Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 27, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | CENTURYLINK, INC | |
Entity Central Index Key | 18,926 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 549,609,275 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
OPERATING REVENUES | $ 4,090 | $ 4,398 | $ 8,299 | $ 8,799 |
OPERATING EXPENSES | ||||
Cost of services and products (exclusive of depreciation and amortization) | 1,890 | 1,949 | 3,778 | 3,849 |
Selling, general and administrative | 884 | 815 | 1,694 | 1,652 |
Depreciation and amortization | 949 | 987 | 1,829 | 1,963 |
Total operating expenses | 3,723 | 3,751 | 7,301 | 7,464 |
OPERATING INCOME | 367 | 647 | 998 | 1,335 |
OTHER (EXPENSE) INCOME | ||||
Interest expense | (320) | (340) | (638) | (671) |
Other (expense) income, net | (7) | 10 | (13) | 33 |
Total other expense, net | (327) | (330) | (651) | (638) |
INCOME BEFORE INCOME TAX EXPENSE | 40 | 317 | 347 | 697 |
Income tax expense | 23 | 121 | 167 | 265 |
NET INCOME | $ 17 | $ 196 | $ 180 | $ 432 |
BASIC AND DILUTED EARNINGS PER COMMON SHARE | ||||
BASIC (per share) | $ 0.03 | $ 0.36 | $ 0.33 | $ 0.80 |
DILUTED (per share) | 0.03 | 0.36 | 0.33 | 0.80 |
DIVIDENDS DECLARED PER COMMON SHARE | $ 0.54 | $ 0.54 | $ 1.08 | $ 1.08 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||||
BASIC (in shares) | 541,361 | 539,627 | 540,909 | 539,213 |
DILUTED (in shares) | 542,151 | 540,375 | 541,836 | 540,281 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 17 | $ 196 | $ 180 | $ 432 |
Items related to employee benefit plans: | ||||
Change in net actuarial loss, net of $(22), $(17), $(42) and $(33) tax | 30 | 28 | 61 | 54 |
Change in net prior service costs, net of $(1), $(1), $(2) and $(2) tax | 2 | 2 | 4 | 4 |
Foreign currency translation adjustment and other, net of $—, $—, $— and $— tax | 4 | (4) | 2 | (5) |
Other comprehensive income | 36 | 26 | 67 | 53 |
COMPREHENSIVE INCOME | $ 53 | $ 222 | $ 247 | $ 485 |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Change in net actuarial loss, tax | $ (22) | $ (17) | $ (42) | $ (33) |
Change in net prior service costs, tax | (1) | (1) | (2) | (2) |
Foreign currency translation adjustment and other, tax | $ 0 | $ 0 | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 342 | $ 222 |
Accounts receivable, less allowance of $174 and $178 | 1,868 | 2,017 |
Assets held for sale | 7 | 2,376 |
Other | 691 | 547 |
Total current assets | 2,908 | 5,162 |
NET PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment | 40,744 | 39,194 |
Accumulated depreciation | (23,161) | (22,155) |
Net property, plant and equipment | 17,583 | 17,039 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 19,639 | 19,650 |
Restricted cash | 6,015 | 2 |
Other intangible assets, less accumulated amortization of $2,176 and $2,042 | 1,556 | 1,531 |
Other, net | 823 | 836 |
Total goodwill and other assets | 30,434 | 24,816 |
TOTAL ASSETS | 50,925 | 47,017 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 196 | 1,503 |
Accounts payable | 944 | 1,179 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 669 | 802 |
Income and other taxes | 290 | 301 |
Interest | 262 | 260 |
Other | 238 | 213 |
Current liabilities associated with assets held for sale | 0 | 419 |
Advance billings and customer deposits | 644 | 672 |
Total current liabilities | 3,243 | 5,349 |
LONG-TERM DEBT | 24,881 | 18,185 |
DEFERRED CREDITS AND OTHER LIABILITIES | ||
Deferred income taxes, net | 3,230 | 3,471 |
Benefit plan obligations, net | 5,362 | 5,527 |
Other | 1,123 | 1,086 |
Total deferred credits and other liabilities | 9,715 | 10,084 |
COMMITMENTS AND CONTINGENCIES (Note 10) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock—non-redeemable, $25.00 par value, authorized 2,000 and 2,000 shares, issued and outstanding 7 and 7 shares | 0 | 0 |
Common stock, $1.00 par value, authorized 1,600,000 and 1,600,000 shares, issued and outstanding 549,743 and 546,545 shares | 550 | 547 |
Additional paid-in capital | 14,637 | 14,970 |
Accumulated other comprehensive loss | (2,050) | (2,117) |
Accumulated deficit | (51) | (1) |
Total stockholders' equity | 13,086 | 13,399 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 50,925 | 47,017 |
Customer relationships | ||
Customer relationships, less accumulated amortization of $6,716 and $6,318 | $ 2,401 | $ 2,797 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts receivable, allowance | $ 174 | $ 178 |
Preferred stock-non-redeemable, par value | $ 25 | $ 25 |
Preferred stock-non-redeemable, authorized shares | 2,000 | 2,000 |
Preferred stock-non-redeemable, issued shares | 7 | 7 |
Preferred stock-non-redeemable, outstanding shares | 7 | 7 |
Common stock, par value | $ 1 | $ 1 |
Common stock, authorized shares | 1,600,000 | 1,600,000 |
Common stock, issued shares | 549,743 | 546,545 |
Common stock, outstanding shares | 549,743 | 546,545 |
Customer relationships | ||
Finite-lived intangible assets, accumulated amortization | $ 6,716 | $ 6,318 |
Other intangible assets | ||
Finite-lived intangible assets, accumulated amortization | $ 2,176 | $ 2,042 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
OPERATING ACTIVITIES | ||
Net income | $ 180 | $ 432 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,829 | 1,963 |
Deferred income taxes | (126) | 21 |
Loss on the sale of data centers and colocation business | 119 | 0 |
Impairment of assets held for sale | 11 | 1 |
Provision for uncollectible accounts | 78 | 96 |
Net loss on early retirement of debt | 5 | 0 |
Share-based compensation | 43 | 40 |
Changes in current assets and liabilities: | ||
Accounts receivable | 71 | (125) |
Accounts payable | (112) | 74 |
Accrued income and other taxes | 29 | 208 |
Other current assets and liabilities, net | (306) | (64) |
Retirement benefits | (56) | (28) |
Changes in other noncurrent assets and liabilities, net | (92) | (35) |
Other, net | 69 | 18 |
Net cash provided by operating activities | 1,742 | 2,601 |
INVESTING ACTIVITIES | ||
Payments for property, plant and equipment and capitalized software | (1,610) | (1,264) |
Cash paid for acquisitions | (5) | (24) |
Proceeds from the sale of data centers and colocation business, less cash sold | 1,473 | 0 |
Proceeds from sale of property | 48 | 11 |
Other, net | 0 | (2) |
Net cash used in investing activities | (94) | (1,279) |
FINANCING ACTIVITIES | ||
Net proceeds from issuance of long-term debt | 6,608 | 1,215 |
Proceeds from financing obligation (Note 3) | 378 | 0 |
Payments of long-term debt | (1,530) | (1,464) |
Net payments on Credit Facility and revolving line of credit | (370) | (410) |
Dividends paid | (590) | (586) |
Proceeds from issuance of common stock | 4 | 3 |
Shares withheld to satisfy tax withholdings | (15) | (15) |
Net cash provided by (used in) financing activities | 4,485 | (1,257) |
Net increase in cash, cash equivalents and restricted cash | 6,133 | 65 |
Cash, cash equivalents and restricted cash at beginning of period | 224 | 128 |
Cash, cash equivalents and restricted cash at end of period | 6,357 | 193 |
Supplemental cash flow information: | ||
Income taxes refunded (paid), net | (260) | (21) |
Interest paid (net of capitalized interest of $41 and $24) | $ (624) | $ (660) |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Interest paid, capitalized interest | $ 41 | $ 24 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED OTHER COMPREHENSIVE LOSS | (ACCUMULATED DEFICIT) RETAINED EARNINGS |
Balance at beginning of period at Dec. 31, 2015 | $ 544 | $ 15,178 | $ (1,934) | $ 272 | |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock through dividend reinvestment, incentive and benefit plans | 2 | 3 | |||
Shares withheld to satisfy tax withholdings | (14) | ||||
Share-based compensation and other, net | 38 | ||||
Dividends declared | 0 | (589) | |||
Other comprehensive income | $ 53 | 53 | |||
Net income | 432 | 432 | |||
Balance at end of period at Jun. 30, 2016 | 13,985 | 546 | 15,205 | (1,881) | 115 |
Balance at beginning of period at Mar. 31, 2016 | (1,907) | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Other comprehensive income | 26 | 26 | |||
Net income | 196 | ||||
Balance at end of period at Jun. 30, 2016 | 13,985 | 546 | 15,205 | (1,881) | 115 |
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting | Restatement adjustment | Accounting Standards Update 2016-09 | 0 | ||||
Balance at beginning of period at Dec. 31, 2016 | 13,399 | 547 | 14,970 | (2,117) | (1) |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock through dividend reinvestment, incentive and benefit plans | 3 | 3 | |||
Shares withheld to satisfy tax withholdings | (15) | ||||
Share-based compensation and other, net | 38 | ||||
Dividends declared | (359) | (233) | |||
Other comprehensive income | 67 | 67 | |||
Net income | 180 | 180 | |||
Balance at end of period at Jun. 30, 2017 | 13,086 | 550 | 14,637 | (2,050) | (51) |
Balance at beginning of period at Mar. 31, 2017 | (2,086) | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Other comprehensive income | 36 | 36 | |||
Net income | 17 | ||||
Balance at end of period at Jun. 30, 2017 | $ 13,086 | $ 550 | $ 14,637 | $ (2,050) | (51) |
Increase (Decrease) in Stockholders' Equity | |||||
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting | Restatement adjustment | Accounting Standards Update 2016-09 | $ 3 |
Background
Background | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | Background General We are an integrated communications company engaged primarily in providing an array of services to our residential and business customers. Our communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching ("MPLS"), private line (including special access), Ethernet, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol ("VoIP"), information technology and other ancillary services. On October 31, 2016, we entered into a definitive merger agreement under which we agreed to acquire Level 3 Communications, Inc. ("Level 3") in a cash and stock transaction. See Note 2—Pending Acquisition of Level 3 for additional information. On May 1, 2017, we sold our data centers and colocation business to a consortium led by BC Partners, Inc. and Medina Capital for a combination of cash and equity. See Note 3—Sale of Data Centers and Colocation Business for additional information. Basis of Presentation Our consolidated balance sheet as of December 31, 2016 , which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first six months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2016 . The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other (expense) income, net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities. We pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital. We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 9—Segment Information for additional information. These changes had no impact on total operating revenues, total operating expenses or net income for any period. Recently Adopted Accounting Pronouncements In the second quarter of 2017, we adopted Accounting Standards Update ("ASU") 2016-18, "Restricted Cash (a consensus of the Financial Accounting Standards Board ("FASB") Emerging Issues Task Force)" ("ASU 2016-18"). In the first quarter of 2017, we adopted ASU 2016-09, “Improvements to Employee Share Based Compensation” (“ASU 2016-09”) and ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). Each of these are described further below. Restricted Cash On November 17, 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents as compared to the previous presentation, which explains only the change in cash and cash equivalents. ASU 2016-18 is effective January 1, 2018, but early adoption is permitted and requires retrospective application of the requirements to all previous periods presented. We early adopted ASU 2016-18 in the second quarter of 2017. Prior to the financing transactions we entered into in the second quarter of 2017 related to the Level 3 acquisition, as further described in Note 4—Long-Term Debt and Credit Facilities, our restricted cash balances have been immaterial. With the adoption of ASU 2016-18, our "net increase in cash, cash equivalents and restricted cash" presented in our consolidated statements of cash flows for the six months ended June 30, 2017 increased by $6 billion as a result of the inclusion of the restricted cash related to the Level 3 financing transaction, with a corresponding increase in net cash generated from financing activities. Share-based Compensation ASU 2016-09 modified the accounting and associated income tax accounting for share-based compensation in order to reduce the cost and complexity associated with previous U.S. generally accepted accounting principles (“GAAP”). The primary provisions of ASU 2016-09 that affect our consolidated financial statements for the three and six months ended June 30, 2017 are: 1. A reclassification of the income tax effect associated with the difference between the expense recognized for share-based payments and the related tax deduction from additional paid-in capital to income tax expense. This change was applied on a prospective basis and resulted in a $1 million decrease in income tax expense for the three months ended June 30, 2017 and a $6 million increase in income tax expense for the six months ended June 30, 2017 . 2. We elected to change our accounting policy to account for forfeitures of share-based payment grants as they occur as opposed to our previous policy of estimating the forfeitures on the grant date. The cumulative effect of adopting this policy as of January 1, 2017 resulted in a decrease of $3 million , net of a $2 million tax effect, in accumulated deficit. Net Periodic Pension and Postretirement Benefit Costs ASU 2017-07 modified the presentation of net periodic pension and postretirement benefit costs and requires the service cost component to be reported separately from the other components in order to provide more useful information. Under ASU 2017-07, the service cost component of net periodic pension and postretirement benefit costs is required to be presented in the same expense category as the related salary and wages for the employee. The other components of the net periodic pension and postretirement benefit costs are required to be recognized below operating income in other (expense) income, net in our consolidated statements of operations. This change was applied on a retrospective basis to all previous periods to match the current period presentation. This retrospective application resulted in a $3 million and $9 million reduction in operating income and a corresponding decrease in total other expense, net for the three and six months ended June 30, 2016 , respectively. Recent Accounting Pronouncements Goodwill Impairment On January 26, 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the impairment testing for goodwill by changing the measurement for goodwill impairment. Under current rules, we are required to compute the implied fair value of goodwill to measure the impairment amount if the carrying value of a reporting unit exceeds its fair value. Under ASU 2017-04, the goodwill impairment charge will equal the excess of the reporting unit carrying value above fair value, limited to the amount of goodwill assigned to the reporting unit. We are required to adopt the provisions of ASU 2017-04 for any goodwill impairment tests, including our required annual test, occurring after January 1, 2020, but have the option to early adopt for any impairment test that we are required to perform. We have not determined if we will elect to early adopt the provisions of ASU 2017-04. The provisions of ASU 2017-04 would not have affected our last goodwill impairment assessment, but no assurance can be provided that the simplified testing methodology will not affect our goodwill impairment assessment in the future. Income Taxes On October 24, 2016, the FASB issued ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” ("ASU 2016-16"). ASU 2016-16 eliminates the current prohibition on the recognition of the income tax effects on the transfer of assets among our subsidiaries. After adoption of this ASU, the income tax effects associated with these