4Q14 Earnings Presentation

February 4, 2015

Fourth Quarter and Full Year 2014 Results

Issued on February 4, 2015

Cautionary Statement & Pro Forma Adjustment

2

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 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 the tw telecom and 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.

Level 3 and tw telecom results on a standalone basis exclude intercompany eliminations, acquisition-related expenses, and acquisition

accounting adjustments associated with the acquisition of tw telecom in 2014.

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 fourth quarter of

2013 was $18 million. Network Related Expenses, SG&A, Adjusted EBITDA and Adjusted EBITDA margin for the fourth quarter of

2013 have been adjusted on a pro forma basis to include the $18 million to present the results on a consistent basis with the accrual of

bonus compensation expense in 2014 as 100 percent cash.


Significant Progress in Financial Performance

2014 Overview

Completion of the tw telecom Acquisition

Steady Progress Against Integration Plans

Streamlining Organization, Products, Networks and Support Systems


Level 3 Standalone Highlights - Full Year 2014

4

6.1% YoY CNS Revenue Growth

19% YoY Adjusted EBITDA Growth

10% YoY Enterprise CNS

Revenue Growth

Free Cash Flow of

$325 MillionCompared to Negative $47 Million in 2013

Note: Revenue growth rate percentage is calculated from full year 2013 to full year 2014 on a standalone and constant currency basis


$1,443

$1,497

4Q13 4Q14

Level 3 Standalone CNS and Enterprise Revenue - Fourth Quarter 2014

5

North

AmericaEMEA Latin

America

11%

CNS Revenue($ in Millions)

Fourth Quarter

Enterprise CNS Revenue Growth

Note: EMEA Enterprise growth includes UK Government Business.

Excluding UK Government Business, EMEA Enterprise grew 12% at constant currency and 9.5% as reported

5.1% GrowthConstant Currency

9.0%Constant Currency


6.7%As Reported

(2.6%)As Reported

3.7% GrowthAs Reported

Total Enterprise


8.3%As Reported


Revenue Churn

6

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

Level 3 Standalone - Revenue Churn

1.6%

1.5%

1.4%

1.3%

1.5%

1.4% 1.4% 1.4%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14


Level 3 Standalone Expenses - Fourth Quarter 2014

7

Network Related and SG&A Expenses($ in millions)

Network Access Margin

Network Access Costs($ in millions)

(1) Network Related Expenses and SG&A and Network Related and SG&A margins in the fourth quarter and the full year of 2013 have been

adjusted on a pro forma basis to include the $18 million and $59 million, respectively, to present the results on a consistent basis with the accrual

of bonus compensation expense in 2014 as 100 percent cash

$296 $301

$247 $245

33.9%33.4%

4Q13 4Q14

NRE SG&A NRE and SG&A Expenses % Total Revenue

$546$543

$618 $619

4Q13 4Q14

61.4%62.1%

4Q13 4Q14


Level 3 Standalone Adjusted EBITDA - Fourth Quarter and Full Year 2014

(1) Adjusted EBITDA and Adjusted EBITDA margin in the fourth quarter and the full year of 2013 have been adjusted on a pro forma basis to

include the $18 million and $59 million of equity based bonus compensation expense, respectively, to present the results on a consistent basis

with the accrual of bonus compensation expense in 2014 as 100 percent cash

$448

$470

28.0%

28.8%

4Q13 4Q14

Adjusted EBITDA Adjusted EBITDA Margin

$1,565

$1,869

24.8%

28.8%

FY13 FY14

Adjusted EBITDA Adjusted EBITDA Margin

Fourth Quarter Adjusted EBITDA(1)

($ in millions)

Full Year Adjusted EBITDA(1)

($ in millions)

Strong Improvement in Margin

19%

Growth


$760 $847

FY13 FY14

Level 3 Standalone Capital Expenditures and Free Cash Flow - FY2014

9

FY2014 Free Cash Flow($ in millions)

$(47)

$325

FY13 FY14

$372 million

Improvement13%

Total Revenue

FY2014 Capital Expenditures($ in millions)


Standalone tw telecom Revenue

10

$400 $433

4Q13 4Q14

4Q14 tw telecom Revenue($ in millions)

FY2014 tw telecom Revenue($ in millions)

