Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | LEVEL 3 PARENT, LLC | |
Entity Central Index Key | 0000794323 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
OPERATING REVENUE | ||||
Total operating revenue | $ 1,407 | $ 6,870 | $ 8,220 | $ 8,173 |
OPERATING EXPENSES | ||||
Cost of services and products (exclusive of depreciation and amortization) | 690 | 3,937 | ||
Selling, general and administrative | 253 | 1,354 | ||
Operating expenses - affiliates | 24 | 257 | ||
Depreciation and amortization | 282 | 1,704 | ||
Total operating expenses | 1,249 | 7,252 | ||
OPERATING INCOME | 158 | 968 | ||
OTHER (EXPENSE) INCOME | ||||
Interest income | 1 | 0 | ||
Interest income - affiliate | 11 | 67 | ||
Interest expense | (80) | (509) | ||
Loss on modification and extinguishment of debt | 0 | 0 | ||
Other income (expense), net | 3 | 11 | ||
Total other expense, net | (65) | (431) | ||
INCOME BEFORE INCOME TAX EXPENSE | 93 | 537 | ||
Income tax expense | (234) | (196) | ||
NET INCOME (LOSS) | (141) | 341 | ||
Predecessor | ||||
OPERATING REVENUE | ||||
Total operating revenue | 6,870 | 8,173 | ||
OPERATING EXPENSES | ||||
Cost of services and products (exclusive of depreciation and amortization) | 3,493 | 4,162 | ||
Selling, general and administrative | 1,208 | 1,407 | ||
Operating expenses - affiliates | 0 | 0 | ||
Depreciation and amortization | 1,018 | 1,159 | ||
Total operating expenses | 5,719 | 6,728 | ||
OPERATING INCOME | 1,151 | 1,445 | ||
OTHER (EXPENSE) INCOME | ||||
Interest income | 13 | 4 | ||
Interest income - affiliate | 0 | 0 | ||
Interest expense | (441) | (544) | ||
Loss on modification and extinguishment of debt | (44) | (40) | ||
Other income (expense), net | 14 | (23) | ||
Total other expense, net | (458) | (603) | ||
INCOME BEFORE INCOME TAX EXPENSE | 693 | 842 | ||
Income tax expense | (268) | (165) | ||
NET INCOME (LOSS) | 425 | 677 | ||
Non-Affiliate Services | ||||
OPERATING REVENUE | ||||
Total operating revenue | 1,391 | 6,870 | 8,113 | 8,173 |
Non-Affiliate Services | Predecessor | ||||
OPERATING REVENUE | ||||
Total operating revenue | 6,870 | 8,173 | ||
Affiliate revenue | ||||
OPERATING REVENUE | ||||
Total operating revenue | $ 16 | 0 | $ 107 | 0 |
Affiliate revenue | Predecessor | ||||
OPERATING REVENUE | ||||
Total operating revenue | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
NET INCOME (LOSS) | $ (141) | $ 341 | ||
OTHER COMPREHENSIVE (LOSS) INCOME: | ||||
Defined benefit pension plan adjustment, net of ($1), $—, ($3), and $4 tax | 0 | 5 | ||
Foreign currency translation adjustment, net of $50, ($17), ($46), and $39 tax | 18 | (200) | ||
Net other comprehensive (loss) income | 18 | (195) | ||
COMPREHENSIVE INCOME (LOSS) | $ (123) | $ 146 | ||
Predecessor | ||||
NET INCOME (LOSS) | $ 425 | $ 677 | ||
OTHER COMPREHENSIVE (LOSS) INCOME: | ||||
Defined benefit pension plan adjustment, net of ($1), $—, ($3), and $4 tax | (1) | (6) | ||
Foreign currency translation adjustment, net of $50, ($17), ($46), and $39 tax | 81 | (80) | ||
Net other comprehensive (loss) income | 80 | (86) | ||
COMPREHENSIVE INCOME (LOSS) | $ 505 | $ 591 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Foreign currency translation adjustments, tax effect | $ 0 | $ (1) | ||
Defined benefit pension plan adjustments, tax effect | $ (17) | $ 50 | ||
Predecessor | ||||
Foreign currency translation adjustments, tax effect | $ (3) | $ 4 | ||
Defined benefit pension plan adjustments, tax effect | $ (46) | $ 39 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 243 | $ 297 |
Restricted cash and securities - current | 4 | 5 |
Accounts receivable, less allowance of $11 and $3 | 712 | 748 |
Accounts receivable - affiliates | 0 | 13 |
Assets held for sale | 0 | 140 |
Note receivable - affiliate | 1,825 | 1,825 |
Other | 234 | 117 |
Total current assets | 3,018 | 3,145 |
NET PROPERTY, PLANT AND EQUIPMENT | ||
Property, plant and equipment | 10,474 | 9,555 |
Accumulated depreciation | (1,021) | (143) |
Net property, plant and equipment | 9,453 | 9,412 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 11,119 | 10,837 |
Restricted cash and securities | 25 | 29 |
Customer relationships, net | 7,567 | 8,845 |
Other intangible assets, net | 410 | 378 |
Other, net | 699 | 489 |
Total goodwill and other assets | 19,820 | 20,578 |
TOTAL ASSETS | 32,291 | 33,135 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 6 | 8 |
Accounts payable | 726 | 695 |
Accounts payable - affiliates | 246 | 41 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 233 | 136 |
Income and other taxes | 130 | 100 |
Interest | 95 | 109 |
Other | 78 | 59 |
Advance billings and customer deposits | 310 | 258 |
Total current liabilities | 1,824 | 1,406 |
LONG-TERM DEBT | 10,838 | 10,882 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,181 | 1,093 |
Deferred tax liability | 202 | 212 |
Other | 369 | 270 |
Total deferred revenue and other liabilities | 1,752 | 1,575 |
COMMITMENTS AND CONTINGENCIES (Note 16) | ||
MEMBER'S EQUITY | ||
Member's equity | 18,048 | 19,254 |
Accumulated other comprehensive (loss) gain | (171) | 18 |
Total member's equity | 17,877 | 19,272 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 32,291 | $ 33,135 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 11 | $ 3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES | |||||||
Net income (loss) | $ (141) | $ 341 | $ 284 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 282 | 1,704 | |||||
Deferred income taxes | 270 | 175 | |||||
Net long-term debt issuance costs and premium amortization | (5) | (30) | |||||
Loss on modification and extinguishment of debt | 0 | 0 | |||||
Share-based compensation | 26 | 0 | |||||
Accrued interest on long-term debt, net | 27 | (14) | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | (1) | 46 | |||||
Accounts payable | 35 | (37) | |||||
Deferred revenue | (15) | 71 | |||||
Other current assets and liabilities | (100) | 4 | |||||
Other current assets and liabilities, affiliates | (17) | 216 | |||||
Changes in other noncurrent assets and liabilities, net | (38) | (93) | |||||
Other, net | (15) | 14 | |||||
Net cash provided by operating activities | 308 | 2,397 | |||||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (207) | (1,038) | |||||
Purchase of marketable securities | 0 | 0 | |||||
Maturity of marketable securities | 0 | 0 | |||||
Proceeds from sale of property, plant and equipment and other assets | 0 | 134 | |||||
Note receivable - affiliate | (1,825) | 0 | |||||
Net cash used in investing activities | (2,032) | (904) | |||||
FINANCING ACTIVITIES | |||||||
Net proceeds from issuance of long-term debt | 0 | 0 | |||||
Payments of long-term debt | (1) | (7) | |||||
Distributions | (250) | (1,545) | |||||
Other | (2) | 0 | |||||
Net cash used in financing activities | (253) | (1,552) | |||||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (1,977) | (59) | |||||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,308 | 331 | |||||
Cash, cash equivalents, restricted cash and securities at end of period | 331 | $ 2,308 | 272 | 331 | |||
Supplemental cash flow information: | |||||||
Income taxes paid, net | 10 | 33 | |||||
Interest paid | 56 | 542 | |||||
Cash, cash equivalents, restricted cash and securities: | |||||||
Total | 331 | 2,308 | $ 331 | 331 | $ 2,308 | ||
Predecessor | |||||||
OPERATING ACTIVITIES | |||||||
Net income (loss) | 425 | $ 677 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,018 | 1,159 | |||||
Deferred income taxes | 217 | 123 | |||||
Net long-term debt issuance costs and premium amortization | 14 | 21 | |||||
Loss on modification and extinguishment of debt | 44 | 40 | |||||
Share-based compensation | 132 | 156 | |||||
Accrued interest on long-term debt, net | (47) | 21 | |||||
Changes in current assets and liabilities: | |||||||
Accounts receivable | (16) | 31 | |||||
Accounts payable | (102) | 83 | |||||
Deferred revenue | 146 | 18 | |||||
Other current assets and liabilities | 70 | 26 | |||||
Other current assets and liabilities, affiliates | 0 | 0 | |||||
Changes in other noncurrent assets and liabilities, net | 8 | (9) | |||||
Other, net | 5 | (3) | |||||
Net cash provided by operating activities | 1,914 | 2,343 | |||||
INVESTING ACTIVITIES | |||||||
Capital expenditures | (1,119) | (1,334) | |||||
Purchase of marketable securities | (1,127) | 0 | |||||
Maturity of marketable securities | 1,127 | 0 | |||||
Proceeds from sale of property, plant and equipment and other assets | 1 | 3 | |||||
Note receivable - affiliate | 0 | 0 | |||||
Net cash used in investing activities | (1,118) | (1,331) | |||||
FINANCING ACTIVITIES | |||||||
Net proceeds from issuance of long-term debt | 4,569 | 764 | |||||
Payments of long-term debt | (4,917) | (820) | |||||
Distributions | 0 | 0 | |||||
Other | 3 | (3) | |||||
Net cash used in financing activities | (345) | (59) | |||||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 451 | 953 | 953 | ||||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,308 | 1,857 | 1,857 | 904 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 2,308 | 1,857 | |||||
Supplemental cash flow information: | |||||||
Income taxes paid, net | 49 | 35 | |||||
Interest paid | 468 | 508 | |||||
Cash, cash equivalents, restricted cash and securities: | |||||||
Cash and cash equivalents | 2,274 | $ 1,819 | |||||
Restricted cash and securities - current | 5 | 7 | |||||
Restricted cash and securities - noncurrent | 29 | 31 | |||||
Total | $ 2,308 | $ 1,857 | $ 1,857 | $ 904 | $ 2,308 | $ 1,857 |
CONSOLIDATED STATEMENTS OF MEMB
CONSOLIDATED STATEMENTS OF MEMBER'S/STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | ACCUMULATED DEFICIT | MEMBER'S EQUITY |
Balance at beginning of period (Predecessor) at Dec. 31, 2015 | $ (301) | |||||
MEMBER'S EQUITY | ||||||
Net income (loss) | Predecessor | $ 677 | $ 677 | ||||
Net other comprehensive (loss) income | Predecessor | (86) | (86) | ||||
Balance at end of period (Predecessor) at Dec. 31, 2016 | (387) | |||||
Balance at beginning of period (Predecessor) at Dec. 31, 2015 | $ 4 | $ 19,642 | (9,219) | |||
STOCKHOLDERS' EQUITY | ||||||
Common stock issued under employee stock benefit plans and other | Predecessor | 37 | |||||
Share-based compensation | Predecessor | 121 | |||||
Balance at end of period (Predecessor) at Dec. 31, 2016 | 10,917 | 4 | 19,800 | (8,500) | ||
MEMBER'S EQUITY | ||||||
Net income (loss) | Predecessor | 425 | 425 | ||||
Net other comprehensive (loss) income | Predecessor | 80 | 80 | ||||
Balance at end of period (Predecessor) at Oct. 31, 2017 | (307) | |||||
Balance at end of period at Oct. 31, 2017 | $ 19,617 | |||||
STOCKHOLDERS' EQUITY | ||||||
Common stock issued under employee stock benefit plans and other | Predecessor | 30 | |||||
Share-based compensation | Predecessor | 102 | |||||
Balance at end of period (Predecessor) at Oct. 31, 2017 | 11,554 | 4 | 19,932 | (8,075) | ||
Balance at beginning of period (Predecessor) at Dec. 31, 2016 | (387) | |||||
MEMBER'S EQUITY | ||||||
Net income (loss) | 284 | |||||
Balance at end of period at Dec. 31, 2017 | 18 | 19,254 | ||||
Balance at beginning of period (Predecessor) at Dec. 31, 2016 | 10,917 | 4 | 19,800 | (8,500) | ||
Balance at end of period at Dec. 31, 2017 | 19,272 | |||||
Balance at beginning of period (Predecessor) at Oct. 31, 2017 | (307) | |||||
Balance at beginning of period at Oct. 31, 2017 | 19,617 | |||||
MEMBER'S EQUITY | ||||||
Net income (loss) | (141) | (141) | ||||
Net other comprehensive (loss) income | 18 | 18 | ||||
Contributions | 28 | |||||
Distributions | (250) | |||||
Balance at end of period at Dec. 31, 2017 | 18 | 19,254 | ||||
Balance at beginning of period (Predecessor) at Oct. 31, 2017 | 11,554 | $ 4 | $ 19,932 | (8,075) | ||
Balance at end of period at Dec. 31, 2017 | 19,272 | |||||
MEMBER'S EQUITY | ||||||
Net income (loss) | 341 | |||||
Net other comprehensive (loss) income | (195) | (195) | ||||
Purchase price accounting adjustments | (5) | |||||
Distributions | (1,545) | |||||
Balance at end of period at Dec. 31, 2018 | $ (171) | $ 18,048 | ||||
Balance at end of period at Dec. 31, 2018 | $ 17,877 | |||||
MEMBER'S EQUITY | ||||||
Cumulative effect of adoption of ASU | Accounting Standards Update 2014-09 | $ 9 |
CONSOLIDATED STATEMENTS OF ME_2
CONSOLIDATED STATEMENTS OF MEMBER'S/STOCKHOLDERS' EQUITY (Parenthetical) $ in Millions | Jan. 01, 2018USD ($) |
MEMBER'S EQUITY | Accounting Standards Update 2014-09 | |
Cumulative net effect of adoption of ASU, tax | $ (3) |
Background and Summary of Signi
Background and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Background and Summary of Significant Accounting Policies | Background and Summary of Significant Accounting Policies General We are an international facilities-based communications provider (that is, a provider that owns or leases a substantial portion of the property, plant and equipment necessary to provide our services) of a broad range of integrated communications services. We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies. Effective November 1, 2017, we were acquired by CenturyLink in a cash and stock transaction, including the assumption of our debt (the "CenturyLink Merger"). See Note 2—CenturyLink Merger . Basis of Presentation On November 1, 2017, we became a wholly owned subsidiary of CenturyLink. On the date of the acquisition, our assets and liabilities were recognized at fair value. This revaluation has been reflected in our financial statements and, therefore, has resulted in a new basis of accounting for the successor period beginning on November 1, 2017. This new basis of accounting means that our financial statements for the successor periods will not be comparable to our previously reported financial statements, including the predecessor period financial statements in this report. The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (CenturyLink and its other subsidiaries, referred to herein as affiliates) have not been eliminated. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2018 . We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue for 2018, 2017 and 2016. Although we continued as a surviving corporation and legal entity after the acquisition of us by CenturyLink, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and member's/stockholder's equity (deficit) are presented for two periods: predecessor and successor, which relates to the period preceding the acquisition and the period succeeding the acquisition. Summary of Significant Accounting Policies Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters, including, but not limited to, revenue recognition, revenue reserves, network access costs, network access cost dispute reserves, investments, long-term contracts, customer retention patterns, allowance for doubtful accounts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets (including deferred tax assets), impairment assessments, taxes, certain liabilities and other provisions and contingencies, are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 12—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates. Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily fiber capacity agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services, including local voice, VPN, Ethernet, data, private line (including special access), network access, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global/international, enterprise, wholesale, government, small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments include certain activation and certain installation charges. If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which ranges from one year to seven years depending on the service. In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term. For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. Promotional or performance based incentive payments are estimated at contract inception (and updated on a periodic basis as needed) and accounted for as variable consideration. In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, whether the modification is a termination of the existing contract and creation of a new contract, or if it is a change to the existing contract. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell optical capacity on our network. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 10 - 20 years. In most cases, we account for the cash consideration received on transfers of optical capacity as ASC 606 revenue which we recognize ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is adjusted for the time value of money and is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. We defer (i.e. capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average customer life. Third party installations over $50 thousand are amortized over contract term; internal contract costs are amortized over 30 months. These deferred costs are monitored every period to reflect any significant change in assumptions. See Note 4—Revenue Recognition for additional information. Affiliate Transactions We provide to our affiliates telecommunications services that we also provide to external customers. Services provided by us to our affiliates are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. From time to time we make distributions to our parent. Distributions are reflected on our consolidated statements of member's/stockholders' equity and the consolidated statements of cash flows reflects distributions made as financing activities. USF Surcharges, Gross Receipts Taxes and Other Surcharges In determining whether to include in our revenue and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF surcharges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenue and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenue and costs of services and products. Total revenue and cost of services and products on the consolidated statements of operations include USF contributions of $415 million and $71 million for the successor year ended December 31, 2018 and successor period ended December 31, 2017 , and $331 million and $414 million for the predecessor period ended October 31, 2017 and the predecessor year ended December 31, 2016 , respectively. Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received. Income Taxes Until November 1, 2017, we filed a consolidated federal income tax return with our eligible subsidiaries. Since CenturyLink's acquisition of us on November 1, 2017, we have been included in the consolidated federal income tax return of CenturyLink. Under CenturyLink's tax allocation policy, CenturyLink treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 12—Income Taxes , are primarily determined as a result of the application of the separate return allocation method and therefore the settlement of these amounts is dependent upon our parent, CenturyLink, rather than tax authorities. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by CenturyLink and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating loss carryforwards ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 12—Income Taxes for additional information. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when checks have been issued but have not been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows. Restricted Cash and Securities Restricted cash and securities consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2018 and 2017 . Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables less an allowance for doubtful accounts. The allowance for doubtful accounts receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for doubtful accounts when collection is considered to be not probable. Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for doubtful accounts approximates fair value. Concentration of Credit Risk We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach consumer and enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material change in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation. Property, Plant and Equipment As a result of CenturyLink's acquisition of us, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition plus the estimated value of any associated legally or contractually required retirement obligations. Therefore, the allocated fair values of the assets represent their new basis of accounting in our consolidated financial statements. This resulted in adjustments to our property, plant and equipment accounts, including accumulated depreciation at the acquisition date. The adjustments related to CenturyLink's acquisition of us are described in Note 2—CenturyLink Merger and Note 7— Property, Plant and Equipment . We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items for which cost is based on specific identification. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments assess the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred. Capitalized labor associated with employees and contract labor working on capital projects were approximately $95 million and $32 million for the successor year ended December 31, 2018 and successor period ended December 31, 2017 and $ 178 million and $ 210 million for the predecessor period ended October 31, 2017 and year ended December 31, 2016 . We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value. Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to seven years. We amortize our other intangible assets over an estimated life of five years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, we recognize an impairment charge for the amount by which the carrying amount of these assets exceeds their estimated fair value. We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded carrying value of equity exceeds the fair value of equity. Therefore, the equity carrying value and future cash flows is assessed each time a goodwill impairment assessment is performed on a reporting unit. To do so, we assign our assets, liabilities and cash flows to reporting units using reasonable and consistent allocation methodologies, which entail various estimates, judgments and assumptions. We believe these estimates, judgments and assumptions to be reasonable, but changes in any of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment . As a result of the merger, the impairment testing date was changed to October 31 for successor periods beginning in 2018. We conducted our annual goodwill impairment analysis as of October 31, 2018 and concluded that our goodwill was not impaired in 2018 . We conducted our annual goodwill impairment analysis as of October 1, 2017 and concluded that our goodwill was not impaired in 2017 . We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. As a result of CenturyLink's acquisition of us, we are now comprised of one reporting unit, consistent with our determination that our business consists of one operating segment. See Note 3—Goodwill, Customer Relationships and Other Intangible Assets for additional information. Foreign Currency Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. A significant portion of our non-United States subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during the successor year ended December 31, 2018 and period ended December 31, 2017 and the predecessor period ended October 31, 2017 and year ended December 31, 2016 . Foreign currency translation gains and losses are recognized as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in the consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in "Other, net" on the consolidated statements of operations. Recently Adopted Accounting Pronouncements During 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers ”, ASU 2016-16, “ Intra-Entity Transfers of Assets Other Than Inventory, ” ASU 2018-02, “ Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ” and ASU 2017-04, Simplifying the Test for Goodwill Impairment . Each of these is described further below. Revenue Recognition In May 2014, the FASB issued ASU 2014-09 which replaces virtually all existing generally accepted accounting principles on revenue recognition 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 adopted the new revenue recognition standard under the modified retrospective transition method. During the year ended December 31, 2018, we recorded a cumulative catch-up adjustment that increased our retained earnings by $9 million , net of $3 million of income taxes. See Note 4—Revenue Recognition for additional information. Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02 provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (the "Act") (or portion thereof) is recorded. If an entity elects to reclassify the income tax effects of the Act, the amount of that reclassification shall include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Act related to items remaining in accumulated other comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. ASU 2018-02 is effective January 1, 2019, but early adoption is permitted and should be applied either |
CenturyLink Merger
CenturyLink Merger | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
CenturyLink Merger | CenturyLink Merger On November 1, 2017, CenturyLink acquired Level 3 through successive merger transactions, including a merger of Level 3 with and into a merger subsidiary, which survived such merger as CenturyLink's indirect wholly-owned subsidiary under the name of Level 3 Parent, LLC. CenturyLink entered into this acquisition to, among other things, realize certain strategic benefits, including enhanced financial and operational scale, market diversification and an enhanced combined network. As a result of the acquisition, Level 3 shareholders received $26.50 per share in cash and 1.4286 shares of CenturyLink common stock, with cash paid in lieu of fractional shares, for each outstanding share of Level 3 common stock they owned at closing, subject to certain limited exceptions. CenturyLink issued this consideration with respect to all of the outstanding common stock of Level 3, with the exception of shares held by the dissenting common shareholders. CenturyLink shareholders owned approximately 51% and former Level 3 shareholders owned approximately 49% of the combined company. In addition, each outstanding Level 3 restricted stock unit award granted prior to April 1, 2014 or granted to an outside director of Level 3 was converted into $26.50 in cash and 1.4286 shares of CenturyLink common stock (and cash in lieu of fractional shares) with respect to each Level 3 share covered by such award (the "Converted RSU Awards"). Each outstanding Level 3 restricted stock unit award granted on or after April 1, 2014 (other than those granted to outside directors of Level 3) was converted into a CenturyLink restricted stock unit award using a conversion ratio of 2.8386 to 1 as determined in accordance with a formula set forth in the merger agreement (“the Continuing RSU Awards”). In connection with the closing of the Merger Agreement, we loaned $1.825 billion to CenturyLink in exchange for an unsecured demand note that bears interest at 3.5% per annum. The principal amount of such note is payable upon demand by Level 3 Parent but no later than November 1, 2020 and may be prepaid by CenturyLink at any time. In connection with receiving approval from the U.S. Department of Justice to complete the Level 3 acquisition CenturyLink agreed to divest (i) certain Level 3 network assets in three metropolitan areas and (ii) 24 strands of dark fiber connecting 30 specified city-pairs across the United States. All of the metro network assets were classified as assets held for sale on our consolidated balance sheet as of December 31, 2017 . All of those assets were sold by December 31, 2018 . The proceeds from the sale of the metro network assets were included in the proceeds from sale of property, plant and equipment in our consolidated statements of cash flows. No gain or loss was recognized with these transactions. CenturyLink recognized the assets and liabilities of Level 3 based on the fair value of the acquired tangible and intangible assets and assumed liabilities of Level 3 as of November 1, 2017, the consummation date of the acquisition, with the excess aggregate consideration recorded as goodwill. The estimation of such fair values and the estimation of lives of depreciable tangible assets and amortizable intangible assets required significant judgment. CenturyLink completed their final fair value determination during the fourth quarter of 2018. The final fair value determinations were different than those reflected in our consolidated financial statements at December 31, 2017. As of October 31, 2018, the aggregate consideration exceeded the aggregate estimated fair value of the acquired assets and assumed liabilities by $11.2 billion , which we have recognized as goodwill. The goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect to realize. None of the goodwill associated with this acquisition is deductible for income tax purposes. The following is our assignment of the aggregate consideration: Adjusted November 1, 2017 Balance as of December 31, 2017 Purchase Price Adjustments Adjusted November 1, 2017 Balance as of October 31, 2018 (Dollars in millions) Cash, accounts receivable and other current assets (1) $ 3,317 (26 ) 3,291 Property, plant and equipment 9,311 157 9,468 Identifiable intangible assets (2) Customer relationships 8,964 (533 ) 8,431 Other 391 (13 ) 378 Other noncurrent assets 782 216 998 Current liabilities, excluding current maturities of long-term debt (1,461 ) (32 ) (1,493 ) Current maturities of long-term debt (7 ) — (7 ) Long-term debt (10,888 ) — (10,888 ) Deferred revenue and other liabilities (1,613 ) (114 ) (1,727 ) Goodwill 10,837 340 11,177 Total estimated aggregate consideration $ 19,633 (5 ) 19,628 _______________________________________________________________________________ (1) Includes accounts receivable, which had a gross contractual value of $884 million on November 1, 2017. (2) The weighted-average amortization period for the acquired intangible assets is approximately 12.0 years. Acquisition-Related Expenses We have incurred acquisition-related expenses related to our activities surrounding the CenturyLink Merger. The table below summarizes our acquisition-related expenses, which consist of integration-related expenses, including severance and retention compensation expenses, and transaction-related expenses: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Transaction-related expenses $ 1 — 18 — Integration-related expenses 120 28 67 15 Total acquisition-related expenses $ 121 28 85 15 As part of the acquisition accounting on November 1, 2017, we also included in our goodwill approximately $1 million for certain restricted stock awards and $47 million related to transaction costs, all of which were contingent on the completion of the acquisition and had no benefit to CenturyLink after the acquisition. |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Goodwill, customer relationships and other intangible assets consisted of the following: Successor December 31, December 31, (Dollars in millions) Goodwill $ 11,119 10,837 Customer relationships, less accumulated amortization of $833 and $126 $ 7,567 8,845 Other intangible assets subject to amortization: Trade names, less accumulated amortization of $30 and $4 $ 100 126 Developed technology, less accumulated amortization of $67 and $9 310 252 Total other intangible assets, net $ 410 378 The following table shows the rollforward of goodwill from November 1, 2017 through December 31, 2018 : (Dollars in millions) As of November 1, 2017 $ 10,821 Purchase accounting and other adjustments 16 As of December 31, 2017 10,837 Purchase accounting and other adjustments 340 Effect of foreign currency rate change (58 ) As of December 31, 2018 $ 11,119 Our goodwill balance includes $16 million , of goodwill that was allocated to us from CenturyLink associated with differences in the deferred state income taxes that CenturyLink expects to realize due to its consolidation of our results of operations into its state tax returns. Total amortization expense for intangible assets for the successor period ended December 31, 2018 , the successor period ended December 31, 2017 , the predecessor period ended October 31, 2017 and the predecessor year ended December 31, 2016 was $798 million , $139 million , $168 million and $ 211 million , respectively. As of December 31, 2018 , the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $ 20 billion . As of the successor date of December 31, 2018 , the weighted average remaining useful lives of our finite-lived intangible assets was 11 years in total; 11 years for customer relationships, 4 years for trade names, and 3 years for developed technology. We estimate that total amortization expense for intangible assets for the successor years ending 2019 through 2023 will be as follows: (Dollars in millions) 2019 $ 800 2020 800 2021 800 2022 796 2023 766 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Comparative Results The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Operating revenue $ 8,220 (5 ) 8,215 Cost of services and products (exclusive of depreciation and amortization) 3,937 — 3,937 Selling, general and administrative 1,354 52 1,406 Interest expense 509 (9 ) 500 Income tax expense 196 (12 ) 184 Net income 341 (36 ) 305 The following table presents a reconciliation of certain consolidated balance sheet captions under ASC 606 to the balance sheet results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Other current assets $ 234 (33 ) 201 Other long-term assets, net 191 (31 ) 160 Deferred revenue 1,491 (4 ) 1,487 Deferred income tax assets, net 306 15 321 Member's equity 17,877 (45 ) 17,832 Disaggregated Revenue by Service Offering The following table provides disaggregation of revenue from contracts with customers based on service offering for the year ended December 31, 2018 . It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Successor Year Ended December 31, 2018 (Dollars in millions) Total Revenue Adjustments (6) Total Revenue from Contracts with Customers IP and Data Services (1) $ 3,945 — 3,945 Transport and Infrastructure (2) 2,699 (189 ) 2,510 Voice and Collaboration (3) 1,464 — 1,464 Other Revenue (4) 5 (3 ) 2 Affiliate Revenue (5) 107 (107 ) — Total Revenue $ 8,220 (299 ) 7,921 Timing of revenue Goods transferred at a point in time $ — Services performed over time 7,921 Total revenue from contracts with customers $ 7,921 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2018 and January 1, 2018: Successor December 31, 2018 January 1, 2018 (Dollars in millions) Customer receivables (1) $ 712 748 Contract assets 19 22 Contract liabilities 393 353 _______________________________________________________________________________ (1) Gross customer receivables of $723 million and $751 million, net of allowance for doubtful accounts of $11 million and $3 million, at December 31, 2018 and January 1, 2018, respectively Contract liabilities are consideration we have received from our customers in advance of providing the goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to seven years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. The following table provides information about revenue recognized for the year ended December 31, 2018 : Successor (Dollars in millions) Revenue recognized in the current period from: Amounts included in contract liability at the beginning of the period (January 1, 2018) $ 158 Performance obligations satisfied in previous periods — Performance Obligations As of December 31, 2018 , our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts that are unsatisfied (or partially satisfied) is approximately $5.2 billion . We expect to recognize approximately 77% of this revenue through 2021, with the balance recognized thereafter. We do not disclose the amount of unsatisfied performance obligations for contracts under which we are contractually entitled to bill pre-determined amounts for future services (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), or contracts that are classified as leasing arrangements that are not subject to ASC 606. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs for the year ended December 31, 2018 : Successor December 31, 2018 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 13 14 Costs incurred 68 99 Amortization (17 ) (29 ) End of period balance $ 64 84 Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of telecommunications services to customers, including labor and materials consumed for these activities. Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average expected contract term of 12 to 60 months for our business customers and amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statement of operations. The amount of these deferred costs that are anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. Products and Services Revenue We categorize our products, services and revenue among the following five categories: • IP and Data Services , which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services; • Transport and Infrastructure , which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services; • Voice and Collaboration , which includes primarily TDM voice services, VoIP and other ancillary services; • Other , which includes sublease rental income and information technology services and managed services, which may be purchased in conjunction with our other network services; and • Affiliate services, we provide to our affiliates telecommunication services that we also provide to external customers. From time to time, we may change the categorization of our products and services. Our operating revenue for our products and services consisted of the following categories: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) IP and Data Services $ 3,945 668 3,284 3,862 Transport and Infrastructure 2,699 464 2,272 2,703 Voice and Collaboration 1,464 258 1,308 1,600 Other revenue 5 1 6 8 Affiliate revenue 107 16 — — Total revenue $ 8,220 1,407 6,870 8,173 We recognize revenue 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 revenue aggregated $415 million , $71 million , $331 million and $414 million for the successor year ended December 31, 2018 and period ended December 31, 2017 and the predecessor period ended October 31, 2017 and year ended December 31, 2016 , respectively. These USF surcharges, where we record revenue and transaction taxes, are assigned to the products and services categories based on the underlying revenue. 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. The following table presents total assets as of the successor date of December 31, 2018 and December 31, 2017 as well as operating revenue for the predecessor period ended October 31, 2017 and the successor year ended December 31, 2016 by geographic region: Total Assets Successor December 31, 2018 December 31, 2017 (Dollars in millions) North America $ 27,520 27,776 EMEA 2,765 1,192 Latin America 2,006 4,167 Total $ 32,291 33,135 Revenue Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) North America $ 6,739 1,155 5,651 6,748 EMEA 744 128 607 755 Latin America 737 124 612 670 Total $ 8,220 1,407 6,870 8,173 Our operations are integrated into and reported as part of the consolidated segment data of CenturyLink. CenturyLink's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we have one reportable segment. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 20% and 19% for the successor year ended December 31, 2018 and period ended December 31, 2017 , and 18% and 16% for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The following chart reflects our consolidated long-term debt, including unamortized premiums, net and debt issuance costs, but excluding intercompany debt: Successor Interest Rates Maturities December 31, December 31, (Dollars in millions) Level 3 Parent, LLC 5.750% Senior Notes due 2022 (1) 5.750% 2022 $ 600 600 Subsidiaries Level 3 Financing, Inc. Senior Notes: 6.125% Senior Notes due 2021 (2) 6.125% 2021 640 640 5.375% Senior Notes due 2022 (2) 5.375% 2022 1,000 1,000 5.625% Senior Notes due 2023 (2) 5.625% 2023 500 500 5.125% Senior Notes due 2023 (2) 5.125% 2023 700 700 5.375% Senior Notes due 2025 (2) 5.375% 2025 800 800 5.375% Senior Notes due 2024 (2) 5.375% 2024 900 900 5.25% Senior Notes due 2026 (2) 5.250% 2026 775 775 Term Loan: Tranche B 2024 Term Loan (3)(4) LIBOR + 2.25% 2024 4,611 4,611 Capital leases and other debt Various Various 163 179 Unamortized premiums, net 155 185 Total long-term debt 10,844 10,890 Less current maturities (6 ) (8 ) Long-term debt, excluding current maturities $ 10,838 10,882 _______________________________________________________________________________ (1) The notes are not guaranteed by any of Level 3 Parent, LLC's subsidiaries. (2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Parent, LLC and Level 3 Communications, LLC. (3) The Tranche B 2024 Term Loan had an interest rate of 4.754% and 3.557% as of December 31, 2018 and December 31, 2017, respectively. The interest rate on the Tranche B 2024 Term Loan is set with a minimum London Interbank Offered Rate ("LIBOR") of zero percent. The term loan was refinanced on February 22, 2017 as described below. (4) The Tranche B 2024 Term Loan is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain of its non-regulated subsidiaries. Senior Secured Term Loan As of the successor date of December 31, 2018 , Level 3 Financing, Inc., Level 3 Parent, LLC's direct wholly owned subsidiary ("Level 3 Financing") had a senior secured credit facility consisting of a $4.6 billion Tranche B Term Loan due 2024. The Tranche B 2024 Term Loan carries an interest rate, in the case of base rate borrowings, equal to (i) the greater of the Prime Rate, the Federal Funds Effective Rate plus 50 basis points , or LIBOR plus 100 basis points (with all such terms and calculations as defined or further specified in the applicable credit agreement) plus (ii) 1.25% per annum. Any Eurodollar borrowings under the Tranche B 2024 Term Loan bear interest at LIBOR plus 2.25% per annum. The Tranche B 2024 Term Loan requires certain specified mandatory prepayments in connection with certain asset sales and other transactions, subject to certain significant exceptions. The obligations of Level 3 Financing, under the Tranche B 2024 Term Loan are, subject to certain exceptions, secured by certain assets of Level 3 Parent, LLC and certain of its material domestic telecommunication subsidiaries. Also, Level 3 Parent, LLC has guaranteed and certain of its subsidiaries guarantee the obligations of Level 3 Financing, under the Tranche B 2024 Term Loan. Level 3 Communications, LLC and its material domestic subsidiaries guarantee and, subject to certain exceptions, pledge certain of their assets to secure the obligations of Level 3 Financing, under the Tranche B 2024 Term Loan. Senior Notes All of the notes reflected in the table above pay interest semiannually and allow for the redemption of the notes at the option of the issuer upon not less than 30 or more than 60 days’ prior notice by paying the greater of 101% of the principal amount or a “make whole” amount, plus accrued interest. In addition, the notes also have a provision that allows for an additional right of optional redemption using cash proceeds received