 
—

 
3,084

 
5,271

 
—

 
8,355

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
380

 
2,367

 
—

 
2,747

Investment in Subsidiaries
10,099

 
8,959

 
3,734

 
—

 
(22,792
)
 
—

Other Assets, net
8

 
105

 
9

 
242

 
—

 
364

Total Assets
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

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

 
$
1

 
$
284

 
$
328

 
$
—

 
$
613

Current portion of long-term debt
474

 
—

 
2

 
27

 
—

 
503

Accrued payroll and employee benefits
—

 
—

 
104

 
41

 
—

 
145

Accrued interest
30

 
136

 
—

 
—

 
—

 
166

Current portion of deferred revenue
—

 
—

 
120

 
138

 
—

 
258

Due to affiliates
—

 
—

 
—

 
—

 
—

 
—

Other
—

 
2

 
71

 
66

 
—

 
139

Total Current Liabilities
504

 
139

 
581

 
600

 
—

 
1,824

Long-Term Debt, less current portion
898

 
6,906

 
16

 
35

 
—

 
7,855

Deferred Revenue, less current portion
—

 
—

 
573

 
312

 
—

 
885

Other Liabilities
15

 
29

 
125

 
616

 
—

 
785

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,765

 
19,594

 
(26,481
)
 
6,593

 
(22,792
)
 
1,679

Total Liabilities and Stockholders' Equity (Deficit)
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

Condensed Consolidating Balance Sheets
December 31, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
347

 
$
270

 
$
—

 
$
631

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
79

 
594

 
—

 
673

Due from affiliates
15,507

 
16,886

 
—

 
—

 
(32,393
)
 
—

Other
2

 
15

 
47

 
79

 
—

 
143

Total Current Assets
15,517

 
16,907

 
474

 
949

 
(32,393
)
 
1,454

Property, Plant, and Equipment, net
—

 
—

 
3,028

 
5,212

 
—

 
8,240

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
395

 
2,387

 
—

 
2,782

Investment in Subsidiaries
10,039

 
27,014

 
3,735

 
—

 
(40,788
)
 
—

Other Assets, net
10

 
113

 
11

 
241

 
—

 
375

Total Assets
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

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

 
$
2

 
$
42

 
$
581

 
$
—

 
$
625

Current portion of long-term debt
—

 
—

 
3

 
28

 
—

 
31

Accrued payroll and employee benefits
—

 
—

 
171

 
38

 
—

 
209

Accrued interest
30

 
129

 
—

 
1

 
—

 
160

Current portion of deferred revenue
—

 
—

 
131

 
122

 
—

 
253

Due to affiliates
—

 
—

 
32,165

 
228

 
(32,393
)
 
—

Other
—

 
13

 
74

 
81

 
—

 
168

Total Current Liabilities
30

 
144

 
32,586

 
1,079

 
(32,393
)
 
1,446

Long-Term Debt, less current portion
1,370

 
6,905

 
17

 
39

 
—

 
8,331

Deferred Revenue, less current portion
—

 
—

 
603

 
303

 
—

 
906

Other Liabilities
15

 
27

 
135

 
603

 
—

 
780

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,154

 
36,958

 
(25,680
)
 
6,767

 
(40,788
)
 
1,411

Total Liabilities and Stockholders' Equity (Deficit)
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(66
)
 
$
(222
)
 
$
370

 
$
362

 
$
—

 
$
444

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(192
)
 
(212
)
 
—

 
(404
)
Decrease in restricted cash and securities, net
—

 
—

 
—

 
2

 
—

 
2

Net Cash Provided by (Used in) Investing Activities
—

 
—

 
(192
)
 
(210
)
 
—

 
(402
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
—

 
—

 
—

 
(6
)
 
—

 
(6
)
Increase (decrease) due from/to affiliates, net
66

 
222

 
(111
)
 
(177
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
66

 
222

 
(111
)
 
(183
)
 
—

 
(6
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(30
)
 
—

 
(30
)
Net Change in Cash and Cash Equivalents
—

 
—

 
67

 
(61
)
 
—

 
6

Cash and Cash Equivalents at Beginning of Period
8

 
6

 
347

 
270

 
—

 
631

Cash and Cash Equivalents at End of Period
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(86
)
 
$
(269
)
 
$
74

 
$
504

 
$
—

 
$
223

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(218
)
 
—

 
(377
)
Decrease in restricted cash and securities, net
5

 
—

 
—

 
3

 
—

 
8

Other
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Net Cash Provided by (Used in) Investing Activities
5

 
—

 
(159
)
 
(229
)
 
—

 
(383
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(172
)
 
(3
)
 
(4
)
 
(20
)
 
—

 
(199
)
Increase (decrease) due from/to affiliates, net
9

 
272

 
60

 
(341
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
(163
)
 
269

 
56

 
(361
)
 
—

 
(199
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(24
)
 
—

 
(24
)
Net Change in Cash and Cash Equivalents
(244
)
 
—

 
(29
)
 
(110
)
 
—

 
(383
)
Cash and Cash Equivalents at Beginning of Period
253

 
5

 
386

 
335

 
—

 
979

Cash and Cash Equivalents at End of Period
$
9

 
$
5

 
$
357

 
$
225

 
$
—

 
$
596

Schedule of Condensed Consolidating Statements of Operations 
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2014

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

 
$
—

 
$
760

 
$
918

 
$
(53
)
 
$
1,625

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
288

 
378

 
(53
)
 
613

Depreciation and Amortization
—

 
—

 
69

 
118

 
—

 
187

Selling, General and Administrative
1

 
1

 
371

 
196

 
—

 
569

Total Costs and Expenses
1

 
1

 
728

 
692

 
(53
)
 
1,369

Operating Income (Loss)
(1
)
 
(1
)
 
32

 
226

 
—

 
256

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(34
)
 
(113
)
 
1

 
(3
)
 
—

 
(149
)
Interest income (expense) affiliates, net
303

 
459

 
(727
)
 
