LEVEL 3 COMMUNICATIONS INC, 10-Q filed on 5/6/2016
Quarterly Report
Document and Entity Information Document
3 Months Ended
Mar. 31, 2016
May 4, 2016
Entity Information [Line Items]
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
Entity Central Index Key
0000794323 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2016 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
Yes 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
357,932,844 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Statements of Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenue
$ 2,051 
$ 2,053 
Costs and Expenses:
 
 
Network access costs
694 
723 
Network related expenses
338 
356 
Depreciation and amortization
301 
288 
Selling, general and administrative Expenses
356 
370 
Total Costs and Expenses
1,689 
1,737 
Operating Income
362 
316 
Other Income (Expense):
 
 
Interest income
1 
1 
Interest expense
(135)
(180)
Other, net
(10)
(10)
Total Other Expense
(144)
(189)
Income Before Income Taxes
218 
127 
Income Tax Expense
(94)
(5)
Net Income
$ 124 
$ 122 
Basic Earnings per Common Share
 
 
Net Income Per Share
$ 0.35 
$ 0.35 
Weighted-Average Shares Outstanding (in thousands)
356,785 
346,874 
Diluted Earnings per Common Share
 
 
Net Income Per Share
$ 0.34 
$ 0.35 
Weighted-Average Shares Outstanding (in thousands)
360,339 
350,832 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net Income
$ 124 
$ 122 
Other Comprehensive Income (Loss) net of Tax:
 
 
Foreign currency translation adjustments, net of tax effect of $8 and $0
48 
(141)
Defined benefit pension plan adjustments, net of tax effect of ($2) and $0
3 
0 
Other Comprehensive Income (Loss), Net of Tax
45 
(141)
Comprehensive Income (Loss)
$ 169 
$ (19)
Comprehensive Income Parenthetical (Parentheticals) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Comprehensive Income Parenthetical [Abstract]
 
 
Foreign currency translation adjustments, tax effect
$ 8 
$ 0 
Defined benefit pension plan adjustments, tax effect
$ (2)
$ 0 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Assets:
 
 
Cash and cash equivalents
$ 1,004 
$ 854 
Restricted cash and securities
837 
8 
Receivables, less allowances for doubtful accounts of $33 and $32, respectively
807 
757 
Other
141 
111 
Total Current Assets
2,789 
1,730 
Property, Plant and Equipment, net of accumulated depreciation of $10,625 and $10,365, respectively
9,974 
9,878 
Restricted Cash and Securities
41 
42 
Goodwill
7,746 
7,749 
Other Intangibles, net
1,074 
1,127 
Deferred Tax Assets
3,365 
3,441 
Other Assets, net
50 
50 
Total Assets
25,039 
24,017 
Liabilities and Stockholders' Equity:
 
 
Accounts payable
680 
629 
Current portion of long-term debt
781 
15 
Accrued payroll and employee benefits
146 
218 
Accrued interest
131 
108 
Current portion of deferred revenue
283 
267 
Other
166 
179 
Total Current Liabilities
2,187 
1,416 
Long-Term Debt, less current portion
10,870 
10,866 
Deferred Revenue, less current portion
1,012 
977 
Other Liabilities
628 
632 
Total Liabilities
14,697 
13,891 
Commitments and Contingencies
   
   
Stockholders’ Equity:
 
 
Preferred stock, $.01 par value, authorized 10,000,000 shares: no shares issued or outstanding
0 
0 
Common stock, $.01 par value, authorized 433,333,333 shares in both periods; 357,005,439 issued and outstanding at March 31, 2016 and 356,374,473 issued and outstanding at December 31, 2015
4 
4 
Additional paid-in capital
19,689 
19,642 
Accumulated other comprehensive loss
(256)
(301)
Accumulated deficit
(9,095)
(9,219)
Total Stockholders’ Equity
10,342 
10,126 
Total Liabilities and Stockholders’ Equity
$ 25,039 
$ 24,017 
Consolidated Balance Sheets Parentheticals (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Allowance for doubtful accounts
$ 33 
$ 32 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
$ 10,625 
$ 10,365 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
433,333,333 
433,333,333 
Common stock, shares issued
357,005,439 
356,374,473 
Common stock, shares outstanding
357,005,439 
356,374,473 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash Flows from Operating Activities:
 
 
Net Income
$ 124 
$ 122 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
301 
288 
Non-cash compensation expense attributable to stock awards
47 
31 
Accretion of debt discount and amortization of debt issuance costs
5 
7 
Accrued interest on long-term debt, net
23 
22 
Deferred income taxes
85 
(10)
Gain on sale of property, plant and equipment and other assets
0 
(1)
Other, net
(9)
21 
Changes in working capital items:
 
 
Receivables
(44)
(23)
Other current assets
(35)
(19)
Accounts payable
48 
(24)
Deferred revenue
46 
8 
Other current liabilities
(81)
(117)
Net Cash Provided by Operating Activities
510 
305 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(297)
(254)
Increase in restricted cash and securities, net
(828)
1 
Proceeds from sale of property, plant and equipment and other assets
0 
1 
Net Cash Used in Investing Activities
(1,125)
(252)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
765 
492 
Payments on and repurchases of long-term debt and capital leases
(1)
(2)
Net Cash Provided by Financing Activities
764 
490 
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(9)
Net Change in Cash and Cash Equivalents
150 
534 
Cash and Cash Equivalents at Beginning of Period
854 
580 
Cash and Cash Equivalents at End of Period
1,004 
1,114 
Supplemental Disclosure of Cash Flow Information:
 
 
Cash interest paid
112 
147 
Income taxes paid, net of refunds
7 
7 
Non-cash Financing Activities:
 
 
Capital lease obligations incurred
0 
1 
Long-term debt conversion into equity
0 
333 
Accrued interest conversion into equity
$ 0 
$ 10 
Organization and Summary of Significant Accounting Policies (Notes)
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies

Description of Business

Level 3 Communications, Inc. and subsidiaries (the "Company" or "Level 3") is an international facilities-based provider (that is, a provider that owns or leases a substantial portion of the plant, property and equipment necessary to provide its services) of a broad range of integrated communications services. The Company created its communications network by constructing its own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. The Company designed its network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.

Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of Level 3 Communications, Inc. and subsidiaries in which it has a controlling interest. All significant intercompany accounts and transactions have been eliminated. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

As part of its consolidation policy, the Company considers its controlled subsidiaries, investments in businesses in which the Company is not the primary beneficiary or does not have effective control but has the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give the Company rights to economic risks or rewards of a legal entity. The Company does not have variable interests in a variable interest entity where it is required to consolidate the entity as the primary beneficiary.
    
Prior to October 1, 2015, the Company included the results of its wholly owned Venezuelan subsidiary in its Consolidated Financial Statements using the consolidation method of accounting. The Company’s Venezuelan subsidiary was in the Latin America segment and had total revenue of $23 million and Adjusted EBITDA of $15 million for the three months ended March 31, 2015. For more information on the Company's segments and non-GAAP measures see Note 8 - Segment Information.
Venezuelan exchange control regulations have resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and U.S. dollar, and have restricted the Company's Venezuelan operations’ ability to pay dividends and settle intercompany obligations in U.S. dollars. The severe currency controls imposed by the Venezuelan government have significantly limited the ability to realize the benefits from earnings of the Company’s Venezuelan operations and access the resulting liquidity provided by those earnings in U.S. dollars. The Company expects that this condition will continue for the foreseeable future. Additionally, government regulations affecting the Company's ability to manage its Venezuelan subsidiary’s capital structure, purchasing, product pricing, customer invoicing and collections, and labor relations; and the current political and economic situation within Venezuela have resulted in an acute degradation in the Company's ability to make key operational decisions for its Venezuelan operations. This lack of exchangeability into U.S. dollars and the degradation in the Company's ability to control key operational decisions has resulted in a lack of control over the Company's Venezuelan subsidiary for U.S. accounting purposes. Therefore, while continuing to wholly own its Venezuelan subsidiary, the Company concluded it no longer met the accounting criteria for consolidation and deconsolidated its Venezuelan subsidiary on September 30, 2015, and began accounting for its variable interest investment in its Venezuelan operations using the cost method of accounting. The factors that led to the Company's conclusions at the end of the third quarter 2015 continued to exist through the end of the first quarter 2016. Any dividends from the Company's Venezuelan subsidiary are recorded as other income upon receipt of the cash in U.S. dollars. Prior period results have not been adjusted to reflect the deconsolidation of the Company's Venezuelan subsidiary.
The accompanying Consolidated Balance Sheet as of December 31, 2015, which was derived from audited Consolidated Financial Statements, and the unaudited interim Consolidated Financial Statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015. In the opinion of the Company’s management, these financial statements contain all adjustments necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the interim periods presented herein. The results of operations for an interim period are not necessarily indicative of the results of operations expected for a full fiscal year.
The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates under different assumptions or conditions and such differences could be material.

Reclassifications

Certain amounts in the prior year Consolidated Financial Statements and accompanying footnotes have been reclassified to conform to the current year's presentation primarily pursuant to the adoption of Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs. As of December 31, 2015, approximately $19 million of current debt issuance costs have been reclassified from other current assets to long-term debt, less current portion and approximately $109 million of non-current debt issuance costs have been reclassified from other non-current assets to long-term debt, less current portion.

Recently Issued Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the effect the adoption of this standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (ASC Topic 842), which requires entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. This ASU will replace most existing leasing guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early application is permitted. The standard requires the use of a modified retrospective transition method. The Company is evaluating the effect that ASU 2016-02 will have on its Consolidated Financial Statements and related disclosures, and expects the new guidance to significantly increase the reported assets and liabilities on its Consolidated Balance Sheets.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, ASC Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its Consolidated Financial Statements and related disclosures and has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
Earnings Per Share (Notes)
Earnings Per Share
Earnings Per Share

The Company computes basic earnings per share by dividing net income for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing the net income for the period by the weighted average number of shares of common stock outstanding during the period and including the dilutive effect of common stock that would be issued assuming conversion or exercise of outstanding convertible notes and stock-based compensation awards.

The effect of approximately 4 million total outperform stock appreciation rights ("OSOs"), restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs") outstanding at March 31, 2016 has been included in the computation of diluted earnings per share for the three months ended March 31, 2016. The effect of approximately 4 million total OSOs and RSUs outstanding at March 31, 2015 has been included in the computation of diluted earnings per share for the three months ended March 31, 2015. PRSUs were excluded from the computation of diluted earnings per share for the three months ended March 31, 2015, as they were contingently issuable and no shares would have been issued if this period were the end of the contingency period.
Other Intangible Assets (Notes)
Acquired Intangible Assets
Other Intangible Assets

Other intangible assets as of March 31, 2016 and December 31, 2015 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
March 31, 2016
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,975

 
$
(977
)
 
$
998

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
230

 
(169
)
 
61

 
2,260

 
(1,201
)
 
1,059

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,275

 
$
(1,201
)
 
$
1,074

December 31, 2015
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,975

 
$
(932
)
 
$
1,043

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
230

 
(161
)
 
69

 
2,260

 
(1,148
)
 
1,112

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,275

 
$
(1,148
)
 
$
1,127



Finite-lived intangible asset amortization expense was $53 million for the three months ended March 31, 2016 and $56 million for the three months ended March 31, 2015.

At March 31, 2016, the weighted average remaining useful lives of the Company's finite-lived intangible assets was 5.5 years in total; 5.6 years for customer contracts and relationships, and 3.1 years for patents and developed technology.

As of March 31, 2016, estimated amortization expense for the Company’s finite-lived intangible assets over the next five years is as follows (dollars in millions):

2016 (remaining nine months)
$
159

2017
196

2018
193

2019
181

2020
166

2021
143

Thereafter
21

 
$
1,059

Fair Value of Financial Instruments (Notes)
Fair Value of Financial Instruments
Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, restricted cash and securities, receivables, accounts payable, capital leases, other liabilities and long-term debt (including the current portion). The carrying values of cash and cash equivalents, restricted cash and securities, receivables, accounts payable, capital leases and other liabilities approximated their fair values at March 31, 2016 and December 31, 2015.

GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements and disclosures for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as interest and foreign exchange rates, transfer restrictions, and risk of non-performance.

Fair Value Hierarchy

GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value measurement of each class of assets and liabilities is dependent upon its categorization within the fair value hierarchy, based upon the lowest level of input that is significant to the fair value measurement of each class of asset and liability. GAAP establishes three levels of inputs that may be used to measure fair value:

Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities.

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

Level 3— Unobservable inputs for the asset or liability.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period. There were no transfers within the fair value hierarchy during each of the three months ended March 31, 2016 and March 31, 2015.

The table below presents the fair values for the Company’s long-term debt as well as the input levels used to determine these fair values as of March 31, 2016 and December 31, 2015:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
March 31,
2016
 
December 31,
2015
 
March 31,
2016
 
December 31,
2015
 
March 31,
2016
 
December 31,
2015
Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
4,558

 
$
4,556

 
$
4,612

 
$
4,570

 
$
—

 
$
—

Senior Notes
 
6,894

 
6,126

 
7,115

 
6,298

 
—

 
—

Capital Leases and Other
 
199

 
199

 
—

 
—

 
199

 
199

Total Long-term Debt, including the current portion
 
$
11,651

 
$
10,881

 
$
11,727

 
$
10,868

 
$
199

 
$
199



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

Term Loans

The fair value of the Term Loans referenced above was approximately $4.6 billion at both March 31, 2016 and December 31, 2015. The fair value of each loan is based on quoted prices for identical terms and maturities. Each loan tranche is actively traded.

