Fourth Quarter 2013 Results
February 05, 2014

© Level 3 Communications, LLC. All Rights Reserved. Level 3, Level 3 Commun...
Cautionary Statement
Some statements made in this presentation are forward-looking in nature and are based on management's...
2013 Highlights
 Eight consecutive quarters of Enterprise CNS revenue growth on a
constant currency basis

 Adjusted EBI...
Core Network Services
Revenue
CNS revenue grew to $1.443
billion or 4.1% YoY on a constant
currency basis

CNS By Region

...
Level 3 Gross Margin / SG&A
Gross Margin
($ in millions)

Gross Margin improved to 61.4% in

$959

$984

$961

4Q13 from ...
Level 3 Adjusted EBITDA and Capital Expenditures
(2)

Adjusted EBITDA
($ in millions)

Excluding a Latin America tax benef...
Level 3 Cash Flow

Unlevered Cash Flow
($ in millions)

$627

 For FY13, Unlevered Cash Flow
improved by $99 million comp...
Debt Maturity Profile
 Net Debt to Adjusted EBITDA ratio was 4.8x, compared to 5.3x at the
end of 2012
 Focused on the l...
Full Year 2014 Business Outlook
 For the full year 2014, expect CNS revenue growth to be higher than the 2.9%
growth we s...
Appendix

Issued on February 05, 2014

10
Revenue by Region
Level 3 Communications
($ in millions)

4Q12

3Q13

4Q13

4Q13/
4Q12
%Change
Constant
Currency

4Q13/
3Q...
Services Revenue
Level 3 Communications
($ in millions)

Core Network Services Revenue
Colocation and Datacenter Services
...
Non-GAAP Reconciliation

Issued on February 05, 2014

© Level 3 Communications, Inc. All Rights Reserved.

13
Schedule To Reconcile To Non-GAAP Financial Metrics
Pursuant to Regulation G, the company is hereby providing definitions ...
Schedule To Reconcile To Non-GAAP Financial Metrics
Consolidated Revenue is defined as total revenue from the Consolidated...
Schedule To Reconcile To Non-GAAP Financial Metrics
Management believes that Adjusted EBITDA and Adjusted EBITDA Margin ar...
Schedule To Reconcile To Non-GAAP Financial Metrics

Debt is defined as total gross debt, including capital leases from th...
Schedule To Reconcile To Non-GAAP Financial Metrics
Unlevered Cash Flow is defined as net cash provided by (used in) opera...
Schedule To Reconcile To Non-GAAP Financial Metrics
Free Cash Flow is defined as net cash provided by (used in) operating ...
Schedule To Reconcile To Non-GAAP Financial Metrics
Level 3
Communications
($ in millions)
(unaudited)
4Q12

3Q13

4Q13

F...
Schedule To Reconcile To Non-GAAP Financial Metrics
Level 3 Communications, Inc. and Consolidated Subsidiaries
Adjusted EB...
Schedule To Reconcile To Non-GAAP Financial Metrics

Level 3 Communications, Inc. and Consolidated Subsidiaries
Cash Flows...
Schedule To Reconcile To Non-GAAP Financial Metrics
Level 3 Communications, Inc. and Consolidated
Net Debt to LTM Adjusted...
Upcoming SlideShare
Loading in …5
×

4 q13 lvlt external earnings presentation 2014-02-05

4,207 views
4,107 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
4,207
On SlideShare
0
From Embeds
0
Number of Embeds
3,797
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

