LEVEL 3 COMMUNICATIONS INC, 10-Q filed on 8/4/2017
Quarterly Report
Document and Entity Information Document
6 Months Ended
Jun. 30, 2017
Aug. 2, 2017
Entity Information [Line Items]
 
 
Entity Registrant Name
LEVEL 3 COMMUNICATIONS INC 
 
Entity Central Index Key
0000794323 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2017 
 
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
 
362,691,792 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q2 
 
Consolidated Statements of Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]
 
 
 
 
Revenue
$ 2,061 
$ 2,056 
$ 4,109 
$ 4,107 
Costs and Expenses:
 
 
 
 
Network access costs
675 
676 
1,366 
1,370 
Network related expenses
337 
339 
673 
677 
Depreciation and amortization
330 
310 
650 
611 
Selling, general and administrative Expenses
366 
357 
730 
713 
Total Costs and Expenses
1,708 
1,682 
3,419 
3,371 
Operating Income
353 
374 
690 
736 
Other Income (Expense):
 
 
 
 
Interest income
3 
1 
5 
2 
Interest expense
(132)
(140)
(266)
(275)
Loss on modification and extinguishment of Debt
0 
(40)
(44)
(40)
Other, net
(1)
(5)
3 
(15)
Total Other Expense
(130)
(184)
(302)
(328)
Income Before Income Taxes
223 
190 
388 
408 
Income Tax Expense
(69)
(34)
(139)
(124)
Net Income
$ 154 
$ 156 
$ 249 
$ 284 
Basic Earnings per Common Share
 
 
 
 
Net Income Per Share
$ 0.42 
$ 0.44 
$ 0.69 
$ 0.79 
Weighted-Average Shares Outstanding (in thousands)
362,385 
357,924 
361,942 
357,355 
Diluted Earnings per Common Share
 
 
 
 
Net Income Per Share
$ 0.42 
$ 0.43 
$ 0.68 
$ 0.79 
Weighted-Average Shares Outstanding (in thousands)
365,002 
361,250 
364,569 
360,804 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
 
 
 
 
Net Income
$ 154 
$ 156 
$ 249 
$ 284 
Other Comprehensive Income, net of Tax:
 
 
 
 
Foreign currency translation adjustments, net of tax effect of ($29), $16, ($37) and $24
42 
(24)
62 
24 
Defined benefit pension plan adjustments, net of tax effect of $0, $1, $0, and ($1)
(1)
2 
0 
(1)
Other Comprehensive Income, net of Tax
41 
(22)
62 
23 
Comprehensive Income
$ 195 
$ 134 
$ 311 
$ 307 
Comprehensive Income Parenthetical (Parentheticals) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Comprehensive Income Parenthetical [Abstract]
 
 
 
 
Foreign currency translation adjustments, tax effect
$ (29)
$ 16 
$ (37)
$ 24 
Defined benefit pension plan adjustments, tax effect
$ 0 
$ 1 
$ 0 
$ (1)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Assets:
 
 
Cash and cash equivalents
$ 1,056 
$ 1,819 
Marketable securities
1,127 
0 
Restricted cash and securities
5 
7 
Receivables, less allowances for doubtful accounts of $32 and $29, respectively
707 
712 
Other
141 
115 
Total Current Assets
3,036 
2,653 
Property, Plant and Equipment, net of accumulated depreciation of $11,874 and $11,249, respectively
10,392 
10,139 
Restricted Cash and Securities
29 
31 
Goodwill
7,737 
7,729 
Other Intangibles, net
809 
915 
Deferred Tax Assets
3,235 
3,370 
Other Assets, net
49 
51 
Total Assets
25,287 
24,888 
Liabilities and Stockholders' Equity:
 
 
Accounts payable
693 
706 
Current portion of long-term debt
306 
7 
Accrued payroll and employee benefits
178 
195 
Accrued interest
97 
129 
Current portion of deferred revenue
262 
266 
Other
162 
168 
Total Current Liabilities
1,698 
1,471 
Long-Term Debt, less current portion
10,584 
10,877 
Deferred Revenue, less current portion
1,058 
1,001 
Other Liabilities
632 
622 
Total Liabilities
13,972 
13,971 
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; 361,479,420 issued and outstanding at June 30, 2017 and 360,021,098 issued and outstanding at December 31, 2016
4 
4 
Additional paid-in capital
19,887 
19,800 
Accumulated other comprehensive loss
(325)
(387)
Accumulated deficit
(8,251)
(8,500)
Total Stockholders’ Equity
11,315 
10,917 
Total Liabilities and Stockholders’ Equity
$ 25,287 
$ 24,888 
Consolidated Balance Sheets Parentheticals (Parentheticals) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Allowance for doubtful accounts
$ 32 
$ 29 
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment
$ 11,874 
$ 11,249 
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 (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized
433,333,333 
433,333,333 
Common stock, shares issued
361,479,420 
360,021,098 
Common stock, shares outstanding
361,479,420 
360,021,098 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash Flows from Operating Activities:
 
 
Net Income
$ 249 
$ 284 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
650 
611 
Non-cash compensation expense attributable to stock awards
87 
78 
Loss on modification and extinguishment of debt
44 
40 
Accretion of debt discount and amortization of debt issuance costs
9 
10 
Accrued interest on long-term debt, net
(32)
23 
Deferred income taxes
119 
101 
Gain on sale of property, plant and equipment and other assets
0 
(1)
Other, net
(8)
(3)
Changes in working capital items:
 
 
Receivables
16 
(69)
Other current assets
(36)
(40)
Accounts payable
(17)
132 
Deferred revenue
50 
42 
Other current liabilities
(31)
(67)
Net Cash Provided by Operating Activities
1,100 
1,141 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(696)
(664)
Change in restricted cash and securities, net
4 
11 
Purchases of marketable securities
(1,127)
0 
Proceeds from the sale of property, plant and equipment and other assets
0 
1 
Net Cash Used in Investing Activities
(1,819)
(652)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
4,569 
764 
Payments on and repurchases of long-term debt and capital leases
(4,615)
(816)
Net Cash (Used in) Provided by Financing Activities
(46)
(52)
Effect of Exchange Rates on Cash and Cash Equivalents
2 
0 
Net Change in Cash and Cash Equivalents
(763)
437 
Cash and Cash Equivalents at Beginning of Period
1,819 
854 
Cash and Cash Equivalents at End of Period
1,056 
1,291 
Supplemental Disclosure of Cash Flow Information:
 
 
Cash interest paid
282 
245 
Income taxes paid, net of refunds
$ 32 
$ 18 
Organization and Summary of Significant Accounting Policies (Notes)
Organization and Summary of Significant Accounting Policies
(1) Organization and Summary of Significant Accounting Policies

Description of Business

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

On October 31, 2016, we entered into an agreement and plan of merger (the "Merger Agreement") with CenturyLink, Inc., a Louisiana corporation ("CenturyLink"), Wildcat Merger Sub 1 LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 1"), and WWG Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 2"), pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, we will be acquired by CenturyLink in a cash and stock transaction, including the assumption of our debt (the "CenturyLink Merger"). See Note 2 - CenturyLink Merger.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include our and our subsidiaries' accounts in which we have 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 our consolidation policy, we consider our controlled subsidiaries, investments in businesses in which we are not the primary beneficiary or do not have effective control but have the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give us rights to economic risks or rewards of a legal entity. We do not have variable interests in a variable interest entity where we are required to consolidate the entity as the primary beneficiary. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of the second quarter of 2017.

The accompanying Consolidated Balance Sheet as of December 31, 2016, which was derived from audited Consolidated Financial Statements, and the unaudited interim Consolidated Financial Statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016 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 our audited Consolidated Financial Statements and notes thereto included in our Form 10-K for the year ended December 31, 2016. In the opinion of our 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.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases ("ASC 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. We are evaluating the effect that ASU 2016-02 will have on our Consolidated Financial Statements and related disclosures, and expect the new guidance to significantly increase the reported assets and liabilities on our Consolidated Balance Sheets.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amended the existing accounting standards for revenue recognition and requires an entity to recognize the amount of revenue it expects to be entitled to for the transfer of promised goods or services to customers. The ASU and subsequent amendments have been codified as ASC 606, Revenue from Contracts with Customers (“ASC 606”). In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, and interim reporting periods within those periods. Early adoption is permitted using the original effective date of annual reporting periods beginning after December 15, 2016, and interim reporting periods within those periods. The new guidance may be applied retrospectively to each prior period presented or prospectively with the cumulative effect recognized as of the date of initial adoption. We will not adopt ASC 606 early.

We have performed a comprehensive analysis of our revenue streams and contractual arrangements to identify and quantify the effects of ASC 606 on our consolidated financial statements and are developing new accounting and reporting policies, business and internal control processes and procedures to facilitate adoption of the standard. Because we currently have service contracts that contain a significant financing component that are not currently separately accounted for, we will be required to estimate and record incremental revenue and interest cost associated with these contractual terms. In addition, we will be required to capitalize, and subsequently amortize, commission costs associated with obtaining or fulfilling our customer contracts, which we do not currently defer and amortize. We will also have to comply with new revenue disclosure requirements. We are continuing to review and evaluate underlying contract information that will be used to support new accounting and disclosure requirements under ASC 606 and evaluate other matters that may result from adoption of the standard. We have not yet selected a transition method, as our method of transition may be affected by the CenturyLink Merger, which we expect will be completed in the third quarter of 2017, and subsequent integration activities completed prior to the January 1, 2018 ASC 606 adoption date.
Earnings Per Share (Notes)
Earnings Per Share
(3) Earnings Per Share

We compute 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 exercise of stock-based compensation awards.

The effects of approximately 3 million total restricted stock units ("RSUs") and performance restricted stock units ("PRSUs") outstanding at June 30, 2017 have been included in the computation of diluted earnings per share for the three and six months ended June 30, 2017. Less than 1 million of PRSUs granted in 2016 were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2017, as they were contingently issuable and no shares would have been issued if these periods were the end of the contingency period. The effect of approximately 3 million total outperform stock appreciation rights ("OSOs"), RSUs and PRSUs outstanding at June 30, 2016 was included in the computation of diluted earnings per share for the three and six months ended June 30, 2016.
Other Intangible Assets (Notes)
Acquired Intangible Assets
(4) Other Intangible Assets

Other intangible assets as of June 30, 2017 and December 31, 2016 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
June 30, 2017
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,973

 
$
(1,205
)
 
$
768

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
227

 
(201
)
 
26

 
2,255

 
(1,461
)
 
794

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,270

 
$
(1,461
)
 
$
809

December 31, 2016
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,973

 
$
(1,113
)
 
$
860

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
229

 
(189
)
 
40

 
2,257

 
(1,357
)
 
900

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,272

 
$
(1,357
)
 
$
915



Finite-lived intangible asset amortization expense was $52 million and $104 million for the three and six months ended June 30, 2017 and $53 million and $106 million for the three and six months ended June 30, 2016.

At June 30, 2017, the weighted average remaining useful lives of our finite-lived intangible assets was 4.4 in total; 4.4 for customer contracts and relationships, and 2.3 for patents and developed technology.

As of June 30, 2017, estimated amortization expense for our finite-lived intangible assets over the next five years is as follows (dollars in millions):

2017 (remaining six months)
$
95

2018
190

2019
179

2020
166

2021
143

2022
21

Thereafter
—

 
$
794

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

Our financial instruments consist of cash, cash equivalents, marketable securities, 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, marketable securities, restricted cash and securities, receivables, accounts payable, capital leases and other liabilities approximated their fair values at June 30, 2017 and December 31, 2016.

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, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as interest and foreign exchange rates, transfer restrictions, and risk of nonperformance.

Fair Value Hierarchy

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

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

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

Level 3— Unobservable inputs for the asset or liability.

We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the fair value hierarchy during each of the six months ended June 30, 2017 and June 30, 2016.

Marketable Securities

Our securities include U.S. Treasury Bills and commercial paper, which are classified as held to maturity. Held to maturity securities are carried at amortized cost. The contractual maturities of held to maturity securities as of June 30, 2017 were all within one year.


The table below presents the fair values for our long-term debt as well as the input levels used to determine these fair values as of June 30, 2017 and December 31, 2016:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
June 30,
2017
 
December 31,
2016
 
June 30,
2017
 
December 31,
2016
 
June 30,
2017
 
December 31,
2016
Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
4,569

 
$
4,566

 
$
4,622

 
$
4,671

 
$
—

 
$
—

Senior Notes
 
6,140

 
6,135

 
6,436

 
6,283

 
—

 
—

Capital Leases and Other
 
181

 
183

 
—

 
—

 
181

 
183

Total Long-term Debt, including the current portion
 
$
10,890

 
$
10,884

 
$
11,058

 
$
10,954

 
$
181

 
$
183



We do 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 and $4.7 billion at June 30, 2017 and December 31, 2016, respectively. The fair value of each loan is based on quoted prices. Each loan tranche is actively traded. For additional information on the refinancing of the Term Loans, see Note 6 - Long-Term Debt.

Senior Notes

The fair value of the Senior Notes referenced above was approximately $6.4 billion at June 30, 2017 and $6.3 billion at December 31, 2016, respectively, based on quoted prices for identical terms and maturities. Each series of notes is actively traded.

Capital Leases

The fair value of our capital leases is 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
(6) Long-Term Debt

    The following table summarizes our long-term debt (amounts in millions):
 
Date of
 
June 30, 2017
December 31, 2016
 
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
—
Quarterly
LIBOR +3.00%
$
—

$
815

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

1,796

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

2,000

Tranche B 2024 Term Loan (1)(4)
Feb 2017
Feb 2024
Quarterly
LIBOR +2.25%
4,611

—

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

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 (2)
Mar 2016
Mar 2026
Apr/Oct
5.250%
775

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 and Other Debt
 
 
 
 
181

183

Total Debt Obligations
 
 
 
 
11,007

11,009

Unamortized discounts
 
 
 
 
—

(13
)
Unamortized debt issuance costs
 
 
 
 
(117
)
(112
)
Current Portion
 
 
 
 
(306
)
(7
)
Total Long-Term Debt
 
 
 
 
$
10,584

$
10,877


(1) The term loans are secured obligations and guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC and certain other subsidiaries.
(2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.
(3) The notes were not guaranteed by any of Level 3 Communications, Inc.'s subsidiaries.
(4) The Tranche B 2024 Term Loan had an interest rate of 3.466% as of June 30, 2017. All other term loans were refinanced on February 22, 2017 as described below. The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of December 31, 2016. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of December 31, 2016. The interest rate on the Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan were set with a minimum LIBOR of 1.00%. The interest rate on the Tranche B-II 2022 Term Loan was set with a minimum LIBOR of 0.75% and the interest rate on the Tranche B 2024 Term Loan is set with a minimum LIBOR of zero percent. The Floating Rate Senior Notes due 2018 had an interest rate of 4.939% as of June 30, 2017 and 4.762% as of December 31, 2016.


Senior Secured Term Loans

As of June 30, 2017, Level 3 Financing, Inc., Level 3 Communications, Inc.'s direct wholly owned subsidiary ("Level 3 Financing") had a senior secured credit facility consisting of a $4.611 billion Tranche B Term Loan due 2024.
    
