Level 3 Communications’ 2015 profit boosted by $3.2B tax benefit

BROOMFIELD — Buoyed by a $3.2 billion tax benefit during the fourth quarter, Broomfield-based telecom Level 3 Communications Inc. on Thursday reported a profit of $3.4 billion, or $9.71 per share, for its 2015 fiscal year that ended Dec. 31.

By comparison, Level 3 recorded a profit of $314 million in 2014.

Revenue was $2.1 billion for fourth-quarter 2015, compared with $1.9 billion for fourth-quarter 2014. For 2015, revenue was $8.2 billion compared with $6.8 billion for 2014.

In fourth-quarter 2015, the company generated a profit of $3.3 billion and basic earnings per share of $9.33, compared with $66 million, or 22 cents per share, for the same quarter a year ago.

The tax benefit was related to the release of the company’s valuation allowance against its U.S. federal and state deferred tax assets. A valuation allowance is a balance-sheet line item that offsets all or a portion of the value of a company’s deferred tax assets, in effect, taken out of profits, because the company doesn’t expect it will be able to realize this value. When the valuation is released, the amount is returned to the profit column. Excluding all of these items, basic earnings per share were 53 cents for fourth-quarter 2015.

“Our 2015 results demonstrate  Level 3’s solid execution and performance,” said Jeff Storey, president and chief executive of Level 3 (NYSE: LVLT). “Demand for bandwidth remains strong, and the proliferation of connected devices continues. These demand drivers are creating an enterprise networking opportunity that is well suited for the depth, scale and reach of Level 3’s global network and capabilities. We believe we are well positioned to continue to take enterprise market share.”

Sunit Patel, Level 3’s chief financial officer, said the company met or exceeded key outlook measures for the year.

“Even with the TW Telecom integration, global currency pressures driven by macroeconomic headwinds and the deconsolidation of our Venezuelan subsidiary last quarter, we had good momentum which drove revenue growth and strong profit performance for the year.”

Patel said the company refinanced $4.9 billion of debt during 2015, resulting in more than $110 million of annualized cash interest expense savings.

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