LEVEL 3 PARENT LLC BROOMFIELD, Colo., July 29, 2014 /PRNewswire/ -- Level 3 Communications, Inc. (NYSE: LVLT) reported total revenue of $1.625 billion for the second quarter 2014, compared to $1.565 billion for the second quarter 2013.
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In the second quarter 2014, the company generated net income of $51 million and $0.21 basic and diluted net income per share, which included a $0.14 loss for the devaluation of the Venezuelan Bolivar, and $0.02 of tw telecom transaction-related fees. Excluding these items, the company generated basic and diluted net income per share of $0.37.
Adjusted EBITDA was $463 million in the second quarter 2014, excluding $4 million of tw telecom transaction-related fees. For the second quarter 2013, Adjusted EBITDA on a pro forma basis was $385 million, which has been adjusted to include $15 million in bonus-related non-cash compensation expense and to exclude $13 million of severance charges, both of which were recognized in that quarter.
"Level 3 delivered another quarter of solid revenue and Adjusted EBITDA growth," said Jeff Storey, president and CEO of Level 3. "Our ability to help enterprise customers solve their evolving, global telecommunications needs is a key differentiator in the industry. During the second quarter, we also indicated our intent to acquire tw telecom and the integration planning process is well underway."
Financial Results
Second Quarter 2013
Metric Second Quarter 2014
($ in millions, except per
share data)
--------------------------
Core Network Services
Revenue $1,479 $1,379
--------------------- ------ ------
Wholesale Voice Services and
Other Revenue $146 $186
---------------------------- ---- ----
Total Revenue $1,625 $1,565
------------- ------ ------
Adjusted EBITDA(1)(2)(3)(4) $463 $385
-------------------------- ---- ----
Capital Expenditures $241 $208
-------------------- ---- ----
Unlevered Cash Flow(1) $211 $153
--------------------- ---- ----
Free Cash Flow(1) $62 $8
---------------- --- ---
Gross Margin(1) 62.3% 60.6%
-------------- ---- ----
Adjusted EBITDA
Margin(1)(2)(3)(4) 28.5% 24.6%
------------------- ---- ----
Net Income (Loss) $51 ($24)
---------------- --- ----
Basic Earnings (Loss) Per
Share $0.21 ($0.11)
------------------------- ----- ------
Diluted Earnings (Loss) Per
Share $0.21 ($0.11)
--------------------------- ----- ------
(1) See schedule of non-GAAP metrics for
definition and reconciliation to
GAAP measures.
(2) Adjusted EBITDA for the second quarter
2014 excludes tw telecom transaction-
related fees of $4 million.
(3) In 2013, the company accrued 60
percent of its annual employee bonus
compensation expense in the form of
equity and 40 percent in cash,
compared to 100 percent cash in
2014. The amount of the bonus
accrued as equity-based
compensation in the second quarter
of 2013 was $15 million. Adjusted
EBITDA and the resulting Adjusted
EBITDA margin in the second quarter
of 2013 have been adjusted on a pro
forma basis to include the $15
million to present the results on a
consistent basis with the accrual of
bonus compensation expense in 2014
as 100 percent cash.
(4) Adjusted EBITDA for the second quarter
2013 excludes $13 million of
severance charges.
Revenue
Second Quarter 2013 Percent
Change,
Core
Network
Services
(CNS)
Revenue Second Quarter 2014 Constant Currency
($ in
millions)
----------
North
America $1,051 $970 8%
-------- ------ ---- ---
Wholesale $367 $367 -
--------- ---- ---- ---
Enterprise $684 $603 13%
---------- ---- ---- ---
EMEA $229 $220 (2%)
---- ---- ---- ---
Wholesale $86 $88 (8%)
--------- --- --- ---
Enterprise(1) $143 $132 2%
------------ ---- ---- ---
Latin
America $199 $189 10%
-------- ---- ---- ---
Wholesale $42 $40 7%
--------- --- --- ---
Enterprise $157 $149 10%
---------- ---- ---- ---
Total
CNS
Revenue $1,479 $1,379 7%
-------- ------ ------ ---
Wholesale $495 $495 (1%)
--------- ---- ---- ---
Enterprise(1) $984 $884 11%
------------ ---- ---- ---
(1) Includes EMEA UK Government.
Core Network Services (CNS)
CNS revenue was $1.479 billion in the second quarter 2014, increasing 6.9 percent year-over-year on a constant currency basis.