$1,564 $1,685

FY13 FY14

8%

Growth

Note: Results are based on tw telecom’s definitions for these metrics


$141 $156

4Q13 4Q14

11

Standalone tw telecom M-EBITDA

4Q14 tw telecom M-EBITDA($ in millions)

FY2014 tw telecom M-EBITDA($ in millions)

$553

$579

FY13 FY14

5%

Growth

Note: Results are based on tw telecom’s definitions for these metrics


Wholesale Enterprise

Pro Forma Combined Company CNS Revenue

12

(1) Regional and Customer revenue mix based on fourth quarter 2014 CNS revenue results

(2) All results include the effects of intercompany eliminations and purchase accounting adjustments with tw telecom

North America EMEA Latin America

Metric

($ in millions) 4Q14 4Q13 FY14

CNS Revenue $1,915 $1,828 $7,541

WVS Revenue $137 $159 $582

Total Revenue $2,052 $1,987 $8,123

79%11%

10%

71%29%

CNS Revenue Mix by Region CNS Revenue Mix by Customer Type


Pro Forma Combined Company CNS Services Revenue – 4Q14

13

IP & Data

Services

Colocation &

Datacenter

Transport

& Fiber

Voice

Services

$873M8.9%

YoY Growth

5.5% YoY Decline

0% YoY Growth

4.5% YoY Growth

$155M

$585M

$302M

4Q14 Percent of CNS

Revenue by Service Type

Note: Growth rate percentage is calculated from fourth quarter 2013 to fourth quarter 2014 on a pro forma combined company basis, as reported

IP & Data

Transport &

Fiber

Colocation &

Datacenter

Voice

Services46%

30%16%

8%


1) See schedule of non-GAAP metrics for definition and reconciliation to GAAP measures

2) Fourth Quarter 2013 and Fourth Quarter 2014 Pro Forma Combined Company results reflect a full three months of both Level 3’s and tw

telecom’s results.

3) Full year 2014 Pro Forma Combined Company results reflect a full year of both Level 3’s and tw telecom’s results

Pro Forma Combined Company Adjusted EBITDA

Metric($ in millions)

4Q14(2) 4Q13(2) FY14(3)

Adjusted EBITDA Excluding Acquisition-Related Expenses(1)

$625 $587 $2,443

Adjusted EBITDA Including Acquisition-Related Expenses(1)

$469 $587 $2,271

Adjusted EBITDA Margin Excluding Acquisition-Related Expenses(1)

30.5% 29.5% 30.1%

Adjusted EBITDA Margin Including Acquisition-Related Expenses(1)

22.9% 29.5% 28.0%


Overview

$240 million expected total run-rate synergies

$200 million of expected annualized run-rate Adjusted EBITDA savings

• Expect to achieve 70% ($140M) of annualized Adjusted EBITDA savings within 18

months of closing(10/31/2014)

• Achieved $38 million in run-rate Adjusted EBITDA synergies in 4Q14

$40 million of expected capital expenditure synergies

• Expect to achieve all capital expenditure synergies in 2015

• Offset by integration related capital expenditures of approximately $70 million

Total 2014 Integration Expenses of $60 million

• Expect expenses of $50 million for 2015

Integration Synergies and Expenses


Pro forma

Dec. 31, 2014

$333 $300

$2,315

$3,471

$640

$3,600

$500

2015 2016 2017 2018 2019 2020 2021 2022 2023

16

As of Dec. 31, 2014, on a consolidated basis, the company had cash and cash equivalents of approximately $580 million

Shares outstanding as of Dec. 31, 2014, were approximately 341 million

On a fully diluted basis, shares outstanding are approximately 358 million

Net Debt to Adjusted EBITDA ratio of 4.4x (pro forma basis and excluding acquisition-related expenses), compared to 4.8x

(standalone Level 3) in the fourth quarter 2013

Focused on the low end of target leverage range of 3 to 5 times

Note: Maturity chart excludes capital leases and other debt of approximately $207 million

Pro forma debt includes capital markets transactions that were completed during and immediately after the end of the fourth quarter 2014

and the application of the net proceeds of those transactions

($ in Millions)

