LEVEL 3 COMMUNICATIONS INC, 10-Q filed on 11/8/2011
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2011
Nov. 4, 2011
Document And Entity Information [Abstract]
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
Entity Central Index Key
0000794323 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2011 
 
Amendment Flag
FALSE 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
No 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
207,649,059 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q3 
 
Consolidated Statements of Operations (USD $)
In Millions, except Share data
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Revenue:
 
 
 
 
Communications
$ 927 
$ 895 
$ 2,754 
$ 2,687 
Coal Mining
20 
17 
54 
43 
Total Revenue
947 
912 
2,808 
2,730 
Cost of Revenue
 
 
 
 
Communications
342 
353 
1,046 
1,082 
Coal Mining
18 
15 
52 
43 
Total Cost of Revenue
360 
368 
1,098 
1,125 
Depreciation and Amortization
204 
215 
615 
663 
Selling, General and Administrative
375 
345 
1,089 
1,026 
Restructuring Charges
0 
1 
0 
2 
Total Costs and Expenses
939 
929 
2,802 
2,816 
Operating Income (Loss)
8 
(17)
6 
(86)
Other Income (Expense):
 
 
 
 
Interest expense
(178)
(144)
(495)
(438)
Loss on extinguishments of debt, net
(30)
0 
(73)
(59)
Other, net
(1)
(1)
5 
15 
Total Other (Expense) Income
(209)
(145)
(563)
(482)
(Loss) Income Before Income Taxes
(201)
(162)
(557)
(568)
Income Tax Expense
(6)
(1)
(36)
(2)
Net (Loss) Income
$ (207)
$ (163)
$ (593)
$ (570)
Basic and Diluted Loss per Share (in dollars per share)
$ (1.75)1
$ (1.47)1
$ (5.18)1
$ (5.16)1
Shares Used to Compute Basic Loss per Share (in thousands): (in shares)
118,067,000 1
110,958,000 1
114,585,000 1
110,488,000 1
Shares Used to Compute Diluted Loss per Share (in thousands): (in shares)
118,067,000 1
110,958,000 1
114,585,000 1
110,488,000 1
Consolidated Balance Sheets (USD $)
In Millions, except Share data
Sep. 30, 2011
Dec. 31, 2010
Current Assets:
 
 
Cash and cash equivalents
$ 461 
$ 616 
Restricted cash and securities
1,259 
2 
Receivables, less allowances for doubtful accounts of $20 and $17, respectively
337 
264 
Other
104 
90 
Total Current Assets
2,161 
972 
Property, Plant and Equipment, net of accumulated depreciation of $7,789 and $7,241, respectively
5,117 
5,302 
Restricted Cash and Securities
121 
120 
Goodwill
1,428 
1,427 
Other Intangibles, net
300 
371 
Other Assets, net
127 
163 
Total Assets
9,254 
8,355 
Current Liabilities:
 
 
Accounts payable
342 
329 
Current portion of long-term debt
265 
180 
Accrued payroll and employee benefits
77 
84 
Accrued interest
189 
146 
Current portion of deferred revenue
140 
151 
Other
90 
66 
Total Current Liabilities
1,103 
956 
Long-Term Debt, less current portion
7,420 
6,268 
Deferred Revenue, less current portion
742 
736 
Other Liabilities
512 
552 
Total Liabilities
9,777 
8,512 
Commitments and Contingencies
 
 
Stockholders' Deficit:
 
 
Preferred stock, $.01 par value, authorized 10,000,000 shares: no shares issued or oustanding
 
 
Common stock, $.01 par value, authorized 293,333,333 shares at September 30, 2011 and 193,333,333 shares at December 31, 2010: 118,894,880 issued and outstanding at September 30, 2011 and 111,365,226 issued and outstanding at December 31, 2010
18 1
17 1
Additional paid-in capital
11,796 
11,603 
Accumulated other comprehensive loss
(65)
(98)
Accumulated deficit
(12,272)
(11,679)
Total Stockholders' Equity (Deficit)
(523)
(157)
Total Liabilities and Stockholders' Equity (Deficit)
$ 9,254 
$ 8,355 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data
Sep. 30, 2011
Dec. 31, 2010
Statement of Financial Position [Abstract]
 
 
Receivables, allowances for doubtful accounts (in dollars)
$ 20 
$ 17 
Property, Plant and Equipment, accumulated depreciation (in dollars)
$ 7,789 
$ 7,241 
Preferred stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, authorized shares
10,000,000 
10,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized shares
293,333,333 
193,333,333 
Common stock, shares issued
118,894,880 
111,365,226 
Common stock, shares outstanding
118,894,880 
111,365,226 
Consolidated Statements of Cash Flows (USD $)
In Millions
9 Months Ended
Sep. 30,
2011
2010
Cash Flows from Operating Activities:
 
 
Net loss
$ (593)
$ (570)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation and amortization
615 
663 
Non-cash compensation expense attributable to stock awards
68 
50 
Loss on extinguishments of debt, net
73 
59 
Change in fair value of embedded derivative
0 
(10)
Accretion of debt discount and amortization of debt issuance costs
45 
42 
Accrued interest on long-term debt, net
36 
(16)
Deferred income taxes
34 
0 
Other, net
(10)
0 
Changes in working capital items:
 
 
Receivables
(73)
5 
Other current assets
(13)
(12)
Payables
10 
(25)
Deferred revenue
(7)
(8)
Other current liabilities
14 
(29)
Net Cash Provided by Operating Activities
199 
149 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(350)
(319)
(Increase) Decrease in restricted cash and securities, net
(63)
4 
Proceeds from the sale of property, plant and equipment
4 
1 
Net Cash Used in Investing Activities
(409)
(314)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
765 
783 
Payments on and repurchases of long-term debt
(711)
(929)
Net Cash Provided by (Used in) Financing Activities
54 
(146)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(7)
Net Change in Cash and Cash Equivalents
(155)
(318)
Cash and Cash Equivalents at Beginning of Period
616 
836 
Cash and Cash Equivalents at End of Period
461 
518 
Supplemental Disclosure of Cash Flow Information:
 
 
Cash interest paid
414 
412 
Income taxes paid, net of refunds
1 
(1)
Non-cash Investing and Financing Activities:
 
 
Long-term debt issued and proceeds placed into escrow
1,200 
0 
Long-term debt issued in exchange transaction
300 
0 
Long-term debt retired in exchange transaction
295 
0 
Conversion of notes into common stock
$ 128 
$ 0 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
 
Description of Business
 
Level 3 Communications, Inc. and its subsidiaries (“Level 3” or the “Company”) is a facilities based provider (that is, a provider that owns or leases a substantial portion of the plant, property and equipment necessary to provide its services) of a broad range of integrated communications services. The Company has created its communications network generally by constructing its own assets, but also through a combination of purchasing and leasing from other companies and facilities. The Company’s network is an advanced, international, facilities based communications network. The Company designed its network to provide communications services, which employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.
 
The Company is also engaged in coal mining through its two 50% owned joint-venture surface mines, one each in Montana and Wyoming.
 
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, which are enterprises engaged in the communications and coal mining businesses. Fifty-percent-owned mining joint ventures are consolidated on a pro rata basis. All significant intercompany accounts and transactions have been eliminated.

As part of its consolidation policy, the Company considers its controlled subsidiaries, investments in the business in which the Company is not the primary beneficiary or does not have effective control but has the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give the Company rights to economic risks or rewards of a legal entity.  The Company does not have variable interests in a variable interest entity where it is required to consolidate the entity as the primary beneficiary or where it has concluded it is not the primary beneficiary.
 
The accompanying consolidated balance sheet as of December 31, 2010, which was derived from audited consolidated financial statements, and the unaudited interim consolidated financial statements as of September 30, 2011 and for the three and nine months ended September 30, 2011 and 2010 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 accounting principles generally accepted in the United States of America (“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 Annual Report on Form 10-K for the year ended December 31, 2010. In the opinion of the Company’s management, these financial statements contain all adjustments (consisting only of normal recurring 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.
 
Effective after the close of trading on October 19, 2011, the Company completed a 1 for 15 reverse stock split as previously approved by the Company's stockholders. Proportional adjustments were made to the Company's outstanding convertible debt, warrant, equity awards and to its equity compensation plans to reflect the reverse stock split. No fractional shares were issued in connection with the reverse stock split, as stockholders who would otherwise hold a fractional share of common stock will receive a cash payment in lieu of that fractional share. All references herein to common stock and per share data have been retrospectively adjusted to reflect the reverse stock split.

Correction of Immaterial Error
 
During the first quarter of 2011, Level 3 identified an error in the Company’s previously issued consolidated financial statements related to the recognition of deferred tax liabilities attributable to certain indefinite-lived intangible assets with an indeterminate future reversal period that the Company is unable to consider as a source of income for the realization of its deferred tax assets. The Company recorded income tax expense of approximately $26 million during the first quarter of 2011 for taxable temporary differences associated with deferred taxes on certain indefinite-lived intangible assets. The purchased indefinite-lived intangible assets arose in prior periods, and the adjustment did not affect income taxes paid, and did not materially affect any of the Company’s previously reported results of operations or financial condition, or the current period results of operations or financial condition.

Recently Issued Accounting Pronouncements
 
In June 2011, the Financial Accounting Standards Board (“FASB”) issued guidance that clarifies the prominence of other comprehensive income in the financial statements by requiring an entity to present the components of net income and comprehensive income in either one or two consecutive financial statements.  The amendment also eliminates the option to present other comprehensive income in the statement of changes in equity.  Level 3 is required to adopt this guidance retrospectively as of January 1, 2012.

In August 2011, the FASB issued guidance that allows companies to consider qualitative factors when testing goodwill for impairment. Current GAAP requires an entity to perform a two step test in which the first step involves calculating the fair value of goodwill and comparing it to the carrying value. The recently issued guidance allows an entity to assess qualitative factors to determine whether it is more likely than not that the fair value exceeds the carrying value prior to performing the two step evaluation. If it is determined that it is unlikely that the carrying value exceeds the fair value, then the entity is no longer required to complete the two step goodwill impairment evaluation. The guidance is effective for Level 3 in 2012, but early adoption is permitted.

 
Events Associated with the Amalgamation of Global Crossing
Events Associated with the Amalgamation of Global Crossing
Events Associated with the Amalgamation of Global Crossing

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

    
In connection with the closing of the Amalgamation, Level 3 Financing, Inc. amended its existing credit agreement to incur an additional $650 million of borrowings through an additional Tranche (the "Tranche B II Term Loan.") The aggregate net proceeds of Level 3 Financing’s Tranche B II Term Loan issued in October 2011 were used to consummate the Amalgamation, to refinance certain existing indebtedness of Global Crossing in connection with the consummation of the Amalgamation and for general corporate purposes. In addition, the $1.2 billion of proceeds from the initial and additional issuance of 8.125% Senior Notes due 2019 in June and July 2011(see Note 8 — Long-Term Debt) by an indirect wholly owned subsidiary were deposited into an escrow account. On October 4, 2011, following the consummation of the Amalgamation and the satisfaction of certain escrow release conditions, the 8.125% Senior Notes were assumed by Level 3 Financing (the “Notes Assumption”), and the funds were released from the escrow account. The net proceeds from the 8.125% Senior Notes were used to refinance certain existing indebtedness of Global Crossing in connection with the closing of the Amalgamation and for general corporate purposes.
 
As a result of the Amalgamation, the Company issued approximately 88.53 million shares, adjusted for the 1 for 15 reverse stock split on October 19, 2011, of Level 3 common stock to former holders of Global Crossing common shares and Global Crossing’s 2% cumulative senior convertible preferred stock, and Level 3 caused the refinancing of approximately $1.36 billion of Global Crossing's outstanding consolidated debt. Approximately $430 million of Global Crossing (UK) Finance PLC Senior Secured notes due 2014 were redeemed on November 3, 2011 at the current redemption premiums outlined in its indenture dated December 23, 2004. The entire aggregate principal amount of the $750 million of Global Crossing Limited’s outstanding 12% senior notes due 2015 and all of the outstanding $150 million of 9% senior notes due 2019 were also redeemed in early November 2011. Of the outstanding principal of each of the Global Crossing Limited senior notes, 35 percent was first redeemed on November 3, 2011 as a result of a qualified “Equity Offering” (as defined under the indentures relating to each issue of the Global Crossing Limited senior notes) to its new corporate parent. The remaining 65 percent of the outstanding principal of each issue of the Global Crossing senior notes were redeemed subsequently on November 4, 2011 at “make-whole” prices calculated using the rate of the comparable U.S. Treasury security plus 50 basis points. The shares of Global Crossing Common Stock, which previously traded under the symbol “GLBC,” ceased trading on the NASDAQ Global Select Market (“NASDAQ”) before the open of trading on October 4, 2011 and were delisted from NASDAQ as of October 5, 2011.

Based on (i) the number of Level 3 shares issued (88.53 million as adjusted for the 1 for 15 reverse stock split completed on October 19, 2011), (ii) the closing stock price of Level 3 common stock as of October 3, 2011 ($21.15 as adjusted for the 1 for 15 reverse stock split completed on October 19, 2011), and (iii) the debt of Global Crossing refinanced ($1.36 billion), the Company estimates the that the aggregate consideration for acquisition accounting approximated $3.23 billion. The restricted stock units covering Global Crossing common shares settled for Level 3 shares of common stock were reduced in settlement of employee income and payroll tax withholding obligations and the corresponding amounts were paid in cash. The premium paid by Level 3 in this transaction is attributable to strategic benefits, including a significantly expanded IP/optical network with global reach including South America, Asia and the Pacific, improved credit profile and reduced financial leverage attributed to enhanced financial and operation scale, and opportunity for investment and network expansion. The combined business will have a comprehensive portfolio of voice, video, and data services, which will operate on a unique global services platform anchored by fiber optic networks in North America, Europe, and Latin America. The goodwill associated with this transaction is not expected to be deductible for income tax purposes.

The combined results of operations of Level 3 and Global Crossing will be included in the Company's consolidated results of operations beginning in October 2011. The assets acquired and liabilities assumed of Global Crossing will be recognized at their acquisition date fair value. The purchase price consideration and allocation of acquired assets (and the related estimated lives of depreciable tangible and identifiable intangible assets) and assumed liabilities, including the assignment of goodwill to reporting units, will require extensive analysis and is expected to be completed no later than October 4, 2012. The following is a preliminary allocation of purchase price based on information currently available. The final identification of all the intangible assets acquired and determination of the purchase price allocation may be significantly different from the preliminary allocation reflected below.

 
Initial Purchase Price Allocation
 
(dollars in millions)
Assets:
 
  Cash, cash equivalents, and restricted cash
$
236

  Property, plant, and equipment, net
3,119

  Goodwill
509

  Identifiable intangibles
300

  Other Assets
520

Total Assets
4,684

 
 
Liabilities:
 
  Long-term debt
(1,554
)
  Other Liabilities
(1,176
)
Total Liabilities
(2,730
)
Total Estimated Equity Consideration
$
1,954


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

 
Three Months Ended
Nine Months Ended
 
September 30, 2011
September 30, 2010
September 30, 2011
September 30, 2010
Total Revenue
$
1,630

$
1,545

$
4,815

$
4,612

Net Loss
(293
)
(198
)
(799
)
(868
)


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

Acquisition related costs include transaction costs such as legal, accounting, valuation, and other professional services. Level 3 expects to incur approximately $52 million of total acquisition related transaction costs, of which approximately $20 million had been incurred through September 30, 2011. In addition, Level 3 expects to incur approximately $200 million to $225 million of integration costs. However, the ultimate costs incurred may vary from these estimates.

In connection with this transaction, Level 3 signed a voting agreement and stockholder rights agreement with a subsidiary of Singapore Technologies Telemedia, STT Crossing Ltd.(“STT Crossing ”), the company that owned approximately 60 percent of Global Crossing's voting stock prior to the amalgamation, whereby ST Crossing voted in favor of the transaction and was granted the right to designate three members to the Level 3 Board of Directors.

Level 3 also adopted a Stockholder Rights Plan to protect its U.S. federal net operating losses from certain Internal Revenue Code Section 382 restrictions.  This plan was designed to deter trading that would result in a change of control (as defined in that Code Section), and therefore protect the Company's ability to use its historical federal net operating losses in the future.


Loss Per Share
Loss Per Share
Loss Per Share
 
The Company computes basic net loss per share by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period and includes the dilutive effect of common stock that would be issued assuming conversion or exercise of outstanding convertible notes, stock options, stock based compensation awards and other dilutive securities. No such items were included in the computation of diluted loss per share for the three and nine months ended September 30, 2011 and 2010 because the Company incurred a net loss in each of these periods and the effect of inclusion would have been anti-dilutive.

Effective after the close of trading on October 19, 2011, the Company completed a 1 for 15 reverse stock split (see Note 1 - Summary of Significant Accounting Policies). All per share and share data is presented herein on a split adjusted basis. The effect of approximately 47 million and 51 million shares issuable pursuant to the various series of convertible notes outstanding at September 30, 2011 and 2010, respectively, have not been included in the computation of diluted loss per share because their inclusion would have been anti-dilutive to the computation. In addition, the effect of the approximately 3 million outperform stock options, restricted stock units and warrants outstanding at September 30, 2011 and 2010 have not been included in the computation of diluted loss per share because their inclusion would have been anti-dilutive to the computation.

Goodwill
Goodwill
Goodwill
 
The changes in the carrying amount of goodwill during the nine months ended September 30, 2011 are as follows (in millions):
 
 
Communications
Segment
 
Coal
Mining
Segment
 
Total
Balance at December 31, 2010
$
1,427

—

$
—

 
$
1,427

Effect of foreign currency rate change
1

—

—

 
1

Balance at September 30, 2011
$
1,428

 
$
—

 
$
1,428


 
Effective January 1, 2011, the Company adopted new accounting guidance that requires entities with goodwill assigned to reporting units with negative carrying value to perform an allocated fair value test of goodwill impairment if certain qualitative factors indicate that such goodwill could be impaired.  Based on its qualitative assessment as of January 1, 2011, the Company determined the test was not required. Furthermore, there were no events or changes in circumstances during the first nine months of 2011 that indicated the carrying value of goodwill may not be recoverable.
Acquired Intangible Assets
Acquired Intangible Assets
Acquired Intangible Assets
 
Identifiable acquisition-related intangible assets as of September 30, 2011 and December 31, 2010 were as follows (in millions):
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
September 30, 2011
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(549
)
 
$
194

Patents and Developed Technology
140

 
(86
)
 
54

 
883

 
(635
)
 
248

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(635
)
 
$
300

December 31, 2010
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(488
)
 
$
255

Patents and Developed Technology
140

 
(76
)
 
64

 
883

 
(564
)
 
319

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(564
)
 
$
371


 
During the third quarter of 2010, the Company determined that the useful life of certain customer relationships and developed technology should be reduced based on adverse economic conditions affecting customer attrition associated with these assets, which prospectively increased amortization expense by approximately $3 million during the nine months ended September 30, 2011.
 
The gross carrying amount of identifiable acquisition-related intangible assets in the table above is subject to change due to foreign currency fluctuations, as a portion of the Company’s identifiable acquisition-related intangible assets are related to foreign subsidiaries.
 
Acquired finite-lived intangible asset amortization expense was $23 million and $72 million for the three and nine months ended September 30, 2011 and $24 million and $70 million for the three and nine months ended September 30, 2010.