Deferred Revenue
The deferred revenue balance was $1.143 billion at the end of the second quarter 2014, compared to $1.132 billion at the end of the second quarter 2013.
Cost of Revenue
Cost of revenue was $613 million in the second quarter 2014, compared to $616 million in the second quarter 2013.
Gross margin continued to expand, increasing to 62.3 percent for the second quarter 2014, compared to 60.6 percent in the second quarter 2013.
Selling, General and Administrative Expenses (SG&A)
Excluding non-cash compensation expense, SG&A expenses were $553 million in the second quarter 2014, which included $4 million of transaction-related fees. This compared to $564 million in the second quarter 2013, on a pro forma basis, adjusted to include the $15 million in bonus-related non-cash compensation and to exclude $13 million of severance charges.
Non-cash compensation expense was $16 million for the second quarter 2014. For the second quarter 2013, non-cash compensation was $48 million. Second quarter 2013 non-cash compensation expense was $16 million excluding $15 million in bonus-related non-cash compensation expense and $17 million related to the termination of former CEO Jim Crowe's employment agreement.
Adjusted EBITDA
For the second quarter 2014, Adjusted EBITDA was $463 million, excluding $4 million of transaction-related fees. For the second quarter 2013, Adjusted EBITDA on a pro forma basis was $385 million.
Adjusted EBITDA margin increased to 28.5 percent for the second quarter 2014, compared to Adjusted EBITDA margin of 24.6 percent for the second quarter 2013, on a pro forma basis.
Cash Flow and Liquidity
During the second quarter 2014, Unlevered Cash Flow was $211 million, compared to $153 million in the second quarter 2013.
Free Cash Flow was positive $62 million for the second quarter 2014, compared to positive $8 million in the second quarter 2013.
Capital expenditures were $241 million for the second quarter 2014, compared to $208 million for the second quarter 2013.
As of June 30, 2014, the company had cash and cash equivalents of approximately $637 million.
Corporate Transactions
On June 16, 2014, Level 3 announced that it entered into a definitive agreement to acquire tw telecom. Under the terms and subject to conditions of the agreement, tw telecom shareholders will receive $10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom common stock that is owned at closing. Based on Level 3's closing stock price on June 13, 2014, the last trading day prior to the announcement of the transaction, the transaction is valued at $40.86 per tw telecom share, or approximately $7.3 billion, including the assumption of approximately $1.6 billion of net debt as of March 31, 2014.
Business Outlook
"We remain confident in our performance for the rest of year," said Sunit Patel, CFO of Level 3. "On a standalone basis, and excluding the effects from the tw telecom acquisition, we are reiterating our outlook for the full year 2014."
Conference Call and Web Site Information
Level 3 will hold a conference call to discuss the company's second quarter 2014 results today at 10 a.m. ET. The call will be broadcast live on Level 3's Investor Relations website at http://investors.level3.com. Additional information regarding the second quarter 2014 results, including the presentation management will review on the conference call, will be available on Level 3's Investor Relations website. If you are unable to join the call via the Web, the call can be accessed live at 1 877-283-5643 (U.S. Domestic) or 1 312-281-1201 (International). Questions should be sent to investor.relations@level3.com.
For additional information, please call 1 720-888-2518.
About Level 3 Communications
Level 3 Communications, Inc. (NYSE: LVLT) is a Fortune 500 company that provides local, national and global communications services to enterprise, government and carrier customers. Level 3's comprehensive portfolio of secure, managed solutions includes fiber and infrastructure solutions; IP-based voice and data communications; wide-area Ethernet services; video and content distribution; data center and cloud-based solutions. Level 3 serves customers in more than 500 markets in over 60 countries on a global services platform anchored by owned fiber networks on three continents and connected by extensive undersea facilities. For more information, please visit www.level3.com or get to know us on Twitter, Facebook and LinkedIn.
© Level 3 Communications, LLC. All Rights Reserved. Level 3, Level 3 Communications, Level (3) and the Level 3 Logo are either registered service marks or service marks of Level 3 Communications, LLC and/or one of its Affiliates in the United States and/or other countries. Any other service names, product names, company names or logos included herein are the trademarks or service marks of their respective owners. Level 3 services are provided by subsidiaries of Level 3 Communications, Inc.