(35
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(217
)
 
(561
)
 
162

 
—

 
616

 
—

Other, net
—

 
—

 
1

 
(45
)
 
—

 
(44
)
Total Other Income (Expense)
52

 
(215
)
 
(563
)
 
(83
)
 
616

 
(193
)
Income (Loss) before Income Taxes
51

 
(216
)
 
(531
)
 
143

 
616

 
63

Income Tax Expense
—

 
(1
)
 
—

 
(11
)
 
—

 
(12
)
Net Income (Loss)
51

 
(217
)
 
(531
)
 
132

 
616

 
51

Other Comprehensive Income, Net of Income Taxes
13

 
—

 
—

 
13

 
(13
)
 
13

Comprehensive Income (Loss)
$
64

 
$
(217
)
 
$
(531
)
 
$
145

 
$
603

 
$
64

Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2014

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

 
$
—

 
$
1,497

 
$
1,849

 
$
(112
)
 
$
3,234

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
578

 
761

 
(112
)
 
1,227

Depreciation and Amortization
—

 
—

 
139

 
232

 
—

 
371

Selling, General and Administrative
1

 
1

 
696

 
418

 
—

 
1,116

Total Costs and Expenses
1

 
1

 
1,413

 
1,411

 
(112
)
 
2,714

Operating Income (Loss)
(1
)
 
(1
)
 
84

 
438

 
—

 
520

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(68
)
 
(225
)
 
—

 
(7
)
 
—

 
(300
)
Interest income (expense) affiliates, net
591

 
918

 
(1,439
)
 
(70
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(359
)
 
(1,049
)
 
340

 
—

 
1,068

 
—

Other, net
—

 
—

 
4

 
(42
)
 
—

 
(38
)
Total Other Expense
164

 
(356
)
 
(1,095
)
 
(119
)
 
1,068

 
(338
)
Income (Loss) before Income Taxes
163

 
(357
)
 
(1,011
)
 
319

 
1,068

 
182

Income Tax Expense
—

 
(2
)
 
(1
)
 
(16
)
 
—

 
(19
)
Net Income (Loss)
163

 
(359
)
 
(1,012
)
 
303

 
1,068

 
163

Other Comprehensive Loss, Net of Income Taxes
19

 
—

 
—

 
19

 
(19
)
 
19

Comprehensive Income (Loss)
$
182

 
$
(359
)
 
$
(1,012
)
 
$
322

 
$
1,049

 
$
182

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2013

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

 
$
—

 
$
694

 
$
928

 
$
(57
)
 
$
1,565

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
256

 
417

 
(57
)
 
616

Depreciation and Amortization
—

 
—

 
71

 
128

 
—

 
199

Selling, General and Administrative
—

 
—

 
412

 
198

 
—

 
610

Total Costs and Expenses
—

 
—

 
739

 
743

 
(57
)
 
1,425

Operating Income (Loss)
—

 
—

 
(45
)
 
185

 
—

 
140

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(37
)
 
(125
)
 
—

 
(5
)
 
—

 
(167
)
Interest income (expense) affiliates, net
272

 
425

 
(669
)
 
(28
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(259
)
 
(559
)
 
130

 
—

 
688

 
—

Other, net
—

 
—

 
1

 
13

 
—

 
14

Total Other Expense
(24
)
 
(259
)
 
(538
)
 
(20
)
 
688

 
(153
)
Income (Loss) before Income Taxes
(24
)
 
(259
)
 
(583
)
 
165

 
688

 
(13
)
Income Tax Expense
—

 
—

 
—

 
(11
)
 
—

 
(11
)
Net Income (Loss)
(24
)
 
(259
)
 
(583
)
 
154

 
688

 
(24
)
Other Comprehensive Income, Net of Income Taxes
(11
)
 
(11
)
 
—

 
(11
)
 
22

 
(11
)
Comprehensive Income (Loss)
$
(35
)
 
$
(270
)
 
$
(583
)
 
$
143

 
$
710

 
$
(35
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2013

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

 
$
—

 
$
1,379

 
$
1,884

 
$
(121
)
 
$
3,142

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue
—

 
—

 
517

 
849

 
(121
)
 
1,245

Depreciation and Amortization
—

 
—

 
142

 
251

 
—

 
393

Selling, General and Administrative
1

 
—

 
793

 
415

 
—

 
1,209

Total Costs and Expenses
1

 
—

 
1,452

 
1,515

 
(121
)
 
2,847

Operating Income (Loss)
(1
)
 
—

 
(73
)
 
369

 
—

 
295

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(76
)
 
(251
)
 
(1
)
 
(8
)
 
—

 
(336
)
Interest income (expense) affiliates, net
545

 
855

 
(1,338
)
 
(62
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(570
)
 
(1,173
)
 
276

 
—

 
1,467

 
—

Other, net
—

 
(1
)
 
2

 
(37
)
 
—

 
(36
)
Total Other Expense
(101
)
 
(570
)
 
(1,061
)
 
(107
)
 
1,467

 
(372
)
Income (Loss) before Income Taxes
(102
)
 
(570
)
 
(1,134
)
 
262

 
1,467

 
(77
)
Income Tax Expense
—

 
—

 
(1
)
 
(24
)
 
—

 
(25
)
Net Income (Loss)
(102
)
 
(570
)
 
(1,135
)
 
238

 
1,467

 
(102
)
Other Comprehensive Income, Net of Income Taxes
(63
)
 
(63
)
 
—

 
(63
)
 
126

 
(63
)
Comprehensive Income (Loss)
$
(165
)
 
$
(633
)
 
$
(1,135
)
 
$
175

 
$
1,593

 
$
(165
)
Schedule of Condensed Consolidating Balance Sheets 
Condensed Consolidating Balance Sheets
June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637

Restricted cash and securities
—

 
—

 
1

 
5

 
—

 
6

Receivables, less allowances for doubtful accounts
—

 
—

 
85

 
637

 
—

 
722

Due from affiliates
16,060

 
17,582

 
(32,979
)
 