from the sale of equity securities. For specific details of these features and requirements, including the applicable premiums and timing, refer to the indentures for the respective senior notes in connection with the original issuances. Debt Issuance Costs For the successor year ended December 31, 2018 and period ended December 31, 2017 , we deferred no costs in connection with debt issuances. For the predecessor period ended October 31, 2017 and the predecessor year ended December 31, 2016 , we deferred costs of $40 million and $11 million , respectively, in connection with debt issuances. New Issuances On the predecessor date of February 22, 2017, we completed the refinancing of all of our then outstanding $4.6 billion senior secured term loans through the issuance of a new Tranche B 2024 Term Loan in the principal amount of $4.6 billion . The new Tranche B 2024 Term Loan bears interest at LIBOR plus 2.25 percent, with a zero percent minimum LIBOR, and will mature on February 22, 2024. The Tranche B 2024 Term Loan was priced to lenders at par, with the payment to the lenders at closing of an upfront 25 basis point fee. We recognized a charge of approximately $44 million for modification and extinguishment in the first quarter of 2017 related to this refinancing. Repayments On the predecessor date of September 29, 2017, the $300 million aggregate principal amount plus accrued and unpaid interest due under the Floating Rate Senior Notes due 2018 was paid and we recognized a loss on extinguishment of less than $1 million . Aggregate Maturities of Long-Term Debt Set forth below is the aggregate principal amount of our long-term debt and capital leases (excluding unamortized premiums) maturing during the following years: (Dollars in millions) (1) 2019 $ 6 2020 6 2021 648 2022 1,609 2023 1,209 2024 and thereafter 7,211 Total long-term debt $ 10,689 _______________________________________________________________________________ (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. Letters of Credit It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of December 31, 2018 and 2017 , we had outstanding letters of credit or other similar obligations of approximately $30 million and $36 million , respectively, of which $24 million and $30 million are collateralized by cash that is reflected on the consolidated balance sheets as restricted cash and securities. We do not believe exposure to loss related to our letters of credit is material. Covenants The term loan and senior notes of Level 3 Parent, LLC and Level 3 Financing, Inc. contain extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with their affiliates including CenturyLink and its other subsidiaries, dispose of assets and merge or consolidate with any other person. Also, Level 3 Parent, LLC, as well as Level 3 Financing, Inc., will be required to offer to purchase certain of its long-term debt securities under certain circumstances in connection with a "change of control" of Level 3 Parent, LLC. Certain of CenturyLink's and our debt instruments contain cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. Compliance At the successor dates of December 31, 2018 and December 31, 2017, we believe we were in compliance with the financial covenants contained in our debt agreements in all material respects. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable The following table presents details of our accounts receivable balances: Successor December 31, December 31, (Dollars in millions) Trade receivables $ 533 562 Earned and unbilled receivables 177 165 Other 13 24 Total accounts receivable 723 751 Less: allowance for doubtful accounts (1) (11 ) (3 ) Accounts receivable, less allowance $ 712 748 _______________________________________________________________________________ (1) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in the allowance for doubtful accounts being reset as of the date of acquisition. We are exposed to concentrations of credit risk from our customers and other telecommunications service providers. We generally do not require collateral to secure our receivable balances. The following table presents details of our allowance for doubtful accounts: Beginning Balance Additions Deductions Ending Balance (Dollars in millions) 2018 (Successor) $ 3 18 (10 ) 11 December 31, 2017 (Successor) — 3 — 3 October 31, 2017 (Predecessor) 29 16 (12 ) 33 2016 (Predecessor) 32 18 (21 ) 29 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Net property, plant and equipment is composed of the following: Successor Depreciable Lives December 31, December 31, (Dollars in millions) Land N/A $ 339 348 Fiber conduit and other outside plant (1) 15-45 years 5,262 4,750 Central office and other network electronics (2) 7-10 years 1,986 2,134 Support assets (3) 3-30 years 2,327 2,019 Construction-in-progress (4) N/A 560 304 Gross property, plant and equipment 10,474 9,555 Accumulated depreciation (5) (1,021 ) (143 ) Net property, plant and equipment $ 9,453 9,412 _______________________________________________________________________________ (1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3) Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction. (5) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in accumulated depreciation being reset as of the date of acquisition. Depreciation expense was $906 million and $143 million for the successor year ended December 31, 2018 and period ended December 31, 2017 , $850 million and $948 million for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 . Asset Retirement Obligations At the successor dates of December 31, 2018 and 2017 , our asset retirement obligations consisted of restoration requirements for leased facilities. At the predecessor date of December 31, 2016 , our asset retirement obligations balance was primarily related to estimated future costs to remove certain of our network infrastructure at the expiration of the underlying right-of-way ("ROW") term and restoration requirements for leased facilities and estimated future costs of properly disposing of asbestos and other hazardous materials upon remodeling or demolishing buildings. We recognize our estimate of the fair value of our asset retirement obligations in the period incurred in other long-term liabilities. The fair value of the asset retirement obligation is also capitalized as property, plant and equipment and then depreciated over the estimated remaining useful life of the associated asset. The following table provides asset retirement obligation activity: Successor Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Balance at beginning of period $ 45 45 89 90 Accretion expense 5 1 12 10 Purchase price adjustments (1) 58 — — — Liabilities settled (13 ) (1 ) (7 ) (9 ) Revision in estimated cash flows 10 — — — Effect of foreign currency rate change — — — (2 ) Balance at end of period $ 105 45 94 89 _______________________________________________________________________________ (1) These liabilities relate to purchase price adjustments that occurred during 2018 from CenturyLink's acquisition of us. |
Severance and Leased Real Estat
Severance and Leased Real Estate | 12 Months Ended |
Dec. 31, 2018 | |
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. 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. As of the acquisition date, we recorded liabilities to reflect the fair values of the existing lease obligations for real estate for which we had 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 December 31, 2018, the current and noncurrent portions of our leased real estate accrual were $8 million and $39 million , respectively. The remaining lease terms range from less than one year to 12.0 years, with a weighted average of 8.2 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 (Predecessor) $ 2 5 Accrued to expense — 2 Payments, net (1 ) (2 ) Balance at October 31, 2017 (Predecessor) 1 5 Balance at November 1, 2017 (Successor) 1 5 Accrued to expense 6 — Payment, net (2 ) (1 ) Balance at December 31, 2017 (Successor) 5 4 Accrued to expense 33 51 Payments, net (19 ) (8 ) Balance at December 31, 2018 (Successor) $ 19 47 |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits Defined Contribution Plans Prior to the CenturyLink acquisition on November 1, 2017, we offered our qualified employees the opportunity to participate in a defined contribution retirement plan qualifying under the provisions of Section 401(k) of the Internal Revenue Code ("401(k) Plan"). Each employee was eligible to contribute, on a tax deferred basis, a portion of annual earnings generally not to exceed $18,500 in 2018 , $18,000 in 2017 and $18,000 in 2016 . We matched 100% of employee contributions up to 4% of eligible earnings or applicable regulatory limits. Effective December 31, 2017, the Level 3 Communications, Inc. 401(k) Profit Sharing Plan and Trust assets merged with the CenturyLink, Inc. Dollars & Sense 401(k) Plan. Those employees eligible to contribute to the Level 3 Plan at December 31, 2017 were automatically enrolled in the CenturyLink Plan at January 1, 2018. Provisions regarding eligibility, participant and employer contributions, vesting, and benefit payments within the Level 3 Plan document did not materially change and protected provisions applicable to Level 3 and its predecessor Plans remained grandfathered as required by law. Prior to the CenturyLink acquisition on November 1, 2017, our matching contributions were made with Level 3 common stock based on the closing stock price on each pay date. After our acquisition, matching contributions were made in cash. We made 401(k) Plan matching contributions of $7 million for the successor period ended December 31, 2017 , and $30 million and $37 million for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. Our matching contributions are recorded as compensation and included in cost of services of $1 million for the successor period ended December 31, 2017 , and $4 million and $5 million for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. Our matching contributions included in selling, general and administrative expenses totaled $5 million for the successor period ended December 31, 2017 , and $26 million and $32 million for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. Other defined contribution plans we sponsored are individually not significant. On an aggregate basis, the expense we recorded relating to these plans was approximately $5 million and $1 million for the successor year ended December 31, 2018 and period ended December 31, 2017 , and $5 million and $6 million for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. Defined Benefit Plans We have certain contributory and non-contributory employee pension plans, which are not significant to our financial position or operating results. We recognize in our balance sheet the funded status of our defined benefit post-retirement plans, which is measured as the difference between the fair value of the plan assets and the plan benefit obligations. We are also required to recognize changes in the funded status within accumulated other comprehensive income, net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost. The fair value of the plan assets was $133 million and $147 million as of December 31, 2018 and 2017 , respectively. The total plan benefit obligations were $144 million and $165 million as of December 31, 2018 and 2017 , respectively. Therefore, the net unfunded status was $11 million and $18 million as of December 31, 2018 and 2017 , respectively. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | Share-Based Compensation Prior to our acquisition by CenturyLink on November 1, 2017, we recorded share-based compensation expense for our performance restricted stock units, restricted stock units, 401(k) matching contributions and prior to October 1, 2016, outperform stock appreciation rights. Due to CenturyLink's acquisition of us, we now record share-based compensation expense that is allocated to us from CenturyLink. Based on many factors that affect the allocation, the amount of share-based compensation expense recorded at CenturyLink and ultimately allocated to us may fluctuate. We cash settle the share-based compensation expense allocated to us from CenturyLink. Share-based compensation expenses were included in cost of services and products, and selling, general, and administrative expenses in our consolidated statements of operations. During our predecessor period and years, we recognized compensation expense relating to awards granted to our employees under the Level 3 Communications, Inc. Stock Incentive Plan, as amended (the "Stock Plan"). The Stock Plan provided for accelerated vesting of stock awards upon retirement if an employee met certain age and years of service requirements and certain other requirements. Under the Stock Compensation guidance, if an employee meets the age and years of service requirements under the accelerated vesting provision, the award would be expensed at grant or expensed over the period from the grant date to the date the employee meets the requirements, even if the employee has not actually retired. Our total share-based compensation expense was approximately $105 million and $26 million for the successor year ended December 31, 2018 and period ended December 31, 2017 , and $132 million and $156 million for the predecessor period ended October 31, 2017 and year ended December 31, 2016 , respectively. |
Products and Services Revenues
Products and Services Revenues | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Comparative Results The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Operating revenue $ 8,220 (5 ) 8,215 Cost of services and products (exclusive of depreciation and amortization) 3,937 — 3,937 Selling, general and administrative 1,354 52 1,406 Interest expense 509 (9 ) 500 Income tax expense 196 (12 ) 184 Net income 341 (36 ) 305 The following table presents a reconciliation of certain consolidated balance sheet captions under ASC 606 to the balance sheet results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Other current assets $ 234 (33 ) 201 Other long-term assets, net 191 (31 ) 160 Deferred revenue 1,491 (4 ) 1,487 Deferred income tax assets, net 306 15 321 Member's equity 17,877 (45 ) 17,832 Disaggregated Revenue by Service Offering The following table provides disaggregation of revenue from contracts with customers based on service offering for the year ended December 31, 2018 . It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Successor Year Ended December 31, 2018 (Dollars in millions) Total Revenue Adjustments (6) Total Revenue from Contracts with Customers IP and Data Services (1) $ 3,945 — 3,945 Transport and Infrastructure (2) 2,699 (189 ) 2,510 Voice and Collaboration (3) 1,464 — 1,464 Other Revenue (4) 5 (3 ) 2 Affiliate Revenue (5) 107 (107 ) — Total Revenue $ 8,220 (299 ) 7,921 Timing of revenue Goods transferred at a point in time $ — Services performed over time 7,921 Total revenue from contracts with customers $ 7,921 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2018 and January 1, 2018: Successor December 31, 2018 January 1, 2018 (Dollars in millions) Customer receivables (1) $ 712 748 Contract assets 19 22 Contract liabilities 393 353 _______________________________________________________________________________ (1) Gross customer receivables of $723 million and $751 million, net of allowance for doubtful accounts of $11 million and $3 million, at December 31, 2018 and January 1, 2018, respectively Contract liabilities are consideration we have received from our customers in advance of providing the goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to seven years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. The following table provides information about revenue recognized for the year ended December 31, 2018 : Successor (Dollars in millions) Revenue recognized in the current period from: Amounts included in contract liability at the beginning of the period (January 1, 2018) $ 158 Performance obligations satisfied in previous periods — Performance Obligations As of December 31, 2018 , our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts that are unsatisfied (or partially satisfied) is approximately $5.2 billion . We expect to recognize approximately 77% of this revenue through 2021, with the balance recognized thereafter. We do not disclose the amount of unsatisfied performance obligations for contracts under which we are contractually entitled to bill pre-determined amounts for future services (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), or contracts that are classified as leasing arrangements that are not subject to ASC 606. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs for the year ended December 31, 2018 : Successor December 31, 2018 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 13 14 Costs incurred 68 99 Amortization (17 ) (29 ) End of period balance $ 64 84 Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of telecommunications services to customers, including labor and materials consumed for these activities. Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average expected contract term of 12 to 60 months for our business customers and amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statement of operations. The amount of these deferred costs that are anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. Products and Services Revenue We categorize our products, services and revenue among the following five categories: • IP and Data Services , which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services; • Transport and Infrastructure , which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services; • Voice and Collaboration , which includes primarily TDM voice services, VoIP and other ancillary services; • Other , which includes sublease rental income and information technology services and managed services, which may be purchased in conjunction with our other network services; and • Affiliate services, we provide to our affiliates telecommunication services that we also provide to external customers. From time to time, we may change the categorization of our products and services. Our operating revenue for our products and services consisted of the following categories: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) IP and Data Services $ 3,945 668 3,284 3,862 Transport and Infrastructure 2,699 464 2,272 2,703 Voice and Collaboration 1,464 258 1,308 1,600 Other revenue 5 1 6 8 Affiliate revenue 107 16 — — Total revenue $ 8,220 1,407 6,870 8,173 We recognize revenue 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 revenue aggregated $415 million , $71 million , $331 million and $414 million for the successor year ended December 31, 2018 and period ended December 31, 2017 and the predecessor period ended October 31, 2017 and year ended December 31, 2016 , respectively. These USF surcharges, where we record revenue and transaction taxes, are assigned to the products and services categories based on the underlying revenue. 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. The following table presents total assets as of the successor date of December 31, 2018 and December 31, 2017 as well as operating revenue for the predecessor period ended October 31, 2017 and the successor year ended December 31, 2016 by geographic region: Total Assets Successor December 31, 2018 December 31, 2017 (Dollars in millions) North America $ 27,520 27,776 EMEA 2,765 1,192 Latin America 2,006 4,167 Total $ 32,291 33,135 Revenue Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) North America $ 6,739 1,155 5,651 6,748 EMEA 744 128 607 755 Latin America 737 124 612 670 Total $ 8,220 1,407 6,870 8,173 Our operations are integrated into and reported as part of the consolidated segment data of CenturyLink. CenturyLink's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we have one reportable segment. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 20% and 19% for the successor year ended December 31, 2018 and period ended December 31, 2017 , and 18% and 16% for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. |
Affiliate Transactions
Affiliate Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Affiliate Transactions | Affiliate Transactions We provide to our affiliates telecommunications services that we also provide to external customers. Whenever possible, costs are directly assigned to our affiliates for the services they use. If costs cannot be directly assigned, they are allocated among all affiliates based upon cost causative measures; or if no cost causative measure is available, these costs are allocated based on a general allocator. These cost allocation methodologies are reasonable. From time to time, we adjust the basis for allocating the costs of a shared service among affiliates. Such changes in allocation methodologies are generally billed prospectively. We also purchase services from our affiliates including telecommunication services, insurance, flight services and other support services such as legal, regulatory, finance and accounting, tax, human resources and executive support. Subsequent Event As of the date of this report, $225 million of distributions were made to our parent in the first quarter of 2019. |
Fair Value Disclosure
