Level 3 Parent, LLC - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
8-K/A - 8-K/A - Level 3 Parent, LLC	lvlt_8-kx081514.htm
EX-99.3 - EXHIBIT 99.3 - Level 3 Parent, LLC	a993unauditedproformaq2.htm

Exhibit 99.2

tw telecom inc.

CONDENSED CONSOLIDATED BALANCE SHEETS



	June 30, 2014			December 31, 2013
	(unaudited)
	(amounts in thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	190,163		$	284,419
Investments	173,564			194,576
Receivables, less allowances of $7,087 and $6,748, respectively	106,335			107,258
Prepaid expenses and other current assets	25,745			22,545
Deferred income taxes	54,026			54,026
Total current assets	549,833			662,824
Property, plant and equipment	4,849,680			4,675,335
Less accumulated depreciation	(3,115,543		)	(2,980,379		)
	1,734,137			1,694,956
Deferred income taxes	79,426			96,087
Goodwill	412,694			412,694
Intangible assets, net of accumulated amortization	9,089			11,555
Other assets, net	42,245			44,344
Total assets	$	2,827,424		$	2,922,460
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	70,732		$	38,454
Deferred revenue	49,248			48,371
Accrued taxes, franchise and other fees	54,029			55,043
Accrued interest	22,732			21,606
Accrued payroll and benefits	54,469			52,604
Accrued carrier costs	4,439			25,507
Current portion debt and capital lease obligations, net	8,147			32,470
Other current liabilities	31,160			35,241
Total current liabilities	294,956			309,296
Long-term debt and capital lease obligations, net	1,914,878			1,916,775
Long-term deferred revenue	19,792			20,046
Other long-term liabilities	42,838			40,274
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.01 par value, 20,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.01 par value, 439,800 shares authorized, 153,760 shares issued	1,538			1,538
Additional paid-in capital	1,701,063			1,701,356
Treasury stock, 15,708 and 12,593 shares, at cost, respectively	(455,082		)	(357,974		)
Accumulated deficit	(692,717		)	(708,979		)
Accumulated other comprehensive income	158			128
Total stockholders’ equity	554,960			636,069
Total liabilities and stockholders’ equity	$	2,827,424		$	2,922,460

See accompanying notes to condensed consolidated financial statements.

tw telecom inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(amounts in thousands, except per share amounts)
Revenue:
Data and Internet services	$	253,031		$	220,063		$	496,702		$	431,784
Voice services	77,919			76,437			155,280			152,467
Network services	56,667			64,079			115,034			129,034
Service revenue	387,617			360,579			767,016			713,285
Taxes and fees	25,412			20,622			48,164			41,216
Intercarrier compensation	6,674			8,282			12,816			16,191
Total revenue	419,703			389,483			827,996			770,692
Costs and expenses ^(a):
Operating (exclusive of depreciation, amortization and accretion shown separately below)	181,391			164,131			355,430			325,213
Selling, general and administrative	108,613			96,438			215,445			190,000
Depreciation, amortization and accretion	84,185			75,652			166,641			150,047
Total costs and expenses	374,189			336,221			737,516			665,260
Operating income	45,514			53,262			90,480			105,432
Interest expense	(24,873		)	(21,544		)	(50,521		)	(49,884		)
Debt extinguishment costs	—			(399		)	(1,282		)	(399		)
Interest income	109			173			257			450
Income before income taxes	20,750			31,492			38,934			55,599
Income tax expense	9,601			14,145			17,994			25,108
Net income	$	11,149		$	17,347		$	20,940		$	30,491
Earnings per share:
Basic	$	0.08		$	0.12		$	0.15		$	0.20
Diluted	$	0.08		$	0.11		$	0.15		$	0.20
Weighted average shares outstanding:
Basic	136,360			147,071			137,219			148,095
Diluted	137,814			148,342			139,172			151,081

^(a) Includes non-cash stock-based employee compensation expense (Note 7):



Operating	$	545	$	545	$	1,084	$	1,128
Selling, general and administrative	$	8,107	$	7,869	$	16,954	$	16,748

See accompanying notes to condensed consolidated financial statements.

tw telecom inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
	(amounts in thousands)
Net income	$	11,149	$	17,347		$	20,940	$	30,491
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities	40		(28		)	30		(20		)
Other comprehensive income (loss), net of tax	40		(28		)	30		(20		)
Comprehensive income	$	11,189	$	17,319		$	20,970	$	30,471

See accompanying notes to condensed consolidated financial statements.