Senior Notes

The fair value of the Senior Notes referenced above was approximately $7.1 billion at March 31, 2016 and $6.3 billion at December 31, 2015, respectively, based on quoted prices for identical terms and maturities. Each series of notes is actively traded.

Capital Leases

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

    The following table summarizes the Company’s long-term debt (amounts in millions):
 
Date of
 
March 31,
2016
December 31, 2015
 
Issuance/Amendment
Maturity
Interest Payments
Interest Rate
Amount
Amount
Senior Secured Term Loans:
 
 
 
 
 
 
Borrowed by Level 3 Financing, Inc.
Tranche B-III 2019 Term Loan (1)(4)
Aug 2013
Aug 2019
Quarterly
LIBOR +3.00%
$
815

$
815

Tranche B 2020 Term Loan (1)(4)
Oct 2013
Jan 2020
Quarterly
LIBOR +3.00%
1,796

1,796

Tranche B-II 2022 Term Loan (1)(4)
May 2015
May 2022
Quarterly
LIBOR +2.75%
2,000

2,000

Senior Notes:
 
 
 
 
 
 
Issued by Level 3 Financing, Inc.
Floating Rate Senior Notes due 2018 (2)(4)
Nov 2013
Jan 2018
May/Nov
6-Month LIBOR +3.50%
300

300

7% Senior Notes due 2020 (2)(5)
Aug 2012
Jun 2020
Jun/Dec
7.000%
775

775

6.125% Senior Notes due 2021 (2)
Nov 2013
Jan 2021
Apr/Oct
6.125%
640

640

5.375% Senior Notes due 2022 (2)
Aug 2014
Aug 2022
May/Nov
5.375%
1,000

1,000

5.625% Senior Notes due 2023 (2)
Jan 2015
Feb 2023
Jun/Dec
5.625%
500

500

5.125% Senior Notes due 2023 (2)
Apr 2015
May 2023
Mar/Sept
5.125%
700

700

5.375% Senior Notes due 2025 (2)
Apr 2015
May 2025
Mar/Sept
5.375%
800

800

5.375% Senior Notes due 2024 (2)
Nov 2015
Jan 2024
Jan/Jul
5.375%
900

900

5.25% Senior Notes due 2026 (6)
Mar 2016
Mar 2026
Apr/Oct
5.250%
775

—

Issued by Level 3 Communications, Inc.
5.75% Senior Notes due 2022 (3)
Dec 2014
Dec 2022
Mar/Sept
5.750%
600

600

Capital Leases
 
 
 
 
199

199

Total Debt Obligations
 
 
 
 
11,800

11,025

Unamortized discounts
 
 
 
 
(15
)
(16
)
Unamortized debt issuance costs
 
 
 
 
(134
)
(128
)
Current portion of long-term debt
 
 
 
 
(781
)
(15
)
Total Long-Term Debt
 
 
 
 
$
10,870

$
10,866

(1) The term loans are secured obligations and guaranteed by the Company and Level 3 Communications, LLC and certain other subsidiaries.
(2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by the Company and Level 3 Communications, LLC.
(3) The notes were not guaranteed by any of the Company’s subsidiaries.
(4) The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of March 31, 2016 and December 31, 2015. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of March 31, 2016 and December 31, 2015. The Floating Rate Senior Notes due 2018 had an interest rate of 4.101% as of March 31, 2016 and December 31, 2015. The interest rate on the Tranche B-III 2019 Term Loan, and the Tranche B 2020 Term Loan are set with a minimum LIBOR of 1.00%, and the Tranche B-II 2022 Term Loan is set with a minimum LIBOR of 0.75%.
(5) The 7% Senior Notes due 2020 were redeemed on April 21, 2016 as discussed below.
(6) The notes are fully and unconditionally guaranteed on a unsubordinated unsecured basis by the Company.

Senior Secured Term Loans

As of March 31, 2016, Level 3 Financing, Inc., the Company's direct wholly owned subsidiary ("Level 3 Financing") had a senior secured credit facility consisting of $815 million Tranche B-III Term Loan due 2019, $1.796 billion Tranche B Term Loan due 2020 and $2 billion Tranche B-II Term Loan due 2022.


Senior Notes

All of the notes pay interest semiannually, and allow for the redemption of the notes at the option of the issuer upon not less than 30 or more than 60 days’ prior notice by paying the greater of 101% of the principal amount or a “make-whole” amount, plus accrued interest. In addition, the notes also have a provision that allows for an additional right of optional redemption using cash proceeds received from the sale of equity securities. For specific details of these features and requirements, including the applicable premiums and timing, refer to the indentures for the respective senior notes in connection with the original issuances.

7% Senior Notes due 2020 and 5.25% Senior Notes due 2026

On March 22, 2016, Level 3 Financing issued $775 million in aggregate principal amount of its 5.25% Senior Notes due 2026 (the “5.25% Senior Notes due 2026”). The 5.25% Senior Notes due 2026 are fully and unconditionally guaranteed on an unsubordinated unsecured basis by the Company. In addition, each of Level 3 Communications, Inc. and Level 3 Financing has agreed to endeavor in good faith using commercially reasonable efforts to cause Level 3 Communications, LLC to obtain all material governmental authorizations and consents required in order for it to guarantee the 5.25% Senior Notes due 2026 at the earliest practicable date and to enter into a guarantee of the 5.25% Senior Notes due 2026 promptly thereafter.

The 5.25% Senior Notes due 2026 were not originally registered under the Securities Act of 1933, as amended. A registration rights agreement with respect to these notes became effective as of March 22, 2016.

On April 21, 2016, all of the outstanding principal amount of the 7% Senior Notes Due 2020 was redeemed at a redemption price equal to 104.138% of the principal amount, along with accrued and unpaid interest to but excluding the redemption date. To fund the redemption of these notes, Level 3 Financing used the net proceeds, along with cash on hand, from the March 22, 2016 issuance of its 5.25% Senior Notes due 2026. The net proceeds, along with cash on hand totaling $828 million were in Restricted Cash and Securities on the Consolidated Balance Sheet as of March 31, 2016. The Company will recognize a loss on modification and extinguishment of debt of approximately $40 million in Other Expense in the second quarter of 2016 as a result of the redemption of the 7% Senior Notes due 2020.

Capital Leases

As of March 31, 2016, the Company had $199 million of capital leases. The Company leases property, equipment, certain dark fiber facilities and metro fiber under non-cancelable IRU agreements that are accounted for as capital leases. The average interest rate on these capital leases approximated 5.8% as of March 31, 2016.

Covenant Compliance

At March 31, 2016 and December 31, 2015, the Company was in compliance with the financial covenants on all outstanding debt issuances.






Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts and debt issuance costs) were as follows as of March 31, 2016 (dollars in millions):

2016 (remaining nine months)
$
789

2017
7

2018
307

2019
822

2020
1,804

2021
10

Thereafter
8,061

 
$
11,800

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

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

(dollars in millions)
 
Net Foreign Currency Translation Adjustment
 
Defined Benefit Pension Plans
 
Total
Balance at December 31, 2014
 
$
(111
)
 
$
(36
)
 
$
(147
)
Other comprehensive loss before reclassifications
 
(141
)
 
—

 
(141
)
Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
—

Balance at March 31, 2015
 
$
(252
)
 
$
(36
)
 
$
(288
)

Balance at December 31, 2015
 
$
(273
)
 
$
(28
)
 
$
(301
)
Other comprehensive income (loss) before reclassifications
 
48

 
(2
)
 
46

Amounts reclassified from accumulated other comprehensive loss
 
—

 
(1
)
 
(1
)
Balance at March 31, 2016
 
$
(225
)

$
(31
)

$
(256
)
Stock-Based Compensation (Notes)
Stock-Based Compensation
Stock-Based Compensation
The following table summarizes non-cash compensation expense attributable to stock-based awards for the three months ended March 31, 2016 and 2015 (dollars in millions):
 
Three Months Ended March 31,
 
2016
 
2015
Outperform Stock Appreciation Rights
$
1

 
$
2

Restricted Stock Units
21

 
11

Performance Restricted Stock Units
14

 
5

401(k) Match Expense
11

 
13

 
$
47

 
$
31



As of March 31, 2016, there were less than 1 million OSOs outstanding, and approximately 5 million total restricted stock and performance restricted stock units outstanding.
Segment Information (Notes)
Segment Reporting Disclosure [Text Block]
Segment Information

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

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

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

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

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

The following table presents revenue by segment:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Core Network Services Revenue:
 
 
 
 
North America
 
$
1,601

 
$
1,535

EMEA
 
191

 
207

Latin America
 
155

 
185

Total Core Network Services Revenue
 
1,947

 
1,927

 
 
 
 
 
Wholesale Voice Services Revenue:
 
 
 
 
North America
 
99

 
118

EMEA
 
3

 
4

Latin America
 
2

 
4

Total Wholesale Voice Services Revenue
 
104

 
126

 
 
 
 
 
Total Revenue
 
$
2,051

 
$
2,053




The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Adjusted EBITDA:
 
 
 
 
North America
 
$
812

 
$
740

EMEA
 
54

 
56

Latin America
 
74

 
80

Unallocated Corporate Expenses
 
(230
)
 
(241
)
Adjusted EBITDA
 
710

 
635

Income Tax Expense
 
(94
)
 
(5
)
Total Other Expense
 
(144
)
 
(189
)
Depreciation and Amortization
 
(301
)
 
(288
)
Non-Cash Stock Compensation Attributable to Stock Awards
 
(47
)
 
(31
)
Net Income
 
$
124

 
$
122



The following table presents capital expenditures by segment and reconciles capital expenditures by segment to total capital expenditures:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Capital Expenditures:
 
 
 
 
North America
 
$
195

 
$
167

EMEA
 
39

 
28

Latin America
 
23

 
28

Unallocated Corporate Capital Expenditures
 
40

 
31

Total Capital Expenditures
 
$
297

 
$
254



The following table presents total assets by segment:
(dollars in millions)
 
March 31, 2016
 
December 31, 2015
Assets:
 
 
 
 
North America
 
$
20,940

 
$
19,961

EMEA
 
1,798

 
1,796

Latin America
 
2,173

 
2,131

Other
 
128

 
129

Total Assets
 
$
25,039

 
$
24,017




The changes in the carrying amount of goodwill by segment during the three months ended March 31, 2016 were as follows (in millions):
 
 
North America
 
EMEA
 
Latin America
 
Total
Balance at December 31, 2015
$
7,024


$
129

 
$
596

 
$
7,749

  Effect of foreign currency rate change
—

 
(3
)
 
—

 
(3
)
Balance at March 31, 2016
$
7,024


$
126

 
$
596

 
$
7,746

 
There were no events or changes in circumstances during the first three months of 2016 that indicated the carrying value of goodwill may not be recoverable.
Commitments, Contingencies and Other Items (Notes)
Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items

The Company is subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect its financial condition, future results of operations or cash flows. Amounts accrued for such contingencies aggregate to $120 million and are included in “Other” current liabilities and “Other Liabilities” in the Company's Consolidated Balance Sheet at March 31, 2016. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued would have no effect on the Company's results of operations but could materially adversely affect its cash flows for the affected period.

The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Below is a description of material legal proceedings and other contingencies pending at March 31, 2016. Although the Company believes it has accrued for these matters in accordance with the accounting guidance for contingencies, contingencies are inherently unpredictable and it is possible that results of operations or cash flows could be materially and adversely affected in any particular period by unfavorable developments in, or resolution or disposition of, one or more of these matters. For those contingencies in respect of which the Company believes that it is reasonably possible that a loss may result that is materially in excess of the accrual (if any) established for the matter, the Company has either provided an estimate of such possible loss or range of loss or included a statement that such an estimate cannot be made. In addition to the contingencies described below, the Company is party to many other legal proceedings and contingencies, the resolution of which is not expected to materially affect its financial condition or future results of operations beyond the amounts accrued.

Rights-of-Way Litigation

The Company is party to a number of purported class action lawsuits involving its right to install fiber optic cable network in railroad right-of-ways adjacent to plaintiffs' land. In general, the Company obtained the rights to construct its networks from railroads, utilities, and others, and has installed its networks along the rights-of-way so granted. Plaintiffs in the purported class actions assert that they are the owners of lands over which the fiber optic cable networks pass, and that the railroads, utilities and others who granted the Company the right to construct and maintain its network did not have the legal authority to do so. The complaints seek damages on theories of trespass, unjust enrichment and slander of title and property, as well as punitive damages. The Company has also received, and may in the future receive, claims and demands related to rights-of-way issues similar to the issues in these cases that may be based on similar or different legal theories. The Company has defeated motions for class certification in a number of these actions but expects that, absent settlement of these actions, plaintiffs in the pending lawsuits will continue to seek certification of statewide or multi-state classes. The only lawsuit in which a class was certified against the Company, absent an agreed upon settlement, occurred in Koyle, et. al. v. Level 3 Communications, Inc., et. al., a purported two state class action filed in the United States District Court for the District of Idaho. The Koyle lawsuit has been dismissed pursuant to a settlement reached in November 2010 as described further below.

The Company negotiated a series of class settlements affecting all persons who own or owned land next to or near railroad rights of way in which it has installed its fiber optic cable networks. The United States District Court for the District of Massachusetts in Kingsborough v. Sprint Communications Co. L.P. granted preliminary approval of the proposed settlement; however, on September 10, 2009, the court denied a motion for final approval of the settlement on the basis that the court lacked subject matter jurisdiction and dismissed the case.