Fair Value Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosure | Fair Value Disclosure Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, note receivable-affiliate and long-term debt, excluding capital lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, 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 primarily on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as 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: Successor As of December 31, 2018 As of December 31, 2017 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in million) Liabilities-Long-term debt, excluding capital lease and other obligations 2 $ 10,681 10,089 10,711 10,528 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act reduces the U.S. corporate income tax rate from a maximum of 35% to 21% for all corporations, effective January 1, 2018, and makes certain changes to U.S. taxation of income earned by foreign subsidiaries, capital expenditures, interest expense and various other items. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21%, we revalued our net deferred tax assets at December 31, 2017 and recognized a provisional $195 million tax expense in our consolidated statement of operations for the year ended December 31, 2017 . As a result of finalizing our provisional amount recorded in 2017, we recorded an increase to this amount of $92 million in 2018. The Tax Act imposed a one-time repatriation tax on certain earnings of foreign subsidiaries. The Tax Act also includes certain anti-abuse and base erosion provisions that may impact the amount of U.S. tax that we pay with respect to income earned by our foreign subsidiaries. We have completed our analysis of the impact of the one-time repatriation tax and concluded that we do not have a tax liability under this provision. We have also completed our analysis of the anti-abuse and base erosion provisions and have recorded a tax expense of $10 million related to the global intangible low-taxed income provisions and do not have liability related to the base erosion and anti-abuse tax provisions of the Act. Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Income tax expense was as follows: Federal Current $ — — — — Deferred 199 231 193 177 State Current (9 ) 2 7 4 Deferred 28 6 16 27 Foreign Current 30 4 39 41 Deferred (52 ) (9 ) 13 (84 ) Total income tax expense $ 196 234 268 165 Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Income tax expense was allocated as follows: Income tax expense in the consolidated statements of operations: Attributable to income $ 196 234 268 165 Member's/Stockholders' equity: Tax effect of the change in accumulated other comprehensive loss $ (49 ) 17 49 (43 ) The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Percentage of pre-tax income) Statutory federal income tax rate 21.0 % 35.0 % 35.0 % 35.0 % State income taxes, net of federal income tax benefit 2.8 % 3.6 % 2.9 % 3.7 % Tax Reform 17.2 % 210.6 % — % (13.2 )% Global intangible low-taxed income 1.8 % — % — % — % CenturyLink acquisition transaction costs — % 11.3 % — % — % Uncertain tax positions 0.5 % 1.2 % 0.1 % 0.1 % Net foreign income tax (4.8 )% (19.3 )% 0.9 % (6.7 )% Executive compensation limitation 1.2 % 5.4 % 0.9 % 1.1 % Research and development credits (1.3 )% (0.9 )% (1.2 )% — % Other, net (1.9 )% 4.7 % 0.1 % (0.4 )% Effective income tax rate 36.5 % 251.6 % 38.7 % 19.6 % The successor year ended December 31, 2018 and the period ended December 31, 2017 , the effective tax rate is 36.5% and 251.6% compared to 38.7% for the predecessor period ended October 31, 2017 and 19.6% for the predecessor year ended December 31, 2016 , respectively. The effective tax rate for the successor period ended December 31, 2018 reflects $92 million of an estimated one-time income tax expense related to income tax law changes under the Tax Act enacted in 2017. The effective tax rate for the successor period ended December 31, 2017 reflects $195 million of an estimated one-time income tax expense related to income tax law changes under the Tax Act enacted in 2017. The predecessor year ended December 31, 2016 reflects a $110 million estimated one-time income tax benefit related to newly issued regulations under Internal Revenue Code Section 987 addressing the taxation of foreign currency translations gains and losses arising from foreign branches, as well as $82 million of income tax benefit related to the release of foreign valuation allowances, primarily in Germany, Brazil and Mexico. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: Successor December 31, December 31, (Dollars in millions) Deferred tax assets Deferred revenue $ 298 256 Net operating loss carry forwards 3,494 3,633 Property, plant and equipment 57 63 Other 309 282 Gross deferred tax assets 4,158 4,234 Less valuation allowance (931 ) (942 ) Net deferred tax assets 3,227 3,292 Deferred tax liabilities Deferred revenue (45 ) (44 ) Property, plant and equipment (853 ) (689 ) Intangible assets (1,998 ) (2,329 ) Other (25 ) (16 ) Gross deferred tax liabilities (2,921 ) (3,078 ) Net deferred tax assets $ 306 214 Of the $306 million and $214 million net deferred tax assets at December 31, 2018 and 2017 , respectively, $202 million and $212 million is reflected as a long-term liability and $508 million and $426 million is reflected as a net noncurrent deferred tax asset at December 31, 2018 and 2017 , respectively. During the twelve months ended December 31, 2017 , we completed an extensive analysis of our Internal Revenue Code ("IRC") Section 382 limitation that resulted in an increase of the amount of net operating loss carry forwards as of December 31, 2017 by approximately $1.0 billion on a pre-tax basis that was recorded in purchase accounting. At the successor date of December 31, 2018 , we had federal NOLs of $13.8 billion before uncertain tax positions of $4.3 billion and state NOLs of $10 billion . If unused, the NOLs will expire between 2022 and 2037. At the successor date of December 31, 2018 , we had $31 million of federal tax credits. At the successor date of December 31, 2018 , we had foreign NOLs of $6.0 billion . We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2018 , a valuation allowance of $0.9 billion was established as it is more likely than not that this amount of net operating loss and tax credit carryforwards will not be utilized prior to expiration. Our valuation allowance at December 31, 2018 and 2017 is primarily related to foreign and state NOL carryforwards. This valuation allowance decreased by $11 million during 2018 primarily due to the impact of foreign exchange rate adjustments and state law changes. During 2016, we recognized a $22 million income tax benefit from the vesting of share-based compensation due to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting . We also recognized $82 million of income tax benefit related to the release of deferred tax asset valuation allowances primarily in Germany, Brazil, and Mexico. The determinations to release the foreign valuation allowances were driven by our projection of future profitability for each legal entity due to the recapitalization of our German subsidiary, the planned action to restructure our Brazilian business, and the merger of our Mexican subsidiaries. With respect to our foreign corporate subsidiaries, we provide for U.S. income taxes on the undistributed earnings and the other outside basis temporary differences (differences between a parent's book and tax basis in a subsidiary, including currency translation adjustments) unless they are considered indefinitely reinvested outside the United States. The amount of temporary differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which U.S. income taxes have not been provided was immaterial. With respect to our foreign branches, we had historically established deferred tax liabilities for foreign branches with an overall cumulative translation gain, but had not established deferred tax assets for those with an overall translation loss as we had no plans to trigger realization of the losses in the foreseeable future. On December 7, 2016, the Internal Revenue Service issued regulations under Internal Revenue Code Section 987 addressing the taxation of foreign currency translations gains and losses arising from foreign branches. The new regulations require a “fresh start” recalculation of the unrealized gains and losses as of the adoption date. The regulations provide that the tax bases of specified assets, such as fixed assets, will be translated at historic foreign exchange rates. As a result, the deferred taxes related to such foreign currency translation are expected to reverse through the operations of the branch thereby allowing the recognition of deferred tax assets arising from translation losses as well. The issuance of the regulations resulted in us recognizing an estimated one-time tax benefit of $110 million during the fourth quarter 2016. A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from the successor period November 1 to December 31, 2017 , the predecessor period January 1 to October 31, 2017 and the predecessor year ended December 31, 2016 is as follows: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 (Dollars in millions) Unrecognized tax benefits at beginning of period $ 21 20 18 Tax positions of prior periods netted against deferred tax assets 950 — — (Decrease) increase in tax positions taken in the prior period (1 ) 1 — Increase in tax positions taken in the current period 3 — 2 Decrease due to settlement/payments (1 ) — — Decrease from the lapse of statute of limitations (2 ) — — Unrecognized tax benefits at end of period $ 970 21 20 The total amount (including interest and any related federal benefit) of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $23 million , $28 million , and $27 million for the successor year ended December 31, 2018 , period ended December 31, 2017 and the predecessor period ended October 31, 2017 , respectively. Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $6 million and $20 million at December 31, 2018 and 2017 , respectively. We, or at least one of our affiliates, file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carry forwards are available. Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $2 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control. We incur tax expense attributable to income in various subsidiaries that are required to file state or foreign income tax returns on a separate legal entity basis. We also recognize accrued interest and penalties in income tax expense related to uncertain tax benefits. Our tax rate is volatile and may move up or down with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, changes in tax laws, and the movement of liabilities established for uncertain tax positions as statutes of limitations expire or positions are otherwise effectively settled. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) Operating Revenue Operating Income Net Income (Loss) (Dollars in millions) 2018 First quarter (successor) $ 2,087 261 62 Second quarter (successor) 2,052 196 40 Third quarter (successor) 2,010 227 88 Fourth quarter (successor) 2,071 284 151 Total $ 8,220 968 341 2017 First quarter (predecessor) $ 2,048 337 95 Second quarter (predecessor) 2,062 353 154 Third quarter (predecessor) 2,059 349 157 Fourth quarter (predecessor) 701 112 19 Two months ended December 31 (successor) 1,407 158 (141 ) Total $ 8,277 1,309 284 In the two months ended December 31, 2017 , we recognized a $195 million income tax expense related to the Tax Act. In the twelve months ended December 31, 2018, we recognized a $92 million income tax expense related to the Tax Act. |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Items | Commitments, Contingencies and Other Items We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities. Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously-established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Amounts accrued for our litigation and non-income tax contingencies at December 31, 2018 aggregated to approximately $70 million and are included in other current liabilities and other liabilities in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. Peruvian Tax Litigation In 2005, the Peruvian tax authorities ("SUNAT") issued tax assessments against one of our Peruvian subsidiaries asserting $26 million of additional income tax withholding and value-added taxes ("VAT"), penalties and interest for calendar years 2001 and 2002 on the basis that the Peruvian subsidiary incorrectly documented its importations. After taking into account the developments described below, as well as the accrued interest and foreign exchange effects, we believe the total amount of exposure is $11 million at December 31, 2018 . We challenged the assessments via administrative and then judicial review processes. In October 2011, the highest administrative review tribunal (the "Tribunal") decided the central issue underlying the 2002 assessments in SUNAT's favor. We appealed the Tribunal's decision to the first judicial level, which decided the central issue in favor of Level 3. SUNAT and we filed cross-appeals with the court of appeal. In May 2017, the court of appeal issued a decision reversing the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. Oral argument was held before the Supreme Court of Justice in October 2018. A decision on this case is pending. In October 2013, the Tribunal decided the central issue underlying the 2001 assessments in SUNAT’s favor. We appealed that decision to the first judicial level in Peru, which decided the central issue in favor of SUNAT. In June 2017, we filed an appeal with the court of appeal. In November 2017, the court of appeals issued a decision affirming the first judicial level and we filed an appeal of the decision to the Supreme Court of Justice. That appeal is pending. Brazilian Tax Claims In December 2004, March 2009, April 2009 and July 2014, the São Paulo state tax authorities issued tax assessments against one of our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenue from leasing certain assets (in the case of the December 2004, March 2009 and July 2014 assessments) and revenue from the provision of Internet access services (in the case of the April 2009 and July 2014 assessments), by treating such activities as the provision of communications services, to which the ICMS tax applies. In September 2002, July 2009 and May 2012, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on similar issues. We have filed objections to these assessments, arguing that the lease of assets and the provision of Internet access are not communication services subject to ICMS. The objections to the September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and we have appealed those decisions to the judicial courts. In October 2012 and June 2014, we received favorable rulings from the lower court on the December 2004 and March 2009 assessments regarding equipment leasing, but those rulings are subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the April and July 2009 and May 2012 assessments are still pending final administrative decisions. The July 2014 assessment was confirmed during the fourth quarter of 2014 at the first administrative level, and we appealed this decision to the second administrative level. We are vigorously contesting all such assessments in both states and, in particular, view the assessment of ICMS on revenue from equipment leasing to be without merit. These assessments, if upheld, could result in a loss of up to $37 million at December 31, 2018 in excess of the accruals established for these matters. Qui Tam Action We were notified in late 2017 of a qui tam action pending against Level 3 Communications, Inc. and others in the United States District Court for the Eastern District of Virginia, captioned United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. The original qui tam complaint was filed under seal on November 26, 2013, and an amended complaint was filed under seal on June 16, 2014. The court unsealed the complaints on October 26, 2017. The amended complaint alleges that we, principally through two former employees, submitted false claims and made false statements to the government in connection with two government contracts. The relator seeks damages in this lawsuit of approximately $50 million , subject to trebling, plus statutory penalties, pre-and-post judgment interest, and attorney’s fees. The case is currently stayed. We are evaluating our defenses to the claims. At this time, we do not believe it is probable we will incur a material loss. If, contrary to our expectations, the plaintiff prevails in this matter and proves damages at or near $50 million , and is successful in having those damages trebled, the outcome could have a material adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid. Several people, including two former Level 3 employees, were indicted in the United States District Court for the Eastern District of Virginia on October 3, 2017, and charged with, among other things, accepting kickbacks from a subcontractor, who was also indicted, for work to be performed under a prime government contract. Of the two former employees, one entered into a plea agreement, and the other is deceased. We are fully cooperating in the government’s investigations in this matter. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings 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 described under this heading 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 us. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. Environmental Contingencies In connection with largely historical operations, we have responded to or been notified of potential environmental liability at 175 properties. We are engaged in addressing or have litigated environmental liabilities at many of those properties. We could potentially be held liable, jointly, or severally, and without regard to fault, for the costs of investigation and remediation of these sites. The discovery of additional environmental liabilities or changes in existing environmental requirements could have a material adverse effect on our business. Capital Leases We lease facilities and equipment under various capital lease arrangements. Depreciation of assets under capital leases is included in depreciation and amortization expense in our consolidated statements of operations. Payments on capital leases are included in repayments of long-term debt, including current maturities in our consolidated statements of cash flows. The tables below summarize our capital lease activity Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Assets acquired through capital leases $ 7 — — 19 Depreciation expense 13 — 2 5 Cash payments towards capital leases 14 — 1 10 Successor As of December 31, 2018 2017 (Dollars in millions) Assets included in property, plant and equipment $ 135 128 Accumulated depreciation 15 2 The future annual minimum payments under capital lease arrangements as of December 31, 2018 were as follows: Future Minimum Payments (Dollars in millions) Capital lease obligations: 2019 $ 16 2020 15 2021 16 2022 16 2023 17 2024 and thereafter 164 Total minimum payments 244 Less: amount representing interest and executory costs (81 ) Present value of minimum payments 163 Less: current portion (6 ) Long-term portion $ 157 Operating Lease Income We lease fiber capacity agreements, various office and switching facilities and other network sites to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. For the successor year ended December 31, 2018, the period ended December 31, 2017, the predecessor period ended October 31, 2017 and year ended December 31, 2016, our gross rental income was $192 million , $28 million , $138 million and $165 million , respectively. At December 31, 2018, our future commitments for operating lease income were as follows: Future Minimum Receipts (Dollars in millions) 2019 $ 135 2020 90 2021 78 2022 73 2023 69 Right-of-Way and Operating Lease Expense We lease various equipment, office facilities, retail outlets, switching facilities and other network sites. These leases, with few exceptions, provide for renewal options and escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. For the successor year ended December 31, 2018, the period ended December 31, 2017, the predecessor period ended October 31, 2017 and year ended December 31, 2016, our gross rental expense was $524 million , $95 million , $447 million and $552 million , respectively. We also received sublease rental income for the successor year ended December 31, 2018, the period ended December 31, 2017, the predecessor period ended October 31, 2017 and year ended December 31, 2016 of $9 million , $2 million , $7 million and $8 million , respectively. At December 31, 2018, our future rental commitments for right-of-way agreements and operating leases were as follows: Right-of-Way Agreements Operating Leases Total (Dollars in millions) 2019 $ 77 396 473 2020 51 259 310 2021 38 219 257 2022 37 164 201 2023 37 137 174 2024 and thereafter 225 613 838 Total future minimum payments (1) $ 465 1,788 2,253 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $29 million due in the future under non-cancelable subleases. Purchase Commitments We have several commitments primarily for marketing activities and support services from a variety of vendors to be used in the ordinary course of business totaling $ 339 million at December 31, 2018. Of this amount, we expect to purchase $ 132 million in 2019, $ 130 million in 2020 through 2021, $ 41 million in 2022 through 2023 and $ 36 million in 2024 and thereafter. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we were contractually committed as of December 31, 2018. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheet by component for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017 and December 31, 2018: Pension Plans Foreign Currency Translation Adjustments and Other Total (Dollars in millions) Balance at December 31, 2016 (predecessor) $ (34 ) (353 ) (387 ) Other comprehensive (loss) income before reclassifications (3 ) 81 78 Amounts reclassified from accumulated other comprehensive loss 2 — 2 Net other comprehensive (loss) income (1 ) 81 80 Balance at October 31, 2017 (predecessor) $ (35 ) (272 ) (307 ) Balance at November 1, 2017 (successor) $ — — — Other comprehensive income before reclassifications — 18 18 Amounts reclassified from accumulated other comprehensive loss — — — Net other comprehensive income — 18 18 Balance at December 31, 2017 (successor) $ — 18 18 Balance at December 31, 2017 (successor) $ — 18 18 Other comprehensive loss before reclassifications — (200 ) (200 ) Amounts reclassified from accumulated other comprehensive income 5 — 5 Net current-period other comprehensive income 5 (200 ) (195 ) Cumulative effect of adoption of ASU 2018-02, Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income — 6 6 Balance at December 31, 2018 (successor) $ 5 (176 ) (171 ) |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Consolidating Financial Information | Condensed Consolidating Financial Information Level 3 Financing, Inc., a wholly owned subsidiary, has issued Senior Notes that are unsecured obligations of Level 3 Financing, Inc.; however, they are also fully and unconditionally and jointly and severally guaranteed on an unsecured senior basis by Level 3 Parent, LLC and Level 3 Communications, LLC. In conjunction with the registration of the Level 3 Financing, Inc. Senior Notes, the accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 "Financial statements of guarantors and affiliates whose securities collateralize an issue registered or being registered." The operating activities of the separate legal entities included in our consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the statements of comprehensive income (loss), balance sheets and statements of cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Parent, LLC. These transactions are eliminated in our consolidated results. Condensed Consolidating Statements of Comprehensive Income (Loss) For the year ended December 31, 2018 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,884 4,229 — 8,113 Operating revenue - affiliates — — 130 285 (308 ) 107 Total operating revenue — — 4,014 4,514 (308 ) 8,220 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 2,209 1,728 — 3,937 Selling, general and administrative 12 3 392 1,255 (308 ) 1,354 Operating expenses - affiliates — — 176 81 — 257 Depreciation and amortization — — 688 1,016 — 1,704 Total operating expenses 12 3 3,465 4,080 (308 ) 7,252 OPERATING (LOSS) INCOME (12 ) (3 ) 549 434 — 968 OTHER INCOME (EXPENSE) Interest income (expense) - affiliates, net 2,430 1,562 (3,800 ) (125 ) — 67 Interest expense (33 ) (457 ) (3 ) (16 ) — (509 ) Equity in net (losses) earnings of subsidiaries (2,044 ) (3,257 ) 254 — 5,047 — Other income, net (9 ) — 1 19 — 11 Total other income (expense), net 344 (2,152 ) (3,548 ) (122 ) 5,047 (431 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 332 (2,155 ) (2,999 ) 312 5,047 537 Income tax benefit (expense) 10 111 (232 ) (85 ) — (196 ) NET INCOME (LOSS) 342 (2,044 ) (3,231 ) 227 5,047 341 Other comprehensive loss, net of income taxes (195 ) — — (195 ) 195 (195 ) COMPREHENSIVE INCOME (LOSS) $ 147 (2,044 ) (3,231 ) 32 5,242 146 Condensed Consolidating Statements of Comprehensive Income (Loss) For the period ended December 31, 2017 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 748 671 (28 ) 1,391 Operating revenue - affiliates — — 16 — — 16 Total operating revenue — — 764 671 (28 ) 1,407 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 418 300 (28 ) 690 Selling, general and administrative 1 3 179 70 — 253 Operating expenses - affiliates — — 24 — — 24 Depreciation and amortization — — 117 165 — 282 Total operating expenses 1 3 738 535 (28 ) 1,249 OPERATING (LOSS) INCOME (1 ) (3 ) 26 136 — 158 OTHER (EXPENSE) INCOME Interest income — — 1 — — 1 Interest income (expense) affiliates, net 262 368 (578 ) (41 ) — 11 Interest expense (5 ) (72 ) — (3 ) — (80 ) Equity in net (losses) earnings of subsidiaries (827 ) (15 ) 71 — 771 — Other income (expense), net 1 — 2 — — 3 Total other (expense) income, net (569 ) 281 (504 ) (44 ) 771 (65 ) (LOSS) INCOME BEFORE INCOME TAX (EXPENSE) BENEFIT (570 ) 278 (478 ) 92 771 93 Income tax benefit (expense) 429 (1,105 ) 433 9 — (234 ) NET (LOSS) INCOME (141 ) (827 ) (45 ) 101 771 (141 ) Other comprehensive income, net of income taxes 18 — — 18 (18 ) 18 COMPREHENSIVE (LOSS) INCOME $ (123 ) (827 ) (45 ) 119 753 (123 ) Condensed Consolidating Statements of Comprehensive Income (Loss) For the period ended October 31, 2017 (Predecessor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,108 3,891 (129 ) 6,870 Total operating revenue — — 3,108 3,891 (129 ) 6,870 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 1,942 1,680 (129 ) 3,493 Selling, general and administrative 4 3 942 259 — 1,208 Depreciation and amortization — — 356 662 — 1,018 Total operating expenses 4 3 3,240 2,601 (129 ) 5,719 OPERATING (LOSS) INCOME (4 ) (3 ) (132 ) 1,290 — 1,151 OTHER INCOME (EXPENSE) Interest income — — 12 1 — 13 Interest income (expense) - affiliates, net 1,260 1,890 (2,896 ) (254 ) — — Interest expense (30 ) (397 ) (2 ) (12 ) — (441 ) Loss on modification and extinguishment of debt — (44 ) — — — (44 ) Equity in net (losses) earnings of subsidiaries (815 ) (2,138 ) 692 — 2,261 — Other (expense) income, net 3 — 15 (4 ) — 14 Total other income (expense), net 418 (689 ) (2,179 ) (269 ) 2,261 (458 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 414 (692 ) (2,311 ) 1,021 2,261 693 Income tax benefit (expense) 11 (123 ) (2 ) (154 ) — (268 ) NET INCOME (LOSS) 425 (815 ) (2,313 ) 867 2,261 425 Other comprehensive income, net of income taxes 80 — — — — 80 COMPREHENSIVE INCOME (LOSS) $ 505 (815 ) (2,313 ) 867 2,261 505 Condensed Consolidating Statements of Comprehensive Income (Loss) For the year ended December 31, 2016 (Predecessor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,558 4,747 (132 ) 8,173 Total operating revenue — — 3,558 4,747 (132 ) 8,173 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 2,249 2,045 (132 ) 4,162 Selling, general and administrative 16 5 1,025 361 — 1,407 Depreciation and amortization — — 372 787 — 1,159 Total operating expenses 16 5 3,646 3,193 (132 ) 6,728 OPERATING (LOSS) INCOME (16 ) (5 ) (88 ) 1,554 — 1,445 OTHER INCOME (EXPENSE) Interest income — — 3 1 — 4 Interest income (expense) - affiliates, net 1,385 2,113 (3,215 ) (283 ) — — Interest expense (36 ) (505 ) (2 ) (1 ) — (544 ) Equity in net earnings (losses) of subsidiaries (669 ) (2,033 ) 757 — 1,945 — Other (expense) income, net (1 ) (39 ) 2 (25 ) — (63 ) Total other income (expense), net 679 (464 ) (2,455 ) (308 ) 1,945 (603 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 663 (469 ) (2,543 ) 1,246 1,945 842 Income tax benefit (expense) 14 (200 ) (2 ) 23 — (165 ) NET INCOME (LOSS) 677 (669 ) (2,545 ) 1,269 1,945 677 Other comprehensive loss, net of income taxes (86 ) — — (86 ) 86 (86 ) COMPREHENSIVE INCOME (LOSS) $ 591 (669 ) (2,545 ) 1,183 2,031 591 Condensed Consolidating Balance Sheets December 31, 2018 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2 — 164 77 — 243 Restricted cash and securities - current — — — 4 — 4 Accounts receivable — — 70 642 — 712 Advances to affiliates 16,852 23,957 7,744 2,707 (51,260 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other 1 3 97 133 — 234 Total current assets 18,680 23,960 8,075 3,563 (51,260 ) 3,018 NET PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment — — 3,456 7,018 — 10,474 Accumulated depreciation — — (320 ) (701 ) — (1,021 ) Net property, plant and equipment — — 3,136 6,317 — 9,453 GOODWILL AND OTHER ASSETS Goodwill — — 1,665 9,454 — 11,119 Restricted cash and securities 15 — 9 1 — 25 Customer relationships, net — — 3,823 3,744 — 7,567 Other intangible assets, net — — 409 1 — 410 Investment in subsidiaries 15,541 17,915 3,861 — (37,317 ) — Other, net 275 1,421 110 225 (1,332 ) 699 Total goodwill and other assets 15,831 19,336 9,877 13,425 (38,649 ) 19,820 TOTAL ASSETS $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 LIABILITIES AND MEMBER'S EQUITY (DEFICIT) CURRENT LIABILITIES Current maturities of long-term debt $ — — 1 5 — 6 Accounts payable — — 380 346 — 726 Accounts payable - affiliates 62 11 162 11 — 246 Accrued expenses and other liabilities Salaries and benefits — — 189 44 — 233 Income and other taxes — 4 72 54 — 130 Interest 11 78 1 5 — 95 Other 3 1 8 66 — 78 Advance billings and customer deposits — — 168 142 — 310 Due to affiliates — — 45,347 5,913 (51,260 ) — Total current liabilities 76 94 46,328 6,586 (51,260 ) 1,824 LONG-TERM DEBT 613 10,068 7 150 — 10,838 DEFERRED REVENUE AND OTHER LIABILITES Deferred revenue — — 971 210 — 1,181 Deferred tax liability 56 — 841 637 (1,332 ) 202 Other — — 197 172 — 369 Total deferred revenue and other liabilities 56 — 2,009 1,019 (1,332 ) 1,752 COMMITMENTS AND CONTINGENCIES MEMBER'S EQUITY (DEFICIT) 33,766 33,134 (27,256 ) 15,550 (37,317 ) 17,877 TOTAL LIABILITIES AND MEMBER'S EQUITY (DEFICIT) $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 Condensed Consolidating Balance Sheets December 31, 2017 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) ASSETS CURRENT ASSETS Cash and cash equivalents $ 13 — 175 109 — 297 Restricted cash and securities - current — — 1 4 — 5 Accounts receivable — — 26 722 — 748 Accounts receivable - affiliates — — 60 4 (51 ) 13 Assets held for sale 68 — 5 67 — 140 Advances to affiliates 16,251 21,032 — 5,200 (42,483 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other — — 54 63 — 117 Total current assets 18,157 21,032 321 6,169 (42,534 ) 3,145 NET PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment — — 3,285 6,270 — 9,555 Accumulated depreciation — — (48 ) (95 ) — (143 ) Net property, plant and equipment — — 3,237 6,175 — 9,412 GOODWILL AND OTHER ASSETS Goodwill — — 1,200 9,637 — 10,837 Restricted cash and securities 19 — 10 — — 29 Customer relationships, net — — 4,324 4,521 — 8,845 Other intangible assets, net — — 378 — — 378 Investment in subsidiaries 16,954 18,403 3,616 — (38,973 ) — Other, net 280 1,795 32 153 (1,771 ) 489 Total goodwill and other assets 17,253 20,198 9,560 14,311 (40,744 ) 20,578 TOTAL ASSETS $ 35,410 41,230 13,118 26,655 (83,278 ) 33,135 LIABILITIES AND MEMBER'S EQUITY (DEFICIT) CURRENT LIABILITIES Current maturities of long-term debt $ — — 2 6 — 8 Accounts payable — 1 323 371 — 695 Accounts payable - affiliates 11 — — 81 (51 ) 41 Accrued expenses and other liabilities Salaries and benefits — — 109 27 — 136 Income and other taxes — — 55 45 — 100 Interest 11 91 — 7 — 109 Other 16 — 25 18 — 59 Advance billings and customer deposits — — 127 131 — 258 Due to affiliates — — 42,483 — (42,483 ) — Total current liabilities 38 92 43,124 686 (42,534 ) 1,406 LONG-TERM DEBT 616 10,096 13 157 — 10,882 DEFERRED REVENUE AND OTHER LIABILITES Deferred revenue — — 841 252 — 1,093 Deferred tax liability 648 — 870 465 (1,771 ) 212 Other 1 1 103 165 — 270 Total deferred revenue and other liabilities 649 1 1,814 882 (1,771 ) 1,575 COMMITMENTS AND CONTINGENCIES MEMBER'S EQUITY (DEFICIT) 34,107 31,041 (31,833 ) 24,930 (38,973 ) 19,272 TOTAL LIABILITIES AND MEMBER'S EQUITY (DEFICIT) $ 35,410 41,230 13,118 26,655 (83,278 ) 33,135 Condensed Consolidating Statements of Cash Flows For the year ended December 31, 2018 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (98 ) — 2,059 436 — 2,397 INVESTING ACTIVITIES Capital expenditures — — (527 ) (511 ) — (1,038 ) Proceeds from the sale of property, plant and equipment and other assets 83 — — 51 — 134 Net cash provided by (used in) investing activities 83 — (527 ) (460 ) — (904 ) FINANCING ACTIVITIES Payments of long-term debt — — — (7 ) — (7 ) Distributions (1,545 ) — — — — (1,545 ) Increase (decrease) due to from affiliates, net 1,545 — (1,545 ) — — — Net cash used in financing activities — — (1,545 ) (7 ) — (1,552 ) Net decrease in cash, cash equivalents and restricted cash and securities (15 ) — (13 ) (31 ) — (59 ) Cash, cash equivalents and restricted cash and securities at beginning of period 32 — 186 113 — 331 Cash, cash equivalents and restricted cash and securities at end of period $ 17 — 173 82 — 272 Condensed Consolidating Statements of Cash Flows For the period ended December 31, 2017 (Successor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (1 ) — 172 137 — 308 INVESTING ACTIVITIES Capital expenditures — — (110 ) (97 ) — (207 ) Note receivable - affiliate — — (1,825 ) — — (1,825 ) Net cash used in investing activities — — (1,935 ) (97 ) — (2,032 ) FINANCING ACTIVITIES Payments of long-term debt — — — (1 ) — (1 ) Distributions (250 ) — — — — (250 ) Increase (decrease) due from/to affiliates, net 250 — (250 ) — — — Other — — — (2 ) — (2 ) Net cash used in financing activities — — (250 ) (3 ) — (253 ) Net increase (decrease) in cash, cash equivalents, and restricted cash and securities (1 ) — (2,013 ) 37 — (1,977 ) Cash, cash equivalents and restricted cash and securities at beginning of period 33 — 2,199 76 — 2,308 Cash, cash equivalents and restricted cash and securities at end of period $ 32 — 186 113 — 331 Condensed Consolidating Statements of Cash Flows For the period ended October 31, 2017 (Predecessor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (61 ) (401 ) 1,615 761 — 1,914 INVESTING ACTIVITIES Capital expenditures — — (667 ) (452 ) — (1,119 ) Purchase of marketable securities — — (1,127 ) — — (1,127 ) Maturity of marketable securities — — 1,127 — — 1,127 Proceeds from sale of property, plant and equipment and other assets — — 1 — — 1 Net cash used in investing activities — — (666 ) (452 ) — (1,118 ) FINANCING ACTIVITIES Net proceeds from issuance of long-term debt — 4,569 — — — 4,569 Payments of long-term debt — (4,911 ) 1 (7 ) — (4,917 ) Increase (decrease) due from/to affiliates, net 57 743 (460 ) (340 ) — — Other — — — 3 — 3 Net cash provided by (used in) financing activities 57 401 (459 ) (344 ) — (345 ) Net (decrease) increase in cash, cash equivalents, and restricted cash and securities (4 ) — 490 (35 ) — 451 Cash, cash equivalents and restricted cash and securities at beginning of period 37 — 1,710 110 — 1,857 Cash, cash equivalents and restricted cash and securities at end of period $ 33 — 2,200 75 — 2,308 Condensed Consolidating Statements of Cash Flows For the year ended December 31, 2016 (Predecessor) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (49 ) (468 ) 565 2,295 — 2,343 INVESTING ACTIVITIES Capital expenditures — — (704 ) (630 ) — (1,334 ) Proceeds from sale of property, plant and equipment and other assets — — 1 2 — 3 Net cash used in investing activities — — (703 ) (628 ) — (1,331 ) FINANCING ACTIVITIES Net proceeds from issuance of long-term debt — 764 — — — 764 Payments of long-term debt — (806 ) (1 ) (13 ) — (820 ) Increase (decrease) due from/to affiliates, net 47 504 1,107 (1,658 ) — — Other — — — (3 ) — (3 ) Net cash provided by (used in) financing activities 47 462 1,106 (1,674 ) — (59 ) Net increase (decrease) in cash, cash equivalents, and restricted cash and securities (2 ) (6 ) 968 (7 ) — 953 Cash, cash equivalents and restricted cash and securities at beginning of period 39 6 742 117 — 904 Cash, cash equivalents and restricted cash and securities at end of period $ 37 — 1,710 110 — 1,857 |
Background and Summary of Sig_2
Background and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation On November 1, 2017, we became a wholly owned subsidiary of CenturyLink. On the date of the acquisition, our assets and liabilities were recognized at fair value. This revaluation has been reflected in our financial statements and, therefore, has resulted in a new basis of accounting for the successor period beginning on November 1, 2017. This new basis of accounting means that our financial statements for the successor periods will not be comparable to our previously reported financial statements, including the predecessor period financial statements in this report. The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. Transactions with our non-consolidated affiliates (CenturyLink and its other subsidiaries, referred to herein as affiliates) have not been eliminated. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2018 . We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue for 2018, 2017 and 2016. |
Reclassifications | Although we continued as a surviving corporation and legal entity after the acquisition of us by CenturyLink, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and member's/stockholder's equity (deficit) are presented for two periods: predecessor and successor, which relates to the period preceding the acquisition and the period succeeding the acquisition. |
Use of Estimates | Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters, including, but not limited to, revenue recognition, revenue reserves, network access costs, network access cost dispute reserves, investments, long-term contracts, customer retention patterns, allowance for doubtful accounts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets (including deferred tax assets), impairment assessments, taxes, certain liabilities and other provisions and contingencies, are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 12—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates. |
Revenue Recognition | Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily fiber capacity agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services, including local voice, VPN, Ethernet, data, private line (including special access), network access, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global/international, enterprise, wholesale, government, small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments include certain activation and certain installation charges. If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which ranges from one year to seven years depending on the service. In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term. For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. Promotional or performance based incentive payments are estimated at contract inception (and updated on a periodic basis as needed) and accounted for as variable consideration. In certain cases, customers may be permitted to modify their contracts. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, whether the modification is a termination of the existing contract and creation of a new contract, or if it is a change to the existing contract. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell optical capacity on our network. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 10 - 20 years. In most cases, we account for the cash consideration received on transfers of optical capacity as ASC 606 revenue which we recognize ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is adjusted for the time value of money and is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. We defer (i.e. capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average customer life. Third party installations over $50 thousand are amortized over contract term; internal contract costs are amortized over 30 months. These deferred costs are monitored every period to reflect any significant change in assumptions. See Note 4—Revenue Recognition for additional information. |
Affiliate Transactions | Affiliate Transactions We provide to our affiliates telecommunications services that we also provide to external customers. Services provided by us to our affiliates are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. From time to time we make distributions to our parent. Distributions are reflected on our consolidated statements of member's/stockholders' equity and the consolidated statements of cash flows reflects distributions made as financing activities. |
USF Surcharges, Gross Receipts Taxes and Other Surcharges | USF Surcharges, Gross Receipts Taxes and Other Surcharges In determining whether to include in our revenue and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF surcharges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenue and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenue and costs of services and products. Total revenue and cost of services and products on the consolidated statements of operations include USF contributions of $415 million and $71 million for the successor year ended December 31, 2018 and successor period ended December 31, 2017 , and $331 million and $414 million for the predecessor period ended October 31, 2017 and the predecessor year ended December 31, 2016 , respectively. |
Legal Costs | Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received. |
Income Taxes | Income Taxes Until November 1, 2017, we filed a consolidated federal income tax return with our eligible subsidiaries. Since CenturyLink's acquisition of us on November 1, 2017, we have been included in the consolidated federal income tax return of CenturyLink. Under CenturyLink's tax allocation policy, CenturyLink treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 12—Income Taxes , are primarily determined as a result of the application of the separate return allocation method and therefore the settlement of these amounts is dependent upon our parent, CenturyLink, rather than tax authorities. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by CenturyLink and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating loss carryforwards ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 12—Income Taxes for additional information. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when checks have been issued but have not been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows. |