Pro Forma Combined Company Capital Structure Highlights

As of Dec. 31, 2014, approximately $142 million of the $475 million aggregate principal amount of the

company’s 7% Convertible Senior Notes due 2015 were converted into approximately 5 million shares of the

company’s common stock


Adjusted EBITDA Growth of 12% – 16%

Free Cash Flow $550 - $600

GAAP Interest Expense $680

Cash Interest Expense $640

Capital Expenditures 15% of Total Revenue

Depreciation & Amortization $1,160

Cash and GAAP Income Tax $60

Non-cash Compensation $120

2015 Business Outlook

Note: ($ in Millions)

Please refer to Fourth Quarter and Full Year 2014 Earnings Release for further details


Appendix


Financial and Operational Metrics – Ending 4Q14

19

CNS Revenue by Geography

79% North America

11% EMEA

10% Latin America

CNS Revenue by Product Group

46% IP & Data

30% Transport & Fiber

16% Voice Services

8% Colocation & Datacenter

Shares Outstanding (Reported)

341 million

Shares Outstanding (Diluted)

358 million

NOL Balance (As of 12/31/14)

$10.3 billion

Net Debt to Adjusted

EBITDA ratio

4.4x

Focused on the low end of

target leverage range of 3

to 5 times

Cash and cash equivalents

~$580 million

Level 3 Standalone Results: Revenue(1)Standalone Level 3 Revenue Metrics Combined Company Operational/Financial Metrics

Headcount

Total Employees: 13,500

Total QBHC: ~1,400

Customers

Total: ~52,000

94% Enterprise

6% Wholesale

On-net Buildings

Total: ~40,600

79% North America

5% EMEA

16% Latin America

CNS Revenue by Customer

71% Enterprise

29% Wholesale

CNS Revenue by Currency

86% USD

6% GBP

3% EUR

3% BRL

2% All Other Currencies

CNS Revenue by Geography

73% North America

14% EMEA

13% Latin America

CNS Revenue by Product Group

40% IP & Data

35% Transport & Fiber

16% Voice Services

9% Colocation & Datacenter

CNS Revenue by Customer

68% Enterprise

32% Wholesale

CNS Revenue by Currency(3Q14)

82% USD

7% GBP

4% EUR

4% BRL

3% All Other Currencies

Combined Company Revenue Metrics


Level 3 Non-GAAP Reconciliation


Schedule To Reconcile To Non-GAAP Financial Metrics

21

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.



22

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).

Network Access Costs includes leased capacity, right-of-way costs, access charges, satellite transponder

lease costs and other third party costs directly attributable to providing access to customer locations from

the Level 3 network, but excludes Network Related Expenses, and depreciation and amortization. Network

Access Costs do not include any employee expenses or impairment expenses; these expenses are

allocated to Network Related Expenses or Selling, General and Administrative Expenses.

Network Related Expenses includes certain expenses associated with the delivery of services to

customers and the operation and maintenance of the Level 3 network, such as facility rent, utilities,

maintenance and other costs, each related to the operation of its communications network, as well as

salaries, wages and related benefits (including non-cash stock-based compensation expenses) associated

with personnel who are responsible for the delivery of services, operation and maintenance of its

communications network, and accretion expense on asset retirement obligations, but excludes depreciation

and amortization.



23

Network Access Margin ($) is defined as total Revenue less Network Access Costs from the

Consolidated Statements of Operations, and excludes Network Related Expenses.

Network Access Margin (%) is defined as Network Access Margin ($) divided by total Revenue.

Management believes that network access 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.



24

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.



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 Pro Forma to include tw telecom results excluding acquisition-related expenses.

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.



26

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.


($ in millions) 4Q13 4Q14 FY2013 FY2014

Consolidated Net Income (Loss) 14$ 45$ (109)$ 293$

Income Tax Expense (Benefit) (1) (105) 38 (78)

Total Other Expense 206 250 737 757

Depreciation and Amortization Expense 204 187 800 745

Non-cash Compensation Expense 36 24 151 72

Bonus-Related Non-Cash Compensation (18) — (59) —

Non-cash Impairment 7 1 7 1

Acquisition-Related Expenses — 68 — 79

Consolidated Adjusted EBITDA 448$ 470$ 1,565$ 1,869$

Consolidated Revenue 1,602$ 1,634$ 6,313$ 6,497$

Adjusted EBITDA Margin 28.0 % 28.8 % 24.8 % 28.8 %

Level 3 Communications, Inc. and Consolidated

Standalone Adjusted EBITDA Reconciliation

27




($ in millions) 4Q13 4Q14 FY2013 FY2014

Net Cash Provided by Operating

Activities 386$ 343 713$ 1,108

Capital Expenditures (189) (239) (760) (847)