In November 2010, the Company negotiated revised settlement terms for a series of state class settlements affecting all persons who own or owned land next to or near railroad rights of way in which the Company has installed its fiber optic cable networks. The Company is currently pursuing presentment of the settlement in applicable jurisdictions. The settlements, affecting current and former landowners, have received final federal court approval in the vast majority of applicable states and the parties are actively engaged in, or have completed, the claims process for those states, including payment of claims. The Company continues to seek approval in the remaining two states.

Management believes that the Company has substantial defenses to the claims asserted in all of these actions and intends to defend them vigorously if a satisfactory settlement is not ultimately approved for all affected landowners.

Peruvian Tax Litigation

Beginning in 2005, one of the Company's Peruvian subsidiaries received a number of assessments for tax, penalties and interest for calendar years 2001 and 2002. Peruvian tax authorities ("SUNAT") took the position that the Peruvian subsidiary incorrectly documented its importations resulting in additional income tax withholding and value-added taxes ("VAT"). The total amount of the asserted claims, including potential interest and penalties, was $26 million, consisting of $3 million for income tax withholding in connection with the import of services for calendar years 2001 and 2002, $7 million for VAT in connection with the import of services for calendar years 2001 and 2002, and $16 million in connection with the disallowance of VAT credits for periods beginning in 2005. After taking into account the developments described below, as well as the accrued interest and foreign exchange effects, the total amount of exposure is $31 million at March 31, 2016.

The Company challenged the tax assessments during 2005 by filing administrative claims before SUNAT. During August 2006 and June 2007, SUNAT rejected the Company's administrative claims, thereby confirming the assessments. Appeals were filed in September 2006 and July 2007 with the Tribunal Fiscal, the highest level of administrative review, which is not part of the Peru judiciary (the "Tribunal"). The 2001 and 2002 assessed withholding tax assessments were resolved in favor of the Company in separate administrative resolutions; however, the penalties with respect to withholding tax remain at issue in the administrative appeals.

In October 2011, the Tribunal issued its administrative resolution with respect to the calendar year 2002 tax period regarding VAT, associated penalties and penalties associated with withholding taxes, deciding the central issue underlying the assessments in the government's favor, while confirming the assessment in part and denying a portion of the assessment on procedural grounds. The Company appealed the Tribunal's October 2011 administrative resolutions to the judicial court in Peru. In September 2014, the first judicial court rendered a decision largely in the Company’s favor on the central issue underlying the assessments. SUNAT appealed the court’s decision to the next judicial level. The court of appeal remanded the case to the first judicial court for further development of the facts and legal analysis supporting its decision. In April 2016, the first judicial level rendered a decision in the Company’s favor on the central issue underlying the assessments.      

In October 2013, the Tribunal notified the Company of its July 2013 administrative resolution with respect to the calendar year 2001 tax period regarding VAT, associated penalties and penalties associated with withholding taxes, determining the central issue underlying the assessments in the government's favor, while confirming the assessment in part and denying a portion of the assessment on procedural grounds. The Company appealed the Tribunal's July 2013 administrative resolutions to the judicial court in Peru. In April 2015, the first judicial court rendered a decision largely in SUNAT’s favor on the central issue underlying the assessments. The Company has appealed the court’s decision to the next judicial level. In April 2016, the court of appeal rendered a decision that declared null the April 2015 decision and remanded the case to the first judicial court for further development of the facts and legal analysis supporting its decision. 

In December 2013, SUNAT initiated an audit of calendar year 2001. In June 2014, the Company was served with SUNAT’s assessments of the 2001 VAT credits declared null by the Tribunal and the corresponding fine. In July 2014, the Company challenged these assessments by filing administrative claims before SUNAT. In January 2015, SUNAT rejected the administrative claims, thereby confirming the assessments. The Company filed an appeal with the Tribunal in February 2015. In May 2015, the Tribunal notified the Company of its administrative resolution declaring the assessments and corresponding fines null. The time for SUNAT to appeal this resolution has closed. Under local practice, notification of an appeal can take several months. Counsel confirmed in the first quarter of 2016 that SUNAT has not filed an appeal to the resolution. Nevertheless, SUNAT retains the right to reissue the assessments declared null or start a new audit. However, the Company is under no obligation to provide additional information and any fine issued by SUNAT based on the same information that it has already used in the past would be declared null. Accordingly, in March 2016, the Company released an accrual of approximately $15 million for an assessment and associated interest.

Employee Severance and Contractor Termination Disputes

A number of former employees and third-party contractors have asserted a variety of claims in litigation against certain Latin American subsidiaries of the Company for separation pay, severance, commissions, pension benefits, unpaid vacation pay, breach of employment contracts, unpaid performance bonuses, property damages, moral damages and related statutory penalties, fines, costs and expenses (including accrued interest, attorneys fees and statutorily mandated inflation adjustments) as a result of their separation from the Company or termination of service relationships. The Company is vigorously defending itself against the asserted claims, which aggregate to approximately $42 million at March 31, 2016.

Brazilian Tax Claims

In December 2004, March 2009, April 2009 and July 2014, the São Paulo state tax authorities issued tax assessments against one of the Company's Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenue from leasing movable properties (in the case of the December 2004, March 2009 and July 2014 assessments) and revenue from the provision of Internet access services (in the case of the April 2009 and July 2014 assessments), by treating such activities as the provision of communications services, to which the ICMS tax applies. During the third quarter of 2014, the Company released an accrual of $6 million for tax, penalty and associated interest corresponding to the ICMS applicable on the provision of Internet access services due to the expiration of the statute of limitations for the January 2008 to June 2009 tax periods. In September 2002, July 2009 and May 2012, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on similar issues. The Company has filed objections to these assessments, arguing that the lease of assets and the provision of Internet access are not communication services subject to ICMS. The objections to the September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and the Company has appealed those decisions to the judicial courts. In October 2012 and June 2014, the Company received favorable rulings from the lower court on the December 2004 and March 2009 assessments regarding equipment leasing, but those rulings are subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the April and July 2009 and May 2012 assessments are still pending final administrative decisions. The July 2014 assessment was confirmed during the fourth quarter of 2014 at the first administrative level and the Company appealed this decision to the second administrative level. During the fourth quarter of 2014, the Company entered into an amnesty with the Rio de Janeiro state tax authorities with respect to potential ICMS liability for the 2008 tax period. As a result, the Company paid $5 million and released an accrual of $3 million of tax corresponding to the ICMS applicable on the provision of Internet access services.

The Company is vigorously contesting all such assessments in both states, and in particular, views the assessment of ICMS on revenue from leasing movable properties to be without merit. Nevertheless, the Company believes that it is reasonably possible that these assessments could result in a loss of up to $47 million at March 31, 2016 in excess of the accruals established for these matters.

Letters of Credit

It is customary for Level 3 to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on behalf of Level 3 in accordance with specified terms and conditions. As of March 31, 2016 and December 31, 2015, Level 3 had outstanding letters of credit or other similar obligations of approximately $48 million and $46 million, respectively, of which $42 million and $43 million are collateralized by cash that is reflected on the Consolidated Balance Sheets as restricted cash and securities. The Company does not believe exposure to loss related to its letters of credit is material.
Condensed Consolidating Financial Information (Notes)
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information

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

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

The operating activities of the separate legal entities included in the Company’s Consolidated Financial Statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2016

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

 
$
—

 
$
866

 
$
1,219

 
$
(34
)
 
$
2,051

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
408

 
(34
)
 
694

Network Related Expenses
—

 
—

 
237

 
101

 
—

 
338

Depreciation and Amortization
—

 
—

 
88

 
213

 
—

 
301

Selling, General and Administrative Expenses
1

 
1

 
250

 
104

 
—

 
356

Total Costs and Expenses
1

 
1

 
895

 
826

 
(34
)
 
1,689

Operating Income (Loss)
(1
)
 
(1
)
 
(29
)
 
393

 
—

 
362

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(9
)
 
(128
)
 
(1
)
 
3

 
—

 
(135
)
Interest income (expense) affiliates, net
342

 
531

 
(801
)
 
(72
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(212
)
 
(541
)
 
199

 
—

 
554

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
121

 
(138
)
 
(601
)
 
(80
)
 
554

 
(144
)
Income (Loss) before Income Taxes
120

 
(139
)
 
(630
)
 
313

 
554

 
218

Income Tax (Benefit) Expense
4

 
(73
)
 
(1
)
 
(24
)
 
—

 
(94
)
Net Income (Loss)
124

 
(212
)
 
(631
)
 
289

 
554

 
124

Other Comprehensive Income (Loss), Net of Income Taxes
45

 
—

 
—

 
45

 
(45
)
 
45

Comprehensive Income (Loss)
$
169

 
$
(212
)
 
$
(631
)
 
$
334

 
$
509

 
$
169

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2015

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

 
$
—

 
$
818

 
$
1,287

 
$
(52
)
 
$
2,053

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
455

 
(52
)
 
723

Network Related Expenses
—

 
—

 
230

 
126

 
—

 
356

Depreciation and Amortization
—

 
—

 
74

 
214

 
—

 
288

Selling, General and Administrative Expenses
1

 
—

 
247

 
122

 
—

 
370

Total Costs and Expenses
1

 
—

 
871

 
917

 
(52
)
 
1,737

Operating (Loss) Income
(1
)
 
—

 
(53
)
 
370

 
—

 
316

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(19
)
 
(155
)
 
(1
)
 
(5
)
 
—

 
(180
)
Interest income (expense) affiliates, net
333

 
501

 
(766
)
 
(68
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(191
)
 
(536
)
 
177

 
—

 
550

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
123

 
(190
)
 
(588
)
 
(84
)
 
550

 
(189
)
Income (Loss) before Income Taxes
122

 
(190
)
 
(641
)
 
286

 
550

 
127

Income Tax Expense
—

 
(1
)
 
—

 
(4
)
 
—

 
(5
)
Net Income (Loss)
122

 
(191
)
 
(641
)
 
282

 
550

 
122

Other Comprehensive Income (Loss), Net of Income Taxes
(141
)
 
—

 
—

 
(141
)
 
141

 
(141
)
Comprehensive Income (Loss)
$
(19
)
 
$
(191
)
 
$
(641
)
 
$
141

 
$
691

 
$
(19
)
Condensed Consolidating Balance Sheets
March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004

Restricted cash and securities
—

 
829

 
1

 
7

 
—

 
837

Receivables, less allowances for doubtful accounts
—

 
—

 
48

 
759

 
—

 
807

Due from affiliates
12,778

 
23,210

 
—

 
2,211

 
(38,199
)
 
—

Other
—

 
—

 
86

 
55

 
—

 
141

Total Current Assets
12,790

 
24,045

 
1,021

 
3,132

 
(38,199
)
 
2,789

Property, Plant, and Equipment, net
—

 
—

 
3,528

 
6,446

 
—

 
9,974

Restricted Cash and Securities
27

 
—

 
13

 
1

 
—

 
41

Goodwill and Other Intangibles, net
—

 
—

 
360

 
8,460

 
—

 
8,820

Investment in Subsidiaries
16,800

 
17,709

 
3,730

 
—

 
(38,239
)
 
—

Deferred Tax Assets
42

 
2,775

 
—

 
548

 
—

 
3,365

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

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

 
$
2

 
$
297

 
$
381

 
$
—

 
$
680

Current portion of long-term debt
—

 
766

 
2

 
13

 
—

 
781

Accrued payroll and employee benefits
—

 
—

 
103

 
43

 
—

 
146

Accrued interest
3

 
120

 
—

 
8

 
—

 
131

Current portion of deferred revenue
—

 
—

 
117

 
166

 
—

 
283

Due to affiliates
—

 
—

 
38,199

 
—

 
(38,199
)
 
—

Other
—

 
—

 
121

 
45

 
—

 
166

Total Current Liabilities
3

 
888

 
38,839

 
656

 
(38,199
)
 
2,187

Long-Term Debt, less current portion
591

 
10,094

 
14

 
171

 
—

 
10,870

Deferred Revenue, less current portion
—

 
—

 
708

 
304

 
—

 
1,012

Other Liabilities
15

 
—

 
135

 
478

 
—

 
628

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
29,050

 
33,547

 
(31,032
)
 
17,016

 
(38,239
)
 
10,342

Total Liabilities and Stockholders' Equity (Deficit)
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

Condensed Consolidating Balance Sheets
December 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
727

 
$
109

 
$
—

 
$
854

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
47

 
710

 
—

 
757

Due from affiliates
12,415

 
22,759

 
—

 
2,816

 
(37,990
)
 
—

Other
—

 
—

 
56

 
55

 
—

 
111

Total Current Assets
12,427

 
22,765

 
831

 
3,697

 
(37,990
)
 
1,730

Property, Plant, and Equipment, net
—

 
—

 
3,423

 
6,455

 
—

 
9,878

Restricted Cash and Securities
27

 
—

 
14

 
1

 
—

 
42

Goodwill and Other Intangibles, net
—

 
—

 
363

 
8,513

 
—

 
8,876

Investment in Subsidiaries
16,772

 
17,714

 
3,734

 
—

 
(38,220
)
 
—

Deferred Tax Assets
38

 
2,847

 
—

 
556

 
—

 
3,441

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

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

 
$
1

 
$
195

 
$
433

 
$
—

 
$
629

Current portion of long-term debt
—

 
—

 
2

 
13

 
—

 
15

Accrued payroll and employee benefits
—

 
—

 
186

 
32

 
—

 
218

Accrued interest
11

 
90

 
—

 
7

 
—

 
108

Current portion of deferred revenue
—

 
—

 
119

 
148

 
—

 
267

Due to affiliates
—

 
—

 
37,990

 
—

 
(37,990
)
 