Restricted Cash and Securities | Restricted Cash and Securities Restricted cash and securities consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2018 and 2017 . |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables less an allowance for doubtful accounts. The allowance for doubtful accounts receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for doubtful accounts when collection is considered to be not probable. Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for doubtful accounts approximates fair value. |
Concentration of Credit Risk | Concentration of Credit Risk We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach consumer and enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material change in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation. |
Property, Plant and Equipment | Property, Plant and Equipment As a result of CenturyLink's acquisition of us, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition plus the estimated value of any associated legally or contractually required retirement obligations. Therefore, the allocated fair values of the assets represent their new basis of accounting in our consolidated financial statements. This resulted in adjustments to our property, plant and equipment accounts, including accumulated depreciation at the acquisition date. The adjustments related to CenturyLink's acquisition of us are described in Note 2—CenturyLink Merger and Note 7— Property, Plant and Equipment . We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items for which cost is based on specific identification. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments assess the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred. Capitalized labor associated with employees and contract labor working on capital projects were approximately $95 million and $32 million for the successor year ended December 31, 2018 and successor period ended December 31, 2017 and $ 178 million and $ 210 million for the predecessor period ended October 31, 2017 and year ended December 31, 2016 . We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value. |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to seven years. We amortize our other intangible assets over an estimated life of five years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, we recognize an impairment charge for the amount by which the carrying amount of these assets exceeds their estimated fair value. We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded carrying value of equity exceeds the fair value of equity. Therefore, the equity carrying value and future cash flows is assessed each time a goodwill impairment assessment is performed on a reporting unit. To do so, we assign our assets, liabilities and cash flows to reporting units using reasonable and consistent allocation methodologies, which entail various estimates, judgments and assumptions. We believe these estimates, judgments and assumptions to be reasonable, but changes in any of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment . As a result of the merger, the impairment testing date was changed to October 31 for successor periods beginning in 2018. We conducted our annual goodwill impairment analysis as of October 31, 2018 and concluded that our goodwill was not impaired in 2018 . We conducted our annual goodwill impairment analysis as of October 1, 2017 and concluded that our goodwill was not impaired in 2017 . We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. As a result of CenturyLink's acquisition of us, we are now comprised of one reporting unit, consistent with our determination that our business consists of one operating segment. See Note 3—Goodwill, Customer Relationships and Other Intangible Assets for additional information. |
Foreign Currency | Foreign Currency Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. A significant portion of our non-United States subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during the successor year ended December 31, 2018 and period ended December 31, 2017 and the predecessor period ended October 31, 2017 and year ended December 31, 2016 . Foreign currency translation gains and losses are recognized as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in the consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in "Other, net" on the consolidated statements of operations. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements During 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers ”, ASU 2016-16, “ Intra-Entity Transfers of Assets Other Than Inventory, ” ASU 2018-02, “ Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ” and ASU 2017-04, Simplifying the Test for Goodwill Impairment . Each of these is described further below. Revenue Recognition In May 2014, the FASB issued ASU 2014-09 which replaces virtually all existing generally accepted accounting principles on revenue recognition 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 adopted the new revenue recognition standard under the modified retrospective transition method. During the year ended December 31, 2018, we recorded a cumulative catch-up adjustment that increased our retained earnings by $9 million , net of $3 million of income taxes. See Note 4—Revenue Recognition for additional information. Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02 provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (the "Act") (or portion thereof) is recorded. If an entity elects to reclassify the income tax effects of the Act, the amount of that reclassification shall include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Act related to items remaining in accumulated other comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. ASU 2018-02 is effective January 1, 2019, but early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. We early adopted and applied ASU 2018-02 in the first quarter of 2018. The adoption of ASU 2018-02 resulted in a $6 million decrease to member's equity and increase to accumulated other comprehensive income. See Note 17—Accumulated Other Comprehensive Income (Loss) for additional information. Income Taxes In October 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 ASU 2016-16, 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 adopted ASU 2016-16 on January 1, 2018. The adoption of ASU 2016-16 did not have a material impact to our consolidated financial statements. Goodwill Impairment In January 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 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 its fair value, limited to the amount of goodwill assigned to the reporting unit. We elected to early adopt the provisions of ASU 2017-04 as of October 1, 2018. Recently Issued Accounting Pronouncements Financial Instruments In June 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 expect to adopt the provisions of ASU 2016-13 effective January 1, 2020 and expect to recognize the impacts through a cumulative adjustment to retained earnings as of the date of adoption. Leases In February 2016, the FASB issued ASU 2016-02, “ Leases ” (“ASU 2016-02”), and associated ASUs related to ASU 842, Leases , which require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. In addition, the new guidance will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. For leases where we are a lessee, the presentation and measurement of the assets and liabilities will depend on each lease’s classification as either a finance or operating lease. For leases where we are a lessor, the accounting remains largely unchanged from current U.S. GAAP but does contain some targeted improvements to align with the new revenue recognition guidance issued in 2014 (ASC 606). The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We have a cross-functional team in place to evaluate and implement the new guidance and we have substantially completed the implementation of third-party software solutions to facilitate compliance with accounting and reporting requirements. The team continues to review existing lease arrangements and has collected and loaded a significant portion of our lease portfolio into the software. We continue to enhance accounting systems and update business processes and controls related to the new guidance for leases. Collectively, these activities are expected to facilitate our ability to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019. ASU 2016-02 requires a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial adoption. An entity may choose to use either (1) the effective date or (2) the beginning of the earliest comparative period presented in the financial statements at the date of initial application. We will apply the transition requirements at the January 1, 2019 effective date by showing a cumulative effect adjustment in the first quarter of 2019, rather than restating any prior periods. In addition, we will elect the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs. As an accounting policy election, we will exclude short-term leases (term of 12 months or less) from the balance sheet presentation and will account for non-lease and lease components in a contract as a single lease component for most asset classes. We are in the process of completing our adoption of ASU 2016-02, including reviewing our lease portfolio , completing the implementation and testing of the third-party software solution and exercising internal controls over adoption and implementation of ASU 2016-02. Therefore, the estimated impact on our consolidated balance sheet cannot currently be determined. However, we expect the adoption of ASU 2016-02 will have a material impact on our consolidated balance sheet through the recognition of right of use assets and lease liabilities for our operating leases. The impact to our consolidated statements of operations and consolidated statements of cash flows is not expected to be material. We believe the new standard will have no impact on our debt covenant compliance under our current agreements. |
CenturyLink Merger (Tables)
CenturyLink Merger (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following is our assignment of the aggregate consideration: Adjusted November 1, 2017 Balance as of December 31, 2017 Purchase Price Adjustments Adjusted November 1, 2017 Balance as of October 31, 2018 (Dollars in millions) Cash, accounts receivable and other current assets (1) $ 3,317 (26 ) 3,291 Property, plant and equipment 9,311 157 9,468 Identifiable intangible assets (2) Customer relationships 8,964 (533 ) 8,431 Other 391 (13 ) 378 Other noncurrent assets 782 216 998 Current liabilities, excluding current maturities of long-term debt (1,461 ) (32 ) (1,493 ) Current maturities of long-term debt (7 ) — (7 ) Long-term debt (10,888 ) — (10,888 ) Deferred revenue and other liabilities (1,613 ) (114 ) (1,727 ) Goodwill 10,837 340 11,177 Total estimated aggregate consideration $ 19,633 (5 ) 19,628 _______________________________________________________________________________ (1) Includes accounts receivable, which had a gross contractual value of $884 million on November 1, 2017. (2) The weighted-average amortization period for the acquired intangible assets is approximately 12.0 years. |
Summary of Acquisition Related Expenses | The table below summarizes our acquisition-related expenses, which consist of integration-related expenses, including severance and retention compensation expenses, and transaction-related expenses: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Transaction-related expenses $ 1 — 18 — Integration-related expenses 120 28 67 15 Total acquisition-related expenses $ 121 28 85 15 |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill, customer relationships and other intangible assets | Goodwill, customer relationships and other intangible assets consisted of the following: Successor December 31, December 31, (Dollars in millions) Goodwill $ 11,119 10,837 Customer relationships, less accumulated amortization of $833 and $126 $ 7,567 8,845 Other intangible assets subject to amortization: Trade names, less accumulated amortization of $30 and $4 $ 100 126 Developed technology, less accumulated amortization of $67 and $9 310 252 Total other intangible assets, net $ 410 378 |
Schedule of goodwill | The following table shows the rollforward of goodwill from November 1, 2017 through December 31, 2018 : (Dollars in millions) As of November 1, 2017 $ 10,821 Purchase accounting and other adjustments 16 As of December 31, 2017 10,837 Purchase accounting and other adjustments 340 Effect of foreign currency rate change (58 ) As of December 31, 2018 $ 11,119 |
Schedule of estimated amortization expense of intangible asset | We estimate that total amortization expense for intangible assets for the successor years ending 2019 through 2023 will be as follows: (Dollars in millions) 2019 $ 800 2020 800 2021 800 2022 796 2023 766 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Operating revenue $ 8,220 (5 ) 8,215 Cost of services and products (exclusive of depreciation and amortization) 3,937 — 3,937 Selling, general and administrative 1,354 52 1,406 Interest expense 509 (9 ) 500 Income tax expense 196 (12 ) 184 Net income 341 (36 ) 305 The following table presents a reconciliation of certain consolidated balance sheet captions under ASC 606 to the balance sheet results using the historical accounting method: Successor Reported Balances as of December 31, 2018 Impact of ASC 606 ASC 605 Historical Adjusted Balances (Dollars in millions) Other current assets $ 234 (33 ) 201 Other long-term assets, net 191 (31 ) 160 Deferred revenue 1,491 (4 ) 1,487 Deferred income tax assets, net 306 15 321 Member's equity 17,877 (45 ) 17,832 |
Disaggregation of Revenue | The following table provides disaggregation of revenue from contracts with customers based on service offering for the year ended December 31, 2018 . It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Successor Year Ended December 31, 2018 (Dollars in millions) Total Revenue Adjustments (6) Total Revenue from Contracts with Customers IP and Data Services (1) $ 3,945 — 3,945 Transport and Infrastructure (2) 2,699 (189 ) 2,510 Voice and Collaboration (3) 1,464 — 1,464 Other Revenue (4) 5 (3 ) 2 Affiliate Revenue (5) 107 (107 ) — Total Revenue $ 8,220 (299 ) 7,921 Timing of revenue Goods transferred at a point in time $ — Services performed over time 7,921 Total revenue from contracts with customers $ 7,921 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606. |
Contract with Customer, Asset and Liability | The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2018 and January 1, 2018: Successor December 31, 2018 January 1, 2018 (Dollars in millions) Customer receivables (1) $ 712 748 Contract assets 19 22 Contract liabilities 393 353 _______________________________________________________________________________ (1) Gross customer receivables of $723 million and $751 million, net of allowance for doubtful accounts of $11 million and $3 million, at December 31, 2018 and January 1, 2018, respectively The following table provides information about revenue recognized for the year ended December 31, 2018 : Successor (Dollars in millions) Revenue recognized in the current period from: Amounts included in contract liability at the beginning of the period (January 1, 2018) $ 158 Performance obligations satisfied in previous periods — |
Capitalized Contract Cost | The following table provides changes in our contract acquisition costs and fulfillment costs for the year ended December 31, 2018 : Successor December 31, 2018 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 13 14 Costs incurred 68 99 Amortization (17 ) (29 ) End of period balance $ 64 84 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following chart reflects our consolidated long-term debt, including unamortized premiums, net and debt issuance costs, but excluding intercompany debt: Successor Interest Rates Maturities December 31, December 31, (Dollars in millions) Level 3 Parent, LLC 5.750% Senior Notes due 2022 (1) 5.750% 2022 $ 600 600 Subsidiaries Level 3 Financing, Inc. Senior Notes: 6.125% Senior Notes due 2021 (2) 6.125% 2021 640 640 5.375% Senior Notes due 2022 (2) 5.375% 2022 1,000 1,000 5.625% Senior Notes due 2023 (2) 5.625% 2023 500 500 5.125% Senior Notes due 2023 (2) 5.125% 2023 700 700 5.375% Senior Notes due 2025 (2) 5.375% 2025 800 800 5.375% Senior Notes due 2024 (2) 5.375% 2024 900 900 5.25% Senior Notes due 2026 (2) 5.250% 2026 775 775 Term Loan: Tranche B 2024 Term Loan (3)(4) LIBOR + 2.25% 2024 4,611 4,611 Capital leases and other debt Various Various 163 179 Unamortized premiums, net 155 185 Total long-term debt 10,844 10,890 Less current maturities (6 ) (8 ) Long-term debt, excluding current maturities $ 10,838 10,882 _______________________________________________________________________________ (1) The notes are not guaranteed by any of Level 3 Parent, LLC's subsidiaries. (2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Parent, LLC and Level 3 Communications, LLC. (3) The Tranche B 2024 Term Loan had an interest rate of 4.754% and 3.557% as of December 31, 2018 and December 31, 2017, respectively. The interest rate on the Tranche B 2024 Term Loan is set with a minimum London Interbank Offered Rate ("LIBOR") of zero percent. The term loan was refinanced on February 22, 2017 as described below. (4) The Tranche B 2024 Term Loan is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain of its non-regulated subsidiaries. |
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding unamortized premiums) | Set forth below is the aggregate principal amount of our long-term debt and capital leases (excluding unamortized premiums) maturing during the following years: (Dollars in millions) (1) 2019 $ 6 2020 6 2021 648 2022 1,609 2023 1,209 2024 and thereafter 7,211 Total long-term debt $ 10,689 _______________________________________________________________________________ (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | The following table presents details of our accounts receivable balances: Successor December 31, December 31, (Dollars in millions) Trade receivables $ 533 562 Earned and unbilled receivables 177 165 Other 13 24 Total accounts receivable 723 751 Less: allowance for doubtful accounts (1) (11 ) (3 ) Accounts receivable, less allowance $ 712 748 _______________________________________________________________________________ (1) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in the allowance for doubtful accounts being reset as of the date of acquisition. |
Allowance for Credit Losses on Financing Receivables | The following table presents details of our allowance for doubtful accounts: Beginning Balance Additions Deductions Ending Balance (Dollars in millions) 2018 (Successor) $ 3 18 (10 ) 11 December 31, 2017 (Successor) — 3 — 3 October 31, 2017 (Predecessor) 29 16 (12 ) 33 2016 (Predecessor) 32 18 (21 ) 29 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Net property, plant and equipment is composed of the following: Successor Depreciable Lives December 31, December 31, (Dollars in millions) Land N/A $ 339 348 Fiber conduit and other outside plant (1) 15-45 years 5,262 4,750 Central office and other network electronics (2) 7-10 years 1,986 2,134 Support assets (3) 3-30 years 2,327 2,019 Construction-in-progress (4) N/A 560 304 Gross property, plant and equipment 10,474 9,555 Accumulated depreciation (5) (1,021 ) (143 ) Net property, plant and equipment $ 9,453 9,412 _______________________________________________________________________________ (1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3) Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction. (5) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in accumulated depreciation being reset as of the date of acquisition. |
Schedule of Change in Asset Retirement Obligation | The following table provides asset retirement obligation activity: Successor Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Balance at beginning of period $ 45 45 89 90 Accretion expense 5 1 12 10 Purchase price adjustments (1) 58 — — — Liabilities settled (13 ) (1 ) (7 ) (9 ) Revision in estimated cash flows 10 — — — Effect of foreign currency rate change — — — (2 ) Balance at end of period $ 105 45 94 89 _______________________________________________________________________________ (1) These liabilities relate to purchase price adjustments that occurred during 2018 from CenturyLink's acquisition of us. |
Severance and Leased Real Est_2
Severance and Leased Real Estate (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | 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 (Predecessor) $ 2 5 Accrued to expense — 2 Payments, net (1 ) (2 ) Balance at October 31, 2017 (Predecessor) 1 5 Balance at November 1, 2017 (Successor) 1 5 Accrued to expense 6 — Payment, net (2 ) (1 ) Balance at December 31, 2017 (Successor) 5 4 Accrued to expense 33 51 Payments, net (19 ) (8 ) Balance at December 31, 2018 (Successor) $ 19 47 |
Products and Services Revenues
Products and Services Revenues (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of operating revenues by product and services | Our operating revenue for our products and services consisted of the following categories: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) IP and Data Services $ 3,945 668 3,284 3,862 Transport and Infrastructure 2,699 464 2,272 2,703 Voice and Collaboration 1,464 258 1,308 1,600 Other revenue 5 1 6 8 Affiliate revenue 107 16 — — Total revenue $ 8,220 1,407 6,870 8,173 |