On February 22, 2017, we completed the refinancing of all of our then outstanding $4.611 billion senior secured term loans through the issuance of a new Tranche B 2024 Term Loan in the principal amount of $4.611 billion. The term loans refinanced were our Tranche B-III 2019 Term Loan, Tranche B 2020 Term Loan, and the Tranche B-II 2022 Term Loan. The new Tranche B 2024 Term Loan bears interest at LIBOR plus 2.25 percent, with a zero percent minimum LIBOR, and will mature on February 22, 2024. The Tranche B 2024 Term Loan was priced to lenders at par, with the payment to the lenders at closing of an upfront 25 basis point fee. We recognized a charge of approximately $44 million for modification and extinguishment in the first quarter of 2017 related to this refinancing.

As the new Tranche B 2024 Term Loan represents a new tranche to our existing credit facility, new regulatory approvals are required for Level 3 Communications, LLC and certain other regulated subsidiaries of Level 3 Financing to guarantee and to provide security for the Tranche B 2024 Term Loan. As a result, the guarantees and a portion of the collateral provided by those entities to support the term loans that were refinanced are not available to support the Tranche B 2024 Term Loan unless and until those regulatory approvals are obtained.

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 our 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 Level 3 Communications, Inc. and Level 3 Communications, LLC.

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 our 5.25% Senior Notes due 2026. We recognized a charge of approximately $40 million for modification and extinguishment in the second quarter of 2016 related to this refinancing.

Capital Leases

As of June 30, 2017, we had $181 million of capital leases. We lease property, equipment, certain dark fiber facilities and metro fiber under non-cancelable IRU agreements that are accounted for as capital leases. The weighted average interest rate on these capital leases approximated 5.8% as of June 30, 2017.

Covenant Compliance

At June 30, 2017 and December 31, 2016, we were 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 debt issuance costs) were as follows as of June 30, 2017 (dollars in millions):

2017 (remaining six months)
$
4

2018
307

2019
7

2020
8

2021
650

2022
1,610

Thereafter
8,421

 
$
11,007

Accumulated Other Comprehensive Loss (Notes)
Accumulated Other Comprehensive Loss
(7) 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, 2015
 
$
(273
)
 
$
(28
)
 
$
(301
)
Other comprehensive income (loss) before reclassifications, net of tax
 
24

 
(1
)
 
23

Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
—

Balance at June 30, 2016
 
$
(249
)
 
$
(29
)
 
$
(278
)

Balance at December 31, 2016
 
$
(353
)
 
$
(34
)
 
$
(387
)
Other comprehensive income before reclassifications, net of tax
 
62

 
1

 
63

Amounts reclassified from accumulated other comprehensive loss
 
—

 
(1
)
 
(1
)
Balance at June 30, 2017
 
$
(291
)

$
(34
)

$
(325
)
Stock-Based Compensation (Notes)
Stock-Based Compensation
(8) Stock-Based Compensation
The following table summarizes non-cash compensation expense for each of the three and six months ended June 30, 2017 and 2016 (dollars in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Outperform Stock Appreciation Rights
$
—

 
$
1

 
$
—

 
$
2

Restricted Stock Units
28

 
13

 
56

 
34

Performance Restricted Stock Units
3

 
10

 
12

 
24

401(k) Match Expense
8

 
8

 
19

 
19

 
39

 
32

 
87

 
79

Capitalized Non-Cash Comp
—

 
(1
)
 
—

 
(1
)
Total
$
39

 
$
31

 
$
87

 
$
78



As of June 30, 2017, there were approximately 6 million total restricted stock and performance restricted stock units outstanding.
Segment Information (Notes)
Segment Information
(9) Segment Information

Operating segments are defined under GAAP as components of an enterprise for which separate financial information is available and evaluated regularly by our chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. Our 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 us, is equal to net income 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 our internal reporting and is a key measure used by management to evaluate our profitability and operating performance 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 our performance to that of our competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period our 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 benefit (expense) because these items are associated with our 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 our primary operations.

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 our 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
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016(1)
 
June 30, 2017
 
June 30, 2016(1)
Core Network Services Revenue:
 
 
 
 
 
 
 
 
North America
 
$
1,607

 
$
1,605

 
$
3,201

 
$
3,206

EMEA
 
176

 
191

 
351

 
381

Latin America
 
182

 
160

 
359

 
315

Total Core Network Services Revenue
 
1,965

 
1,956

 
3,911

 
3,902

 
 
 
 
 
 
 
 
 
Wholesale Voice Services Revenue:
 
 
 
 
 
 
 
 
North America
 
91

 
95

 
189

 
194

EMEA
 
2

 
3

 
5

 
7

Latin America
 
3

 
2

 
4

 
4

Total Wholesale Voice Services Revenue
 
96

 
100

 
198

 
205

 
 
 
 
 
 
 
 
 
Total Revenue
 
$
2,061

 
$
2,056

 
$
4,109

 
$
4,107


(1) The 2016 results have been adjusted to reflect changes made to customer assignments between the wholesale and enterprise channels as of the beginning of 2017.


The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income:
 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
Adjusted EBITDA:
 
 
 
 
 
 
 
 
North America
 
$
815

 
$
819

 
$
1,624

 
$
1,631

EMEA
 
69

 
52

 
126

 
106

Latin America
 
77

 
64

 
157

 
138

Unallocated Corporate Expenses
 
(239
)
 
(220
)
 
(480
)
 
(450
)
Adjusted EBITDA
 
722

 
715

 
1,427

 
1,425

Income Tax Expense
 
(69
)
 
(34
)
 
(139
)
 
(124
)
Total Other Expense
 
(130
)
 
(184
)
 
(302
)
 
(328
)
Depreciation and Amortization
 
(330
)
 
(310
)
 
(650
)
 
(611
)
Non-Cash Stock Compensation
 
(39
)
 
(31
)
 
(87
)
 
(78
)
Net Income
 
$
154

 
$
156

 
$
249

 
$
284



The following table presents capital expenditures by segment and reconciles capital expenditures by segment to total capital expenditures:
 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
Capital Expenditures:
 
 
 
 
 
 
 
 
North America
 
$
220

 
$
237

 
$
474

 
$
432

EMEA
 
27

 
40

 
58

 
79

Latin America
 
43

 
51

 
78

 
74

Unallocated Corporate Capital Expenditures
 
38

 
39

 
86

 
79

Total Capital Expenditures
 
$
328

 
$
367

 
$
696

 
$
664



The following table presents total assets by segment:
(dollars in millions)
 
June 30, 2017
 
December 31, 2016
Assets:
 
 
 
 
North America
 
$
21,082

 
$
20,818

EMEA
 
1,739

 
1,639

Latin America
 
2,339

 
2,304

Other
 
127

 
127

Total Assets
 
$
25,287

 
$
24,888




The changes in the carrying amount of goodwill by segment during the six months ended June 30, 2017 were as follows (in millions):
 
 
North America
 
EMEA
 
Latin America
 
Total
Balance at December 31, 2016
$
7,024


$
109

 
$
596

 
$
7,729

  Effect of foreign currency rate change
—

 
8

 
—

 
8

Balance at June 30, 2017
$
7,024


$
117

 
$
596

 
$
7,737

 
There were no events or changes in circumstances during the first three and six months of 2017 that indicated the carrying value of goodwill may not be recoverable.
Commitments, Contingencies and Other Items (Notes)
Commitments, Contingencies and Other Items
(10) Commitments, Contingencies and Other Items

We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. Amounts accrued for such contingencies aggregate to $100 million and are included in “Other” current liabilities and “Other Liabilities” in our Consolidated Balance Sheet at June 30, 2017. 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 our results of operations but could materially adversely affect our cash flows for the affected period.

We review our accruals at least quarterly and adjust them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Below is a description of material legal proceedings and other contingencies pending at June 30, 2017. Although we believe we have 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 we believe it is reasonably possible that a loss may result that is materially in excess of the accrual (if any) established for the matter, we have 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, we are party to many other legal proceedings and contingencies, the resolution of which is not expected to materially affect our financial condition or future results of operations beyond the amounts accrued.

Rights-of-Way Litigation

We are party to a number of purported class action lawsuits involving our right to install fiber optic cable network in railroad right-of-ways adjacent to plaintiffs' land. In general, we obtained the rights to construct our networks from railroads, utilities, and others, and have installed our 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 us the right to construct and maintain our 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. We have also received, and may in the future receive, claims and demands related to rights-of-way issues similar to the issues in these cases that may be based on similar or different legal theories. We have defeated motions for class certification in a number of these actions but expect 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 us, 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.

We negotiated a series of class settlements affecting all persons who own or owned land next to or near railroad rights of way in which we have installed our 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, we 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 we have installed our fiber optic cable networks. We are currently pursuing presentment of the settlement in applicable jurisdictions. The settlements, affecting current and former landowners, have received final federal court approval in all but one of the applicable states and the parties are actively engaged in, or have completed, the claims process for the vast majority of the applicable states, including payment of claims. We continue to seek approval in the remaining state.

Management believes that we have 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 our 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 $17 million at June 30, 2017.

We challenged the tax assessments during 2005 by filing administrative claims before SUNAT. During August 2006 and June 2007, SUNAT rejected our 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 our favor 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. We 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 our 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 our favor on the central issue underlying the assessments. SUNAT has appealed the substantive issue to the next judicial level. We also appealed certain procedural points. In May 2017, the court of appeal issued a decision reversing the favorable decision reached by the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level.     

In October 2013, the Tribunal notified us 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. We 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. We 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 June 2017, the first judicial court issued a ruling against us primarily based on the same grounds from the original decision. In June 2017, we filed an appeal with the court of appeal.

In December 2013, SUNAT initiated an audit of calendar year 2001. In June 2014, we were served with SUNAT’s assessments of the 2001 VAT credits declared null by the Tribunal and the corresponding fine. In July 2014, we challenged these assessments by filing administrative claims before SUNAT. In January 2015, SUNAT rejected the administrative claims, thereby confirming the assessments. We filed an appeal with the Tribunal in February 2015. In May 2015, the Tribunal notified us 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, we are 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, we released an accrual of approximately $15 million for an assessment and associated interest.

In addition, based on a change in legal interpretation by the Peruvian judicial courts, the statute of limitations with respect to the 2001 fines has expired. Accordingly, in the fourth quarter of 2016, we released an accrual of approximately $11 million of fines 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 of our Latin American subsidiaries 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 us or termination of service relationships. We are vigorously defending ourselves against the asserted claims, which aggregate to approximately $33 million at June 30, 2017.

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 our 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, we 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. We have 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 we have appealed those decisions to the judicial courts. In October 2012 and June 2014, we 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 we appealed this decision to the second administrative level. During the fourth quarter of 2014, we 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, we paid $5 million and released an accrual of $3 million of tax corresponding to the ICMS applicable on the provision of Internet access services in the fourth quarter of 2014.

We are vigorously contesting all such assessments in both states and, in particular, view the assessment of ICMS on revenue from leasing movable properties to be without merit. Nevertheless, we believe it is reasonably possible that these assessments could result in a loss of up to $50 million at June 30, 2017 in excess of the accruals established for these matters.

Letters of Credit

It is customary for us 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 our behalf in accordance with specified terms and conditions. As of June 30, 2017 and December 31, 2016, we had outstanding letters of credit or other similar obligations of approximately $35 million and $39 million, respectively, of which $30 million and $33 million are collateralized by cash that is reflected on the Consolidated Balance Sheets as restricted cash and securities. We do not believe exposure to loss related to our letters of credit is material.
Condensed Consolidating Financial Information (Notes)
Condensed Consolidating Financial Information
(11) Condensed Consolidating Financial Information

Level 3 Financing, Inc., a wholly owned subsidiary, 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 Level 3 Financing, Inc. 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 our Consolidated Financial Statements are interdependent. The accompanying condensed consolidating financial information presents the statements of comprehensive income, balance sheets and statements of 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 our consolidated results.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2017

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

 
$
—

 
$
933

 
$
1,174

 
$
(46
)
 
$
2,061

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
339

 
382

 
(46
)
 
675

Network Related Expenses
—

 
—

 
246

 
91

 
—

 
337

Depreciation and Amortization
—

 
—

 
109

 
221

 
—

 
330

Selling, General and Administrative Expenses
1

 
1

 
294

 
70

 
—

 
366

Total Costs and Expenses
1

 
1

 
988

 
764

 
(46
)
 
1,708

Operating Income (Loss)
(1
)
 
(1
)
 
(55
)
 
410

 
—

 
353

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
3

 
—

 
—

 
3

Interest expense
(9
)
 
(117
)
 
(1
)
 
(5
)
 
—

 
(132
)
Interest income (expense) affiliates, net
378

 
567

 
(868
)
 
(77
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(216
)
 
(632
)
 
200

 
—

 
648

 
—

Other, net
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Total Other Income (Expense)
153

 
(182
)
 
(667
)
 
(82
)
 
648

 
(130
)
Income (Loss) before Income Taxes
152

 
(183
)
 
(722
)
 
328

 
648

 
223

Income Tax Benefit (Expense)
2

 
(33
)
 
(1
)
 
(37
)
 
—

 
(69
)
Net Income (Loss)
154

 
(216
)
 
(723
)
 
291

 
648

 
154

Other Comprehensive Income (Loss), Net of Income Taxes
41

 
—

 
—

 
41

 
(41
)
 
41

Comprehensive Income (Loss)
$
195

 
$
(216
)
 
$
(723
)
 
$
332

 
$
607

 
$
195






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2017

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

 
$
—

 
$
1,853

 
$
2,331

 
$
(75
)
 
$
4,109

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
662

 
779

 
(75
)
 
1,366

Network Related Expenses
—

 
—

 
489

 
184

 
—

 
673

Depreciation and Amortization
—

 
—

 
213

 
437

 
—

 
650

Selling, General and Administrative Expenses
2

 
2

 
571

 
155

 
—

 
730

Total Costs and Expenses
2

 
2

 
1,935

 
1,555

 
(75
)
 
3,419

Operating Income (Loss)
(2
)
 
(2
)
 
(82
)
 
776

 
—

 
690

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
5

 
—

 
—

 
5

Interest expense
(18
)
 
(237
)
 
(2
)
 
(9
)
 
—

 
(266
)
Interest income (expense) affiliates, net
755

 
1,141

 
(1,737
)
 
(159
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(491
)
 
(1,278
)
 
403

 
—

 
1,366

 
—

Other, net
—

 
(44
)
 
4

 
(1
)
 
—

 
(41
)
Total Other Income (Expense)
246

 
(418
)
 
(1,327
)
 
(169
)
 
1,366

 
(302
)
Income (Loss) before Income Taxes
244

 
(420
)
 
(1,409
)
 
607

 
1,366

 
388

Income Tax Benefit (Expense)
5

 
(71
)
 
(1
)
 
(72
)
 
—

 
(139
)
Net Income (Loss)
249

 
(491
)
 
(1,410
)
 