tw telecom inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Six Months Ended June 30,
	2014			2013
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	20,940		$	30,491
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	166,641			150,047
Deferred income taxes	17,252			24,289
Stock-based compensation expense	18,038			17,876
Loss on debt extinguishment	1,282			399
Amortization of discount on debt and deferred debt issue costs	3,212			7,850
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other assets	(1,629		)	(14,046		)
Accounts payable, deferred revenue and other liabilities	(1,231		)	(10,346		)
Net cash provided by operating activities	224,505			206,560
Cash flows from investing activities:
Capital expenditures	(195,998		)	(187,509		)
Purchases of investments	(109,275		)	(157,523		)
Proceeds from sale of investments	129,509			125,041
Other investing activities, net	5,841			(465		)
Net cash used in investing activities	(169,923		)	(220,456		)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	10,778			50,874
Taxes paid related to net share settlement of equity awards	(18,941		)	(18,315		)
Purchases of treasury stock	(112,564		)	(197,310		)
Excess tax benefits from stock-based compensation	794			944
Proceeds from modification of debt, net of financing costs	—			49,684
Retirement of debt obligations	(24,418		)	(256,348		)
Payment of debt and capital lease obligations	(4,487		)	(2,096		)
Net cash used in financing activities	(148,838		)	(372,567		)
Decrease in cash and cash equivalents	(94,256		)	(386,463		)
Cash and cash equivalents at beginning of period	284,419			806,728
Cash and cash equivalents at end of period	$	190,163		$	420,265
Supplemental disclosures of cash flow information:
Cash paid for interest	$	46,632		$	43,540
Cash paid for income taxes, net of refunds	$	2,314		$	4,477
Cash paid for debt extinguishment costs	$	939		$	469
Non-cash investing & financing activities:
Addition of capital lease obligations	$	1,352		$	4,302

See accompanying notes to condensed consolidated financial statements.

tw telecom inc.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2014

(Unaudited)



	Common Stock			Treasury Stock					Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income		Total stockholders’ equity
	Shares	Amount		Shares		Amount			Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income		Total stockholders’ equity
	(amounts in thousands)
Balance at December 31, 2013	153,760	$	1,538	(12,593	)	$	(357,974	)	$	1,701,356		$	(708,979	)	$	128	$	636,069
Net income	—	—		—		—			—			20,940			—		20,940
Other comprehensive income, net of tax	—	—		—		—			—			—			30		30
Excess tax benefits from stock-based compensation, net	—	—		—		—			610			—			—		610
Purchases of treasury stock	—	—		(3,674	)	(112,564		)	—			—			—		(112,564		)
Exercise of stock options net of (withholdings) to satisfy employee tax obligations upon vesting of stock awards	—	—		651		18,670			(23,737		)	(3,096		)	—		(8,163		)
Stock-based compensation	—	—		(92	)	(3,214		)	22,834			(1,582		)	—		18,038
Balance at June 30, 2014	153,760	$	1,538	(15,708	)	$	(455,082	)	$	1,701,063		$	(692,717	)	$	158	$	554,960

See accompanying notes to condensed consolidated financial statements.

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Description of Business and Capital Structure

tw telecom inc. (together with its wholly-owned subsidiaries, the “Company”) is a leading national provider of managed network services, specializing in business Ethernet, data networking, converged, Internet Protocol ("IP") based virtual private network or "IP VPN", Internet access, voice, including voice over Internet Protocol or “VoIP”, and network security services to enterprise organizations, including public sector entities, and carriers throughout the United States, including their global locations.

The Company has one class of common stock outstanding with one vote per share. The Company also is authorized to issue shares of preferred stock. The Company’s Board of Directors has the authority to establish voting powers, preferences and special rights for the preferred stock. No shares of preferred stock have been issued.

See Note 2, "Recent Developments", for information regarding the Agreement and Plan of Merger with Level 3 Communications, Inc. ("Level 3").

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements 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 U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These condensed consolidated financial statements should therefore be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include all adjustments of a normal, recurring nature that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the interim periods presented. The results of operations for an interim period are not necessarily indicative of the results of operations for a full fiscal year.

Prior Year Reclassifications

Beginning January 1, 2014, the Company is reporting revenue from taxes and fees in a separate line item on the condensed consolidated statements of operations and is reporting revenue from dedicated high capacity Ethernet services in data and Internet services rather than network services. These reclassifications have been made in the prior year condensed consolidated statement of operations to conform to the current year presentation. Neither of these changes affects total revenue for the current period or prior periods. The following table provides revenue as currently reported and previously reported for the three and six months ended June 30, 2013:



	Three Months Ended June 30, 2013				Six months ended June 30, 2013
	As Currently Reported		As Previously Reported		As Currently Reported		As Previously Reported
	(amounts in thousands)
Revenue:
Data and Internet services	$	220,063	209,634		431,784		411,716
Voice services	76,437		93,080		152,467		185,435
Network services	64,079		78,487		129,034		157,350
Service revenue	360,579		381,201		713,285		754,501
Taxes and fees	20,622		—		41,216		—
Intercarrier compensation	8,282		8,282		16,191		16,191
Total revenue	$	389,483	$	389,483	$	770,692	$	770,692

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Accumulated Other Comprehensive Income

The balance in accumulated other comprehensive income as of June 30, 2014 and December 31, 2013 relates to the Company's investments that are classified as available-for-sale securities. The Company recognized no material changes in accumulated other comprehensive income for the three and six months ended June 30, 2014 or 2013. There were no significant items reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2014 or 2013.

Revenue

The Company’s revenue is derived primarily from business communications services comprised of the following:

•

Data and Internet services include services that enable customers to connect their internal computer networks between locations and to access external networks, including Internet access and data transport at high speeds using Ethernet protocol, local and wide-area business Ethernet and IP VPN solutions, including service enhancements that provide customers with more visibility and control over their Ethernet services, which we refer to as the "Intelligent Network". Data and Internet services also include a portfolio of managed services including the data and Internet components of converged services, which fully integrates a combination of certain communication applications including IP VPN, Internet, enterprise Session Initiation Protocol ("SIP") trunking (a VoIP solution), security and managed router service into a single managed IP solution; and the data and Internet components of integrated services, which enable customers to purchase a full array of access options that include Internet services.