Schedule of operating revenues by geographic region | The following table presents total assets as of the successor date of December 31, 2018 and December 31, 2017 as well as operating revenue for the predecessor period ended October 31, 2017 and the successor year ended December 31, 2016 by geographic region: Total Assets Successor December 31, 2018 December 31, 2017 (Dollars in millions) North America $ 27,520 27,776 EMEA 2,765 1,192 Latin America 2,006 4,167 Total $ 32,291 33,135 Revenue Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) North America $ 6,739 1,155 5,651 6,748 EMEA 744 128 607 755 Latin America 737 124 612 670 Total $ 8,220 1,407 6,870 8,173 Our operations are integrated into and reported as part of the consolidated segment data of CenturyLink. CenturyLink's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we have one reportable segment. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 20% and 19% for the successor year ended December 31, 2018 and period ended December 31, 2017 , and 18% and 16% for the predecessor period ended October 31, 2017 and for the predecessor year ended December 31, 2016 , respectively. |
Fair Value Disclosure (Tables)
Fair Value Disclosure (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement Inputs and Valuation Techniques | 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 fair value of liabilities measured on a recurring basis | 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: Successor As of December 31, 2018 As of December 31, 2017 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in million) Liabilities-Long-term debt, excluding capital lease and other obligations 2 $ 10,681 10,089 10,711 10,528 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) | Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Income tax expense was as follows: Federal Current $ — — — — Deferred 199 231 193 177 State Current (9 ) 2 7 4 Deferred 28 6 16 27 Foreign Current 30 4 39 41 Deferred (52 ) (9 ) 13 (84 ) Total income tax expense $ 196 234 268 165 |
Schedule of income before income tax, domestic and foreign | Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Income tax expense was allocated as follows: Income tax expense in the consolidated statements of operations: Attributable to income $ 196 234 268 165 Member's/Stockholders' equity: Tax effect of the change in accumulated other comprehensive loss $ (49 ) 17 49 (43 ) |
Schedule of effective income tax rate reconciliation | The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Percentage of pre-tax income) Statutory federal income tax rate 21.0 % 35.0 % 35.0 % 35.0 % State income taxes, net of federal income tax benefit 2.8 % 3.6 % 2.9 % 3.7 % Tax Reform 17.2 % 210.6 % — % (13.2 )% Global intangible low-taxed income 1.8 % — % — % — % CenturyLink acquisition transaction costs — % 11.3 % — % — % Uncertain tax positions 0.5 % 1.2 % 0.1 % 0.1 % Net foreign income tax (4.8 )% (19.3 )% 0.9 % (6.7 )% Executive compensation limitation 1.2 % 5.4 % 0.9 % 1.1 % Research and development credits (1.3 )% (0.9 )% (1.2 )% — % Other, net (1.9 )% 4.7 % 0.1 % (0.4 )% Effective income tax rate 36.5 % 251.6 % 38.7 % 19.6 % |
Deferred tax assets and liabilities | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: Successor December 31, December 31, (Dollars in millions) Deferred tax assets Deferred revenue $ 298 256 Net operating loss carry forwards 3,494 3,633 Property, plant and equipment 57 63 Other 309 282 Gross deferred tax assets 4,158 4,234 Less valuation allowance (931 ) (942 ) Net deferred tax assets 3,227 3,292 Deferred tax liabilities Deferred revenue (45 ) (44 ) Property, plant and equipment (853 ) (689 ) Intangible assets (1,998 ) (2,329 ) Other (25 ) (16 ) Gross deferred tax liabilities (2,921 ) (3,078 ) Net deferred tax assets $ 306 214 |
Schedule of unrecognized tax benefits | A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from the successor period November 1 to December 31, 2017 , the predecessor period January 1 to October 31, 2017 and the predecessor year ended December 31, 2016 is as follows: Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 (Dollars in millions) Unrecognized tax benefits at beginning of period $ 21 20 18 Tax positions of prior periods netted against deferred tax assets 950 — — (Decrease) increase in tax positions taken in the prior period (1 ) 1 — Increase in tax positions taken in the current period 3 — 2 Decrease due to settlement/payments (1 ) — — Decrease from the lapse of statute of limitations (2 ) — — Unrecognized tax benefits at end of period $ 970 21 20 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of quarterly financial data (unaudited) | Operating Revenue Operating Income Net Income (Loss) (Dollars in millions) 2018 First quarter (successor) $ 2,087 261 62 Second quarter (successor) 2,052 196 40 Third quarter (successor) 2,010 227 88 Fourth quarter (successor) 2,071 284 151 Total $ 8,220 968 341 2017 First quarter (predecessor) $ 2,048 337 95 Second quarter (predecessor) 2,062 353 154 Third quarter (predecessor) 2,059 349 157 Fourth quarter (predecessor) 701 112 19 Two months ended December 31 (successor) 1,407 158 (141 ) Total $ 8,277 1,309 284 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of capital lease activity | The tables below summarize our capital lease activity Successor Predecessor Year Ended December 31, 2018 Period Ended December 31, 2017 Period Ended October 31, 2017 Year Ended December 31, 2016 (Dollars in millions) Assets acquired through capital leases $ 7 — — 19 Depreciation expense 13 — 2 5 Cash payments towards capital leases 14 — 1 10 Successor As of December 31, 2018 2017 (Dollars in millions) Assets included in property, plant and equipment $ 135 128 Accumulated depreciation 15 2 |
Schedule of future minimum payments under capital leases | The future annual minimum payments under capital lease arrangements as of December 31, 2018 were as follows: Future Minimum Payments (Dollars in millions) Capital lease obligations: 2019 $ 16 2020 15 2021 16 2022 16 2023 17 2024 and thereafter 164 Total minimum payments 244 Less: amount representing interest and executory costs (81 ) Present value of minimum payments 163 Less: current portion (6 ) Long-term portion $ 157 |
Schedule of future minimum receipts | At December 31, 2018, our future commitments for operating lease income were as follows: Future Minimum Receipts (Dollars in millions) 2019 $ 135 2020 90 2021 78 2022 73 2023 69 |
Schedule of operating leases, future minimum payments due and unrecorded unconditional purchase obligation | At December 31, 2018, our future rental commitments for right-of-way agreements and operating leases were as follows: Right-of-Way Agreements Operating Leases Total (Dollars in millions) 2019 $ 77 396 473 2020 51 259 310 2021 38 219 257 2022 37 164 201 2023 37 137 174 2024 and thereafter 225 613 838 Total future minimum payments (1) $ 465 1,788 2,253 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $29 million due in the future under non-cancelable subleases. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheet by component for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017 and December 31, 2018: Pension Plans Foreign Currency Translation Adjustments and Other Total (Dollars in millions) Balance at December 31, 2016 (predecessor) $ (34 ) (353 ) (387 ) Other comprehensive (loss) income before reclassifications (3 ) 81 78 Amounts reclassified from accumulated other comprehensive loss 2 — 2 Net other comprehensive (loss) income (1 ) 81 80 Balance at October 31, 2017 (predecessor) $ (35 ) (272 ) (307 ) Balance at November 1, 2017 (successor) $ — — — Other comprehensive income before reclassifications — 18 18 Amounts reclassified from accumulated other comprehensive loss — — — Net other comprehensive income — 18 18 Balance at December 31, 2017 (successor) $ — 18 18 Balance at December 31, 2017 (successor) $ — 18 18 Other comprehensive loss before reclassifications — (200 ) (200 ) Amounts reclassified from accumulated other comprehensive income 5 — 5 Net current-period other comprehensive income 5 (200 ) (195 ) Cumulative effect of adoption of ASU 2018-02, Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income — 6 6 Balance at December 31, 2018 (successor) $ 5 (176 ) (171 ) |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Consolidating Statements of Operations | Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,884 4,229 — 8,113 Operating revenue - affiliates — — 130 285 (308 ) 107 Total operating revenue — — 4,014 4,514 (308 ) 8,220 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 2,209 1,728 — 3,937 Selling, general and administrative 12 3 392 1,255 (308 ) 1,354 Operating expenses - affiliates — — 176 81 — 257 Depreciation and amortization — — 688 1,016 — 1,704 Total operating expenses 12 3 3,465 4,080 (308 ) 7,252 OPERATING (LOSS) INCOME (12 ) (3 ) 549 434 — 968 OTHER INCOME (EXPENSE) Interest income (expense) - affiliates, net 2,430 1,562 (3,800 ) (125 ) — 67 Interest expense (33 ) (457 ) (3 ) (16 ) — (509 ) Equity in net (losses) earnings of subsidiaries (2,044 ) (3,257 ) 254 — 5,047 — Other income, net (9 ) — 1 19 — 11 Total other income (expense), net 344 (2,152 ) (3,548 ) (122 ) 5,047 (431 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 332 (2,155 ) (2,999 ) 312 5,047 537 Income tax benefit (expense) 10 111 (232 ) (85 ) — (196 ) NET INCOME (LOSS) 342 (2,044 ) (3,231 ) 227 5,047 341 Other comprehensive loss, net of income taxes (195 ) — — (195 ) 195 (195 ) COMPREHENSIVE INCOME (LOSS) $ 147 (2,044 ) (3,231 ) 32 5,242 146 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 748 671 (28 ) 1,391 Operating revenue - affiliates — — 16 — — 16 Total operating revenue — — 764 671 (28 ) 1,407 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 418 300 (28 ) 690 Selling, general and administrative 1 3 179 70 — 253 Operating expenses - affiliates — — 24 — — 24 Depreciation and amortization — — 117 165 — 282 Total operating expenses 1 3 738 535 (28 ) 1,249 OPERATING (LOSS) INCOME (1 ) (3 ) 26 136 — 158 OTHER (EXPENSE) INCOME Interest income — — 1 — — 1 Interest income (expense) affiliates, net 262 368 (578 ) (41 ) — 11 Interest expense (5 ) (72 ) — (3 ) — (80 ) Equity in net (losses) earnings of subsidiaries (827 ) (15 ) 71 — 771 — Other income (expense), net 1 — 2 — — 3 Total other (expense) income, net (569 ) 281 (504 ) (44 ) 771 (65 ) (LOSS) INCOME BEFORE INCOME TAX (EXPENSE) BENEFIT (570 ) 278 (478 ) 92 771 93 Income tax benefit (expense) 429 (1,105 ) 433 9 — (234 ) NET (LOSS) INCOME (141 ) (827 ) (45 ) 101 771 (141 ) Other comprehensive income, net of income taxes 18 — — 18 (18 ) 18 COMPREHENSIVE (LOSS) INCOME $ (123 ) (827 ) (45 ) 119 753 (123 ) Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,108 3,891 (129 ) 6,870 Total operating revenue — — 3,108 3,891 (129 ) 6,870 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 1,942 1,680 (129 ) 3,493 Selling, general and administrative 4 3 942 259 — 1,208 Depreciation and amortization — — 356 662 — 1,018 Total operating expenses 4 3 3,240 2,601 (129 ) 5,719 OPERATING (LOSS) INCOME (4 ) (3 ) (132 ) 1,290 — 1,151 OTHER INCOME (EXPENSE) Interest income — — 12 1 — 13 Interest income (expense) - affiliates, net 1,260 1,890 (2,896 ) (254 ) — — Interest expense (30 ) (397 ) (2 ) (12 ) — (441 ) Loss on modification and extinguishment of debt — (44 ) — — — (44 ) Equity in net (losses) earnings of subsidiaries (815 ) (2,138 ) 692 — 2,261 — Other (expense) income, net 3 — 15 (4 ) — 14 Total other income (expense), net 418 (689 ) (2,179 ) (269 ) 2,261 (458 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 414 (692 ) (2,311 ) 1,021 2,261 693 Income tax benefit (expense) 11 (123 ) (2 ) (154 ) — (268 ) NET INCOME (LOSS) 425 (815 ) (2,313 ) 867 2,261 425 Other comprehensive income, net of income taxes 80 — — — — 80 COMPREHENSIVE INCOME (LOSS) $ 505 (815 ) (2,313 ) 867 2,261 505 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING REVENUE Operating revenue $ — — 3,558 4,747 (132 ) 8,173 Total operating revenue — — 3,558 4,747 (132 ) 8,173 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 2,249 2,045 (132 ) 4,162 Selling, general and administrative 16 5 1,025 361 — 1,407 Depreciation and amortization — — 372 787 — 1,159 Total operating expenses 16 5 3,646 3,193 (132 ) 6,728 OPERATING (LOSS) INCOME (16 ) (5 ) (88 ) 1,554 — 1,445 OTHER INCOME (EXPENSE) Interest income — — 3 1 — 4 Interest income (expense) - affiliates, net 1,385 2,113 (3,215 ) (283 ) — — Interest expense (36 ) (505 ) (2 ) (1 ) — (544 ) Equity in net earnings (losses) of subsidiaries (669 ) (2,033 ) 757 — 1,945 — Other (expense) income, net (1 ) (39 ) 2 (25 ) — (63 ) Total other income (expense), net 679 (464 ) (2,455 ) (308 ) 1,945 (603 ) INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) 663 (469 ) (2,543 ) 1,246 1,945 842 Income tax benefit (expense) 14 (200 ) (2 ) 23 — (165 ) NET INCOME (LOSS) 677 (669 ) (2,545 ) 1,269 1,945 677 Other comprehensive loss, net of income taxes (86 ) — — (86 ) 86 (86 ) COMPREHENSIVE INCOME (LOSS) $ 591 (669 ) (2,545 ) 1,183 2,031 591 |
Schedule of Condensed Consolidating Balance Sheets | Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2 — 164 77 — 243 Restricted cash and securities - current — — — 4 — 4 Accounts receivable — — 70 642 — 712 Advances to affiliates 16,852 23,957 7,744 2,707 (51,260 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other 1 3 97 133 — 234 Total current assets 18,680 23,960 8,075 3,563 (51,260 ) 3,018 NET PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment — — 3,456 7,018 — 10,474 Accumulated depreciation — — (320 ) (701 ) — (1,021 ) Net property, plant and equipment — — 3,136 6,317 — 9,453 GOODWILL AND OTHER ASSETS Goodwill — — 1,665 9,454 — 11,119 Restricted cash and securities 15 — 9 1 — 25 Customer relationships, net — — 3,823 3,744 — 7,567 Other intangible assets, net — — 409 1 — 410 Investment in subsidiaries 15,541 17,915 3,861 — (37,317 ) — Other, net 275 1,421 110 225 (1,332 ) 699 Total goodwill and other assets 15,831 19,336 9,877 13,425 (38,649 ) 19,820 TOTAL ASSETS $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 LIABILITIES AND MEMBER'S EQUITY (DEFICIT) CURRENT LIABILITIES Current maturities of long-term debt $ — — 1 5 — 6 Accounts payable — — 380 346 — 726 Accounts payable - affiliates 62 11 162 11 — 246 Accrued expenses and other liabilities Salaries and benefits — — 189 44 — 233 Income and other taxes — 4 72 54 — 130 Interest 11 78 1 5 — 95 Other 3 1 8 66 — 78 Advance billings and customer deposits — — 168 142 — 310 Due to affiliates — — 45,347 5,913 (51,260 ) — Total current liabilities 76 94 46,328 6,586 (51,260 ) 1,824 LONG-TERM DEBT 613 10,068 7 150 — 10,838 DEFERRED REVENUE AND OTHER LIABILITES Deferred revenue — — 971 210 — 1,181 Deferred tax liability 56 — 841 637 (1,332 ) 202 Other — — 197 172 — 369 Total deferred revenue and other liabilities 56 — 2,009 1,019 (1,332 ) 1,752 COMMITMENTS AND CONTINGENCIES MEMBER'S EQUITY (DEFICIT) 33,766 33,134 (27,256 ) 15,550 (37,317 ) 17,877 TOTAL LIABILITIES AND MEMBER'S EQUITY (DEFICIT) $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) ASSETS CURRENT ASSETS Cash and cash equivalents $ 13 — 175 109 — 297 Restricted cash and securities - current — — 1 4 — 5 Accounts receivable — — 26 722 — 748 Accounts receivable - affiliates — — 60 4 (51 ) 13 Assets held for sale 68 — 5 67 — 140 Advances to affiliates 16,251 21,032 — 5,200 (42,483 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other — — 54 63 — 117 Total current assets 18,157 21,032 321 6,169 (42,534 ) 3,145 NET PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment — — 3,285 6,270 — 9,555 Accumulated depreciation — — (48 ) (95 ) — (143 ) Net property, plant and equipment — — 3,237 6,175 — 9,412 GOODWILL AND OTHER ASSETS Goodwill — — 1,200 9,637 — 10,837 Restricted cash and securities 19 — 10 — — 29 Customer relationships, net — — 4,324 4,521 — 8,845 Other intangible assets, net — — 378 — — 378 Investment in subsidiaries 16,954 18,403 3,616 — (38,973 ) — Other, net 280 1,795 32 153 (1,771 ) 489 Total goodwill and other assets 17,253 20,198 9,560 14,311 (40,744 ) 20,578 TOTAL ASSETS $ 35,410 41,230 13,118 26,655 (83,278 ) 33,135 LIABILITIES AND MEMBER'S EQUITY (DEFICIT) CURRENT LIABILITIES Current maturities of long-term debt $ — — 2 6 — 8 Accounts payable — 1 323 371 — 695 Accounts payable - affiliates 11 — — 81 (51 ) 41 Accrued expenses and other liabilities Salaries and benefits — — 109 27 — 136 Income and other taxes — — 55 45 — 100 Interest 11 91 — 7 — 109 Other 16 — 25 18 — 59 Advance billings and customer deposits — — 127 131 — 258 Due to affiliates — — 42,483 — (42,483 ) — Total current liabilities 38 92 43,124 686 (42,534 ) 1,406 LONG-TERM DEBT 616 10,096 13 157 — 10,882 DEFERRED REVENUE AND OTHER LIABILITES Deferred revenue — — 841 252 — 1,093 Deferred tax liability 648 — 870 465 (1,771 ) 212 Other 1 1 103 165 — 270 Total deferred revenue and other liabilities 649 1 1,814 882 (1,771 ) 1,575 COMMITMENTS AND CONTINGENCIES MEMBER'S EQUITY (DEFICIT) 34,107 31,041 (31,833 ) 24,930 (38,973 ) 19,272 TOTAL LIABILITIES AND MEMBER'S EQUITY (DEFICIT) $ 35,410 41,230 13,118 26,655 (83,278 ) 33,135 |
Schedule of Condensed Consolidating Statements of Cash Flows | Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (98 ) — 2,059 436 — 2,397 INVESTING ACTIVITIES Capital expenditures — — (527 ) (511 ) — (1,038 ) Proceeds from the sale of property, plant and equipment and other assets 83 — — 51 — 134 Net cash provided by (used in) investing activities 83 — (527 ) (460 ) — (904 ) FINANCING ACTIVITIES Payments of long-term debt — — — (7 ) — (7 ) Distributions (1,545 ) — — — — (1,545 ) Increase (decrease) due to from affiliates, net 1,545 — (1,545 ) — — — Net cash used in financing activities — — (1,545 ) (7 ) — (1,552 ) Net decrease in cash, cash equivalents and restricted cash and securities (15 ) — (13 ) (31 ) — (59 ) Cash, cash equivalents and restricted cash and securities at beginning of period 32 — 186 113 — 331 Cash, cash equivalents and restricted cash and securities at end of period $ 17 — 173 82 — 272 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (1 ) — 172 137 — 308 INVESTING ACTIVITIES Capital expenditures — — (110 ) (97 ) — (207 ) Note receivable - affiliate — — (1,825 ) — — (1,825 ) Net cash used in investing activities — — (1,935 ) (97 ) — (2,032 ) FINANCING ACTIVITIES Payments of long-term debt — — — (1 ) — (1 ) Distributions (250 ) — — — — (250 ) Increase (decrease) due from/to affiliates, net 250 — (250 ) — — — Other — — — (2 ) — (2 ) Net cash used in financing activities — — (250 ) (3 ) — (253 ) Net increase (decrease) in cash, cash equivalents, and restricted cash and securities (1 ) — (2,013 ) 37 — (1,977 ) Cash, cash equivalents and restricted cash and securities at beginning of period 33 — 2,199 76 — 2,308 Cash, cash equivalents and restricted cash and securities at end of period $ 32 — 186 113 — 331 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (61 ) (401 ) 1,615 761 — 1,914 INVESTING ACTIVITIES Capital expenditures — — (667 ) (452 ) — (1,119 ) Purchase of marketable securities — — (1,127 ) — — (1,127 ) Maturity of marketable securities — — 1,127 — — 1,127 Proceeds from sale of property, plant and equipment and other assets — — 1 — — 1 Net cash used in investing activities — — (666 ) (452 ) — (1,118 ) FINANCING ACTIVITIES Net proceeds from issuance of long-term debt — 4,569 — — — 4,569 Payments of long-term debt — (4,911 ) 1 (7 ) — (4,917 ) Increase (decrease) due from/to affiliates, net 57 743 (460 ) (340 ) — — Other — — — 3 — 3 Net cash provided by (used in) financing activities 57 401 (459 ) (344 ) — (345 ) Net (decrease) increase in cash, cash equivalents, and restricted cash and securities (4 ) — 490 (35 ) — 451 Cash, cash equivalents and restricted cash and securities at beginning of period 37 — 1,710 110 — 1,857 Cash, cash equivalents and restricted cash and securities at end of period $ 33 — 2,200 75 — 2,308 Level 3 Parent, LLC Level 3 Financing, Inc. Level 3 Communications, LLC Other Non-Guarantor Subsidiaries Eliminations Total (Dollars in millions) OPERATING ACTIVITIES Net cash (used in) provided by operating activities $ (49 ) (468 ) 565 2,295 — 2,343 INVESTING ACTIVITIES Capital expenditures — — (704 ) (630 ) — (1,334 ) Proceeds from sale of property, plant and equipment and other assets — — 1 2 — 3 Net cash used in investing activities — — (703 ) (628 ) — (1,331 ) FINANCING ACTIVITIES Net proceeds from issuance of long-term debt — 764 — — — 764 Payments of long-term debt — (806 ) (1 ) (13 ) — (820 ) Increase (decrease) due from/to affiliates, net 47 504 1,107 (1,658 ) — — Other — — — (3 ) — (3 ) Net cash provided by (used in) financing activities 47 462 1,106 (1,674 ) — (59 ) Net increase (decrease) in cash, cash equivalents, and restricted cash and securities (2 ) (6 ) 968 (7 ) — 953 Cash, cash equivalents and restricted cash and securities at beginning of period 39 6 742 117 — 904 Cash, cash equivalents and restricted cash and securities at end of period $ 37 — 1,710 110 — 1,857 |
Background and Summary of Sig_3
Background and Summary of Significant Accounting Policies (Details) | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Mar. 31, 2018USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2018USD ($)reporting_unit | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Description of Business | ||||||
Amortization threshold | $ 50,000 | |||||
USF contributions | $ 71,000,000 | $ 415,000,000 | ||||