asset transfers, except for the transfer of inventory, will be recognized in the period the asset is transferred versus the current deferral and recognition upon either the sale of the asset to a third party or over the remaining useful life of the asset. We are currently reviewing the requirements of this ASU and evaluating the impact on our consolidated financial statements. We expect to adopt the provisions of ASU 2016-16 on the required adoption date of January 1, 2018. The impact of adopting ASU 2016-16, if any, will be recognized through a cumulative adjustment to (accumulated deficit) retained earnings as of the date of adoption. Financial Instruments On June 16, 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires our management team to estimate the total credit losses expected on the portfolio of financial instruments. We are currently reviewing the requirements of the standard and evaluating the impact on our consolidated financial statements. We are required to adopt the provisions of ASU 2016-13 effective January 1, 2020, but could elect to early adopt the provisions as of January 1, 2019. We expect to recognize the impacts of adopting ASU 2016-13 through a cumulative adjustment to (accumulated deficit) retained earnings as of the date of adoption. As of the date of this report, we have not yet determined the date we will adopt ASU 2016-13. Leases On February 25, 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 will require lessees to present right-of-use assets and lease liabilities on their balance sheets for operating leases, which are currently not reflected on their balance sheets. ASU 2016-02 is effective for annual and interim periods beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. Upon adoption of ASU 2016-02, we are required to recognize and measure leases at the beginning of the earliest period presented in our consolidated financial statements using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. We will implement this new standard on its effective date, but we have not yet decided which practical expedient options we will elect. We are currently evaluating new lease administrative and accounting systems and are in the process of developing an implementation plan. We are also currently evaluating and assessing the impact ASU 2016-02 will have on us and our consolidated financial statements. As of the date of this report, we believe it is premature to provide any estimate of the impact of adopting ASU 2016-02. Upon the January 1, 2019 implementation of the new accounting standard for Leases (ASU 2016-02), accounting for the failed-sale-leaseback transaction described in Note 3 — Sale of Data Centers and Colocation Business, will no longer be applicable based on our facts and circumstances, and the real estate assets and corresponding financing obligation will be derecognized from our consolidated balance sheet. Revenue Recognition On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 replaces virtually all existing GAAP on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs, but we expect we will defer certain contract acquisition costs in the future, which could have the impact of lowering our operating expenses. We currently defer contract fulfillment costs only to the extent of any deferred revenue. Under ASU 2014-09, in certain transactions our deferred contract fulfillment costs could exceed our deferred revenues, which could result in an increase in deferred costs, and could also impact the timing on our recognition of these deferred costs. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year until January 1, 2018, which is the date we plan to adopt this standard. ASU 2014-09 may be adopted by applying the provisions of this standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis, which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2018. We have completed our initial assessment of our business and systems requirements, and we are currently developing and implementing a new revenue recognition system to comply with the requirements of ASU 2014-09. Based on this initial assessment, we currently plan to adopt the new revenue recognition standard under the modified retrospective transition method. As of the date of this report, we are not able to provide reasonably accurate estimates of the impact of implementing ASU 2014-09 on the timing of our revenue recognition or the transition adjustment that will be recorded to equity on January 1, 2018. |
Pending Acquisition of Level 3
Pending Acquisition of Level 3 | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Pending Acquisition of Level 3 On October 31, 2016, we entered into a definitive merger agreement under which we agreed to acquire Level 3 in a cash and stock transaction. Under the terms of the agreement, Level 3 shareholders will receive $26.50 per share in cash and 1.4286 of CenturyLink shares for each share of Level 3 common stock they own at closing. CenturyLink shareholders are expected to own approximately 51% and Level 3 shareholders are expected to own approximately 49% of the combined company at closing. In addition, CenturyLink will assume Level 3's long-term debt upon closing. On March 31, 2017, Level 3 had outstanding $11 billion of total long-term debt. The merger agreement was approved by CenturyLink and Level 3 shareholders at special meetings held on March 16, 2017. Completion of the transaction is subject to (i) the receipt of regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (ii) approvals from the Federal Communications Commission ("FCC") and certain state regulatory authorities and (iii) other customary closing conditions. Subject to these conditions, we anticipate closing this transaction by the end of the third quarter 2017. |
Sale of Data Centers and Coloca
Sale of Data Centers and Colocation Business | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations, Disclosure | Sale of Data Centers and Colocation Business On May 1, 2017, we sold our data centers and colocation business to a consortium led by BC Partners, Inc. and Medina Capital in exchange for cash and a minority stake in the limited partnership that owns the consortium's newly-formed global secure infrastructure company, Cyxtera Technologies ("Cyxtera"). We received pre-tax cash proceeds of $1.8 billion , and we have valued our minority stake at $150 million , which was based upon the total equity contribution to the limited partnership. Due to the sale and related restructuring actions we have taken regarding certain subsidiaries involved in the data centers and colocation business, we have estimated a cumulative current tax impact relating to the sale totaling $65 million , $18 million of which was accrued in 2016, $15 million of which was accrued in the three months ended March 31, 2017, and $32 million of which was accrued in the three months ended June 30, 2017. In connection with our sale of the data centers and colocation business to Cyxtera, we agreed to lease back from Cyxtera a portion of the data center space to provide data hosting services to our customers. Because we have continuing involvement in the business through our minority stake in Cyxtera's parent, we do not meet the requirements for a sale-leaseback transaction as described in ASC 840-40, Leases - Sale-Leaseback Transactions . Under the failed-sale-leaseback accounting model, we are deemed under GAAP to still own certain real estate assets sold to Cyxtera, which we must continue to reflect on our consolidated balance sheet and depreciate over the assets' remaining useful life. We must also treat a certain amount of the pre-tax cash proceeds from the sale of the assets as though it were the result of a financing obligation on our consolidated balance sheet, and our consolidated results of operations must include imputed revenue associated with the portion of the real estate assets that we have not leased back and imputed interest expense on the financing obligation. A portion of the rent payments required under our leaseback arrangement with Cyxtera are recognized as reductions of the financing obligation, resulting in lower recognized rent expense than the amounts actually paid each period. At the end of the lease term, the remaining imputed financing obligation and the remaining net book value of the real estate assets are derecognized. The following table reflects the assets sold to and the liabilities assumed by Cyxtera Technologies on May 1, 2017, including our preliminary estimates of the impact of failed-sale-leaseback: Dollars in millions Goodwill $ 1,141 Property, plant and equipment 1,046 Other intangible assets 249 Other assets 62 Less assets recorded as part of the failed-sale-leaseback (501 ) Total net amount of assets derecognized $ 1,997 Capital lease obligations $ 294 Other liabilities 273 Less imputed financing obligations from the failed-sale-leaseback (648 ) Total net imputed liabilities recognized $ (81 ) In addition, based on our preliminary estimates, the failed-sale-leaseback accounting treatment had the following effects on our consolidated results of operations for the three and six months ended June 30, 2017: Positive (Negative) Impact to Net Income Dollars in millions Increase in revenue $ 12 Decrease in cost of sales 3 Increase in loss on sale of business included in selling, general and administrative expense (117 ) Increase in depreciation expense (one-time) (44 ) Increase in depreciation expense (ongoing) (10 ) Increase in interest expense (8 ) Decrease in income tax expense 63 Decrease in net income $ (101 ) After factoring in the costs to sell the data centers and colocation business, excluding the estimated impacts from the failed-sale-leaseback accounting treatment, the sale resulted in a $2 million loss as a result of the carrying value of the assets sold and liabilities assumed was greater than the value of the proceeds we received. Based on our preliminary estimates of the fair market values of the failed-sale-leaseback assets, the failed-sale-leaseback accounting treatment resulted in an additional loss of $117 million as a result of the requirement to treat a certain amount of the pre-tax cash proceeds from the sale of the assets as though it were the result of a financing obligation. The combined loss of $119 million is included in selling, general and administrative expenses in our consolidated statement of operations for the six months ended June 30, 2017. The sale also resulted in a significant capital loss carryforward which will be entirely offset by a valuation allowance due to our determination that we are not likely to be able to utilize this carryforward prior to its expiration. We evaluated our minority stake in the limited partnership and determined that we were not the primary beneficiary of the entity. As a result, we classified our $150 million investment in the limited partnership in other assets on our consolidated balance sheet as of June 30, 2017. In addition to our investment, we have a receivable for $83 million from Cyxtera, classified in other current assets, primarily as a result of the continued efforts to separate the activities of the divested colocation business from our ongoing data hosting services. Over the near term, we expect that the receivable balance from Cyxtera will decline to an immaterial amount. We will continue to have an ongoing obligation to Cyxtera related to our lease of data center space from them. During the three months ended June 30, 2017, we paid rent to Cyxtera totaling $14 million . Effective November 3, 2016, which is the date we entered into the agreement to sell our data centers and colocation business, we ceased recording depreciation of the property, plant and equipment to be sold and amortization of the business's intangible assets in accordance with applicable accounting rules. Otherwise, we estimate that we would have recorded additional depreciation and amortization expense of $17 million in the second quarter of 2017 and $67 million from January 1, 2017 through May 1, 2017. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Credit Facilities | Long-Term Debt and Credit Facilities Long-term debt, including unamortized discounts and premiums and unamortized debt issuance costs, consisting of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including CenturyLink Escrow, LLC, Qwest Corporation, Qwest Capital Funding, Inc. and Embarq Corporation and its subsidiaries ("Embarq"), were as follows: Interest Rates Maturities As of June 30, 2017 As of (Dollars in millions) CenturyLink, Inc. Senior notes 5.625% - 7.650% 2019 - 2042 $ 8,125 8,975 Credit Facility and revolving line of credit (1) —% 2019 — 370 Term loan 2.980% 2019 325 336 Subsidiaries CenturyLink Escrow, LLC Term loan "B" (2) 1.375% 2025 6,000 — Qwest Corporation Senior notes 6.125% - 7.750% 2021 - 2057 7,294 7,259 Term loan 2.980% 2025 100 100 Qwest Capital Funding, Inc. Senior notes 6.500% - 7.750% 2018 - 2031 981 981 Embarq Corporation and subsidiaries Senior note 7.995% 2036 1,485 1,485 First mortgage bonds 7.125% - 8.770% 2017 - 2025 223 223 Other 9.000% 2019 150 150 Capital lease and other obligations (3) Various Various 766 440 Unamortized discounts, net (166 ) (133 ) Unamortized debt issuance costs (206 ) (193 ) Total long-term debt 25,077 19,993 Less current maturities not associated with assets held for sale (196 ) (1,503 ) Less capital lease obligations associated with assets held for sale — (305 ) Long-term debt, excluding current maturities and capital leases obligations associated with assets held for sale $ 24,881 18,185 ______________________________________________________________________ (1) The aggregate amount outstanding on our Credit Facility and revolving line of credit borrowings at December 31, 2016 was $370 million with a weighted-average interest rate of 4.500% . At June 30, 2017, we had no borrowings outstanding under our Credit Facility or revolving line of credit. These amounts change on a regular basis. (2) Represents the fixed rate in effect at June 30, 2017. Please see "Level 3 Financing Credit Agreement" for information on future rates. (3) As a result of not meeting the sale leaseback accounting requirements, we must treat a certain amount of the pre-tax cash proceeds from the sale of our real estate assets as though it were the result of a financing obligation on our consolidated balance sheet. Also, the capital lease obligations that were shown as held for sale as of December 31, 2016 are retained. Please see Note 3—Sale of Data Centers and Colocation Business for additional information on our preliminary estimate of the financing obligation. New Issuances On April 27, 2017 , Qwest Corporation issued $ 575 million aggregate principal amount of 6.75% Notes due 2057 and, on May 5, 2017, issued an additional $85 million aggregate principal amount of such notes pursuant to an over-allotment option in exchange for aggregate net proceeds, after deducting underwriting discounts and other expenses, of $638 million . All of the 6.75% Notes are senior unsecured obligations and may be redeemed by Qwest Corporation, in whole or in part, on or after June 15, 2022, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. Repayments On June 15, 2017, CenturyLink, Inc. paid at maturity the $350 million principal and accrued and unpaid interest due under its 5.15% Notes. On May 9, 2017, Qwest Corporation redeemed $125 million aggregate principal amount of the remaining $288 million of its 7.5% Notes due 2051, which resulted in an immaterial loss. On May 4, 2017 , Qwest Corporation redeemed all $500 million of its 6.5% Notes due 2017, which resulted in an immaterial loss . On April 3, 2017 , CenturyLink, Inc. paid at maturity the $500 million principal and accrued and unpaid interest due under its 6.00% Notes. Level 3 Financing Credit Agreement To fund a substantial portion of its pending acquisition of Level 3, on June 19, 2017, CenturyLink, Inc. caused its wholly-owned subsidiary, CenturyLink Escrow, LLC (the "Escrow Borrower"), to enter into a credit agreement (the "Credit Agreement") with, among others, Bank of America, N.A., as administrative agent and collateral agent, providing for $9.945 