—

Other
—

 
—

 
115

 
64

 
—

 
179

Total Current Liabilities
11

 
91

 
38,607

 
697

 
(37,990
)
 
1,416

Long-Term Debt, less current portion
591

 
10,092

 
15

 
168

 
—

 
10,866

Deferred Revenue, less current portion
—

 
—

 
680

 
297

 
—

 
977

Other Liabilities
15

 
—

 
133

 
484

 
—

 
632

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
28,647

 
33,143

 
(31,058
)
 
17,614

 
(38,220
)
 
10,126

Total Liabilities and Stockholders' Equity (Deficit)
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(17
)
 
$
(92
)
 
$
130

 
$
489

 
$
—

 
$
510

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(138
)
 
—

 
(297
)
(Increase) decrease in restricted cash and securities, net
—

 
(829
)
 
1

 
—

 
—

 
(828
)
Net Cash Used in Investing Activities
—

 
(829
)
 
(158
)
 
(138
)
 
—

 
(1,125
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
765

 
—

 
—

 
—

 
765

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

 
—

 
—

 
(1
)
 
—

 
(1
)
Increase (decrease) due from/to affiliates, net
17

 
156

 
187

 
(360
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
17

 
921

 
187

 
(361
)
 
—

 
764

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
—

 
—

 
159

 
(9
)
 
—

 
150

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004

Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(7
)
 
$
(137
)
 
$
(82
)
 
$
531

 
$
—

 
$
305

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(77
)
 
(177
)
 
—

 
(254
)
Decrease in restricted cash and securities, net
—

 
—

 
1

 
—

 
—

 
1

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
—

 
—

 
(76
)
 
(176
)
 
—

 
(252
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
492

 
—

 
—

 
—

 
492

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

 
—

 
—

 
(2
)
 
—

 
(2
)
Increase (decrease) due from/to affiliates, net
14

 
(355
)
 
692

 
(351
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
14

 
137

 
692

 
(353
)
 
—

 
490

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(9
)
 
—

 
(9
)
Net Change in Cash and Cash Equivalents
7

 
—

 
534

 
(7
)
 
—

 
534

Cash and Cash Equivalents at Beginning of Period
7

 
5

 
307

 
261

 
—

 
580

Cash and Cash Equivalents at End of Period
$
14

 
$
5

 
$
841

 
$
254

 
$
—

 
$
1,114

Organization and Summary of Significant Accounting Policies (Policies)
Description of Business 
Description of Business

Level 3 Communications, Inc. and subsidiaries (the "Company" or "Level 3") is an international facilities-based provider (that is, a provider that owns or leases a substantial portion of the plant, property and equipment necessary to provide its services) of a broad range of integrated communications services. The Company created its communications network by constructing its own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. The Company designed its network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.
Principles of Consolidation and Basis of Presentation 
Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of Level 3 Communications, Inc. and subsidiaries in which it has a controlling interest. All significant intercompany accounts and transactions have been eliminated. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

As part of its consolidation policy, the Company considers its controlled subsidiaries, investments in businesses in which the Company is not the primary beneficiary or does not have effective control but has the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give the Company rights to economic risks or rewards of a legal entity. The Company does not have variable interests in a variable interest entity where it is required to consolidate the entity as the primary beneficiary.
    
Prior to October 1, 2015, the Company included the results of its wholly owned Venezuelan subsidiary in its Consolidated Financial Statements using the consolidation method of accounting. The Company’s Venezuelan subsidiary was in the Latin America segment and had total revenue of $23 million and Adjusted EBITDA of $15 million for the three months ended March 31, 2015. For more information on the Company's segments and non-GAAP measures see Note 8 - Segment Information.
Venezuelan exchange control regulations have resulted in an other-than-temporary lack of exchangeability between the Venezuelan bolivar and U.S. dollar, and have restricted the Company's Venezuelan operations’ ability to pay dividends and settle intercompany obligations in U.S. dollars. The severe currency controls imposed by the Venezuelan government have significantly limited the ability to realize the benefits from earnings of the Company’s Venezuelan operations and access the resulting liquidity provided by those earnings in U.S. dollars. The Company expects that this condition will continue for the foreseeable future. Additionally, government regulations affecting the Company's ability to manage its Venezuelan subsidiary’s capital structure, purchasing, product pricing, customer invoicing and collections, and labor relations; and the current political and economic situation within Venezuela have resulted in an acute degradation in the Company's ability to make key operational decisions for its Venezuelan operations. This lack of exchangeability into U.S. dollars and the degradation in the Company's ability to control key operational decisions has resulted in a lack of control over the Company's Venezuelan subsidiary for U.S. accounting purposes. Therefore, while continuing to wholly own its Venezuelan subsidiary, the Company concluded it no longer met the accounting criteria for consolidation and deconsolidated its Venezuelan subsidiary on September 30, 2015, and began accounting for its variable interest investment in its Venezuelan operations using the cost method of accounting. The factors that led to the Company's conclusions at the end of the third quarter 2015 continued to exist through the end of the first quarter 2016. Any dividends from the Company's Venezuelan subsidiary are recorded as other income upon receipt of the cash in U.S. dollars. Prior period results have not been adjusted to reflect the deconsolidation of the Company's Venezuelan subsidiary.
The accompanying Consolidated Balance Sheet as of December 31, 2015, which was derived from audited Consolidated Financial Statements, and the unaudited interim Consolidated Financial Statements as of March 31, 2016 and for the three months ended March 31, 2016 and 2015 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2015. In the opinion of the Company’s management, these financial statements contain all adjustments necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the interim periods presented herein. The results of operations for an interim period are not necessarily indicative of the results of operations expected for a full fiscal year.
The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates under different assumptions or conditions and such differences could be material.
Reclassifications 
Reclassifications

Certain amounts in the prior year Consolidated Financial Statements and accompanying footnotes have been reclassified to conform to the current year's presentation primarily pursuant to the adoption of Accounting Standards Update ("ASU") 2015-03, Simplifying the Presentation of Debt Issuance Costs. As of December 31, 2015, approximately $19 million of current debt issuance costs have been reclassified from other current assets to long-term debt, less current portion and approximately $109 million of non-current debt issuance costs have been reclassified from other non-current assets to long-term debt, less current portion.
Recently Issued Accounting Pronouncements 
Recently Issued Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the effect the adoption of this standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (ASC Topic 842), which requires entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. This ASU will replace most existing leasing guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early application is permitted. The standard requires the use of a modified retrospective transition method. The Company is evaluating the effect that ASU 2016-02 will have on its Consolidated Financial Statements and related disclosures, and expects the new guidance to significantly increase the reported assets and liabilities on its Consolidated Balance Sheets.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, ASC Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its Consolidated Financial Statements and related disclosures and has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.
Other Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 

Other intangible assets as of March 31, 2016 and December 31, 2015 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
March 31, 2016
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,975

 
$
(977
)
 
$
998

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
230

 
(169
)
 
61

 
2,260

 
(1,201
)
 
1,059

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,275

 
$
(1,201
)
 
$
1,074

December 31, 2015
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,975

 
$
(932
)
 
$
1,043

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
230

 
(161
)
 
69

 
2,260

 
(1,148
)
 
1,112

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,275

 
$
(1,148
)
 
$
1,127

Schedule of estimated amortization expense of finite-lived acquisition-related intangible assets 
As of March 31, 2016, estimated amortization expense for the Company’s finite-lived intangible assets over the next five years is as follows (dollars in millions):

2016 (remaining nine months)
$
159

2017
196

2018
193

2019
181

2020
166

2021
143

Thereafter
21

 
$
1,059

Fair Value of Financial Instruments (Tables)
Schedule of fair value of liabilities measured on a recurring basis
The table below presents the fair values for the Company’s long-term debt as well as the input levels used to determine these fair values as of March 31, 2016 and December 31, 2015:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
March 31,
2016
 
December 31,
2015
 
March 31,
2016
 
December 31,
2015
 
March 31,
2016
 
December 31,
2015
Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
4,558

 
$
4,556

 
$
4,612

 
$
4,570

 
$
—

 
$
—

Senior Notes
 
6,894

 
6,126

 
7,115

 
6,298

 
—

 
—

Capital Leases and Other
 
199

 
199

 
—

 
—

 
199

 
199

Total Long-term Debt, including the current portion
 
$
11,651

 
$
10,881

 
$
11,727

 
$
10,868

 
$
199

 
$
199



The Company does not have any assets or liabilities where the fair value is measured using significant unobservable inputs (Level 3).
Long-Term Debt (Tables)
Schedule of long-term debt 
    The following table summarizes the Company’s long-term debt (amounts in millions):
 
Date of
 
March 31,
2016
December 31, 2015
 
Issuance/Amendment
Maturity
Interest Payments
Interest Rate
Amount
Amount
Senior Secured Term Loans:
 
 
 
 
 
 
Borrowed by Level 3 Financing, Inc.
Tranche B-III 2019 Term Loan (1)(4)
Aug 2013
Aug 2019
Quarterly
LIBOR +3.00%
$
815

$
815

Tranche B 2020 Term Loan (1)(4)
Oct 2013
Jan 2020
Quarterly
LIBOR +3.00%
1,796

1,796

Tranche B-II 2022 Term Loan (1)(4)
May 2015
May 2022
Quarterly
LIBOR +2.75%
2,000

2,000

Senior Notes:
 
 
 
 
 
 
Issued by Level 3 Financing, Inc.
Floating Rate Senior Notes due 2018 (2)(4)
Nov 2013
Jan 2018
May/Nov
6-Month LIBOR +3.50%
300

300

7% Senior Notes due 2020 (2)(5)
Aug 2012
Jun 2020
Jun/Dec
7.000%
775

775

6.125% Senior Notes due 2021 (2)
Nov 2013
Jan 2021
Apr/Oct
6.125%
640

640

5.375% Senior Notes due 2022 (2)
Aug 2014
Aug 2022
May/Nov
5.375%
1,000

1,000

5.625% Senior Notes due 2023 (2)
Jan 2015
Feb 2023
Jun/Dec
5.625%
500

500

5.125% Senior Notes due 2023 (2)
Apr 2015
May 2023
Mar/Sept
5.125%
700

700

5.375% Senior Notes due 2025 (2)
Apr 2015
May 2025
Mar/Sept
5.375%
800

800

5.375% Senior Notes due 2024 (2)
Nov 2015
Jan 2024
Jan/Jul
5.375%
900

900

5.25% Senior Notes due 2026 (6)
Mar 2016
Mar 2026
Apr/Oct
5.250%
775

—

Issued by Level 3 Communications, Inc.
5.75% Senior Notes due 2022 (3)
Dec 2014
Dec 2022
Mar/Sept
5.750%
600

600

Capital Leases
 
 
 
 
199

199

Total Debt Obligations
 
 
 
 
11,800

11,025

Unamortized discounts
 
 
 
 
(15
)
(16
)
Unamortized debt issuance costs
 
 
 
 
(134
)
(128
)
Current portion of long-term debt
 
 
 
 
(781
)
(15
)
Total Long-Term Debt
 
 
 
 
$
10,870

$
10,866

(1) The term loans are secured obligations and guaranteed by the Company and Level 3 Communications, LLC and certain other subsidiaries.
(2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by the Company and Level 3 Communications, LLC.
(3) The notes were not guaranteed by any of the Company’s subsidiaries.
(4) The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of March 31, 2016 and December 31, 2015. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of March 31, 2016 and December 31, 2015. The Floating Rate Senior Notes due 2018 had an interest rate of 4.101% as of March 31, 2016 and December 31, 2015. The interest rate on the Tranche B-III 2019 Term Loan, and the Tranche B 2020 Term Loan are set with a minimum LIBOR of 1.00%, and the Tranche B-II 2022 Term Loan is set with a minimum LIBOR of 0.75%.
(5) The 7% Senior Notes due 2020 were redeemed on April 21, 2016 as discussed below.
(6) The notes are fully and unconditionally guaranteed on a unsubordinated unsecured basis by the Company.