535

 
1,366

 
249

Other Comprehensive Income (Loss), Net of Income Taxes
62

 
—

 
—

 
62

 
(62
)
 
62

Comprehensive Income (Loss)
$
311

 
$
(491
)
 
$
(1,410
)
 
$
597

 
$
1,304

 
$
311

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2016

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

 
$
—

 
$
879

 
$
1,211

 
$
(34
)
 
$
2,056

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
315

 
395

 
(34
)
 
676

Network Related Expenses
—

 
—

 
237

 
102

 
—

 
339

Depreciation and Amortization
—

 
—

 
92

 
218

 
—

 
310

Selling, General and Administrative Expenses
1

 
2

 
263

 
91

 
—

 
357

Total Costs and Expenses
1

 
2

 
907

 
806

 
(34
)
 
1,682

Operating (Loss) Income
(1
)
 
(2
)
 
(28
)
 
405

 
—

 
374

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(9
)
 
(128
)
 
—

 
(3
)
 
—

 
(140
)
Interest income (expense) affiliates, net
343

 
528

 
(802
)
 
(69
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(187
)
 
(489
)
 
201

 
—

 
475

 
—

Other, net
—

 
(39
)
 
1

 
(7
)
 
—

 
(45
)
Total Other Income (Expense)
147

 
(128
)
 
(599
)
 
(79
)
 
475

 
(184
)
Income (Loss) before Income Taxes
146

 
(130
)
 
(627
)
 
326

 
475

 
190

Income Tax Expense
3

 
(50
)
 
(1
)
 
14

 
—

 
(34
)
Net Income (Loss)
149

 
(180
)
 
(628
)
 
340

 
475

 
156

Other Comprehensive Income (Loss), Net of Income Taxes
(22
)
 
—

 
—

 
(22
)
 
22

 
(22
)
Comprehensive Income (Loss)
$
127

 
$
(180
)
 
$
(628
)
 
$
318

 
$
497

 
$
134






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2016

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

 
$
—

 
$
1,745

 
$
2,430

 
$
(68
)
 
$
4,107

Costs and Expense:
 
Network Access Costs
—

 
—

 
635

 
803

 
(68
)
 
1,370

Network Related Expenses
—

 
—

 
474

 
203

 
—

 
677

Depreciation and Amortization
—

 
—

 
180

 
431

 
—

 
611

Selling, General and Administrative Expenses
2

 
3

 
513

 
195

 
—

 
713

Total Costs and Expenses
2

 
3

 
1,802

 
1,632

 
(68
)
 
3,371

Operating (Loss) Income
(2
)
 
(3
)
 
(57
)
 
798

 
—

 
736

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
1

 
—

 
2

Interest expense
(18
)
 
(256
)
 
(1
)
 
—

 
—

 
(275
)
Interest income (expense) affiliates, net
685

 
1,059

 
(1,603
)
 
(141
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(399
)
 
(1,030
)
 
400

 
—

 
1,029

 
—

Other, net
—

 
(39
)
 
3

 
(19
)
 
—

 
(55
)
Total Other Income (Expense)
268

 
(266
)
 
(1,200
)
 
(159
)
 
1,029

 
(328
)
Income (Loss) before Income Taxes
266

 
(269
)
 
(1,257
)
 
639

 
1,029

 
408

Income Tax Expense
7

 
(119
)
 
(2
)
 
(10
)
 
—

 
(124
)
Net Income (Loss)
273

 
(388
)
 
(1,259
)
 
629

 
1,029

 
284

Other Comprehensive Income (Loss), Net of Income Taxes
23

 
—

 
—

 
23

 
(23
)
 
23

Comprehensive Income (Loss)
$
296

 
$
(388
)
 
$
(1,259
)
 
$
652

 
$
1,006

 
$
307

Condensed Consolidating Balance Sheets
June 30, 2017

 
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
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056

Marketable Securities
—

 
—

 
1,127

 
—

 
—

 
1,127

Restricted cash and securities
—

 
—

 
1

 
4

 
—

 
5

Receivables, less allowances for doubtful accounts
—

 
—

 
4

 
703

 
—

 
707

Due from affiliates
17,832

 
22,581

 
—

 
2,824

 
(43,237
)
 
—

Other
—

 
—

 
116

 
25

 
—

 
141

Total Current Assets
17,846

 
22,581

 
2,186

 
3,660

 
(43,237
)
 
3,036

Property, Plant, and Equipment, net
—

 
—

 
4,105

 
6,287

 
—

 
10,392

Restricted Cash and Securities
19

 
—

 
10

 
—

 
—

 
29

Goodwill and Other Intangibles, net
—

 
—

 
352

 
8,194

 
—

 
8,546

Investment in Subsidiaries
16,926

 
17,664

 
3,639

 
—

 
(38,229
)
 
—

Deferred Tax Assets
55

 
2,617

 
(1
)
 
564

 
—

 
3,235

Other Assets, net
—

 
—

 
14

 
35

 
—

 
49

Total Assets
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

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

 
$
1

 
$
324

 
$
368

 
$
—

 
$
693

Current portion of long-term debt
—

 
299

 
2

 
5

 
—

 
306

Accrued payroll and employee benefits
—

 
—

 
149

 
29

 
—

 
178

Accrued interest
11

 
79

 
—

 
7

 
—

 
97

Current portion of deferred revenue
—

 
—

 
111

 
151

 
—

 
262

Due to affiliates
—

 
—

 
43,237

 
—

 
(43,237
)
 
—

Other
—

 
(1
)
 
130

 
33

 
—

 
162

Total Current Liabilities
11

 
378

 
43,953

 
593

 
(43,237
)
 
1,698

Long-Term Debt, less current portion
593

 
9,816

 
12

 
163

 
—

 
10,584

Deferred Revenue, less current portion
—

 
—

 
781

 
277

 
—

 
1,058

Other Liabilities
16

 
—

 
164

 
452

 
—

 
632

Commitments and Contingencies

 

—


 

 

 

Stockholders' Equity (Deficit)
34,226

 
32,668

 
(34,605
)
 
17,255

 
(38,229
)
 
11,315

Total Liabilities and Stockholders' Equity (Deficit)
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

Condensed Consolidating Balance Sheets
December 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
$
15

 
$
—

 
$
1,700

 
$
104

 
$
—

 
$
1,819

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
26

 
686

 
—

 
712

Due from affiliates
17,032

 
21,715

 
—

 
2,180

 
(40,927
)
 
—

Other
—

 
—

 
87

 
28

 
—

 
115

Total Current Assets
17,047

 
21,715

 
1,814

 
3,004

 
(40,927
)
 
2,653

Property, Plant, and Equipment, net
—

 
—

 
3,869

 
6,270

 
—

 
10,139

Restricted Cash and Securities
22

 
—

 
9

 
—

 
—

 
31

Goodwill and Other Intangibles, net
—

 
—

 
353

 
8,291

 
—

 
8,644

Investment in Subsidiaries
16,869

 
17,599

 
3,674

 
—

 
(38,142
)
 
—

Deferred Tax Assets
51

 
2,687

 
—

 
632

 
—

 
3,370

Other Assets, net
—

 
—

 
16

 
35

 
—

 
51

Total Assets
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

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

 
$
—

 
$
307

 
$
399

 
$
—

 
$
706

Current portion of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accrued payroll and employee benefits
—

 
—

 
160

 
35

 
—

 
195

Accrued interest
11

 
110

 
—

 
8

 
—

 
129

Current portion of deferred revenue
—

 
—

 
116

 
150

 
—

 
266

Due to affiliates
—

 
—

 
40,927

 
—

 
(40,927
)
 
—

Other
—

 
—

 
127

 
41

 
—

 
168

Total Current Liabilities
11

 
110

 
41,639

 
638

 
(40,927
)
 
1,471

Long-Term Debt, less current portion
592

 
10,108

 
13

 
164

 
—

 
10,877

Deferred Revenue, less current portion
—

 
—

 
719

 
282

 
—

 
1,001

Other Liabilities
16

 
—

 
155

 
451

 
—

 
622

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
33,370

 
31,783

 
(32,791
)
 
16,697

 
(38,142
)
 
10,917

Total Liabilities and Stockholders' Equity (Deficit)
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2017

 
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
$
(14
)
 
$
(267
)
 
$
352

 
$
1,029

 
$
—

 
$
1,100

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(427
)
 
(269
)
 
—

 
(696
)
Decrease (increase) in restricted cash and securities, net
3

 
—

 
(1
)
 
2

 
—

 
4

Purchases of marketable securities
—

 
—

 
(1,127
)
 
—

 
—

 
(1,127
)
Proceeds from the sale of property, plant and equipment and other assets
—

 
—

 
—

 
—

 
—

 
—

Net Cash Provided by (Used in) Investing Activities
3

 
—

 
(1,555
)
 
(267
)
 
—

 
(1,819
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
4,569

 
—

 
—

 
—

 
4,569

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

 
(4,611
)
 
(1
)
 
(3
)
 
—

 
(4,615
)
Increase (decrease) due from/to affiliates, net
10

 
309

 
442

 
(761
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
10

 
267

 
441

 
(764
)
 
—

 
(46
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
2

 
—

 
2

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
(762
)
 
—

 
—

 
(763
)
Cash and Cash Equivalents at Beginning of Period
15

 
—

 
1,700

 
104

 
—

 
1,819

Cash and Cash Equivalents at End of Period
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 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
$
(18
)
 
$
(225
)
 
$
274

 
$
1,110

 
$
—

 
$
1,141

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(333
)
 
(331
)
 
—

 
(664
)
Decrease in restricted cash and securities, net
5

 
—

 
6

 
—

 
—

 
11

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
5

 
—

 
(327
)
 
(330
)
 
—

 
(652
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
764

 
—

 
—

 
—

 
764

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

 
(806
)
 
—

 
(10
)
 
—

 
(816
)
Increase (decrease) due from/to affiliates, net
12

 
267

 
528

 
(807
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
12

 
225

 
528

 
(817
)
 
—

 
(52
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
—

 
—

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
475

 
(37
)
 
—

 
437

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
11

 
$
6

 
$
1,202

 
$
72

 
$
—

 
$
1,291

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

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

On October 31, 2016, we entered into an agreement and plan of merger (the "Merger Agreement") with CenturyLink, Inc., a Louisiana corporation ("CenturyLink"), Wildcat Merger Sub 1 LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 1"), and WWG Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 2"), pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, we will be acquired by CenturyLink in a cash and stock transaction, including the assumption of our debt (the "CenturyLink Merger"). See Note 2 - CenturyLink Merger.
Principles of Consolidation and Basis of Presentation 
Principles of Consolidation and Basis of Presentation

The consolidated financial statements include our and our subsidiaries' accounts in which we have 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 our consolidation policy, we consider our controlled subsidiaries, investments in businesses in which we are not the primary beneficiary or do not have effective control but have the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give us rights to economic risks or rewards of a legal entity. We do not have variable interests in a variable interest entity where we are required to consolidate the entity as the primary beneficiary. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of the second quarter of 2017.

The accompanying Consolidated Balance Sheet as of December 31, 2016, which was derived from audited Consolidated Financial Statements, and the unaudited interim Consolidated Financial Statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016 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 our audited Consolidated Financial Statements and notes thereto included in our Form 10-K for the year ended December 31, 2016. In the opinion of our 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.
Recently Issued Accounting Pronouncements 
Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases ("ASC 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. We are evaluating the effect that ASU 2016-02 will have on our Consolidated Financial Statements and related disclosures, and expect the new guidance to significantly increase the reported assets and liabilities on our Consolidated Balance Sheets.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which amended the existing accounting standards for revenue recognition and requires an entity to recognize the amount of revenue it expects to be entitled to for the transfer of promised goods or services to customers. The ASU and subsequent amendments have been codified as ASC 606, Revenue from Contracts with Customers (“ASC 606”). In July 2015, the FASB deferred the effective date to annual reporting periods beginning after December 15, 2017, and interim reporting periods within those periods. Early adoption is permitted using the original effective date of annual reporting periods beginning after December 15, 2016, and interim reporting periods within those periods. The new guidance may be applied retrospectively to each prior period presented or prospectively with the cumulative effect recognized as of the date of initial adoption. We will not adopt ASC 606 early.

We have performed a comprehensive analysis of our revenue streams and contractual arrangements to identify and quantify the effects of ASC 606 on our consolidated financial statements and are developing new accounting and reporting policies, business and internal control processes and procedures to facilitate adoption of the standard. Because we currently have service contracts that contain a significant financing component that are not currently separately accounted for, we will be required to estimate and record incremental revenue and interest cost associated with these contractual terms. In addition, we will be required to capitalize, and subsequently amortize, commission costs associated with obtaining or fulfilling our customer contracts, which we do not currently defer and amortize. We will also have to comply with new revenue disclosure requirements. We are continuing to review and evaluate underlying contract information that will be used to support new accounting and disclosure requirements under ASC 606 and evaluate other matters that may result from adoption of the standard. We have not yet selected a transition method, as our method of transition may be affected by the CenturyLink Merger, which we expect will be completed in the third quarter of 2017, and subsequent integration activities completed prior to the January 1, 2018 ASC 606 adoption date.
Other Intangible Assets (Tables)
Schedule of acquisition-related intangible assets 

Other intangible assets as of June 30, 2017 and December 31, 2016 were as follows (dollars in millions):

 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
June 30, 2017
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,973

 
$
(1,205
)
 
$
768

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
227

 
(201
)
 
26

 
2,255

 
(1,461
)
 
794

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,270

 
$
(1,461
)
 
$
809

December 31, 2016
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Customer Contracts and Relationships
$
1,973

 
$
(1,113
)
 
$
860

Trademarks
55

 
(55
)
 
—

Patents and Developed Technology
229

 
(189
)
 
40

 
2,257

 
(1,357
)
 
900

Indefinite-Lived Intangible Assets:
 
 
 
 
 
Trade Name
15

 
—

 
15

 
$
2,272

 
$
(1,357
)
 
$
915

Schedule of estimated amortization expense of finite-lived acquisition-related intangible assets 
As of June 30, 2017, estimated amortization expense for our finite-lived intangible assets over the next five years is as follows (dollars in millions):

2017 (remaining six months)
$
95

2018
190

2019
179

2020
166

2021
143

2022
21

Thereafter
—

 
$
794

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 our long-term debt as well as the input levels used to determine these fair values as of June 30, 2017 and December 31, 2016:

 
 
 
 
 
 
Fair Value Measurement Using
 
 
Total Carrying Value in Consolidated Balance Sheets
 
Unadjusted Quoted Prices in Active
Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
(dollars in millions)
 
June 30,
2017
 
December 31,
2016
 
June 30,
2017
 
December 31,
2016
 
June 30,
2017
 
December 31,
2016
Liabilities Not Recorded at Fair Value in the Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, including the current portion:
 
 
 
 
 
 
 
 
 
 
 
 
Term Loans
 
$
4,569

 
$
4,566

 
$
4,622

 
$
4,671

 
$
—

 
$
—

Senior Notes
 
6,140

 
6,135

 
6,436

 
6,283

 
—

 
—

Capital Leases and Other
 
181

 
183

 
—

 
—

 
181

 
183

Total Long-term Debt, including the current portion
 
$
10,890

 
$
10,884

 
$
11,058

 
$
10,954

 
$
181

 
$
183



We do 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 our long-term debt (amounts in millions):
 
Date of
 
June 30, 2017
December 31, 2016
 
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
—
Quarterly
LIBOR +3.00%
$
—

$
815

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

1,796

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

2,000

Tranche B 2024 Term Loan (1)(4)
Feb 2017
Feb 2024
Quarterly
LIBOR +2.25%
4,611

—

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

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 (2)
Mar 2016
Mar 2026
Apr/Oct
5.250%
775

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 and Other Debt
 
 
 
 
181

183

Total Debt Obligations
 
 
 
 
11,007

11,009

Unamortized discounts
 
 
 
 
—

(13
)
Unamortized debt issuance costs
 
 
 
 
(117
)
(112
)
Current Portion
 
 
 
 
(306
)
(7
)
Total Long-Term Debt
 
 
 
 
$
10,584

$
10,877


(1) The term loans are secured obligations and guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC and certain other subsidiaries.
(2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.
(3) The notes were not guaranteed by any of Level 3 Communications, Inc.'s subsidiaries.
(4) The Tranche B 2024 Term Loan had an interest rate of 3.466% as of June 30, 2017. All other term loans were refinanced on February 22, 2017 as described below. The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of December 31, 2016. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of December 31, 2016. The interest rate on the Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan were set with a minimum LIBOR of 1.00%. The interest rate on the Tranche B-II 2022 Term Loan was set with a minimum LIBOR of 0.75% and the interest rate on the Tranche B 2024 Term Loan is set with a minimum LIBOR of zero percent. The Floating Rate Senior Notes due 2018 had an interest rate of 4.939% as of June 30, 2017 and 4.762% as of December 31, 2016.