billion in senior secured credit facilities (the "New Senior Secured Credit Facilities"). These facilities consist of (i) a $2 billion revolving credit facility (“the New Revolving Credit Facility”), which is expected to have 18 lenders, each with commitments ranging from $32.8 million to $167.8 million ; (ii) a $1.575 billion senior secured term loan “A” credit facility, which is expected to have 17 lenders, each with commitments ranging from $28.6 million to $132.2 million ; (iii) a $370 million senior secured term loan “A-1” credit facility with CoBank, ACB; and (iv) a $6 billion senior secured term loan “B” credit facility, which was fully funded into escrow on June 19, 2017. These escrowed debt proceeds, together with pre-funded amounts in escrow to cover interest payments, are reflected as “restricted cash” in our consolidated balance sheet as of June 30, 2017. We intend to use the proceeds of borrowings under the New Senior Secured Credit Facilities, together with other available funds, to fund the cash portion of the consideration and transaction costs payable in connection with the Level 3 acquisition, to refinance existing indebtedness, and for other general corporate purposes. The New Revolving Credit Facility and borrowings under the Term Loan A and A-1 facilities will mature five years after the closing of the Level 3 acquisition. Borrowings under the Term Loan B facility will mature on January 31, 2025. The proceeds of the borrowings under the Term Loan B facility, net of an original issue discount of 0.5% , will continue to be held in escrow prior to the closing of the Level 3 acquisition. Once all applicable conditions with respect to the Level 3 acquisition and the Credit Agreement have been met, CenturyLink, Inc. (i) will assume the Escrow Borrower’s rights and obligations as the borrower under the New Senior Secured Credit Facilities, (ii) will borrow funds under the Term Loan A and A-1 facilities and (iii) will have the ability to borrow funds under the New Revolving Credit Facility, in each case on the terms and conditions specified in the Credit Agreement. Loans under the Term Loan A and A-1 facilities and the New Revolving Credit Facility will bear interest at a rate equal to, at our option, the London Interbank Offered Rate (“LIBOR”) or the alternative base rate (each as defined in the Credit Agreement) plus an applicable margin between 2.25% to 3.00% per annum for LIBOR loans and 1.25% to 2.00% per annum for alternative base rate loans, depending on our then current total leverage ratio. Borrowings under the Term Loan B facility bore interest at 1.375% per annum through July 18, 2017 and will bear interest at 2.75% per annum thereafter through the consummation date of the Level 3 acquisition. Upon consummation of the Level 3 acquisition, borrowings under the Term Loan B facility will bear interest at LIBOR plus 2.75% per annum. After the closing of the Level 3 acquisition, loans under each of the term loan facilities will require certain specified quarterly amortization payments and certain specified mandatory prepayments in connection with certain asset sales and debt issuances and out of excess cash flow, among other things, subject in each case to certain significant exceptions. Upon consummation of the Level 3 acquisition, all of our obligations under the New Senior Secured Credit Facilities are expected to be guaranteed by certain of our subsidiaries. The guarantees by certain of those guarantors are expected to be secured by a first priority security interest in substantially all assets directly owned by them, subject to certain exceptions and limitations. The New Revolving Credit Facility is designed to replace our current revolving credit facility. A portion of the New Revolving Credit Facility in an amount not to exceed $100 million will be available for swingline loans and a portion in an amount not to exceed $400 million will be available for the issuance of letters of credit. Upon the closing of the Level 3 acquisition, CenturyLink, Inc.'s existing term loan with CoBank, ACB that is scheduled to mature in 2019 will be paid, and CenturyLink, Inc. will enter into term loan "A-1" with the same lender. Upon consummation of the Level 3 acquisition, CenturyLink, Inc. will be obligated to pay certain specified commitment and fees under the New Senior Secured Credit Facilities. With respect to the Term Loan A and A-1 facilities and the New Revolving Credit Facility, the Credit Agreement requires us to maintain (i) a maximum total leverage ratio of not more than 5.00 to 1.00 between the closing date of the Level 3 acquisition and the second anniversary thereof and 4.75 to 1.00 thereafter and (ii) a minimum consolidated interest coverage ratio of at least 2.00 to 1.00, with such ratios being determined and calculated in the manner described in the Credit Agreement. The New Senior Secured Credit Facilities contain various representations and warranties and affirmative and negative covenants that apply, in certain circumstances, before and after the closing of the Level 3 acquisition. Such covenants include, among other things and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with its affiliates, dispose of assets and merge or consolidate with any other person. There is a risk that the funding conditions for the New Senior Secured Credit Facilities (which include the completion of the Level 3 acquisition) will not be satisfied, and that the debt financing may not be available when required. In addition, we have the right to substitute the proceeds of other debt financing, or commitments for other debt financing, for all or any portion of these credit facilities. As of the date of this report, no such other debt financing has been arranged. Covenants As of June 30, 2017 , we believe we were in compliance with the provisions and covenants contained in our Credit Facility, Credit Agreement and other material debt agreements. |
Severance and Leased Real Estat
Severance and Leased Real Estate | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Severance and Leased Real Estate | Severance and Leased Real Estate Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workload demands due to the loss of customers purchasing certain services. We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our consolidated balance sheets and report severance expenses in selling, general and administrative expenses in our consolidated statements of operations. As described in Note 9—Segment Information, we do not allocate these severance expenses to our segments. We have recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate which we have ceased using, net of estimated sublease rentals. Our fair value estimates were determined using discounted cash flow methods. We recognize expense to reflect accretion of the discounted liabilities and periodically we adjust the expense when our actual subleasing experience differs from our initial estimates. We report the current portion of liabilities for ceased-use real estate leases in accrued expenses and other liabilities - other and report the noncurrent portion in deferred credits and other liabilities - other in our consolidated balance sheets. We report the related expenses in selling, general and administrative expenses in our consolidated statements of operations. At June 30, 2017 , the current and noncurrent portions of our leased real estate accrual were $8 million and $55 million , respectively. The remaining lease terms range from 0.7 years to 8.5 years , with a weighted-average of 7.4 years . Changes in our accrued liabilities for severance expenses and leased real estate were as follows: Severance Real Estate (Dollars in millions) Balance at December 31, 2016 $ 98 67 Accrued to expense 6 2 Payments, net (89 ) — Reversals and adjustments — (6 ) Balance at June 30, 2017 $ 15 63 |
Employee Benefits
Employee Benefits | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits Net periodic benefit expense (income) for our qualified and non-qualified pension plans included the following components: Pension Plans Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Service cost $ 14 15 31 32 Interest cost 105 107 206 214 Expected return on plan assets (167 ) (183 ) (333 ) (367 ) Recognition of prior service credit (2 ) (2 ) (4 ) (4 ) Recognition of actuarial loss 52 45 103 87 Net periodic pension benefit expense (income) $ 2 (18 ) 3 (38 ) Net periodic benefit expense for our post-retirement benefit plans included the following components: Post-Retirement Benefit Plans Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Service cost $ 5 5 9 10 Interest cost 25 27 50 55 Expected return on plan assets (1 ) (2 ) (1 ) (4 ) Recognition of prior service cost 5 5 10 10 Net periodic post-retirement benefit expense $ 34 35 68 71 We report service cost for our qualified pension and post-retirement benefit plans in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations. Additionally, a portion of the service cost is also allocated to certain assets under construction, which when completed are capitalized and reflected as part of property, plant and equipment in our consolidated balance sheets. The remaining components of net periodic benefit (income) expense are reported in other (expense) income, net in our consolidated statements of operations. The expected rate of return on plan assets is the long-term rate of return we expect to earn on the plans' assets, net of administrative expenses paid from plan assets. Benefits paid by our qualified pension plan are paid through a trust that holds all plan assets. Based on current laws and circumstances, we do not expect any contributions to be required for our qualified pension plan during the remainder of 2017. However, we currently expect to make a voluntary contribution of $100 million to the trust for our qualified pension plan in the third quarter of 2017 . |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per Common Share | Earnings Per Common Share Basic and diluted earnings per common share for the three and six months ended June 30, 2017 and 2016 were calculated as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions, except per share amounts, shares in thousands) Income (Numerator): Net income $ 17 196 180 432 Earnings applicable to non-vested restricted stock — — — — Net income applicable to common stock for computing basic earnings per common share 17 196 180 432 Net income as adjusted for purposes of computing diluted earnings per common share $ 17 196 180 432 Shares (Denominator): Weighted-average number of shares: Outstanding during period 549,100 545,988 548,359 545,417 Non-vested restricted stock (7,739 ) (6,361 ) (7,450 ) (6,204 ) Weighted-average shares outstanding for computing basic earnings per common share 541,361 539,627 540,909 539,213 Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities 10 10 10 10 Shares issuable under incentive compensation plans 780 738 917 1,058 Number of shares as adjusted for purposes of computing diluted earnings per common share 542,151 540,375 541,836 540,281 Basic earnings per common share $ 0.03 0.36 0.33 0.80 Diluted earnings per common share $ 0.03 0.36 0.33 0.80 Our calculation of diluted earnings per common share excludes shares of common stock that are issuable upon exercise of stock options when the exercise price is greater than the average market price of our common stock. We also exclude unvested restricted stock awards that are antidilutive as a result of unrecognized compensation cost. Such shares averaged 3.1 million and 4.1 million for the three months ended June 30, 2017 and 2016 , respectively, and averaged 3.7 million and 3.6 million for the six months ended June 30, 2017 and 2016 , respectively. |
Fair Value Disclosure
Fair Value Disclosure | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosure | Fair Value Disclosure Our financial instruments consist of cash, cash equivalents and restricted cash, accounts receivable, accounts payable and long-term debt, excluding capital lease and other obligations. Due to their short-term nature, the carrying amounts of our cash, cash equivalents and restricted cash, accounts receivable and accounts payable approximate their fair values. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB. We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on discounted future cash flows using current market interest rates. The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows: Input Level Description of Input Level 1 Observable inputs such as quoted market prices in active markets. Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 Unobservable inputs in which little or no market data exists. The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below: As of June 30, 2017 As of December 31, 2016 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities—Long-term debt, excluding capital lease and other obligations 2 $ 24,311 25,230 19,553 19,639 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Segment Data In January 2017, we implemented a new organizational structure designed to further strengthen our ability to attain our operational, strategic and financial goals. Prior to this reorganization, we operated and reported as two segments, business and consumer. As a result of this reorganization, we changed the name of the predecessor business segment to "enterprise" segment. We now have the following two reportable segments: • Enterprise Segment. Consists generally of providing strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers. Our strategic products and services offered to these customers include our MPLS, Ethernet, broadband, VoIP and other ancillary services. Our legacy services offered to these customers primarily include local and long-distance voice, including the sale of unbundled network elements ("UNEs"), which allow our wholesale customers to use all or part of our network to provide voice and data services to their customers, private line (including special access), switched access and other ancillary services. Our data integration offerings include the sale of telecommunications equipment located on customers' premises and related products and professional services, all of which are described further below under the heading "Product and Service Categories"; and • Consumer Segment. Consists generally of providing strategic and legacy products and services to residential customers. Our strategic products and services offered to these customers include our broadband, video (including our Prism TV services) and other ancillary services. Our legacy services offered to these customers include local and long-distance voice and other ancillary services. In connection with our January 2017 reorganization, we also reassigned our information technology, managed hosting, cloud hosting and hosting area network services from our former business segment to a new non-reportable operating segment. The results of our two reportable segments, enterprise and consumer, are summarized below: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Total reportable segment revenues $ 3,617 3,929 7,385 7,860 Total reportable segment expenses 1,877 2,011 3,807 3,941 Total reportable segment income $ 1,740 1,918 3,578 3,919 Total margin percentage 48 % 49 % 48 % 50 % Enterprise segment: Revenues $ 2,215 2,435 4,571 4,877 Expenses 1,285 1,372 2,615 2,691 Income $ 930 1,063 1,956 2,186 Margin percentage 42 % 44 % 43 % 45 % Consumer segment: Revenues $ 1,402 1,494 2,814 2,983 Expenses 592 639 1,192 1,250 Income $ 810 855 1,622 1,733 Margin percentage 58 % 57 % 58 % 58 % Additional Changes in Segment Reporting As a part of the implementation of the new organizational structure described in "Segment Data", we made several changes with respect to the assignment of certain expenses to our reportable segments, most notably the reassignment of certain marketing and advertising expenses from the consumer segment to the enterprise segment. We have recast our previously-reported segment results for the three and six months ended June 30, 2016, to conform to the current presentation reflected in this report. Following the consummation of our pending acquisition of