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

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts and debt issuance costs) were as follows as of March 31, 2016 (dollars in millions):

2016 (remaining nine months)
$
789

2017
7

2018
307

2019
822

2020
1,804

2021
10

Thereafter
8,061

 
$
11,800

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

(dollars in millions)
 
Net Foreign Currency Translation Adjustment
 
Defined Benefit Pension Plans
 
Total
Balance at December 31, 2014
 
$
(111
)
 
$
(36
)
 
$
(147
)
Other comprehensive loss before reclassifications
 
(141
)
 
—

 
(141
)
Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
—

Balance at March 31, 2015
 
$
(252
)
 
$
(36
)
 
$
(288
)

Balance at December 31, 2015
 
$
(273
)
 
$
(28
)
 
$
(301
)
Other comprehensive income (loss) before reclassifications
 
48

 
(2
)
 
46

Amounts reclassified from accumulated other comprehensive loss
 
—

 
(1
)
 
(1
)
Balance at March 31, 2016
 
$
(225
)

$
(31
)

$
(256
)
Stock-Based Compensation (Tables)
Schedule of non-cash compensation expense and capitalized non-cash compensation
The following table summarizes non-cash compensation expense attributable to stock-based awards for the three months ended March 31, 2016 and 2015 (dollars in millions):
 
Three Months Ended March 31,
 
2016
 
2015
Outperform Stock Appreciation Rights
$
1

 
$
2

Restricted Stock Units
21

 
11

Performance Restricted Stock Units
14

 
5

401(k) Match Expense
11

 
13

 
$
47

 
$
31

Segment Information (Tables)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] 
The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Adjusted EBITDA:
 
 
 
 
North America
 
$
812

 
$
740

EMEA
 
54

 
56

Latin America
 
74

 
80

Unallocated Corporate Expenses
 
(230
)
 
(241
)
Adjusted EBITDA
 
710

 
635

Income Tax Expense
 
(94
)
 
(5
)
Total Other Expense
 
(144
)
 
(189
)
Depreciation and Amortization
 
(301
)
 
(288
)
Non-Cash Stock Compensation Attributable to Stock Awards
 
(47
)
 
(31
)
Net Income
 
$
124

 
$
122

Schedule of Segment Reporting Information, by Segment [Table Text Block] 
The following table presents capital expenditures by segment and reconciles capital expenditures by segment to total capital expenditures:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Capital Expenditures:
 
 
 
 
North America
 
$
195

 
$
167

EMEA
 
39

 
28

Latin America
 
23

 
28

Unallocated Corporate Capital Expenditures
 
40

 
31

Total Capital Expenditures
 
$
297

 
$
254

Reconciliation of Revenue from Segments to Consolidated [Table Text Block] 
The following table presents revenue by segment:
 
 
Three Months Ended
(dollars in millions)
 
March 31, 2016
 
March 31, 2015
Core Network Services Revenue:
 
 
 
 
North America
 
$
1,601

 
$
1,535

EMEA
 
191

 
207

Latin America
 
155

 
185

Total Core Network Services Revenue
 
1,947

 
1,927

 
 
 
 
 
Wholesale Voice Services Revenue:
 
 
 
 
North America
 
99

 
118

EMEA
 
3

 
4

Latin America
 
2

 
4

Total Wholesale Voice Services Revenue
 
104

 
126

 
 
 
 
 
Total Revenue
 
$
2,051

 
$
2,053

Reconciliation of Assets from Segment to Consolidated [Table Text Block] 
The following table presents total assets by segment:
(dollars in millions)
 
March 31, 2016
 
December 31, 2015
Assets:
 
 
 
 
North America
 
$
20,940

 
$
19,961

EMEA
 
1,798

 
1,796

Latin America
 
2,173

 
2,131

Other
 
128

 
129

Total Assets
 
$
25,039

 
$
24,017

Reconciliation of Goodwill from Segment to Consolidated [Table Text Block] 
The changes in the carrying amount of goodwill by segment during the three months ended March 31, 2016 were as follows (in millions):
 
 
North America
 
EMEA
 
Latin America
 
Total
Balance at December 31, 2015
$
7,024


$
129

 
$
596

 
$
7,749

  Effect of foreign currency rate change
—

 
(3
)
 
—

 
(3
)
Balance at March 31, 2016
$
7,024


$
126

 
$
596

 
$
7,746

 
There were no events or changes in circumstances during the first three months of 2016 that indicated the carrying value of goodwill may not be recoverable.
Condensed Consolidating Financial Information (Tables)
Condensed Consolidating Financial Information 
Condensed Consolidating Financial Information

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

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

The operating activities of the separate legal entities included in the Company’s Consolidated Financial Statements are interdependent. The accompanying condensed consolidating financial information presents the results of operations, financial position and cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Communications, Inc. These transactions are eliminated in the consolidated results of the Company.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2016

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

 
$
—

 
$
866

 
$
1,219

 
$
(34
)
 
$
2,051

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
408

 
(34
)
 
694

Network Related Expenses
—

 
—

 
237

 
101

 
—

 
338

Depreciation and Amortization
—

 
—

 
88

 
213

 
—

 
301

Selling, General and Administrative Expenses
1

 
1

 
250

 
104

 
—

 
356

Total Costs and Expenses
1

 
1

 
895

 
826

 
(34
)
 
1,689

Operating Income (Loss)
(1
)
 
(1
)
 
(29
)
 
393

 
—

 
362

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(9
)
 
(128
)
 
(1
)
 
3

 
—

 
(135
)
Interest income (expense) affiliates, net
342

 
531

 
(801
)
 
(72
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(212
)
 
(541
)
 
199

 
—

 
554

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
121

 
(138
)
 
(601
)
 
(80
)
 
554

 
(144
)
Income (Loss) before Income Taxes
120

 
(139
)
 
(630
)
 
313

 
554

 
218

Income Tax (Benefit) Expense
4

 
(73
)
 
(1
)
 
(24
)
 
—

 
(94
)
Net Income (Loss)
124

 
(212
)
 
(631
)
 
289

 
554

 
124

Other Comprehensive Income (Loss), Net of Income Taxes
45

 
—

 
—

 
45

 
(45
)
 
45

Comprehensive Income (Loss)
$
169

 
$
(212
)
 
$
(631
)
 
$
334

 
$
509

 
$
169

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2015

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

 
$
—

 
$
818

 
$
1,287

 
$
(52
)
 
$
2,053

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
455

 
(52
)
 
723

Network Related Expenses
—

 
—

 
230

 
126

 
—

 
356

Depreciation and Amortization
—

 
—

 
74

 
214

 
—

 
288

Selling, General and Administrative Expenses
1

 
—

 
247

 
122

 
—

 
370

Total Costs and Expenses
1

 
—

 
871

 
917

 
(52
)
 
1,737

Operating (Loss) Income
(1
)
 
—

 
(53
)
 
370

 
—

 
316

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(19
)
 
(155
)
 
(1
)
 
(5
)
 
—

 
(180
)
Interest income (expense) affiliates, net
333

 
501

 
(766
)
 
(68
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(191
)
 
(536
)
 
177

 
—

 
550

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
123

 
(190
)
 
(588
)
 
(84
)
 
550

 
(189
)
Income (Loss) before Income Taxes
122

 
(190
)
 
(641
)
 
286

 
550

 
127

Income Tax Expense
—

 
(1
)
 
—

 
(4
)
 
—

 
(5
)
Net Income (Loss)
122

 
(191
)
 
(641
)
 
282

 
550

 
122

Other Comprehensive Income (Loss), Net of Income Taxes
(141
)
 
—

 
—

 
(141
)
 
141

 
(141
)
Comprehensive Income (Loss)
$
(19
)
 
$
(191
)
 
$
(641
)
 
$
141

 
$
691

 
$
(19
)
Condensed Consolidating Balance Sheets
March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004

Restricted cash and securities
—

 
829

 
1

 
7

 
—

 
837

Receivables, less allowances for doubtful accounts
—

 
—

 
48

 
759

 
—

 
807

Due from affiliates
12,778

 
23,210

 
—

 
2,211

 
(38,199
)
 
—

Other
—

 
—

 
86

 
55

 
—

 
141

Total Current Assets
12,790

 
24,045

 
1,021

 
3,132

 
(38,199
)
 
2,789

Property, Plant, and Equipment, net
—

 
—

 
3,528

 
6,446

 
—

 
9,974

Restricted Cash and Securities
27

 
—

 
13

 
1

 
—

 
41

Goodwill and Other Intangibles, net
—

 
—

 
360

 
8,460

 
—

 
8,820

Investment in Subsidiaries
16,800

 
17,709

 
3,730

 
—

 
(38,239
)
 
—

Deferred Tax Assets
42

 
2,775

 
—

 
548

 
—

 
3,365

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

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

 
$
2

 
$
297

 
$
381

 
$
—

 
$
680

Current portion of long-term debt
—

 
766

 
2

 
13

 
—

 
781

Accrued payroll and employee benefits
—

 
—

 
103

 
43

 
—

 
146

Accrued interest
3

 
120

 
—

 
8

 
—

 
131

Current portion of deferred revenue
—

 
—

 
117

 
166

 
—

 
283

Due to affiliates
—

 
—

 
38,199

 
—

 
(38,199
)
 
—

Other
—

 
—

 
121

 
45

 
—

 
166

Total Current Liabilities
3

 
888

 
38,839

 
656

 
(38,199
)
 
2,187

Long-Term Debt, less current portion
591

 
10,094

 
14

 
171

 
—

 
10,870

Deferred Revenue, less current portion
—

 
—

 
708

 
304

 
—

 
1,012

Other Liabilities
15

 
—

 
135

 
478

 
—

 
628

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
29,050

 
33,547

 
(31,032
)
 
17,016

 
(38,239
)
 
10,342

Total Liabilities and Stockholders' Equity (Deficit)
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

Condensed Consolidating Balance Sheets
December 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
727

 
$
109

 
$
—

 
$
854

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
47

 
710

 
—

 
757

Due from affiliates
12,415

 
22,759

 
—

 
2,816

 
(37,990
)
 
—

Other
—

 
—

 
56

 
55

 
—

 
111

Total Current Assets
12,427

 
22,765

 
831

 
3,697

 
(37,990
)
 
1,730

Property, Plant, and Equipment, net
—

 
—

 
3,423

 
6,455

 
—

 
9,878

Restricted Cash and Securities
27

 
—

 
14

 
1

 
—

 
42

Goodwill and Other Intangibles, net
—

 
—

 
363

 
8,513

 
—

 
8,876

Investment in Subsidiaries
16,772

 
17,714

 
3,734

 
—

 
(38,220
)
 
—

Deferred Tax Assets
38

 
2,847

 
—

 
556

 
—

 
3,441

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

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

 
$
1

 
$
195

 
$
433

 
$
—

 
$
629

Current portion of long-term debt
—

 
—

 
2

 
13

 
—

 
15

Accrued payroll and employee benefits
—

 
—

 
186

 
32

 
—

 
218

Accrued interest
11

 
90

 
—

 
7

 
—

 
108

Current portion of deferred revenue
—

 
—

 
119

 
148

 
—

 
267

Due to affiliates
—

 
—

 
37,990

 
—

 
(37,990
)
 
—

Other
—

 
—

 
115

 
64

 
—

 
179

Total Current Liabilities
11

 
91

 
38,607

 
697

 
(37,990
)
 
1,416

Long-Term Debt, less current portion
591

 
10,092

 
15

 
168

 
—

 
10,866

Deferred Revenue, less current portion
—

 
—

 
680

 
297

 
—

 
977

Other Liabilities
15

 
—

 
133

 
484

 
—

 
632

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
28,647

 
33,143

 
(31,058
)
 
17,614

 
(38,220
)
 
10,126

Total Liabilities and Stockholders' Equity (Deficit)
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(17
)
 
$
(92
)
 
$
130

 
$
489

 
$
—

 
$
510

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(138
)
 
—

 
(297
)
(Increase) decrease in restricted cash and securities, net
—

 
(829
)
 
1

 
—

 
—

 
(828
)
Net Cash Used in Investing Activities
—

 
(829
)
 
(158
)
 
(138
)
 
—

 
(1,125
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
765

 
—

 
—

 
—

 
765

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

 
—

 
—

 
(1
)
 
—

 
(1
)
Increase (decrease) due from/to affiliates, net
17

 
156

 
187

 
(360
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
17

 
921

 
187

 
(361
)
 
—

 
764

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
—

 
—

 
159

 
(9
)
 
—

 
150

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004

Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(7
)
 
$
(137
)
 
$
(82
)
 
$
531

 
$
—

 
$
305

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(77
)
 
(177
)
 
—

 
(254
)
Decrease in restricted cash and securities, net
—

 
—

 
1

 
—

 
—

 
1

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
—

 
—

 
(76
)
 
(176
)
 
—

 
(252
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
492

 
—

 
—

 
—

 
492

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

 
—

 
—

 
(2
)
 
—

 
(2
)
Increase (decrease) due from/to affiliates, net
14

 
(355
)
 
692

 
(351
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
14

 
137

 
692

 
(353
)
 
—

 
490

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(9
)
 
—

 
(9
)
Net Change in Cash and Cash Equivalents
7

 
—

 
534

 
(7
)
 
—

 
534

Cash and Cash Equivalents at Beginning of Period
7

 
5

 
307

 
261

 
—

 
580

Cash and Cash Equivalents at End of Period
$
14

 
$
5

 
$
841

 
$
254

 
$
—

 
$
1,114

Schedule of Condensed Consolidating Statements of Comprehensive Income (Loss) 
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2016

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

 
$
—

 
$
866

 
$
1,219

 
$
(34
)
 
$
2,051

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
408

 
(34
)
 
694

Network Related Expenses
—

 
—

 
237

 
101

 
—

 
338

Depreciation and Amortization
—

 
—

 
88

 
213

 
—

 
301

Selling, General and Administrative Expenses
1

 
1

 
250

 
104

 
—

 
356

Total Costs and Expenses
1

 
1

 
895

 
826

 
(34
)
 
1,689

Operating Income (Loss)
(1
)
 
(1
)
 
(29
)
 
393

 
—

 
362

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest Income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(9
)
 
(128
)
 
(1
)
 
3

 
—

 
(135
)
Interest income (expense) affiliates, net
342

 
531

 
(801
)
 
(72
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(212
)
 
(541
)
 
199

 
—

 
554

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
121

 
(138
)
 
(601
)
 
(80
)
 
554

 
(144
)
Income (Loss) before Income Taxes
120

 
(139
)
 
(630
)
 
313

 
554

 
218

Income Tax (Benefit) Expense
4

 
(73
)
 
(1
)
 
(24
)
 
—

 
(94
)
Net Income (Loss)
124

 
(212
)
 
(631
)
 
289

 
554

 
124

Other Comprehensive Income (Loss), Net of Income Taxes
45

 
—

 
—

 
45

 
(45
)
 
