Communications Adjusted EBITDA excludes non-cash compensation expense and includes restructuring charges. The company incurred less than $1 million of restructuring charges for the first quarter 2011, the fourth quarter 2010 and first quarter 2010.
Consolidated Cash Flow and Liquidity
During the first quarter 2011, Unlevered Cash Flow was $41 million, versus $183 million in the fourth quarter 2010, and $51 million for the first quarter 2010.
Consolidated Free Cash Flow was negative $115 million for the first quarter 2011, compared to positive $73 million in the fourth quarter 2010 and negative $90 million for the first quarter 2010.The first quarter 2011 Free Cash Flow loss is due to a $45 million increase in net cash interest payments over the fourth quarter of 2010 and a $71 million use of cash for working capital within the quarter. The working capital use of cash in 2011 resulted from an increase in DSOs from about 26 days to 28 days for about a $30 million use of cash, a $25 million use of cash from bonus payments and accrued payroll, and a $10 million use of cash from an increase in prepaid expenses. The latter two items are timing-related and will be offset over the remainder of the year. As of March 31, 2011, the company had cash and cash equivalents of approximately $1,079 million, or $616 million on a pro forma basis after the partial redemption of the company’s 9.25% Senior Notes due 2014 that was completed after the close of the first quarter 2011. Corporate Transactions Global Crossing On April 11, 2011, Level 3 announced that it had entered into a definitive agreement to acquire Global Crossing Limited in a tax-free, stock-for-stock transaction. Under the terms and subject to conditions of the agreement, Global Crossing shareholders will receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. Based on Level 3’s closing stock price on April 8, 2011, the last trading day prior to the announcement of the transaction, the transaction is valued at $23.04 per Global Crossing common or preferred share, or approximately $3.0 billion, including the assumption of approximately $1.1 billion of net debt as of Dec. 31, 2010.