Level 3 (discussed further in Note 2—Pending Acquisition of Level 3), we plan to substantially change our organizational structure. We currently expect that these organizational changes will cause us to change our current reportable segments. Product and Service Categories From time to time, we change the categorization of our products and services, and we may make similar changes in the future. During the second quarter of 2017, we determined that certain of our legacy services, specifically our dark fiber network leasing, are more closely aligned with our strategic services than with our legacy services. As a result, we now reflect these operating revenues as strategic services, and we have reclassified certain prior period amounts to conform to this change. The revision resulted in an increase of revenue from strategic services and a corresponding decrease in revenue from legacy services of $12 million and $24 million for the three and six months ended June 30, 2016 , respectively. We categorize our products, services and revenues among the following four categories: • Strategic services , which include primarily broadband, MPLS, Ethernet, hosting (including cloud hosting and managed hosting), video (including our facilities-based video services, which we offer in 16 markets), VoIP, information technology and other ancillary services; • Legacy services , which include primarily local and long-distance voice, including the sale of UNEs, private line (including special access), Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), switched access and other ancillary services; • Data integration , which includes the sale of telecommunications equipment located on customers' premises and related products and professional services, such as network management, installation and maintenance of data equipment, the building of proprietary fiber-optic broadband networks for our governmental and business customers and the reselling of software; and • Other operating revenues, which consist primarily of Connect America Fund ("CAF") support payments, Universal Service Fund ("USF") support payments and USF surcharges. We receive federal support payments from both Phase 1 and Phase 2 of the CAF program, and support payments from both federal and state USF programs. These support payments are government subsidies designed to reimburse us for various costs related to certain telecommunications services, including the costs of deploying, maintaining and operating voice and broadband infrastructure in high-cost rural areas where we are not able to fully recover our costs from our customers. We also collect USF surcharges based on specific items we list on our customers' invoices to fund the FCC's universal service programs. We also generate other operating revenues from the leasing and subleasing of space in our office buildings, warehouses and other properties. Because we centrally manage the activities that generate these other operating revenues, these revenues are not included in our segment revenues. Our operating revenue detail for our products and services consisted of the following categories: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Strategic services Enterprise high-bandwidth data services (1) $ 760 753 1,529 1,491 Other enterprise strategic services (2) 225 328 553 655 IT and managed services (3) 162 161 314 323 Consumer broadband services (4) 661 682 1,322 1,349 Other consumer strategic services (5) 107 118 210 225 Total strategic services revenues 1,915 2,042 3,928 4,043 Legacy services Enterprise voice services (6) 558 611 1,131 1,233 Enterprise low-bandwidth data services (7) 302 352 616 717 Other enterprise legacy services (8) 247 269 502 544 Consumer voice services (6) 562 615 1,137 1,249 Other consumer legacy services (9) 71 79 144 159 Total legacy services revenues 1,740 1,926 3,530 3,902 Data integration Enterprise data integration 123 122 240 237 IT and managed services data integration 9 1 10 1 Consumer data integration 1 — 1 1 Total data integration revenues 133 123 251 239 Other revenues High-cost support revenue (10) 168 173 336 347 Other revenue (11) 134 134 254 268 Total other revenues 302 307 590 615 Total revenues $ 4,090 4,398 8,299 8,799 ______________________________________________________________________ (1) Includes MPLS and Ethernet revenue (2) Includes primarily colocation, broadband, VOIP, video and fiber lease revenue (3) Includes primarily IT services, managed hosting, cloud hosting and hosting area network revenue (4) Includes broadband and related services revenue (5) Includes video and other revenue (6) Includes local and long-distance voice revenue (7) Includes private line (including special access) revenue (8) Includes UNEs, public access, switched access and other ancillary revenue (9) Includes other ancillary revenue (10) Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue (11) Includes USF surcharges and failed-sale-leaseback rental income We recognize revenues in our consolidated statements of operations for certain USF surcharges and transaction taxes that we bill to our customers. Our consolidated statements of operations also reflect the offsetting expense for the amounts we remit to the government agencies. The total amount of such surcharges and transaction taxes that we included in revenues aggregated $133 million and $144 million for the three months ended June 30, 2017 and 2016 , respectively, and $263 million and $291 million for the six months ended June 30, 2017 and 2016 , respectively. These USF surcharges, where we record revenue, are included in "other" operating revenues and these transaction taxes are included in "legacy services" revenues. We also act as a collection agent for certain other USF and transaction taxes that we are required by government agencies to bill our customers, for which we do not record any revenue or expense because we only act as a pass-through agent. Allocations of Revenues and Expenses Our segment revenues include all revenues from our strategic, legacy and data integration operations as described in more detail above. Our segment revenues are based upon each customer's classification. We report our segment revenues based upon all services provided to that segment's customers. Our segment expenses include specific expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are (i) directly associated with specific segment customers or activities and (ii) allocated expenses, which include network expenses, facilities expenses and other expenses such as fleet and real estate expenses. We do not assign depreciation and amortization expense or impairments to our segments, as the related assets and capital expenditures are centrally managed and are not monitored by or reported to the chief operating decision maker ("CODM") by segment. Generally speaking, severance expenses, restructuring expenses and certain centrally managed administrative functions (such as finance, information technology, legal and human resources) are not assigned to our segments. Interest expense is also excluded from segment results because we manage our financing on a consolidated basis and have not allocated assets or debt to specific segments. Other income and expense items are not monitored as a part of our segment operations and are therefore excluded from our segment results. The following table reconciles total reportable segment income to net income: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Total reportable segment income $ 1,740 1,918 3,578 3,919 Non-reportable segment revenues 171 162 324 324 Other operating revenues 302 307 590 615 Depreciation and amortization (949 ) (987 ) (1,829 ) (1,963 ) Other operating expenses (897 ) (753 ) (1,665 ) (1,560 ) Total other expense, net (327 ) (330 ) (651 ) (638 ) Income before income tax expense 40 317 347 697 Income tax expense (23 ) (121 ) (167 ) (265 ) Net income $ 17 196 180 432 We do not have any single customer that provides more than 10% of our total consolidated operating revenues. Substantially all of our consolidated revenues come from customers located in the United States. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are vigorously defending against all of the matters described below under the headings "Pending Matters" and "Other Proceedings and Disputes." As a matter of course, we are prepared both to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. We have established accrued liabilities for these matters described below where losses are deemed probable and reasonably estimable. Pending Matters CenturyLink and the members of the CenturyLink Board have been named as defendants in a putative shareholder class action lawsuit filed on January 11, 2017 in the 4th Judicial District Court of the State of Louisiana, Ouachita Parish, captioned Jeffery Tomasulo v. CenturyLink, Inc., et al., Docket No. C-20170110. The complaint asserts, among other things, that the members of CenturyLink’s Board allegedly breached their fiduciary duties to the CenturyLink shareholders in approving the Level 3 merger agreement and, more particularly, that: the consideration that CenturyLink agreed to pay to Level 3 stockholders in the transaction is allegedly unfairly high; the CenturyLink directors allegedly had conflicts of interest in negotiating and approving the transaction; and the disclosures set forth in our preliminary joint proxy statement/prospectus filed in December 2016 are insufficient in that they allegedly fail to contain material information concerning the transaction. The complaint seeks, among other things, a declaration that the members of the CenturyLink Board have breached their fiduciary duties, corrective disclosure, rescissory or other damages and equitable relief, including rescission of the transaction. On February 13, 2017, the parties entered into a memorandum of understanding providing for the settlement of the lawsuit. The proposed settlement is subject to court approval, among other conditions, and the amount of the settlement is not material to our consolidated financial statements. In William Douglas Fulghum, et al. v. Embarq Corporation, et al., filed on December 28, 2007 in the United States District Court for the District of Kansas, a group of retirees filed a class action lawsuit challenging the decision to make certain modifications in retiree benefits programs relating to life insurance, medical insurance and prescription drug benefits, generally effective January 1, 2006 and January 1, 2008 (which, at the time of the modifications, was expected to reduce estimated future expenses for the subject benefits by more than $300 million ). Defendants include Embarq, certain of its benefit plans, its Employee Benefits Committee and the individual plan administrator of certain of its benefits plans. Additional defendants include Sprint Nextel and certain of its benefit plans. The court certified classes on the claims for vested benefits and age discrimination, but rejected class certification on the claims for breach of fiduciary duty. On October 14, 2011, the Fulghum lawyers filed a new, related lawsuit, Abbott et al. v. Sprint Nextel et al. In Abbott, approximately 1,500 plaintiffs alleged breach of fiduciary duty in connection with the changes in retiree benefits that were at issue in Fulghum. After extensive district court proceedings in Fulghum, and an interlocutory appeal to the United States Court of Appeals for the Tenth Circuit, defendants prevailed in 2015 on all age discrimination claims and on the majority of claims for vested benefits. The district court in Fulghum subsequently granted judgment in favor of defendants on all remaining vested benefits claims, and in July 2016 ordered that any affected class members could appeal this ruling. No appeal was taken, and all claims for vested benefits thus have lapsed. On August 31, 2016, the parties reached a settlement in principle on all remaining claims in Fulghum and Abbott. Since then, a settlement agreement has been finalized and, per its terms, the vast majority of the settlement funds were paid out to the claims administrator in March 2017, with the remainder to be paid out in the next few months. The settlement payments are not material to our consolidated financial statements. Subsidiaries of CenturyLink, Inc. are among hundreds of companies involved in an industry-wide dispute, raised in nearly 100 federal lawsuits (filed between 2014 and 2016) that have been consolidated in the United States District Court for the District of Northern Texas for pretrial procedures. The disputes relate to switched access charges that local exchange carriers ("LECs") collect from interexchange carriers ("IXCs") for IXCs' use of LEC's access services. In the lawsuits, three IXCs, Sprint Communications Company L.P. ("Sprint"), affiliates of Verizon Communications Inc. ("Verizon") and affiliates of Level 3 Communications LLC ("Level 3"), assert that federal and state laws bar LECs from collecting access charges when IXCs exchange certain types of calls between mobile and wireline devices that are routed through an IXC. Some of these IXCs have asserted claims seeking refunds of payments for access charges previously paid and relief from future access charges. In addition, Level 3 has ceased paying switched access charges on these calls. In November 2015, the federal court agreed with the LECs and rejected the IXCs' contention that federal law prohibits these particular access charges, and also allowed the IXCs to refile state-law claims. The Verizon entities did not file any new state claims, while Sprint filed state claims substantially similar to those previously dismissed. Based on the November 2015 ruling, we filed suit against Level 3 seeking payment of charges which Level 3 has disputed and withheld. Separately, some of the defendants, including us, have petitioned the FCC to address these issues on an industry-wide basis. As both an IXC and a LEC, we both pay and assess significant amounts of the charges in question. The outcome of these disputes and lawsuits, as well as any related regulatory proceedings that could ensue, are currently not predictable. If we are required to stop assessing these charges or to pay refunds of any such charges, our financial results could be negatively affected. CenturyLink, Inc. and several of its subsidiaries are defendants in lawsuits filed over the past few years in the Circuit Court of St. Louis County, Missouri by numerous Missouri municipalities alleging underpayment of taxes. These municipalities are seeking, among other things, (i) a declaratory judgment regarding the extent of our obligations to pay certain business license and gross receipts taxes and (ii) a monetary award of back taxes covering 2007 to the present, plus penalties and interest. In a February 2017 ruling in connection with one of these pending cases, the court entered into a final order awarding plaintiffs $4 million and broadening the tax base on a going forward basis. We filed a notice of appeal on March 3, 2017.We expect the outcome of our appeal to reduce our ultimate exposure, although we can provide no assurances to this effect. In a June 9, 2017 ruling in connection with another one of these pending cases, the court made findings which, if not overturned, will result in a tax liability to us well in excess of the contingent liability we have established. Following further proceedings at the district court, we plan to file an appeal and continue to vigorously defend against these claims. For a variety of reasons, we expect the outcome of our appeal to significantly reduce our ultimate exposure, although we can provide no assurances to this effect. In June 2017, a former employee filed an employment lawsuit against us claiming that she was wrongfully terminated for alleging that we charged some of our retail customers for products and services they did not authorize. Shortly thereafter, and based in part on the allegations made by the former employee, a series of consumer and shareholder putative class actions were filed against us and we received a shareholder derivative demand. The Minnesota Attorney General also filed a civil suit on behalf of Minnesota consumers alleging that we engaged in improper sales and billing practices. The filing of additional related lawsuits is possible. In late June 2017, the Board of Directors formed a special committee of outside directors to investigate alleged improper sales and billing practices and related matters. The special committee is in the early stages of its investigation. Other Proceedings and Disputes From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings or proceedings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third party tort actions. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial in the coming 24 months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $100,000 in fines and penalties. The outcome of these other proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on our financial position, results of operations or cash flows. |