45

Comprehensive Income (Loss)
$
169

 
$
(212
)
 
$
(631
)
 
$
334

 
$
509

 
$
169

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2015

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

 
$
—

 
$
818

 
$
1,287

 
$
(52
)
 
$
2,053

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
320

 
455

 
(52
)
 
723

Network Related Expenses
—

 
—

 
230

 
126

 
—

 
356

Depreciation and Amortization
—

 
—

 
74

 
214

 
—

 
288

Selling, General and Administrative Expenses
1

 
—

 
247

 
122

 
—

 
370

Total Costs and Expenses
1

 
—

 
871

 
917

 
(52
)
 
1,737

Operating (Loss) Income
(1
)
 
—

 
(53
)
 
370

 
—

 
316

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest expense
(19
)
 
(155
)
 
(1
)
 
(5
)
 
—

 
(180
)
Interest income (expense) affiliates, net
333

 
501

 
(766
)
 
(68
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(191
)
 
(536
)
 
177

 
—

 
550

 
—

Other, net
—

 
—

 
2

 
(12
)
 
—

 
(10
)
Total Other Income (Expense)
123

 
(190
)
 
(588
)
 
(84
)
 
550

 
(189
)
Income (Loss) before Income Taxes
122

 
(190
)
 
(641
)
 
286

 
550

 
127

Income Tax Expense
—

 
(1
)
 
—

 
(4
)
 
—

 
(5
)
Net Income (Loss)
122

 
(191
)
 
(641
)
 
282

 
550

 
122

Other Comprehensive Income (Loss), Net of Income Taxes
(141
)
 
—

 
—

 
(141
)
 
141

 
(141
)
Comprehensive Income (Loss)
$
(19
)
 
$
(191
)
 
$
(641
)
 
$
141

 
$
691

 
$
(19
)
Schedule of Condensed Consolidating Balance Sheets 
Condensed Consolidating Balance Sheets
March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004

Restricted cash and securities
—

 
829

 
1

 
7

 
—

 
837

Receivables, less allowances for doubtful accounts
—

 
—

 
48

 
759

 
—

 
807

Due from affiliates
12,778

 
23,210

 
—

 
2,211

 
(38,199
)
 
—

Other
—

 
—

 
86

 
55

 
—

 
141

Total Current Assets
12,790

 
24,045

 
1,021

 
3,132

 
(38,199
)
 
2,789

Property, Plant, and Equipment, net
—

 
—

 
3,528

 
6,446

 
—

 
9,974

Restricted Cash and Securities
27

 
—

 
13

 
1

 
—

 
41

Goodwill and Other Intangibles, net
—

 
—

 
360

 
8,460

 
—

 
8,820

Investment in Subsidiaries
16,800

 
17,709

 
3,730

 
—

 
(38,239
)
 
—

Deferred Tax Assets
42

 
2,775

 
—

 
548

 
—

 
3,365

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

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

 
$
2

 
$
297

 
$
381

 
$
—

 
$
680

Current portion of long-term debt
—

 
766

 
2

 
13

 
—

 
781

Accrued payroll and employee benefits
—

 
—

 
103

 
43

 
—

 
146

Accrued interest
3

 
120

 
—

 
8

 
—

 
131

Current portion of deferred revenue
—

 
—

 
117

 
166

 
—

 
283

Due to affiliates
—

 
—

 
38,199

 
—

 
(38,199
)
 
—

Other
—

 
—

 
121

 
45

 
—

 
166

Total Current Liabilities
3

 
888

 
38,839

 
656

 
(38,199
)
 
2,187

Long-Term Debt, less current portion
591

 
10,094

 
14

 
171

 
—

 
10,870

Deferred Revenue, less current portion
—

 
—

 
708

 
304

 
—

 
1,012

Other Liabilities
15

 
—

 
135

 
478

 
—

 
628

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
29,050

 
33,547

 
(31,032
)
 
17,016

 
(38,239
)
 
10,342

Total Liabilities and Stockholders' Equity (Deficit)
$
29,659

 
$
44,529

 
$
8,664

 
$
18,625

 
$
(76,438
)
 
$
25,039

Condensed Consolidating Balance Sheets
December 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
12

 
$
6

 
$
727

 
$
109

 
$
—

 
$
854

Restricted cash and securities
—

 
—

 
1

 
7

 
—

 
8

Receivables, less allowances for doubtful accounts
—

 
—

 
47

 
710

 
—

 
757

Due from affiliates
12,415

 
22,759

 
—

 
2,816

 
(37,990
)
 
—

Other
—

 
—

 
56

 
55

 
—

 
111

Total Current Assets
12,427

 
22,765

 
831

 
3,697

 
(37,990
)
 
1,730

Property, Plant, and Equipment, net
—

 
—

 
3,423

 
6,455

 
—

 
9,878

Restricted Cash and Securities
27

 
—

 
14

 
1

 
—

 
42

Goodwill and Other Intangibles, net
—

 
—

 
363

 
8,513

 
—

 
8,876

Investment in Subsidiaries
16,772

 
17,714

 
3,734

 
—

 
(38,220
)
 
—

Deferred Tax Assets
38

 
2,847

 
—

 
556

 
—

 
3,441

Other Assets, net
—

 
—

 
12

 
38

 
—

 
50

Total Assets
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

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

 
$
1

 
$
195

 
$
433

 
$
—

 
$
629

Current portion of long-term debt
—

 
—

 
2

 
13

 
—

 
15

Accrued payroll and employee benefits
—

 
—

 
186

 
32

 
—

 
218

Accrued interest
11

 
90

 
—

 
7

 
—

 
108

Current portion of deferred revenue
—

 
—

 
119

 
148

 
—

 
267

Due to affiliates
—

 
—

 
37,990

 
—

 
(37,990
)
 
—

Other
—

 
—

 
115

 
64

 
—

 
179

Total Current Liabilities
11

 
91

 
38,607

 
697

 
(37,990
)
 
1,416

Long-Term Debt, less current portion
591

 
10,092

 
15

 
168

 
—

 
10,866

Deferred Revenue, less current portion
—

 
—

 
680

 
297

 
—

 
977

Other Liabilities
15

 
—

 
133

 
484

 
—

 
632

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
28,647

 
33,143

 
(31,058
)
 
17,614

 
(38,220
)
 
10,126

Total Liabilities and Stockholders' Equity (Deficit)
$
29,264

 
$
43,326

 
$
8,377

 
$
19,260

 
$
(76,210
)
 
$
24,017

Schedule of Condensed Consolidating Statements of Cash Flows 
Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2016

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(17
)
 
$
(92
)
 
$
130

 
$
489

 
$
—

 
$
510

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(159
)
 
(138
)
 
—

 
(297
)
(Increase) decrease in restricted cash and securities, net
—

 
(829
)
 
1

 
—

 
—

 
(828
)
Net Cash Used in Investing Activities
—

 
(829
)
 
(158
)
 
(138
)
 
—

 
(1,125
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
765

 
—

 
—

 
—

 
765

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

 
—

 
—

 
(1
)
 
—

 
(1
)
Increase (decrease) due from/to affiliates, net
17

 
156

 
187

 
(360
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
17

 
921

 
187

 
(361
)
 
—

 
764

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
1

 
—

 
1

Net Change in Cash and Cash Equivalents
—

 
—

 
159

 
(9
)
 
—

 
150

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
12

 
$
6

 
$
886

 
$
100

 
$
—

 
$
1,004



Condensed Consolidating Statements of Cash Flows
Three Months Ended March 31, 2015

 
Level 3 Communications, Inc.
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(dollars in millions)
Net Cash Provided by (Used in) Operating Activities
$
(7
)
 
$
(137
)
 
$
(82
)
 
$
531

 
$
—

 
$
305

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures
—

 
—

 
(77
)
 
(177
)
 
—

 
(254
)
Decrease in restricted cash and securities, net
—

 
—

 
1

 
—

 
—

 
1

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
—

 
—

 
(76
)
 
(176
)
 
—

 
(252
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
492

 
—

 
—

 
—

 
492

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

 
—

 
—

 
(2
)
 
—

 
(2
)
Increase (decrease) due from/to affiliates, net
14

 
(355
)
 
692

 
(351
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
14

 
137

 
692

 
(353
)
 
—

 
490

Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
(9
)
 
—

 
(9
)
Net Change in Cash and Cash Equivalents
7

 
—

 
534

 
(7
)
 
—

 
534

Cash and Cash Equivalents at Beginning of Period
7

 
5

 
307

 
261

 
—

 
580

Cash and Cash Equivalents at End of Period
$
14

 
$
5

 
$
841

 
$
254

 
$
—

 
$
1,114

Organization and Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
schedule of consolidation [Line Items]
 
 
 
Revenue
$ 2,051 
$ 2,053 
 
Adjusted EBITDA by Segment
710 
635 
 
Deferred Finance Costs, Current, Net
 
 
19 
Deferred Finance Costs, Noncurrent, Net
 
 
109 
Latin America [Member]
 
 
 
schedule of consolidation [Line Items]
 
 
 
Adjusted EBITDA by Segment
74 
80 
 
VENEZUELA |
Latin America [Member]
 
 
 
schedule of consolidation [Line Items]
 
 
 
Revenue
 
23 
 
Adjusted EBITDA by Segment
 
$ 15 
 
Earnings Per Share (Details) (Stock options, outperform stock appreciation rights (OSOs), restricted stock units and warrants)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Stock options, outperform stock appreciation rights (OSOs), restricted stock units and warrants
 
 
Earnings per share
 
 
Stock Awards Included in Computation of Earnings Per Share, Amount
4 
4 
Earnings Per Share Supplemental (Details) (Performance Restricted Stock Units)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Performance Restricted Stock Units
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
Stock Awards Included in Computation of Earnings Per Share, Amount
0 
Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Finite-Lived Intangible Assets:
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 2,260 
 
$ 2,260 
Finite-Lived Intangible Assets, Accumulated Amortization
(1,201)
 
(1,148)
Finite-Lived Intangible Assets, Net
1,059 
 
1,112 
Acquired finite-lived intangible asset amortization expense
53 
56 
 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
5 years 6 months 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
Total identifiable acquisition-related intangible assets, Gross Carrying Amount
2,275 
 
2,275 
Total identifiable acquisition-related intangible assets, Net
1,074 
 
1,127 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
2016 (remaining nine months)
159 
 
 
2017
196 
 
 
2018
193 
 
 
2019
181 
 
 
2020
166 
 
 
2021
143 
 
 
Thereafter
21 
 
 
Finite-Lived Intangible Assets, Net
1,059 
 
1,112 
Vyvx Trade Name
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
Indefinite-Lived Intangible Assets
15 
 
15 
Customer Contracts And Relationships
 
 
 
Finite-Lived Intangible Assets:
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
1,975 
 
1,975 
Finite-Lived Intangible Assets, Accumulated Amortization
(977)
 
(932)
Finite-Lived Intangible Assets, Net
998 
 
1,043 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
5 years 7 months 6 days 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
Finite-Lived Intangible Assets, Net
998 
 
1,043 
Trademarks
 
 
 
Finite-Lived Intangible Assets:
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
55 
 
55 
Finite-Lived Intangible Assets, Accumulated Amortization
(55)
 
(55)
Finite-Lived Intangible Assets, Net
0 
 
0 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
Finite-Lived Intangible Assets, Net
0 
 
0 
Patents and Developed Technology
 
 
 
Finite-Lived Intangible Assets:
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
230 
 
230 
Finite-Lived Intangible Assets, Accumulated Amortization
(169)
 
(161)
Finite-Lived Intangible Assets, Net
61 
 
69 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
3 years 1 month 6 days 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
Finite-Lived Intangible Assets, Net
$ 61 
 
$ 69 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (Fair Value, Measurements, Recurring, USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Total Carrying Value in Consolidated Balance Sheet
 
 
Long-term Debt, including the current portion:
 
 
Term Loans
$ 4,558 
$ 4,556 
Senior Notes
6,894 
6,126 
Capital Leases and Other
199 
199 
Total Long-term Debt, including the current portion:
11,651 
10,881 
Unadjusted Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
 
 
Long-term Debt, including the current portion:
 
 
Term Loans
4,612 
4,570 
Senior Notes
7,115 
6,298 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
11,727 
10,868 
Significant Other Observable Inputs (Level 2)
 
 
Long-term Debt, including the current portion:
 