Forward-Looking Statement
Some statements made in this press release are forward-looking in nature and are based on management's current expectations or beliefs. These forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Level 3's control, which could cause actual events to differ materially from those expressed or implied by the statements. Important factors that could prevent Level 3 from achieving its stated goals include, but are not limited to, the company's ability to: successfully integrate the tw telecom acquisition or otherwise realize the anticipated benefits thereof; manage risks associated with continued uncertainty in the global economy; maintain and increase traffic on its network; develop and maintain effective business support systems; manage system and network failures or disruptions; avert the breach of its network and computer system security measures; develop new services that meet customer demands and generate acceptable margins; defend intellectual property and proprietary rights; manage the future expansion or adaptation of its network to remain competitive; manage continued or accelerated decreases in market pricing for communications services; obtain capacity for its network from other providers and interconnect its network with other networks on favorable terms; attract and retain qualified management and other personnel; successfully integrate future acquisitions; effectively manage political, legal, regulatory, foreign currency and other risks it is exposed to due to its substantial international operations; mitigate its exposure to contingent liabilities; and meet all of the terms and conditions of its debt obligations. Additional information concerning these and other important factors can be found within Level 3's filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
Contact Information
Media: Investors:
Ashley Pritchard Mark Stoutenberg
+1 720-888-5950 +1 720-888-2518
ashley.pritchard@level3.com mark.stoutenberg@level3.com
Level 3 Communications:
Non-GAAP Metrics
Pursuant to Regulation G, the company is hereby providing definitions of non-GAAP financial metrics and reconciliations to the most directly comparable GAAP measures.
The following describes and reconciles those financial measures as reported under accounting principles generally accepted in the United States (GAAP) with those financial measures as adjusted by the items detailed below and presented in the accompanying news release. These calculations are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP. In keeping with its historical financial reporting practices, the company believes that the supplemental presentation of these calculations provides meaningful non-GAAP financial measures to help investors understand and compare business trends among different reporting periods on a consistent basis.
In addition, measures referred to in the accompanying news release as being calculated "on a constant currency basis" or "in constant currency terms" are non-GAAP metrics intended to present the relevant information assuming a constant exchange rate between the two periods being compared. Such metrics are calculated by applying the currency exchange rates used in the preparation of the prior period financial results to the subsequent period results.
Consolidated Revenue is defined as total revenue from the Consolidated Statements of Operations.
Core Network Services Revenue includes revenue from colocation and datacenter services, transport and fiber, IP and data services, and voice services (local and enterprise).
Gross Margin ($) is defined as total revenue less cost of revenue from the Consolidated Statements of Operations.
Gross Margin (%) is defined as gross margin ($) divided by total revenue. Management believes that gross margin is a relevant metric to provide to investors, as it is a metric that management uses to measure the margin available to the company after it pays third party network services costs; in essence, a measure of the efficiency of the company's network.
Adjusted EBITDA is defined as net income (loss) from the Consolidated Statements of Operations before income taxes, total other income (expense), non-cash impairment charges, depreciation and amortization and non-cash stock compensation expense.
Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by total revenue.
Adjusted EBITDA Metric
Q2 2014
(in millions)
------------
Net Income $51
Income Tax Expense 12
Total Other Expense 193
Depreciation and Amortization 187
Non-Cash Stock Compensation 16
Adjusted EBITDA $459
====
Adjusted EBITDA Margin 28.2%
Adjusted EBITDA Metric
Q1 2014
-------
(in millions)
------------
Net Income $112
Income Tax Expense 7
Total Other Expense 145
Depreciation and Amortization 184
Non-Cash Stock Compensation 10
Adjusted EBITDA $458
====
Adjusted EBITDA Margin 28.5%
Adjusted EBITDA Metric
Q2 2013 (1)
----------
(in millions)
------------
Net Loss $(24)
Income Tax Expense 11
Total Other Expense 153
Depreciation and Amortization 199
Non-Cash Stock Compensation 48
---
Adjusted EBITDA $387
====
Adjusted EBITDA Margin 24.7%
((1))Adjusted EBITDA and the resulting Adjusted EBITDA Margin includes $15 million in the second quarter of 2013 in non-cash bonus related compensation.
Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are relevant and useful metrics to provide to investors, as they are an important part of the company's internal reporting and are key measures used by Management to evaluate profitability and operating performance of the company and to make resource allocation decisions. Management believes such measures are especially important in a capital-intensive industry such as telecommunications. Management also uses Adjusted EBITDA and Adjusted EBITDA Margin to compare the company's performance to that of its competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period its ability to fund capital expenditures, fund growth, service debt and determine bonuses. Adjusted EBITDA excludes non-cash impairment charges and non-cash stock compensation expense because of the non-cash nature of these items. Adjusted EBITDA also excludes interest income, interest expense and income taxes because these items are associated with the company's capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses primarily reflect the impact of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods, which may be evaluated through cash flow measures. Adjusted EBITDA excludes the gain (or loss) on extinguishment and modification of debt and other, net because these items are not related to the primary operations of the company.
There are limitations to using Adjusted EBITDA as a financial measure, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from the company's calculations. Additionally, this financial measure does not include certain significant items such as interest income, interest expense, income taxes, depreciation and amortization, non-cash impairment charges, non-cash stock compensation expense, the gain (or loss) on extinguishment and modification of debt and net other income (expense). Adjusted EBITDA and Adjusted EBITDA Margin should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.
Unlevered Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures, plus cash interest paid and less interest income all as disclosed in the Consolidated Statements of Cash Flows or the Consolidated Statements of Operations. Management believes that Unlevered Cash Flow is a relevant metric to provide to investors, as it is an indicator of the operational strength and performance of the company and, measured over time, provides management and investors with a sense of the underlying business' growth pattern and ability to generate cash. Unlevered Cash Flow excludes cash used for acquisitions and debt service and the impact of exchange rate changes on cash and cash equivalents balances.
There are material limitations to using Unlevered Cash Flow to measure the company's cash performance as it excludes certain material items such as payments on and repurchases of long-term debt, interest income, cash interest expense and cash used to fund acquisitions. Comparisons of Level 3's Unlevered Cash Flow to that of some of its competitors may be of limited usefulness since Level 3 does not currently pay a significant amount of income taxes due to net operating losses, and therefore, generates higher cash flow than a comparable business that does pay income taxes. Additionally, this financial measure is subject to variability quarter over quarter as a result of the timing of payments related to accounts receivable and accounts payable and capital expenditures. Unlevered Cash Flow should not be used as a substitute for net change in cash and cash equivalents in the Consolidated Statements of Cash Flows.
Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures as disclosed in the Consolidated Statements of Cash Flows. Management believes that Free Cash Flow is a relevant metric to provide to investors, as it is an indicator of the company's ability to generate cash to service its debt. Free Cash Flow excludes cash used for acquisitions, principal repayments and the impact of exchange rate changes on cash and cash equivalents balances.
There are material limitations to using Free Cash Flow to measure the company's performance as it excludes certain material items such as principal payments on and repurchases of long-term debt and cash used to fund acquisitions. Comparisons of Level 3's Free Cash Flow to that of some of its competitors may be of limited usefulness since Level 3 does not currently pay a significant amount of income taxes due to net operating losses, and therefore, generates higher cash flow than a comparable business that does pay income taxes. Additionally, this financial measure is subject to variability quarter over quarter as a result of the timing of payments related to interest expense, accounts receivable and accounts payable and capital expenditures. Free Cash Flow should not be used as a substitute for net change in cash and cash equivalents on the Consolidated Statements of Cash Flows.