As of September 30, 2011, estimated amortization expense for the Company’s finite-lived acquisition-related intangible assets over the next five years and thereafter is as follows (in millions):
 
2011 (remaining three months)
$
22

2012
69

2013
51

2014
39

2015
28

2016
21

Thereafter
18

 
$
248



Fair Value of Financial Instruments
Fair Value of Financial Instruments
Fair Value of Financial Instruments
 
The Company’s financial instruments consist of cash and cash equivalents, restricted cash and securities, accounts receivable, accounts payable, interest rate swaps and long-term debt (including the current portion) as of September 30, 2011 and December 31, 2010. The Company also had embedded derivative contracts included in its financial position as of December 31, 2010. The carrying values of cash and cash equivalents, restricted cash and securities, accounts receivable and accounts payable approximated their fair values at September 30, 2011 and December 31, 2010. The interest rate swaps and embedded derivative contracts are recorded in the consolidated balance sheets at fair value. See Note 7 — Derivative Financial Instruments. The carrying value of the Company’s long-term debt, including the current portion, reflects the original amounts borrowed net of unamortized discounts, premiums and debt discounts and was $7.7 billion as of September 30, 2011 and $6.4 billion as of December 31, 2010.
 
GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
 
Fair Value Hierarchy
 
GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value measurement of each class of assets and liabilities is dependent upon its categorization within the fair value hierarchy, based upon the lowest level of input that is significant to the fair value measurement of each class of asset and liability. GAAP establishes three levels of inputs that may be used to measure fair value:
 
Level 1—Quoted prices in active markets for identical assets or liabilities.
 
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
 
Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The table below presents the fair values for each class of Level 3’s liabilities measured on a recurring basis as well as the input levels used to determine these fair values as of September 30, 2011 and December 31, 2010:
 
 
 
 
 
 
Fair Value Measurement Using
 
Total
Carrying Value
in Consolidated
Balance Sheet
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
September 30,
2011
 
December 31,
2010
 
September 30,
2011
 
December 31,
2010
 
September 30,
2011
 
December 31,
2010
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
98

 
$
108

 
$
—

 
$
—

 
$
98

 
$
108

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

 
—

 
—

 
—

 
—

 
—

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
98

 
$
108

 
$
—

 
$
—

 
$
98

 
$
108

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Senior Notes
$
4,716

 
$
2,885

 
$
4,405

 
$
2,789

 
$
—

 
$
—

Convertible Notes
1,197

 
1,788

 
556

 
697

 
1,031

 
1,189

Term Loans
1,679

 
1,679

 
1,595

 
1,632

 
—

 
—

Commercial Mortgage
65

 
67

 
—

 
—

 
77

 
79

Capital Leases and Other
28

 
29

 
—

 
—

 
28

 
29

Total Long-term Debt, including the current portion:
$
7,685

 
$
6,448

 
$
6,556

 
$
5,118

 
$
1,136

 
$
1,297


 
The Company does not have any liabilities measured using significant unobservable (Level 3) inputs.
 
Derivatives
 
The interest rate swaps are measured in accordance with the GAAP Fair Value Measurements and Disclosures guidance using discounted cash flow techniques that use observable market inputs, such as LIBOR-based forward yield curves, forward rates, and the specific swap rate stated in each of the swap agreements. The embedded derivative contracts are priced using inputs that are observable in the market, such as the Company’s stock price, risk-free interest rate and other contractual terms of certain of the Company’s convertible senior notes.
 
Senior Notes
 
The estimated fair value of the Company’s Senior Notes approximated $4.4 billion at September 30, 2011 and $2.8 billion at December 31, 2010 based on market prices. The fair value of each instrument was based on the September 30, 2011 and December 31, 2010 trading quotes as provided by large financial institutions that trade in the Company’s securities. The pricing quotes provided by these market participants incorporate spreads to the Treasury curve, security coupon (which ranges from LIBOR plus 3.75% to 11.875%), corporate and security credit ratings, maturity date (ranging from 2014 to 2019) and liquidity, among other security characteristics and relative value at both the borrower entity level and across other securities of similar terms.
 
The 11.875% Senior Notes due 2019 are obligations of the Company and are not guaranteed by its subsidiaries.  The remaining Senior Notes are obligations of Level 3 Financing, Inc. and are fully and unconditionally guaranteed by Level 3 Communications, Inc., and with respect to the 9.375% Senior Notes due 2019, are also fully and unconditionally guaranteed by Level 3 Communications, LLC, which is a first tier, wholly owned subsidiary of Level 3 Financing, Inc.

Convertible Notes
 
The estimated fair value of the Company’s actively traded Convertible Notes, including the 3.5% Convertible Senior Notes due 2012 and the 6.5% Convertible Senior Notes due 2016, approximated $556 million at September 30, 2011.  The estimated fair value of the Company’s actively traded Convertible Notes was $697 million at December 31, 2010, including the two notes above as well as the 5.25% Convertible Senior Notes due 2011, which were redeemed in the first quarter of 2011. The fair value of the Company’s actively traded Convertible Notes is based on the trading quotes as of September 30, 2011 and December 31, 2010 provided by large financial institutions that trade in the Company’s securities. The estimated fair value of the Company’s Convertible Notes that are not actively traded, such as the 7% Convertible Senior Notes due 2015, the 7% Convertible Senior Notes due 2015, Series B, and the 15% Convertible Senior Notes due 2013, approximated $1 billion at September 30, 2011.  A portion of the Company’s 15% Convertible Senior Notes due in 2013 were converted to equity during the third quarter of 2011, as discussed in Note 8 — Long-Term Debt. At December 31, 2010, the estimated fair value of the Company’s Convertible Notes that are not actively traded included the above notes and the 9% Convertible Senior Discount Notes due 2013, which were redeemed in the first quarter of 2011, was $1.2 billion.  To estimate the fair value of the Convertible Notes that are not actively traded, Level 3 used a Black-Scholes valuation model and an income approach using discounted cash flows. The most significant inputs affecting the valuation are the pricing quotes provided by market participants that incorporate spreads to the Treasury curve, security coupon (ranging from 7% to 15%), convertible optionality, corporate and security credit ratings, maturity date (ranging from 2013 to 2015), liquidity, and other equity option inputs, such as the risk-free rate, underlying stock price, strike price of the embedded derivative, estimated volatility and maturity inputs for the option component and for the bond component, among other security characteristics and relative value at both the borrower entity level and across other securities with similar terms. The fair value of each instrument is obtained by adding together the value derived by discounting the security’s coupon or interest payment using a risk-adjusted discount rate and the value calculated from the embedded equity option based on the estimated volatility of the Company’s stock price, conversion rate of the particular Convertible Note, remaining time to maturity, and risk-free rate.
 
The Convertible Notes are unsecured obligations of Level 3 Communications, Inc.  No subsidiary of Level 3 Communications, Inc. has provided a guarantee of the Convertible Notes.
 
Term Loans
 
The fair value of the Term Loans was approximately $1.6 billion at September 30, 2011 and December 31, 2010, respectively.  The fair value of each loan is based on the September 30, 2011 and December 31, 2010 trading quotes as provided by large financial institutions that trade in the Company’s Term Loans. The pricing quotes provided by these market participants incorporate LIBOR curve expectations, interest spread, which is LIBOR plus 2.25% for the $1.4 billion Tranche A Term Loan (aggregate principal value) and LIBOR plus 8.5% for the $280 million Tranche B Term Loan (aggregate principal value), LIBOR floor (only applicable to the Tranche B Term Loan at 3.0% minimum), corporate and loan credit ratings, maturity date (March 2014) and liquidity, among other loan characteristics and relative value across other instruments of similar terms.
 
The Term Loans are secured by a pledge of the equity interests in certain domestic subsidiaries of Level 3 Financing, Inc. and 65% of the equity interest in Level 3 Financing, Inc.’s Canadian subsidiary and liens on the assets of Level 3 Communications, Inc. and certain domestic subsidiaries of Level 3 Financing, Inc.  In addition, Level 3 Communications, Inc. and certain domestic subsidiaries of Level 3 Financing, Inc. have provided full and unconditional guarantees of the obligations under the Term Loans.
 
Commercial Mortgage
 
The fair value of the Commercial Mortgage was approximately $77 million and $79 million at September 30, 2011 and December 31, 2010, respectively, as compared to the carrying amounts of $65 million and $67 million, respectively.  The Commercial Mortgage is not actively traded and its fair value is estimated by management using a valuation model based on an income approach.  The significant inputs used to estimate fair value of this debt instrument using discounted cash flows include the anticipated scheduled mortgage payments and observable market yields on other actively traded debt of similar characteristics and collateral type.
 
The Commercial Mortgage is a secured obligation of HQ Realty, Inc., a wholly owned subsidiary of the Company.  HQ Realty, Inc.’s obligations under the Commercial Mortgage are secured by a first priority lien on the Company’s headquarters campus located at 1025 Eldorado Boulevard, Broomfield, Colorado 80021 and certain HQ Realty, Inc. cash and reserve accounts.
 
The assets of HQ Realty, Inc. are not available to satisfy any third party obligations other than those of HQ Realty, Inc. In addition, the assets of the Company and its subsidiaries other than HQ Realty, Inc. are not available to satisfy the obligations of HQ Realty, Inc.

Derivative Financial Instruments
Derivative Financial Instruments
Derivative Financial Instruments
 
The Company uses derivative financial instruments, primarily interest rate swaps, to manage its exposure to fluctuations in interest rate movements. The Company’s primary objective in managing interest rate risk is to decrease the volatility of its earnings and cash flows affected by changes in the underlying rates. To achieve this objective, the Company enters into financial derivatives, primarily interest rate swap agreements, the values of which change in the opposite direction of the anticipated future cash flows.  The Company has floating rate long-term debt (see Note 8 — Long-Term Debt). These obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense also decreases. The Company has designated its interest rate swap agreements as cash flow hedges. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the lives of the agreements without exchange of the underlying notional amount. The change in the fair value of the interest rate swap agreements is reflected in Accumulated Other Comprehensive Income (Loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings, due to the fact that the interest rate swap agreements qualify as effective cash flow hedges. The Company does not use derivative financial instruments for speculative purposes.
 
In March 2007, Level 3 Financing Inc., the Company’s wholly owned subsidiary, entered into two interest rate swap agreements to hedge the interest payments on $1 billion notional amount of floating rate debt. The two interest rate swap agreements are with different counterparties and are for $500 million each. The transactions were effective beginning in April 2007 and mature in January 2014. The Company uses interest rate swaps to convert specific variable rate debt issuances into fixed rate debt.  Under the terms of the interest rate swap transactions, the Company receives interest payments based on rolling three month LIBOR terms and pays interest at the fixed rate of 4.93% under one arrangement and 4.92% under the other.  The Company evaluates the effectiveness of the hedges on a quarterly basis. The Company measures effectiveness by offsetting the change in the variable portion of the interest rate swaps with the changes in interest expense paid due to fluctuations in the LIBOR-based interest rate. During the periods presented, these derivatives were used to hedge the variable cash flows associated with existing obligations. The Company recognizes any ineffective portion of the change in fair value of the hedged item in the consolidated statements of operations. All components of the interest rate swaps were included in the assessment of hedge effectiveness. Hedge ineffectiveness for the Company’s cash flow hedges was not material in any period presented.
 
The Company also has certain equity conversion rights associated with debt instruments, which are not designated as hedging instruments, but are considered derivative instruments.  The Company’s primary objective associated with including such conversion rights in certain of its debt instruments is to reduce the contractual interest rate and related current cash borrowing cost of the debt instruments. The Company did not have a remaining liability associated with its equity conversion rights as of June 30, 2010.  As a result of the September 2010 issuance of $175 million of 6.5% Convertible Senior Notes due in 2016, the Company did not have a sufficient number of authorized and unissued common shares available to settle all of the equity conversion rights and make-whole premiums associated with its convertible debt. Certain of these derivative instruments were classified as liabilities at December 31, 2010 due to a potential requirement to settle the conversion rights in cash as a result of the Company not having a sufficient number of authorized and unissued shares of common stock to cover all potentially convertible shares, for which the conversion rights were carried at fair value. The fair value of the embedded derivative liability at December 31, 2010 was not significant. As a result of the exchange and redemption of the Company’s outstanding 9% Convertible Senior Discount Notes due 2013 and 5.25% Convertible Senior Notes due 2011, the fair value of these derivative instruments, which was insignificant, was reclassified into stockholders’ equity during the first quarter of 2011, as the Company had sufficient authorized and unissued shares of common stock available to settle all of the potential conversion rights.  Due to the timing between the Company's annual grant of stock based compensation on July 1, 2011 and the partial conversion of the Company's 15% Convertible Senior Discount Notes due 2013 on July 15, 2011, the Company had an insignificant amount of activity associated with its embedded derivatives during the three months ended September 30, 2011. The Company has recognized the gains or losses from changes in fair values of these derivative instruments in other income (expense) in the consolidated statements of operations.  As the Company was no longer required to recognize a liability for the equity conversion rights associated with its debt instruments during the first quarter 2011, Level 3 did not have any gains or losses reflected in its operating results for the three and nine months ended September 30, 2011. Changes in these derivatives resulted in the Company recognizing no gain and a $10 million gain during the three and nine months ended September 30, 2010.
 
The Company is exposed to credit related losses in the event of non-performance by counterparties. The counterparties to any of the financial derivatives the Company enters into are major institutions with investment grade credit ratings. The Company evaluates counterparty credit risk before entering into any hedge transaction and continues to closely monitor the financial market and the risk that its counterparties will default on their obligations. This credit risk is generally limited to the unrealized gains in such contracts, should any of these counterparties fail to perform as contracted.
 
Amounts accumulated in AOCI related to derivatives are indirectly recognized in earnings as periodic settlements occur throughout the term of the swaps, when the related interest payments are made on the Company’s variable-rate debt. As of September 30, 2011, the Company had the following outstanding derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative
 
Number of
Instruments
 
Notional
(in Millions)
Interest rate swaps
 
Two
 
$
1,000

 
 
 
 
 

 
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as follows (in millions):
 
 
 
Liability Derivatives
 
 
September 30, 2011
 
December 31, 2010
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
98

 
Other noncurrent liabilities
 
$
108

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
September 30, 2011
 
December 31, 2010
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Embedded equity conversion rights
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
—


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

 
 

Three months ended September 30,
 
$
2

 
$
(9
)
Nine months ended September 30,
 
$
10

 
$
(30
)

 
The amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions) consists of the following (in millions):
 
Derivatives designated as hedging instruments
 
Income Statement Location
 
2011
 
2010
Cash flow hedging contracts:
 
 
 
 

 
 

Three months ended September 30,
 
Interest Expense
 
$
(12
)
 
$
(11
)
Nine months ended September 30,
 
Interest Expense
 
$
(35
)
 
$
(34
)

 
Changes in the fair value of interest rate swaps designated as hedging instruments of the variability of cash flows associated with floating-rate, long-term debt obligations are reported in AOCI. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged debt obligation in the same period in which the related interest on the floating-rate debt obligations affects earnings.  Amounts currently included in AOCI will be reclassified to earnings prior to the settlement of these cash flow hedging contracts in 2014.  The Company estimates that $47 million of net losses on the interest rate swaps (based on the estimated LIBOR curve as of September 30, 2011) will be reclassified into earnings within the next twelve months. The Company’s interest rate swap agreements designated as cash flow hedging contracts qualify as effective hedge relationships, and as a result, hedge ineffectiveness was not material in any of the periods presented.
 
The effect of the Company’s derivatives not designated as hedging instruments on net loss is as follows (in millions):
 
Derivatives not designated as
hedging instruments
 
Location of Gain Recognized in
Income/Loss on Derivative
 
 
 
 
 
 
2011
 
2010
Embedded equity conversion rights:
 
 
 
 

 
 

Three months ended September 30,
 
Other Income (Expense)—Other, net
 
$
—

 
$
—

Nine months ended September 30,
 
Other Income (Expense)—Other, net
 
$
—

 
$
10


 
Long-Term Debt
Long-Term Debt
Long-Term Debt
 
As of September 30, 2011 and December 31, 2010, long-term debt was as follows:
(dollars in millions)
 
September 30,
2011
 
December 31,
2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
 
$
1,680

 
$
1,680

Senior Notes due 2014 (9.25%)
 
807

 
1,250

Floating Rate Senior Notes due 2015 (4.2018% as of September 30, 2011 and 4.344% as of December 31, 2010)
 
300

 
300

Senior Notes due 2017 (8.75%)
 
700

 
700

Senior Notes due 2018 (10.0%)
 
640

 
640

Senior Notes due 2019 (11.875%)
 
605

 
—

Senior Notes due 2019 (9.375%)
 
500

 
—

Senior Notes due 2019 (8.125%)
 
1,200

 
—

Convertible Senior Notes due 2011 (5.25%)
 
—

 
196

Convertible Senior Notes due 2012 (3.5%)
 
274

 
294

Convertible Senior Notes due 2013 (15.0%)
 
272

 
400

Convertible Senior Discount Notes due 2013 (9.0%)
 
—

 
295

Convertible Senior Notes due 2015 (7.0%)
 
200

 
200

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

 
275

Convertible Senior Notes due 2016 (6.5%)
 
201

 
201

Commercial Mortgage due 2015 (9.86%)
 
65

 
67

Capital Leases
 
28

 
29

Total Debt Obligations
 
7,747

 
6,527

Unamortized (Discount) Premium:
 
 

 
 

Discount on Senior Secured Term Loan due 2014
 
(1
)
 
(1
)
Premium on Senior Notes due 2014 (9.25%)
 
4

 
7

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

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

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

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

 
(20
)
Discount on Convertible Senior Notes due 2012 (3.5%)
 
(14
)
 
(29
)
Discount on Convertible Senior Notes due 2015 (7.0%)
 
(3
)
 
(3
)
Discount due to embedded derivative contracts
 
(9
)
 
(21
)
Total Unamortized (Discount) Premium
 
(62
)
 
(79
)
Carrying Value of Debt
 
7,685

 
6,448

Less current portion
 
(265
)
 
(180
)
Long-term Debt, less current portion
 
$
7,420

 
$
6,268


 
Approximately $274 million of the Company’s 3.5% Convertible Senior Notes due 2012 have been reclassified into the current portion of long-term debt based on the contractual maturity date in June 2012.
 
2011 Debt Issuance and Related Redemptions
 
8.125% Senior Notes Due 2019
 
In June 2011, Level 3 Escrow, Inc. (“Level 3 Escrow”), an indirect, wholly owned subsidiary of Level 3 Communications, Inc., issued $600 million in aggregate principal amount of its 8.125% Senior Notes due 2019 (the “8.125% Senior Notes”). Level 3 Escrow issued the 8.125% Senior Notes due 2019 to investors at a price of 99.264% of their principal amount. The debt issuance discount of approximately $4 million was reflected as a reduction in long-term debt and was being amortized as interest expense over the beginning initial term of the 8.125% Senior Notes using the effective interest method. As a result of certain conditions that could have required Level 3 Escrow to redeem the notes on or before April 10, 2012, discussed further below, the initial term of the 8.125% Senior Notes was deemed to be through April 2012. When the contingency was resolved, the Company reclassified these notes into long-term debt as of September 30, 2011 and the remaining related debt issue discount will be amortized as interest expense over the remaining term of the 8.125% Senior Notes. The 8.125% Senior Notes will mature on July 1, 2019 and are not currently guaranteed by any of the Company’s subsidiaries. Interest on the notes accrues at 8.125% per year and is payable on January 1 and July 1, beginning on January 1, 2012.