4 q13 lvlt external earnings presentation 2014-02-05

  1. 1. Fourth Quarter 2013 Results February 05, 2014 © Level 3 Communications, LLC. All Rights Reserved. Level 3, Level 3 Communications, 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. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service names, product names, company names or logos included herein are the trademarks or service marks of their respective owners.
  2. 2. Cautionary Statement Some statements made in this presentation 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 Global Crossing 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 presentation 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. Issued on February 05, 2014 2
  3. 3. 2013 Highlights  Eight consecutive quarters of Enterprise CNS revenue growth on a constant currency basis  Adjusted EBITDA grew 11% for the full year 2013 compared to the full year 2012  Adjusted EBITDA grew 12%, excluding severance charges in 2012 and 2013  Free cash flow was positive $29 million for the full year 2013, excluding interest rate swap payments of $46 million and accelerated cash interest expense payments of $30 million  Reached company’s longstanding target leverage range of 3 to 5 times  Net Debt to Adjusted EBITDA ratio was 4.8 Issued on February 05, 2014 3
  4. 4. Core Network Services Revenue CNS revenue grew to $1.443 billion or 4.1% YoY on a constant currency basis CNS By Region CNS By Customer Type 14% 35% 15% 65% 71%  Enterprise CNS grew 8.7% YoY on a constant currency basis:  11% YoY from North America  14% YoY from Latin America North America EMEA Latin America Enterprise Total Enterprise CNS Revenue  4.2% YoY from EMEA(1) Wholesale ($ in Millions) $939  CNS revenue churn(2) decreased to 1.3% from 1.4% in 3Q13 and 1.6% $871 $871 4Q12 1Q13 $884 $905 in 1Q13 (1) Excludes EMEA UK Government (2) Level 3 measures revenue churn as disconnects of Core Network Services monthly recurring revenue as a percent of Core Network Services revenue. This calculation excludes usage. Also included in the churn calculations are customers who are disconnecting existing service, but are replacing their old service with new, generally higher speed services Issued on February 05, 2014 2Q13 3Q13 4Q13 4
  5. 5. Level 3 Gross Margin / SG&A Gross Margin ($ in millions) Gross Margin improved to 61.4% in $959 $984 $961 4Q13 from 59.4% in 4Q12 61.2% FY13 Gross Margin improved to 60.9%, 61.4% 3Q13 4Q13 59.4% compared to 59.2% for FY12 4Q12 SG&A expenses(1) declined by GM $ GM % approximately 6% YoY in 4Q13 SG&A(1)(2) For the full year, SG&A (1) as a percentage of revenue improved to 35.1% from 36.3% ($ in millions) $576 $552 $518 36.7% 34.2% 32.3% (1) SG&A excludes non-cash compensation and non-cash impairment charge (2) SG&A includes $30 million and $20 million of severance charges in 3Q13 and 4Q12, respectively Issued on February 05, 2014 4Q12 3Q13 SG&A 4Q13 SG&A % revenue 5
  6. 6. Level 3 Adjusted EBITDA and Capital Expenditures (2) Adjusted EBITDA ($ in millions) Excluding a Latin America tax benefit(1):  Adjusted EBITDA(2) was $456 million for 4Q13 $466 $407 $385 29.1%  Adjusted EBITDA 28.5% from 25.2% in 4Q12 margin(2) expanded to  For FY13, Adjusted EBITDA margin improved to 25.7% from 22.9% for FY12 25.2% 24.5% 4Q12 3Q13 Adj EBITDA 4Q13 (1) Adj EBITDA % of Revenue Capital Expenditures ($ in millions) For full year 2013, capital expenditures $194 $189 4Q12 were 12% of total revenue $198 3Q13 4Q13 (1) $10 million non-recurring Latin America non-income tax benefit in 4Q13 (2) Adjusted EBITDA includes $30 million and $20 million of severance charges in 3Q13 and 4Q12, respectively Issued on February 05, 2014 6
  7. 7. Level 3 Cash Flow Unlevered Cash Flow ($ in millions) $627  For FY13, Unlevered Cash Flow improved by $99 million compared to the FY12  For the FY13, Free Cash Flow improved by $118 million compared to the FY12 $528 FY12 FY13 Free Cash Flow ($ in millions)  For FY13, Free Cash flow was positive $29 million, excluding interest rate swap and accelerated cash interest payments ($47) ($165) FY12 Issued on February 05, 2014 FY13 7