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 debt issuance costs) were as follows as of June 30, 2017 (dollars in millions):

2017 (remaining six months)
$
4

2018
307

2019
7

2020
8

2021
650

2022
1,610

Thereafter
8,421

 
$
11,007

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, 2015
 
$
(273
)
 
$
(28
)
 
$
(301
)
Other comprehensive income (loss) before reclassifications, net of tax
 
24

 
(1
)
 
23

Amounts reclassified from accumulated other comprehensive loss
 
—

 
—

 
—

Balance at June 30, 2016
 
$
(249
)
 
$
(29
)
 
$
(278
)

Balance at December 31, 2016
 
$
(353
)
 
$
(34
)
 
$
(387
)
Other comprehensive income before reclassifications, net of tax
 
62

 
1

 
63

Amounts reclassified from accumulated other comprehensive loss
 
—

 
(1
)
 
(1
)
Balance at June 30, 2017
 
$
(291
)

$
(34
)

$
(325
)
Stock-Based Compensation (Tables)
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs
The following table summarizes non-cash compensation expense for each of the three and six months ended June 30, 2017 and 2016 (dollars in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Outperform Stock Appreciation Rights
$
—

 
$
1

 
$
—

 
$
2

Restricted Stock Units
28

 
13

 
56

 
34

Performance Restricted Stock Units
3

 
10

 
12

 
24

401(k) Match Expense
8

 
8

 
19

 
19

 
39

 
32

 
87

 
79

Capitalized Non-Cash Comp
—

 
(1
)
 
—

 
(1
)
Total
$
39

 
$
31

 
$
87

 
$
78

Segment Information (Tables)
Reconciliation of Revenue from Segments to Consolidated 
The following table presents revenue by segment:
 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016(1)
 
June 30, 2017
 
June 30, 2016(1)
Core Network Services Revenue:
 
 
 
 
 
 
 
 
North America
 
$
1,607

 
$
1,605

 
$
3,201

 
$
3,206

EMEA
 
176

 
191

 
351

 
381

Latin America
 
182

 
160

 
359

 
315

Total Core Network Services Revenue
 
1,965

 
1,956

 
3,911

 
3,902

 
 
 
 
 
 
 
 
 
Wholesale Voice Services Revenue:
 
 
 
 
 
 
 
 
North America
 
91

 
95

 
189

 
194

EMEA
 
2

 
3

 
5

 
7

Latin America
 
3

 
2

 
4

 
4

Total Wholesale Voice Services Revenue
 
96

 
100

 
198

 
205

 
 
 
 
 
 
 
 
 
Total Revenue
 
$
2,061

 
$
2,056

 
$
4,109

 
$
4,107

Reconciliation of Operating Profit (Loss) from Segments to Consolidated 
The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income:
 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
Adjusted EBITDA:
 
 
 
 
 
 
 
 
North America
 
$
815

 
$
819

 
$
1,624

 
$
1,631

EMEA
 
69

 
52

 
126

 
106

Latin America
 
77

 
64

 
157

 
138

Unallocated Corporate Expenses
 
(239
)
 
(220
)
 
(480
)
 
(450
)
Adjusted EBITDA
 
722

 
715

 
1,427

 
1,425

Income Tax Expense
 
(69
)
 
(34
)
 
(139
)
 
(124
)
Total Other Expense
 
(130
)
 
(184
)
 
(302
)
 
(328
)
Depreciation and Amortization
 
(330
)
 
(310
)
 
(650
)
 
(611
)
Non-Cash Stock Compensation
 
(39
)
 
(31
)
 
(87
)
 
(78
)
Net Income
 
$
154

 
$
156

 
$
249

 
$
284

Schedule of Segment Reporting Information, by Segment 
The following table presents capital expenditures by segment and reconciles capital expenditures by segment to total capital expenditures:
 
 
Three Months Ended
 
Six Months Ended
(dollars in millions)
 
June 30, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
Capital Expenditures:
 
 
 
 
 
 
 
 
North America
 
$
220

 
$
237

 
$
474

 
$
432

EMEA
 
27

 
40

 
58

 
79

Latin America
 
43

 
51

 
78

 
74

Unallocated Corporate Capital Expenditures
 
38

 
39

 
86

 
79

Total Capital Expenditures
 
$
328

 
$
367

 
$
696

 
$
664

Reconciliation of Assets from Segment to Consolidated 
The following table presents total assets by segment:
(dollars in millions)
 
June 30, 2017
 
December 31, 2016
Assets:
 
 
 
 
North America
 
$
21,082

 
$
20,818

EMEA
 
1,739

 
1,639

Latin America
 
2,339

 
2,304

Other
 
127

 
127

Total Assets
 
$
25,287

 
$
24,888

Reconciliation of Goodwill from Segment to Consolidated 
The changes in the carrying amount of goodwill by segment during the six months ended June 30, 2017 were as follows (in millions):
 
 
North America
 
EMEA
 
Latin America
 
Total
Balance at December 31, 2016
$
7,024


$
109

 
$
596

 
$
7,729

  Effect of foreign currency rate change
—

 
8

 
—

 
8

Balance at June 30, 2017
$
7,024


$
117

 
$
596

 
$
7,737

 
There were no events or changes in circumstances during the first three and six months of 2017 that indicated the carrying value of goodwill may not be recoverable.
Condensed Consolidating Financial Information (Tables)
Condensed Consolidating Financial Information 
(11) Condensed Consolidating Financial Information

Level 3 Financing, Inc., a wholly owned subsidiary, 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 Level 3 Financing, Inc. 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 our Consolidated Financial Statements are interdependent. The accompanying condensed consolidating financial information presents the statements of comprehensive income, balance sheets and statements of 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 our consolidated results.
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2017

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

 
$
—

 
$
933

 
$
1,174

 
$
(46
)
 
$
2,061

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
339

 
382

 
(46
)
 
675

Network Related Expenses
—

 
—

 
246

 
91

 
—

 
337

Depreciation and Amortization
—

 
—

 
109

 
221

 
—

 
330

Selling, General and Administrative Expenses
1

 
1

 
294

 
70

 
—

 
366

Total Costs and Expenses
1

 
1

 
988

 
764

 
(46
)
 
1,708

Operating Income (Loss)
(1
)
 
(1
)
 
(55
)
 
410

 
—

 
353

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
3

 
—

 
—

 
3

Interest expense
(9
)
 
(117
)
 
(1
)
 
(5
)
 
—

 
(132
)
Interest income (expense) affiliates, net
378

 
567

 
(868
)
 
(77
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(216
)
 
(632
)
 
200

 
—

 
648

 
—

Other, net
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Total Other Income (Expense)
153

 
(182
)
 
(667
)
 
(82
)
 
648

 
(130
)
Income (Loss) before Income Taxes
152

 
(183
)
 
(722
)
 
328

 
648

 
223

Income Tax Benefit (Expense)
2

 
(33
)
 
(1
)
 
(37
)
 
—

 
(69
)
Net Income (Loss)
154

 
(216
)
 
(723
)
 
291

 
648

 
154

Other Comprehensive Income (Loss), Net of Income Taxes
41

 
—

 
—

 
41

 
(41
)
 
41

Comprehensive Income (Loss)
$
195

 
$
(216
)
 
$
(723
)
 
$
332

 
$
607

 
$
195






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2017

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

 
$
—

 
$
1,853

 
$
2,331

 
$
(75
)
 
$
4,109

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
662

 
779

 
(75
)
 
1,366

Network Related Expenses
—

 
—

 
489

 
184

 
—

 
673

Depreciation and Amortization
—

 
—

 
213

 
437

 
—

 
650

Selling, General and Administrative Expenses
2

 
2

 
571

 
155

 
—

 
730

Total Costs and Expenses
2

 
2

 
1,935

 
1,555

 
(75
)
 
3,419

Operating Income (Loss)
(2
)
 
(2
)
 
(82
)
 
776

 
—

 
690

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
5

 
—

 
—

 
5

Interest expense
(18
)
 
(237
)
 
(2
)
 
(9
)
 
—

 
(266
)
Interest income (expense) affiliates, net
755

 
1,141

 
(1,737
)
 
(159
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(491
)
 
(1,278
)
 
403

 
—

 
1,366

 
—

Other, net
—

 
(44
)
 
4

 
(1
)
 
—

 
(41
)
Total Other Income (Expense)
246

 
(418
)
 
(1,327
)
 
(169
)
 
1,366

 
(302
)
Income (Loss) before Income Taxes
244

 
(420
)
 
(1,409
)
 
607

 
1,366

 
388

Income Tax Benefit (Expense)
5

 
(71
)
 
(1
)
 
(72
)
 
—

 
(139
)
Net Income (Loss)
249

 
(491
)
 
(1,410
)
 
535

 
1,366

 
249

Other Comprehensive Income (Loss), Net of Income Taxes
62

 
—

 
—

 
62

 
(62
)
 
62

Comprehensive Income (Loss)
$
311

 
$
(491
)
 
$
(1,410
)
 
$
597

 
$
1,304

 
$
311

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2016

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

 
$
—

 
$
879

 
$
1,211

 
$
(34
)
 
$
2,056

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
315

 
395

 
(34
)
 
676

Network Related Expenses
—

 
—

 
237

 
102

 
—

 
339

Depreciation and Amortization
—

 
—

 
92

 
218

 
—

 
310

Selling, General and Administrative Expenses
1

 
2

 
263

 
91

 
—

 
357

Total Costs and Expenses
1

 
2

 
907

 
806

 
(34
)
 
1,682

Operating (Loss) Income
(1
)
 
(2
)
 
(28
)
 
405

 
—

 
374

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(9
)
 
(128
)
 
—

 
(3
)
 
—

 
(140
)
Interest income (expense) affiliates, net
343

 
528

 
(802
)
 
(69
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(187
)
 
(489
)
 
201

 
—

 
475

 
—

Other, net
—

 
(39
)
 
1

 
(7
)
 
—

 
(45
)
Total Other Income (Expense)
147

 
(128
)
 
(599
)
 
(79
)
 
475

 
(184
)
Income (Loss) before Income Taxes
146

 
(130
)
 
(627
)
 
326

 
475

 
190

Income Tax Expense
3

 
(50
)
 
(1
)
 
14

 
—

 
(34
)
Net Income (Loss)
149

 
(180
)
 
(628
)
 
340

 
475

 
156

Other Comprehensive Income (Loss), Net of Income Taxes
(22
)
 
—

 
—

 
(22
)
 
22

 
(22
)
Comprehensive Income (Loss)
$
127

 
$
(180
)
 
$
(628
)
 
$
318

 
$
497

 
$
134






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2016

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

 
$
—

 
$
1,745

 
$
2,430

 
$
(68
)
 
$
4,107

Costs and Expense:
 
Network Access Costs
—

 
—

 
635

 
803

 
(68
)
 
1,370

Network Related Expenses
—

 
—

 
474

 
203

 
—

 
677

Depreciation and Amortization
—

 
—

 
180

 
431

 
—

 
611

Selling, General and Administrative Expenses
2

 
3

 
513

 
195

 
—

 
713

Total Costs and Expenses
2

 
3

 
1,802

 
1,632

 
(68
)
 
3,371

Operating (Loss) Income
(2
)
 
(3
)
 
(57
)
 
798

 
—

 
736

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
1

 
—

 
2

Interest expense
(18
)
 
(256
)
 
(1
)
 
—

 
—

 
(275
)
Interest income (expense) affiliates, net
685

 
1,059

 
(1,603
)
 
(141
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(399
)
 
(1,030
)
 
400

 
—

 
1,029

 
—

Other, net
—

 
(39
)
 
3

 
(19
)
 
—

 
(55
)
Total Other Income (Expense)
268

 
(266
)
 
(1,200
)
 
(159
)
 
1,029

 
(328
)
Income (Loss) before Income Taxes
266

 
(269
)
 
(1,257
)
 
639

 
1,029

 
408

Income Tax Expense
7

 
(119
)
 
(2
)
 
(10
)
 
—

 
(124
)
Net Income (Loss)
273

 
(388
)
 
(1,259
)
 
629

 
1,029

 
284

Other Comprehensive Income (Loss), Net of Income Taxes
23

 
—

 
—

 
23

 
(23
)
 
23

Comprehensive Income (Loss)
$
296

 
$
(388
)
 
$
(1,259
)
 
$
652

 
$
1,006

 
$
307

Condensed Consolidating Balance Sheets
June 30, 2017

 
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
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056

Marketable Securities
—

 
—

 
1,127

 
—

 
—

 
1,127

Restricted cash and securities
—

 
—

 
1

 
4

 
—

 
5

Receivables, less allowances for doubtful accounts
—

 
—

 
4

 
703

 
—

 
707

Due from affiliates
17,832

 
22,581

 
—

 
2,824

 
(43,237
)
 
—

Other
—

 
—

 
116

 
25

 
—

 
141

Total Current Assets
17,846

 
22,581

 
2,186

 
3,660

 
(43,237
)
 
3,036

Property, Plant, and Equipment, net
—

 
—

 
4,105

 
6,287

 
—

 
10,392

Restricted Cash and Securities
19

 
—

 
10

 
—

 
—

 
29

Goodwill and Other Intangibles, net
—

 
—

 
352

 
8,194

 
—

 
8,546

Investment in Subsidiaries
16,926

 
17,664

 
3,639

 
—

 
(38,229
)
 