Cash Interest/Acquisition-Related

Expenditures — 59 — 64

Free Cash Flow 197$ 163$ (47)$ 325$

Cash Interest Paid 161 190 674 598

Cash Interest-Related Expenditures — (36) — (36)

Interest Income — — — (1)

Unlevered Cash Flow 358$ 317$ 627$ 886$

Standalone Cash Flows

Level 3 Communications, Inc. and Consolidated Subsidiaries


Schedule To Reconcile To Non-GAAP Financial Metrics ($ in millions)

Legacy

Level 3

Add: Nov and

Dec

Intercompany

Transactions

Standalone

Level 3

Standalone

tw

Intercompany

Eliminations

Acquisition

Accounting Total

Core Network Services (CNS) Revenue

North America 1,083$ 5$ 1,088$ 433$ (15)$ —$ 1,506$

Wholesale 359$ 5$ 364$ 94$ (15)$ —$ 443$

Enterprise 724$ —$ 724$ 339$ —$ —$ 1,063$

EMEA 218$ —$ 218$ —$ —$ —$ 218$

Wholesale 75$ —$ 75$ —$ —$ —$ 75$

Enterprise 143$ —$ 143$ —$ —$ —$ 143$

Latin America 191$ —$ 191$ —$ —$ —$ 191$

Wholesale 41$ —$ 41$ —$ —$ —$ 41$

Enterprise 150$ —$ 150$ —$ —$ —$ 150$

Total CNS Revenue 1,492$ 5$ 1,497$ 433$ (15)$ —$ 1,915$

Wholesale Voice Services and Other 137 — 137 — — 137

Total Revenue 1,629$ 5$ 1,634$ 433$ (15)$ —$ 2,052$

Network Access Costs (616) (4) (620) (123) 11 — (732)

Network Related Expenses (303) (1) (304) (77) 3 — (378)

Selling, General and Administrative Expenses (333) — (333) (234) — — (567)

Add back: Non-Cash Compensation Expenses 24 — 24 69 — — 93

Add back: Non-Cash Impairment 1 — 1 — — — 1

Adjusted EBITDA Including Acquisition-Related

Expenses 402$ —$ 402$ 68$ (1)$ —$ 469$

Transaction Costs 15$ —$ 15$ 85$ —$ —$ 100$

Integration Costs 53 — 53 3 — — 56

Total Acquisition-Related Expenses 68$ —$ 68$ 88$ —$ —$ 156$

Adjusted EBITDA Excluding Acquisition-Related

Expenses 470$ —$ 470$ 156$ (1)$ —$ 625$

Capital Expenditures 239$ —$ 239$ 107$ —$ —$ 346$

Colocation and Datacenter Services 142$ 142$ 14$ (1)$ —$ 155$

Transport and Fiber 521 4 525 72 (12) — 585

IP and Data Services 594 1 595 280 (2) — 873

Voice Services (Local and Enterprise) 235 — 235 67 — — 302

Total Core Network Services 1,492$ 5$ 1,497$ 433$ (15)$ —$ 1,915$

Wholesale Voice Services and Other 137 137 — — — 137

Total Revenue 1,629$ 5$ 1,634$ 433$ (15)$ —$ 2,052$

4Q14 Pro Forma Combined Company Results



($ in millions)

Legacy

Level 3

Add: Nov and

Dec

Intercompany

Transactions

Standalone

Level 3

Standalone

tw

Intercompany

Eliminations

Acquisition

Accounting Total


North America 4,240$ 5$ 4,245$ 1,685$ (58)$ (1)$ 5,871$

Wholesale 1,462$ 5$ 1,467$ 362$ (58)$ (1)$ 1,770$

Enterprise 2,778$ —$ 2,778$ 1,323$ —$ —$ 4,101$

EMEA 891$ —$ 891$ —$ —$ —$ 891$

Wholesale 328$ —$ 328$ —$ —$ —$ 328$

Enterprise 563$ —$ 563$ —$ —$ —$ 563$

Latin America 779$ —$ 779$ —$ —$ —$ 779$

Wholesale 165$ —$ 165$ —$ —$ —$ 165$

Enterprise 614$ —$ 614$ —$ —$ —$ 614$

Core Network Services 5,910$ 5$ 5,915$ 1,685$ (58)$ (1)$ 7,541$

Wholesale Voice Services and Other 582 — 582 — — 582

Total Revenue 6,492$ 5$ 6,497$ 1,685$ (58)$ (1)$ 8,123$

Network Access Costs (2,450) (4) (2,454) (486) 46 — (2,894)