  8. 8. Debt Maturity Profile  Net Debt to Adjusted EBITDA ratio was 4.8x, compared to 5.3x at the end of 2012  Focused on the low end of target leverage range of 3 to 5 times  Average interest rate at the end of 2013 was 6.8%, compared to 7.6% at the end of 2012  Cash on hand as of December 31, 2013 of $631 million $3,420 Dec 31, 2013 $3,471 ($ in Millions) $475 2014 2015 Issued on February 05, 2014 $640 $300 2016 2017 2018 2019 2020 2021 Note: Maturity chart excludes capital leases and other debt of approximately $87 million 8
  9. 9. Full Year 2014 Business Outlook  For the full year 2014, expect CNS revenue growth to be higher than the 2.9% growth we saw for the full year 2013  Expect Adjusted EBITDA growth of 11% to 14% for the full year 2014 compared to the full year 2013  From a starting point of $1.565 billion  Expect Free Cash Flow of $225 - $275 million for the full year 2014  Expect Depreciation and Amortization of approximately $750 million for the full year 2014 Issued on February 05, 2014 9
  10. 10. Appendix Issued on February 05, 2014 10
  11. 11. Revenue by Region Level 3 Communications ($ in millions) 4Q12 3Q13 4Q13 4Q13/ 4Q12 %Change Constant Currency 4Q13/ 3Q13 %Change Constant Currency 4.6 % (5.1)% 11.2 % 3.7 % 2.1 % 4.7 % 4Q13 % CNS FY 2012 FY2013 71 % 26 % 45 % $ 3,840 $ 1,541 $ 2,299 $ 3,949 $ 1,478 $ 2,471 FY2013/ FY2012 %Change Constant Currency CNS Revenue ($ in millions) North America Wholesale Enterprise $ $ $ 979 392 587 $ $ $ 987 365 622 $ 1,025 $ 374 $ 651 EMEA Wholesale Enterprise UK Government $ $ $ $ 228 87 99 42 $ $ $ $ 222 88 102 32 $ $ $ $ 223 89 105 29 (3.9)% 0.2 % 4.2 % (31.2)% (2.4)% (0.8)% (0.3)% (13.3)% 15 % 6% 7% 2% $ $ $ $ 911 364 372 175 $ $ $ $ 888 354 403 131 (2.6)% (3.7)% 8.1 % (23.1)% Latin America Wholesale Enterprise $ $ $ 184 41 143 $ $ $ 188 39 149 $ $ $ 195 41 154 11.3 % 3.6 % 13.5 % 4.7 % 6.2 % 4.3 % 14 % 3% 11 % $ $ $ 712 156 556 $ $ $ 754 160 594 10.7 % 5.5 % 12.1 % Total Wholesale $ 1,391 $ 520 $ 1,397 $ 492 $ 1,443 $ 504 4.1 % (3.5)% 2.9 % 1.9 % 100 % 35 % $ 5,463 $ 2,061 $ 5,591 $ 1,992 2.9 % (3.4)% Enterprise(1) $ $ $ 939 8.7 % 3.4 % 65 % $ 3,402 $ 3,599 6.8 % Total CNS Wholesale Voice Services and Other Revenue Total Revenue $ 1,391 $ 1,397 $ 1,443 4.1 % 2.9 % $ 5,463 $ 5,591 2.9 % 223 $ 1,614 172 $ 1,569 159 $ 1,602 (28.4)% (0.4)% (7.6)% 1.7 % 913 $ 6,376 $ 722 $ 6,313 (20.9)% (0.5)% ( 1) 871 905 2.8 % (4.2)% 7.5 % Includes EMEA UK Government 2013 Pro Forma EMEA CNS Revenue ($ in millions) FY 2013 EMEA Wholesale Enterprise $ $ $ Issued on February 05, 2014 888 354 534 1Q13 $ $ $ 223 89 134 2Q13 $ $ $ 220 88 132 3Q13 $ $ $ 222 88 134 4Q13 $ $ $ 223 89 134 © Level 3 Communications, Inc. All Rights Reserved. 11
  12. 12. Services Revenue Level 3 Communications ($ in millions) Core Network Services Revenue Colocation and Datacenter Services Transport and Fiber IP and Data Services Voice Services (Local and Enterprise) Total Core Network Services Wholesale Voice Services and Other Total Revenue 4Q12 $ $ $ 145 494 512 3Q13 $ $ $ 144 491 528 4Q13/ 4Q13/ 4Q12 3Q13 %Change %Change 4Q13 $ $ $ FY2012 FY2013 FY2013/ FY2012 %Change 154 499 554 6.2 % 1.0 % 8.2 % 6.9 % 1.6 % 4.9 % 11 % 35 % 38 % $ 561 $ 1,950 $ 2,002 $ 585 $ 1,962 $ 2,106 4.3 % 0.6 % 5.2 % 16 % 100 % $ 950 $ 5,463 $ 938 $ 5,591 (1.3)% 2.3 % $ 913 $ 6,376 $ 722 $ 6,313 (20.9)% (1.0)% $ 240 $ 1,391 $ 234 $ 1,397 $ 236 $ 1,443 (1.7)% 3.7 % 0.9 % 3.3 % $ 223 $ 1,614 $ 172 $ 1,569 $ 159 $ 1,602 (28.7)% (0.7)% (7.6)% 2.1 % 11% 4Q13 Percent of CNS Revenue by Service Type 4Q13 % CNS 38% Data Center and Colocation Services 16% Voice Services (Local and Enterprise) Transport & Fiber IP and Data Services 35% Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 12
  13. 13. Non-GAAP Reconciliation Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 13
  14. 14. Schedule To Reconcile To Non-GAAP Financial 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. Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 14