—

Deferred Tax Assets
55

 
2,617

 
(1
)
 
564

 
—

 
3,235

Other Assets, net
—

 
—

 
14

 
35

 
—

 
49

Total Assets
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

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

 
$
1

 
$
324

 
$
368

 
$
—

 
$
693

Current portion of long-term debt
—

 
299

 
2

 
5

 
—

 
306

Accrued payroll and employee benefits
—

 
—

 
149

 
29

 
—

 
178

Accrued interest
11

 
79

 
—

 
7

 
—

 
97

Current portion of deferred revenue
—

 
—

 
111

 
151

 
—

 
262

Due to affiliates
—

 
—

 
43,237

 
—

 
(43,237
)
 
—

Other
—

 
(1
)
 
130

 
33

 
—

 
162

Total Current Liabilities
11

 
378

 
43,953

 
593

 
(43,237
)
 
1,698

Long-Term Debt, less current portion
593

 
9,816

 
12

 
163

 
—

 
10,584

Deferred Revenue, less current portion
—

 
—

 
781

 
277

 
—

 
1,058

Other Liabilities
16

 
—

 
164

 
452

 
—

 
632

Commitments and Contingencies

 

—


 

 

 

Stockholders' Equity (Deficit)
34,226

 
32,668

 
(34,605
)
 
17,255

 
(38,229
)
 
11,315

Total Liabilities and Stockholders' Equity (Deficit)
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

Condensed Consolidating Balance Sheets
December 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
$
15

 
$
—

 
$
1,700

 
$
104

 
$
—

 
$
1,819

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
26

 
686

 
—

 
712

Due from affiliates
17,032

 
21,715

 
—

 
2,180

 
(40,927
)
 
—

Other
—

 
—

 
87

 
28

 
—

 
115

Total Current Assets
17,047

 
21,715

 
1,814

 
3,004

 
(40,927
)
 
2,653

Property, Plant, and Equipment, net
—

 
—

 
3,869

 
6,270

 
—

 
10,139

Restricted Cash and Securities
22

 
—

 
9

 
—

 
—

 
31

Goodwill and Other Intangibles, net
—

 
—

 
353

 
8,291

 
—

 
8,644

Investment in Subsidiaries
16,869

 
17,599

 
3,674

 
—

 
(38,142
)
 
—

Deferred Tax Assets
51

 
2,687

 
—

 
632

 
—

 
3,370

Other Assets, net
—

 
—

 
16

 
35

 
—

 
51

Total Assets
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

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

 
$
—

 
$
307

 
$
399

 
$
—

 
$
706

Current portion of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accrued payroll and employee benefits
—

 
—

 
160

 
35

 
—

 
195

Accrued interest
11

 
110

 
—

 
8

 
—

 
129

Current portion of deferred revenue
—

 
—

 
116

 
150

 
—

 
266

Due to affiliates
—

 
—

 
40,927

 
—

 
(40,927
)
 
—

Other
—

 
—

 
127

 
41

 
—

 
168

Total Current Liabilities
11

 
110

 
41,639

 
638

 
(40,927
)
 
1,471

Long-Term Debt, less current portion
592

 
10,108

 
13

 
164

 
—

 
10,877

Deferred Revenue, less current portion
—

 
—

 
719

 
282

 
—

 
1,001

Other Liabilities
16

 
—

 
155

 
451

 
—

 
622

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
33,370

 
31,783

 
(32,791
)
 
16,697

 
(38,142
)
 
10,917

Total Liabilities and Stockholders' Equity (Deficit)
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2017

 
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
$
(14
)
 
$
(267
)
 
$
352

 
$
1,029

 
$
—

 
$
1,100

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(427
)
 
(269
)
 
—

 
(696
)
Decrease (increase) in restricted cash and securities, net
3

 
—

 
(1
)
 
2

 
—

 
4

Purchases of marketable securities
—

 
—

 
(1,127
)
 
—

 
—

 
(1,127
)
Proceeds from the sale of property, plant and equipment and other assets
—

 
—

 
—

 
—

 
—

 
—

Net Cash Provided by (Used in) Investing Activities
3

 
—

 
(1,555
)
 
(267
)
 
—

 
(1,819
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
4,569

 
—

 
—

 
—

 
4,569

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

 
(4,611
)
 
(1
)
 
(3
)
 
—

 
(4,615
)
Increase (decrease) due from/to affiliates, net
10

 
309

 
442

 
(761
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
10

 
267

 
441

 
(764
)
 
—

 
(46
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
2

 
—

 
2

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
(762
)
 
—

 
—

 
(763
)
Cash and Cash Equivalents at Beginning of Period
15

 
—

 
1,700

 
104

 
—

 
1,819

Cash and Cash Equivalents at End of Period
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 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
$
(18
)
 
$
(225
)
 
$
274

 
$
1,110

 
$
—

 
$
1,141

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(333
)
 
(331
)
 
—

 
(664
)
Decrease in restricted cash and securities, net
5

 
—

 
6

 
—

 
—

 
11

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
5

 
—

 
(327
)
 
(330
)
 
—

 
(652
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
764

 
—

 
—

 
—

 
764

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

 
(806
)
 
—

 
(10
)
 
—

 
(816
)
Increase (decrease) due from/to affiliates, net
12

 
267

 
528

 
(807
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
12

 
225

 
528

 
(817
)
 
—

 
(52
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
—

 
—

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
475

 
(37
)
 
—

 
437

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
11

 
$
6

 
$
1,202

 
$
72

 
$
—

 
$
1,291

Schedule of Condensed Consolidating Statements of Comprehensive Income (Loss) 
Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2017

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

 
$
—

 
$
933

 
$
1,174

 
$
(46
)
 
$
2,061

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
339

 
382

 
(46
)
 
675

Network Related Expenses
—

 
—

 
246

 
91

 
—

 
337

Depreciation and Amortization
—

 
—

 
109

 
221

 
—

 
330

Selling, General and Administrative Expenses
1

 
1

 
294

 
70

 
—

 
366

Total Costs and Expenses
1

 
1

 
988

 
764

 
(46
)
 
1,708

Operating Income (Loss)
(1
)
 
(1
)
 
(55
)
 
410

 
—

 
353

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
3

 
—

 
—

 
3

Interest expense
(9
)
 
(117
)
 
(1
)
 
(5
)
 
—

 
(132
)
Interest income (expense) affiliates, net
378

 
567

 
(868
)
 
(77
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(216
)
 
(632
)
 
200

 
—

 
648

 
—

Other, net
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Total Other Income (Expense)
153

 
(182
)
 
(667
)
 
(82
)
 
648

 
(130
)
Income (Loss) before Income Taxes
152

 
(183
)
 
(722
)
 
328

 
648

 
223

Income Tax Benefit (Expense)
2

 
(33
)
 
(1
)
 
(37
)
 
—

 
(69
)
Net Income (Loss)
154

 
(216
)
 
(723
)
 
291

 
648

 
154

Other Comprehensive Income (Loss), Net of Income Taxes
41

 
—

 
—

 
41

 
(41
)
 
41

Comprehensive Income (Loss)
$
195

 
$
(216
)
 
$
(723
)
 
$
332

 
$
607

 
$
195






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2017

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

 
$
—

 
$
1,853

 
$
2,331

 
$
(75
)
 
$
4,109

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
662

 
779

 
(75
)
 
1,366

Network Related Expenses
—

 
—

 
489

 
184

 
—

 
673

Depreciation and Amortization
—

 
—

 
213

 
437

 
—

 
650

Selling, General and Administrative Expenses
2

 
2

 
571

 
155

 
—

 
730

Total Costs and Expenses
2

 
2

 
1,935

 
1,555

 
(75
)
 
3,419

Operating Income (Loss)
(2
)
 
(2
)
 
(82
)
 
776

 
—

 
690

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
5

 
—

 
—

 
5

Interest expense
(18
)
 
(237
)
 
(2
)
 
(9
)
 
—

 
(266
)
Interest income (expense) affiliates, net
755

 
1,141

 
(1,737
)
 
(159
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(491
)
 
(1,278
)
 
403

 
—

 
1,366

 
—

Other, net
—

 
(44
)
 
4

 
(1
)
 
—

 
(41
)
Total Other Income (Expense)
246

 
(418
)
 
(1,327
)
 
(169
)
 
1,366

 
(302
)
Income (Loss) before Income Taxes
244

 
(420
)
 
(1,409
)
 
607

 
1,366

 
388

Income Tax Benefit (Expense)
5

 
(71
)
 
(1
)
 
(72
)
 
—

 
(139
)
Net Income (Loss)
249

 
(491
)
 
(1,410
)
 
535

 
1,366

 
249

Other Comprehensive Income (Loss), Net of Income Taxes
62

 
—

 
—

 
62

 
(62
)
 
62

Comprehensive Income (Loss)
$
311

 
$
(491
)
 
$
(1,410
)
 
$
597

 
$
1,304

 
$
311

Condensed Consolidating Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2016

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

 
$
—

 
$
879

 
$
1,211

 
$
(34
)
 
$
2,056

Costs and Expense:
 
 
 
 
 
 
 
 
 
 
 
Network Access Costs
—

 
—

 
315

 
395

 
(34
)
 
676

Network Related Expenses
—

 
—

 
237

 
102

 
—

 
339

Depreciation and Amortization
—

 
—

 
92

 
218

 
—

 
310

Selling, General and Administrative Expenses
1

 
2

 
263

 
91

 
—

 
357

Total Costs and Expenses
1

 
2

 
907

 
806

 
(34
)
 
1,682

Operating (Loss) Income
(1
)
 
(2
)
 
(28
)
 
405

 
—

 
374

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest expense
(9
)
 
(128
)
 
—

 
(3
)
 
—

 
(140
)
Interest income (expense) affiliates, net
343

 
528

 
(802
)
 
(69
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(187
)
 
(489
)
 
201

 
—

 
475

 
—

Other, net
—

 
(39
)
 
1

 
(7
)
 
—

 
(45
)
Total Other Income (Expense)
147

 
(128
)
 
(599
)
 
(79
)
 
475

 
(184
)
Income (Loss) before Income Taxes
146

 
(130
)
 
(627
)
 
326

 
475

 
190

Income Tax Expense
3

 
(50
)
 
(1
)
 
14

 
—

 
(34
)
Net Income (Loss)
149

 
(180
)
 
(628
)
 
340

 
475

 
156

Other Comprehensive Income (Loss), Net of Income Taxes
(22
)
 
—

 
—

 
(22
)
 
22

 
(22
)
Comprehensive Income (Loss)
$
127

 
$
(180
)
 
$
(628
)
 
$
318

 
$
497

 
$
134






























Condensed Consolidating Statements of Comprehensive Income (Loss)
Six Months Ended June 30, 2016

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

 
$
—

 
$
1,745

 
$
2,430

 
$
(68
)
 
$
4,107

Costs and Expense:
 
Network Access Costs
—

 
—

 
635

 
803

 
(68
)
 
1,370

Network Related Expenses
—

 
—

 
474

 
203

 
—

 
677

Depreciation and Amortization
—

 
—

 
180

 
431

 
—

 
611

Selling, General and Administrative Expenses
2

 
3

 
513

 
195

 
—

 
713

Total Costs and Expenses
2

 
3

 
1,802

 
1,632

 
(68
)
 
3,371

Operating (Loss) Income
(2
)
 
(3
)
 
(57
)
 
798

 
—

 
736

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
1

 
—

 
2

Interest expense
(18
)
 
(256
)
 
(1
)
 
—

 
—

 
(275
)
Interest income (expense) affiliates, net
685

 
1,059

 
(1,603
)
 
(141
)
 
—

 
—

Equity in net earnings (losses) of subsidiaries
(399
)
 
(1,030
)
 
400

 
—

 
1,029

 
—

Other, net
—

 
(39
)
 
3

 
(19
)
 
—

 
(55
)
Total Other Income (Expense)
268

 
(266
)
 
(1,200
)
 
(159
)
 
1,029

 
(328
)
Income (Loss) before Income Taxes
266

 
(269
)
 
(1,257
)
 
639

 
1,029

 
408

Income Tax Expense
7

 
(119
)
 
(2
)
 
(10
)
 
—

 
(124
)
Net Income (Loss)
273

 
(388
)
 
(1,259
)
 
629

 
1,029

 
284

Other Comprehensive Income (Loss), Net of Income Taxes
23

 
—

 
—

 
23

 
(23
)
 
23

Comprehensive Income (Loss)
$
296

 
$
(388
)
 
$
(1,259
)
 
$
652

 
$
1,006

 
$
307

Schedule of Condensed Consolidating Balance Sheets 
Condensed Consolidating Balance Sheets
June 30, 2017

 
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
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056

Marketable Securities
—

 
—

 
1,127

 
—

 
—

 
1,127

Restricted cash and securities
—

 
—

 
1

 
4

 
—

 
5

Receivables, less allowances for doubtful accounts
—

 
—

 
4

 
703

 
—

 
707

Due from affiliates
17,832

 
22,581

 
—

 
2,824

 
(43,237
)
 
—

Other
—

 
—

 
116

 
25

 
—

 
141

Total Current Assets
17,846

 
22,581

 
2,186

 
3,660

 
(43,237
)
 
3,036

Property, Plant, and Equipment, net
—

 
—

 
4,105

 
6,287

 
—

 
10,392

Restricted Cash and Securities
19

 
—

 
10

 
—

 
—

 
29

Goodwill and Other Intangibles, net
—

 
—

 
352

 
8,194

 
—

 
8,546

Investment in Subsidiaries
16,926

 
17,664

 
3,639

 
—

 
(38,229
)
 
—

Deferred Tax Assets
55

 
2,617

 
(1
)
 
564

 
—

 
3,235

Other Assets, net
—

 
—

 
14

 
35

 
—

 
49

Total Assets
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

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

 
$
1

 
$
324

 
$
368

 
$
—

 
$
693

Current portion of long-term debt
—

 
299

 
2

 
5

 
—

 
306

Accrued payroll and employee benefits
—

 
—

 
149

 
29

 
—

 
178

Accrued interest
11

 
79

 
—

 
7

 
—

 
97

Current portion of deferred revenue
—

 
—

 
111

 
151

 
—

 
262

Due to affiliates
—

 
—

 
43,237

 
—

 
(43,237
)
 
—

Other
—

 
(1
)
 
130

 
33

 
—

 
162

Total Current Liabilities
11

 
378

 
43,953

 
593

 
(43,237
)
 
1,698

Long-Term Debt, less current portion
593

 
9,816

 
12

 
163

 
—

 
10,584

Deferred Revenue, less current portion
—

 
—

 
781

 
277

 
—

 
1,058

Other Liabilities
16

 
—

 
164

 
452

 
—

 
632

Commitments and Contingencies

 

—


 

 

 

Stockholders' Equity (Deficit)
34,226

 
32,668

 
(34,605
)
 
17,255

 
(38,229
)
 
11,315

Total Liabilities and Stockholders' Equity (Deficit)
$
34,846

 
$
42,862

 
$
10,305

 
$
18,740

 
$
(81,466
)
 