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

The 8.125% Senior Notes will be subject to redemption at the option of Level 3 Financing, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days’ prior notice, (i) prior to July 1, 2015, at 100% of the principal amount of 8.125% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on and after April 1, 2015, at the redemption prices set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, if redeemed during the twelve months beginning April 1, of the years indicated below:
 
Year
Redemption
Price
2015
104.063
%
2016
102.031
%
2017
100.000
%
    
At any time or from time to time after the Notes Assumption and on or prior to April 1, 2014, up to 35% of the original aggregate principal amount of the 8.125% Senior Notes may be redeemed at a redemption price equal to 108.125% of the principal amount of the 8.125% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including the redemption date, with the net cash proceeds contributed from one or more private placements of Level 3 or underwritten public offerings of common stock of Level 3 resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 65% of the original aggregate principal amount of the 8.125% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.

    
The offering of the 8.125% Senior Notes was not registered under the Securities Act of 1933, as amended, and the 8.125% Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  The 8.125% Senior Notes were sold to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended, and non-U.S. persons outside the United States under Regulation S under the Securities Act of 1933, as amended.

In connection with the offering of the 8.125% Senior Notes, the Company entered into registration rights agreements pursuant to which Level 3 agreed to file a registration statement to exchange the offered notes with new notes that are substantially identical in all material respects, and to use commercially reasonable efforts to cause the registration statement to be declared effective no later than 270 days after October 4, 2011. The maximum consideration that could be transferred to the initial purchasers pursuant to the registration rights agreement in the event of a Registration Default, as defined, is special interest on the principal amount of the Senior Notes not to exceed 1% per annum.


9.375% Senior Notes Due 2019
 
On March 4, 2011, the Company’s wholly owned subsidiary, Level 3 Financing, Inc. (“Level 3 Financing”) issued $500 million aggregate principal amount of its 9.375% Senior Notes due 2019 (the “9.375% Senior Notes”) at a price of 98.001% of their principal amount. The net proceeds from the offering, were used to redeem a portion of Level 3 Financing’s outstanding 9.25% Senior Notes due 2014 on April 4, 2011. The debt issuance discount of approximately $10 million is reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 9.375% Senior Notes using the effective interest method.  The 9.375% Senior Notes are senior unsecured obligations of Level 3 Financing, ranking equal in right of payment with all other senior unsecured obligations of Level 3 Financing. Level 3 has guaranteed the 9.375% Senior Notes. The 9.375% Senior Notes will mature on April 1, 2019. Interest on the Notes will be payable on April 1 and October 1 of each year, beginning on October 1, 2011.
 
Debt issuance costs of approximately $11 million were capitalized and are being amortized over the term of the 9.375% Senior Notes using the effective interest rate method.
 
The 9.375% Senior Notes Due 2019 are subject to redemption at the option of Level 3 Financing in whole or in part, at any time or from time to time, prior to April 1, 2015, at 100% of the principal amount of 9.375% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on or after April 1, 2015 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning April 1, of the years indicated below:
 
Year
Redemption
Price
2015
104.688
%
2016
102.344
%
2017
100.000
%
 
At any time or from time to time on or prior to April 1, 2014, Level 3 Financing may redeem up to 35% of the original aggregate principal amount of the 9.375% Senior Notes at a redemption price equal to 109.375% of the principal amount of the 9.375% Senior Notes so redeemed, plus accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, with the net cash proceeds contributed to the capital of Level 3 Financing from one or more private placements or underwritten public offerings of common stock of Level 3 resulting, in each case, in gross proceeds of at least $100 million in the aggregate. However, at least 65% of the original aggregate principal amount of the 9.375% Senior Notes must remain outstanding immediately after giving effect to such redemption. Any such redemption shall be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days’ prior notice.

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


11.875% Senior Notes Due 2019
 
In January 2011, in two separate transactions, Level 3 Communications, Inc. issued a total of $605 million aggregate principal amount of its 11.875% Senior Notes due 2019 (“11.875% Senior Notes”). The Company issued a portion of its 11.875% Senior Notes due 2019 to investors at a price of 98.173% of their principal amount. The net proceeds from the issuance of the 11.875% Senior Notes due 2019, which included an $11 million debt issuance discount, were used to redeem the Company’s 5.25% Convertible Senior Notes due 2011 and exchange the 9% Convertible Senior Discount Notes due 2013 during the first quarter of 2011.  The net discount of approximately $11 million is reflected as a reduction in long-term debt and is being amortized as interest expense over the term of the 11.875% Senior Notes using the effective interest method.  The 11.875% Senior Notes will mature on February 1, 2019 and are not guaranteed by the Company’s subsidiaries. Interest on the notes accrues at 11.875% per year and is payable on April 1 and October 1 of each year, beginning April 1, 2011.
 
Debt issuance costs of approximately $8 million were capitalized and are being amortized over the term of the 11.875% Senior Notes using the effective interest rate method.
 
The 11.875% Senior Notes are subject to redemption at the option of Level 3 Communications, Inc. in whole or in part, at any time or from time to time, prior to February 1, 2015, at 100% of the principal amount of 11.875% Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date, and on or after April 1, 2015 at the redemption prices (expressed as a percentage of principal amount) set forth below, plus accrued and unpaid interest thereon to the redemption date, if redeemed during the twelve months beginning February 1, of the years indicated below:
 
Year
Redemption
Price
2015
105.938
%
2016
102.969
%
2017
100.000
%

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

The offering of the 11.875% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement. In July 2011, all of the originally placed notes were exchanged for a new issue of 11.875% Senior Notes due 2019 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable. 

 
2011 Debt Redemptions, Exchanges, and Conversions
 
In August 2011, the Company repurchased approximately $20 million of its 3.5% Convertible Senior Notes due 2012 at a price of 98.875% of the principal amount. The Company recognized a loss on extinguishment of less than $1 million in the third quarter of 2011 associated with the repurchase of the 3.5% Convertible Senior Notes due 2012.

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

In April 2011, in connection with the issuance of the 9.375% Senior Notes due 2019, together with cash on hand, the Company redeemed approximately $443 million aggregate principal amount of its 9.25% Senior Notes due 2014 at a price of 104.625% of the principal amount.  The Company recognized a loss on extinguishment of the portion of the aggregate principal amount of its 9.25% Senior Notes due 2014 retired of approximately $23 million in the second quarter of 2011.
 
In the first quarter of 2011, in connection with the issuance of the 11.875% Senior Notes due 2019, the Company redeemed the outstanding $196 million aggregate principal amount of 5.25% Convertible Senior Notes due 2011 at a price of 100.75% of the principal amount and exchanged the outstanding $295 million aggregate principal amount of 9% Convertible Senior Discount Notes due 2013. The Company recognized a loss of $20 million in the first quarter as a result of the redemption of the 5.25% Convertible Senior Notes due 2011 and the exchange of the 9% Convertible Senior Discount Notes due 2013.
 
2010 Debt Issuances
 
6.5% Convertible Senior Notes Due 2016
 
During the third quarter of 2010, the Company issued $175 million aggregate principal amount of its 6.5% Convertible Senior Notes due 2016 (the “6.5% Convertible Senior Notes”). The net proceeds from the issuance of the 6.5% Convertible Senior Notes were approximately $170 million after deducting debt issuance costs. In connection with the issuance of the Company’s 6.5% Convertible Senior Notes, the Company granted an overallotment option to the underwriters to purchase up to an additional $26 million aggregate principal amount of these notes less the underwriting discount. The underwriters exercised the overallotment option in full during the fourth quarter of 2010, and the Company received net proceeds of approximately $25.5 million, after deducting underwriting discounts and commissions. The 6.5% Convertible Senior Notes will mature on October 1, 2016 and have an interest rate of 6.5% per annum with interest payable semiannually on April 1 and October 1, beginning April 1, 2011.
 
Debt issuance costs of approximately $6 million were capitalized and are being amortized over the term of the 6.5% Convertible Senior Notes using the effective interest rate method.
 
10% Senior Notes Due 2018
 
During the first quarter of 2010, Level 3 Financing, Inc. issued $640 million in aggregate principal amount of its 10% Senior Notes due 2018 (the “10% Senior Notes”) in a private offering. The net proceeds from the issuance of the 10% Senior Notes were $613 million after deducting a $13 million discount and approximately $14 million of debt issuance costs. The net proceeds were used to fund Level 3 Financing, Inc.’s purchase of its 12.25% Senior Notes due 2013 (the “12.25% Senior Notes”) in a concurrent tender offer and consent solicitation. The 10% Senior Notes will mature on February 1, 2018 and are guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC (see Note 13—Condensed Consolidating Financial Information). Interest on the notes accrues at 10% per year and is payable on February 1 and August 1 of each year, beginning August 1, 2010.
 
The offering of the 10% Senior Notes was not originally registered under the Securities Act of 1933, as amended, and included a registration rights agreement.  In June 2010, all of the originally placed notes were exchanged for a new issue of 10% Senior Notes due 2018 with identical terms and conditions, other than those related to registration rights, in a registered exchange offer and are now freely tradeable.
 
2010 Tender Offer
 
In the first quarter of 2010, Level 3 Financing, Inc. commenced a tender offer to purchase for cash any and all of the outstanding $550 million aggregate principal amount of its 12.25% Senior Notes for a price equal to $1,080 per $1,000 principal amount of the notes, which included $1,050 as the tender offer consideration and $30 as a consent payment (the “12.25% Tender Offer”). In connection with the 12.25% Tender Offer, Level 3 and Level 3 Financing, Inc. solicited consents to certain proposed amendments to the indenture governing the 12.25% Senior Notes to eliminate substantially all of the covenants, certain repurchase rights and certain events of default and related provisions contained in the indenture.
 
Holders of the 12.25% Senior Notes, representing approximately 99.4% of the aggregate principal amount of the outstanding 12.25% Senior Notes, participated in the tender offer. At the expiration of the tender offer, an aggregate principal amount of approximately $547 million of notes had been tendered. The Company redeemed in full the remaining $3 million aggregate principal of the 12.25% Senior Notes, at a redemption price equal to 106.125% of the principal amount thereof, plus accrued and unpaid interest.
 
The Company recognized a loss associated with the 12.25% Tender Offer of approximately $55 million.
 
2010 Debt Repayments and Repurchases
 
In the third quarter of 2010, the Company repaid the $38 million aggregate principal amount of its 2.875% Convertible Senior Notes due 2010 that matured on July 15, 2010.
 
In the second quarter of 2010, the Company redeemed all of the outstanding $172 million aggregate principal amount of its 10% Convertible Senior Notes due 2011 for a price equal to $1,016.70 per $1,000 principal amount of the notes plus accrued and unpaid interest up to, but not including the redemption date.  The Company used cash on hand to fund the redemption of these notes and recognized a loss on extinguishment of approximately $4 million.
 
In the first quarter of 2010, the Company repaid $111 million aggregate principal amount of its 6% Convertible Subordinated Notes due 2010 that matured on March 15, 2010.  In addition, in various transactions during the first quarter of 2010, the Company repurchased $3 million in aggregate principal amount of 5.25% Convertible Senior Notes due 2011, the remaining $3 million of its 10.75% Senior Notes due 2011, and $2 million aggregate principal amount of 2.875% Convertible Senior Notes due 2010.  Repurchases were made at prices to par ranging from 95% to 100%, and the Company recognized a net loss on these repurchases of less than $1 million.
 
Long-Term Debt Maturities
 
Aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) were as follows as of September 30, 2011 (in millions):
 
2011 (remaining three months)
$
1

2012
279

2013
278

2014
2,494

2015
832

2016
201

Thereafter
3,662

 
$
7,747



See Note 14 - Subsequent Events for additional information.

Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
 
The following table summarizes non-cash compensation expense and capitalized non-cash compensation for the three and nine months ended September 30, 2011 and 2010 (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
OSO
$
3

 
$
2

 
$
7

 
$
8

Restricted Stock Units and Shares
11

 
6

 
18

 
14

401(k) Match Expense
3

 
3

 
10

 
9

Restricted Stock Unit Bonus Grant
9

 
9

 
33

 
19

 
26

 
20

 
68

 
50

Capitalized Noncash Compensation
—

 
—

 
—

 
—

 
$
26

 
$
20

 
$
68

 
$
50


 
The Company capitalizes non-cash compensation for those employees directly involved in the construction of the network, installation of services for customers or development of business support systems. As of September 30, 2011, there were approximately 1 million outperform stock option appreciation units (“OSOs”) outstanding.  As of September 30, 2011, there were approximately 2 million nonvested restricted stock and restricted stock units (“RSUs”) outstanding.
 
During the first quarter of 2010, the Company revised the eligibility criteria and grant schedule for its non-cash compensation.  Effective April 1, 2010, the Company’s OSOs are granted quarterly to certain levels of management and its RSUs are granted annually on July 1 to management and certain other eligible employees.  During 2010 and 2011, there were no changes to the vesting schedule, or any other aspects of the Company’s non-cash compensation plans.
Comprehensive Loss
Comprehensive Loss
Comprehensive Loss
 
The components of total comprehensive loss, net of taxes, were as follows (in millions):

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Net loss
$
(207
)
 
$
(163
)
 
$
(593
)
 
$
(570
)
Change in cumulative translation adjustment
(40
)
 
58

 
10

 
(38
)
Change in unrealized holding gain (loss) on interest rate swaps
2

 
(9
)
 
10

 
(30
)
Other, net
14

 
1

 
13

 
1

Comprehensive loss
$
(231
)
 
$
(113
)
 
$
(560
)
 
$
(637
)

 
The components of accumulated other comprehensive loss, net of taxes, were as follows (in millions):
 
 
September 30, 2011
 
December 31, 2010
Cumulative translation adjustment
$
65

 
$
55

Accumulated net unrealized holding gain (loss) on interest rate swaps
(98
)
 
(108
)
Other, net
(32
)
 
(45
)
Accumulated other comprehensive loss
$
(65
)
 
$
(98
)
Segment Information
Segment Information
Segment Information
 
Accounting guidance for the disclosures about segments of an enterprise defines operating segments as components of an enterprise for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company’s operating segments are managed separately and represent separate strategic business units that offer different products or services and serve different markets. The Company’s reportable segments include: communications and coal mining (see Note 1 — Summary of Significant Accounting Policies). Other business interests, which are not reportable segments, include corporate assets and overhead costs that are not attributable to a specific segment.
 
The Company evaluates performance based upon Adjusted EBITDA, as defined by the Company, as net income (loss) from the consolidated statements of operations before (1) income tax benefit (expense), (2) total other income (expense), (3) non-cash impairment charges included within restructuring and impairment charges, (4) depreciation and amortization expense and (5) non-cash stock compensation expense included within selling, general and administrative expenses on the consolidated statements of operations.
 
Segment information for the Company’s Communications and Coal Mining businesses is summarized as follows (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Revenue from external customers:
 

 
 

 
 

 
 

Communications
$
927

 
$
895

 
$
2,754

 
$
2,687

Coal Mining
20

 
17

 
54

 
43

 
$
947

 
$
912

 
$
2,808

 
$
2,730

Adjusted EBITDA:
 

 
 

 
 

 
 

Communications
$
236

 
$
216

 
$
687

 
$
627

Coal Mining
$
2

 
$
2

 
$
2

 
$
—


 
Communications revenue consists of:
 
1)
Core Network Services includes revenue from transport, infrastructure, data, and local and enterprise voice communications services.
 
2)  
Wholesale Voice Services includes revenue from long distance voice services, including domestic voice termination, international voice termination and toll free services.
 
3)
Other Communications Services includes revenue from managed modem and its related reciprocal compensation services and SBC Contract Services, which includes revenue from the SBC Master Services Agreement, which was obtained in the December 2005 acquisition of WilTel.
 
Communications revenue attributable to each of these services is as follows (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Communications Services:
 

 
 

 
 

 
 

Core Network Services Revenue
$
759

 
$
707

 
$
2,232

 
$
2,107

Wholesale Voice Services Revenue
152

 
161

 
467

 
489

Other Communications Revenue
16

 
27

 
55

 
91

Total Communications Revenue
$
927

 
$
895

 
$
2,754

 
$
2,687


 
The following information provides a reconciliation of net loss to Adjusted EBITDA by operating segment, as defined by the Company, for the three and nine months ended September 30, 2011 and 2010 (in millions):
 
Three Months Ended September 30, 2011
Communications
 
Coal
Mining
Net income (loss)
$
(203
)
 
$
1

Income tax expense
6

 
—

Total other expense
204

 
—

Depreciation and amortization expense
203

 
1

Non-cash compensation expense
26

 
—

Adjusted EBITDA
$
236

 
$
2

Total Net Loss for reportable segments
 

 
$
(202
)
Unallocated corporate expense
 

 
(5
)
Consolidated Net Loss
 

 
$
(207
)
 
 
Nine Months Ended September 30, 2011
Communications
 
Coal
Mining
Net loss
$
(582
)
 
$
(1
)
Income tax expense
36

 
—

Total other expense
553

 
—

Depreciation and amortization expense
612

 
3

Non-cash compensation expense
68

 
—

Adjusted EBITDA
$
687

 
$
2

Total Net Loss for reportable segments
 

 
$
(583
)
Unallocated corporate expense
 

 
(10
)
Consolidated Net Loss
 

 
$
(593
)
 
Three Months Ended September 30, 2010
Communications
 
Coal
Mining
Net income (loss)
$
(163
)
 
$
1

Income tax expense
1

 
—

Total other expense
144

 
—

Depreciation and amortization expense
214

 
1

Non-cash compensation expense
20

 
—

Adjusted EBITDA
$
216

 
$
2

Total Net Loss for reportable segments
 

 
$
(162
)
Unallocated corporate income
 

 
(1
)
Consolidated Net Loss
 

 
$
(163
)
 

 
Nine Months Ended September 30, 2010
Communications
 
Coal
Mining
Net loss
$
(565
)
 
$
(2
)
Income tax expense
2

 
—

Total other (income) expense
480

 
(1
)
Depreciation and amortization expense
660

 
3

Non-cash compensation expense
50

 
—

Adjusted EBITDA
$
627

 
$
—

Total Net Loss for reportable segments
 

 
$
(567
)
Unallocated corporate expense
 

 
(3
)
Consolidated Net Loss
 

 
$
(570
)

 
Due to the Amalgamation with Global Crossing completed on October 4, 2011, the Company may need to modify the manner in which components of the Company are evaluated for performance and resource allocation, which in turn, may affect the Company's reportable operating segments in future periods.

Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items
 
Level 3 Communications, Inc. and certain of its subsidiaries (the “companies”) are parties to a number of purported class action lawsuits involving the companies’ right to install fiber optic cable network in railroad right-of-ways adjacent to plaintiffs’ land. The only lawsuit in which a class has been certified against the companies 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. In November 2005, the court granted class certification only for the state of Idaho. The companies have defeated motions for class certification in a number of these actions but expect that plaintiffs in the pending lawsuits will continue to seek certification of statewide or multi-state classes. In general, the companies obtained the rights to construct their networks from railroads, utilities, and others, and have installed their 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 companies’ fiber optic cable networks pass, and that the railroads, utilities, and others who granted the companies the right to construct and maintain their networks 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 companies have 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 companies negotiated a series of class settlements affecting all persons who own or owned land next to or near railroad rights of way in which the companies have installed their fiber optic cable network. 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 companies 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 companies have installed their fiber optic cable network. The companies are currently negotiating certain procedural issues with legal counsel representing the interests of the current and former landowners with respect to presentment of the settlement in applicable jurisdictions. The settlement affecting current and former landowners in the state of Idaho was presented to the United States District Court for the District of Idaho and final approval of the settlement was granted on June 23, 2011.  The settlement has been presented to federal courts in several additional states for approval.
 