Other Financial Information
Other Financial Information | 6 Months Ended |
Jun. 30, 2017 | |
Additional Financial Information Disclosure [Abstract] | |
Other financial information | Other Financial Information Other Current Assets The following table presents details of other current assets in our consolidated balance sheets: As of As of (Dollars in millions) Prepaid expenses $ 247 206 Materials, supplies and inventory 144 134 Deferred activation and installation charges 105 101 Other 195 106 Total other current assets $ 691 547 Selected Current Liabilities Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows: As of As of (Dollars in millions) Accounts payable $ 944 1,179 Other current liabilities: Accrued rent $ 30 31 Legal contingencies 26 30 Other 182 152 Total other current liabilities $ 238 213 Included in accounts payable at June 30, 2017 and December 31, 2016 , were (i) $51 million and $56 million , respectively, representing book overdrafts and (ii) $73 million and $196 million , respectively, associated with capital expenditures. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Information Relating to 2017 The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and six months ended June 30, 2017 : Pension Plans Post-Retirement Benefit Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at March 31, 2017 $ (1,865 ) (159 ) (62 ) (2,086 ) Other comprehensive income (loss) before reclassifications — — 4 4 Amounts reclassified from accumulated other comprehensive income 29 3 — 32 Net current-period other comprehensive income 29 3 4 36 Balance at June 30, 2017 $ (1,836 ) (156 ) (58 ) (2,050 ) Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2016 $ (1,895 ) (162 ) (60 ) (2,117 ) Other comprehensive income (loss) before reclassifications — — 2 2 Amounts reclassified from accumulated other comprehensive income 59 6 — 65 Net current-period other comprehensive income 59 6 2 67 Balance at June 30, 2017 $ (1,836 ) (156 ) (58 ) (2,050 ) The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and six months ended June 30, 2017 : Three Months Ended June 30, 2017 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 52 Other (expense) income, net Prior service cost 3 Other (expense) income, net Total before tax 55 Income tax benefit (23 ) Income tax expense Net of tax $ 32 Six Months Ended June 30, 2017 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 103 Other (expense) income, net Prior service cost 6 Other (expense) income, net Total before tax 109 Income tax benefit (44 ) Income tax expense Net of tax $ 65 ________________________________________________________________________ (1) See Note 6—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. Information Relating to 2016 The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and six months ended June 30, 2016 : Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at March 31, 2016 $ (1,690 ) (177 ) (40 ) (1,907 ) Other comprehensive income (loss) before reclassifications — — (4 ) (4 ) Amounts reclassified from accumulated other comprehensive income 27 3 — 30 Net current-period other comprehensive income 27 3 (4 ) 26 Balance at June 30, 2016 $ (1,663 ) (174 ) (44 ) (1,881 ) Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2015 $ (1,715 ) (180 ) (39 ) (1,934 ) Other comprehensive income (loss) before reclassifications — — (5 ) (5 ) Amounts reclassified from accumulated other comprehensive income 52 6 — 58 Net current-period other comprehensive income 52 6 (5 ) 53 Balance at June 30, 2016 $ (1,663 ) (174 ) (44 ) (1,881 ) The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and six months ended June 30, 2016 : Three Months Ended June 30, 2016 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 45 Other (expense) income, net Prior service cost 3 Other (expense) income, net Total before tax 48 Income tax benefit (18 ) Income tax expense Net of tax $ 30 Six Months Ended June 30, 2016 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 87 Other (expense) income, net Prior service cost 6 Other (expense) income, net Total before tax 93 Income tax benefit (35 ) Income tax expense Net of tax $ 58 ________________________________________________________________________ (1) See Note 6—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. |
Labor Union Contracts
Labor Union Contracts | 6 Months Ended |
Jun. 30, 2017 | |
Labor Union Contracts [Abstract] | |
Concentration risk disclosure | Labor Union Contracts Approximately 36% of our employees are members of various bargaining units represented by the Communication Workers of America ("CWA") and the International Brotherhood of Electrical Workers ("IBEW"). Approximately 1,000 of our employees are subject to collective bargaining agreements that are scheduled to expire during the remainder of 2017. We recently reached new agreements with the CWA District 7 and IBEW Local 206, which represented approximately 10,000 , or 25% , of our employees that were subject to collective bargaining agreements expiring on October 7, 2017. The new agreements were effective June 18, 2017 and will expire on March 28, 2020 and include terms substantially similar to those contained in the prior agreements. |
Background (Policies)
Background (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation policy | The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other (expense) income, net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities. |
Dividends | We pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital. |
Reclassification policy | We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 9—Segment Information for additional information. These changes had no impact on total operating revenues, total operating expenses or net income for any period. |
Recent accounting pronouncements | Recently Adopted Accounting Pronouncements In the second quarter of 2017, we adopted Accounting Standards Update ("ASU") 2016-18, "Restricted Cash (a consensus of the Financial Accounting Standards Board ("FASB") Emerging Issues Task Force)" ("ASU 2016-18"). In the first quarter of 2017, we adopted ASU 2016-09, “Improvements to Employee Share Based Compensation” (“ASU 2016-09”) and ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). Each of these are described further below. Restricted Cash On November 17, 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents as compared to the previous presentation, which explains only the change in cash and cash equivalents. ASU 2016-18 is effective January 1, 2018, but early adoption is permitted and requires retrospective application of the requirements to all previous periods presented. We early adopted ASU 2016-18 in the second quarter of 2017. Prior to the financing transactions we entered into in the second quarter of 2017 related to the Level 3 acquisition, as further described in Note 4—Long-Term Debt and Credit Facilities, our restricted cash balances have been immaterial. With the adoption of ASU 2016-18, our "net increase in cash, cash equivalents and restricted cash" presented in our consolidated statements of cash flows for the six months ended June 30, 2017 increased by $6 billion as a result of the inclusion of the restricted cash related to the Level 3 financing transaction, with a corresponding increase in net cash generated from financing activities. Share-based Compensation ASU 2016-09 modified the accounting and associated income tax accounting for share-based compensation in order to reduce the cost and complexity associated with previous U.S. generally accepted accounting principles (“GAAP”). The primary provisions of ASU 2016-09 that affect our consolidated financial statements for the three and six months ended June 30, 2017 are: 1. A reclassification of the income tax effect associated with the difference between the expense recognized for share-based payments and the related tax deduction from additional paid-in capital to income tax expense. This change was applied on a prospective basis and resulted in a $1 million decrease in income tax expense for the three months ended June 30, 2017 and a $6 million increase in income tax expense for the six months ended June 30, 2017 . 2. We elected to change our accounting policy to account for forfeitures of share-based payment grants as they occur as opposed to our previous policy of estimating the forfeitures on the grant date. The cumulative effect of adopting this policy as of January 1, 2017 resulted in a decrease of $3 million , net of a $2 million tax effect, in accumulated deficit. Net Periodic Pension and Postretirement Benefit Costs ASU 2017-07 modified the presentation of net periodic pension and postretirement benefit costs and requires the service cost component to be reported separately from the other components in order to provide more useful information. Under ASU 2017-07, the service cost component of net periodic pension and postretirement benefit costs is required to be presented in the same expense category as the related salary and wages for the employee. The other components of the net periodic pension and postretirement benefit costs are required to be recognized below operating income in other (expense) income, net in our consolidated statements of operations. This change was applied on a retrospective basis to all previous periods to match the current period presentation. This retrospective application resulted in a $3 million and $9 million reduction in operating income and a corresponding decrease in total other expense, net for the three and six months ended June 30, 2016 , respectively. Recent Accounting Pronouncements Goodwill Impairment On January 26, 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the impairment testing for goodwill by changing the measurement for goodwill impairment. Under current rules, we are required to compute the implied fair value of goodwill to measure the impairment amount if the carrying value of a reporting unit exceeds its fair value. Under ASU 2017-04, the goodwill impairment charge will equal the excess of the reporting unit carrying value above fair value, limited to the amount of goodwill assigned to the reporting unit. We are required to adopt the provisions of ASU 2017-04 for any goodwill impairment tests, including our required annual test, occurring after January 1, 2020, but have the option to early adopt for any impairment test that we are required to perform. We have not determined if we will elect to early adopt the provisions of ASU 2017-04. The provisions of ASU 2017-04 would not have affected our last goodwill impairment assessment, but no assurance can be provided that the simplified testing methodology will not affect our goodwill impairment assessment in the future. Income Taxes On October 24, 2016, the FASB issued ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” ("ASU 2016-16"). ASU 2016-16 eliminates the current prohibition on the recognition of the income tax effects on the transfer of assets among our subsidiaries. After adoption of this ASU, the income tax effects associated with these asset transfers, except for the transfer of inventory, will be recognized in the period the asset is transferred versus the current deferral and recognition upon either the sale of the asset to a third party or over the remaining useful life of the asset. We are currently reviewing the requirements of this ASU and evaluating the impact on our consolidated financial statements. We expect to adopt the provisions of ASU 2016-16 on the required adoption date of January 1, 2018. The impact of adopting ASU 2016-16, if any, will be recognized through a cumulative adjustment to (accumulated deficit) retained earnings as of the date of adoption. Financial Instruments On June 16, 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires our management team to estimate the total credit losses expected on the portfolio of financial instruments. We are currently reviewing the requirements of the standard and evaluating the impact on our consolidated financial statements. We are required to adopt the provisions of ASU 2016-13 effective January 1, 2020, but could elect to early adopt the provisions as of January 1, 2019. We expect to recognize the impacts of adopting ASU 2016-13 through a cumulative adjustment to (accumulated deficit) retained earnings as of the date of adoption. As of the date of this report, we have not yet determined the date we will adopt ASU 2016-13. Leases On February 25, 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 will require lessees to present right-of-use assets and lease liabilities on their balance sheets for operating leases, which are currently not reflected on their balance sheets. ASU 2016-02 is effective for annual and interim periods beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. Upon adoption of ASU 2016-02, we are required to recognize and measure leases at the beginning of the earliest period presented in our consolidated financial statements using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. We will implement this new standard on its effective date, but we have not yet decided which practical expedient options we will elect. We are currently evaluating new lease administrative and accounting systems and are in the process of developing an implementation plan. We are also currently evaluating and assessing the impact ASU 2016-02 will have on us and our consolidated financial statements. As of the date of this report, we believe it is premature to provide any estimate of the impact of adopting ASU 2016-02. Upon the January 1, 2019 implementation of the new accounting standard for Leases (ASU 2016-02), accounting for the failed-sale-leaseback transaction described in Note 3 — Sale of Data Centers and Colocation Business, will no longer be applicable based on our facts and circumstances, and the real estate assets and corresponding financing obligation will be derecognized from our consolidated balance sheet. Revenue Recognition On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 replaces virtually all existing GAAP on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs, but we expect we will defer certain contract acquisition costs in the future, which could have the impact of lowering our operating expenses. We currently defer contract fulfillment costs only to the extent of any deferred revenue. Under ASU 2014-09, in certain transactions our deferred contract fulfillment costs could exceed our deferred revenues, which could result in an increase in deferred costs, and could also impact the timing on our recognition of these deferred costs. On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year until January 1, 2018, which is the date we plan to adopt this standard. ASU 2014-09 may be adopted by applying the provisions of this standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis, which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2018. We have completed our initial assessment of our business and systems requirements, and we are currently developing and implementing a new revenue recognition system to comply with the requirements of ASU 2014-09. Based on this initial assessment, we currently plan to adopt the new revenue recognition standard under the modified retrospective transition method. As of the date of this report, we are not able to provide reasonably accurate estimates of the impact of implementing ASU 2014-09 on the timing of our revenue recognition or the transition adjustment that will be recorded to equity on January 1, 2018. |