(663
)
 
—

 
—

Other
4

 
16

 
68

 
86

 
—

 
174

Total Current Assets
16,072

 
17,604

 
(32,411
)
 
274

 
—

 
1,539

Property, Plant, and Equipment, net
—

 
—

 
3,084

 
5,271

 
—

 
8,355

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
380

 
2,367

 
—

 
2,747

Investment in Subsidiaries
10,099

 
8,959

 
3,734

 
—

 
(22,792
)
 
—

Other Assets, net
8

 
105

 
9

 
242

 
—

 
364

Total Assets
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

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

 
$
1

 
$
284

 
$
328

 
$
—

 
$
613

Current portion of long-term debt
474

 
—

 
2

 
27

 
—

 
503

Accrued payroll and employee benefits
—

 
—

 
104

 
41

 
—

 
145

Accrued interest
30

 
136

 
—

 
—

 
—

 
166

Current portion of deferred revenue
—

 
—

 
120

 
138

 
—

 
258

Due to affiliates
—

 
—

 
—

 
—

 
—

 
—

Other
—

 
2

 
71

 
66

 
—

 
139

Total Current Liabilities
504

 
139

 
581

 
600

 
—

 
1,824

Long-Term Debt, less current portion
898

 
6,906

 
16

 
35

 
—

 
7,855

Deferred Revenue, less current portion
—

 
—

 
573

 
312

 
—

 
885

Other Liabilities
15

 
29

 
125

 
616

 
—

 
785

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,765

 
19,594

 
(26,481
)
 
6,593

 
(22,792
)
 
1,679

Total Liabilities and Stockholders' Equity (Deficit)
$
26,182

 
$
26,668

 
$
(25,186
)
 
$
8,156

 
$
(22,792
)
 
$
13,028

Condensed Consolidating Balance Sheets
December 31, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8

 
$
6

 
$
347

 
$
270

 
$
—

 
$
631

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
79

 
594

 
—

 
673

Due from affiliates
15,507

 
16,886

 
—

 
—

 
(32,393
)
 
—

Other
2

 
15

 
47

 
79

 
—

 
143

Total Current Assets
15,517

 
16,907

 
474

 
949

 
(32,393
)
 
1,454

Property, Plant, and Equipment, net
—

 
—

 
3,028

 
5,212

 
—

 
8,240

Restricted Cash and Securities
3

 
—

 
18

 
2

 
—

 
23

Goodwill and Other Intangibles, net
—

 
—

 
395

 
2,387

 
—

 
2,782

Investment in Subsidiaries
10,039

 
27,014

 
3,735

 
—

 
(40,788
)
 
—

Other Assets, net
10

 
113

 
11

 
241

 
—

 
375

Total Assets
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

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

 
$
2

 
$
42

 
$
581

 
$
—

 
$
625

Current portion of long-term debt
—

 
—

 
3

 
28

 
—

 
31

Accrued payroll and employee benefits
—

 
—

 
171

 
38

 
—

 
209

Accrued interest
30

 
129

 
—

 
1

 
—

 
160

Current portion of deferred revenue
—

 
—

 
131

 
122

 
—

 
253

Due to affiliates
—

 
—

 
32,165

 
228

 
(32,393
)
 
—

Other
—

 
13

 
74

 
81

 
—

 
168

Total Current Liabilities
30

 
144

 
32,586

 
1,079

 
(32,393
)
 
1,446

Long-Term Debt, less current portion
1,370

 
6,905

 
17

 
39

 
—

 
8,331

Deferred Revenue, less current portion
—

 
—

 
603

 
303

 
—

 
906

Other Liabilities
15

 
27

 
135

 
603

 
—

 
780

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
—

Stockholders' Equity (Deficit)
24,154

 
36,958

 
(25,680
)
 
6,767

 
(40,788
)
 
1,411

Total Liabilities and Stockholders' Equity (Deficit)
$
25,569

 
$
44,034

 
$
7,661

 
$
8,791

 
$
(73,181
)
 
$
12,874

Schedule of Condensed Consolidating Statements of Cash Flows 
Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2014

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(66
)
 
$
(222
)
 
$
370

 
$
362

 
$
—

 
$
444

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(192
)
 
(212
)
 
—

 
(404
)
Decrease in restricted cash and securities, net
—

 
—

 
—

 
2

 
—

 
2

Net Cash Provided by (Used in) Investing Activities
—

 
—

 
(192
)
 
(210
)
 
—

 
(402
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
—

 
—

 
—

 
(6
)
 
—

 
(6
)
Increase (decrease) due from/to affiliates, net
66

 
222

 
(111
)
 
(177
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
66

 
222

 
(111
)
 
(183
)
 
—

 
(6
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(30
)
 
—

 
(30
)
Net Change in Cash and Cash Equivalents
—

 
—

 
67

 
(61
)
 
—

 
6

Cash and Cash Equivalents at Beginning of Period
8

 
6

 
347

 
270

 
—

 
631

Cash and Cash Equivalents at End of Period
$
8

 
$
6

 
$
414

 
$
209

 
$
—

 
$
637



Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2013

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(86
)
 
$
(269
)
 
$
74

 
$
504

 
$
—

 
$
223

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(218
)
 
—

 
(377
)
Decrease in restricted cash and securities, net
5

 
—

 
—

 
3

 
—

 
8

Other
—

 
—

 
—

 
(14
)
 
—

 
(14
)
Net Cash Provided by (Used in) Investing Activities
5

 
—

 
(159
)
 
(229
)
 
—

 
(383
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Payments on and repurchases of long-term debt, including current portion and refinancing costs
(172
)
 
(3
)
 
(4
)
 
(20
)
 
—

 
(199
)
Increase (decrease) due from/to affiliates, net
9

 
272

 
60

 
(341
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
(163
)
 
269

 
56

 
(361
)
 
—

 
(199
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(24
)
 
—

 
(24
)
Net Change in Cash and Cash Equivalents
(244
)
 