It is still too early for the Company to reach a conclusion as to the ultimate outcome of these actions. However, management believes that the companies have substantial defenses to the claims asserted in all of these actions (and any similar claims which may be named in the future), and intends to defend them vigorously if a satisfactory settlement is not ultimately approved for all affected landowners. Additionally, management believes that any resulting liabilities for these actions, beyond amounts reserved, will not materially affect the Company’s financial condition or future results of operations, but could affect future cash flows.
 
In February 2009, Level 3 Communications, Inc., certain of its current officers and a former officer were named as defendants in purported class action lawsuits filed in the United States District Court for the District of Colorado, which have been consolidated as In re Level 3 Communications, Inc. Securities Litigation (Civil Case No. 09-cv-00200-PAB-CBS). The plaintiffs in each complaint allege, in general, that throughout the purported class period specified in the complaint that the defendants failed to disclose material adverse facts about the Company’s integration activities, business and operations. The complaints seek damages based on purported violations of Section 10(b) of the Securities Exchange Act of 1934, Securities and Exchange Commission Rule 10b-5 promulgated thereunder and Section 20(a) of the Securities Exchange Act of 1934. On May 4, 2009, the Court appointed a lead plaintiff in the case, and on September 29, 2009, the lead plaintiff filed a Consolidated Class Action Complaint (the “Complaint”). A motion to dismiss the Complaint was filed by the Company and the other named defendants. While the motion to dismiss the Complaint was pending, the court granted the lead plaintiff’s motion to further amend the Complaint (the “Amended Compliant”). Thereafter, the Company and the other defendants named in the Amended Complaint filed a motion to dismiss the Amended Complaint with prejudice. The court granted this motion to dismiss with prejudice, and the plaintiff has appealed the decision to the Tenth Circuit Court of Appeals.
 
It remains too early for the Company to reach a conclusion as to the ultimate outcome of these actions. However, management believes that the Company has substantial defenses to the claims asserted in all of these actions (and any similar claims which may be named in the future) and intends to defend these actions vigorously.
 
In March 2009, Level 3 Communications, Inc., as a nominal defendant, certain of its directors and its current officers, and a former officer, were named as defendants in purported stockholder derivative actions in the District Court, Broomfield County, Colorado, which have been consolidated as In re Level 3 Communications, Inc. Derivative Litigation (Lead Case No. 2009CV59). On December 11, 2009, Level 3 Communications, Inc., as a nominal defendant, certain of its directors and current officers, and a former officer, were named as defendants in a purported stockholder derivative action in the United States District Court for the District of Colorado in Iron Workers District Council Of Tennessee Valley & Vicinity Pension Plan v. Level 3 Communications, Inc., et. al.(Civil Case No. 09cv02914). The Plaintiffs allege that during the period specified in the complaints the named defendants failed to disclose material adverse facts about the Company’s integration activities, business and operations. The complaints seek damages on behalf of the Company based on purported breaches of fiduciary duties for disseminating false and misleading statements and failing to maintain internal controls; unjust enrichment; abuse of control; gross mismanagement; waste of corporate assets; and, with respect to certain defendants, breach of fiduciary duties in connection with the resignation of Kevin O’Hara. The parties have agreed to a temporary stay of all activities in the state court actions pending the outcome of the motion to dismiss or other relevant time periods in the securities litigation described above. The stay in the federal court action has been lifted and the parties are engaged in the filing of additional pleadings and motions prior to the commencement of discovery.
 
It remains too early for the Company to reach a conclusion as to the ultimate outcome of these derivative actions. However, management believes that the complaints have numerous deficiencies including that each plaintiff failed to make a demand on the Company’s Board of Directors before filing the suit.
 
In March 2009, late April 2009 and early May 2009, Level 3 Communications, Inc., the Level 3 Communications, Inc. 401(k) Plan Committee and certain current and former officers and directors of Level 3 Communications, Inc. were named as defendants in purported class action lawsuits filed in the U.S. District Court for the District of Colorado. These cases have been consolidated as Walter v. Level 3 Communications, Inc., et. al., (Civil Case No. 09cv00658). The complaint alleges breaches of fiduciary and other duties under the Employee Retirement Income Security Act (“ERISA”) with respect to investments in the Company’s common stock held in individual participant accounts in the Level 3 Communications, Inc. 401(k) Plan. The complaint claims that those investments were imprudent for reasons that are similar to those alleged in the securities and derivative actions described above.
 
The parties have reached a settlement in principle and are preparing settlement documents for presentation to the court for approval.  Additionally, management believes that any resulting liabilities for these actions, beyond amounts reserved, will not materially affect the Company’s financial condition or future results of operations or future cash flows.
 
It remains too early for the Company to reach a conclusion as to the ultimate outcome of these ERISA actions. However, management believes that the Company has substantial defenses to the claims asserted in all of these actions (and any similar claims which may be named in the future) and intends to defend these actions vigorously if the settlement is not approved.
 
The Company and its subsidiaries are parties to many other legal proceedings. Management believes that any resulting liabilities for these legal proceedings, beyond amounts reserved, will not materially affect the Company’s financial condition or future results of operations, but could affect future cash flows.
 
Letters of Credit
 
It is customary in Level 3’s industries 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 September 30, 2011 and December 31, 2010, Level 3 had outstanding letters of credit of approximately $22 million, which are collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash. The Company does not believe it is reasonable to estimate the fair value of the letters of credit and does not believe exposure to loss is reasonably possible nor material.
 
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
 
Level 3 Financing, a wholly owned subsidiary of the Company, has issued Senior Notes that are unsecured obligations of Level 3 Financing; however, they are also jointly and severally and fully and unconditionally guaranteed on an unsecured senior basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.  Level 3 Communications, LLC has also provided a guarantee of the 9.375% Senior Notes due 2019, which became registered securities upon the completion of the exchange offer dated July 1, 2011.
 
In conjunction with the registration of the Senior Notes, the accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 “Financial statements of guarantors and affiliates whose securities collateralize an issue registered or being registered.”
 
The operating activities of the separate legal entities included in the Company’s consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.

Condensed Consolidating Statements of Operations
For the three months ended September 30, 2011
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
605

 
$
399

 
$
(57
)
 
$
947

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
222

 
192

 
(54
)
 
360

Depreciation and Amortization
—

 
—

 
102

 
102

 
—

 
204

Selling, General and Administrative
—

 
—

 
328

 
50

 
(3
)
 
375

Total Costs and Expenses
—

 
—

 
652

 
344

 
(57
)
 
939

Operating (Loss) Income
—

 
—

 
(47
)
 
55

 
—

 
8

Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(51
)
 
(99
)
 
—

 
(28
)
 
—

 
(178
)
Interest income (expense) affiliates, net
212

 
350

 
(514
)
 
(48
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(338
)
 
(589
)
 
29

 
—

 
898

 
—

Other, net
(30
)
 
—

 
2

 
(3
)
 
—

 
(31
)
Other Income (Expense)
(207
)
 
(338
)
 
(483
)
 
(79
)
 
898

 
(209
)
(Loss) Income Before Income Taxes
(207
)
 
(338
)
 
(530
)
 
(24
)
 
898

 
(201
)
Income Tax Expense
—

 
—

 
(1
)
 
(5
)
 
—

 
(6
)
Net (Loss) Income
$
(207
)
 
$
(338
)
 
$
(531
)
 
$
(29
)
 
$
898

 
$
(207
)


Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2011
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
1,741

 
$
1,236

 
$
(169
)
 
$
2,808

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
658

 
600

 
(160
)
 
1,098

Depreciation and Amortization
—

 
—

 
309

 
306

 
—

 
615

Selling, General and Administrative
1

 
—

 
941

 
156

 
(9
)
 
1,089

Total Costs and Expenses
1

 
—

 
1,908

 
1,062

 
(169
)
 
2,802

Operating (Loss) Income
(1
)
 
—

 
(167
)
 
174

 
—

 
6

Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(163
)
 
(296
)
 
(2
)
 
(34
)
 
—

 
(495
)
Interest income (expense) affiliates, net
633

 
1,069

 
(1,545
)
 
(157
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,011
)
 
(1,761
)
 
107

 
—

 
2,665

 
—

Other, net
(51
)
 
(23
)
 
8

 
(2
)
 
—

 
(68
)
Other Income (Expense)
(592
)
 
(1,011
)
 
(1,432
)
 
(193
)
 
2,665

 
(563
)
(Loss) Income Before Income Taxes
(593
)
 
(1,011
)
 
(1,599
)
 
(19
)
 
2,665

 
(557
)
Income Tax Expense
—

 
—

 
(21
)
 
(15
)
 
—

 
(36
)
Net (Loss) Income
$
(593
)
 
$
(1,011
)
 
$
(1,620
)
 
$
(34
)
 
$
2,665

 
$
(593
)
Condensed Consolidating Statements of Operations
For the three months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
518

 
$
454

 
$
(60
)
 
$
912

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
207

 
218

 
(57
)
 
368

Depreciation and Amortization
—

 
—

 
107

 
108

 
—

 
215

Selling, General and Administrative
1

 
—

 
298

 
49

 
(3
)
 
345

Restructuring Charges
—

 
—

 
1

 
—

 
—

 
1

Total Costs and Expenses
1

 
—

 
613

 
375

 
(60
)
 
929

Operating (Loss) Income
(1
)
 
—

 
(95
)
 
79

 
—

 
(17
)
Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(47
)
 
(94
)
 
(1
)
 
(2
)
 
—

 
(144
)
Interest income (expense) affiliates, net
199

 
325

 
(479
)
 
(45
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(314
)
 
(545
)
 
42

 
—

 
817

 
—

Other, net
—

 
—

 
2

 
(3
)
 
—

 
(1
)
Other Income (Expense)
(162
)
 
(314
)
 
(436
)
 
(50
)
 
817

 
(145
)
(Loss) Income Before Income Taxes
(163
)
 
(314
)
 
(531
)
 
29

 
817

 
(162
)
Income Tax Expense
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Net (Loss) Income
$
(163
)
 
$
(314
)
 
$
(532
)
 
$
29

 
$
817

 
$
(163
)
Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
1,508

 
$
1,394

 
$
(172
)
 
$
2,730

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
603

 
685

 
(163
)
 
1,125

Depreciation and Amortization
—

 
—

 
325

 
338

 
—

 
663

Selling, General and Administrative
2

 
—

 
886

 
147

 
(9
)
 
1,026

Restructuring Charges
—

 
—

 
1

 
1

 
—

 
2

Total Costs and Expenses
2

 
—

 
1,815

 
1,171

 
(172
)
 
2,816

Operating (Loss) Income
(2
)
 
—

 
(307
)
 
223

 
—

 
(86
)
Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(148
)
 
(282
)
 
(1
)
 
(7
)
 
—

 
(438
)
Interest income (expense) affiliates, net
597

 
974

 
(1,414
)
 
(157
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,023
)
 
(1,660
)
 
129

 
—

 
2,554

 
—

Other, net
6

 
(55
)
 
(4
)
 
9

 
—

 
(44
)
Other Income (Expense)
(568
)
 
(1,023
)
 
(1,290
)
 
(155
)
 
2,554

 
(482
)
(Loss) Income Before Income Taxes
(570
)
 
(1,023
)
 
(1,597
)
 
68

 
2,554

 
(568
)
Income Tax Expense
—

 
—

 
(2
)
 
—

 
—

 
(2
)
Net (Loss) Income
$
(570
)
 
$
(1,023
)
 
$
(1,599
)
 
$
68

 
$
2,554

 
$
(570
)
Condensed Consolidating Balance Sheets
September 30, 2011
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 

 
 

 
 

 
 

 
 

 
 

Current Assets:
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
44

 
$
6

 
$
329

 
$
82

 
$
—

 
$
461

Restricted cash and securities
—

 
—

 
1

 
1,258

 
—

 
1,259

Receivables
—

 
—

 
95

 
242

 
—

 
337

Due from (to) affiliates
12,635

 
12,267

 
(27,304
)
 
2,402

 
—

 
—

Other
4

 
11

 
54

 
35

 
—

 
104

Total Current Assets
12,683

 
12,284

 
(26,825
)
 
4,019

 
—

 
2,161

Property, Plant and Equipment, net
—

 
—

 
2,824

 
2,293

 
—

 
5,117

Restricted Cash and Securities
18

 
—

 
22

 
81

 
—

 
121

Goodwill and Other Intangibles, net
—

 
—

 
496

 
1,232

 
—

 
1,728

Investment in Subsidiaries
(11,373
)
 
(18,891
)
 
3,396

 
—

 
26,868

 
—

Other Assets, net
13

 
41

 
7

 
66

 
—

 
127

Total Assets
$
1,341

 
$
(6,566
)
 
$
(20,080
)
 
$
7,691

 
$
26,868

 
$
9,254

Liabilities and Stockholders’ Equity (Deficit)
 

 
 

 
 

 
 

 
 

 
 

Current Liabilities:
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$
1

 
$
—

 
$
39

 
$
302

 
$
—

 
$
342

Current portion of long-term debt
261

 
—

 
2

 
2

 
—

 
265

Accrued payroll and employee benefits
—

 
—

 
71

 
6

 
—

 
77

Accrued interest
55

 
102

 
—

 
32

 
—

 
189

Current portion of deferred revenue
—

 
—

 
110

 
30

 
—

 
140

Other
—

 
1

 
57

 
32

 
—

 
90

Total Current Liabilities
317

 
103

 
279

 
404

 
—

 
1,103

Long-Term Debt, less current portion
1,531

 
4,609

 
23

 
1,257

 
—

 
7,420

Deferred Revenue, less current portion
—

 
—

 
684

 
58

 
—

 
742

Other Liabilities
16

 
99

 
150

 
247

 
—

 
512

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 


Stockholders’ Equity (Deficit)
(523
)
 
(11,377
)
 
(21,216
)
 
5,725

 
26,868

 
(523
)
Total Liabilities and Stockholders’ Equity (Deficit)
$
1,341

 
$
(6,566
)
 
$
(20,080
)
 
$
7,691

 
$
26,868

 
$
9,254

Condensed Consolidating Balance Sheets
December 31, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 

 
 

 
 

 
 

 
 

 
 

Current Assets:
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Restricted cash and securities
—

 
—

 
1

 
1

 
—

 
2

Receivables
—

 
—

 
46

 
218

 
—

 
264

Due from (to) affiliates
11,927

 
11,424

 
(26,093
)
 
2,742

 
—

 
—

Other
4

 
10

 
41

 
35

 
—

 
90

Total Current Assets
12,104

 
11,441

 
(25,655
)
 
3,082

 
—

 
972

Property, Plant and Equipment, net
—

 
—

 
2,937

 
2,365

 
—

 
5,302

Restricted Cash and Securities
18

 
—

 
21

 
81

 
—

 
120

Goodwill and Other Intangibles, net
—

 
—

 
543

 
1,255

 
—

 
1,798

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

 
—

 
24,038

 
—

Other Assets, net
9

 
65

 
6

 
83

 
—

 
163

Total Assets
$
1,694

 
$
(5,670
)
 
$
(18,573
)
 
$
6,866

 
$
24,038

 
$
8,355

Liabilities and Stockholders’ Equity (Deficit)
 

 
 

 
 

 
 

 
 

 
 

Current Liabilities:
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$
1

 
$
—

 
$
57

 
$
271

 
$
—

 
$
329

Current portion of long-term debt
176

 
—

 
2

 
2

 
—

 
180

Accrued payroll and employee benefits
—

 
—

 
78

 
6

 
—

 
84

Accrued interest
47

 
99

 
—

 
—

 
—

 
146

Current portion of deferred revenue
—

 
—

 
115

 
36

 
—

 
151

Other
—

 
1

 
65

 
—

 
—

 
66

Total Current Liabilities
224

 
100

 
317

 
315

 
—

 
956

Long-Term Debt, less current portion
1,612

 
4,564

 
24

 
68

 
—

 
6,268

Deferred Revenue, less current portion
—

 
—

 
673

 
63

 
—

 
736

Other Liabilities
15

 
107

 
154

 
276

 
—

 
552

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
0

Stockholders’ Equity (Deficit)
(157
)
 
(10,441
)
 
(19,741
)
 
6,144

 
24,038

 
(157
)
Total Liabilities and Stockholders’ Equity (Deficit)
$
1,694

 
$
(5,670
)
 
$
(18,573
)
 
$
6,866

 
$
24,038

 
$
8,355

Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2011
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(129
)
 
$
(279
)
 
$
153

 
$
454

 
$
—

 
$
199

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 

Capital expenditures
—

 
—

 
(146
)
 
(204
)
 
—

 
(350
)
Increase in restricted cash and securities, net
—

 
—

 
—

 
(63
)
 
—

 
(63
)
Proceeds from sale of property, plant and equipment
—

 
—

 
1

 
3

 
—

 
4

Net Cash Used in Investing Activities
—

 
—

 
(145
)
 
(264
)
 
—

 
(409
)
Cash Flows from Financing Activities:
 

 
 

 
 

 
 

 
 

 
 

Long-term debt borrowings, net of issuance costs
292

 
474

 
—

 
(1
)
 
—

 
765

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(245
)
 
(463
)
 
—

 
(3
)
 
—

 
(711
)
Increase (decrease) due from affiliates, net
(47
)
 
267

 
(29
)
 
(191
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
—

 
278

 
(29
)
 
(195
)
 
—

 
54

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
(129
)
 
(1
)
 
(21
)
 
(4
)
 
—

 
(155
)
Cash and Cash Equivalents at Beginning of Period
173

 
7

 
350

 
86

 
—

 
616

Cash and Cash Equivalents at End of Period
$
44

 
$
6

 
$
329

 
$
82

 
$
—

 
$
461


Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(131
)
 
$
(277
)
 
$
(28
)
 
$
585

 
$
—

 
$
149

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 

Capital expenditures
—

 
—

 
(117
)
 
(202
)
 
—

 
(319
)
Decrease in restricted cash and securities, net
—

 
—

 
3

 
1

 
—

 
4

Proceeds from sale of property, plant, and equipment
—

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
—

 
—

 
(114
)
 
(200
)
 
—

 
(314
)
Cash Flows from Financing Activities:
 

 
 

 
 

 
 

 
 

 
 

Long-term debt borrowings, net of issuance costs
170

 
613

 
—

 
—

 
—

 
783

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

 
(929
)
Increase (decrease) due from affiliates, net
224

 
262

 
(19
)
 
(467
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
66

 
276

 
(20
)
 
(468
)
 
—

 
(146
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Net Change in Cash and Cash Equivalents
(65
)
 
(1
)
 
(162
)
 
(90
)
 
—

 
(318
)
Cash and Cash Equivalents at Beginning of Period
236

 
8

 
431

 
161

 
—

 
836

Cash and Cash Equivalents at End of Period
$
171

 
$
7

 
$
269

 
$
71

 
$
—

 
518

 
Subsequent Events
Subsequent Events
Subsequent Events

The Company transferred the listing of its common stock to the New York Stock Exchange (“NYSE”) and began trading on a reverse stock split adjusted basis on October 20, 2011 under its current ticker symbol “LVLT.”