Network Related Expenses (1,204) (1) (1,205) (262) 11 — (1,456)

Selling, General and Administrative Expenses (1,121) — (1,121) (550) — — (1,671)




Expenses 1,790$ —$ 1,790$ 483$ (1)$ (1)$ 2,271$

Transaction Costs 22$ —$ 22$ 90$ —$ —$ 112$

Integration Costs 57 — 57 3 — — 60

Total Acquisition-Related Expenses 79$ —$ 79$ 93$ —$ —$ 172$


Expenses 1,869$ —$ 1,869$ 576$ (1)$ (1)$ 2,443$

Capital Expenditures 847$ —$ 847$ 408$ —$ —$ 1,255$

Colocation and Datacenter Services 581$ —$ 581$ 49$ (4)$ —$ 626$

Transport and Fiber 2,041 4 2,045 299 (48) (1) 2,295

IP and Data Services 2,345 1 2,346 1,069 (6) — 3,409

Voice Services (Local and Enterprise) 943 — 943 268 — — 1,211

Total Core Network Services 5,910$ 5$ 5,915$ 1,685$ (58)$ (1)$ 7,541$

Wholesale Voice Services and Other 582 — 582 — — — 582

Total Revenue 6,492$ 5$ 6,497$ 1,685$ (58)$ (1)$ 8,123$

FY2014 Pro Forma Combined Company Results


Schedule To Reconcile To Non-GAAP Financial Metrics ($ in millions)

Legacy Level

3

Add: Intercompany

Transactions Standalone Level 3 Standalone tw

Intercompany

Eliminations

Acquisition

Accounting Total


North America 1,025$ —$ 1,025$ 400$ (15)$ —$ 1,410$

Wholesale 374$ —$ 374$ 79$ (15)$ —$ 438$

Enterprise 651$ —$ 651$ 321$ —$ —$ 972$

EMEA 223$ —$ 223$ —$ —$ —$ 223$

Wholesale 89$ —$ 89$ —$ —$ —$ 89$

Enterprise 134$ —$ 134$ —$ —$ —$ 134$

Latin America 195$ —$ 195$ —$ —$ —$ 195$

Wholesale 41$ —$ 41$ —$ —$ —$ 41$

Enterprise 154$ —$ 154$ —$ —$ —$ 154$

Total CNS Revenue 1,443$ —$ 1,443$ 400$ (15)$ —$ 1,828$


Total Revenue 1,602$ —$ 1,602$ 400$ (15)$ —$ 1,987$

Network Access Costs (618) — (618) (115) 11 — (722)

Network Related Expenses (298) — (298) (58) 3 — (353)

Selling, General and Administrative Expenses (263) — (263) (95) — — (358)



Subtract: Non-Cash Stock-Based Bonus (18) — (18) — — — (18)


Expenses 448$ —$ 448$ 140$ (1)$ —$ 587$

Transaction Costs — — — — — — —

Integration Costs — — — — — — —

Total Acquisition-Related Expenses — — — — — — —


Expenses 448$ —$ 448$ 140$ (1)$ —$ 587$

Capital Expenditures 189$ —$ 189$ 208$ —$ —$ 397$

Colocation and Datacenter Services 154$ —$ 154$ 11$ (1)$ —$ 164$

Transport and Fiber 496 — 496 76 (12) — 560

IP and Data Services 557 — 557 247 (2) — 802

Voice Services (Local and Enterprise) 236 — 236 66 — — 302

Total Core Network Services 1,443$ —$ 1,443$ 400$ (15)$ —$ 1,828$


Total Revenue 1,602$ —$ 1,602$ 400$ (15)$ —$ 1,987$

4Q13 Pro Forma Combined Company Results


tw telecom Non-GAAP Reconciliation


Pursuant to Regulation G, the Company is hereby providing definitions of tw telecom’s non-GAAP financial metrics and reconciliations to the most directly comparable GAAP

measures.