  15. 15. Schedule To Reconcile To Non-GAAP Financial Metrics 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. Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 15
  16. 16. Schedule To Reconcile To Non-GAAP Financial Metrics 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 noncash 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 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 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. Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 16
  17. 17. Schedule To Reconcile To Non-GAAP Financial Metrics 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. Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 17
  18. 18. Schedule To Reconcile To Non-GAAP Financial Metrics 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 longterm 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 Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 18
  19. 19. Schedule To Reconcile To Non-GAAP Financial Metrics 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 longterm 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. Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 19
  20. 20. Schedule To Reconcile To Non-GAAP Financial Metrics Level 3 Communications ($ in millions) (unaudited) 4Q12 3Q13 4Q13 FY2012 FY2013 Core Network Services Wholesale Voice Services and Other Total Revenue $ 1,391 $ 1,397 $ 1,443 $ 5,463 $ 5,591 $ 223 $ 1,614 $ 172 $ 1,569 $ 159 $ 1,602 $ 913 $ 6,376 $ 722 $ 6,313 Adjusted EBITDA(1) Capital Expenditures $ $ 407 198 $ $ 385 194 $ $ 466 189 $ 1,459 $ 743 $ 1,624 $ 760 Unlevered Cash Flow(1) $ 325 $ 88 $ 358 $ 528 $ 627 Free Cash Flow(1) $ 202 $ (90) $ 197 $ (165) $ (47) Gross Margin 59.4 % 61.2 % 61.4 % 59.2 % 60.9 % Adjusted EBITDA Margin (1) 25.2 % 24.5 % 29.1 % 22.9 % 25.7 % (1) See schedule of non-GAAP metrics for definition and reconciliation to GAAP measures Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 20
  21. 21. Schedule To Reconcile To Non-GAAP Financial Metrics Level 3 Communications, Inc. and Consolidated Subsidiaries Adjusted EBITDA 2012 Q4 ($ in millions) Consolidated Net Income (Loss) Income Tax Expense (Benefit) Total Other Expense Depreciation and Amortization Expense Non-cash Compensation Expense Non-cash Impairment Consolidated Adjusted EBITDA $ Consolidated Revenue Adjusted EBITDA Margin Bonus-related Non-cash Compensation FY 2013 Pro Forma Adjusted EBITDA, adjusted for Bonus-related Non-cash Compensation FY 2013 Pro Forma Adjusted EBITDA Margin, adjusted for Bonusrelated Non-cash Compensation Issued on February 05, 2014 2013 Q1 (56) 13 231 $ Q2 Q3 Q4 FY 2012 (78) $ 14 219 (24) $ 11 153 (21) $ 14 159 14 (1) 206 199 48 — 387 $ 203 30 — 385 $ 204 36 7 466 $ 186 33 — 407 $ 194 37 — 386 $ $ 1,614 $ 1,577 $ 1,565 $ 1,569 $ 1,602 24.5 % 24.7 % 24.5 % 29.1 % 25.2 % $ (422) 48 949 FY 2013 $ (109) 38 737 $ 749 135 — 1,459 $ 800 151 7 1,624 $ 6,376 $ 6,313 22.9 % 25.7 % $ 15 $ 15 $ 11 $ 18 $ 59 $ 371 $ 372 $ 374 $ 448 $ 1,565 23.5 % 23.8 % 23.8 % © Level 3 Communications, Inc. All Rights Reserved. 28.0 % 24.8 % 21
  22. 22. Schedule To Reconcile To Non-GAAP Financial Metrics Level 3 Communications, Inc. and Consolidated Subsidiaries Cash Flows 2012 Q4 ($ in millions) Net Cash Provided by Operating Activities Capital Expenditures Free Cash Flow Cash Interest Paid Interest Income Unlevered Cash Flow Issued on February 05, 2014 $ $ $ 400 (198) 202 123 — 325 2013 Q3 $ $ $ Q4 104 $ (194) (90) $ 178 — 88 $ © Level 3 Communications, Inc. All Rights Reserved. 386 (189) 197 161 — 358 FY 2012 $ $ $ 578 (743) (165) 695 (2) 528 FY 2013 $ $ $ 713 (760) (47) 674 — 627 22
  23. 23. Schedule To Reconcile To Non-GAAP Financial Metrics Level 3 Communications, Inc. and Consolidated Net Debt to LTM Adjusted EBITDA ratio as of December 31, 2013 ($ in millions) Debt $ Cash and Cash Equivalents 8,392 (631) Net Debt $ 7,761 LTM Adjusted EBITDA $ 1,624 Net Debt to LTM Adjusted EBITDA Ratio Issued on February 05, 2014 © Level 3 Communications, Inc. All Rights Reserved. 4.8 23

×