—

 
(29
)
 
(110
)
 
—

 
(383
)
Cash and Cash Equivalents at Beginning of Period
253

 
5

 
386

 
335

 
—

 
979

Cash and Cash Equivalents at End of Period
$
9

 
$
5

 
$
357

 
$
225

 
$
—

 
$
596

Organization and Summary of Significant Accounting Policies Property Plant and Equipment (Details)
6 Months Ended
Jun. 30, 2014
Property, Plant and Equipment [Line Items]
 
Property, Plant and Equipment, Estimated Useful Lives
50.9 
Change in Accounting Estimate, Effect of Change on Basic Earnings Per Share
$ 0.22 
Change in Accounting Estimate, Effect of Change on Basic and Diluted Earnings Per Share
$ 0.21 
Pending Acquisition of tw telecom (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Business Acquisition [Line Items]
 
 
 
Business Acquisition, Date of Acquisition Agreement
Jun. 15, 2014 
 
 
Business Combination, Consideration Transferred
 
$ 7,600,000,000 
 
Business Acquisition, Debt Assumed
 
 
1,900,000,000 
business acquisition, cash consideration per share
 
10 
 
Stock consideration per share
 
0.7 
 
2.4 Billion Senior Secured Debt [Member]
 
 
 
Business Acquisition [Line Items]
 
 
 
Proceeds from Issuance of Secured Debt
 
2,400,000,000 
 
$600 Million Unsecured Debt [Member]
 
 
 
Business Acquisition [Line Items]
 
 
 
Proceeds from Issuance of Unsecured Debt
 
600,000,000 
 
$3.0 Billion Unsecured Debt [Member]
 
 
 
Business Acquisition [Line Items]
 
 
 
Proceeds from Issuance of Debt
 
$ 3,000,000,000 
 
Earnings Per Share (Details)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Convertible Senior Notes
 
 
Earnings per share
 
 
Securities not included in computation of diluted loss per share (in millions of shares)
18 
28 
Stock options, outperform stock appreciation rights (OSOs), restricted stock units and warrants
 
 
Earnings per share
 
 
Securities not included in computation of diluted loss per share (in millions of shares)
5 
6 
Acquired Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 999 
 
$ 999 
 
$ 999 
Finite-Lived Intangible Assets, Accumulated Amortization
(862)
 
(862)
 
(826)
Finite-Lived Intangible Assets, Net
137 
 
137 
 
173 
Acquired finite-lived intangible asset amortization expense
17 
18 
36 
36 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Total identifiable acquisition-related intangible assets, Gross Carrying Amount
1,031 
 
1,031 
 
1,031 
Total identifiable acquisition-related intangible assets, Net
169 
 
169 
 
205 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
2013 (remaining three months)
27 
 
27 
 
 
2014
48 
 
48 
 
 
2015
31 
 
31 
 
 
2016
15 
 
15 
 
 
2017
13 
 
13 
 
 
2018
3 
 
3 
 
 
Thereafter
0 
 
0 
 
 
Finite-Lived Intangible Assets, Net
137 
 
137 
 
173 
Vyvx Trade Name
 
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Indefinite-Lived Intangible Assets
32 
 
32 
 
32 
Customer Contracts And Relationships
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
786 
 
786 
 
786 
Finite-Lived Intangible Assets, Accumulated Amortization
(700)
 
(700)
 
(678)
Finite-Lived Intangible Assets, Net
86 
 
86 
 
108 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
1 year 9 months 18 days 
 
 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
86 
 
86 
 
108 
Trademarks
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
55 
 
55 
 
55 
Finite-Lived Intangible Assets, Accumulated Amortization
(38)
 
(38)
 
(31)
Finite-Lived Intangible Assets, Net
17 
 
17 
 
24 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
1 year 3 months 18 days 
 
 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
17 
 
17 
 
24 
Patents and Developed Technology
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
158 
 
158 
 
158 
Finite-Lived Intangible Assets, Accumulated Amortization
(124)
 
(124)
 
(117)
Finite-Lived Intangible Assets, Net
34 
 
34 
 
41 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
2 years 6 months 
 
 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
$ 34 
 
$ 34 
 
$ 41 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (Fair Value, Measurements, Recurring, USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Total Carrying Value in Consolidated Balance Sheet
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other current and non-current liabilities)
$ 0 
$ 12 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
0 
12 
Long-term Debt, including the current portion:
 
 
Term Loans
2,605 
2,604 
Senior Notes
5,199 
5,198 
Convertible Notes
474 
474 
Capital Leases and Other
80 
86 
Total Long-term Debt, including the current portion:
8,358 
8,362 
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 current and 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
2,614 
2,633 
Senior Notes
5,702 
5,673 
Convertible Notes
0 
0 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
8,316 
8,306 
Significant Other Observable Inputs (Level 2)
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other current and non-current liabilities)
0 
12 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
0 
12 
Long-term Debt, including the current portion:
 
 
Term Loans
0 
0 
Senior Notes
0 
0 
Convertible Notes
794 
647 
Capital Leases and Other
80 
86 
Total Long-term Debt, including the current portion:
$ 874 
$ 733 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Long-term debt
 
 
Total Debt Obligations
$ 8,386 
$ 8,392 
Total Unamortized Discount
(28)
(30)
Carrying Value of Debt
8,358 
8,362 
Less current portion
(503)
(31)
Long-Term Debt, less current portion
7,855 
8,331 
Senior Secured Term Loan
 
 
Long-term debt
 
 
Total Debt Obligations
2,611 1
2,611 1
Total Unamortized Discount
(6)
(7)
Tranche B-III 2019 Term Loan
 
 
Long-term debt
 
 
Total Debt Obligations
815 
 
Tranche B 2020 Term Loan
 
 
Long-term debt
 
 
Stated interest rate (as a percent)
4.00% 
 
Total Debt Obligations
1,796 
 
Floating Rate Senior Notes due 2018 [Member]
 