•	Voice services are traditional voice capabilities, whether provided over Time Division Multiplexing ("TDM") or VoIP, including those provided as standalone and bundled services, long distance and toll free services. Voice services also include the voice components of managed and integrated services.


•	Network services are point-to-point services that transmit voice, data and images using state-of-the-art fiber optics, and collocation services that provide secure space with controlled climate and power where customers can locate their equipment to connect to the Company’s network in facilities equipped for enterprise information technology environmental requirements.

The Company also generates revenue from intercarrier compensation, which is comprised of switched access services and reciprocal compensation. Switched access represents the compensation from another carrier for the delivery of traffic from a long distance carrier’s point of presence to an end-user’s premises provided through the Company’s switching facilities. The Federal Communications Commission ("FCC") and state public utility commissions regulate switched access rates in their respective jurisdictions. Reciprocal compensation represents compensation from local exchange carriers (“LECs”) for local exchange traffic originated on another LEC’s facilities and terminated on the Company’s facilities.

The Company classifies taxes and fees billed to customers and remitted to government authorities on a gross versus net basis in revenue and expense. In making this determination, the Company assesses, among other things, whether the Company is the primary obligor or principal taxpayer for the taxes and fees assessed in each jurisdiction where the Company does business. In jurisdictions where the Company determines that it is the principal taxpayer, the Company records the taxes and fees on a gross basis, including the taxes and fees in revenue and expense. In jurisdictions where the Company determines that it is merely a collection agent for the government authority, the Company records the taxes on a net basis. The total amount of such taxes and fees classified as revenue is included in "Taxes and fees" on the Company's condensed consolidated statements of operations.

The Company’s customers include enterprise organizations in a wide variety of industry segments including, among others, the financial services, technology and scientific, health care, distribution, manufacturing and professional services industries, data centers, cloud application providers, public sector entities, system integrators and communications service providers, including incumbent local exchange carriers ("ILECs"), competitive local exchange carriers ("CLECs"), wireless communications companies and cable companies.

Revenue for network, data and Internet, and the majority of voice services is generally billed in advance on a monthly fixed rate basis and recognized over the period the services are provided. Revenue for the majority of intercarrier compensation

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

and certain components of voice services, such as long distance, is generally billed on a transactional basis in arrears based on a customer’s actual usage; therefore, estimates are used to recognize revenue in the period earned.

The Company evaluates whether receivables are reasonably assured of collection based on certain factors, including the likelihood of billing being disputed by customers. If there is a billing dispute with a customer, revenue generally is not recognized until the dispute is resolved. The Company does not recognize revenue associated with contract termination charges until cash is received.

Significant Customers

The Company has substantial business relationships with a few large customers, including major telecommunications carriers. The Company’s 10 largest customers accounted for an aggregate of 17% and 18% of the Company’s total revenue for the six months ended June 30, 2014 and 2013, respectively. No customer accounted for 5% or more of total revenue for the six months ended June 30, 2014 or 2013.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued an accounting standards update that establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The new standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the impact of this new standard on its consolidated financial statements as well as the transition method the Company intends to use.

2. Recent Developments

Level 3 Merger

On June 15, 2014, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Level 3 Communications, Inc. ("Level 3") and certain of its subsidiaries whereby the Company agreed to merge with and into a wholly owned subsidiary of Level 3 (the "Level 3 merger").

Upon completion of the Level 3 merger, (i) each issued and outstanding share of common stock of the Company, other than dissenting shares, will be converted into 0.7 shares (the "Stock Consideration") of Level 3's common stock and the right to receive $10.00 in cash (the "Cash Consideration" and, together with the Stock Consideration, the "Merger Consideration"). The Merger Agreement also provides that the (i) issued and outstanding options to purchase the Company's common stock will be exchanged for Merger Consideration, as adjusted to reflect the exercise price of each such outstanding option and (ii) issued and outstanding restricted stock and restricted stock units covering the Company's common stock will vest and be exchanged for Merger Consideration. The Level 3 merger is expected to close during the fourth quarter of 2014, but not before October 4, 2014. The closing of the Level 3 merger is subject to the receipt of certain regulatory and governmental approvals and the satisfaction of certain conditions, including the approval of the Level 3 merger by the Company's stockholders and the approval of Level 3's proposed stock issuance and charter amendments by Level 3's stockholders.

3. Earnings per Common Share and Potential Common Share

Basic earnings per common share (“EPS”) is measured as the income allocated to common stockholders divided by the weighted average outstanding common shares for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (such as convertible securities and stock options) as if they had been converted to shares at the beginning of the period presented. Potential common shares that have an anti-dilutive effect (e.g., those that increase income per share) are excluded from diluted EPS.