In connection with the closing of the Amalgamation (See Note 2 - Events Associated with the Amalgamation of Global Crossing), Level 3 Financing amended its existing credit agreement to incur an additional $650 million of borrowings through an additional Tranche. The Company issued the Tranche B II Term Loan to investors at a price of 99% of its principal amount. The net discount of approximately $6.5 million will be reflected as a reduction in long-term debt and amortized as interest expense over the term of the Tranche B II Term Loan using the effective interest method. The Tranche B II Term Loan will accrue interest at 4.25% plus LIBOR, (with a LIBOR minimum of 1.5%), with interest payments due quarterly. The net proceeds from the Tranche B II Term Loan were used to consummate the Amalgamation, to refinance certain existing indebtedness of Global Crossing in connection with the consummation of the Amalgamation and for general corporate purposes.

On November 4, 2011, the Company announced the marketing of a $550 million senior secured term loan through an additional Tranche of its existing Senior Secured Term Loan due 2014 (the "Tranche B III Term Loan"). The net proceeds along with cash on hand will be used to redeem the 3.5% Convertible Senior Notes due in June 2012 and repay the $280 million Tranche B Term Loan that is outstanding under the existing Senior Secured Term Loan.
Events Associated with the Amalgamation of Global Crossing (Tables)
Schedule of preliminary purchase price allocation 
The following is a preliminary allocation of purchase price based on information currently available. The final identification of all the intangible assets acquired and determination of the purchase price allocation may be significantly different from the preliminary allocation reflected below.

 
Initial Purchase Price Allocation
 
(dollars in millions)
Assets:
 
  Cash, cash equivalents, and restricted cash
$
236

  Property, plant, and equipment, net
3,119

  Goodwill
509

  Identifiable intangibles
300

  Other Assets
520

Total Assets
4,684

 
 
Liabilities:
 
  Long-term debt
(1,554
)
  Other Liabilities
(1,176
)
Total Liabilities
(2,730
)
Total Estimated Equity Consideration
$
1,954


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

 
Three Months Ended
Nine Months Ended
 
September 30, 2011
September 30, 2010
September 30, 2011
September 30, 2010
Total Revenue
$
1,630

$
1,545

$
4,815

$
4,612

Net Loss
(293
)
(198
)
(799
)
(868
)


Goodwill (Tables)
Schedule of changes in carrying amount of goodwill
The changes in the carrying amount of goodwill during the nine months ended September 30, 2011 are as follows (in millions):
 
 
Communications
Segment
 
Coal
Mining
Segment
 
Total
Balance at December 31, 2010
$
1,427

—

$
—

 
$
1,427

Effect of foreign currency rate change
1

—

—

 
1

Balance at September 30, 2011
$
1,428

 
$
—

 
$
1,428

Acquired Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 
Identifiable acquisition-related intangible assets as of September 30, 2011 and December 31, 2010 were as follows (in millions):
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
September 30, 2011
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(549
)
 
$
194

Patents and Developed Technology
140

 
(86
)
 
54

 
883

 
(635
)
 
248

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(635
)
 
$
300

December 31, 2010
 

 
 

 
 

Finite-Lived Intangible Assets:
 

 
 

 
 

Customer Contracts and Relationships
$
743

 
$
(488
)
 
$
255

Patents and Developed Technology
140

 
(76
)
 
64

 
883

 
(564
)
 
319

Indefinite-Lived Intangible Assets:
 

 
 

 
 

Vyvx Trade Name
32

 
—

 
32

Wireless Licenses
20

 
—

 
20

 
$
935

 
$
(564
)
 
$
371

Schedule of estimated amortization expense of acquired finite-lived intangible asset 
As of September 30, 2011, estimated amortization expense for the Company’s finite-lived acquisition-related intangible assets over the next five years and thereafter is as follows (in millions):
 
2011 (remaining three months)
$
22

2012
69

2013
51

2014
39

2015
28

2016
21

Thereafter
18

 
$
248

Fair Value of Financial Instruments (Tables)
Schedule of fair value of liabilities measured on a recurring basis
The table below presents the fair values for each class of Level 3’s liabilities measured on a recurring basis as well as the input levels used to determine these fair values as of September 30, 2011 and December 31, 2010:
 
 
 
 
 
 
Fair Value Measurement Using
 
Total
Carrying Value
in Consolidated
Balance Sheet
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
September 30,
2011
 
December 31,
2010
 
September 30,
2011
 
December 31,
2010
 
September 30,
2011
 
December 31,
2010
 
(dollars in millions)
Liabilities Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Derivatives:
 

 
 

 
 

 
 

 
 

 
 

Interest Rate Swap Liabilities (included in other non-current liabilities)
$
98

 
$
108

 
$
—

 
$
—

 
$
98

 
$
108

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

 
—

 
—

 
—

 
—

 
—

Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
$
98

 
$
108

 
$
—

 
$
—

 
$
98

 
$
108

Liabilities Not Recorded at Fair Value in the Financial Statements:
 

 
 

 
 

 
 

 
 

 
 

Long-term Debt, including the current portion:
 

 
 

 
 

 
 

 
 

 
 

Senior Notes
$
4,716

 
$
2,885

 
$
4,405

 
$
2,789

 
$
—

 
$
—

Convertible Notes
1,197

 
1,788

 
556

 
697

 
1,031

 
1,189

Term Loans
1,679

 
1,679

 
1,595

 
1,632

 
—

 
—

Commercial Mortgage
65

 
67

 
—

 
—

 
77

 
79

Capital Leases and Other
28

 
29

 
—

 
—

 
28

 
29

Total Long-term Debt, including the current portion:
$
7,685

 
$
6,448

 
$
6,556

 
$
5,118

 
$
1,136

 
$
1,297

Derivative Financial Instruments (Tables)
Schedule of outstanding interest rate derivatives designated as cash flow hedges 
As of September 30, 2011, the Company had the following outstanding derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate Derivative
 
Number of
Instruments
 
Notional
(in Millions)
Interest rate swaps
 
Two
 
$
1,000

 
 
 
 
 
Schedule of fair value of derivative financial instruments 
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as follows (in millions):
 
 
 
Liability Derivatives
 
 
September 30, 2011
 
December 31, 2010
Derivatives designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Cash flow hedging contracts
 
Other noncurrent liabilities
 
$
98

 
Other noncurrent liabilities
 
$
108

 
 
 
 
 
 
 
 
 
 
 
Liability Derivatives
 
 
September 30, 2011
 
December 31, 2010
Derivatives not designated as
hedging instruments
 
Balance Sheet
Location
 
Fair
Value
 
Balance Sheet
Location
 
Fair
Value
Embedded equity conversion rights
 
Other noncurrent liabilities
 
$
—

 
Other noncurrent liabilities
 
$
—

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

 
 

Three months ended September 30,
 
$
2

 
$
(9
)
Nine months ended September 30,
 
$
10

 
$
(30
)
Schedule of the amount of gains (losses) reclassified from AOCI to Income/Loss 
The amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions) consists of the following (in millions):
 
Derivatives designated as hedging instruments
 
Income Statement Location
 
2011
 
2010
Cash flow hedging contracts:
 
 
 
 

 
 

Three months ended September 30,
 
Interest Expense
 
$
(12
)
 
$
(11
)
Nine months ended September 30,
 
Interest Expense
 
$
(35
)
 
$
(34
)
Schedule of effect of derivatives not designated as hedging instruments on net loss 
The effect of the Company’s derivatives not designated as hedging instruments on net loss is as follows (in millions):
 
Derivatives not designated as
hedging instruments
 
Location of Gain Recognized in
Income/Loss on Derivative
 
 
 
 
 
 
2011
 
2010
Embedded equity conversion rights:
 
 
 
 

 
 

Three months ended September 30,
 
Other Income (Expense)—Other, net
 
$
—

 
$
—

Nine months ended September 30,
 
Other Income (Expense)—Other, net
 
$
—

 
$
10

Long-Term Debt (Tables)
9 Months Ended
Sep. 30, 2011
Long-term debt
 
Schedule of long-term debt
Text Block 
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments)
Text Block 
Senior Notes due 2019 (8.125%)
 
Long-term debt
 
Schedule of redemption prices of Senior Notes
Text Block 
Senior Notes due 2019 (11.875%)
 
Long-term debt
 
Schedule of redemption prices of Senior Notes
Text Block 
Senior Notes due 2019 (9.375%)
 
Long-term debt
 
Schedule of redemption prices of Senior Notes
Text Block 
Schedule of long-term debt 
As of September 30, 2011 and December 31, 2010, long-term debt was as follows:
(dollars in millions)
 
September 30,
2011
 
December 31,
2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
 
$
1,680

 
$
1,680

Senior Notes due 2014 (9.25%)
 
807

 
1,250

Floating Rate Senior Notes due 2015 (4.2018% as of September 30, 2011 and 4.344% as of December 31, 2010)
 
300

 
300

Senior Notes due 2017 (8.75%)
 
700

 
700

Senior Notes due 2018 (10.0%)
 
640

 
640

Senior Notes due 2019 (11.875%)
 
605

 
—

Senior Notes due 2019 (9.375%)
 
500

 
—

Senior Notes due 2019 (8.125%)
 
1,200

 
—

Convertible Senior Notes due 2011 (5.25%)
 
—

 
196

Convertible Senior Notes due 2012 (3.5%)
 
274

 
294

Convertible Senior Notes due 2013 (15.0%)
 
272

 
400

Convertible Senior Discount Notes due 2013 (9.0%)
 
—

 
295

Convertible Senior Notes due 2015 (7.0%)
 
200

 
200

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

 
275

Convertible Senior Notes due 2016 (6.5%)
 
201

 
201

Commercial Mortgage due 2015 (9.86%)
 
65

 
67

Capital Leases
 
28

 
29

Total Debt Obligations
 
7,747

 
6,527

Unamortized (Discount) Premium:
 
 

 
 

Discount on Senior Secured Term Loan due 2014
 
(1
)
 
(1
)
Premium on Senior Notes due 2014 (9.25%)
 
4

 
7

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

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

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

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

 
(20
)
Discount on Convertible Senior Notes due 2012 (3.5%)
 
(14
)
 
(29
)
Discount on Convertible Senior Notes due 2015 (7.0%)
 
(3
)
 
(3
)
Discount due to embedded derivative contracts
 
(9
)
 
(21
)
Total Unamortized (Discount) Premium
 
(62
)
 
(79
)
Carrying Value of Debt
 
7,685

 
6,448

Less current portion
 
(265
)
 
(180
)
Long-term Debt, less current portion
 
$
7,420

 
$
6,268

Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) 
Aggregate future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) were as follows as of September 30, 2011 (in millions):
 
2011 (remaining three months)
$
1

2012
279

2013
278

2014
2,494

2015
832

2016
201

Thereafter
3,662

 
$
7,747

Schedule of redemption prices of Senior Notes 
Year
Redemption
Price
2015
104.063
%
2016
102.031
%
2017
100.000
%
    
Schedule of redemption prices of Senior Notes 
 
Year
Redemption
Price
2015
105.938
%
2016
102.969
%
2017
100.000
%

Schedule of redemption prices of Senior Notes 
 
Year
Redemption
Price
2015
104.688
%
2016
102.344
%
2017
100.000
%
 
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 nine months ended September 30, 2011 and 2010 (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
OSO
$
3

 
$
2

 
$
7

 
$
8

Restricted Stock Units and Shares
11

 
6

 
18

 
14

401(k) Match Expense
3

 
3

 
10

 
9

Restricted Stock Unit Bonus Grant
9

 
9

 
33

 
19

 
26

 
20

 
68

 
50

Capitalized Noncash Compensation
—

 
—

 
—

 
—

 
$
26

 
$
20

 
$
68

 
$
50

Comprehensive Loss (Tables)
Schedule of components of comprehensive loss, net of taxes 
The components of total comprehensive loss, net of taxes, were as follows (in millions):

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Net loss
$
(207
)
 
$
(163
)
 
$
(593
)
 
$
(570
)
Change in cumulative translation adjustment
(40
)
 
58

 
10

 
(38
)
Change in unrealized holding gain (loss) on interest rate swaps
2

 
(9
)
 
10

 
(30
)
Other, net
14

 
1

 
13

 
1

Comprehensive loss
$
(231
)
 
$
(113
)
 
$
(560
)
 
$
(637
)
Schedule of components of accumulated other comprehensive loss, net of taxes 
The components of accumulated other comprehensive loss, net of taxes, were as follows (in millions):
 
 
September 30, 2011
 
December 31, 2010
Cumulative translation adjustment
$
65

 
$
55

Accumulated net unrealized holding gain (loss) on interest rate swaps
(98
)
 
(108
)
Other, net
(32
)
 
(45
)
Accumulated other comprehensive loss
$
(65
)
 
$
(98
)
Segment Information (Tables)
Summary of segment information 
Segment information for the Company’s Communications and Coal Mining businesses is summarized as follows (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Revenue from external customers:
 

 
 

 
 

 
 

Communications
$
927

 
$
895

 
$
2,754

 
$
2,687

Coal Mining
20

 
17

 
54

 
43

 
$
947

 
$
912

 
$
2,808

 
$
2,730

Adjusted EBITDA:
 

 
 

 
 

 
 

Communications
$
236

 
$
216

 
$
687

 
$
627

Coal Mining
$
2

 
$
2

 
$
2

 
$
—

Schedule of breakout of Communications segment revenue by service 
Communications revenue attributable to each of these services is as follows (in millions):
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2011
 
2010
 
2011
 
2010
Communications Services:
 

 
 

 
 

 
 

Core Network Services Revenue
$
759

 
$
707

 
$
2,232

 
$
2,107

Wholesale Voice Services Revenue
152

 
161

 
467

 
489

Other Communications Revenue
16

 
27

 
55

 
91

Total Communications Revenue
$
927

 
$
895

 
$
2,754

 
$
2,687

Reconciliation of net loss to Adjusted EBITDA by operating segment 
The following information provides a reconciliation of net loss to Adjusted EBITDA by operating segment, as defined by the Company, for the three and nine months ended September 30, 2011 and 2010 (in millions):
 
Three Months Ended September 30, 2011
Communications
 
Coal
Mining
Net income (loss)
$
(203
)
 
$
1

Income tax expense
6

 
—

Total other expense
204

 
—

Depreciation and amortization expense
203

 
1

Non-cash compensation expense
26

 
—

Adjusted EBITDA
$
236

 
$
2

Total Net Loss for reportable segments
 

 
$
(202
)
Unallocated corporate expense
 

 
(5
)
Consolidated Net Loss
 

 
$
(207
)
 
 
Nine Months Ended September 30, 2011
Communications
 
Coal
Mining
Net loss
$
(582
)
 
$
(1
)
Income tax expense
36

 
—

Total other expense
553

 
—

Depreciation and amortization expense
612

 
3

Non-cash compensation expense
68

 
—

Adjusted EBITDA
$
687

 
$
2

Total Net Loss for reportable segments
 

 
$
(583
)
Unallocated corporate expense
 

 
(10
)
Consolidated Net Loss
 

 
$
(593
)
 
Three Months Ended September 30, 2010
Communications
 
Coal
Mining
Net income (loss)
$
(163
)
 
$
1

Income tax expense
1

 
—

Total other expense
144

 
—

Depreciation and amortization expense
214

 
1

Non-cash compensation expense
20

 
—

Adjusted EBITDA
$
216

 
$
2

Total Net Loss for reportable segments
 

 
$
(162
)
Unallocated corporate income
 

 
(1
)
Consolidated Net Loss
 

 
$
(163
)
 

 
Nine Months Ended September 30, 2010
Communications
 
Coal
Mining
Net loss
$
(565
)
 
$
(2
)
Income tax expense
2

 
—

Total other (income) expense
480

 
(1
)
Depreciation and amortization expense
660

 
3

Non-cash compensation expense
50

 
—

Adjusted EBITDA
$
627

 
$
—

Total Net Loss for reportable segments
 

 
$
(567
)
Unallocated corporate expense
 

 
(3
)
Consolidated Net Loss
 

 
$
(570
)
Condensed Consolidating Financial Information (Tables)
Schedule of Condensed Consolidating Statements of Operations 
Condensed Consolidating Statements of Operations
For the three months ended September 30, 2011
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
605

 
$
399

 
$
(57
)
 
$
947

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
222

 
192

 
(54
)
 
360

Depreciation and Amortization
—

 
—

 
102

 
102

 
—

 
204

Selling, General and Administrative
—

 
—

 
328

 
50

 
(3
)
 
375

Total Costs and Expenses
—

 
—

 
652

 
344

 
(57
)
 
939

Operating (Loss) Income
—

 
—

 
(47
)
 
55

 
—

 
8

Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(51
)
 
(99
)
 
—

 
(28
)
 
—

 
(178
)
Interest income (expense) affiliates, net
212

 
350

 
(514
)
 
(48
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(338
)
 
(589
)
 
29

 
—

 
898

 
—

Other, net
(30
)
 
—

 
2

 
(3
)
 
—

 
(31
)
Other Income (Expense)
(207
)
 
(338
)
 
(483
)
 
(79
)
 
898

 
(209
)
(Loss) Income Before Income Taxes
(207
)
 
(338
)
 
(530
)
 
(24
)
 
898

 
(201
)
Income Tax Expense
—

 
—

 
(1
)
 
(5
)
 
—

 
(6
)
Net (Loss) Income
$
(207
)
 
$
(338
)
 
$
(531
)
 
$
(29
)
 
$
898

 
$
(207
)
Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2011
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
1,741

 
$
1,236

 
$
(169
)
 
$
2,808

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
658

 
600

 
(160
)
 
1,098

Depreciation and Amortization
—

 
—

 
309

 
306

 
—

 
615

Selling, General and Administrative
1

 
—

 
941

 
156

 
(9
)
 
1,089

Total Costs and Expenses
1

 
—

 
1,908

 
1,062

 
(169
)
 
2,802

Operating (Loss) Income
(1
)
 
—

 
(167
)
 
174

 
—

 
6

Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(163
)
 
(296
)
 
(2
)
 
(34
)
 
—

 
(495
)
Interest income (expense) affiliates, net
633

 
1,069

 
(1,545
)
 
(157
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,011
)
 
(1,761
)
 
107

 
—

 
2,665

 
—

Other, net
(51
)
 
(23
)
 
8

 
(2
)
 
—

 
(68
)
Other Income (Expense)
(592
)
 
(1,011
)
 
(1,432
)
 
(193
)
 
2,665

 
(563
)
(Loss) Income Before Income Taxes
(593
)
 
(1,011
)
 
(1,599
)
 
(19
)
 
2,665

 
(557
)
Income Tax Expense
—

 
—

 
(21
)
 
(15
)
 
—

 
(36
)
Net (Loss) Income
$
(593
)
 
$
(1,011
)
 
$
(1,620
)
 
$
(34
)
 
$
2,665

 
$
(593
)


Condensed Consolidating Statements of Operations
For the three months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
518

 
$
454

 
$
(60
)
 
$
912

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
207

 
218

 
(57
)
 
368

Depreciation and Amortization
—

 
—

 
107

 
108

 
—

 
215

Selling, General and Administrative
1

 
—

 
298

 
49

 
(3
)
 
345

Restructuring Charges
—

 
—

 
1

 
—

 
—

 
1

Total Costs and Expenses
1

 
—

 
613

 
375

 
(60
)
 
929

Operating (Loss) Income
(1
)
 
—

 
(95
)
 
79

 
—

 
(17
)
Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(47
)
 
(94
)
 
(1
)
 
(2
)
 
—

 
(144
)
Interest income (expense) affiliates, net
199

 
325

 
(479
)
 
(45
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(314
)
 
(545
)
 
42

 
—

 
817

 
—

Other, net
—

 
—

 
2

 
(3
)
 
—

 
(1
)
Other Income (Expense)
(162
)
 
(314
)
 
(436
)
 