 
Long-term debt
 
 
Total Debt Obligations
300 
300 
11.875% Senior Notes due 2019
 
 
Long-term debt
 
 
Total Debt Obligations
605 
605 
Total Unamortized Discount
(8)
(8)
9.375% Senior Notes due 2019
 
 
Long-term debt
 
 
Total Debt Obligations
500 
500 
Total Unamortized Discount
(7)
(7)
8.125% Senior Notes due 2019
 
 
Long-term debt
 
 
Total Debt Obligations
1,200 
1,200 
Total Unamortized Discount
(7)
(7)
8.875% Senior Notes due 2019
 
 
Long-term debt
 
 
Total Debt Obligations
300 
300 
8.625% Senior Notes due 2020
 
 
Long-term debt
 
 
Total Debt Obligations
900 
900 
7.0% Senior Notes due 2020
 
 
Long-term debt
 
 
Total Debt Obligations
775 
775 
SeniorNotes6Point125PercentDue2021 [Member]
 
 
Long-term debt
 
 
Total Debt Obligations
640 
640 
7.0% Convertible Senior Notes due 2015
 
 
Long-term debt
 
 
Total Debt Obligations
200 
200 
Total Unamortized Discount
0 
(1)
7.0% Convertible Senior Notes due 2015 Series B
 
 
Long-term debt
 
 
Total Debt Obligations
275 
275 
Capital Leases
 
 
Long-term debt
 
 
Total Debt Obligations
68 
73 
Other
 
 
Long-term debt
 
 
Total Debt Obligations
$ 12 
$ 13 
Long-Term Debt - Textuals (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Long-term debt
 
 
Total Debt Obligations
$ 8,386 
$ 8,392 
2013 (remaining three months)
25 
 
2014
483 
 
2015
7 
 
2016
6 
 
2017
306 
 
2018
3,426 
 
Thereafter
4,133 
 
Tranche B 2020 Term Loan
 
 
Long-term debt
 
 
Stated interest rate (as a percent)
4.00% 
 
Total Debt Obligations
1,796 
 
Tranche B-III 2019 Term Loan
 
 
Long-term debt
 
 
Total Debt Obligations
815 
 
8.875% Senior Notes due 2019
 
 
Long-term debt
 
 
Total Debt Obligations
300 
300 
7.0% Senior Notes due 2020
 
 
Long-term debt
 
 
Total Debt Obligations
$ 775 
$ 775 
Accumulated Other Comprehensive Income (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
$ 55 
$ (37)
$ 36 
$ 26 
Other comprehensive income before reclassifications
16 
(65)
 
 
Amounts reclassified from accumulated other comprehensive income
3 
2 
 
 
Accumulated Translation Adjustment [Member]
 
 
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
85 
0 
67 
56 
Other comprehensive income before reclassifications
18 
(56)
 
 
Amounts reclassified from accumulated other comprehensive income
0 
0 
 
 
Accumulated Defined Benefit Plans Adjustment [Member]
 
 
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(30)
(37)
(31)
(30)
Other comprehensive income before reclassifications
(2)
(9)
 
 
Amounts reclassified from accumulated other comprehensive income
$ 3 
$ 2 
 
 
Stock-Based Compensation - Non-cash compensation expense and capitalized non-cash compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Nonvested restricted stock and restricted stock units (RSUs)
3,000,000 
 
3,000,000 
 
OSOs outstanding
2,000,000 
 
2,000,000 
 
Non-cash compensation expense and capitalized non-cash compensation
$ 16 
$ 48 
$ 26 
$ 85 
Outperform Stock Options
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
2 
11 
4 
16 
Restricted Stock Units and Shares
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
6 
14 
12 
21 
Performance Restricted Stock Units [Member]
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
3 
0 
3 
0 
401(k) Match Expense
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
5 
5 
12 
13 
Restricted Stock Unit Bonus Grant
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
0 
14 
(5)
29 
Management Incentive and Retention Plan
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Stock-based compensation expense
$ 0 
$ 4 
$ 0 
$ 6 
Non-qualified stock options
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
OSOs outstanding
9,000 
 
9,000 
 
Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Assets
$ 13,028 
 
$ 13,028 
 
$ 12,874 
Payments to Acquire Productive Assets
241 
208 
404 
377 
 
Adjusted EBITDA by Segment
459 
387 
917 
773 
 
Revenue
1,625 
1,565 
3,234 
3,142 
 
Income Tax Expense (Benefit)
(12)
(11)
(19)
(25)
 
Other Income
(193)
(153)
(338)
(372)
 
Depreciation, Depletion and Amortization
(187)
(199)
(371)
(393)
 
Share-based Compensation
(16)
(48)
(26)
(85)
 
Net Income (Loss) Available to Common Stockholders, Basic
51 
(24)
163 
(102)
 
Corporate and Other [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Assets
254 
 
254 
 
266 
Payments to Acquire Productive Assets
64 
34 
83 
55 
 
Adjusted EBITDA by Segment
(167)
(181)
(333)
(353)
 
North America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Assets
8,239 
 
8,239 
 
8,133 
Payments to Acquire Productive Assets
105 
101 
202 
200 
 
Adjusted EBITDA by Segment
480 
434 
968 
862 
 
Europe [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Assets
2,058 
 
2,058 
 
2,030 
Payments to Acquire Productive Assets
29 
43 
48 
69 
 
Adjusted EBITDA by Segment
56 
58 
110 
115 
 
Latin America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Assets
2,477 
 
2,477 
 
2,445 
Payments to Acquire Productive Assets
43 
30 
71 
53 
 
Adjusted EBITDA by Segment
90 
76 
172 
149 
 
Core Network Service [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
1,479 
1,379 
2,936 
2,751 
 
Core Network Service [Member] |
North America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
1,051 
970 
2,094 
1,937 
 
Core Network Service [Member] |
Europe [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
229 
220 
454 
443 
 
Core Network Service [Member] |
Latin America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
199 
189 
388 
371 
 
Wholesale Voice Services and Other [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
146 
186 
298 
391 
 