 
Term Loans
0 
0 
Senior Notes
0 
0 
Capital Leases and Other
199 
199 
Total Long-term Debt, including the current portion:
$ 199 
$ 199 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2016
Tranche B-III 2019 Term Loan
Dec. 31, 2015
Tranche B-III 2019 Term Loan
Mar. 31, 2016
TrancheB2020TermLoanTotal [Member]
Dec. 31, 2015
TrancheB2020TermLoanTotal [Member]
Mar. 31, 2016
Floating Rate Senior Notes due 2018 [Member]
Dec. 31, 2015
Floating Rate Senior Notes due 2018 [Member]
Mar. 31, 2016
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Dec. 31, 2015
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Mar. 31, 2016
7.0% Senior Notes due 2020
Dec. 31, 2015
7.0% Senior Notes due 2020
Mar. 31, 2016
SeniorNotes6Point125PercentDue2021 [Member]
Dec. 31, 2015
SeniorNotes6Point125PercentDue2021 [Member]
Mar. 31, 2016
5point375SeniorNotesdue2022 [Member]
Dec. 31, 2015
5point375SeniorNotesdue2022 [Member]
Mar. 31, 2016
Senior Notes 5point75Percent Due 2022 [Member]
Dec. 31, 2015
Senior Notes 5point75Percent Due 2022 [Member]
Mar. 31, 2016
Senior Notes 5point 625Percent Due 2023 [Member]
Dec. 31, 2015
Senior Notes 5point 625Percent Due 2023 [Member]
Mar. 31, 2016
Senior Notes 5.375 Percent Due 2024 [Member]
Dec. 31, 2015
Senior Notes 5.375 Percent Due 2024 [Member]
Mar. 31, 2016
Senior Notes 5point 125Percent Due 2023 [Member]
Dec. 31, 2015
Senior Notes 5point 125Percent Due 2023 [Member]
Mar. 31, 2016
Senior Notes 5point 375Percent Due 2025 [Member]
Dec. 31, 2015
Senior Notes 5point 375Percent Due 2025 [Member]
Mar. 31, 2016
Capital Leases
Dec. 31, 2015
Capital Leases
Mar. 31, 2016
Level 3 Communications, LLC
Dec. 31, 2015
Level 3 Communications, LLC
Mar. 31, 2016
Level 3 Communications, LLC
Tranche B-III 2019 Term Loan
Jan. 1, 2014
Level 3 Communications, LLC
Tranche B-III 2019 Term Loan
Mar. 31, 2016
Level 3 Communications, LLC
TrancheB2020TermLoanTotal [Member]
Jan. 1, 2014
Level 3 Communications, LLC
TrancheB2020TermLoanTotal [Member]
May 8, 2015
Level 3 Financing [Member]
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Mar. 31, 2016
Level 3 Financing [Member]
7.0% Senior Notes due 2020
Mar. 31, 2016
Level 3 Financing [Member]
SeniorNotes6Point125PercentDue2021 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
5.37percent Senior Notes Due 2022 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 625Percent Due 2023 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 125Percent Due 2023 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 375Percent Due 2024 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 375Percent Due 2025 [Member]
Mar. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Mar. 22, 2016
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Dec. 31, 2015
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Mar. 31, 2016
Parent Company [Member]
Dec. 31, 2015
Parent Company [Member]
Mar. 31, 2016
Parent Company [Member]
Senior Notes 5point75Percent Due 2022 [Member]
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate Terms
 
 
 
 
 
 
6-Month LIBOR +3.50% 
 
LIBOR +2.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR +3.00% 
 
LIBOR +3.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
 
 
 
 
4.101% 
 
3.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.00% 
6.125% 
5.375% 
5.625% 
5.125% 
5.375% 
5.375% 
5.25% 
 
 
 
 
5.75% 
Debt Instrument, Face Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 815 
 
 
$ 2,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt Obligations
11,800 
11,025 
815 
815 
1,796 
1,796 
300 
300 
2,000 
2,000 
775 
775 
640 
640 
1,000 
1,000 
600 
600 
500 
500 
900 
900 
700 
700 
800 
800 
199 
199 
 
 
 
 
 
1,796 
 
 
 
 
 
 
 
 
775 
775 
0 
 
 
 
Total Unamortized Discount
15 
16 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized Debt Issuance Expense
(134)
(128)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
(781)
(15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2)
(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
 
Long-Term Debt, less current portion
$ 10,870 
$ 10,866 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 14 
$ 15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 591 
$ 591 
 
Long-Term Debt - Textuals (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended 3 Months Ended
Mar. 31, 2016
days
Dec. 31, 2015
Mar. 31, 2016
Tranche B III 2019 and Tranche B 2020 Term Loans [Member]
Mar. 31, 2016
Senior Notes 5point 125Percent Due 2023 [Member]
Dec. 31, 2015
Senior Notes 5point 125Percent Due 2023 [Member]
Mar. 31, 2016
Senior Notes 5point 125Percent Due 2023 [Member]
Level 3 Financing [Member]
Mar. 31, 2016
Senior Notes 5point 625Percent Due 2023 [Member]
Dec. 31, 2015
Senior Notes 5point 625Percent Due 2023 [Member]
Mar. 31, 2016
Senior Notes 5point 625Percent Due 2023 [Member]
Level 3 Financing [Member]
Mar. 31, 2016
Tranche B-III 2019 Term Loan
Dec. 31, 2015
Tranche B-III 2019 Term Loan
Jan. 1, 2014
Tranche B-III 2019 Term Loan
Level 3 Financing, Inc.
Mar. 31, 2016
TrancheB2020TermLoanTotal [Member]
Dec. 31, 2015
TrancheB2020TermLoanTotal [Member]
Jan. 1, 2014
TrancheB2020TermLoanTotal [Member]
Level 3 Financing, Inc.
Mar. 31, 2016
7.0% Senior Notes due 2020
Dec. 31, 2015
7.0% Senior Notes due 2020
Mar. 31, 2016
7.0% Senior Notes due 2020
Level 3 Financing [Member]
Mar. 31, 2016
Capital Lease Obligations [Member]
Dec. 31, 2015
Capital Lease Obligations [Member]
Mar. 31, 2016
Senior Notes 5point 375Percent Due 2025 [Member]
Dec. 31, 2015
Senior Notes 5point 375Percent Due 2025 [Member]
Mar. 31, 2016
Senior Notes 5point 375Percent Due 2025 [Member]
Level 3 Financing [Member]
Mar. 31, 2016
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Dec. 31, 2015
2.0 Billion Tranche B-II 2022 Term Loan [Member]
May 8, 2015
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Level 3 Financing [Member]
Mar. 31, 2016
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Mar. 31, 2016
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Mar. 22, 2016
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Dec. 31, 2015
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Mar. 31, 2016
Floating Rate Senior Notes due 2018 [Member]
Dec. 31, 2015
Floating Rate Senior Notes due 2018 [Member]
Mar. 31, 2016
Tranche B-III 2019, Tranche B 2020 and Tranche B 2022 Term Loans [Member]
Level 3 Financing, Inc.
London Interbank Offered Rate (LIBOR) [Member]
Mar. 31, 2016
Tranche B-III 2019, Tranche B 2020 and Tranche B 2022 Term Loans [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Jun. 30, 2016
Subsequent Event [Member]
7.0% Senior Notes due 2020
Level 3 Financing [Member]
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt, Weighted Average Interest Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.80% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
4.00% 
 
 
5.125% 
 
 
5.625% 
 
 
 
 
 
 
 
 
7.00% 
 
 
 
 
5.375% 
3.50% 
 
 
 
5.25% 
 
 
4.101% 
 
 
 
 
Proceeds from Issuance of Debt
$ 828 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains (Losses) on Extinguishment of Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(40)
Debt Instrument, Redemption Period Notice Minimum Number of Days
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument Redemption Period Notice Maximum Number of Days
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Redemption Price, Percentage
101.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
104.138% 
Total Debt Obligations
11,800 
11,025 
 
700 
700 
 
500 
500 
 
815 
815 
 
1,796 
1,796 
1,796 
775 
775 
 
199 
199 
800 
800 
 
2,000 
2,000 
 
 
775 
775 
0 
300 
300 
 
 
 
2016 (remaining nine months)
789 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
307 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
822 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020
1,804 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021
10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thereafter
8,061 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
 
 
 
 
 
 
 
 
 
 
$ 815 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,000 
 
 
 
 
 
 
 
 
 
Debt Instrument, Description of Variable Rate Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
 
LIBOR 
 
 
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.75% 
 
 
 
 
 
 
1.00% 
 
Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Dec. 31, 2014
Accumulated Other Comprehensive Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
$ (256)
$ (288)
$ (301)
$ (147)
Other comprehensive income before reclassifications
46 
(141)
 
 
Amounts reclassified from accumulated other comprehensive income
(1)
0 
 
 
Accumulated Translation Adjustment [Member]
 
 
 
 
Accumulated Other Comprehensive Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(225)
(252)
(273)
(111)
Other comprehensive income before reclassifications
48 
(141)
 
 
Amounts reclassified from accumulated other comprehensive income
0 
0 
 
 
Accumulated Defined Benefit Plans Adjustment [Member]
 
 
 
 
Accumulated Other Comprehensive Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(31)
(36)
(28)
(36)
Other comprehensive income before reclassifications
(2)
0 
 
 
Amounts reclassified from accumulated other comprehensive income
$ (1)
$ 0 
 
 
Stock-Based Compensation - Non-cash compensation expense and capitalized non-cash compensation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Non-cash compensation expense and capitalized non-cash compensation
 
 
Nonvested restricted stock and restricted stock units (RSUs)
5 
 
OSOs outstanding
1 
 
Non-cash compensation expense and capitalized non-cash compensation
$ 47 
$ 31 
Outperform Stock Appreciation Rights
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
Stock-based compensation expense
1 
2 
Restricted Stock Units
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
Stock-based compensation expense
21 
11 
Performance Restricted Stock Units
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
Stock-based compensation expense
14 
5 
401 (K) Match Expense
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
Stock-based compensation expense
$ 11 
$ 13 
Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Goodwill
$ 7,746 
 
$ 7,749 
Assets
25,039 
 
24,017 
Payments to Acquire Productive Assets
297 
254 
 
Adjusted EBITDA by Segment
710 
635 
 
Revenue
2,051 
2,053 
 
Income Tax Expense
(94)
(5)
 
Other Expenses
(144)
(189)
 
Depreciation, Depletion and Amortization
(301)
(288)
 
Share-based Compensation
(47)
(31)
 
Net Income (Loss) Available to Common Stockholders, Basic
124 
122 
 
Goodwill, Translation Adjustments
(3)
 
 
Corporate and Other [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Assets
128 
 
129 
Payments to Acquire Productive Assets
40 
31 
 
Adjusted EBITDA by Segment
(230)
(241)
 
North America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Goodwill
7,024 
 
7,024 
Assets
20,940 
 
19,961 
Payments to Acquire Productive Assets
195 
167 
 
Adjusted EBITDA by Segment
812 
740 
 
Goodwill, Translation Adjustments
0 
 
 
EMEA [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Goodwill
126 
 
129 
Assets
1,798 
 
1,796 
Payments to Acquire Productive Assets
39 
28 
 
Adjusted EBITDA by Segment
54 
56 
 
Goodwill, Translation Adjustments
(3)
 
 
Latin America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Goodwill
596 
 
596 
Assets
2,173 
 
2,131 
Payments to Acquire Productive Assets
23 
28 
 
Adjusted EBITDA by Segment
74 
80 
 
Goodwill, Translation Adjustments
0 
 
 
Core Network Service [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
1,947 
1,927 
 
Core Network Service [Member] |
North America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
1,601 
1,535 
 
Core Network Service [Member] |
EMEA [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
191 
207 
 
Core Network Service [Member] |
Latin America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
155 
185 
 
Wholesale Voice Services [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
104 
126 
 
Wholesale Voice Services [Member] |
North America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
99 
118 
 
Wholesale Voice Services [Member] |
EMEA [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
3 
4 
 
Wholesale Voice Services [Member] |
Latin America [Member]
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
Revenue
$ 2 
$ 4 
 
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 3 Months Ended
Mar. 31, 2016
Mar. 31, 2016
Peruvian Tax Litigation
Pending Litigation
Mar. 31, 2016
Peruvian Tax Litigation, Before Interest
Pending Litigation
Mar. 31, 2016
Peruvian Tax Litigation, Income Tax witholding 2001 and 2002
Pending Litigation
Mar. 31, 2016
Peruvian Tax Litigation, VAT for 2001 and 2002
Pending Litigation
Mar. 31, 2016
Peruvian Tax Litigation, Disallowance of VAT in 2005
Pending Litigation
Mar. 31, 2016
Employee Severance and Contractor Termination Disputes
Pending Litigation
Mar. 31, 2016
up to
Brazilian Tax Claims
Pending Litigation
Mar. 31, 2015
Brazilian Tax Reserve Release [Member]
Brazilian Tax Claims
Pending Litigation
Dec. 31, 2014
Brazilian Tax Reserve Release [Member]
Brazilian Tax Claims
Pending Litigation
Loss Contingencies
 
 
 
 
 
 
 
 
 
 
Estimated Litigation Liability
$ 120 
 
 
 
 
 
 
 
 
 
Loss Contingency, Asserted Claim
 
31 
26 
3 
7 
16 
42 
 
 
 
Release of Loss Contingency Accrual
 
15 
 
 
 
 
 
 
 
 
Loss Contingency Accrual, Period Increase (Decrease)
 
 
 
 
 
 
 
 
6 
3 
Loss Contingency Accrual, Payments
 
 
 
 
 
 
 
 
 
5 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
 
 
 
 
 
 
 
$ 47 
 
 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
 
 
Amount outstanding under letters of credit or other similar obligations
$ 48 
$ 46 
Collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash
$ 42 
$ 43 
Condensed Consolidating Financial Information - Statements of Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Condensed Consolidating Financial Information
 
 
Revenue
$ 2,051 
$ 2,053 
Costs and Expenses:
 
 
Network access costs
694 
723 
Network related expenses
338 
356 
Depreciation and amortization
301 
288 
Selling, general and administrative Expenses
356 
370 
Total Costs and Expenses
1,689 
1,737 
Operating Income (Loss)
362 
316 
Other Income (Expense):
 
 
Interest income
1 
1 
Interest expense
(135)
(180)
Interest income (expense) affiliates, net
0 
0 
Equity in net earnings (losses) of subsidiaries
0 
0 
Other, net
(10)
(10)
Total Other Expense
(144)
(189)
Income (Loss) before Income Taxes
218 
127 
Income Tax Expense
(94)
(5)
Net Income (Loss)
124 
122 
Other Comprehensive Income (Loss), Net of Income Taxes
45 
(141)
Comprehensive Income (Loss)
169 
(19)
Level 3 Communications, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Revenue
0 
0 
Costs and Expenses:
 