(50
)
 
817

 
(145
)
(Loss) Income Before Income Taxes
(163
)
 
(314
)
 
(531
)
 
29

 
817

 
(162
)
Income Tax Expense
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Net (Loss) Income
$
(163
)
 
$
(314
)
 
$
(532
)
 
$
29

 
$
817

 
$
(163
)


Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Revenue
$
—

 
$
—

 
$
1,508

 
$
1,394

 
$
(172
)
 
$
2,730

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 

Cost of Revenue
—

 
—

 
603

 
685

 
(163
)
 
1,125

Depreciation and Amortization
—

 
—

 
325

 
338

 
—

 
663

Selling, General and Administrative
2

 
—

 
886

 
147

 
(9
)
 
1,026

Restructuring Charges
—

 
—

 
1

 
1

 
—

 
2

Total Costs and Expenses
2

 
—

 
1,815

 
1,171

 
(172
)
 
2,816

Operating (Loss) Income
(2
)
 
—

 
(307
)
 
223

 
—

 
(86
)
Other Income (Expense):
 

 
 

 
 

 
 

 
 

 
 

Interest expense
(148
)
 
(282
)
 
(1
)
 
(7
)
 
—

 
(438
)
Interest income (expense) affiliates, net
597

 
974

 
(1,414
)
 
(157
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(1,023
)
 
(1,660
)
 
129

 
—

 
2,554

 
—

Other, net
6

 
(55
)
 
(4
)
 
9

 
—

 
(44
)
Other Income (Expense)
(568
)
 
(1,023
)
 
(1,290
)
 
(155
)
 
2,554

 
(482
)
(Loss) Income Before Income Taxes
(570
)
 
(1,023
)
 
(1,597
)
 
68

 
2,554

 
(568
)
Income Tax Expense
—

 
—

 
(2
)
 
—

 
—

 
(2
)
Net (Loss) Income
$
(570
)
 
$
(1,023
)
 
$
(1,599
)
 
$
68

 
$
2,554

 
$
(570
)


Schedule of Condensed Consolidating Balance Sheets 
Condensed Consolidating Balance Sheets
September 30, 2011
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 

 
 

 
 

 
 

 
 

 
 

Current Assets:
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
44

 
$
6

 
$
329

 
$
82

 
$
—

 
$
461

Restricted cash and securities
—

 
—

 
1

 
1,258

 
—

 
1,259

Receivables
—

 
—

 
95

 
242

 
—

 
337

Due from (to) affiliates
12,635

 
12,267

 
(27,304
)
 
2,402

 
—

 
—

Other
4

 
11

 
54

 
35

 
—

 
104

Total Current Assets
12,683

 
12,284

 
(26,825
)
 
4,019

 
—

 
2,161

Property, Plant and Equipment, net
—

 
—

 
2,824

 
2,293

 
—

 
5,117

Restricted Cash and Securities
18

 
—

 
22

 
81

 
—

 
121

Goodwill and Other Intangibles, net
—

 
—

 
496

 
1,232

 
—

 
1,728

Investment in Subsidiaries
(11,373
)
 
(18,891
)
 
3,396

 
—

 
26,868

 
—

Other Assets, net
13

 
41

 
7

 
66

 
—

 
127

Total Assets
$
1,341

 
$
(6,566
)
 
$
(20,080
)
 
$
7,691

 
$
26,868

 
$
9,254

Liabilities and Stockholders’ Equity (Deficit)
 

 
 

 
 

 
 

 
 

 
 

Current Liabilities:
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$
1

 
$
—

 
$
39

 
$
302

 
$
—

 
$
342

Current portion of long-term debt
261

 
—

 
2

 
2

 
—

 
265

Accrued payroll and employee benefits
—

 
—

 
71

 
6

 
—

 
77

Accrued interest
55

 
102

 
—

 
32

 
—

 
189

Current portion of deferred revenue
—

 
—

 
110

 
30

 
—

 
140

Other
—

 
1

 
57

 
32

 
—

 
90

Total Current Liabilities
317

 
103

 
279

 
404

 
—

 
1,103

Long-Term Debt, less current portion
1,531

 
4,609

 
23

 
1,257

 
—

 
7,420

Deferred Revenue, less current portion
—

 
—

 
684

 
58

 
—

 
742

Other Liabilities
16

 
99

 
150

 
247

 
—

 
512

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 


Stockholders’ Equity (Deficit)
(523
)
 
(11,377
)
 
(21,216
)
 
5,725

 
26,868

 
(523
)
Total Liabilities and Stockholders’ Equity (Deficit)
$
1,341

 
$
(6,566
)
 
$
(20,080
)
 
$
7,691

 
$
26,868

 
$
9,254



Condensed Consolidating Balance Sheets
December 31, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 

 
 

 
 

 
 

 
 

 
 

Current Assets:
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$
173

 
$
7

 
$
350

 
$
86

 
$
—

 
$
616

Restricted cash and securities
—

 
—

 
1

 
1

 
—

 
2

Receivables
—

 
—

 
46

 
218

 
—

 
264

Due from (to) affiliates
11,927

 
11,424

 
(26,093
)
 
2,742

 
—

 
—

Other
4

 
10

 
41

 
35

 
—

 
90

Total Current Assets
12,104

 
11,441

 
(25,655
)
 
3,082

 
—

 
972

Property, Plant and Equipment, net
—

 
—

 
2,937

 
2,365

 
—

 
5,302

Restricted Cash and Securities
18

 
—

 
21

 
81

 
—

 
120

Goodwill and Other Intangibles, net
—

 
—

 
543

 
1,255

 
—

 
1,798

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

 
—

 
24,038

 
—

Other Assets, net
9

 
65

 
6

 
83

 
—

 
163

Total Assets
$
1,694

 
$
(5,670
)
 
$
(18,573
)
 
$
6,866

 
$
24,038

 
$
8,355

Liabilities and Stockholders’ Equity (Deficit)
 

 
 

 
 

 
 

 
 

 
 

Current Liabilities:
 

 
 

 
 

 
 

 
 

 
 

Accounts payable
$
1

 
$
—

 
$
57

 
$
271

 
$
—

 
$
329

Current portion of long-term debt
176

 
—

 
2

 
2

 
—

 
180

Accrued payroll and employee benefits
—

 
—

 
78

 
6

 
—

 
84

Accrued interest
47

 
99

 
—

 
—

 
—

 
146

Current portion of deferred revenue
—

 
—

 
115

 
36

 
—

 
151

Other
—

 
1

 
65

 
—

 
—

 
66

Total Current Liabilities
224

 
100

 
317

 
315

 
—

 
956

Long-Term Debt, less current portion
1,612

 
4,564

 
24

 
68

 
—

 
6,268

Deferred Revenue, less current portion
—

 
—

 
673

 
63

 
—

 
736

Other Liabilities
15

 
107

 
154

 
276

 
—

 
552

Commitments and Contingencies
—

 
—

 
—

 
—

 
—

 
0

Stockholders’ Equity (Deficit)
(157
)
 
(10,441
)
 
(19,741
)
 
6,144

 
24,038

 
(157
)
Total Liabilities and Stockholders’ Equity (Deficit)
$
1,694

 
$
(5,670
)
 
$
(18,573
)
 
$
6,866

 
$
24,038

 
$
8,355



Schedule of Condensed Consolidating Statements of Cash Flows 
Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2011
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(129
)
 
$
(279
)
 
$
153

 
$
454

 
$
—

 
$
199

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 

Capital expenditures
—

 
—

 
(146
)
 
(204
)
 
—

 
(350
)
Increase in restricted cash and securities, net
—

 
—

 
—

 
(63
)
 
—

 
(63
)
Proceeds from sale of property, plant and equipment
—

 
—

 
1

 
3

 
—

 
4

Net Cash Used in Investing Activities
—

 
—

 
(145
)
 
(264
)
 
—

 
(409
)
Cash Flows from Financing Activities:
 

 
 

 
 

 
 

 
 

 
 

Long-term debt borrowings, net of issuance costs
292

 
474

 
—

 
(1
)
 
—

 
765

Payments on and repurchases of long-term debt, including current portion and refinancing costs
(245
)
 
(463
)
 
—

 
(3
)
 
—

 
(711
)
Increase (decrease) due from affiliates, net
(47
)
 
267

 
(29
)
 
(191
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
—

 
278

 
(29
)
 
(195
)
 
—

 
54

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
(129
)
 
(1
)
 
(21
)
 
(4
)
 
—

 
(155
)
Cash and Cash Equivalents at Beginning of Period
173

 
7

 
350

 
86

 
—

 
616

Cash and Cash Equivalents at End of Period
$
44

 
$
6

 
$
329

 
$
82

 
$
—

 
$
461


Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2010
 
 
Level 3
Communications,
Inc.
 
Level 3
Financing,
Inc.
 
Level 3
Communications,
LLC
 
Other
Non-Guarantor
Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(131
)
 
$
(277
)
 
$
(28
)
 
$
585

 
$
—

 
$
149

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 

Capital expenditures
—

 
—

 
(117
)
 
(202
)
 
—

 
(319
)
Decrease in restricted cash and securities, net
—

 
—

 
3

 
1

 
—

 
4

Proceeds from sale of property, plant, and equipment
—

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
—

 
—

 
(114
)
 
(200
)
 
—

 
(314
)
Cash Flows from Financing Activities:
 

 
 

 
 

 
 

 
 

 
 

Long-term debt borrowings, net of issuance costs
170

 
613

 
—

 
—

 
—

 
783

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

 
(929
)
Increase (decrease) due from affiliates, net
224

 
262

 
(19
)
 
(467
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
66

 
276

 
(20
)
 
(468
)
 
—

 
(146
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(7
)
 
—

 
(7
)
Net Change in Cash and Cash Equivalents
(65
)
 
(1
)
 
(162
)
 
(90
)
 
—

 
(318
)
Cash and Cash Equivalents at Beginning of Period
236

 
8

 
431

 
161

 
—

 
836

Cash and Cash Equivalents at End of Period
$
171

 
$
7

 
$
269

 
$
71

 
$
—

 
518

 
Summary of Significant Accounting Policies (Details) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended
Sep. 30,
3 Months Ended
Mar. 31, 2011
2011
jointventures
2010
2011
Montana
jointventures
2011
Wyoming
jointventures
0 Months Ended
Oct. 20, 2011
Reverse stock split
0 Months Ended
Oct. 19, 2011
Reverse stock split
Description of Business
 
 
 
 
 
 
 
Number of joint-venture surface mines
 
2 
 
1 
1 
 
 
Percentage of ownership of common stock in a joint-venture (as a percent)
 
 
 
50.00% 
50.00% 
 
 
Reverse stock split ratio (in shares)
 
 
 
 
 
15 
15 
Deferred taxes on certain indefinite-lived intangible assets
$ 26 
$ 34 
$ 0 
 
 
 
 
Events Associated with the Amalgamation of Global Crossing (Details) (USD $)
1 Months Ended
Nov. 30,		 1 Months Ended
Oct. 31,		 3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
9 Months Ended
Sep. 30, 2011
Oct. 3, 2011
Sep. 30, 2011
Global Crossing
members
0 Months Ended
Oct. 4, 2011
Global Crossing
2% Cumulative convertible preferred stock
Amalgamation
2011
Global Crossing
12% Senior Notes due 2015
Amalgamation
2011
Global Crossing
9% Senior Notes due 2019
Amalgamation
2011
Global Crossing
Amalgamation
Nov. 4, 2011
Global Crossing
Amalgamation
Nov. 3, 2011
Global Crossing
Amalgamation
0 Months Ended
Nov. 3, 2011
Global Crossing (UK) Finance PLC
Senior Secured Notes due 2014
Amalgamation
0 Months Ended
Oct. 4, 2011
Common stock
Amalgamation
2011
Common stock
Amalgamation
2011
Senior Secured Term Loan due 2014
Tranche B II Term Loan
Issuance of debt
9 Months Ended
Sep. 30, 2011
Senior Notes due 2019 (8.125%)
Sep. 30, 2011
Minimum
Sep. 30, 2011
Maximum
2011
Amalgamation
2010
Amalgamation
2011
Amalgamation
2010
Amalgamation
Oct. 4, 2011
Amalgamation
0 Months Ended
Oct. 20, 2011
Reverse stock split
0 Months Ended
Oct. 19, 2011
Reverse stock split
Pending Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amalgamation stock exchange ratio (in shares)
 
 
 
 
 
 
 
 
 
 
16 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividend rate (as a percent)
 
 
 
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional principal amount of debt issued
 
 
 
 
 
 
 
 
 
 
 
 
$ 650,000,000 
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of 8.125% Senior Notes due 2019 in June and July 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
1,200,000,000 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
12.00% 
9.00% 
 
 
 
 
 
 
 
8.125% 
 
 
 
 
 
 
 
 
 
Shares issued in Amalgamation transaction (in shares)
 
 
 
 
 
 
 
 
 
 
 
88,530,000 
 
 
 
 
 
 
 
 
 
 
 
Reverse stock split ratio (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15 
15 
Amount of outstanding debt redeemed and refinanced
 
 
 
 
 
 
1,360,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of debt redeemed
 
 
 
 
750,000,000 
150,000,000 
 
 
 
430,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of outstanding principal redeemed (as a percent)
 
 
 
 
 
 
 
65.00% 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis spread on comparable U.S. Treasury security used to calculate make-whole prices for debt redemption
 
 
 
 
 
 
 
0.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closing stock price
 
$ 21.15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated total Amalgamation transaction consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,230,000,000 
 
3,230,000,000 
 
 
 
 
Initial Purchase Price Allocation [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents, and restricted cash
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
236,000,000 
 
 
Property, plant, and equipment, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,119,000,000 
 
 
Goodwill
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
509,000,000 
 
 
Identifiable intangibles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
300,000,000 
 
 
Other Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
520,000,000 
 
 
Total Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,684,000,000 
 
 
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,554,000,000)
 
 
Other Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,176,000,000)
 
 
Total Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,730,000,000)
 
 
Total Estimated Equity Consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,954,000,000 
 
 
Pro Forma Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,630,000,000 
1,545,000,000 
4,815,000,000 
4,612,000,000 
 
 
 
Net Loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(293,000,000)
(198,000,000)
(799,000,000)
(868,000,000)
 
 
 
Estimated acquisition related transaction costs
52,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related costs incurred
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated integration costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 200,000,000 
$ 225,000,000 
 
 
 
 
 
 
 
Percentage of acquiree owned by ST Telemedia (as a percent)
 
 
60.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Board members designated by ST Telemedia
 
 
3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss Per Share (Details)
9 Months Ended
Sep. 30,
2011
Convertible notes
2010
Convertible notes
2011
Stock options, restricted stock units and warrants
2010
Stock options, restricted stock units and warrants
0 Months Ended
Oct. 20, 2011
Reverse stock split
0 Months Ended
Oct. 19, 2011
Reverse stock split
Loss per share
 
 
 
 
 
 
Reverse stock split ratio (in shares)
 
 
 
 
15 
15 
Securities not included in computation of diluted loss per share (in shares)
47,000,000 
51,000,000 
3,000,000 
3,000,000 
 
 
Goodwill (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2011
Changes in carrying amount of goodwill
 
Balance at the beginning of the period
$ 1,427 
Effect of foreign currency rate change
1 
Balance at the end of the period
1,428 
Communications Segment
 
Changes in carrying amount of goodwill
 
Balance at the beginning of the period
1,427 
Effect of foreign currency rate change
1 
Balance at the end of the period
1,428 
Coal Mining Segment
 
Changes in carrying amount of goodwill
 
Balance at the beginning of the period
0 
Effect of foreign currency rate change
0 
Balance at the end of the period
$ 0 
Acquired Intangible Assets (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 883 
 
$ 883 
 
$ 883 
Finite-Lived Intangible Assets, Accumulated Amortization
(635)
 
(635)
 
(564)
Finite-Lived Intangible Assets, Net
248 
 
248 
 
319 
Increase in amortization expense due to reduction in useful life as a result of adverse economic conditions
 
 
3 
 
 
Acquired finite-lived intangible asset amortization expense
23 
24 
72 
70 
 
Total Acquired Intangible Assets
 
 
 
 
 
Intangible assets, Gross Carrying Amount
935 
 
935 
 
935 
Total intangible assets, Net
300 
 
300 
 
371 
Estimated amortization expense of acquired finite-lived intangible asset
 
 
 
 
 
2011 (remaining three months)
 
 
22 
 
 
2012
 
 
69 
 
 
2013
 
 
51 
 
 
2014
 
 
39 
 
 
2015
 
 
28 
 
 
2016
 
 
21 
 
 
Thereafter
 
 
18 
 
 
Total
 
 
248 
 
 
Customer Contracts and Relationships
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
743 
 
743 
 
743 
Finite-Lived Intangible Assets, Accumulated Amortization
(549)
 
(549)
 
(488)
Finite-Lived Intangible Assets, Net
194 
 
194 
 
255 
Patents and Developed Technology
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
140 
 
140 
 
140 
Finite-Lived Intangible Assets, Accumulated Amortization
(86)
 
(86)
 
(76)
Finite-Lived Intangible Assets, Net
54 
 
54 
 
64 
Vyvx Trade Name
 
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Indefinite-Lived Intangible Assets, Net
32 
 
32 
 
32 
Wireless Licenses
 
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Indefinite-Lived Intangible Assets, Net
$ 20 
 
$ 20 
 
$ 20 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Fair Value Disclosures [Abstract]
 
 
Carrying value of long-term debt, including current portion
$ 7,685 
$ 6,448 
Recurring basis |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
0 
0 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
0 
0 
Long-term Debt, including the current portion:
 
 
Senior Notes
4,405 
2,789 
Convertible Notes
556 
697 
Term Loans
1,595 
1,632 
Commercial Mortgage
0 
0 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
6,556 
5,118 
Recurring basis |
Significant Other Observable Inputs (Level 2)
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
98 
108 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
98 
108 
Long-term Debt, including the current portion:
 
 
Senior Notes
0 
0 
Convertible Notes
1,031 
1,189 
Term Loans
0 
0 
Commercial Mortgage
77 
79 
Capital Leases and Other
28 
29 
Total Long-term Debt, including the current portion:
1,136 
1,297 
Total Carrying Value in Consolidated Balance Sheet
 
 
Liabilities Recorded at Fair Value in the Financial Statements:
 
 
Interest Rate Swap Liabilities (included in other non-current liabilities)
98 
108 
Total Derivative Liabilities Recorded at Fair Value in the Financial Statements
98 
108 
Long-term Debt, including the current portion:
 
 
Senior Notes
4,716 
2,885 
Convertible Notes
1,197 
1,788 
Term Loans
1,679 
1,679 
Commercial Mortgage
65 
67 
Capital Leases and Other
28 
29 
Total Long-term Debt, including the current portion:
$ 7,685 
$ 6,448 
Fair Value of Financial Instruments - Liabilities, Non Recurring (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30,
Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Senior Notes
Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Actively traded convertible notes
Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Not actively traded convertible notes
Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure
Term Loans
Sep. 30, 2011
Estimate of Fair Value, Fair Value Disclosure
Commercial Mortgages
Dec. 31, 2010
Estimate of Fair Value, Fair Value Disclosure
Commercial Mortgages
9 Months Ended
Sep. 30, 2011
Senior Notes
Sep. 30, 2011
Senior Notes due 2019 (11.875%)
Sep. 30, 2011
Senior Notes due 2019 (9.375%)
9 Months Ended
Sep. 30, 2011
Actively traded convertible notes
ConvertibleNotes
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Sep. 30, 2011
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
9 Months Ended
Sep. 30, 2011
Not actively traded convertible notes
Sep. 30, 2011
Convertible Senior Notes due 2015 (7.0%)
Sep. 30, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Sep. 30, 2011
Term Loans
Dec. 31, 2010
Term Loans
2011
Tranche A Term Loan
2011
Tranche B Term Loan
Sep. 30, 2011
Commercial Mortgages
Dec. 31, 2010
Commercial Mortgages
Liabilities measured on a recurring basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Notes
$ 4,400 
$ 2,800 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis of interest rate on debt
 