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following is a reconciliation of the numerators and denominators used in the basic and diluted EPS computations:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(amounts in thousands, except per share amounts)
Numerator
Net income	$	11,149		$	17,347		$	20,940		$	30,491
Allocation of net income to unvested restricted stock	(199		)	(331		)	(378		)	(587		)
Net income allocated to common stockholders, basic	$	10,950		$	17,016		$	20,562		$	29,904
Net income allocated to common stockholders, diluted	$	10,950		$	17,016		$	20,562		$	29,904
Denominator
Basic weighted average shares outstanding	136,360			147,071			137,219			148,095
Dilutive potential common shares:
Stock options	269			886			330			1,180
Unvested restricted stock	1,185			385			1,623			1,806
Diluted weighted average shares outstanding	137,814			148,342			139,172			151,081
Basic earnings per share	$	0.08		$	0.12		$	0.15		$	0.20
Diluted earnings per share	$	0.08		$	0.11		$	0.15		$	0.20

There were no anti-dilutive shares for the three and six months ended June 30, 2014. Restricted stock awards to be settled in common stock upon vesting which were excluded from the computation of diluted weighted average shares outstanding because their inclusion would be anti-dilutive, totaled 2.9 million shares for the three months ended June 30, 2013. There were no anti-dilutive shares for the six months ended June 30, 2013.

4. Investments

The Company’s investments at June 30, 2014 and December 31, 2013 are summarized as follows:



	June 30, 2014		December 31, 2013
	(amounts in thousands)
Cash equivalents:
U.S. Treasury money market mutual funds	$	41,399	$	28,845
Commercial paper	9,998		1,335
Total cash equivalents	$	51,397	$	30,180
Investments:
Debt securities issued by the U.S. Treasury	$	60,028	$	69,628
Commercial paper	57,268		75,460
Debt securities issued by U.S. Government agencies	56,268		49,488
Total investments	$	173,564	$	194,576
Total cash equivalents and investments	$	224,961	$	224,756

At June 30, 2014 and December 31, 2013, the carrying values of investments included in cash and cash equivalents approximated fair value. The aggregate fair value of available-for-sale securities by major security type is included in Note 6. The amortized cost basis of the available-for-sale securities was not materially different from the aggregate fair value. The contractual maturities of the Company’s available-for-sale securities are all within one year.

Proceeds from the sale and maturity of available-for-sale securities were $60.0 million and $91.1 million during the three months ended June 30, 2014 and 2013, respectively, and $129.5 million and $125.0 million during the six months ended June 30, 2014 and 2013, respectively. Gains and losses on investments are calculated using the specific identification method and are

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

recognized during the period the investment is sold. The Company recognized no material unrealized or realized net gains or losses during the three and six months ended June 30, 2014 and 2013.

5. Long-Term Debt and Capital Lease Obligations

The components of long-term debt and capital lease obligations at June 30, 2014 and December 31, 2013 were as follows:



	Date of						Outstanding Balance as of
	Issuance / Amendment	Maturity	Interest Payments	Interest Rate	Original Principal		June 30, 2014			December 31, 2013
					(amounts in thousands)
Term Loan B	Apr 2013	Apr 2020	At least quarterly	Eurodollar rate + 2.50%	$	520,000	$	514,800		$	517,400
8% Senior Notes	Mar 2010	Mar 2018	Mar/Sept	8%	430,000		—			23,479
5³/₈% Senior Notes	Oct 2012	Oct 2022	Apr/Oct	5 3/8%	480,000		480,000			480,000
5³/₈% Senior Notes	Aug 2013	Oct 2022	Apr/Oct	5 3/8%	450,000		450,000			450,000
6³/₈% Senior Notes	Aug 2013	Sept 2023	Mar/Sept	6 3/8%	350,000		350,000			350,000
Capital lease obligations							145,703			147,046
Total obligations							1,940,503			1,967,925
Unamortized discounts							(17,478		)	(18,680		)
Current portion							(8,147		)	(32,470		)
Total long-term debt and capital lease obligations							$	1,914,878		$	1,916,775

8% Senior Notes due 2018

As of December 31, 2013, tw telecom holdings inc. ("Holdings") had outstanding $23.5 million aggregate principal amount of 8% Senior Notes due 2018 (the "2018 Notes"). During the three months ended March 31, 2014, Holdings redeemed all remaining outstanding 2018 Notes at a redemption price of 104% of the principal amount. During the three months ended March 31, 2014, the Company recognized debt extinguishment costs of $1.3 million, comprised of $0.9 million for premiums associated with the redemption and $0.4 million for write-offs of unamortized deferred debt issuance costs and issuance discount related to the 2018 Notes.

Covenant Compliance

As of June 30, 2014, tw telecom inc. and its wholly-owned subsidiary, Holdings, were in compliance with all of their debt covenants.

6. Fair Value Measurements

Fair value, as defined by relevant accounting standards, is 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 for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would complete a transaction and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Hierarchy

Relevant accounting standards set forth 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. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Relevant accounting standards establish three levels of inputs that may be used to measure fair value:

•

Level 1—Quoted prices in active markets for identical assets or liabilities. Level 1 assets that are measured at fair value on a recurring basis consist of the Company’s investments in U.S. Treasury money market mutual funds that are traded in an active market with sufficient volume and frequency of transactions, and are included as a component of cash and cash equivalents in the condensed consolidated balance sheets.