 
Network access costs
0 
0 
Network related expenses
0 
0 
Depreciation and amortization
0 
0 
Selling, general and administrative Expenses
1 
1 
Total Costs and Expenses
1 
1 
Operating Income (Loss)
(1)
(1)
Other Income (Expense):
 
 
Interest income
0 
0 
Interest expense
(9)
(19)
Interest income (expense) affiliates, net
342 
333 
Equity in net earnings (losses) of subsidiaries
(212)
(191)
Other, net
0 
0 
Total Other Expense
121 
123 
Income (Loss) before Income Taxes
120 
122 
Income Tax Expense
4 
0 
Net Income (Loss)
124 
122 
Other Comprehensive Income (Loss), Net of Income Taxes
45 
(141)
Comprehensive Income (Loss)
169 
(19)
Level 3 Financing, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Revenue
0 
0 
Costs and Expenses:
 
 
Network access costs
0 
0 
Network related expenses
0 
0 
Depreciation and amortization
0 
0 
Selling, general and administrative Expenses
1 
0 
Total Costs and Expenses
1 
0 
Operating Income (Loss)
(1)
0 
Other Income (Expense):
 
 
Interest income
0 
0 
Interest expense
(128)
(155)
Interest income (expense) affiliates, net
531 
501 
Equity in net earnings (losses) of subsidiaries
(541)
(536)
Other, net
0 
0 
Total Other Expense
(138)
(190)
Income (Loss) before Income Taxes
(139)
(190)
Income Tax Expense
(73)
(1)
Net Income (Loss)
(212)
(191)
Other Comprehensive Income (Loss), Net of Income Taxes
0 
0 
Comprehensive Income (Loss)
(212)
(191)
Level 3 Communications, LLC
 
 
Condensed Consolidating Financial Information
 
 
Revenue
866 
818 
Costs and Expenses:
 
 
Network access costs
320 
320 
Network related expenses
237 
230 
Depreciation and amortization
88 
74 
Selling, general and administrative Expenses
250 
247 
Total Costs and Expenses
895 
871 
Operating Income (Loss)
(29)
(53)
Other Income (Expense):
 
 
Interest income
0 
0 
Interest expense
(1)
(1)
Interest income (expense) affiliates, net
(801)
(766)
Equity in net earnings (losses) of subsidiaries
199 
177 
Other, net
2 
2 
Total Other Expense
(601)
(588)
Income (Loss) before Income Taxes
(630)
(641)
Income Tax Expense
(1)
0 
Net Income (Loss)
(631)
(641)
Other Comprehensive Income (Loss), Net of Income Taxes
0 
0 
Comprehensive Income (Loss)
(631)
(641)
Other Non-Guarantor Subsidiaries
 
 
Condensed Consolidating Financial Information
 
 
Revenue
1,219 
1,287 
Costs and Expenses:
 
 
Network access costs
408 
455 
Network related expenses
101 
126 
Depreciation and amortization
213 
214 
Selling, general and administrative Expenses
104 
122 
Total Costs and Expenses
826 
917 
Operating Income (Loss)
393 
370 
Other Income (Expense):
 
 
Interest income
1 
1 
Interest expense
3 
(5)
Interest income (expense) affiliates, net
(72)
(68)
Equity in net earnings (losses) of subsidiaries
0 
0 
Other, net
(12)
(12)
Total Other Expense
(80)
(84)
Income (Loss) before Income Taxes
313 
286 
Income Tax Expense
(24)
(4)
Net Income (Loss)
289 
282 
Other Comprehensive Income (Loss), Net of Income Taxes
45 
(141)
Comprehensive Income (Loss)
334 
141 
Eliminations
 
 
Condensed Consolidating Financial Information
 
 
Revenue
(34)
(52)
Costs and Expenses:
 
 
Network access costs
(34)
(52)
Network related expenses
0 
0 
Depreciation and amortization
0 
0 
Selling, general and administrative Expenses
0 
0 
Total Costs and Expenses
(34)
(52)
Operating Income (Loss)
0 
0 
Other Income (Expense):
 
 
Interest income
0 
0 
Interest expense
0 
0 
Interest income (expense) affiliates, net
0 
0 
Equity in net earnings (losses) of subsidiaries
554 
550 
Other, net
0 
0 
Total Other Expense
554 
550 
Income (Loss) before Income Taxes
554 
550 
Income Tax Expense
0 
0 
Net Income (Loss)
554 
550 
Other Comprehensive Income (Loss), Net of Income Taxes
(45)
141 
Comprehensive Income (Loss)
$ 509 
$ 691 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 1,004 
$ 854 
$ 1,114 
$ 580 
Restricted cash and securities
837 
8 
 
 
Receivables, less allowances for doubtful accounts
807 
757 
 
 
Due from affiliates
0 
0 
 
 
Other
141 
111 
 
 
Total Current Assets
2,789 
1,730 
 
 
Property, Plant and Equipment, net
9,974 
9,878 
 
 
Restricted Cash and Securities
41 
42 
 
 
Goodwill and Other Intangibles Assets, net
8,820 
8,876 
 
 
Investment in Subsidiaries
0 
0 
 
 
Deferred Tax Assets
3,365 
3,441 
 
 
Other Assets, net
50 
50 
 
 
Total Assets
25,039 
24,017 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
680 
629 
 
 
Current portion of long-term debt
781 
15 
 
 
Accrued payroll and employee benefits
146 
218 
 
 
Accrued interest
131 
108 
 
 
Current portion of deferred revenue
283 
267 
 
 
Due to affiliates
0 
0 
 
 
Other
166 
179 
 
 
Total Current Liabilities
2,187 
1,416 
 
 
Long-Term Debt, less current portion
10,870 
10,866 
 
 
Deferred Revenue, less current portion
1,012 
977 
 
 
Other Liabilities
628 
632 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
10,342 
10,126 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
25,039 
24,017 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
12 
12 
14 
7 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
12,778 
12,415 
 
 
Other
0 
0 
 
 
Total Current Assets
12,790 
12,427 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
27 
27 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
16,800 
16,772 
 
 
Deferred Tax Assets
42 
38 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
29,659 
29,264 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
3 
11 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
3 
11 
 
 
Long-Term Debt, less current portion
591 
591 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
15 
15 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
29,050 
28,647 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
29,659 
29,264 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
6 
6 
5 
5 
Restricted cash and securities
829 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
23,210 
22,759 
 
 
Other
0 
0 
 
 
Total Current Assets
24,045 
22,765 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
17,709 
17,714 
 
 
Deferred Tax Assets
2,775 
2,847 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
44,529 
43,326 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
2 
1 
 
 
Current portion of long-term debt
766 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
120 
90 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
888 
91 
 
 
Long-Term Debt, less current portion
10,094 
10,092 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
33,547 
33,143 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
44,529 
43,326 
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
886 
727 
841 
307 
Restricted cash and securities
1 
1 
 
 
Receivables, less allowances for doubtful accounts
48 
47 
 
 
Due from affiliates
0 
0 
 
 
Other
86 
56 
 
 
Total Current Assets
1,021 
831 
 
 
Property, Plant and Equipment, net
3,528 
3,423 
 
 
Restricted Cash and Securities
13 
14 
 
 
Goodwill and Other Intangibles Assets, net
360 
363 
 
 
Investment in Subsidiaries
3,730 
3,734 
 
 
Deferred Tax Assets
0 
0 
 
 
Other Assets, net
12 
12 
 
 
Total Assets
8,664 
8,377 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
297 
195 
 
 
Current portion of long-term debt
2 
2 
 
 
Accrued payroll and employee benefits
103 
186 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
117 
119 
 
 
Due to affiliates
38,199 
37,990 
 
 
Other
121 
115 
 
 
Total Current Liabilities
38,839 
38,607 
 
 
Long-Term Debt, less current portion
14 
15 
 
 
Deferred Revenue, less current portion
708 
680 
 
 
Other Liabilities
135 
133 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
(31,032)
(31,058)
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
8,664 
8,377 
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
100 
109 
254 
261 
Restricted cash and securities
7 
7 
 
 
Receivables, less allowances for doubtful accounts
759 
710 
 
 
Due from affiliates
2,211 
2,816 
 
 
Other
55 
55 
 
 
Total Current Assets
3,132 
3,697 
 
 
Property, Plant and Equipment, net
6,446 
6,455 
 
 
Restricted Cash and Securities
1 
1 
 
 
Goodwill and Other Intangibles Assets, net
8,460 
8,513 
 
 
Investment in Subsidiaries
0 
0 
 
 
Deferred Tax Assets
548 
556 
 
 
Other Assets, net
38 
38 
 
 
Total Assets
18,625 
19,260 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
381 
433 
 
 
Current portion of long-term debt
13 
13 
 
 
Accrued payroll and employee benefits
43 
32 
 
 
Accrued interest
8 
7 
 
 
Current portion of deferred revenue
166 
148 
 
 
Due to affiliates
0 
0 
 
 
Other
45 
64 
 
 
Total Current Liabilities
656 
697 
 
 
Long-Term Debt, less current portion
171 
168 
 
 
Deferred Revenue, less current portion
304 
297 
 
 
Other Liabilities
478 
484 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
17,016 
17,614 
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
18,625 
19,260 
 
 
Eliminations
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
0 
0 
0 
0 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
(38,199)
(37,990)
 
 
Other
0 
0 
 
 
Total Current Assets
(38,199)
(37,990)
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(38,239)
(38,220)
 
 
Deferred Tax Assets
0 
0 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
(76,438)
(76,210)
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
0 
0 
 
 
Current portion of long-term debt
0 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
(38,199)
(37,990)
 
 
Other
0 
0 
 
 
Total Current Liabilities
(38,199)
(37,990)
 
 
Long-Term Debt, less current portion
0 
0 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
(38,239)
(38,220)
 
 
Total Liabilities and Stockholders’ Equity (Deficit)
$ (76,438)
$ (76,210)
 
 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
$ 510 
$ 305 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(297)
(254)
(Increase) decrease in restricted cash and securities, net
(828)
1 
Proceeds from sale of property, plant, and equipment and other assets
 
1 
Net Cash Used in Investing Activities
(1,125)
(252)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
765 
492 
Payments on and repurchases of long-term debt and capital leases
(1)
(2)
Increase (decrease) due from-to affiliates, net
0 
0 
Net Cash Provided by (Used in) Financing Activities
764 
490 
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(9)
Net Change in Cash and Cash Equivalents
150 
534 
Cash and Cash Equivalents at Beginning of Period
854 
580 
Cash and Cash Equivalents at End of Period
1,004 
1,114 
Level 3 Communications, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(17)
(7)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) decrease in restricted cash and securities, net
0 
0 
Proceeds from sale of property, plant, and equipment and other assets
 
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 and capital leases
0 
0 
Increase (decrease) due from-to affiliates, net
17 
14 
Net Cash Provided by (Used in) Financing Activities
17 
14 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
7 
Cash and Cash Equivalents at Beginning of Period
12 
7 
Cash and Cash Equivalents at End of Period
12 
14 
Level 3 Financing, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(92)
(137)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) decrease in restricted cash and securities, net
(829)
0 
Proceeds from sale of property, plant, and equipment and other assets
 
0 
Net Cash Used in Investing Activities
(829)
0 
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
765 
492 
Payments on and repurchases of long-term debt and capital leases
0 
0 
Increase (decrease) due from-to affiliates, net
156 
(355)
Net Cash Provided by (Used in) Financing Activities
921 
137 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
0 
Cash and Cash Equivalents at Beginning of Period
6 
5 
Cash and Cash Equivalents at End of Period
6 
5 
Level 3 Communications, LLC
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
130 
(82)
Cash Flows from Investing Activities:
 
 
Capital expenditures
(159)
(77)
(Increase) decrease in restricted cash and securities, net
1 
1 
Proceeds from sale of property, plant, and equipment and other assets
 
0 
Net Cash Used in Investing Activities
(158)
(76)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
Payments on and repurchases of long-term debt and capital leases
0 
0 
Increase (decrease) due from-to affiliates, net
187 
692 
Net Cash Provided by (Used in) Financing Activities
187 
692 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
159 
534 
Cash and Cash Equivalents at Beginning of Period
727 
307 
Cash and Cash Equivalents at End of Period
886 
841 
Other Non-Guarantor Subsidiaries
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
489 
531 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(138)
(177)
(Increase) decrease in restricted cash and securities, net
0 
0 
Proceeds from sale of property, plant, and equipment and other assets
 
1 
Net Cash Used in Investing Activities
(138)
(176)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
0 
0 
Payments on and repurchases of long-term debt and capital leases
(1)
(2)
Increase (decrease) due from-to affiliates, net
(360)
(351)
Net Cash Provided by (Used in) Financing Activities
(361)
(353)
Effect of Exchange Rates on Cash and Cash Equivalents
1 
(9)
Net Change in Cash and Cash Equivalents
(9)
(7)
Cash and Cash Equivalents at Beginning of Period
109 
261 
Cash and Cash Equivalents at End of Period
100 
254 
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 sale of property, plant, and equipment and other assets
 
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 and capital leases
0 
0 
Increase (decrease) due from-to affiliates, net
0 
0 
Net Cash Provided by (Used in) Financing Activities
0 
0 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
0 
0 
Cash and Cash Equivalents at Beginning of Period
0 
0 
Cash and Cash Equivalents at End of Period
$ 0 
$ 0