Sale of Data Centers and Colo24
Sale of Data Centers and Colocation Business (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of disposal assets held-for-sale and liabilities attributable to disposal assets held-for-sale | The following table reflects the assets sold to and the liabilities assumed by Cyxtera Technologies on May 1, 2017, including our preliminary estimates of the impact of failed-sale-leaseback: Dollars in millions Goodwill $ 1,141 Property, plant and equipment 1,046 Other intangible assets 249 Other assets 62 Less assets recorded as part of the failed-sale-leaseback (501 ) Total net amount of assets derecognized $ 1,997 Capital lease obligations $ 294 Other liabilities 273 Less imputed financing obligations from the failed-sale-leaseback (648 ) Total net imputed liabilities recognized $ (81 ) |
Sale-leaseback transactions | In addition, based on our preliminary estimates, the failed-sale-leaseback accounting treatment had the following effects on our consolidated results of operations for the three and six months ended June 30, 2017: Positive (Negative) Impact to Net Income Dollars in millions Increase in revenue $ 12 Decrease in cost of sales 3 Increase in loss on sale of business included in selling, general and administrative expense (117 ) Increase in depreciation expense (one-time) (44 ) Increase in depreciation expense (ongoing) (10 ) Increase in interest expense (8 ) Decrease in income tax expense 63 Decrease in net income $ (101 ) |
Long-Term Debt and Credit Fac25
Long-Term Debt and Credit Facilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt including unamortized discounts and premiums | Long-term debt, including unamortized discounts and premiums and unamortized debt issuance costs, consisting of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including CenturyLink Escrow, LLC, Qwest Corporation, Qwest Capital Funding, Inc. and Embarq Corporation and its subsidiaries ("Embarq"), were as follows: Interest Rates Maturities As of June 30, 2017 As of (Dollars in millions) CenturyLink, Inc. Senior notes 5.625% - 7.650% 2019 - 2042 $ 8,125 8,975 Credit Facility and revolving line of credit (1) —% 2019 — 370 Term loan 2.980% 2019 325 336 Subsidiaries CenturyLink Escrow, LLC Term loan "B" (2) 1.375% 2025 6,000 — Qwest Corporation Senior notes 6.125% - 7.750% 2021 - 2057 7,294 7,259 Term loan 2.980% 2025 100 100 Qwest Capital Funding, Inc. Senior notes 6.500% - 7.750% 2018 - 2031 981 981 Embarq Corporation and subsidiaries Senior note 7.995% 2036 1,485 1,485 First mortgage bonds 7.125% - 8.770% 2017 - 2025 223 223 Other 9.000% 2019 150 150 Capital lease and other obligations (3) Various Various 766 440 Unamortized discounts, net (166 ) (133 ) Unamortized debt issuance costs (206 ) (193 ) Total long-term debt 25,077 19,993 Less current maturities not associated with assets held for sale (196 ) (1,503 ) Less capital lease obligations associated with assets held for sale — (305 ) Long-term debt, excluding current maturities and capital leases obligations associated with assets held for sale $ 24,881 18,185 ______________________________________________________________________ (1) The aggregate amount outstanding on our Credit Facility and revolving line of credit borrowings at December 31, 2016 was $370 million with a weighted-average interest rate of 4.500% . At June 30, 2017, we had no borrowings outstanding under our Credit Facility or revolving line of credit. These amounts change on a regular basis. (2) Represents the fixed rate in effect at June 30, 2017. Please see "Level 3 Financing Credit Agreement" for information on future rates. (3) As a result of not meeting the sale leaseback accounting requirements, we must treat a certain amount of the pre-tax cash proceeds from the sale of our real estate assets as though it were the result of a financing obligation on our consolidated balance sheet. Also, the capital lease obligations that were shown as held for sale as of December 31, 2016 are retained. Please see Note 3—Sale of Data Centers and Colocation Business for additional information on our preliminary estimate of the financing obligation. |
Severance and Leased Real Est26
Severance and Leased Real Estate (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in accrued liabilities for severance expenses and leased real estate | Changes in our accrued liabilities for severance expenses and leased real estate were as follows: Severance Real Estate (Dollars in millions) Balance at December 31, 2016 $ 98 67 Accrued to expense 6 2 Payments, net (89 ) — Reversals and adjustments — (6 ) Balance at June 30, 2017 $ 15 63 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic pension benefit (income) expense and post-retirement benefit expense | Net periodic benefit expense (income) for our qualified and non-qualified pension plans included the following components: Pension Plans Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Service cost $ 14 15 31 32 Interest cost 105 107 206 214 Expected return on plan assets (167 ) (183 ) (333 ) (367 ) Recognition of prior service credit (2 ) (2 ) (4 ) (4 ) Recognition of actuarial loss 52 45 103 87 Net periodic pension benefit expense (income) $ 2 (18 ) 3 (38 ) Net periodic benefit expense for our post-retirement benefit plans included the following components: Post-Retirement Benefit Plans Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Service cost $ 5 5 9 10 Interest cost 25 27 50 55 Expected return on plan assets (1 ) (2 ) (1 ) (4 ) Recognition of prior service cost 5 5 10 10 Net periodic post-retirement benefit expense $ 34 35 68 71 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per common share | Basic and diluted earnings per common share for the three and six months ended June 30, 2017 and 2016 were calculated as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions, except per share amounts, shares in thousands) Income (Numerator): Net income $ 17 196 180 432 Earnings applicable to non-vested restricted stock — — — — Net income applicable to common stock for computing basic earnings per common share 17 196 180 432 Net income as adjusted for purposes of computing diluted earnings per common share $ 17 196 180 432 Shares (Denominator): Weighted-average number of shares: Outstanding during period 549,100 545,988 548,359 545,417 Non-vested restricted stock (7,739 ) (6,361 ) (7,450 ) (6,204 ) Weighted-average shares outstanding for computing basic earnings per common share 541,361 539,627 540,909 539,213 Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities 10 10 10 10 Shares issuable under incentive compensation plans 780 738 917 1,058 Number of shares as adjusted for purposes of computing diluted earnings per common share 542,151 540,375 541,836 540,281 Basic earnings per common share $ 0.03 0.36 0.33 0.80 Diluted earnings per common share $ 0.03 0.36 0.33 0.80 |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of the three input levels in the hierarchy of fair value measurements | The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows: Input Level Description of Input Level 1 Observable inputs such as quoted market prices in active markets. Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 Unobservable inputs in which little or no market data exists. |
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input level to determine fair values | The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below: As of June 30, 2017 As of December 31, 2016 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities—Long-term debt, excluding capital lease and other obligations 2 $ 24,311 25,230 19,553 19,639 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment results | The results of our two reportable segments, enterprise and consumer, are summarized below: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Total reportable segment revenues $ 3,617 3,929 7,385 7,860 Total reportable segment expenses 1,877 2,011 3,807 3,941 Total reportable segment income $ 1,740 1,918 3,578 3,919 Total margin percentage 48 % 49 % 48 % 50 % Enterprise segment: Revenues $ 2,215 2,435 4,571 4,877 Expenses 1,285 1,372 2,615 2,691 Income $ 930 1,063 1,956 2,186 Margin percentage 42 % 44 % 43 % 45 % Consumer segment: Revenues $ 1,402 1,494 2,814 2,983 Expenses 592 639 1,192 1,250 Income $ 810 855 1,622 1,733 Margin percentage 58 % 57 % 58 % 58 % |
Schedule of operating revenues by products and services | Our operating revenue detail for our products and services consisted of the following categories: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Strategic services Enterprise high-bandwidth data services (1) $ 760 753 1,529 1,491 Other enterprise strategic services (2) 225 328 553 655 IT and managed services (3) 162 161 314 323 Consumer broadband services (4) 661 682 1,322 1,349 Other consumer strategic services (5) 107 118 210 225 Total strategic services revenues 1,915 2,042 3,928 4,043 Legacy services Enterprise voice services (6) 558 611 1,131 1,233 Enterprise low-bandwidth data services (7) 302 352 616 717 Other enterprise legacy services (8) 247 269 502 544 Consumer voice services (6) 562 615 1,137 1,249 Other consumer legacy services (9) 71 79 144 159 Total legacy services revenues 1,740 1,926 3,530 3,902 Data integration Enterprise data integration 123 122 240 237 IT and managed services data integration 9 1 10 1 Consumer data integration 1 — 1 1 Total data integration revenues 133 123 251 239 Other revenues High-cost support revenue (10) 168 173 336 347 Other revenue (11) 134 134 254 268 Total other revenues 302 307 590 615 Total revenues $ 4,090 4,398 8,299 8,799 ______________________________________________________________________ (1) Includes MPLS and Ethernet revenue (2) Includes primarily colocation, broadband, VOIP, video and fiber lease revenue (3) Includes primarily IT services, managed hosting, cloud hosting and hosting area network revenue (4) Includes broadband and related services revenue (5) Includes video and other revenue (6) Includes local and long-distance voice revenue (7) Includes private line (including special access) revenue (8) Includes UNEs, public access, switched access and other ancillary revenue (9) Includes other ancillary revenue (10) Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue (11) Includes USF surcharges and failed-sale-leaseback rental income |
Reconciliation of operating profit (loss) from segments to consolidated net income | The following table reconciles total reportable segment income to net income: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (Dollars in millions) Total reportable segment income $ 1,740 1,918 3,578 3,919 Non-reportable segment revenues 171 162 324 324 Other operating revenues 302 307 590 615 Depreciation and amortization (949 ) (987 ) (1,829 ) (1,963 ) Other operating expenses (897 ) (753 ) (1,665 ) (1,560 ) Total other expense, net (327 ) (330 ) (651 ) (638 ) Income before income tax expense 40 317 347 697 Income tax expense (23 ) (121 ) (167 ) (265 ) Net income $ 17 196 180 432 |
Other Financial Information (Ta
Other Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Additional Financial Information Disclosure [Abstract] | |
Schedule of components of other current assets | The following table presents details of other current assets in our consolidated balance sheets: As of As of (Dollars in millions) Prepaid expenses $ 247 206 Materials, supplies and inventory 144 134 Deferred activation and installation charges 105 101 Other 195 106 Total other current assets $ 691 547 |
Schedule of current liabilities including accounts payable and other current liabilities | Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows: As of As of (Dollars in millions) Accounts payable $ 944 1,179 Other current liabilities: Accrued rent $ 30 31 Legal contingencies 26 30 Other 182 152 Total other current liabilities $ 238 213 |
Accumulated Other Comprehensi32
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Summary of the entity's accumulated other comprehensive income (loss) by component | The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and six months ended June 30, 2017 : Pension Plans Post-Retirement Benefit Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at March 31, 2017 $ (1,865 ) (159 ) (62 ) (2,086 ) Other comprehensive income (loss) before reclassifications — — 4 4 Amounts reclassified from accumulated other comprehensive income 29 3 — 32 Net current-period other comprehensive income 29 3 4 36 Balance at June 30, 2017 $ (1,836 ) (156 ) (58 ) (2,050 ) Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2016 $ (1,895 ) (162 ) (60 ) (2,117 ) Other comprehensive income (loss) before reclassifications — — 2 2 Amounts reclassified from accumulated other comprehensive income 59 6 — 65 Net current-period other comprehensive income 59 6 2 67 Balance at June 30, 2017 $ (1,836 ) (156 ) (58 ) (2,050 ) | The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and six months ended June 30, 2016 : Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at March 31, 2016 $ (1,690 ) (177 ) (40 ) (1,907 ) Other comprehensive income (loss) before reclassifications — — (4 ) (4 ) Amounts reclassified from accumulated other comprehensive income 27 3 — 30 Net current-period other comprehensive income 27 3 (4 ) 26 Balance at June 30, 2016 $ (1,663 ) (174 ) (44 ) (1,881 ) Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2015 $ (1,715 ) (180 ) (39 ) (1,934 ) Other comprehensive income (loss) before reclassifications — — (5 ) (5 ) Amounts reclassified from accumulated other comprehensive income 52 6 — 58 Net current-period other comprehensive income 52 6 (5 ) 53 Balance at June 30, 2016 $ (1,663 ) (174 ) (44 ) (1,881 ) |
Schedule of reclassifications out of accumulated other comprehensive income (loss) by component | The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and six months ended June 30, 2017 : Three Months Ended June 30, 2017 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 52 Other (expense) income, net Prior service cost 3 Other (expense) income, net Total before tax 55 Income tax benefit (23 ) Income tax expense Net of tax $ 32 Six Months Ended June 30, 2017 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 103 Other (expense) income, net Prior service cost 6 Other (expense) income, net Total before tax 109 Income tax benefit (44 ) Income tax expense Net of tax $ 65 ________________________________________________________________________ (1) See Note 6—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. | The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and six months ended June 30, 2016 : Three Months Ended June 30, 2016 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 45 Other (expense) income, net Prior service cost 3 Other (expense) income, net Total before tax 48 Income tax benefit (18 ) Income tax expense Net of tax $ 30 Six Months Ended June 30, 2016 Decrease (Increase) Affected Line Item in Consolidated Statement of (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 87 Other (expense) income, net Prior service cost 6 Other (expense) income, net Total before tax 93 Income tax benefit (35 ) Income tax expense Net of tax $ 58 ________________________________________________________________________ (1) See Note 6—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. |
Background (Details)
Background (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net increase in cash, cash equivalents and restricted cash | $ 6,133 | $ 65 | ||
Income tax expense | $ 23 | $ 121 | 167 | 265 |
Operating income | 367 | 647 | 998 | 1,335 |
Total other expense, net | 327 | 330 | 651 | 638 |
Accounting Standards Update 2016-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Income tax expense | $ (1) | 6 | ||
Accounting Standards Update 2016-18 | New accounting pronouncement, early adoption, effect | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net increase in cash, cash equivalents and restricted cash | 6,000 | |||
Net cash provide by (used in) financing activities | 6,000 | |||