Wholesale Voice Services and Other [Member] |
North America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
137 
175 
282 
368 
 
Wholesale Voice Services and Other [Member] |
Europe [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
5 
8 
10 
17 
 
Wholesale Voice Services and Other [Member] |
Latin America [Member]
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
Revenue
$ 4 
$ 3 
$ 6 
$ 6 
 
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Jun. 30, 2014
Loss Contingencies
 
 
Estimated Litigation Liability
 
$ 220 
Peruvian Tax Litigation |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
59 
Loss Contingency Accrual, Period Increase (Decrease)
28 
 
Peruvian Tax Litigation, Before Interest |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
26 
Peruvian Tax Litigation, Income Tax witholding 2001 and 2002 |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
3 
Peruvian Tax Litigation, VAT for 2001 and 2002 |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
7 
Peruvian Tax Litigation, Disallowance of VAT in 2005 |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
16 
Employee Severance and Contractor Termination Disputes |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Asserted Claim
 
43 
up to |
Brazilian Tax Claims |
Pending Litigation
 
 
Loss Contingencies
 
 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
 
$ 69 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
 
 
Amount outstanding under letters of credit or other similar obligations
$ 28 
$ 29 
Collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash
$ 24 
$ 25 
Condensed Consolidating Financial Information - Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Condensed Consolidating Financial Information
 
 
 
 
Revenue
$ 1,625 
$ 1,565 
$ 3,234 
$ 3,142 
Costs and Expenses:
 
 
 
 
Cost of Revenue
613 
616 
1,227 
1,245 
Depreciation and Amortization
187 
199 
371 
393 
Selling, General and Administrative
569 
610 
1,116 
1,209 
Total Costs and Expenses
1,369 
1,425 
2,714 
2,847 
Operating Income (Loss)
256 
140 
520 
295 
Other Income (Expense):
 
 
 
 
Interest expense
(149)
(167)
(300)
(336)
Interest income (expense) affiliates, net
0 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
0 
0 
0 
0 
Other, net
(44)
14 
(38)
(36)
Total Other Expense
(193)
(153)
(338)
(372)
Income (Loss) before Income Taxes
63 
(13)
182 
(77)
Income Tax Expense
(12)
(11)
(19)
(25)
Net Income (Loss)
51 
(24)
163 
(102)
Other Comprehensive Income (Loss), Net of Income Taxes
13 
(11)
19 
(63)
Comprehensive Income (Loss)
64 
(35)
182 
(165)
Level 3 Communications, Inc.
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
0 
0 
0 
0 
Costs and Expenses:
 
 
 
 
Cost of Revenue
0 
0 
0 
0 
Depreciation and Amortization
0 
0 
0 
0 
Selling, General and Administrative
1 
0 
1 
1 
Total Costs and Expenses
1 
0 
1 
1 
Operating Income (Loss)
(1)
0 
(1)
(1)
Other Income (Expense):
 
 
 
 
Interest expense
(34)
(37)
(68)
(76)
Interest income (expense) affiliates, net
303 
272 
591 
545 
Equity in net earnings (losses) of subsidiaries
(217)
(259)
(359)
(570)
Other, net
0 
0 
0 
0 
Total Other Expense
52 
(24)
164 
(101)
Income (Loss) before Income Taxes
51 
(24)
163 
(102)
Income Tax Expense
0 
0 
0 
0 
Net Income (Loss)
51 
(24)
163 
(102)
Other Comprehensive Income (Loss), Net of Income Taxes
13 
(11)
19 
(63)
Comprehensive Income (Loss)
64 
(35)
182 
(165)
Level 3 Financing, Inc.
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
0 
0 
0 
0 
Costs and Expenses:
 
 
 
 
Cost of Revenue
0 
0 
0 
0 
Depreciation and Amortization
0 
0 
0 
0 
Selling, General and Administrative
1 
0 
1 
0 
Total Costs and Expenses
1 
0 
1 
0 
Operating Income (Loss)
(1)
0 
(1)
0 
Other Income (Expense):
 
 
 
 
Interest expense
(113)
(125)
(225)
(251)
Interest income (expense) affiliates, net
459 
425 
918 
855 
Equity in net earnings (losses) of subsidiaries
(561)
(559)
(1,049)
(1,173)
Other, net
0 
0 
0 
(1)
Total Other Expense
(215)
(259)
(356)
(570)
Income (Loss) before Income Taxes
(216)
(259)
(357)
(570)
Income Tax Expense
(1)
0 
(2)
0 
Net Income (Loss)
(217)
(259)
(359)
(570)
Other Comprehensive Income (Loss), Net of Income Taxes
0 
(11)
0 
(63)
Comprehensive Income (Loss)
(217)
(270)
(359)
(633)
Level 3 Communications, LLC
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
760 
694 
1,497 
1,379 
Costs and Expenses:
 
 
 
 
Cost of Revenue
288 
256 
578 
517 
Depreciation and Amortization
69 
71 
139 
142 
Selling, General and Administrative
371 
412 
696 
793 
Total Costs and Expenses
728 
739 
1,413 
1,452 
Operating Income (Loss)
32 
(45)
84 
(73)
Other Income (Expense):
 
 
 
 
Interest expense
1 
0 
0 
(1)
Interest income (expense) affiliates, net
(727)
(669)
(1,439)
(1,338)
Equity in net earnings (losses) of subsidiaries
162 
130 
340 
276 
Other, net
1 
1 
4 
2 
Total Other Expense
(563)
(538)
(1,095)
(1,061)
Income (Loss) before Income Taxes
(531)
(583)
(1,011)
(1,134)
Income Tax Expense
0 
0 
(1)
(1)
Net Income (Loss)
(531)
(583)
(1,012)
(1,135)
Other Comprehensive Income (Loss), Net of Income Taxes
0 
0 
0 
0 
Comprehensive Income (Loss)
(531)
(583)
(1,012)
(1,135)
Other Non-Guarantor Subsidiaries
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
918 
928 
1,849 
1,884 
Costs and Expenses:
 