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

•

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets that are measured at fair value on a recurring basis consist of the Company’s investments in commercial paper and debt securities issued by the U.S. Treasury and other U.S. government agencies using observable inputs in less active markets and are included as a component of cash and cash equivalents and investments in the condensed consolidated balance sheets. Level 2 liabilities that are measured, but not carried, at fair value on a recurring basis include the Company’s long-term debt. The Company’s long-term debt has not been listed on any securities exchange or quoted on an inter-dealer automated quotation system. The Company has estimated the fair value of its long-term debt based on indicative pricing published by certain investment banks or trading levels in its long-term debt.


•	Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The Company did not have any Level 3 assets or liabilities that were measured at fair value at June 30, 2014 and December 31, 2013.

The following tables reflect assets that are measured and carried at fair value on a recurring basis at June 30, 2014 and December 31, 2013:



	Fair Value Measurements At June 30, 2014						Assets at Fair Value
	Level 1		Level 2		Level 3		Assets at Fair Value
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	41,399	$	—	$	—	$	41,399
Commercial paper	—		9,998		—		9,998
Investments included in cash and cash equivalents	$	41,399	$	9,998	$	—	$	51,397
Debt securities issued by the U.S. Treasury	—		60,028		—		60,028
Commercial paper	—		57,268		—		57,268
Debt securities issued by U.S. Government agencies	—		56,268		—		56,268
Short-term investments	$	—	$	173,564	$	—	$	173,564
Total assets	$	41,399	$	183,562	$	—	$	224,961



	Fair Value Measurements At December 31, 2013						Assets at Fair Value
	Level 1		Level 2		Level 3		Assets at Fair Value
	(amounts in thousands)
Assets
U.S. Treasury money market mutual funds	$	28,845	$	—	$	—	$	28,845
Commercial paper	—		1,335		—		1,335
Investments included in cash and cash equivalents	$	28,845	$	1,335	$	—	$	30,180
Commercial paper	—		75,460		—		75,460
Debt securities issued by the U.S. Treasury	—		69,628		—		69,628
Debt securities issued by U.S. Government agencies	—		49,488		—		49,488
Short-term investments	$	—	$	194,576	$	—	$	194,576
Total assets	$	28,845	$	195,911	$	—	$	224,756

The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term debt, including the current portion, at June 30, 2014 and December 31, 2013:

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



	June 30, 2014				December 31, 2013
	Carrying Value		Fair Value Level 2		Carrying Value		Fair Value Level 2
	(amounts in thousands)
Term Loan B, net of discount	$	512,649	$	514,800	$	515,063	$	519,987
8% Senior Notes, net of discount	—		—		23,392		24,594
5³/₈% Senior Notes, issued October 2012	480,000		520,800		480,000		474,000
5³/₈% Senior Notes, net of discount, issued August 2013	434,673		488,250		433,744		444,375
6³/₈% Senior Notes	350,000		397,250		350,000		364,000
Total debt	$	1,777,322	$	1,921,100	$	1,802,199	$	1,826,956

7. Stock-Based Compensation

During the six months ended June 30, 2014, the Company granted restricted stock awards and restricted stock units with respect to 1.4 million shares and no stock options. As of June 30, 2014, the Company had 3.7 million restricted stock awards and restricted stock units that were unvested and 0.3 million stock options outstanding and exercisable.

As of June 30, 2014, there was $77.2 million of total unrecognized compensation expense related to unvested restricted stock awards and restricted stock units, which is expected to be recognized over a weighted-average period of 2.5 years, and no unrecognized compensation expense related to unvested stock options.

8. Commitments and Contingencies

Management routinely reviews the Company’s exposure to liabilities incurred in the normal course of its business operations. Where a probable contingency exists and the amount of the loss can be reasonably estimated, the Company records the estimated liability. Considerable judgment is required in analyzing and recording such liabilities and actual results may vary from the estimates.

Following the announcement of the execution of the Merger Agreement, three putative shareholder class action complaints (the "Class Action Complaints"), were filed in the Court of Chancery of the State of Delaware against the Company, its Board of Directors, Level 3, and certain subsidiaries of Level 3, challenging the proposed Level 3 merger: Veneros v. tw telecom, et al., Case No. 9835 (filed on or about June 27, 2014), Litman v. tw telecom, et al., Case No. 9838 (filed on or about June 27, 2014), and Carter v. tw telecom, et al., Case No. 9845 (filed on or about June 30, 2014).

The Class Action Complaints generally allege, among other things, that the individual members of the Company's Board of Directors breached their fiduciary duties owed to the public shareholders of the Company by approving its entry into the Merger Agreement and failing to take steps to maximize the value of the Company to its public shareholders, and that the Company, Level 3, and certain of Level 3's subsidiaries, aided and abetted such breaches of fiduciary duties. In addition, the Class Action Complaints allege, among other things, that the proposal regarding the Level 3 merger undervalues the Company, that the process leading up to the Merger Agreement was flawed, and that certain provisions of the Merger Agreement improperly favor Level 3 and impede a potential alternative transaction. The Class Action Complaints generally seek, among other things, declaratory and injunctive relief concerning the alleged fiduciary breaches, injunctive relief prohibiting the defendants from consummating the proposed Level 3 merger, and other forms of equitable relief. The Company intends to defend against these lawsuits vigorously, but is unable to predict the outcome of these lawsuits or reasonably estimate a range of possible loss.