$
25,287

Condensed Consolidating Balance Sheets
December 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
$
15

 
$
—

 
$
1,700

 
$
104

 
$
—

 
$
1,819

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Receivables, less allowances for doubtful accounts
—

 
—

 
26

 
686

 
—

 
712

Due from affiliates
17,032

 
21,715

 
—

 
2,180

 
(40,927
)
 
—

Other
—

 
—

 
87

 
28

 
—

 
115

Total Current Assets
17,047

 
21,715

 
1,814

 
3,004

 
(40,927
)
 
2,653

Property, Plant, and Equipment, net
—

 
—

 
3,869

 
6,270

 
—

 
10,139

Restricted Cash and Securities
22

 
—

 
9

 
—

 
—

 
31

Goodwill and Other Intangibles, net
—

 
—

 
353

 
8,291

 
—

 
8,644

Investment in Subsidiaries
16,869

 
17,599

 
3,674

 
—

 
(38,142
)
 
—

Deferred Tax Assets
51

 
2,687

 
—

 
632

 
—

 
3,370

Other Assets, net
—

 
—

 
16

 
35

 
—

 
51

Total Assets
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

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

 
$
—

 
$
307

 
$
399

 
$
—

 
$
706

Current portion of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accrued payroll and employee benefits
—

 
—

 
160

 
35

 
—

 
195

Accrued interest
11

 
110

 
—

 
8

 
—

 
129

Current portion of deferred revenue
—

 
—

 
116

 
150

 
—

 
266

Due to affiliates
—

 
—

 
40,927

 
—

 
(40,927
)
 
—

Other
—

 
—

 
127

 
41

 
—

 
168

Total Current Liabilities
11

 
110

 
41,639

 
638

 
(40,927
)
 
1,471

Long-Term Debt, less current portion
592

 
10,108

 
13

 
164

 
—

 
10,877

Deferred Revenue, less current portion
—

 
—

 
719

 
282

 
—

 
1,001

Other Liabilities
16

 
—

 
155

 
451

 
—

 
622

Commitments and Contingencies

 

 

 

 

 

Stockholders' Equity (Deficit)
33,370

 
31,783

 
(32,791
)
 
16,697

 
(38,142
)
 
10,917

Total Liabilities and Stockholders' Equity (Deficit)
$
33,989

 
$
42,001

 
$
9,735

 
$
18,232

 
$
(79,069
)
 
$
24,888

Schedule of Condensed Consolidating Statements of Cash Flows 
Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2017

 
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
$
(14
)
 
$
(267
)
 
$
352

 
$
1,029

 
$
—

 
$
1,100

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(427
)
 
(269
)
 
—

 
(696
)
Decrease (increase) in restricted cash and securities, net
3

 
—

 
(1
)
 
2

 
—

 
4

Purchases of marketable securities
—

 
—

 
(1,127
)
 
—

 
—

 
(1,127
)
Proceeds from the sale of property, plant and equipment and other assets
—

 
—

 
—

 
—

 
—

 
—

Net Cash Provided by (Used in) Investing Activities
3

 
—

 
(1,555
)
 
(267
)
 
—

 
(1,819
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
4,569

 
—

 
—

 
—

 
4,569

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

 
(4,611
)
 
(1
)
 
(3
)
 
—

 
(4,615
)
Increase (decrease) due from/to affiliates, net
10

 
309

 
442

 
(761
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
10

 
267

 
441

 
(764
)
 
—

 
(46
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
2

 
—

 
2

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
(762
)
 
—

 
—

 
(763
)
Cash and Cash Equivalents at Beginning of Period
15

 
—

 
1,700

 
104

 
—

 
1,819

Cash and Cash Equivalents at End of Period
$
14

 
$
—

 
$
938

 
$
104

 
$
—

 
$
1,056



Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 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
$
(18
)
 
$
(225
)
 
$
274

 
$
1,110

 
$
—

 
$
1,141

Cash Flows from Investing Activities:
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(333
)
 
(331
)
 
—

 
(664
)
Decrease in restricted cash and securities, net
5

 
—

 
6

 
—

 
—

 
11

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

 
—

 
—

 
1

 
—

 
1

Net Cash Used in Investing Activities
5

 
—

 
(327
)
 
(330
)
 
—

 
(652
)
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
 
 
 
 
Long-term debt borrowings, net of issuance costs
—

 
764

 
—

 
—

 
—

 
764

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

 
(806
)
 
—

 
(10
)
 
—

 
(816
)
Increase (decrease) due from/to affiliates, net
12

 
267

 
528

 
(807
)
 
—

 
—

Net Cash Provided by (Used in) Financing Activities
12

 
225

 
528

 
(817
)
 
—

 
(52
)
Effect of Exchange Rates on Cash and Cash Equivalents
—

 
—

 
—

 
—

 
—

 
—

Net Change in Cash and Cash Equivalents
(1
)
 
—

 
475

 
(37
)
 
—

 
437

Cash and Cash Equivalents at Beginning of Period
12

 
6

 
727

 
109

 
—

 
854

Cash and Cash Equivalents at End of Period
$
11

 
$
6

 
$
1,202

 
$
72

 
$
—

 
$
1,291

Organization and Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Mar. 31, 2017
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2017
Jun. 30, 2016
schedule of consolidation [Line Items]
 
 
 
 
 
 
Revenue
$ 2,061 
$ 2,061 
$ 2,056 
$ 2,056 
$ 4,109 
$ 4,107 
Adjusted EBITDA by Segment
 
722 
 
715 
1,427 
1,425 
Latin America [Member]
 
 
 
 
 
 
schedule of consolidation [Line Items]
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
$ 77 
 
$ 64 
$ 157 
$ 138 
Organization and Summary of Significant Accounting Policies New Accounting Pronouncements (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Mar. 31, 2017
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
New Accounting Pronouncement, Early Adoption [Line Items]
 
 
 
 
 
 
 
Net Income
$ 154 
$ 154 
$ 156 
$ 156 
$ 249 
$ 284 
 
Earnings Per Share, Basic
$ 0.42 
 
$ 0.44 
 
$ 0.69 
$ 0.79 
 
Earnings Per Share, Diluted
$ 0.42 
 
$ 0.43 
 
$ 0.68 
$ 0.79 
 
Weighted Average Number of Shares Outstanding, Diluted
365,002 
 
361,250 
 
364,569 
360,804 
 
Accumulated deficit
$ (8,251)
 
 
 
$ (8,251)
 
$ (8,500)
Earnings Per Share (Details)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2017
Performance Shares
Jun. 30, 2016
Performance Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
1 
 
 
1 
 
Stock Awards Included in Computation of Earnings Per Share, Amount
 
3 
3 
 
3 
Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
$ 2,255 
 
$ 2,255 
 
$ 2,257 
Finite-Lived Intangible Assets, Accumulated Amortization
(1,461)
 
(1,461)
 
(1,357)
Finite-Lived Intangible Assets, Net
794 
 
794 
 
900 
Acquired finite-lived intangible asset amortization expense
52 
53 
104 
106 
 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
 
 
4 years 4 months 24 days 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Total identifiable acquisition-related intangible assets, Gross Carrying Amount
2,270 
 
2,270 
 
2,272 
Total identifiable acquisition-related intangible assets, Net
809 
 
809 
 
915 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
2017 (remaining six months)
95 
 
95 
 
 
2018
190 
 
190 
 
 
2019
179 
 
179 
 
 
2020
166 
 
166 
 
 
2021
143 
 
143 
 
 
2022
21 
 
21 
 
 
Thereafter
0 
 
0 
 
 
Finite-Lived Intangible Assets, Net
794 
 
794 
 
900 
Vyvx Trade Name
 
 
 
 
 
Indefinite-Lived Intangible Assets:
 
 
 
 
 
Indefinite-Lived Intangible Assets
15 
 
15 
 
15 
Customer Contracts And Relationships
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
1,973 
 
1,973 
 
1,973 
Finite-Lived Intangible Assets, Accumulated Amortization
(1,205)
 
(1,205)
 
(1,113)
Finite-Lived Intangible Assets, Net
768 
 
768 
 
860 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
 
 
4 years 4 months 24 days 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
768 
 
768 
 
860 
Trademarks
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
55 
 
55 
 
55 
Finite-Lived Intangible Assets, Accumulated Amortization
(55)
 
(55)
 
(55)
Finite-Lived Intangible Assets, Net
0 
 
0 
 
0 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
0 
 
0 
 
0 
Patents and Developed Technology
 
 
 
 
 
Finite-Lived Intangible Assets:
 
 
 
 
 
Finite-Lived Intangible Assets, Gross Carrying Amount
227 
 
227 
 
229 
Finite-Lived Intangible Assets, Accumulated Amortization
(201)
 
(201)
 
(189)
Finite-Lived Intangible Assets, Net
26 
 
26 
 
40 
Acquired finite-lived intangible assets weighted average remaining useful lives (in years)
 
 
2 years 3 months 18 days 
 
 
Estimated amortization expense of finite-lived acquisition-related intangible assets
 
 
 
 
 
Finite-Lived Intangible Assets, Net
$ 26 
 
$ 26 
 
$ 40 
Fair Value of Financial Instruments - Liabilities, Recurring (Details) (Fair Value, Measurements, Recurring, USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Total Carrying Value in Consolidated Balance Sheet
 
 
Long-term Debt, including the current portion:
 
 
Term Loans
$ 4,569 
$ 4,566 
Senior Notes
6,140 
6,135 
Capital Leases and Other
181 
183 
Total Long-term Debt, including the current portion:
10,890 
10,884 
Unadjusted Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
 
 
Long-term Debt, including the current portion:
 
 
Term Loans
4,622 
4,671 
Senior Notes
6,436 
6,283 
Capital Leases and Other
0 
0 
Total Long-term Debt, including the current portion:
11,058 
10,954 
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
181 
183 
Total Long-term Debt, including the current portion:
$ 181 
$ 183 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Jun. 30, 2017
Tranche B-III 2019 Term Loan
Dec. 31, 2016
Tranche B-III 2019 Term Loan
Jun. 30, 2017
TrancheB2020TermLoanTotal [Member]
Dec. 31, 2016
TrancheB2020TermLoanTotal [Member]
Jun. 30, 2017
Floating Rate Senior Notes due 2018 [Member]
Dec. 31, 2016
Floating Rate Senior Notes due 2018 [Member]
Jun. 30, 2017
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Dec. 31, 2016
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Jun. 30, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Feb. 22, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Jun. 30, 2017
SeniorNotes6Point125PercentDue2021 [Member]
Dec. 31, 2016
SeniorNotes6Point125PercentDue2021 [Member]
Jun. 30, 2017
5point375SeniorNotesdue2022 [Member]
Dec. 31, 2016
5point375SeniorNotesdue2022 [Member]
Jun. 30, 2017
Senior Notes 5point75Percent Due 2022 [Member]
Dec. 31, 2016
Senior Notes 5point75Percent Due 2022 [Member]
Jun. 30, 2017
Senior Notes 5point 625Percent Due 2023 [Member]
Dec. 31, 2016
Senior Notes 5point 625Percent Due 2023 [Member]
Jun. 30, 2017
Senior Notes 5.375 Percent Due 2024 [Member]
Dec. 31, 2016
Senior Notes 5.375 Percent Due 2024 [Member]
Jun. 30, 2017
Senior Notes 5point 125Percent Due 2023 [Member]
Dec. 31, 2016
Senior Notes 5point 125Percent Due 2023 [Member]
Jun. 30, 2017
Senior Notes 5point 375Percent Due 2025 [Member]
Dec. 31, 2016
Senior Notes 5point 375Percent Due 2025 [Member]
Jun. 30, 2017
Capital Leases
Dec. 31, 2016
Capital Leases
Jun. 30, 2017
Level 3 Communications, LLC
Dec. 31, 2016
Level 3 Communications, LLC
Jun. 30, 2017
Level 3 Communications, LLC
Tranche B-III 2019 Term Loan
Jun. 30, 2017
Level 3 Communications, LLC
TrancheB2020TermLoanTotal [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Floating Rate Senior Notes due 2018 [Member]
Dec. 31, 2016
Level 3 Financing [Member]
Floating Rate Senior Notes due 2018 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
7.0% Senior Notes due 2020
Apr. 21, 2016
Level 3 Financing [Member]
7.0% Senior Notes due 2020
Jun. 30, 2017
Level 3 Financing [Member]
SeniorNotes6Point125PercentDue2021 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
5.37percent Senior Notes Due 2022 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Senior Notes 5point 625Percent Due 2023 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Senior Notes 5point 125Percent Due 2023 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Senior Notes 5point 375Percent Due 2024 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Senior Notes 5point 375Percent Due 2025 [Member]
Jun. 30, 2017
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Dec. 31, 2016
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Sep. 30, 2016
Level 3 Financing [Member]
Senior Notes 5point 250Percent Due 2026 [Member]
Apr. 21, 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]
Jun. 30, 2017
Parent Company [Member]
Dec. 31, 2016
Parent Company [Member]
Jun. 30, 2017
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 +2.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR +3.00% 
LIBOR +3.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
 
 
 
 
 
 
 
3.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.939% 
4.762% 
7.00% 
7.00% 
6.125% 
5.375% 
5.625% 
5.125% 
5.375% 
5.375% 
5.25% 
 
5.25% 
5.25% 
 
 
 
5.75% 
Total Debt Obligations
$ 11,007 
$ 11,009 
$ 0 
$ 815 
$ 0 
$ 1,796 
$ 300 
$ 300 
$ 0 
$ 2,000 
$ 4,611 
$ 4,611 
$ 640 
$ 640 
$ 1,000 
$ 1,000 
$ 600 
$ 600 
$ 500 
$ 500 
$ 900 
$ 900 
$ 700 
$ 700 
$ 800 
$ 800 
$ 181 
$ 183 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 775 
$ 775 
 
 
$ 775 
 
 
 
Total Unamortized Discount
0 
13 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized Debt Issuance Expense
(117)
(112)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
(306)
(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2)
(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
 
Long-Term Debt, less current portion
$ 10,584 
$ 10,877 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 12 
$ 13 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 593 
$ 592 
 