Unlevered Cash Flow and
Free Cash Flow
Three Months Ended June 30,
2014 Unlevered
($ in millions) Cash Flow Free Cash Flow
-------------- --------- --------------
Net Cash Provided by
Operating Activities $303 $303
Capital Expenditures (241) (241)
Cash Interest Paid 149 N/A
Interest Income - N/A
Total $211 $62
==== ===
Unlevered Cash Flow and
Free Cash Flow
Three Months Ended March
31, 2014 Unlevered
($ in millions) Cash Flow Free Cash Flow
-------------- --------- --------------
Net Cash Provided by
Operating Activities $141 $141
Capital Expenditures (163) (163)
Cash Interest Paid 128 N/A
Interest Income - N/A
Total $106 $(22)
==== ====
Unlevered Cash Flow and
Free Cash Flow
Three Months Ended June 30,
2013 Unlevered
($ in millions) Cash Flow Free Cash Flow
-------------- --------- --------------
Net Cash Provided by
Operating Activities $216 $216
Capital Expenditures (208) (208)
Cash Interest Paid 145 N/A
Interest Income - N/A
Total $153 $8
==== ===
Regional Revenue Distribution
-----------------------------
2Q14/ 2Q14/
2Q13% 1Q14%
2Q14/ Change 2Q14/ Change 2Q14
2Q13% Constant 1Q14% Constant %
2Q13 3Q13 4Q13 1Q14 2Q14 Change Currency Change Currency CNS
---- ---- ---- ---- ---- ------ -------- ------ -------- ---
CNS Revenue
($ in millions)
North America $970 $987 $1,025 $1,043 $1,051 8.4% 8.3% 0.8% 0.7% 71%
Wholesale $367 $365 $374 $368 $367 -% (0.2)% (0.3)% (0.4)% 25%
Enterprise $603 $622 $651 $675 $684 13.4% 13.4% 1.3% 1.3% 46%
EMEA $220 $222 $223 $225 $229 4.1% (1.8)% 1.8% 0.8% 16%
Wholesale $88 $88 $89 $87 $86 (2.3)% (7.7)% (1.1)% (1.9)% 6%
Enterprise $132 $134 $134 $138 $143 8.3% 2.2% 3.6% 2.5% 10%
Latin America $189 $188 $195 $189 $199 5.3% 9.7% 5.3% 3.4% 13%
Wholesale $40 $39 $41 $40 $42 5.0% 7.2% 5.0% 2.5% 3%
Enterprise $149 $149 $154 $149 $157 5.4% 10.4% 5.4% 3.6% 10%
Total $1,379 $1,397 $1,443 $1,457 $1,479 7.3% 6.9% 1.5% 1.1% 100%
Wholesale $495 $492 $504 $495 $495 -% (0.9)% -% (0.5)% 34%
Enterprise $884 $905 $939 $962 $984 11.3% 11.2% 2.3% 1.8% 66%
Total CNS $1,379 $1,397 $1,443 $1,457 $1,479 7.3% 6.9% 1.5% 1.1%
Wholesale Voice Services and
Other Revenue 186 172 159 152 146 (21.5)% (21.2)% (3.9)% (3.7)%
Total Revenue $1,565 $1,569 $1,602 $1,609 $1,625 3.8% 3.5% 1.0% 0.6%
====== ====== ====== ====== ======
Services Revenue
----------------
2Q14/ 2Q14/ 2Q14
2Q13% 1Q14% %
2Q13 3Q13 4Q13 1Q14 2Q14 Change Change CNS
---- ---- ---- ---- ---- ------ ------ ---
Core Network
Services
Revenue ($ in
millions)
Colocation and
Datacenter
Services $145 $144 $154 $145 $146 0.7% 0.7% 10%
Transport and
Fiber $480 $483 $496 $502 $508 5.8% 1.2% 34%
IP and Data
Services $522 $536 $557 $573 $588 12.6% 2.6% 40%
Voice Services
(Local and
Enterprise) $232 $234 $236 $237 $237 2.2% -% 16%
---- ---- ---- ---- ----
Total Core
Network
Services $1,379 $1,397 $1,443 $1,457 $1,479 7.3% 1.5% 100%
Wholesale Voice
Services and
Other $186 $172 $159 $152 $146 (21.5)% (3.9)%
----
Total Revenue $1,565 $1,569 $1,602 $1,609 $1,625 3.8% 1.0%
====== ====== ====== ====== ======
Debt is defined as total gross debt, including capital leases from the Consolidated Balance Sheet.
Net Debt to Last Twelve Months (LTM) Adjusted EBITDA Ratio is defined as debt, reduced by cash and cash equivalents and divided by LTM Adjusted EBITDA.