The following describes and reconciles those financial measures as reported under 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.

Management provides financial measures of tw telecom using U.S. generally accepted accounting principles (“GAAP”) as well as adjustments to GAAP measures to describe

its business trends, including Modified EBITDA. Management believes that its definition of Modified EBITDA is a standard measure of operating performance and liquidity

that is commonly reported and widely used by analysts, investors, and other interested parties in the telecommunications industry because it eliminates many differences in

financial, capitalization, and tax structures, as well as non-cash and non-operating income or charges to earnings. Modified EBITDA is not intended to replace operating

income (loss), net income (loss), cash flow, and other measures of financial performance and liquidity reported in accordance with GAAP. Management uses Modified

EBITDA internally to assess on-going operations and it is the basis for various financial covenants contained in the Company’s debt agreements and for operating

performance and liquidity. Modified EBITDA is reconciled to Net Income (Loss), the most comparable GAAP measure for operating performance within the Consolidated

Operations Highlights.

In addition, management uses unlevered and levered free cash flow, which measure the ability of M-EBITDA to cover capital expenditures. The Company uses these cash

flow definitions to eliminate certain non-cash costs. Levered and unlevered free cash flow are reconciled to Net Cash provided by operating activities.

Modified EBITDA (or “M-EBITDA”) is defined as net income or loss before depreciation, amortization, accretion, impairment charges and other income and losses, interest

expense, debt extinguishment costs, interest income, income tax expense or benefit, cumulative effect of change in accounting principle, and non-cash stock-based

compensation expense. The Company defines Modified EBITDA margin as M-EBITDA divided by total revenue.

Unlevered free cash flow is defined as Modified EBITDA less capital expenditures, which is reconciled to Net Cash provided by (used in) operating activities.

Levered free cash flow is defined as Modified EBITDA less capital expenditures and net interest expense from operations (excluding debt extinguishment costs, non-cash

interest expense and deferred debt costs), which is reconciled to Net Cash provided by (used in) operating activities.

Schedule To Reconcile To tw telecom Non-GAAP Financial Metrics


($ in millions)

(unaudited)

Metric ($ in millions) 4Q14 4Q13 Full Year 2014 Full Year 2013

Revenue

Data and Internet services 271$ 235$ 1,029$ 893$

Voice services 78 77 310 307

Network services 53 60 223 251

Taxes and fees 26 21 99 83

Intercarrier compensation 5 7 24 30

Total Revenue 433$ 400$ 1,685$ 1,564$

Net Income (Loss) (60)$ 15$ (26)$ 36$

Income Tax (Benefit) Expense (49)$ 13$ (20)$ 34$

Interest Expenses, net of

Interest Income (1) 15$ 23$ 85$ 85$

Debt Extinguishment Costs —$ —$ 1$ 39$

Non-Cash Interest Expense and

Deferred Debt Costs (1) —$ 2$ 5$ 11$

Non-Cash Stock Compensation 69$ 8$ 96$ 39$

Depreciation, Amortization,

Accretion 93$ 80$ 345$ 309$

Modified EBITDA 68$ 141$ 486$ 553$

Acquisition-related expenses 88$ —$ 93$ —$

Modified EBITDA excluding

acquisition-related expenses 156$ 141$ 579$ 553$

tw telecom inc. (standalone)

(1) Net interest expense in the fourth quarter of 2014 benefited from the extinguishment of tw telecom’s long-term debt

obligations.



Consolidated Level 3 Non-GAAP Reconciliation



($ in millions)

Debt 11,366$

Cash and Cash Equivalents (580)

Net Debt 10,786$

Pro Forma LTM Adjusted EBITDA (1) 2,443$

Net Debt to Pro Forma LTM Adjusted EBITDA Ratio 4.4

Level 3 Communications, Inc. and Consolidated Subsidiaries

(1) Please refer to the computation on Tab PF Combined Company Results (FY2014).

As Reported Net Debt to Pro Forma LTM Adjusted EBITDA ratio as of December 31, 2014

4Q14 Earnings Presentation

Investor Relations

Transcript of 4Q14 Earnings Presentation