Long-Term Debt - Textuals (Details) (USD $)
0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Feb. 22, 2017
Jun. 30, 2017
days
Dec. 31, 2016
Jun. 30, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Feb. 22, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Feb. 22, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Jun. 30, 2017
Tranche B Two Thousand Twenty Four Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Minimum [Member]
Dec. 31, 2016
Tranche B III 2019 and Tranche B 2020 Term Loans [Member]
Jun. 30, 2017
Senior Notes 5point 125Percent Due 2023 [Member]
Dec. 31, 2016
Senior Notes 5point 125Percent Due 2023 [Member]
Jun. 30, 2017
Senior Notes 5point 125Percent Due 2023 [Member]
Level 3 Financing [Member]
Jun. 30, 2017
Senior Notes 5point 625Percent Due 2023 [Member]
Dec. 31, 2016
Senior Notes 5point 625Percent Due 2023 [Member]
Jun. 30, 2017
Senior Notes 5point 625Percent Due 2023 [Member]
Level 3 Financing [Member]
Jun. 30, 2017
Tranche B-III 2019 Term Loan
Dec. 31, 2016
Tranche B-III 2019 Term Loan
Jun. 30, 2017
TrancheB2020TermLoanTotal [Member]
Dec. 31, 2016
TrancheB2020TermLoanTotal [Member]
Apr. 21, 2016
7.0% Senior Notes due 2020
Level 3 Financing [Member]
Jun. 30, 2017
7.0% Senior Notes due 2020
Level 3 Financing [Member]
Apr. 21, 2016
7.0% Senior Notes due 2020
Level 3 Financing [Member]
Jun. 30, 2017
Capital Lease Obligations [Member]
Dec. 31, 2016
Capital Lease Obligations [Member]
Jun. 30, 2017
Senior Notes 5point 375Percent Due 2025 [Member]
Dec. 31, 2016
Senior Notes 5point 375Percent Due 2025 [Member]
Jun. 30, 2017
Senior Notes 5point 375Percent Due 2025 [Member]
Level 3 Financing [Member]
Jun. 30, 2017
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Dec. 31, 2016
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Jun. 30, 2017
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Feb. 22, 2017
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Minimum [Member]
Jun. 30, 2017
2.0 Billion Tranche B-II 2022 Term Loan [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Minimum [Member]
Jun. 30, 2016
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Jun. 30, 2017
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Dec. 31, 2016
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Sep. 30, 2016
Senior Notes 5point 250Percent Due 2026 [Member]
Level 3 Financing [Member]
Apr. 21, 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]
Jun. 30, 2017
Floating Rate Senior Notes due 2018 [Member]
Dec. 31, 2016
Floating Rate Senior Notes due 2018 [Member]
Jun. 30, 2017
Floating Rate Senior Notes due 2018 [Member]
Level 3 Financing [Member]
Dec. 31, 2016
Floating Rate Senior Notes due 2018 [Member]
Level 3 Financing [Member]
Jun. 30, 2017
Tranche B-III 2019, Tranche B 2020 and Tranche B 2022 Term Loans [Member]
Level 3 Financing, Inc.
London Interbank Offered Rate (LIBOR) [Member]
Jun. 30, 2017
Tranche B-III 2019, Tranche B 2020 and Tranche B 2022 Term Loans [Member]
Level 3 Financing [Member]
London Interbank Offered Rate (LIBOR) [Member]
Minimum [Member]
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Collateral Fee
$ 0.0025 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Interest Rate, Effective Percentage
 
 
 
3.466% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt, Weighted Average Interest Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.80% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stated interest rate (as a percent)
 
 
 
 
 
 
 
4.00% 
 
 
5.125% 
 
 
5.625% 
 
 
 
 
 
7.00% 
7.00% 
 
 
 
 
5.375% 
 
3.50% 
 
 
 
 
5.25% 
 
5.25% 
5.25% 
 
 
 
4.939% 
4.762% 
 
 
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
 
11,007,000,000 
11,009,000,000 
4,611,000,000 
4,611,000,000 
 
 
 
700,000,000 
700,000,000 
 
500,000,000 
500,000,000 
 
0 
815,000,000 
0 
1,796,000,000 
 
 
 
181,000,000 
183,000,000 
800,000,000 
800,000,000 
 
0 
2,000,000,000 
 
 
 
 
775,000,000 
775,000,000 
 
 
775,000,000 
300,000,000 
300,000,000 
 
 
 
 
2017 (remaining six months)
 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
307,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
7,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
8,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020
 
650,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021
 
1,610,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thereafter
 
8,421,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Description of Variable Rate Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR 
 
Debt Instrument, Basis Spread on Variable Rate
 
 
 
 
 
 
0.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225.00% 
0.75% 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
Upfront basis point
 
 
 
 
 
0.0025 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments of Debt Extinguishment Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 44,000,000 
 
 
 
 
$ 40,000,000 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Accumulated Other Comprehensive Loss [Line Items]
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
$ (387)
$ (301)
Other comprehensive income before reclassifications, net of tax
63 
23 
Amounts reclassified from accumulated other comprehensive loss
(1)
0 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(325)
(278)
Net Foreign Currency Translation Adjustment
 
 
Accumulated Other Comprehensive Loss [Line Items]
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(353)
(273)
Other comprehensive income before reclassifications, net of tax
62 
24 
Amounts reclassified from accumulated other comprehensive loss
0 
0 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(291)
(249)
Defined Benefit Pension Plans
 
 
Accumulated Other Comprehensive Loss [Line Items]
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
(34)
(28)
Other comprehensive income before reclassifications, net of tax
1 
(1)
Amounts reclassified from accumulated other comprehensive loss
(1)
0 
Accumulated Other Comprehensive Income (Loss), Net of Tax
$ (34)
$ (29)
Stock-Based Compensation - Non-cash compensation expense and capitalized non-cash compensation (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
$ 39 
$ 32 
$ 87 
$ 79 
Capitalized Non-Cash Comp
0 
(1)
0 
(1)
Total
39 
31 
87 
78 
Nonvested restricted stock and restricted stock units (RSUs)
6 
 
6 
 
Outperform Stock Appreciation Rights
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
0 
1 
0 
2 
Restricted Stock Units
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
28 
13 
56 
34 
Performance Restricted Stock Units
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
3 
10 
12 
24 
401 (K) Match Expense
 
 
 
 
Non-cash compensation expense and capitalized non-cash compensation
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
$ 8 
$ 8 
$ 19 
$ 19 
Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Mar. 31, 2017
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Goodwill
$ 7,737 
 
 
 
$ 7,737 
 
$ 7,729 
Assets
25,287 
 
 
 
25,287 
 
24,888 
Payments to Acquire Productive Assets
328 
 
367 
 
696 
664 
 
Adjusted EBITDA by Segment
 
722 
 
715 
1,427 
1,425 
 
Revenue
2,061 
2,061 
2,056 
2,056 
4,109 
4,107 
 
Income Tax Expense
(69)
(69)
(34)
(34)
(139)
(124)
 
Other Expenses
 
(130)
 
(184)
(302)
(328)
 
Depreciation, Depletion and Amortization
(330)
(330)
(310)
(310)
(650)
(611)
 
Share-based Compensation
 
(39)
 
(31)
(87)
(78)
 
Net Income (Loss) Available to Common Stockholders, Basic
 
154 
 
156 
249 
284 
 
Goodwill, Translation Adjustments
 
 
 
 
8 
 
 
Corporate and Other [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Assets
127 
 
 
 
127 
 
127 
Payments to Acquire Productive Assets
38 
 
39 
 
86 
79 
 
Adjusted EBITDA by Segment
 
(239)
 
(220)
(480)
(450)
 
North America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Goodwill
7,024 
 
 
 
7,024 
 
7,024 
Assets
21,082 
 
 
 
21,082 
 
20,818 
Payments to Acquire Productive Assets
220 
 
237 
 
474 
432 
 
Adjusted EBITDA by Segment
 
815 
 
819 
1,624 
1,631 
 
Goodwill, Translation Adjustments
 
 
 
 
0 
 
 
EMEA [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Goodwill
117 
 
 
 
117 
 
109 
Assets
1,739 
 
 
 
1,739 
 
1,639 
Payments to Acquire Productive Assets
27 
 
40 
 
58 
79 
 
Adjusted EBITDA by Segment
 
69 
 
52 
126 
106 
 
Goodwill, Translation Adjustments
 
 
 
 
8 
 
 
Latin America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Goodwill
596 
 
 
 
596 
 
596 
Assets
2,339 
 
 
 
2,339 
 
2,304 
Payments to Acquire Productive Assets
43 
 
51 
 
78 
74 
 
Adjusted EBITDA by Segment
 
77 
 
64 
157 
138 
 
Goodwill, Translation Adjustments
 
 
 
 
0 
 
 
Core Network Service [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
1,965 
 
1,956 
 
3,911 
3,902 
 
Core Network Service [Member] |
North America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
1,607 
 
1,605 
 
3,201 
3,206 
 
Core Network Service [Member] |
EMEA [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
176 
 
191 
 
351 
381 
 
Core Network Service [Member] |
Latin America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
182 
 
160 
 
359 
315 
 
Wholesale Voice Services [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
96 
 
100 
 
198 
205 
 
Wholesale Voice Services [Member] |
North America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
91 
 
95 
 
189 
194 
 
Wholesale Voice Services [Member] |
EMEA [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
2 
 
3 
 
5 
7 
 
Wholesale Voice Services [Member] |
Latin America [Member]
 
 
 
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
 
 
 
Revenue
$ 3 
 
$ 2 
 
$ 4 
$ 4 
 
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended 3 Months Ended 3 Months Ended
Jun. 30, 2017
Mar. 31, 2016
Peruvian Tax Litigation
Pending Litigation
Dec. 31, 2016
Peruvian Tax Litigation
Pending Litigation
Jun. 30, 2017
Peruvian Tax Litigation
Pending Litigation
Jun. 30, 2017
Peruvian Tax Litigation, Before Interest
Pending Litigation
Jun. 30, 2017
Peruvian Tax Litigation, Income Tax witholding 2001 and 2002
Pending Litigation
Jun. 30, 2017
Peruvian Tax Litigation, VAT for 2001 and 2002
Pending Litigation
Jun. 30, 2017
Peruvian Tax Litigation, Disallowance of VAT in 2005
Pending Litigation
Jun. 30, 2017
Employee Severance and Contractor Termination Disputes
Pending Litigation
Jun. 30, 2017
up to
Brazilian Tax Claims
Pending Litigation
Dec. 31, 2014
Brazilian Tax Reserve Release [Member]
Brazilian Tax Claims
Pending Litigation
Sep. 30, 2014
Brazilian Tax Reserve Release [Member]
Brazilian Tax Claims
Pending Litigation
Loss Contingencies
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Litigation Liability
$ 100 
 
 
 
 
 
 
 
 
 
 
 
Loss Contingency, Asserted Claim
 
 
 
17 
26 
3 
7 
16 
33 
 
 
 
Release of Loss Contingency Accrual
 
15 
11 
 
 
 
 
 
 
 
 
 
Loss Contingency Accrual, Period Increase (Decrease)
 
 
 
 
 
 
 
 
 
 
3 
6 
Loss Contingency Accrual, Payments
 
 
 
 
 
 
 
 
 
 
5 
 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
 
 
 
 
 
 
 
 
 
$ 50 
 
 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
 
 
Amount outstanding under letters of credit or other similar obligations
$ 35 
$ 39 
Collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash
$ 30 
$ 33 
Condensed Consolidating Financial Information - Statements of Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Mar. 31, 2017
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2017
Jun. 30, 2016
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
$ 2,061 
$ 2,061 
$ 2,056 
$ 2,056 
$ 4,109 
$ 4,107 
Costs and Expenses:
 
 
 
 
 
 
Network access costs
675 
675 
676 
676 
1,366 
1,370 
Network related expenses
337 
337 
339 
339 
673 
677 
Depreciation and amortization
330 
330 
310 
310 
650 
611 
Selling, general and administrative Expenses
366 
366 
357 
357 
730 
713 
Total Costs and Expenses
1,708 
1,708 
1,682 
1,682 
3,419 
3,371 
Operating Income (Loss)
353 
353 
374 
374 
690 
736 
Other Income (Expense):
 
 
 
 
 
 
Interest income
3 
3 
1 
1 
5 
2 
Interest expense
(132)
(132)
(140)
(140)
(266)
(275)
Interest income (expense) affiliates, net
 
0 
 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
 
0 
 
0 
0 
0 
Other, net
 
(1)
 
(45)
(41)
(55)
Total Other Expense
(130)
(130)
(184)
(184)
(302)
(328)
Income (Loss) before Income Taxes
223 
223 
190 
190 
388 
408 
Income Tax Expense
(69)
(69)
(34)
(34)
(139)
(124)
Net Income (Loss)
154 
154 
156 
156 
249 
284 
Other Comprehensive Income (Loss), Net of Income Taxes
 
41 
 
(22)
62 
23 
Comprehensive Income (Loss)
195 
195 
134 
134 
311 
307 
Level 3 Communications, Inc.
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
 
0 
 
0 
0 
0 
Costs and Expenses:
 
 
 
 
 
 
Network access costs
 
0 
 
0 
0 
0 
Network related expenses
 
0 
 
0 
0 
0 
Depreciation and amortization
 
0 
 
0 
0 
0 
Selling, general and administrative Expenses
 
1 
 
1 
2 
2 
Total Costs and Expenses
 
1 
 
1 
2 
2 
Operating Income (Loss)
 
(1)
 
(1)
(2)
(2)
Other Income (Expense):
 
 
 
 
 
 
Interest income
 
0 
 
0 
0 
0 
Interest expense
 
(9)
 
(9)
(18)
(18)
Interest income (expense) affiliates, net
 
378 
 
343 
755 
685 
Equity in net earnings (losses) of subsidiaries
 
(216)
 
(187)
(491)
(399)
Other, net
 
0 
 
0 
0 
0 
Total Other Expense
 
153 
 
147 
246 
268 
Income (Loss) before Income Taxes
 
152 
 
146 
244 
266 
Income Tax Expense
 
2 
 
3 
5 
7 
Net Income (Loss)
 
154 
 
149 
249 
273 
Other Comprehensive Income (Loss), Net of Income Taxes
 
41 
 
(22)
62 
23 
Comprehensive Income (Loss)
 
195 
 
127 
311 
296 
Level 3 Financing, Inc.
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
 
0 
 
0 
0 
0 
Costs and Expenses:
 
 
 
 
 
 
Network access costs
 
0 
 
0 
0 
0 
Network related expenses
 
0 
 
0 
0 
0 
Depreciation and amortization
 
0 
 
0 
0 
0 
Selling, general and administrative Expenses
 
1 
 
2 
2 
3 
Total Costs and Expenses
 
1 
 
2 
2 
3 
Operating Income (Loss)
 
(1)
 
(2)
(2)
(3)
Other Income (Expense):
 
 
 
 
 
 
Interest income
 
0 
 
0 
0 
0 
Interest expense
 
(117)
 
(128)
(237)
(256)
Interest income (expense) affiliates, net
 
567 
 
528 
1,141 
1,059 
Equity in net earnings (losses) of subsidiaries
 
(632)
 
(489)
(1,278)
(1,030)
Other, net
 
0 
 
(39)
(44)
(39)
Total Other Expense
 
(182)
 
(128)
(418)
(266)
Income (Loss) before Income Taxes
 
(183)
 
(130)
(420)
(269)
Income Tax Expense
 
(33)
 
(50)
(71)
(119)
Net Income (Loss)
 
(216)
 
(180)
(491)
(388)
Other Comprehensive Income (Loss), Net of Income Taxes
 
0 
 
0 
0 
0 
Comprehensive Income (Loss)
 
(216)
 
(180)
(491)
(388)
Level 3 Communications, LLC
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
 
933 
 
879 
1,853 
1,745 
Costs and Expenses:
 
 
 
 
 