Level 3 Communications, Inc. and Consolidated Subsidiaries
Net Debt to LTM Adjusted EBITDA Ratio as of June 30, 2014
---------------------------------------------------------
($ in millions)
--------------
Debt $8,386
Cash and Cash Equivalents (637)
Net Debt $7,749
======
LTM Adjusted EBITDA $1,768
======
Net Debt to LTM Adjusted EBITDA
Ratio 4.4
===
LEVEL 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Three Months Ended
------------------
June 30, March 31, June 30,
(dollars in millions,
except per share
data) 2014 2014 2013
--------------------- ---- ---- ----
Revenue $1,625 $1,609 $1,565
Costs and Expenses (exclusive of depreciation and
amortization shown separately below):
Cost of Revenue 613 614 616
Depreciation and
Amortization 187 184 199
Selling, General and
Administrative 569 547 610
--- --- ---
Total Costs and
Expenses 1,389 1,345 1,425
----- ----- -----
Operating Income 256 264 140
Other Income (Expense):
Interest income - - -
Interest expense (149) (151) (167)
Other, net (44) 6 14
---
Total Other Expense (193) (145) (153)
---- ---- ----
Income (Loss) Before
Income Taxes 63 119 (13)
Income Tax Expense (12) (7) (11)
--- --- ---
Net Income (Loss) $51 $112 $(24)
=== ==== ====
Basic Earnings per Common Share:
Net Income (Loss) per
Share $0.21 $0.48 $(0.11)
Weighted-Average
Shares Outstanding
(in thousands) 237,376 235,635 221,609
Diluted Earnings per Common Share:
Net Income (Loss) per
Share $0.21 $0.47 $(0.11)
Weighted-Average
Shares Outstanding
(in thousands) 241,406 239,294 221,609
LEVEL 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
June 30, December 31, June 30,
(dollars in millions) 2014 2013 2013
-------------------- ---- ---- ----
Assets
Current Assets:
Cash and cash
equivalents $637 $631 $596
Restricted cash and
securities 6 7 7
Receivables, less
allowances for
doubtful accounts 722 673 721
Other 174 143 179
--- --- ---
Total Current Assets 1,539 1,454 1,503
Property, Plant and
Equipment, net 8,355 8,240 8,171
Restricted Cash and
Securities 23 23 27
Goodwill 2,578 2,577 2,565
Other Intangibles,
net 169 205 232
Other Assets 364 375 367
Total Assets $13,028 $12,874 $12,865
======= ======= =======
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $613 $625 $688
Current portion of
long-term debt 503 31 30
Accrued payroll and
employee benefits 145 209 177
Accrued interest 166 160 192
Current portion of
deferred revenue 258 253 226
Other 139 168 190
--- --- ---
Total Current
Liabilities 1,824 1,446 1,503
Long-Term Debt, less
current portion 7,855 8,331 8,506
Deferred Revenue,
less current portion 885 906 906
Other Liabilities 785 780 842
--- --- ---
Total Liabilities 11,349 11,463 11,757
Stockholders' Equity 1,679 1,411 1,108
----- ----- -----
Total Liabilities and
Stockholders' Equity $13,028 $12,874 $12,865
======= ======= =======
LEVEL 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
------------------
June 30, March 31, June 30,
(dollars in millions) 2014 2014 2013
-------------------- ---- ---- ----
Cash Flows from Operating Activities:
Net income (loss) $51 $112 $(24)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and
amortization 187 184 199
Non-cash compensation
expense attributable to
stock awards 16 10 48
Accretion of debt discount
and amortization of debt
issuance costs 8 9 9
Accrued interest on long-
term debt (8) 14 13
Non-cash tax adjustments 1 (5) (2)
Deferred income taxes 7 7 (14)
Gain on sale of property,
plant and equipment and
other assets - (1) (1)
Other, net 12 (12) (19)
Changes in working capital items:
Receivables (23) (26) 4
Other current assets (12) (18) (8)
Payables 51 (69) (48)
Deferred revenue (23) 1 7
Other current liabilities 36 (65) 52
--- --- ---
Net Cash Provided by
Operating Activities 303 141 216
Cash Flows from Investing Activities:
Capital expenditures (241) (163) (208)
Change in restricted cash
and securities, net 1 1 5
Other - - (14)
---
Net Cash Used in Investing
Activities (240) (162) (217)
Cash Flows from Financing Activities:
Long-term debt
borrowings, net of
issuance costs - - -
Payments on and
repurchases of long-term
debt and capital leases (3) (3) (13)
---
Net Cash Used in Financing
Activities (3) (3) (13)
Effect of Exchange Rates
on Cash and Cash
Equivalents (30) - -
--- --- ---
Net Change in Cash and
Cash Equivalents 30 (24) (14)
Cash and Cash Equivalents
at Beginning of Period 607 631 610
--- --- ---
Cash and Cash Equivalents
at End of Period $637 $607 $596
==== ==== ====
Supplemental Disclosure of Cash Flow Information:
Cash interest paid $149 $128 $145
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SOURCE Level 3 Communications, Inc.