Accounting Standards Update 2016-09 | Restatement adjustment | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect on retained earnings, net of tax | 3 | |||
Cumulative effect on retained earnings, tax | $ 2 | |||
Accounting Standards Update 2017-07 | Restatement adjustment | New accounting pronouncement, early adoption, effect | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating income | (3) | (9) | ||
Total other expense, net | $ (3) | $ (9) |
Pending Acquisition of Level 3
Pending Acquisition of Level 3 (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | |
Business acquisition | ||||
Outstanding long-term debt | $ 25,077 | $ 19,993 | ||
Level 3 Communications, Inc. | Scenario, Forecast | ||||
Business acquisition | ||||
Price per share of stock in business acquisition (per share) | $ 26.50 | |||
Level 3 Communications, Inc. | Scenario, Forecast | CenturyLink, Inc. | ||||
Business acquisition | ||||
Business acquisition, CenturyLink, Inc. shareholders ownership control (percent) | 51.00% | |||
Business acquisition, Level 3 Communications, Inc. shareholders ownership control (percent) | 49.00% | |||
Level 3 Communications, Inc. | Common Stock | Scenario, Forecast | ||||
Business acquisition | ||||
Stock issuable in business acquisition on a per share basis, Description | 1.4286 of CenturyLink shares for each share of Level 3 common stock | |||
Level 3 Communications, Inc. | Level 3 Communications, Inc. | ||||
Business acquisition | ||||
Outstanding long-term debt | $ 11,000 |
Sale of Data Centers and Colo35
Sale of Data Centers and Colocation Business (Details) - USD ($) $ in Millions | May 01, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Income tax expense | $ 23 | $ 121 | $ 167 | $ 265 | ||||
Less assets recorded as part of the failed-sale-leaseback | (40,744) | $ (39,194) | (40,744) | $ (40,744) | ||||
Total net amount of assets derecognized | 7 | 2,376 | 7 | 7 | ||||
Capital lease obligations | 0 | 305 | 0 | 0 | ||||
Total net imputed liabilities recognized | 0 | (419) | 0 | 0 | ||||
Sale and leaseback transaction loss, net | (119) | $ 0 | ||||||
Current amount due from affiliate | 83 | 83 | 83 | |||||
Sale-leaseback transaction rent expense | 14 | |||||||
Colocation Business and Data Centers | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Net proceeds from sales of data centers and colocation business | $ 1,800 | |||||||
Income tax expense | 32 | $ 15 | $ 18 | 65 | ||||
Depreciation and amortization | 17 | 67 | ||||||
Colocation Business and Data Centers | Disposal group disposed of by sale, not discontinued operations | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Goodwill | 1,141 | |||||||
Property, plant and equipment | 1,046 | |||||||
Other intangible assets | 249 | |||||||
Other assets | 62 | |||||||
Total net amount of assets derecognized | 1,997 | |||||||
Capital lease obligations | 294 | |||||||
Other liabilities | 273 | |||||||
Total net imputed liabilities recognized | (81) | |||||||
Disposal group, gain (loss) on disposal | (2) | |||||||
SIS Holdings, LP | CenturyLink, Inc. | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
CenturyLink, Inc.'s value of minority stake | 150 | 150 | $ 150 | |||||
Cyxtera Technologies | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Income tax expense | $ (63) | (63) | ||||||
Less assets recorded as part of the failed-sale-leaseback | (501) | |||||||
Less imputed financing obligations from the failed-sale-leaseback | $ (648) | |||||||
Gain (Loss) on asset leaseback, failed-sale-leaseback transaction | (117) | |||||||
Sale and leaseback transaction loss, net | $ (119) |
Sale of Data Centers and Colo36
Sale of Data Centers and Colocation Business (Details 2) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Sale Leaseback Transaction [Line Items] | ||||
Revenues | $ 4,090 | $ 4,398 | $ 8,299 | $ 8,799 |
Cost of services and products (exclusive of depreciation and amortization) | (1,890) | (1,949) | (3,778) | (3,849) |
Selling, general and administrative | (884) | (815) | (1,694) | (1,652) |
Depreciation | (949) | (987) | (1,829) | (1,963) |
Interest expense | (320) | (340) | (638) | (671) |
Income tax expense | (23) | (121) | (167) | (265) |
NET INCOME | 17 | $ 196 | 180 | $ 432 |
Cyxtera Technologies | ||||
Sale Leaseback Transaction [Line Items] | ||||
Revenues | 12 | 12 | ||
Cost of services and products (exclusive of depreciation and amortization) | 3 | 3 | ||
Selling, general and administrative | (117) | (117) | ||
Depreciation expense on assets reclassified from held-for-sale | (44) | (44) | ||
Depreciation | (10) | (10) | ||
Interest expense | (8) | (8) | ||
Income tax expense | 63 | 63 | ||
NET INCOME | $ (101) | $ (101) |
Long-Term Debt and Credit Fac37
Long-Term Debt and Credit Facilities (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Long-term Debt and Credit Facilities | ||
Capital lease and other obligations | $ 766 | $ 440 |
Unamortized discounts, net | (166) | (133) |
Unamortized debt issuance costs | (206) | (193) |
Total long-term debt | 25,077 | 19,993 |
Less current maturities not associated with assets held for sale | (196) | (1,503) |
Less capital lease obligations associated with assets held for sale | 0 | (305) |
Long-term debt, excluding current maturities and capital leases obligations associated with assets held for sale | 24,881 | 18,185 |
CenturyLink, Inc. | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | 8,125 | 8,975 |
CenturyLink, Inc. | Line of credit | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 0 | $ 370 |
Interest rate at period end - Credit facility and revolving line of credit (percent) | 0.00% | |
Long-term debt, weighted average interest rate (percent) | 4.50% | |
CenturyLink, Inc. | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 325 | $ 336 |
Stated interest rate (percent) | 2.98% | |
CenturyLink, Inc. | Minimum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 5.625% | |
CenturyLink, Inc. | Maximum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 7.65% | |
CenturyLink Escrow, LLC | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 6,000 | 0 |
Stated interest rate (percent) | 1.375% | |
Qwest Corporation | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 7,294 | 7,259 |
Qwest Corporation | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 100 | 100 |
Stated interest rate (percent) | 2.98% | |
Qwest Corporation | Minimum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 6.125% | |
Qwest Corporation | Maximum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 7.75% | |
Qwest Capital Funding, Inc. | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 981 | 981 |
Qwest Capital Funding, Inc. | Minimum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 6.50% | |
Qwest Capital Funding, Inc. | Maximum | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 7.75% | |
Embarq Corporation | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 1,485 | 1,485 |
Stated interest rate (percent) | 7.995% | |
Embarq Corporation | First mortgage bonds | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 223 | 223 |
Embarq Corporation | Other | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 150 | $ 150 |
Stated interest rate (percent) | 9.00% | |
Embarq Corporation | Minimum | First mortgage bonds | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 7.125% | |
Embarq Corporation | Maximum | First mortgage bonds | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate (percent) | 8.77% |
Long-Term Debt and Credit Fac38
Long-Term Debt and Credit Facilities (Details 2) $ in Millions | Oct. 01, 2017 | Jun. 19, 2017USD ($) | May 05, 2017USD ($) | Jul. 19, 2017 | Jun. 30, 2017USD ($) | Jun. 15, 2017USD ($) | May 08, 2017USD ($) | May 04, 2017USD ($) | Apr. 28, 2017USD ($) | Apr. 03, 2017USD ($) | Dec. 31, 2016USD ($) |
Credit Agreement (New Senior Secured Credit Facilities) | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Long-term debt, gross | $ 9,945 | ||||||||||
Qwest Corporation | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Long-term debt, gross | $ 7,294 | $ 7,259 | |||||||||
Qwest Corporation | Senior notes | 6.5% Notes due 2017 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 6.50% | ||||||||||
Debt instrument, repurchased face amount | $ 500 | ||||||||||
Qwest Corporation | Senior notes | 6.75% Notes due 2057 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt instrument, face amount | $ 575 | ||||||||||
Stated interest rate (percent) | 6.75% | ||||||||||
Face amount of over-allotment | $ 85 | ||||||||||
Proceeds from debt, net of issuance costs | $ 638 | ||||||||||
Qwest Corporation | Senior notes | 7.5% Notes due 2051 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt instrument, face amount | $ 288 | ||||||||||
Stated interest rate (percent) | 7.50% | ||||||||||
Debt instrument, repurchased face amount | $ 125 | ||||||||||
Qwest Corporation | Medium-term notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 2.98% | ||||||||||
Long-term debt, gross | $ 100 | 100 | |||||||||
CenturyLink, Inc. | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Long-term debt, gross | $ 8,125 | 8,975 | |||||||||
CenturyLink, Inc. | Senior notes | 5.15% Notes due 2017 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 5.15% | ||||||||||
Debt instrument, repurchased face amount | $ 350 | ||||||||||
CenturyLink, Inc. | Senior notes | 6.00% Noted due 2017 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 6.00% | ||||||||||
Debt instrument, repurchased face amount | $ 500 | ||||||||||
CenturyLink, Inc. | Medium-term notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 2.98% | ||||||||||
Long-term debt, gross | $ 325 | 336 | |||||||||
CenturyLink Escrow, LLC | Credit Agreement (New Senior Secured Credit Facilities) | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt covenants description | The New Senior Secured Credit Facilities contain various representations and warranties and affirmative and negative covenants that apply, in certain circumstances, before and after the closing of the Level 3 acquisition. Such covenants include, among other things and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with its affiliates, dispose of assets and merge or consolidate with any other person. | ||||||||||
CenturyLink Escrow, LLC | Medium-term notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 1.375% | ||||||||||
Long-term debt, gross | $ 6,000 | $ 0 | |||||||||
CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt instrument, face amount | $ 1,575 | ||||||||||
Credit facility lenders | 17 | ||||||||||
Debt covenants description | With respect to the Term Loan A and A-1 facilities and the New Revolving Credit Facility, the Credit Agreement requires us to maintain (i) a maximum total leverage ratio of not more than 5.00 to 1.00 between the closing date of the Level 3 acquisition and the second anniversary thereof and 4.75 to 1.00 thereafter and (ii) a minimum consolidated interest coverage ratio of at least 2.00 to 1.00, with such ratios being determined and calculated in the manner described in the Credit Agreement. | ||||||||||
CenturyLink Escrow, LLC | Medium-term notes | Term Loan B | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt instrument, face amount | $ 6,000 | ||||||||||
Stated interest rate (percent) | 1.375% | ||||||||||
Original issue discount (percent) | 0.50% | ||||||||||
CenturyLink Escrow, LLC | Medium-term notes | Term Loan A-1 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Debt instrument, face amount | $ 370 | ||||||||||
Debt covenants description | With respect to the Term Loan A and A-1 facilities and the New Revolving Credit Facility, the Credit Agreement requires us to maintain (i) a maximum total leverage ratio of not more than 5.00 to 1.00 between the closing date of the Level 3 acquisition and the second anniversary thereof and 4.75 to 1.00 thereafter and (ii) a minimum consolidated interest coverage ratio of at least 2.00 to 1.00, with such ratios being determined and calculated in the manner described in the Credit Agreement. | ||||||||||
CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Credit facility lenders | 18 | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 2,000 | ||||||||||
Debt covenants description | With respect to the Term Loan A and A-1 facilities and the New Revolving Credit Facility, the Credit Agreement requires us to maintain (i) a maximum total leverage ratio of not more than 5.00 to 1.00 between the closing date of the Level 3 acquisition and the second anniversary thereof and 4.75 to 1.00 thereafter and (ii) a minimum consolidated interest coverage ratio of at least 2.00 to 1.00, with such ratios being determined and calculated in the manner described in the Credit Agreement. | ||||||||||
Minimum | Qwest Corporation | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 6.125% | ||||||||||
Minimum | CenturyLink, Inc. | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 5.625% | ||||||||||
Minimum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Lending commitment per lender | $ 28.6 | ||||||||||
Minimum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Lending commitment per lender | 32.8 | ||||||||||
Maximum | Qwest Corporation | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 7.75% | ||||||||||
Maximum | CenturyLink, Inc. | Senior notes | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 7.65% | ||||||||||
Maximum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Lending commitment per lender | 132.2 | ||||||||||
Maximum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Lending commitment per lender | $ 167.8 | ||||||||||
London Interbank Offered Rate (LIBOR) | Minimum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.25% | ||||||||||
London Interbank Offered Rate (LIBOR) | Minimum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A-1 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.25% | ||||||||||
London Interbank Offered Rate (LIBOR) | Minimum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.25% | ||||||||||
London Interbank Offered Rate (LIBOR) | Maximum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 3.00% | ||||||||||
London Interbank Offered Rate (LIBOR) | Maximum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A-1 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 3.00% | ||||||||||
London Interbank Offered Rate (LIBOR) | Maximum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 3.00% | ||||||||||
Base Rate | Minimum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 1.25% | ||||||||||
Base Rate | Minimum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A-1 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 1.25% | ||||||||||
Base Rate | Minimum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 1.25% | ||||||||||
Base Rate | Maximum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.00% | ||||||||||
Base Rate | Maximum | CenturyLink Escrow, LLC | Medium-term notes | Term Loan A-1 | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.00% | ||||||||||
Base Rate | Maximum | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.00% | ||||||||||
Swingline Loan | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 100 | ||||||||||
Letter of Credit | CenturyLink Escrow, LLC | Revolving credit facility | New Revolving Credit Facility | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 400 | ||||||||||
Scenario, Forecast | CenturyLink Escrow, LLC | Medium-term notes | Term Loan B | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Stated interest rate (percent) | 2.75% | ||||||||||
Scenario, Forecast | London Interbank Offered Rate (LIBOR) | CenturyLink Escrow, LLC | Medium-term notes | Term Loan B | |||||||||||
Long-term Debt and Credit Facilities | |||||||||||
Applicable margin on variable rate debt | 2.75% |
Long-Term Debt and Credit Fac39
Long-Term Debt and Credit Facilities (Details 3) | Apr. 28, 2017 |
Qwest Corporation | Senior notes | 6.75% Notes due 2057 | Debt instrument, redemption, period one | |
Debt Instrument, Redemption [Line Items] | |
Debt Instrument, redemption, description | redeemed by Qwest Corporation, in whole or in part, on or after June 15, 2022, at a redemption price equal to 100% of the principal amount |