 
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
LIBOR 
 
 
Interest spread on debt, low end of range
 
 
 
 
 
 
 
 
 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
 
 
Interest spread on debt, high end of range
 
 
 
 
 
 
 
 
 
11.875% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400 
280 
 
 
Fair value of commercial mortgage
 
 
 
 
 
 
 
77 
79 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value of long term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65 
67 
Number of convertible notes
 
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, lowest interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.00% 
 
 
 
 
 
 
 
 
 
 
 
Security coupon rates used for valuation, highest interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
 
 
 
 
 
1,600 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,600 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
11.875% 
9.375% 
 
3.50% 
6.50% 
5.25% 
5.25% 
5.25% 
 
7.00% 
7.00% 
15.00% 
9.00% 
9.00% 
 
 
 
 
 
 
Convertible Notes
 
 
$ 556 
$ 697 
$ 1,000 
$ 1,200 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest spread on debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.25% 
8.50% 
 
 
Collateral for debt, Equity interest in Level 3 Financing, Inc's Canadian subsidiary (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
Derivative Financial Instruments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,		 1 Months Ended
Mar. 31,		 3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Mar. 31, 2007
Level 3 Financing, Inc.
derivatives
2007
Level 3 Financing, Inc.
Interest Rate Swap, Agreement One
2007
Level 3 Financing, Inc.
Interest Rate Swap, Agreement Two
Sep. 30, 2011
Interest Rate Swap
2011
Interest Expense
2010
Interest Expense
2011
Interest Expense
2010
Interest Expense
Sep. 30, 2011
Other Noncurrent Liabilities
Dec. 31, 2010
Other Noncurrent Liabilities
Sep. 30, 2011
Convertible Senior Notes due 2016 (6.5%)
Dec. 31, 2010
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2010
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Sep. 30, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Cash Flow Hedging
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 26 
$ 175 
 
 
 
 
 
 
 
Interest rate of convertible senior notes (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.50% 
 
 
9.00% 
9.00% 
5.25% 
5.25% 
5.25% 
15.00% 
 
Notional Amount of Interest Rate Cash Flow Hedge Derivatives
1,000 
 
1,000 
 
1,000 
500 
500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis of interest payment
 
 
LIBOR 
 
 
three month LIBOR 
three month LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed interest rate paid under agreement (as a percent)
 
 
 
 
 
4.93% 
4.92% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Embedded equity conversion rights located in Other Income (Expense) - Other, net
0 
0 
0 
10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps, Number of Instruments
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
Fair value, Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts
 
 
 
 
 
 
 
 
 
 
 
 
98 
108 
 
 
 
 
 
 
 
 
 
 
Amount of gains (losses) recognized in Other Comprehensive Loss, Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts
2 
(9)
10 
(30)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of gains (losses) reclassified from AOCI to Income/Loss (effective portions), Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedging contracts - Interest Expense
 
 
 
 
 
 
 
 
(12)
(11)
(35)
(34)
 
 
 
 
 
 
 
 
 
 
 
 
Net losses on the interest rate swaps that will be reclassified into earnings during the next twelve months
 
 
 
 
 
 
 
$ 47 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2011
Dec. 31, 2010
Sep. 30, 2011
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Dec. 31, 2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Sep. 30, 2011
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche A Term Loan ($100 billion)
Dec. 31, 2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche A Term Loan ($100 billion)
Sep. 30, 2011
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche A Term Loan ($400 million)
Dec. 31, 2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche A Term Loan ($400 million)
Sep. 30, 2011
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche B Term Loan
Dec. 31, 2010
Senior Secured Term Loan due 2014 (2.4961%, 2.4924%, and 11.5% as of September 30, 2011 and 2.5391%, 2.5391%, and 11.5% as of December 31, 2010 for the $1 billion, $400 million, and $280 million tranches, respectively)
Term Loans
Tranche B Term Loan
Sep. 30, 2011
Senior Notes due 2019 (8.125%)
Senior Notes
Dec. 31, 2010
Senior Notes due 2019 (8.125%)
Senior Notes
Sep. 30, 2011
Senior Notes due 2019 (11.875%)
Senior Notes
Dec. 31, 2010
Senior Notes due 2019 (11.875%)
Senior Notes
Sep. 30, 2011
Senior Notes due 2019 (9.375%)
Senior Notes
Dec. 31, 2010
Senior Notes due 2019 (9.375%)
Senior Notes
Sep. 30, 2011
Senior Notes
Senior Notes due 2014 (9.25%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2014 (9.25%)
Sep. 30, 2011
Senior Notes
Floating Rate Senior Notes due 2015 (4.2018% as of September 30, 2011 and 4.344% as of December 31, 2010)
Dec. 31, 2010
Senior Notes
Floating Rate Senior Notes due 2015 (4.2018% as of September 30, 2011 and 4.344% as of December 31, 2010)
Sep. 30, 2011
Senior Notes
Senior Notes due 2017 (8.75%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2017 (8.75%)
Sep. 30, 2011
Senior Notes
Senior Notes due 2018 (10.0%)
Dec. 31, 2010
Senior Notes
Senior Notes due 2018 (10.0%)
9 Months Ended
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2012 (3.5%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Notes due 2016 (6.5%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2016 (6.5%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Notes due 2011 (5.25%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Notes due 2015 (7.0%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2015 (7.0%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2015 Series B (7.0%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Notes due 2013 (15.0%)
Convertible Senior Notes
Sep. 30, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Convertible Senior Notes
Dec. 31, 2010
Convertible Senior Discount Notes due 2013 (9.0%)
Convertible Senior Notes
Sep. 30, 2011
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Dec. 31, 2010
Commercial Mortgage
Commercial Mortgage due 2015 (9.86%)
Sep. 30, 2011
Capital Leases
Dec. 31, 2010
Capital Leases
Sep. 30, 2011
Senior Notes due 2014 (9.25%)
Sep. 30, 2011
Senior Notes due 2019 (11.875%)
Jan. 31, 2011
Senior Notes due 2019 (11.875%)
Sep. 30, 2011
Senior Notes due 2019 (9.375%)
Sep. 30, 2011
Senior Notes due 2019 (8.125%)
Sep. 30, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2011
Convertible Senior Notes due 2011 (5.25%)
Mar. 31, 2010
Convertible Senior Notes due 2011 (5.25%)
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
Jul. 15, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Sep. 30, 2011
Convertible Senior Notes due 2015 (7.0%)
Sep. 30, 2011
Convertible Senior Notes due 2015 Series B (7.0%)
Sep. 30, 2011
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2011
Embedded derivative contracts
Dec. 31, 2010
Embedded derivative contracts
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
$ 7,747 
$ 6,527 
$ 1,680 
$ 1,680 
$ 1,000 
 
$ 400 
 
$ 280 
 
$ 1,200 
$ 0 
$ 605 
$ 0 
$ 500 
$ 0 
$ 807 
$ 1,250 
$ 300 
$ 300 
$ 700 
$ 700 
$ 640 
$ 640 
$ 274 
$ 294 
$ 201 
$ 201 
$ 0 
$ 196 
$ 200 
$ 200 
$ 275 
$ 275 
$ 272 
$ 400 
$ 0 
$ 295 
$ 65 
$ 67 
$ 28 
$ 29 
 
 
 
 
 
 
 
 
 
 
$ 272 
 
 
 
 
 
 
 
Total Unamortized (Discount) Premium
(62.0)
(79.0)
(1.0)
(1.0)
 
 
 
 
 
 
(9.0)
0 
(10.0)
0 
(9.0)
0 
4.0 
7.0 
 
 
 
 
(11.0)
(12.0)
(14.0)
(29.0)
 
 
0 
(20.0)
(3.0)
(3.0)
 
 
 
 
 
 
 
 
 
 
 
 
(11.0)
 
 
 
 
 
 
 
 
 
 
 
 
 
(9.0)
(21.0)
Carrying Value of Debt
7,685 
6,448 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current portion
(265)
(180)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt, less current portion
7,420 
6,268 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification to current portion of long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 274 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
8.125% 
 
11.875% 
 
9.375% 
 
9.25% 
 
 
 
8.75% 
 
10.00% 
 
3.50% 
 
6.50% 
 
5.25% 
 
7.00% 
 
7.00% 
 
15.00% 
 
9.00% 
 
9.86% 
 
 
 
9.25% 
11.875% 
 
9.375% 
8.125% 
5.25% 
5.25% 
5.25% 
3.50% 
15.00% 
 
9.00% 
9.00% 
7.00% 
7.00% 
6.50% 
 
 
Debt instrument, effective interest rate at end of period (as a percent)
 
 
 
 
2.4961% 
2.5391% 
2.4924% 
2.5391% 
11.50% 
11.50% 
 
 
 
 
 
 
 
 
4.2018% 
4.344% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Textuals (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,		 12 Months Ended
Jan. 31,		 3 Months Ended
Mar. 31,		 3 Months Ended
Mar. 31,
2011
2010
2011
2010
Dec. 31, 2010
1 Months Ended
Jan. 31, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (11.875%)
9 Months Ended
Sep. 30, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (9.375%)
Mar. 4, 2011
Company and its subsidiary, Level 3 Financing Inc.
Senior Notes due 2019 (9.375%)
2011
Senior Notes due 2019 (8.125%)
Level 3 Financing, Inc.
days
2011
Senior Notes due 2019 (8.125%)
Level 3 Financing, Inc.
Prior To July 2015
2011
Senior Notes due 2019 (9.375%)
Level 3 Financing, Inc.
days
2011
Senior Notes due 2019 (9.375%)
Level 3 Financing, Inc.
Prior to April 2015
2011
Senior Notes due 2019 (9.375%)
Level 3 Financing, Inc.
Twelve Months Beginning April 1, 2015
2011
Senior Notes due 2019 (9.375%)
Level 3 Financing, Inc.
Twelve Months Beginning April 1, 2016
2011
Senior Notes due 2019 (9.375%)
Level 3 Financing, Inc.
Twelve Months Beginning April 1, 2017
3 Months Ended
Mar. 31, 2010
Level 3 Financing, Inc.
Senior Notes due 2018 (10.0%)
Sep. 30, 2011
Level 3 Financing, Inc.
Senior Notes due 2018 (10.0%)
3 Months Ended
Mar. 31, 2010
Level 3 Financing, Inc.
12.25% Senior Notes
1 Months Ended
Jul. 31, 2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
1 Months Ended
Jun. 30, 2010
Level 3 Escrow
Senior Notes due 2019 (8.125%)
9 Months Ended
Sep. 30, 2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
days
offering
Jun. 30, 2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2015
2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2016
2011
Level 3 Escrow
Senior Notes due 2019 (8.125%)
Twelve Months Beginning April 1, 2017
2011
Senior Notes due 2019 (8.125%)
days
Oct. 4, 2011
Senior Notes due 2019 (8.125%)
Amalgamation
Sep. 30, 2011
Senior Notes due 2019 (9.375%)
1 Months Ended
Jan. 31, 2011
Senior Notes due 2019 (11.875%)
2011
Senior Notes due 2019 (11.875%)
days
2011
Senior Notes due 2019 (11.875%)
Prior To February 2015
2016
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2015
2017
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2016
2018
Senior Notes due 2019 (11.875%)
Twelve Months Beginning February 1, 2017
1 Months Ended
Aug. 31, 2011
Convertible Senior Notes due 2012 (3.5%)
3 Months Ended
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
0 Months Ended
Jul. 15, 2011
Convertible Senior Notes due 2013 (15.0%)
Sep. 30, 2011
Convertible Senior Notes due 2013 (15.0%)
1 Months Ended
Apr. 30, 2011
Senior Notes due 2014 (9.25%)
3 Months Ended
Jun. 30, 2011
Senior Notes due 2014 (9.25%)
Sep. 30, 2011
Senior Notes due 2014 (9.25%)
2011
Convertible Senior Notes due 2011 (5.25%)
2010
Convertible Senior Notes due 2011 (5.25%)
Sep. 30, 2011
Convertible Senior Notes due 2011 (5.25%)
3 Months Ended
Mar. 31, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
Sep. 30, 2011
Convertible Senior Discount Notes due 2013 (9.0%)
3 Months Ended
Mar. 31, 2011
Convertible Senior Notes (5.25%) and Convertible Senior Discount Notes (9.0%)
3 Months Ended
Dec. 31, 2010
Convertible Senior Notes due 2016 (6.5%)
3 Months Ended
Sep. 30, 2010
Convertible Senior Notes due 2016 (6.5%)
Sep. 30, 2011
Convertible Senior Notes due 2016 (6.5%)
3 Months Ended
Sep. 30, 2010
2.875% Convertible Senior Notes due 2010
3 Months Ended
Mar. 31, 2010
2.875% Convertible Senior Notes due 2010
3 Months Ended
Jun. 30, 2010
10% Convertible Senior Notes due 2011
2010
6% Convertible Subordinated Notes due 2010
2010
10.75% Senior Notes due 2011
2010
Convertible Senior Notes (5.25%), Senior Notes (10.75%), and Convertible Senior Notes (2.875%)
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of separate debt issuance transactions
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of notes
 
 
 
 
 
 
 
$ 500,000,000 
 
 
 
 
 
 
 
$ 640,000,000 
 
$ 550,000,000 
 
 
 
$ 600,000,000 
 
 
 
 
 
 
$ 605,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 26,000,000 
$ 175,000,000 
 
 
 
 
 
 
 
Additional principal amount of debt issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
175,000,000 
 
 
 
 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
 
 
9.375% 
 
8.125% 
 
 
 
 
 
 
 
10.00% 
12.25% 
 
 
 
 
 
 
 
8.125% 
 
9.375% 
 
11.875% 
 
 
 
 
 
3.50% 
 
15.00% 
 
 
9.25% 
5.25% 
5.25% 
5.25% 
9.00% 
9.00% 
 
 
 
6.50% 
2.875% 
2.875% 
10.00% 
6.00% 
10.75% 
 
Long-term Debt, Gross
7,747,000,000 
 
7,747,000,000 
 
6,527,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
272,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument issuance price as a percentage of the principal amount (as a percent)
 
 
 
 
 
 
98.001% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of notes after deducting debt issuance costs
 
 
765,000,000 
783,000,000 
 
 
 
 
 
 
 
 
 
 
 
613,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25,500,000 
170,000,000 
 
 
 
 
 
 
 
Discount on long-term debt
62,000,000 
 
62,000,000 
 
79,000,000 
 
 
10,000,000 
 
 
 
 
 
 
 
13,000,000 
 
 
9,000,000 
 
 
4,000,000 
 
 
 
 
 
 
11,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt issuance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,000,000 
 
 
 
 
 
 
 
 
 
 
32,000,000 
11,000,000 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
 
 
 
 
Debt repayments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38,000,000 
 
 
111,000,000 
 
 
Principal amount of debt extinguished
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
443,000,000 
 
 
196,000,000 
3,000,000 
 
 
 
 
 
 
 
 
2,000,000 
172,000,000 
 
3,000,000 
 
Redemption price of debt instrument (as a percent)
 
 
 
 
 
 
 
 
 
100.00% 
 
100.00% 
104.688% 
102.344% 
100.00% 
 
 
106.125% 
98.545% 
99.264% 
 
 
104.063% 
102.031% 
100.00% 
 
 
 
98.173% 
 
100.00% 
105.938% 
102.969% 
100.00% 
98.875% 
 
 
 
 
104.625% 
 
100.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt retired in exchange transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
128,000,000 
 
 
 
 
 
 
 
295,000,000 
 
 
 
 
 
 
 
 
 
 
 
Loss on repurchase of debt instrument, less than
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
Loss on extinguishments of debt, net
30,000,000 
0 
73,000,000 
59,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
55,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,000,000 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
4,000,000 
 
 
 
Shares issued upon conversion (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares converted for each $1000 principal amount (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount used for conversion of debt instrument
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment of interest expense from conversion till maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expenses paid for each $1000 principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum percentage of the principal amount of the debt instrument which the entity may redeem with the proceeds from certain equity offerings on or prior to April 1, 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price of the debt instrument if redeemed with the proceeds of certain equity offerings on or prior to 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
109.375% 
 
 
 
 
 
 
 
 
 
108.125% 
 
 
 
 
 
 
 
 
111.875% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum number of private placement equity offerings necessary for proceeds to be used for debt redemption
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum aggregate gross proceeds received from equity offering necessary to be used for redemption of debt instrument
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum percentage of the principal amount of the debt instrument which must remain outstanding after the entity has redeemed a portion of the debt instrument with the proceeds from certain equity offerings on or prior to April 1, 2014 (as a percent)
 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum redemption period for the entity to redeem the debt instrument following the receipt of cash proceeds from certain equity offerings on or prior to April 1, 2014 (in number of days)
 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
90 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum number of days' notice that the entity must provide for the redemption of the debt instrument (in number of days)
 
 
 
 
 
 
 
 
30 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of days' notice that the entity must provide for the redemption of the debt instrument (in number of days)
 
 
 
 
 
 
 
 
60 
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of days following issuance of debt for declaration of registration statement to be declared effective (in days)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
270 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum special interest on principal amount that could be transferred to the initial purchasers in the event of a Registration Default (percent per annum)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price of debt instrument for each $1000 principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,080 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,016.70 
 
 
 
Principal amount used for ratio of debt instrument redemption price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000 
 
 
 
Portion of redemption price for each $1000 principal amount of debt instrument offered as consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,050 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portion of redemption price for each $1000 principal amount of debt instrument offered as a consent payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of the holders which participated in the tender offer as a percentage of the debt instrument's aggregate principal amount outstanding (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99.40% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of debt extinguished through tender offer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
547,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price, low end of range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
95.00% 
Redemption price, high end of range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
Future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2011 (remaining three months)
1,000,000 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2012
279,000,000 
 
279,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
278,000,000 
 
278,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,494,000,000 
 
2,494,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
832,000,000 
 
832,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
201,000,000 
 
201,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thereafter
3,662,000,000 
 
3,662,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
$ 7,747,000,000 
 
$ 7,747,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-Based Compensation (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Stock-based compensation expense
 
 
 
 
Stock- based compensation expense
$ 26 
$ 20 
$ 68 
$ 50 
Capitalized Noncash Compensation
0 
0 
0 
0 
Non-cash compensation expense
26 
20 
68 
50 
Outperform Stock Options
 
 
 
 
Stock-based compensation expense
 
 
 
 
Stock- based compensation expense
3 
2 
7 
8 
Number of outperform stock option units outstanding as of the balance sheet date (in shares)
1 
 
1 
 
Restricted Stock Units and Shares
 
 
 
 
Stock-based compensation expense
 
 
 
 
Stock- based compensation expense
11 
6 
18 
14 
Number of outstanding nonvested shares (in shares)
2 
 
2 
 
401(k) Match Expense
 
 
 
 
Stock-based compensation expense
 
 
 
 
Stock- based compensation expense
3 
3 
10 
9 
Restricted Stock Unit Bonus Grant
 
 
 