 
 
 
Cost of Revenue
378 
417 
761 
849 
Depreciation and Amortization
118 
128 
232 
251 
Selling, General and Administrative
196 
198 
418 
415 
Total Costs and Expenses
692 
743 
1,411 
1,515 
Operating Income (Loss)
226 
185 
438 
369 
Other Income (Expense):
 
 
 
 
Interest expense
(3)
(5)
(7)
(8)
Interest income (expense) affiliates, net
(35)
(28)
(70)
(62)
Equity in net earnings (losses) of subsidiaries
0 
0 
0 
0 
Other, net
(45)
13 
(42)
(37)
Total Other Expense
(83)
(20)
(119)
(107)
Income (Loss) before Income Taxes
143 
165 
319 
262 
Income Tax Expense
(11)
(11)
(16)
(24)
Net Income (Loss)
132 
154 
303 
238 
Other Comprehensive Income (Loss), Net of Income Taxes
13 
(11)
19 
(63)
Comprehensive Income (Loss)
145 
143 
322 
175 
Eliminations
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
(53)
(57)
(112)
(121)
Costs and Expenses:
 
 
 
 
Cost of Revenue
(53)
(57)
(112)
(121)
Depreciation and Amortization
0 
0 
0 
0 
Selling, General and Administrative
0 
0 
0 
0 
Total Costs and Expenses
(53)
(57)
(112)
(121)
Operating Income (Loss)
0 
0 
0 
0 
Other Income (Expense):
 
 
 
 
Interest expense
0 
0 
0 
0 
Interest income (expense) affiliates, net
0 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
616 
688 
1,068 
1,467 
Other, net
0 
0 
0 
0 
Total Other Expense
616 
688 
1,068 
1,467 
Income (Loss) before Income Taxes
616 
688 
1,068 
1,467 
Income Tax Expense
0 
0 
0 
0 
Net Income (Loss)
616 
688 
1,068 
1,467 
Other Comprehensive Income (Loss), Net of Income Taxes
(13)
22 
(19)
126 
Comprehensive Income (Loss)
$ 603 
$ 710 
$ 1,049 
$ 1,593 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2013
Dec. 31, 2012
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 637 
$ 631 
$ 596 
$ 979 
Restricted cash and securities
6 
7 
 
 
Receivables, less allowances for doubtful accounts
722 
673 
 
 
Due from affiliates
0 
0 
 
 
Other
174 
143 
 
 
Total Current Assets
1,539 
1,454 
 
 
Property, Plant and Equipment, net
8,355 
8,240 
 
 
Restricted Cash and Securities
23 
23 
 
 
Goodwill and Other Intangibles Assets, net
2,747 
2,782 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
364 
375 
 
 
Total Assets
13,028 
12,874 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
613 
625 
 
 
Current portion of long-term debt
503 
31 
 
 
Accrued payroll and employee benefits
145 
209 
 
 
Accrued interest
166 
160 
 
 
Current portion of deferred revenue
258 
253 
 
 
Due to affiliates
0 
0 
 
 
Other
139 
168 
 
 
Total Current Liabilities
1,824 
1,446 
 
 
Long-Term Debt, less current portion
7,855 
8,331 
 
 
Deferred Revenue, less current portion
885 
906 
 
 
Other Liabilities
785 
780 
 
 
Commitments and Contingencies
0 
0 
 
 
Stockholders' Equity (Deficit)
1,679 
1,411 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
13,028 
12,874 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
8 
8 
9 
253 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
16,060 
15,507 
 
 
Other
4 
2 
 
 
Total Current Assets
16,072 
15,517 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
3 
3 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
10,099 
10,039 
 
 
Other Assets, net
8 
10 
 
 
Total Assets
26,182 
25,569 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
474 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
30 
30 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
504 
30 
 
 
Long-Term Debt, less current portion
898 
1,370 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
15 
15 
 
 
Commitments and Contingencies
0 
 
 
 
Stockholders' Equity (Deficit)
24,765 
24,154 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
26,182 
25,569 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
6 
6 
5 
5 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
17,582 
16,886 
 
 
Other
16 
15 
 
 
Total Current Assets
17,604 
16,907 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
8,959 
27,014 
 
 
Other Assets, net
105 
113 
 
 
Total Assets
26,668 
44,034 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
1 
2 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
136 
129 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
2 
13 
 
 
Total Current Liabilities
139 
144 
 
 
Long-Term Debt, less current portion
6,906 
6,905 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
29 
27 
 
 
Commitments and Contingencies
0 
 
 
 
Stockholders' Equity (Deficit)
19,594 
36,958 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
26,668 
44,034 
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
414 
347 
357 
386 
Restricted cash and securities
1 
1 
 
 
Receivables, less allowances for doubtful accounts
85 
79 
 
 
Due from affiliates
(32,979)
0 
 
 
Other
68 
47 
 
 
Total Current Assets
(32,411)
474 
 
 
Property, Plant and Equipment, net
3,084 
3,028 
 
 
Restricted Cash and Securities
18 
18 
 
 
Goodwill and Other Intangibles Assets, net
380 
395 
 
 
Investment in Subsidiaries
3,734 
3,735 
 
 
Other Assets, net
9 
11 
 
 
Total Assets
(25,186)
7,661 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
284 
42 
 
 
Current portion of long-term debt
2 
3 
 
 
Accrued payroll and employee benefits
104 
171 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
120 
131 
 
 
Due to affiliates
0 
32,165 
 
 
Other
71 
74 
 
 
Total Current Liabilities
581 
32,586 
 
 
Long-Term Debt, less current portion
16 
17 
 
 
Deferred Revenue, less current portion
573 
603 
 
 
Other Liabilities
125 
135 
 
 
Commitments and Contingencies
0 
 
 
 
Stockholders' Equity (Deficit)
(26,481)
(25,680)
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
(25,186)
7,661 
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
209 
270 
225 
335 
Restricted cash and securities
5 
6 
 