Severance and Leased Real Est40
Severance and Leased Real Estate (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Employee severance | |
Restructuring reserve | |
Balance at the beginning of the period | $ 98 |
Accrued to expense | 6 |
Payments, net | (89) |
Reversals and adjustments | 0 |
Balance at the end of the period | 15 |
Qwest Communications International Inc. | Leased real estate | |
Leased Real Estate | |
Current portion of leased real estate accrual | 8 |
Noncurrent portion of leased real estate accrual | $ 55 |
Weighted average lease terms | 7 years 5 months |
Restructuring reserve | |
Balance at the beginning of the period | $ 67 |
Accrued to expense | 2 |
Payments, net | 0 |
Reversals and adjustments | (6) |
Balance at the end of the period | $ 63 |
Qwest Communications International Inc. | Leased real estate | Minimum | |
Leased Real Estate | |
Remaining lease terms | 8 months |
Qwest Communications International Inc. | Leased real estate | Maximum | |
Leased Real Estate | |
Remaining lease terms | 8 years 6 months |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Pension plans | |||||
Components of net periodic (benefit) expense | |||||
Service cost | $ 14 | $ 15 | $ 31 | $ 32 | |
Interest cost | 105 | 107 | 206 | 214 | |
Expected return on plan assets | (167) | (183) | (333) | (367) | |
Recognition of prior service (credit) cost | (2) | (2) | (4) | (4) | |
Recognition of actuarial loss | 52 | 45 | 103 | 87 | |
Net periodic benefit (income) expense | 2 | (18) | 3 | (38) | |
Post-retirement benefit plans | |||||
Components of net periodic (benefit) expense | |||||
Service cost | 5 | 5 | 9 | 10 | |
Interest cost | 25 | 27 | 50 | 55 | |
Expected return on plan assets | (1) | (2) | (1) | (4) | |
Recognition of prior service (credit) cost | 5 | 5 | 10 | 10 | |
Net periodic benefit (income) expense | $ 34 | $ 35 | $ 68 | $ 71 | |
Scenario, Forecast | Pension plans | |||||
Employee Benefits | |||||
Voluntary contributions to plan by employer | $ 100 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income (Numerator): | ||||
Net income | $ 17 | $ 196 | $ 180 | $ 432 |
Weighted average number of shares: | ||||
Weighted average shares outstanding for computing basic earnings per common share (in shares) | 541,361 | 539,627 | 540,909 | 539,213 |
Incremental common shares attributable to dilutive securities: | ||||
Number of shares as adjusted for purposes of computing diluted earnings per common share (in shares) | 542,151 | 540,375 | 541,836 | 540,281 |
Basic earnings per common share (in dollars per share) | $ 0.03 | $ 0.36 | $ 0.33 | $ 0.80 |
Diluted earnings per common share (in dollars per share) | $ 0.03 | $ 0.36 | $ 0.33 | $ 0.80 |
Common Class A | ||||
Income (Numerator): | ||||
Net income | $ 17 | $ 196 | $ 180 | $ 432 |
Earnings applicable to non-vested restricted stock | 0 | 0 | 0 | 0 |
Net income applicable to common stock for computing basic earnings per common share | 17 | 196 | 180 | 432 |
Net income as adjusted for purposes of computing diluted earnings per common share | $ 17 | $ 196 | $ 180 | $ 432 |
Weighted average number of shares: | ||||
Outstanding during period (in shares) | 549,100 | 545,988 | 548,359 | 545,417 |
Non-vested restricted stock (in shares) | (7,739) | (6,361) | (7,450) | (6,204) |
Weighted average shares outstanding for computing basic earnings per common share (in shares) | 541,361 | 539,627 | 540,909 | 539,213 |
Incremental common shares attributable to dilutive securities: | ||||
Shares issuable under convertible securities (in shares) | 10 | 10 | 10 | 10 |
Shares issuable under incentive compensation plans (in shares) | 780 | 738 | 917 | 1,058 |
Number of shares as adjusted for purposes of computing diluted earnings per common share (in shares) | 542,151 | 540,375 | 541,836 | 540,281 |
Basic earnings per common share (in dollars per share) | $ 0.03 | $ 0.36 | $ 0.33 | $ 0.80 |
Diluted earnings per common share (in dollars per share) | $ 0.03 | $ 0.36 | $ 0.33 | $ 0.80 |
Number of shares of common stock excluded from the computation of diluted earnings per share (in shares) | 3,100 | 4,100 | 3,700 | 3,600 |
Fair Value Disclosure (Details)
Fair Value Disclosure (Details) - Fair value measurements determined on a nonrecurring basis - Fair value inputs, Level 2 - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Carrying amount | ||
Liabilities | ||
Liabilities—Long-term debt, excluding capital lease and other obligations | $ 24,311 | $ 19,553 |
Fair value | ||
Liabilities | ||
Liabilities—Long-term debt, excluding capital lease and other obligations | $ 25,230 | $ 19,639 |
Segment Information (Details)
Segment Information (Details) $ in Millions | Jan. 10, 2017segment | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2017 | Jun. 30, 2016USD ($) |
Segment information | ||||||
Number of reportable segments (segments) | 2 | 2 | ||||
Revenues | $ 4,090 | $ 4,398 | $ 8,299 | $ 8,799 | ||
Expenses | 3,723 | 3,751 | 7,301 | 7,464 | ||
Total reportable segment income | 367 | 647 | 998 | 1,335 | ||
Operating segments | ||||||
Segment information | ||||||
Revenues | 3,617 | 3,929 | 7,385 | 7,860 | ||
Expenses | 1,877 | 2,011 | 3,807 | 3,941 | ||
Total reportable segment income | $ 1,740 | $ 1,918 | $ 3,578 | $ 3,919 | ||
Margin percentage (percent) | 48.00% | 49.00% | 48.00% | 50.00% | ||
Enterprise | ||||||
Segment information | ||||||
Revenues | $ 2,215 | $ 2,435 | $ 4,571 | $ 4,877 | ||
Expenses | 1,285 | 1,372 | 2,615 | 2,691 | ||
Total reportable segment income | $ 930 | $ 1,063 | $ 1,956 | $ 2,186 | ||
Margin percentage (percent) | 42.00% | 44.00% | 43.00% | 45.00% | ||
Consumer | ||||||
Segment information | ||||||
Revenues | $ 1,402 | $ 1,494 | $ 2,814 | $ 2,983 | ||
Expenses | 592 | 639 | 1,192 | 1,250 | ||
Total reportable segment income | $ 810 | $ 855 | $ 1,622 | $ 1,733 | ||
Margin percentage (percent) | 58.00% | 57.00% | 58.00% | 58.00% |
Segment Information (Details 2)
Segment Information (Details 2) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)category | Jun. 30, 2016USD ($) | |
Operating revenues by products and services | ||||
Number of categories of products and services (categories) | category | 4 | |||
Revenues | $ 4,090 | $ 4,398 | $ 8,299 | $ 8,799 |
Surcharge amount on customers' bills | 133 | 144 | 263 | 291 |
Strategic services | ||||
Operating revenues by products and services | ||||
Revenues | 1,915 | 2,042 | 3,928 | 4,043 |
IT and managed services | ||||
Operating revenues by products and services | ||||
Revenues | $ 162 | 161 | $ 314 | 323 |
Facilities-based video services | ||||
Operating revenues by products and services | ||||
Number of markets | 16 | 16 | ||
Legacy services | ||||
Operating revenues by products and services | ||||
Revenues | $ 1,740 | 1,926 | $ 3,530 | 3,902 |
Data integration | ||||
Operating revenues by products and services | ||||
Revenues | 133 | 123 | 251 | 239 |
IT and managed services data integration | ||||
Operating revenues by products and services | ||||
Revenues | 9 | 1 | 10 | 1 |
Other revenues | ||||
Operating revenues by products and services | ||||
Revenues | 302 | 307 | 590 | 615 |
High cost support revenue | ||||
Operating revenues by products and services | ||||
Revenues | 168 | 173 | 336 | 347 |
Other revenue | ||||
Operating revenues by products and services | ||||
Revenues | 134 | 134 | 254 | 268 |
Enterprise | ||||
Operating revenues by products and services | ||||
Revenues | 2,215 | 2,435 | 4,571 | 4,877 |
Enterprise | Enterprise high-bandwidth data services | ||||
Operating revenues by products and services | ||||
Revenues | 760 | 753 | 1,529 | 1,491 |
Enterprise | Other enterprise strategic services | ||||
Operating revenues by products and services | ||||
Revenues | 225 | 328 | 553 | 655 |
Enterprise | Voice services | ||||
Operating revenues by products and services | ||||
Revenues | 558 | 611 | 1,131 | 1,233 |
Enterprise | Enterprise low-bandwidth data services | ||||
Operating revenues by products and services | ||||
Revenues | 302 | 352 | 616 | 717 |
Enterprise | Other enterprise legacy services | ||||
Operating revenues by products and services | ||||
Revenues | 247 | 269 | 502 | 544 |
Enterprise | Data integration | ||||
Operating revenues by products and services | ||||
Revenues | 123 | 122 | 240 | 237 |
Consumer | ||||
Operating revenues by products and services | ||||
Revenues | 1,402 | 1,494 | 2,814 | 2,983 |
Consumer | Consumer broadband services | ||||
Operating revenues by products and services | ||||
Revenues | 661 | 682 | 1,322 | 1,349 |
Consumer | Other consumer strategic services | ||||
Operating revenues by products and services | ||||
Revenues | 107 | 118 | 210 | 225 |
Consumer | Voice services | ||||
Operating revenues by products and services | ||||
Revenues | 562 | 615 | 1,137 | 1,249 |
Consumer | Other consumer legacy services | ||||
Operating revenues by products and services | ||||
Revenues | 71 | 79 | 144 | 159 |
Consumer | Data integration | ||||
Operating revenues by products and services | ||||
Revenues | $ 1 | 0 | $ 1 | 1 |
Other enterprise strategic services | Restatement adjustment | Enterprise | Strategic services | ||||
Operating revenues by products and services | ||||
Revenues | 12 | 24 | ||
Other enterprise legacy services | Restatement adjustment | Enterprise | Legacy services | ||||
Operating revenues by products and services | ||||
Revenues | $ (12) | $ (24) |
Segment Information (Details 3)
Segment Information (Details 3) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total reportable segment income | $ 367 | $ 647 | $ 998 | $ 1,335 |
Depreciation and amortization | (949) | (987) | (1,829) | (1,963) |
Other operating expenses | (3,723) | (3,751) | (7,301) | (7,464) |
Total other expense, net | (327) | (330) | (651) | (638) |
INCOME BEFORE INCOME TAX EXPENSE | 40 | 317 | 347 | 697 |
Income tax expense | (23) | (121) | (167) | (265) |
Net income | 17 | 196 | 180 | 432 |
Operating segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total reportable segment income | 1,740 | 1,918 | 3,578 | 3,919 |
Segment reconciling items | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Non-reportable segment revenues | 171 | 162 | 324 | 324 |
Other operating revenues | 302 | 307 | 590 | 615 |
Depreciation and amortization | (949) | (987) | (1,829) | (1,963) |
Other operating expenses | (897) | (753) | (1,665) | (1,560) |
Total other expense, net | $ (327) | $ (330) | $ (651) | $ (638) |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Oct. 14, 2011plaintiff | Feb. 28, 2017USD ($) | Jun. 30, 2017USD ($)plaintifflawsuit | Dec. 31, 2007USD ($) |
Loss Contingencies | ||||
Patents allegedly infringed (at least) | 1 | |||
Unfavorable regulatory action | ||||
Loss Contingencies | ||||
Estimate of possible loss (per proceeding) | $ 100,000 | |||
William Douglas Fulghum, et al. v. Embarq Corporation | ||||
Loss Contingencies | ||||
Effect of modifications made to Embarq's benefits program (greater than) | $ 300,000,000 | |||
Abbott et al. v. Sprint Nextel et al. | ||||
Loss Contingencies | ||||
Number of plaintiffs | plaintiff | 1,500 | |||
Judicial ruling | Missouri municipalities | ||||
Loss Contingencies | ||||
Number of cases, final court order | 1 | |||
Litigation settlement amount | $ 4,000,000 | |||
CenturyLink, Inc. | Interexchange Carriers | ||||
Loss Contingencies | ||||
Number of plaintiffs | plaintiff | 3 | |||
Number of lawsuits (approximately) | lawsuit | 100 |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Prepaid Expenses and Other Current Assets [Abstract] | ||
Prepaid expenses | $ 247 | $ 206 |
Materials, supplies and inventory | 144 | 134 |
Deferred activation and installation charges | 105 | 101 |
Other | 195 | 106 |
Total other current assets | 691 | 547 |
Accounts Payable, Current [Abstract] | ||
Accounts payable | 944 | 1,179 |
Book overdraft balance | 51 | 56 |
Capital expenditures incurred but not yet paid | 73 | 196 |
Other Current Liabilities | ||
Accrued rent | 30 | 31 |
Legal contingencies | 26 | 30 |
Other | 182 | 152 |
Total other current liabilities | $ 238 | $ 213 |
Accumulated Other Comprehensi49
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Accumulated other comprehensive loss | ||||
Balance at beginning of period | $ 13,399 | |||
Accumulated other comprehensive income (loss) by component | ||||
Other comprehensive income | $ 36 | $ 26 | 67 | $ 53 |
Balance at end of period | 13,086 | 13,985 | 13,086 | 13,985 |
Defined benefit plan | ||||
Accumulated other comprehensive income (loss) by component | ||||
Amounts reclassified from accumulated other comprehensive income | 32 | 30 | 65 | 58 |
Defined benefit plan | Pension plans | ||||
Accumulated other comprehensive loss | ||||
Balance at beginning of period | (1,865) | (1,690) | (1,895) | (1,715) |
Accumulated other comprehensive income (loss) by component | ||||
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income | 29 | 27 | 59 | 52 |
Other comprehensive income | 29 | 27 | 59 | 52 |
Balance at end of period | (1,836) | (1,663) | (1,836) | (1,663) |
Defined benefit plan | Post-retirement benefit plans | ||||
Accumulated other comprehensive loss | ||||
Balance at beginning of period | (159) | (177) | (162) | (180) |
Accumulated other comprehensive income (loss) by component | ||||
Other comprehensive income (loss) before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income | 3 | 3 | 6 | 6 |
Other comprehensive income | 3 | 3 | 6 | 6 |
Balance at end of period | (156) | (174) | (156) | (174) |
Foreign currency translation adjustment and other | ||||
Accumulated other comprehensive loss | ||||
Balance at beginning of period | (62) | (40) | (60) | (39) |
Accumulated other comprehensive income (loss) by component | ||||
Other comprehensive income (loss) before reclassifications | 4 | (4) | 2 | (5) |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 | 0 |
Other comprehensive income | 4 | (4) | 2 | (5) |
Balance at end of period | (58) | (44) | (58) | (44) |
Accumulated other comprehensive income | ||||
Accumulated other comprehensive loss | ||||
Balance at beginning of period | (2,086) | (1,907) | (2,117) | (1,934) |
Accumulated other comprehensive income (loss) by component | ||||
Other comprehensive income (loss) before reclassifications | 4 | (4) | 2 | (5) |
Amounts reclassified from accumulated other comprehensive income | 32 | 30 | 65 | 58 |
Other comprehensive income | 36 | 26 | 67 | 53 |
Balance at end of period | $ (2,050) | $ (1,881) | $ (2,050) | $ (1,881) |
Accumulated Other Comprehensi50
Accumulated Other Comprehensive Loss (Details 2) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Reclassifications out of accumulated other comprehensive income loss by component | ||||
Other (expense) income, net | $ (7) | $ 10 | $ (13) | $ 33 |
Net actuarial loss | Amount reclassified from accumulated other comprehensive loss | ||||
Reclassifications out of accumulated other comprehensive income loss by component | ||||
Other (expense) income, net | 52 | 45 | 103 | 87 |
Prior service cost | Amount reclassified from accumulated other comprehensive loss | ||||
Reclassifications out of accumulated other comprehensive income loss by component | ||||
Other (expense) income, net | 3 | 3 | 6 | 6 |
Defined benefit plan | ||||
Reclassifications out of accumulated other comprehensive income loss by component | ||||
Total before tax | 55 | 48 | 109 | 93 |
Income tax benefit | (23) | (18) | (44) | (35) |
Net of tax | $ 32 | $ 30 | $ 65 | $ 58 |
Labor Union Contracts (Details)
Labor Union Contracts (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Workforce subject to collective bargaining arrangements, expiring remainder of fiscal year | |
Concentration risk | |
Number of unionized employees | 1,000 |
Workforce subject to collective bargaining arrangements, effective June 18, 2017 | |
Concentration risk | |
Number of unionized employees | 10,000 |
Total number of employees | Unionized employees concentration risk | |
Concentration risk | |
Concentration risk (percent) | 36.00% |
Total number of employees | Unionized employees concentration risk | Workforce subject to collective bargaining arrangements, effective June 18, 2017 | |
Concentration risk | |
Concentration risk (percent) | 25.00% |