The Company’s other pending legal proceedings are limited to litigation incidental to its business. In the opinion of management, the ultimate resolution of these matters are not expected to have a material adverse effect on the Company’s financial statements.

9. Supplemental Guarantor Information

The $480 million principal amount 5³/₈% Senior Notes due 2022 (the "2022 Notes"), $450 million principal amount 5³/₈% Senior Notes due 2022 (the "2022 Mirror Notes") and $350 million principal amount 6³/₈% Senior Notes due 2023 (the "2023 Notes") (collectively, the "Senior Notes") are unsecured obligations of Holdings ("Issuer") and are fully and unconditionally guaranteed by the Company (“Parent Guarantor”) and substantially all of the Issuer’s subsidiaries (“Combined Subsidiary Guarantors”). The guarantees are joint and several. The Combined Subsidiary Guarantors are directly or indirectly wholly owned by the Issuer, which is wholly owned by the Parent Guarantor. A significant amount of the Issuer’s cash flow is

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

generated by the Combined Subsidiary Guarantors. As a result, funds necessary to meet the Issuer’s debt service obligations are provided in large part by distributions or advances from the Combined Subsidiary Guarantors. The Senior Notes are governed by indentures that contain certain restrictive covenants. These restrictions affect, and in many respects limit or prohibit, among other things, the ability of the Parent Guarantor, the Issuer and its subsidiaries to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, engage in transactions with stockholders and affiliates, issue capital stock of subsidiaries, create liens, sell assets and engage in mergers and consolidations.

The following information sets forth the Company’s Condensed Consolidating Balance Sheets as of June 30, 2014 and December 31, 2013, Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2014 and 2013, Condensed Consolidating Statements of Comprehensive Income for the three and six months ended June 30, 2014 and 2013, and Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2014 and 2013.

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2014

(unaudited)



	Parent Guarantor		Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,546	$	165,617		$	—		$	—		$	190,163
Investments	—		173,564			—			—			173,564
Receivables, net	—		—			106,335			—			106,335
Prepaid expenses and other current assets	—		15,703			10,042			—			25,745
Deferred income taxes	—		54,006			20			—			54,026
Intercompany receivable	804,463		1,570,131			—			(2,374,594		)	—
Total current assets	829,009		1,979,021			116,397			(2,374,594		)	549,833
Property, plant and equipment, net	—		83,873			1,650,264			—			1,734,137
Deferred income taxes	—		78,942			484			—			79,426
Goodwill	—		—			412,694			—			412,694
Intangible and other assets, net	—		34,280			17,054			—			51,334
Total assets	$	829,009	$	2,176,116		$	2,196,893		$	(2,374,594	)	$	2,827,424
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—	$	12,559		$	58,173		$	—		$	70,732
Current portion debt and capital lease obligations	—		5,247			2,900			—			8,147
Other current liabilities	—		84,443			131,634			—			216,077
Intercompany payable	—		—			2,374,594			(2,374,594		)	—
Total current liabilities	—		102,249			2,567,301			(2,374,594		)	294,956
Losses in subsidiary in excess of investment	274,690		831,084			—			(1,105,774		)	—
Long-term debt and capital lease obligations, net	—		1,772,122			142,756			—			1,914,878
Long-term deferred revenue	—		—			19,792			—			19,792
Other long-term liabilities	—		11,419			31,419			—			42,838
Stockholders’ equity (deficit)	554,319		(540,758		)	(564,375		)	1,105,774			554,960
Total liabilities and stockholders’ equity (deficit)	$	829,009	$	2,176,116		$	2,196,893		$	(2,374,594	)	$	2,827,424

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013



	Parent Guarantor		Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	24,546	$	259,873		$	—		$	—		$	284,419
Investments	—		194,576			—			—			194,576
Receivables, net	—		—			107,258			—			107,258
Prepaid expenses and other current assets	—		14,434			8,111			—			22,545
Deferred income taxes	—		54,006			20			—			54,026
Intercompany receivable	917,932		1,475,298			—			(2,393,230		)	—
Total current assets	942,478		1,998,187			115,389			(2,393,230		)	662,824
Property, plant and equipment, net	—		75,142			1,619,814			—			1,694,956
Deferred income taxes	—		95,603			484			—			96,087
Goodwill	—		—			412,694			—			412,694
Intangible and other assets, net	—		36,001			19,898			—			55,899
Total assets	$	942,478	$	2,204,933		$	2,168,279		$	(2,393,230	)	$	2,922,460
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—	$	8,298		$	30,156		$	—		$	38,454
Current portion debt and capital lease obligations, net	—		29,008			3,462			—			32,470
Other current liabilities	—		87,333			151,039			—			238,372
Intercompany payable	—		—			2,393,230			(2,393,230		)	—
Total current liabilities	—		124,639			2,577,887			(2,393,230		)	309,296
Losses in subsidiary in excess of investment	306,440		858,499			—			(1,164,939		)	—
Long-term debt and capital lease obligations, net	—		1,773,607			143,168			—			1,916,775
Long-term deferred revenue	—		—			20,046			—			20,046
Other long-term liabilities	—		10,526			29,748			—			40,274
Stockholders’ equity (deficit)	636,038		(562,338		)	(602,570		)	1,164,939			636,069
Total liabilities and stockholders’ equity (deficit)	$	942,478	$	2,204,933		$	2,168,279		$	(2,393,230	)	$	2,922,460