 
Receivables, less allowances for doubtful accounts
637 
594 
 
 
Due from affiliates
(663)
0 
 
 
Other
86 
79 
 
 
Total Current Assets
274 
949 
 
 
Property, Plant and Equipment, net
5,271 
5,212 
 
 
Restricted Cash and Securities
2 
2 
 
 
Goodwill and Other Intangibles Assets, net
2,367 
2,387 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
242 
241 
 
 
Total Assets
8,156 
8,791 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
328 
581 
 
 
Current portion of long-term debt
27 
28 
 
 
Accrued payroll and employee benefits
41 
38 
 
 
Accrued interest
0 
1 
 
 
Current portion of deferred revenue
138 
122 
 
 
Due to affiliates
0 
228 
 
 
Other
66 
81 
 
 
Total Current Liabilities
600 
1,079 
 
 
Long-Term Debt, less current portion
35 
39 
 
 
Deferred Revenue, less current portion
312 
303 
 
 
Other Liabilities
616 
603 
 
 
Commitments and Contingencies
0 
 
 
 
Stockholders' Equity (Deficit)
6,593 
6,767 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
8,156 
8,791 
 
 
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
0 
(32,393)
 
 
Other
0 
0 
 
 
Total Current Assets
0 
(32,393)
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(22,792)
(40,788)
 
 
Other Assets, net
0 
0 
 
 
Total Assets
(22,792)
(73,181)
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
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
0 
(32,393)
 
 
Other
0 
0 
 
 
Total Current Liabilities
0 
(32,393)
 
 
Long-Term Debt, less current portion
0 
0 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Commitments and Contingencies
0 
 
 
 
Stockholders' Equity (Deficit)
(22,792)
(40,788)
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
$ (22,792)
$ (73,181)
 
 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
$ 444 
$ 223 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(404)
(377)
Decrease in restricted cash and securities, net
2 
8 
Net Cash Provided by (Used in) Investing Activities
(402)
(383)
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(6)
(199)
Increase (decrease) due from-to affiliates, net
0 
0 
Net Cash Provided by (Used in) Financing Activities
(6)
(199)
Effect of Exchange Rates on Cash and Cash Equivalents
(30)
(24)
Net Change in Cash and Cash Equivalents
6 
(383)
Cash and Cash Equivalents at Beginning of Period
631 
979 
Cash and Cash Equivalents at End of Period
637 
596 
Payments for (Proceeds from) Other Investing Activities
0 
14 
Level 3 Communications, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(66)
(86)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
Decrease in restricted cash and securities, net
0 
5 
Net Cash Provided by (Used in) Investing Activities
0 
5 
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(172)
Increase (decrease) due from-to affiliates, net
66 
9 
Net Cash Provided by (Used in) Financing Activities
66 
(163)
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
(244)
Cash and Cash Equivalents at Beginning of Period
8 
253 
Cash and Cash Equivalents at End of Period
8 
9 
Payments for (Proceeds from) Other Investing Activities
 
0 
Level 3 Financing, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(222)
(269)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
Decrease in restricted cash and securities, net
0 
0 
Net Cash Provided by (Used in) Investing Activities
0 
0 
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(3)
Increase (decrease) due from-to affiliates, net
222 
272 
Net Cash Provided by (Used in) Financing Activities
222 
269 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
0 
Cash and Cash Equivalents at Beginning of Period
6 
5 
Cash and Cash Equivalents at End of Period
6 
5 
Payments for (Proceeds from) Other Investing Activities
 
0 
Level 3 Communications, LLC
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
370 
74 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(192)
(159)
Decrease in restricted cash and securities, net
0 
0 
Net Cash Provided by (Used in) Investing Activities
(192)
(159)
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(4)
Increase (decrease) due from-to affiliates, net
(111)
60 
Net Cash Provided by (Used in) Financing Activities
(111)
56 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
67 
(29)
Cash and Cash Equivalents at Beginning of Period
347 
386 
Cash and Cash Equivalents at End of Period
414 
357 
Payments for (Proceeds from) Other Investing Activities
 
0 
Other Non-Guarantor Subsidiaries
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
362 
504 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(212)
(218)
Decrease in restricted cash and securities, net
2 
3 
Net Cash Provided by (Used in) Investing Activities
(210)
(229)
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(6)
(20)
Increase (decrease) due from-to affiliates, net
(177)
(341)
Net Cash Provided by (Used in) Financing Activities
(183)
(361)
Effect of Exchange Rates on Cash and Cash Equivalents
(30)
(24)
Net Change in Cash and Cash Equivalents
(61)
(110)
Cash and Cash Equivalents at Beginning of Period
270 
335 
Cash and Cash Equivalents at End of Period
209 
225 
Payments for (Proceeds from) Other Investing Activities
 
14 
Eliminations
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
0 
0 
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
Decrease in restricted cash and securities, net
0 
0 
Net Cash Provided by (Used in) Investing Activities
0 
0 
Cash Flows from Financing Activities:
 
 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
0 
Increase (decrease) due from-to affiliates, net
0 
0 
Net Cash Provided by (Used in) Financing Activities
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
0 
Cash and Cash Equivalents at Beginning of Period
0 
0 
Cash and Cash Equivalents at End of Period
0 
0 
Payments for (Proceeds from) Other Investing Activities
 
$ 0 
Subsequent Events Subsequent Events (Details) (USD $)
6 Months Ended
Jun. 30, 2014
2.4 Billion Senior Secured Debt [Member]
 
Subsequent Event [Line Items]
 
Proceeds from Issuance of Secured Debt
$ 2,400,000,000 
5point375SeniorNotesdue2022 [Member]
 
Subsequent Event [Line Items]
 
Proceeds from Issuance of Unsecured Debt
1,000,000,000 
2.0 Billion Senior Secured Debt [Member]
 
Subsequent Event [Line Items]
 
Proceeds from Issuance of Secured Debt
$ 2,000,000,000