 
Network access costs
 
339 
 
315 
662 
635 
Network related expenses
 
246 
 
237 
489 
474 
Depreciation and amortization
 
109 
 
92 
213 
180 
Selling, general and administrative Expenses
 
294 
 
263 
571 
513 
Total Costs and Expenses
 
988 
 
907 
1,935 
1,802 
Operating Income (Loss)
 
(55)
 
(28)
(82)
(57)
Other Income (Expense):
 
 
 
 
 
 
Interest income
 
3 
 
1 
5 
1 
Interest expense
 
(1)
 
0 
(2)
(1)
Interest income (expense) affiliates, net
 
(868)
 
(802)
(1,737)
(1,603)
Equity in net earnings (losses) of subsidiaries
 
200 
 
201 
403 
400 
Other, net
 
(1)
 
1 
4 
3 
Total Other Expense
 
(667)
 
(599)
(1,327)
(1,200)
Income (Loss) before Income Taxes
 
(722)
 
(627)
(1,409)
(1,257)
Income Tax Expense
 
(1)
 
(1)
(1)
(2)
Net Income (Loss)
 
(723)
 
(628)
(1,410)
(1,259)
Other Comprehensive Income (Loss), Net of Income Taxes
 
0 
 
0 
0 
0 
Comprehensive Income (Loss)
 
(723)
 
(628)
(1,410)
(1,259)
Other Non-Guarantor Subsidiaries
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
 
1,174 
 
1,211 
2,331 
2,430 
Costs and Expenses:
 
 
 
 
 
 
Network access costs
 
382 
 
395 
779 
803 
Network related expenses
 
91 
 
102 
184 
203 
Depreciation and amortization
 
221 
 
218 
437 
431 
Selling, general and administrative Expenses
 
70 
 
91 
155 
195 
Total Costs and Expenses
 
764 
 
806 
1,555 
1,632 
Operating Income (Loss)
 
410 
 
405 
776 
798 
Other Income (Expense):
 
 
 
 
 
 
Interest income
 
0 
 
0 
0 
1 
Interest expense
 
(5)
 
(3)
(9)
0 
Interest income (expense) affiliates, net
 
(77)
 
(69)
(159)
(141)
Equity in net earnings (losses) of subsidiaries
 
0 
 
0 
0 
0 
Other, net
 
0 
 
(7)
(1)
(19)
Total Other Expense
 
(82)
 
(79)
(169)
(159)
Income (Loss) before Income Taxes
 
328 
 
326 
607 
639 
Income Tax Expense
 
(37)
 
14 
(72)
(10)
Net Income (Loss)
 
291 
 
340 
535 
629 
Other Comprehensive Income (Loss), Net of Income Taxes
 
41 
 
(22)
62 
23 
Comprehensive Income (Loss)
 
332 
 
318 
597 
652 
Eliminations
 
 
 
 
 
 
Condensed Consolidating Financial Information
 
 
 
 
 
 
Revenue
 
(46)
 
(34)
(75)
(68)
Costs and Expenses:
 
 
 
 
 
 
Network access costs
 
(46)
 
(34)
(75)
(68)
Network related expenses
 
0 
 
0 
0 
0 
Depreciation and amortization
 
0 
 
0 
0 
0 
Selling, general and administrative Expenses
 
0 
 
0 
0 
0 
Total Costs and Expenses
 
(46)
 
(34)
(75)
(68)
Operating Income (Loss)
 
0 
 
0 
0 
0 
Other Income (Expense):
 
 
 
 
 
 
Interest income
 
0 
 
0 
0 
0 
Interest expense
 
0 
 
0 
0 
0 
Interest income (expense) affiliates, net
 
0 
 
0 
0 
0 
Equity in net earnings (losses) of subsidiaries
 
648 
 
475 
1,366 
1,029 
Other, net
 
0 
 
0 
0 
0 
Total Other Expense
 
648 
 
475 
1,366 
1,029 
Income (Loss) before Income Taxes
 
648 
 
475 
1,366 
1,029 
Income Tax Expense
 
0 
 
0 
0 
0 
Net Income (Loss)
 
648 
 
475 
1,366 
1,029 
Other Comprehensive Income (Loss), Net of Income Taxes
 
(41)
 
22 
(62)
(23)
Comprehensive Income (Loss)
 
$ 607 
 
$ 497 
$ 1,304 
$ 1,006 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Jun. 30, 2016
Dec. 31, 2015
Current Assets:
 
 
 
 
Cash and cash equivalents
$ 1,056 
$ 1,819 
$ 1,291 
$ 854 
Marketable Securities
1,127 
0 
 
 
Restricted cash and securities
5 
7 
 
 
Receivables, less allowances for doubtful accounts
707 
712 
 
 
Due from affiliates
0 
0 
 
 
Other
141 
115 
 
 
Total Current Assets
3,036 
2,653 
 
 
Property, Plant and Equipment, net
10,392 
10,139 
 
 
Restricted Cash and Securities
29 
31 
 
 
Goodwill and Other Intangibles Assets, net
8,546 
8,644 
 
 
Investment in Subsidiaries
0 
0 
 
 
Deferred Tax Assets
3,235 
3,370 
 
 
Other Assets, net
49 
51 
 
 
Total Assets
25,287 
24,888 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
693 
706 
 
 
Current portion of long-term debt
306 
7 
 
 
Accrued payroll and employee benefits
178 
195 
 
 
Accrued interest
97 
129 
 
 
Current portion of deferred revenue
262 
266 
 
 
Due to affiliates
0 
0 
 
 
Other
162 
168 
 
 
Total Current Liabilities
1,698 
1,471 
 
 
Long-Term Debt, less current portion
10,584 
10,877 
 
 
Deferred Revenue, less current portion
1,058 
1,001 
 
 
Other Liabilities
632 
622 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
11,315 
10,917 
 
 
Total Liabilities and Stockholders’ Equity
25,287 
24,888 
 
 
Level 3 Communications, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
14 
15 
11 
12 
Marketable Securities
0 
 
 
 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
17,832 
17,032 
 
 
Other
0 
0 
 
 
Total Current Assets
17,846 
17,047 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
19 
22 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
16,926 
16,869 
 
 
Deferred Tax Assets
55 
51 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
34,846 
33,989 
 
 
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
11 
11 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
0 
0 
 
 
Total Current Liabilities
11 
11 
 
 
Long-Term Debt, less current portion
593 
592 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
16 
16 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
34,226 
33,370 
 
 
Total Liabilities and Stockholders’ Equity
34,846 
33,989 
 
 
Level 3 Financing, Inc.
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
0 
0 
6 
6 
Marketable Securities
0 
 
 
 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
22,581 
21,715 
 
 
Other
0 
0 
 
 
Total Current Assets
22,581 
21,715 
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
17,664 
17,599 
 
 
Deferred Tax Assets
2,617 
2,687 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
42,862 
42,001 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
1 
0 
 
 
Current portion of long-term debt
299 
0 
 
 
Accrued payroll and employee benefits
0 
0 
 
 
Accrued interest
79 
110 
 
 
Current portion of deferred revenue
0 
0 
 
 
Due to affiliates
0 
0 
 
 
Other
(1)
0 
 
 
Total Current Liabilities
378 
110 
 
 
Long-Term Debt, less current portion
9,816 
10,108 
 
 
Deferred Revenue, less current portion
0 
0 
 
 
Other Liabilities
0 
0 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
32,668 
31,783 
 
 
Total Liabilities and Stockholders’ Equity
42,862 
42,001 
 
 
Level 3 Communications, LLC
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
938 
1,700 
1,202 
727 
Marketable Securities
1,127 
 
 
 
Restricted cash and securities
1 
1 
 
 
Receivables, less allowances for doubtful accounts
4 
26 
 
 
Due from affiliates
0 
0 
 
 
Other
116 
87 
 
 
Total Current Assets
2,186 
1,814 
 
 
Property, Plant and Equipment, net
4,105 
3,869 
 
 
Restricted Cash and Securities
10 
9 
 
 
Goodwill and Other Intangibles Assets, net
352 
353 
 
 
Investment in Subsidiaries
3,639 
3,674 
 
 
Deferred Tax Assets
(1)
0 
 
 
Other Assets, net
14 
16 
 
 
Total Assets
10,305 
9,735 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
324 
307 
 
 
Current portion of long-term debt
2 
2 
 
 
Accrued payroll and employee benefits
149 
160 
 
 
Accrued interest
0 
0 
 
 
Current portion of deferred revenue
111 
116 
 
 
Due to affiliates
43,237 
40,927 
 
 
Other
130 
127 
 
 
Total Current Liabilities
43,953 
41,639 
 
 
Long-Term Debt, less current portion
12 
13 
 
 
Deferred Revenue, less current portion
781 
719 
 
 
Other Liabilities
164 
155 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
(34,605)
(32,791)
 
 
Total Liabilities and Stockholders’ Equity
10,305 
9,735 
 
 
Other Non-Guarantor Subsidiaries
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
104 
104 
72 
109 
Marketable Securities
0 
 
 
 
Restricted cash and securities
4 
6 
 
 
Receivables, less allowances for doubtful accounts
703 
686 
 
 
Due from affiliates
2,824 
2,180 
 
 
Other
25 
28 
 
 
Total Current Assets
3,660 
3,004 
 
 
Property, Plant and Equipment, net
6,287 
6,270 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
8,194 
8,291 
 
 
Investment in Subsidiaries
0 
0 
 
 
Deferred Tax Assets
564 
632 
 
 
Other Assets, net
35 
35 
 
 
Total Assets
18,740 
18,232 
 
 
Liabilities and Stockholders' Equity:
 
 
 
 
Accounts payable
368 
399 
 
 
Current portion of long-term debt
5 
5 
 
 
Accrued payroll and employee benefits
29 
35 
 
 
Accrued interest
7 
8 
 
 
Current portion of deferred revenue
151 
150 
 
 
Due to affiliates
0 
0 
 
 
Other
33 
41 
 
 
Total Current Liabilities
593 
638 
 
 
Long-Term Debt, less current portion
163 
164 
 
 
Deferred Revenue, less current portion
277 
282 
 
 
Other Liabilities
452 
451 
 
 
Commitments and Contingencies
   
   
 
 
Stockholders' Equity (Deficit)
17,255 
16,697 
 
 
Total Liabilities and Stockholders’ Equity
18,740 
18,232 
 
 
Eliminations
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
0 
0 
0 
0 
Marketable Securities
0 
 
 
 
Restricted cash and securities
0 
0 
 
 
Receivables, less allowances for doubtful accounts
0 
0 
 
 
Due from affiliates
(43,237)
(40,927)
 
 
Other
0 
0 
 
 
Total Current Assets
(43,237)
(40,927)
 
 
Property, Plant and Equipment, net
0 
0 
 
 
Restricted Cash and Securities
0 
0 
 
 
Goodwill and Other Intangibles Assets, net
0 
0 
 
 
Investment in Subsidiaries
(38,229)
(38,142)
 
 
Deferred Tax Assets
0 
0 
 
 
Other Assets, net
0 
0 
 
 
Total Assets
(81,466)
(79,069)
 
 
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
(43,237)
(40,927)
 
 
Other
0 
0 
 
 
Total Current Liabilities
(43,237)
(40,927)
 
 
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)
(38,229)
(38,142)
 
 
Total Liabilities and Stockholders’ Equity
$ (81,466)
$ (79,069)
 
 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
$ 1,100 
$ 1,141 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(696)
(664)
(Increase) decrease in restricted cash and securities, net
4 
11 
Other
 
1 
Purchases of marketable securities
(1,127)
0 
Proceeds from sale of property, plant, and equipment and other assets
0 
1 
Net Cash Used in Investing Activities
(1,819)
(652)
Cash Flows from Financing Activities:
 
 
Long-term debt borrowings, net of issuance costs
4,569 
764 
Payments on and repurchases of long-term debt and capital leases
(4,615)
(816)
Increase (decrease) due from-to affiliates, net
0 
0 
Net Cash (Used in) Provided by Financing Activities
(46)
(52)
Effect of Exchange Rates on Cash and Cash Equivalents
2 
0 
Net Change in Cash and Cash Equivalents
(763)
437 
Cash and Cash Equivalents at Beginning of Period
1,819 
854 
Cash and Cash Equivalents at End of Period
1,056 
1,291 
Level 3 Communications, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(14)
(18)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) decrease in restricted cash and securities, net
3 
5 
Other
 
0 
Purchases of marketable securities
0 
 
Proceeds from sale of property, plant, and equipment and other assets
0 
 
Net Cash Used in Investing Activities
3 
5 
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
10 
12 
Net Cash (Used in) Provided by Financing Activities
10 
12 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
(1)
(1)
Cash and Cash Equivalents at Beginning of Period
15 
12 
Cash and Cash Equivalents at End of Period
14 
11 
Level 3 Financing, Inc.
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
(267)
(225)
Cash Flows from Investing Activities:
 
 
Capital expenditures
0 
0 
(Increase) decrease in restricted cash and securities, net
0 
0 
Other
 
0 
Purchases of marketable securities
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
4,569 
764 
Payments on and repurchases of long-term debt and capital leases
(4,611)
(806)
Increase (decrease) due from-to affiliates, net
309 
267 
Net Cash (Used in) Provided by Financing Activities
267 
225 
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 
6 
Cash and Cash Equivalents at End of Period
0 
6 
Level 3 Communications, LLC
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
352 
274 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(427)
(333)
(Increase) decrease in restricted cash and securities, net
(1)
6 
Other
 
0 
Purchases of marketable securities
(1,127)
 
Proceeds from sale of property, plant, and equipment and other assets
0 
 
Net Cash Used in Investing Activities
(1,555)
(327)
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)
0 
Increase (decrease) due from-to affiliates, net
442 
528 
Net Cash (Used in) Provided by Financing Activities
441 
528 
Effect of Exchange Rates on Cash and Cash Equivalents
0 
0 
Net Change in Cash and Cash Equivalents
(762)
475 
Cash and Cash Equivalents at Beginning of Period
1,700 
727 
Cash and Cash Equivalents at End of Period
938 
1,202 
Other Non-Guarantor Subsidiaries
 
 
Condensed Consolidating Financial Information
 
 
Net Cash Provided by (Used in) Operating Activities
1,029 
1,110 
Cash Flows from Investing Activities:
 
 
Capital expenditures
(269)
(331)
(Increase) decrease in restricted cash and securities, net
2 
0 
Other
 
1 
Purchases of marketable securities
0 
 
Proceeds from sale of property, plant, and equipment and other assets
0 
 
Net Cash Used in Investing Activities
(267)
(330)
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
(3)
(10)
Increase (decrease) due from-to affiliates, net
(761)
(807)
Net Cash (Used in) Provided by Financing Activities
(764)
(817)
Effect of Exchange Rates on Cash and Cash Equivalents
2 
0 
Net Change in Cash and Cash Equivalents
0 
(37)
Cash and Cash Equivalents at Beginning of Period
104 
109 
Cash and Cash Equivalents at End of Period
104 
72 
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 
Other
 
0 
Purchases of marketable securities
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 (Used in) Provided by 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