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended June 30, 2014

(unaudited)



	Parent Guarantor		Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—	$	—		$	419,703		$	—		$	419,703
Costs and expenses:
Operating, selling, general and administrative	—		77,167			212,837			—			290,004
Depreciation, amortization and accretion	—		9,063			75,122			—			84,185
Corporate expense allocation	—		(86,230		)	86,230			—			—
Total costs and expenses	—		—			374,189			—			374,189
Operating income	—		—			45,514			—			45,514
Interest expense, net	—		(20,052		)	(4,712		)	—			(24,764		)
Interest expense allocation	—		20,052			(20,052		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—		—			20,750			—			20,750
Income tax expense	—		9,236			365			—			9,601
Net income (loss) before equity in undistributed earnings of subsidiaries	—		(9,236		)	20,385			—			11,149
Equity in undistributed earnings of subsidiaries	11,149		20,385			—			(31,534		)	—
Net income	$	11,149	$	11,149		$	20,385		$	(31,534	)	$	11,149

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Three Months Ended June 30, 2013

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	389,483		$	—		$	389,483
Costs and expenses:
Operating, selling, general and administrative	—			67,167			193,402			—			260,569
Depreciation, amortization and accretion	—			6,707			68,945			—			75,652
Corporate expense allocation	—			(73,874		)	73,874			—			—
Total costs and expenses	—			—			336,221			—			336,221
Operating income	—			—			53,262			—			53,262
Interest expense, net	(1,569		)	(17,942		)	(1,860		)	—			(21,371		)
Debt extinguishment costs	(327		)	(72		)	—			—			(399		)
Interest expense allocation	1,896			18,014			(19,910		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			31,492			—			31,492
Income tax expense	—			13,672			473			—			14,145
Net income (loss) before equity in undistributed earnings of subsidiaries	—			(13,672		)	31,019			—			17,347
Equity in undistributed earnings of subsidiaries	17,347			31,019			—			(48,366		)	—
Net income	$	17,347		$	17,347		$	31,019		$	(48,366	)	$	17,347

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended June 30, 2014

(unaudited)



	Parent Guarantor		Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—	$	—		$	827,996		$	—		$	827,996
Costs and expenses:
Operating, selling, general and administrative	—		149,108			421,767			—			570,875
Depreciation, amortization and accretion	—		17,654			148,987			—			166,641
Corporate expense allocation	—		(166,762		)	166,762			—			—
Total costs and expenses	—		—			737,516			—			737,516
Operating income	—		—			90,480			—			90,480
Interest expense, net	—		(40,540		)	(9,724		)	—			(50,264		)
Debt extinguishment costs	—		(1,282		)	—			—			(1,282		)
Interest expense allocation	—		41,822			(41,822		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—		—			38,934			—			38,934
Income tax expense	—		17,253			741			—			17,994
Net income (loss) before equity in undistributed earnings of subsidiaries	—		(17,253		)	38,193			—			20,940
Equity in undistributed earnings of subsidiaries	20,940		38,193			—			(59,133		)	—
Net income	$	20,940	$	20,940		$	38,193		$	(59,133	)	$	20,940

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended June 30, 2013

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Total revenue	$	—		$	—		$	770,692		$	—		$	770,692
Costs and expenses:
Operating, selling, general and administrative	—			131,974			383,239			—			515,213
Depreciation, amortization and accretion	—			13,286			136,761			—			150,047
Corporate expense allocation	—			(145,260		)	145,260			—			—
Total costs and expenses	—			—			665,260			—			665,260
Operating income	—			—			105,432			—			105,432
Interest expense, net	(9,705		)	(35,820		)	(3,909		)	—			(49,434		)
Debt extinguishment costs	(327		)	(72		)	—			—			(399		)
Interest expense allocation	10,032			35,892			(45,924		)	—			—
Income before income taxes and equity in undistributed earnings of subsidiaries	—			—			55,599			—			55,599
Income tax expense	—			24,289			819			—			25,108
Net income (loss) before equity in undistributed earnings of subsidiaries	—			(24,289		)	54,780			—			30,491
Equity in undistributed earnings of subsidiaries	30,491			54,780			—			(85,271		)	—
Net income	$	30,491		$	30,491		$	54,780		$	(85,271	)	$	30,491

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2014

(unaudited)



	Parent Guarantor		Issuer		Combined Subsidiary Guarantors		Eliminations			Consolidated
	(amounts in thousands)
Net income	$	11,149	$	11,149	$	20,385	$	(31,534	)	$	11,149
Other comprehensive income, net of tax:
Unrealized gain on available-for-sale securities	40		40		—		(40		)	40
Other comprehensive income, net of tax	40		40		—		(40		)	40
Comprehensive income	$	11,189	$	11,189	$	20,385	$	(31,574	)	$	11,189

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2013

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors		Eliminations			Consolidated
	(amounts in thousands)
Net income	$	17,347		$	17,347		$	31,019	$	(48,366	)	$	17,347
Other comprehensive loss, net of tax:
Unrealized loss on available-for-sale securities	(28		)	(28		)	—		28			(28		)
Other comprehensive loss, net of tax	(28		)	(28		)	—		28			(28		)
Comprehensive income	$	17,319		$	17,319		$	31,019	$	(48,338	)	$	17,319