 
Stock-based compensation expense
 
 
 
 
Stock- based compensation expense
$ 9 
$ 9 
$ 33 
$ 19 
Comprehensive Loss (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
 
 
 
 
 
Net loss
$ (207)
$ (163)
$ (593)
$ (570)
 
Change in cumulative translation adjustment
(40)
58 
10 
(38)
 
Change in unrealized holding gain (loss) on interest rate swaps
2 
(9)
10 
(30)
 
Other, net
14 
1 
13 
1 
 
Comprehensive Loss
(231)
(113)
(560)
(637)
 
Components of accumulated other comprehensive loss, net of taxes
 
 
 
 
 
Cumulative translation adjustment
65 
 
65 
 
55 
Accumulated net unrealized holding gain (loss) on interest rate swaps
(98)
 
(98)
 
(108)
Other, net
(32)
 
(32)
 
(45)
Accumulated other comprehensive loss
$ (65)
 
$ (65)
 
$ (98)
Segment Information - Revenue From External Customers And Adjusted EBITDA (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Segment information
 
 
 
 
Revenue from external customers
$ 947 
$ 912 
$ 2,808 
$ 2,730 
Communications Segment |
Core Network Services
 
 
 
 
Segment information
 
 
 
 
Revenue from external customers
759 
707 
2,232 
2,107 
Communications Segment |
Wholesale Voice Services
 
 
 
 
Segment information
 
 
 
 
Revenue from external customers
152 
161 
467 
489 
Communications Segment |
Other Communications
 
 
 
 
Segment information
 
 
 
 
Revenue from external customers
16 
27 
55 
91 
Communications Segment
 
 
 
 
Segment information
 
 
 
 
Revenue from external customers
927 
895 
2,754 
2,687 
Adjusted EBITDA
236 
216 
687 
627 
Coal Mining Segment
 
 
 
 
Segment information
 
 
 
 
Revenue from external customers
20 
17 
54 
43 
Adjusted EBITDA
$ 2 
$ 2 
$ 2 
$ 0 
Segment Information - Calculation of EBITDA (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Segment information
 
 
 
 
Net income (loss)
$ (207)
$ (163)
$ (593)
$ (570)
Income tax expense
6 
1 
36 
2 
Depreciation and amortization expense
204 
215 
615 
663 
Non-cash compensation expense
26 
20 
68 
50 
Reportable segments
 
 
 
 
Segment information
 
 
 
 
Net income (loss)
(202)
(162)
(583)
(567)
Communications Segment
 
 
 
 
Segment information
 
 
 
 
Net income (loss)
(203)
(163)
(582)
(565)
Income tax expense
6 
1 
36 
2 
Total other (income) expense
204 
144 
553 
480 
Depreciation and amortization expense
203 
214 
612 
660 
Non-cash compensation expense
26 
20 
68 
50 
Adjusted EBITDA
236 
216 
687 
627 
Coal Mining Segment
 
 
 
 
Segment information
 
 
 
 
Net income (loss)
1 
1 
(1)
(2)
Income tax expense
0 
0 
0 
0 
Total other (income) expense
0 
0 
0 
(1)
Depreciation and amortization expense
1 
1 
3 
3 
Non-cash compensation expense
0 
0 
0 
0 
Adjusted EBITDA
2 
2 
2 
0 
Unallocated corporate expense
 
 
 
 
Segment information
 
 
 
 
Net income (loss)
$ (5)
$ (1)
$ (10)
$ (3)
Commitments, Contingencies and Other Items (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2011
Dec. 31, 2010
Dec. 31, 2005
claims
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Number of purported state class actions
 
 
2 
Amount outstanding under letters of credit
$ 22 
$ 22 
 
Condensed Consolidating Financial Information - Narrative (Details) (Senior Notes due 2019 (9.375%))
Sep. 30, 2011
Senior Notes due 2019 (9.375%)
 
Long-term debt
 
Debt instrument, stated interest rate (as a percent)
9.375% 
Condensed Consolidating Financial Information - Statement of Operations (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Condensed Consolidating Financial Information
 
 
 
 
Revenue
$ 947 
$ 912 
$ 2,808 
$ 2,730 
Costs and Expenses:
 
 
 
 
Cost of Revenue
360 
368 
1,098 
1,125 
Depreciation and Amortization
204 
215 
615 
663 
Selling, General and Administrative
375 
345 
1,089 
1,026 
Restructuring Charges
0 
1 
0 
2 
Total Costs and Expenses
939 
929 
2,802 
2,816 
Operating (Loss) Income
8 
(17)
6 
(86)
Other Income (Expense):
 
 
 
 
Interest expense
(178)
(144)
(495)
(438)
Interest income (expense) affiliates, net
0 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
0 
0 
0 
0 
Other, net
(31)
(1)
(68)
(44)
Total Other (Expense) Income
(209)
(145)
(563)
(482)
(Loss) Income Before Income Taxes
(201)
(162)
(557)
(568)
Income Tax Expense
(6)
(1)
(36)
(2)
Net (Loss) Income
(207)
(163)
(593)
(570)
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
0 
1 
1 
2 
Restructuring Charges
 
0 
 
0 
Total Costs and Expenses
0 
1 
1 
2 
Operating (Loss) Income
0 
(1)
(1)
(2)
Other Income (Expense):
 
 
 
 
Interest expense
(51)
(47)
(163)
(148)
Interest income (expense) affiliates, net
212 
199 
633 
597 
Equity in net earnings (losses) of subsidiaries
(338)
(314)
(1,011)
(1,023)
Other, net
(30)
0 
(51)
6 
Total Other (Expense) Income
(207)
(162)
(592)
(568)
(Loss) Income Before Income Taxes
(207)
(163)
(593)
(570)
Income Tax Expense
0 
0 
0 
0 
Net (Loss) Income
(207)
(163)
(593)
(570)
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
0 
0 
0 
0 
Restructuring Charges
 
0 
 
0 
Total Costs and Expenses
0 
0 
0 
0 
Operating (Loss) Income
0 
0 
0 
0 
Other Income (Expense):
 
 
 
 
Interest expense
(99)
(94)
(296)
(282)
Interest income (expense) affiliates, net
350 
325 
1,069 
974 
Equity in net earnings (losses) of subsidiaries
(589)
(545)
(1,761)
(1,660)
Other, net
0 
0 
(23)
(55)
Total Other (Expense) Income
(338)
(314)
(1,011)
(1,023)
(Loss) Income Before Income Taxes
(338)
(314)
(1,011)
(1,023)
Income Tax Expense
0 
0 
0 
0 
Net (Loss) Income
(338)
(314)
(1,011)
(1,023)
Level 3 Communications, LLC
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
605 
518 
1,741 
1,508 
Costs and Expenses:
 
 
 
 
Cost of Revenue
222 
207 
658 
603 
Depreciation and Amortization
102 
107 
309 
325 
Selling, General and Administrative
328 
298 
941 
886 
Restructuring Charges
 
1 
 
1 
Total Costs and Expenses
652 
613 
1,908 
1,815 
Operating (Loss) Income
(47)
(95)
(167)
(307)
Other Income (Expense):
 
 
 
 
Interest expense
0 
(1)
(2)
(1)
Interest income (expense) affiliates, net
(514)
(479)
(1,545)
(1,414)
Equity in net earnings (losses) of subsidiaries
29 
42 
107 
129 
Other, net
2 
2 
8 
(4)
Total Other (Expense) Income
(483)
(436)
(1,432)
(1,290)
(Loss) Income Before Income Taxes
(530)
(531)
(1,599)
(1,597)
Income Tax Expense
(1)
(1)
(21)
(2)
Net (Loss) Income
(531)
(532)
(1,620)
(1,599)
Other Non-Guarantor Subsidiaries
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
399 
454 
1,236 
1,394 
Costs and Expenses:
 
 
 
 
Cost of Revenue
192 
218 
600 
685 
Depreciation and Amortization
102 
108 
306 
338 
Selling, General and Administrative
50 
49 
156 
147 
Restructuring Charges
 
0 
 
1 
Total Costs and Expenses
344 
375 
1,062 
1,171 
Operating (Loss) Income
55 
79 
174 
223 
Other Income (Expense):
 
 
 
 
Interest expense
(28)
(2)
(34)
(7)
Interest income (expense) affiliates, net
(48)
(45)
(157)
(157)
Equity in net earnings (losses) of subsidiaries
0 
0 
0 
0 
Other, net
(3)
(3)
(2)
9 
Total Other (Expense) Income
(79)
(50)
(193)
(155)
(Loss) Income Before Income Taxes
(24)
29 
(19)
68 
Income Tax Expense
(5)
0 
(15)
0 
Net (Loss) Income
(29)
29 
(34)
68 
Eliminations
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
Revenue
(57)
(60)
(169)
(172)
Costs and Expenses:
 
 
 
 
Cost of Revenue
(54)
(57)
(160)
(163)
Depreciation and Amortization
0 
0 
0 
0 
Selling, General and Administrative
(3)
(3)
(9)
(9)
Restructuring Charges
 
0 
 
0 
Total Costs and Expenses
(57)
(60)
(169)
(172)
Operating (Loss) Income
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
898 
817 
2,665 
2,554 
Other, net
0 
0 
0 
0 
Total Other (Expense) Income
898 
817 
2,665 
2,554 
(Loss) Income Before Income Taxes
898 
817 
2,665 
2,554 
Income Tax Expense
0 
0 
0 
0 
Net (Loss) Income
$ 898 
$ 817 
$ 2,665 
$ 2,554 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Sep. 30, 2010
Dec. 31, 2009
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 461 
$ 616 
$ 518 
$ 836 
Restricted cash and securities
1,259 
2 
 
 
Receivables
337 
264 
 
 
Due from (to) affiliates
0 
0 
 
 
Other
104 
90 
 
 
Total Current Assets
2,161 
972 
 
 
Property, Plant and Equipment, net
5,117 
5,302 
 
 
Restricted Cash and Securities
121 
120 
 
 
Goodwill and Other Intangibles Assets, net
1,728 
1,798 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
127 
163 
 
 
Total Assets
9,254 
8,355 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
342 
329 
 
 
Current portion of long-term debt
265 
180 
 
 
Accrued payroll and employee benefits
77 
84 
 
 
Accrued interest
189 
146 
 
 
Current portion of deferred revenue
140 
151 
 
 
Other
90 
66 
 
 
Total Current Liabilities
1,103 
956 
 
 
Long-Term Debt, less current portion
7,420 
6,268 
 
 
Deferred Revenue, less current portion
742 
736 
 
 
Other Liabilities
512 
552 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
(523)
(157)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
9,254 
8,355 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
44 
173 
171 
236 
Restricted cash and securities
0 
0 
 
 
Receivables
0 
0 
 
 
Due from (to) affiliates
12,635 
11,927 
 
 
Other
4 
4 
 
 
Total Current Assets
12,683 
12,104 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
18 
18 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(11,373)
(10,437)
 
 
Other Assets, net
13 
9 
 
 
Total Assets
1,341 
1,694 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
1 
1 
 
 
Current portion of long-term debt
261 
176 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
55 
47 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
317 
224 
 
 
Long-Term Debt, less current portion
1,531 
1,612 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
16 
15 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
(523)
(157)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
1,341 
1,694 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
6 
7 
7 
8 
Restricted cash and securities
0 
0 
 
 
Receivables
0 
0 
 
 
Due from (to) affiliates
12,267 
11,424 
 
 
Other
11 
10 
 
 
Total Current Assets
12,284 
11,441 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(18,891)
(17,176)
 
 
Other Assets, net
41 
65 
 
 
Total Assets
(6,566)
(5,670)
 
 
Current Liabilities:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
102 
99 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
1 
1 
 
 
Total Current Liabilities
103 
100 
 
 
Long-Term Debt, less current portion
4,609 
4,564 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
99 
107 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
(11,377)
(10,441)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
(6,566)
(5,670)
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
329 
350 
269 
431 
Restricted cash and securities
1 
1 
 
 
Receivables
95 
46 
 
 
Due from (to) affiliates
(27,304)
(26,093)
 
 
Other
54 
41 
 
 
Total Current Assets
(26,825)
(25,655)
 
 
Property, Plant and Equipment, net
2,824 
2,937 
 
 
Restricted Cash and Securities
22 
21 
 
 
Goodwill and Other Intangibles Assets, net
496 
543 
 
 
Investment in Subsidiaries
3,396 
3,575 
 
 
Other Assets, net
7 
6 
 
 
Total Assets
(20,080)
(18,573)
 
 
Current Liabilities:
 
 
 
 
Accounts payable
39 
57 
 
 
Current portion of long-term debt
2 
2 
 
 
Accrued payroll and employee benefits
71 
78 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
110 
115 
 
 
Other
57 
65 
 
 
Total Current Liabilities
279 
317 
 
 
Long-Term Debt, less current portion
23 
24 
 
 
Deferred Revenue, less current portion
684 
673 
 
 
Other Liabilities
150 
154 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
(21,216)
(19,741)
 
 
Total Liabilities and Stockholders' Equity (Deficit)
(20,080)
(18,573)
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
82 
86 
71 
161 
Restricted cash and securities
1,258 
1 
 
 
Receivables
242 
218 
 
 
Due from (to) affiliates
2,402 
2,742 
 
 
Other
35 
35 
 
 
Total Current Assets
4,019 
3,082 
 
 
Property, Plant and Equipment, net
2,293 
2,365 
 
 
Restricted Cash and Securities
81 
81 
 
 
Goodwill and Other Intangibles Assets, net
1,232 
1,255 
 
 
Investment in Subsidiaries
0 
0 
 
 
Other Assets, net
66 
83 
 
 
Total Assets
7,691 
6,866 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
302 
271 
 
 
Current portion of long-term debt
2 
2 
 
 
Accrued payroll and employee benefits
6 
6 
 
 
Accrued interest
32 
0 
 
 
Current portion of deferred revenue
30 
36 
 
 
Other
32 
0 
 
 
Total Current Liabilities
404 
315 
 
 
Long-Term Debt, less current portion
1,257 
68 
 
 
Deferred Revenue, less current portion
58 
63 
 
 
Other Liabilities
247 
276 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
5,725 
6,144 
 
 
Total Liabilities and Stockholders' Equity (Deficit)
7,691 
6,866 
 
 
Eliminations
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
0 
0 
0 
0 
Restricted cash and securities
0 
0 
 
 
Receivables
0 
0 
 
 
Due from (to) affiliates
0 
0 
 
 
Other
0 
0 
 
 
Total Current Assets
0 
0 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
26,868 
24,038 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
26,868 
24,038 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
0 
0 
 
 
Long-Term Debt, less current portion
0 
0 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Commitments and Contingencies
 
 
 
 
Total Stockholders' Equity (Deficit)
26,868 
24,038 
 
 
Total Liabilities and Stockholders' Equity (Deficit)
$ 26,868 
$ 24,038 
 
 
Condensed Consolidating Financial Information - Statement of Cash Flows (Details) (USD $)
In Millions
9 Months Ended
Sep. 30,
2011
2010
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
$ 199 
$ 149 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(350)
(319)
(Increase) Decrease in restricted cash and securities, net
(63)
4 
Proceeds from the sale of property, plant and equipment
4 
1 
Net Cash Used in Investing Activities
(409)
(314)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
765.0 
783.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(711)
(929)
Increase (decrease) due from affiliates, net
0 
0 
Net Cash Provided by (Used in) Financing Activities
54 
(146)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(7)
Net Change in Cash and Cash Equivalents
(155)
(318)
Cash and Cash Equivalents at Beginning of Period
616 
836 
Cash and Cash Equivalents at End of Period
461 
518 
Level 3 Communications, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(129)
(131)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
Proceeds from the sale of property, plant and equipment
0 
0 
Net Cash Used in Investing Activities
0 
0 
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
292.0 
170.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(245)
(328)
Increase (decrease) due from affiliates, net
(47)
224 
Net Cash Provided by (Used in) Financing Activities
0 
66 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
(129)
(65)
Cash and Cash Equivalents at Beginning of Period
173 
236 
Cash and Cash Equivalents at End of Period
44 
171 
Level 3 Financing, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(279)
(277)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
Proceeds from the sale of property, plant and equipment
0 
0 
Net Cash Used in Investing Activities
0 
0 
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
474.0 
613.0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(463)
(599)
Increase (decrease) due from affiliates, net
267 
262 
Net Cash Provided by (Used in) Financing Activities
278 
276 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
(1)
(1)
Cash and Cash Equivalents at Beginning of Period
7 
8 
Cash and Cash Equivalents at End of Period
6 
7 
Level 3 Communications, LLC
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
153 
(28)
Cash Flows from Investing Activities:
 
 
Capital expenditures
(146)
(117)
(Increase) Decrease in restricted cash and securities, net
0 
3 
Proceeds from the sale of property, plant and equipment
1 
0 
Net Cash Used in Investing Activities
(145)
(114)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
(1)
Increase (decrease) due from affiliates, net
(29)
(19)
Net Cash Provided by (Used in) Financing Activities
(29)
(20)
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
(21)
(162)
Cash and Cash Equivalents at Beginning of Period
350 
431 
Cash and Cash Equivalents at End of Period
329 
269 
Other Non-Guarantor Subsidiaries
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
454 
585 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(204)
(202)
(Increase) Decrease in restricted cash and securities, net
(63)
1 
Proceeds from the sale of property, plant and equipment
3 
1 
Net Cash Used in Investing Activities
(264)
(200)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
(1.0)
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
(3)
(1)
Increase (decrease) due from affiliates, net
(191)
(467)
Net Cash Provided by (Used in) Financing Activities
(195)
(468)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(7)
Net Change in Cash and Cash Equivalents
(4)
(90)
Cash and Cash Equivalents at Beginning of Period
86 
161 
Cash and Cash Equivalents at End of Period
82 
71 
Eliminations
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
0 
0 
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) Decrease in restricted cash and securities, net
0 
0 
Proceeds from the sale of property, plant and equipment
0 
0 
Net Cash Used in Investing Activities
0 
0 
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
Payments on and repurchases of long-term debt, including current portions and refinancing costs
0 
0 
Increase (decrease) due from 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 
Subsequent Events (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2011
Dec. 31, 2010
1 Months Ended
Oct. 31, 2011
Senior Secured Term Loan due 2014
Tranche B II Term Loan
Issuance of debt
0 Months Ended
Nov. 4, 2011
Senior Secured Term Loan due 2014
Marketing of debt
Tranche B III Term Loan
Nov. 4, 2011
Convertible Senior Notes due 2012 (3.5%)
Marketing of debt
0 Months Ended
Nov. 4, 2011
Senior Secured Term Loan due 2014
Tranche B Term Loan
Repayment of debt
Sep. 30, 2011
Convertible Senior Notes due 2012 (3.5%)
Subsequent Events
 
 
 
 
 
 
 
Additional principal amount of debt issued
 
 
$ 650 
 
 
 
 
Debt instrument issuance as a percentage of the face amount (as a percent)
 
 
99.00% 
 
 
 
 
Discount on long-term debt
62.0 
79.0 
6.5 
 
 
 
 
Basis of interest rate on debt
 
 
LIBOR 
 
 
 
 
Interest spread on debt
 
 
4.25% 
 
 
 
 
Minimum interest spread on debt
 
 
1.50% 
 
 
 
 
Debt marketing announced by Company
 
 
 
550 
 
 
 
Debt instrument, stated interest rate (as a percent)
 
 
 
 
3.50% 
 
3.50% 
Repayments of Long-term Debt
 
 
 
 
 
$ 280