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Six Months Ended June 30, 2014

(unaudited)



	Parent Guarantor		Issuer		Combined Subsidiary Guarantors		Eliminations			Consolidated
	(amounts in thousands)
Net income	$	20,940	$	20,940	$	38,193	$	(59,133	)	$	20,940
Other comprehensive income, net of tax:
Unrealized gain on available-for-sale securities	30		30		—		(30		)	30
Other comprehensive income, net of tax	30		30		—		(30		)	30
Comprehensive income	$	20,970	$	20,970	$	38,193	$	(59,163	)	$	20,970

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

Six Months Ended June 30, 2013

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors		Eliminations			Consolidated
	(amounts in thousands)
Net income	$	30,491		$	30,491		$	54,780	$	(85,271	)	$	30,491
Other comprehensive loss, net of tax:
Unrealized loss on available-for-sale securities	(20		)	(20		)	—		20			(20		)
Other comprehensive loss, net of tax	(20		)	(20		)	—		20			(20		)
Comprehensive income	$	30,471		$	30,471		$	54,780	$	(85,251	)	$	30,471

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2014

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	20,940		$	20,940		$	38,193		$	(59,133	)	$	20,940
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	—			17,654			148,987			—			166,641
Deferred income taxes	—			17,252			—			—			17,252
Stock-based compensation expense	—			—			18,038			—			18,038
Extinguishment costs, amortization of discount on debt and deferred debt issue costs	—			4,494			—			—			4,494
Intercompany and equity investment changes	99,787			(122,248		)	(36,672		)	59,133			—
Changes in operating assets and liabilities	—			301			(3,161		)	—			(2,860		)
Net cash provided by (used in) operating activities	120,727			(61,607		)	165,385			—			224,505
Cash flows from investing activities:
Capital expenditures	—			(26,553		)	(169,445		)	—			(195,998		)
Purchases of investments	—			(109,275		)	—			—			(109,275		)
Proceeds from sale of investments	—			129,509			—			—			129,509
Other investing activities, net	—			169			5,672			—			5,841
Net cash used in investing activities	—			(6,150		)	(163,773		)	—			(169,923		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	(8,163		)	—			—			—			(8,163		)
Purchases of treasury stock	(112,564		)	—			—			—			(112,564		)
Excess tax benefits from stock-based compensation	—			794			—			—			794
Retirement of debt obligations	—			(24,418		)	—			—			(24,418		)
Payment of debt and capital lease obligations	—			(2,875		)	(1,612		)	—			(4,487		)
Net cash used in financing activities	(120,727		)	(26,499		)	(1,612		)	—			(148,838		)
Decrease in cash and cash equivalents	—			(94,256		)	—			—			(94,256		)
Cash and cash equivalents at beginning of period	24,546			259,873			—			—			284,419
Cash and cash equivalents at end of period	$	24,546		$	165,617		$	—		$	—		$	190,163

Table of Contents

tw telecom inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

tw telecom inc.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2013

(unaudited)



	Parent Guarantor			Issuer			Combined Subsidiary Guarantors			Eliminations			Consolidated
	(amounts in thousands)
Cash flows from operating activities:
Net income	$	30,491		$	30,491		$	54,780		$	(85,271	)	$	30,491
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	—			13,286			136,761			—			150,047
Deferred income taxes	—			24,289			—			—			24,289
Stock-based compensation expense	—			—			17,876			—			17,876
Amortization of discount on debt and deferred debt issue costs	6,244			2,005			—			—			8,249
Intercompany and equity investment changes	385,403			(466,631		)	(4,043		)	85,271			—
Changes in operating assets and liabilities	(1,039		)	15,973			(39,326		)	—			(24,392		)
Net cash provided by (used in) operating activities	421,099			(380,587		)	166,048			—			206,560
Cash flows from investing activities:
Capital expenditures	—			(22,465		)	(165,044		)	—			(187,509		)
Purchases of investments	—			(157,523		)	—			—			(157,523		)
Proceeds from sale of investments	—			125,041			—			—			125,041
Other investing activities, net	—			(83		)	(382		)	—			(465		)
Net cash used in investing activities	—			(55,030		)	(165,426		)	—			(220,456		)
Cash flows from financing activities:
Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units	32,559			—			—			—			32,559
Purchases of treasury stock	(197,310		)	—			—			—			(197,310		)
Excess tax benefits from stock-based compensation	—			944			—			—			944
Proceeds from modification of debt, net of financing costs	—			49,684			—			—			49,684
Retirement of convertible debt obligations	(256,348		)	—			—			—			(256,348		)
Payment of debt and capital lease obligations	—			(1,474		)	(622		)	—			(2,096		)
Net cash (used in) provided by financing activities	(421,099		)	49,154			(622		)	—			(372,567		)
Decrease in cash and cash equivalents	—			(386,463		)	—			—			(386,463		)
Cash and cash equivalents at beginning of period	24,544			782,184			—			—			806,728
Cash and cash equivalents at end of period	$	24,544		$	395,721		$	—		$	—		$	420,265

Attached files

Stock widget

Investing forum

Level 3 Parent, LLC Reports