Past due threshold, days outstanding | 30 days | |||||
Capitalized labor and related costs associated with employee and contract labor working on capital projects | $ 32,000,000 | $ 95,000,000 | ||||
Finite-lived intangible assets, useful life | 11 years | |||||
Goodwill impairment | $ 0 | $ 0 | ||||
Number of reporting units | reporting_unit | 1 | |||||
Reclassification from AOCI to retained earnings, tax effect | $ 6,000,000 | |||||
Accumulated deficit | Accounting Standards Update 2014-09 | ||||||
Description of Business | ||||||
Cumulative effect of adoption of ASU | $ 9,000,000 | |||||
Cumulative net effect of adoption of ASU, tax | $ 3,000,000 | |||||
Customer relationships | ||||||
Description of Business | ||||||
Finite-lived intangible assets, useful life | 11 years | |||||
Capitalized software | ||||||
Description of Business | ||||||
Finite-lived intangible assets, useful life | 7 years | |||||
Other | ||||||
Description of Business | ||||||
Finite-lived intangible assets, useful life | 5 years | |||||
Minimum | ||||||
Description of Business | ||||||
Contract term | 1 year | |||||
Period company may receive up front payments for services to be provided in the future (in years) | 10 years | |||||
Minimum | Customer relationships | ||||||
Description of Business | ||||||
Finite-lived intangible assets, useful life | 7 years | |||||
Maximum | ||||||
Description of Business | ||||||
Contract term | 7 years | |||||
Period company may receive up front payments for services to be provided in the future (in years) | 20 years | |||||
Maximum | Customer relationships | ||||||
Description of Business | ||||||
Finite-lived intangible assets, useful life | 14 years | |||||
Weighted Average | ||||||
Description of Business | ||||||
Length of customer life | 30 months | |||||
Predecessor | ||||||
Description of Business | ||||||
USF contributions | $ 331,000,000 | $ 414,000,000 | ||||
Capitalized labor and related costs associated with employee and contract labor working on capital projects | $ 178,000,000 | $ 210,000,000 |
CenturyLink Merger - Narrative
CenturyLink Merger - Narrative (Details) $ / shares in Units, $ in Millions | Dec. 31, 2018USD ($) | Oct. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 01, 2017USD ($)metropolitan_areacitydark_fiber$ / shares | Oct. 31, 2017USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 11,119 | $ 10,837 | $ 10,821 | ||
Level 3 Parent, LLC | Restricted Stock Units (RSUs) | |||||
Business Acquisition [Line Items] | |||||
Stock conversion ratio | 2.8386 | ||||
Level 3 Parent, LLC | Level 3 Communications, Inc. | |||||
Business Acquisition [Line Items] | |||||
Cash consideration per share (in dollars per share) | $ / shares | $ 26.50 | ||||
Level 3 Parent, LLC | CenturyLink | |||||
Business Acquisition [Line Items] | |||||
Stock conversion ratio | 1.4286 | ||||
Number of metropolitan areas containing divested assets | metropolitan_area | 3 | ||||
Number of strands of dark fiber divested | dark_fiber | 24 | ||||
Number of cities connected by dark fiber | city | 30 | ||||
Goodwill | $ 11,177 | $ 10,837 | |||
Transaction costs | $ 47 | ||||
Level 3 Parent, LLC | CenturyLink | Restricted stock awards | |||||
Business Acquisition [Line Items] | |||||
Goodwill | 1 | ||||
Level 3 Parent, LLC | CenturyLink | Unsecured Debt | |||||
Business Acquisition [Line Items] | |||||
Long-term debt | $ 1,825 | ||||
Stated interest rate (as a percent) | 3.50% | ||||
Level 3 Communications, Inc. | Level 3 Parent, LLC | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage by parent | 51.00% | ||||
Level 3 Communications, Inc. | Level 3 Parent, LLC | Level 3 Shareholders | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage by noncontrolling owners | 49.00% |
CenturyLink Merger - Considerat
CenturyLink Merger - Consideration (Details) - USD ($) $ in Millions | Nov. 01, 2017 | Oct. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 11,119 | $ 10,837 | $ 10,821 | ||
CenturyLink | Level 3 Parent, LLC | |||||
Business Acquisition [Line Items] | |||||
Cash, accounts receivable and other current assets | $ 3,291 | 3,317 | |||
Cash, accounts receivable and other current assets, purchase price adjustments | (26) | ||||
Property, plant and equipment | 9,468 | 9,311 | |||
Property, plant and equipment, purchase price adjustments | 157 | ||||
Other non-current assets | 998 | 782 | |||
Other noncurrent assets, purchase price adjustments | 216 | ||||
Current liabilities, excluding the current portion of long-term debt | (1,493) | (1,461) | |||
Current liabilities, excluding current maturities of long-term debt, purchase price adjustments | (32) | ||||
Current maturities of long-term debt | (7) | (7) | |||
Current maturities of long-term debt, purchase price adjustments | 0 | ||||
Long-term debt | (10,888) | (10,888) | |||
Long-term debt, purchase price adjustments | 0 | ||||
Deferred revenue and other liabilities | (1,727) | (1,613) | |||
Deferred revenue and other liabilities, purchase price adjustments | (114) | ||||
Goodwill | 11,177 | 10,837 | |||
Goodwill, purchase price adjustments | $ 340 | ||||
Total estimated aggregate consideration | 19,628 | 19,633 | |||
Total estimated aggregate consideration, purchase price adjustments | (5) | ||||
Accounts receivable contractual value | $ 884 | ||||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||||
CenturyLink | Level 3 Parent, LLC | Customer relationships | |||||
Business Acquisition [Line Items] | |||||
Identifiable intangible assets | 8,431 | 8,964 | |||
Identifiable intangible assets, purchase price adjustments | (533) | ||||
CenturyLink | Level 3 Parent, LLC | Other | |||||
Business Acquisition [Line Items] | |||||
Identifiable intangible assets | 378 | $ 391 | |||
Identifiable intangible assets, purchase price adjustments | $ (13) |
CenturyLink Merger - Acquisitio
CenturyLink Merger - Acquisition Related Costs (Details) - Level 3 Parent, LLC - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | ||||
Transaction-related expenses | $ 0 | $ 1 | ||
Integration-related expenses | 28 | 120 | ||
Total acquisition-related expenses | $ 28 | $ 121 | ||
Predecessor | ||||
Business Acquisition [Line Items] | ||||
Transaction-related expenses | $ 18 | $ 0 | ||
Integration-related expenses | 67 | 15 | ||
Total acquisition-related expenses | $ 85 | $ 15 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 |
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Goodwill | $ 11,119 | $ 10,837 | $ 10,821 |
Finite-lived intangible assets, net | 7,567 | 8,845 | |
Total other intangible assets, net | 410 | 378 | |
Customer relationships | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite-lived intangible assets, net | 7,567 | 8,845 | |
Accumulated amortization | 883 | 126 | |
Trade names | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite-lived intangible assets, net | 100 | 126 | |
Accumulated amortization | 30 | 4 | |
Developed technology | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite-lived intangible assets, net | 310 | 252 | |
Accumulated amortization | $ 67 | $ 9 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions | 2 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 10,821 | $ 10,837 |
Purchase accounting and other adjustments | 16 | |
Effect of foreign currency rate change | (58) | |
Goodwill, ending balance | $ 10,837 | $ 11,119 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Impact to goodwill from business combination deferred state income tax differences | $ 16 | |||
Acquired finite-lived intangible asset amortization expense | $ 139 | 798 | ||
Intangible assets and goodwill | $ 20,026 | |||
Finite-lived intangible assets, useful life | 11 years | |||
Customer relationships | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, useful life | 11 years | |||
Trade names | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, useful life | 4 years | |||
Developed technology | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, useful life | 3 years | |||
Predecessor | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible asset amortization expense | $ 168 | $ 211 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Future Amortization Expense (Details) | Dec. 31, 2018USD ($) |
Estimated amortization expense of acquired finite-lived intangible asset | |
2019 | $ 800 |
2020 | 800 |
2021 | 800 |
2022 | 796 |
2023 | $ 766 |
Revenue Recognition - Reported
Revenue Recognition - Reported Results Under ASC 606 (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Operating Revenue | $ 1,407 | $ 2,071 | $ 2,010 | $ 2,052 | $ 2,087 | $ 6,870 | $ 8,220 | $ 8,277 | $ 8,173 |
Cost of services and products (exclusive of depreciation and amortization) | 690 | 3,937 | |||||||
Selling, general and administrative | 253 | 1,354 | |||||||
Interest expense | 80 | 509 | |||||||
Income tax expense | 234 | 196 | |||||||
Net income (loss) | (141) | 151 | $ 88 | $ 40 | $ 62 | 341 | 284 | ||
Other current assets | 117 | 234 | 234 | 117 | |||||
Other long-term assets, net | 191 | 191 | |||||||
Deferred revenue | 1,491 | 1,491 | |||||||
Deferred income tax assets, net | 306 | 306 | |||||||
Member's equity | $ 19,272 | 17,877 | 17,877 | $ 19,272 | |||||
Impact of ASC 606 | Accounting Standards Update 2014-09 | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Operating Revenue | (5) | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | 0 | ||||||||
Selling, general and administrative | 52 | ||||||||
Interest expense | (9) | ||||||||
Income tax expense | (12) | ||||||||
Net income (loss) | (36) | ||||||||
Other current assets | (33) | (33) | |||||||
Other long-term assets, net | (31) | (31) | |||||||
Deferred revenue | (4) | (4) | |||||||
Deferred income tax assets, net | 15 | 15 | |||||||
Member's equity | (45) | (45) | |||||||
ASC 605 Historical Adjusted Balances | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Operating Revenue | 8,215 | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | 3,937 | ||||||||
Selling, general and administrative | 1,406 | ||||||||
Interest expense | 500 | ||||||||
Income tax expense | 184 | ||||||||
Net income (loss) | 305 | ||||||||
Other current assets | 201 | 201 | |||||||
Other long-term assets, net | 160 | 160 | |||||||
Deferred revenue | 1,487 | 1,487 | |||||||
Deferred income tax assets, net | 321 | 321 | |||||||
Member's equity | $ 17,832 | $ 17,832 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | $ 1,407 | $ 2,071 | $ 2,010 | $ 2,052 | $ 2,087 | $ 6,870 | $ 8,220 | $ 8,277 | $ 8,173 |
Adjustments | (299) | ||||||||
Total Revenue from Contracts with Customers | 7,921 | ||||||||
Transferred at Point in Time | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue from Contracts with Customers | 0 | ||||||||
Transferred over Time | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue from Contracts with Customers | 7,921 | ||||||||
IP and Data Services | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | 668 | 3,284 | 3,945 | 3,862 | |||||
Adjustments | 0 | ||||||||
Total Revenue from Contracts with Customers | 3,945 | ||||||||
Transport and Infrastructure | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | 464 | 2,272 | 2,699 | 2,703 | |||||
Adjustments | (189) | ||||||||
Total Revenue from Contracts with Customers | 2,510 | ||||||||
Voice and Collaboration | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | 258 | 1,308 | 1,464 | 1,600 | |||||
Adjustments | 0 | ||||||||
Total Revenue from Contracts with Customers | 1,464 | ||||||||
Other revenue | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | 1 | 6 | 5 | 8 | |||||
Adjustments | (3) | ||||||||
Total Revenue from Contracts with Customers | 2 | ||||||||
Affiliate revenue | |||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||
Total Revenue | $ 16 | $ 0 | 107 | $ 0 | |||||
Adjustments | (107) | ||||||||
Total Revenue from Contracts with Customers | $ 0 |
Revenue Recognition - Contract
Revenue Recognition - Contract with Customer, Asset and Liability (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Oct. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||||
Customer receivables | $ 712 | $ 748 | ||
Contract assets | 19 | 22 | ||
Contract liabilities | 393 | 353 | ||
Accounts receivable, gross | 723 | 751 | ||
Allowance for doubtful accounts receivable | $ 11 | $ 3 | $ 3 | $ 0 |
Revenue Recognition - Revenue R
Revenue Recognition - Revenue Recognized (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Amounts included in contract liability at the beginning of the period (January 1, 2018) | $ 158 |
Performance obligations satisfied in previous periods | $ 0 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligation (Details) $ in Billions | Dec. 31, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 5.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 77.00% |
Remaining performance obligation, satisfaction period | 3 years |
Revenue Recognition - Capitaliz
Revenue Recognition - Capitalized Contract Costs (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Contract Acquisition Costs | |
Capitalized Contract Cost [Roll Forward] | |
Beginning of period balance | $ 13 |
Costs incurred | 68 |
Amortization | (17) |
End of period balance | 64 |
Contract Fulfillment Costs | |
Capitalized Contract Cost [Roll Forward] | |
Beginning of period balance | 14 |
Costs incurred | 99 |
Amortization | (29) |
End of period balance | $ 84 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Minimum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 1 year |
Maximum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 7 years |
Consumer Customers | Minimum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Length of customer life | 12 months |
Consumer Customers | Maximum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Length of customer life | 60 months |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Long-term debt | ||
Unamortized premiums, net | $ 155 | $ 185 |
Total long-term debt | 10,844 | 10,890 |
Less current maturities | (6) | (8) |
Long-term debt, excluding current maturities | $ 10,838 | 10,882 |
5.750% Senior Notes due 2022 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.75% | |
Debt Obligations | $ 600 | 600 |
6.125% Senior Notes due 2021 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 6.125% | |
Debt Obligations | $ 640 | 640 |
5.375% Senior Notes due 2022 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.375% | |
Debt Obligations | $ 1,000 | 1,000 |
5.625% Senior Notes due 2023 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.625% | |
Debt Obligations | $ 500 | 500 |
5.125% Senior Notes due 2023 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.125% | |
Debt Obligations | $ 700 | 700 |
5.375% Senior Notes due 2025 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.375% | |
Debt Obligations | $ 800 | 800 |
5.375% Senior Notes due 2024 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.375% | |
Debt Obligations | $ 900 | 900 |
5.25% Senior Notes due 2026 | ||
Long-term debt | ||
Debt instrument, stated interest rate | 5.25% | |
Debt Obligations | $ 775 | 775 |
Tranche B 2024 Term Loan | ||
Long-term debt | ||
Debt instrument, interest rate spread on debt | 1.25% | |
Debt Obligations | $ 4,611 | $ 4,611 |
Interest rate during period | 4.754% | 3.557% |
Tranche B 2024 Term Loan | LIBOR | ||
Long-term debt | ||
Debt instrument, interest rate spread on debt | 2.25% | |
Tranche B 2024 Term Loan | LIBOR | Minimum | ||
Long-term debt | ||
Debt instrument, interest rate spread on debt | 100.00% | |
Interest rate during period | 0.00% | |
Capital leases and other debt | ||
Long-term debt | ||
Debt Obligations | $ 163 | $ 179 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | Sep. 29, 2017 | Feb. 22, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2016 |
Long-term debt | |||||||
Debt instrument, redemption period notice minimum | 30 days | ||||||
Debt instrument, redemption period notice maximum | 60 days | ||||||
Debt instrument, redemption price, percentage | 101.00% | ||||||
Deferred debt issuance costs, net | $ 0 | $ 0 | |||||
Predecessor | |||||||
Long-term debt | |||||||
Deferred debt issuance costs, net | $ 40,000,000 | $ 11,000,000 | |||||
Payments of debt extinguishment costs | $ 44,000,000 | ||||||
Tranche B 2024 Term Loan | |||||||
Long-term debt | |||||||
Debt obligations | $ 4,611,000,000 | 4,611,000,000 | |||||
Debt instrument, interest rate spread on debt | 1.25% | ||||||
Tranche B 2024 Term Loan | Predecessor | |||||||
Long-term debt | |||||||
Debt obligations | $ 4,611,000,000 | ||||||
Upfront basis point | 25.00% | ||||||
Tranche B 2024 Term Loan | Federal Funds Effective Rate | |||||||
Long-term debt | |||||||
Debt instrument, interest rate spread on debt | 50.00% | ||||||
Tranche B 2024 Term Loan | LIBOR | |||||||
Long-term debt | |||||||
Debt instrument, interest rate spread on debt | 2.25% | ||||||
Tranche B 2024 Term Loan | LIBOR | Predecessor | |||||||
Long-term debt | |||||||
Debt instrument, interest rate spread on debt | 2.25% | ||||||
Tranche B 2024 Term Loan | LIBOR | Minimum | |||||||
Long-term debt | |||||||
Debt instrument, interest rate spread on debt | 100.00% | ||||||
Tranche B 2024 Term Loan | LIBOR | Minimum | Predecessor | |||||||
Long-term debt | |||||||
Debt instrument, interest rate spread on debt | 0.00% | ||||||
Floating Rate Senior Notes due 2018 | Predecessor | |||||||
Long-term debt | |||||||
Debt obligations | $ 300,000,000 | ||||||
Loss on extinguishment of debt | $ 1,000,000 | ||||||
Letter of Credit | Letter of Credit | |||||||
Long-term debt | |||||||
Letters of credit outstanding | $ 30,000,000 | 36,000,000 | |||||
Letter of Credit | Letter of Credit | Collateralized Debt Obligations | |||||||
Long-term debt | |||||||
Collateralized financings | $ 24,000,000 | $ 30,000,000 |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Debt (Details) $ in Millions | Dec. 31, 2018USD ($) |
Future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments) | |
2019 | $ 6 |
2020 | 6 |
2021 | 648 |
2022 | 1,609 |
2023 | 1,209 |
2024 and thereafter | 7,211 |
Total long-term debt | $ 10,689 |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 723 | $ 751 |
Less: allowance for doubtful accounts | (11) | (3) |
Accounts receivable, less allowance | 712 | 748 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 533 | 562 |
Earned and unbilled receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 177 | 165 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 13 | $ 24 |
Accounts Receivable - Allowance
Accounts Receivable - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning Balance | $ 0 | $ 3 | ||
Additions | 3 | 18 | ||
Deductions | 0 | (10) | ||
Ending Balance | 3 | $ 0 | $ 11 | |
Predecessor | ||||
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning Balance | $ 33 | 29 | $ 32 | |
Additions | 16 | 18 | ||
Deductions | (12) | (21) | ||
Ending Balance | $ 33 | $ 29 |
Property, Plant and Equipment -
Property, Plant and Equipment - Net Property, Plant and Equipment (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | $ 9,555 | $ 10,474 | ||
Accumulated depreciation | (143) | (1,021) | ||
Net property, plant and equipment | 9,412 | 9,453 | ||
Depreciation expense | 143 | 906 | ||
Land | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | 348 | 339 | ||
Fiber conduit and other outside plant | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | 4,750 | $ 5,262 | ||
Fiber conduit and other outside plant | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 15 years | |||
Fiber conduit and other outside plant | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 45 years | |||
Central office and other network electronics | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | 2,134 | $ 1,986 | ||
Central office and other network electronics | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 7 years | |||
Central office and other network electronics | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 10 years | |||
Support assets | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | 2,019 | $ 2,327 | ||
Support assets | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 3 years | |||
Support assets | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciable Lives | 30 years | |||
Construction-in-progress | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Property, plant and equipment | $ 304 | $ 560 | ||
Predecessor | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Depreciation expense | $ 850 | $ 948 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Asset Retirement Obligations (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||
Balance at beginning of period | $ 45 | $ 45 | ||
Accretion expense | 1 | 5 | ||
Purchase price adjustments | 0 | 58 | ||
Liabilities settled | (1) | (13) | ||
Revision in estimated cash flows | 0 | 10 | ||
Effect of foreign currency rate change | 0 | 0 | ||
Balance at end of period | 45 | $ 45 | $ 105 | |
Predecessor | ||||
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||||
Balance at beginning of period | $ 94 | 89 | $ 90 | |
Accretion expense | 12 | 10 | ||
Purchase price adjustments | 0 | 0 | ||
Liabilities settled | (7) | (9) | ||
Revision in estimated cash flows | 0 | 0 | ||
Effect of foreign currency rate change | 0 | (2) | ||
Balance at end of period | $ 94 | $ 89 |
Severance and Leased Real Est_3
Severance and Leased Real Estate (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | |
Employee Severance | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | $ 1 | $ 5 | |
Accrued to expense | 6 | 33 | |
Payments, net | (2) | (19) | |
Restructuring reserve, ending balance | 5 | $ 1 | 19 |
Property Subject to Operating Lease | |||
Restructuring Reserve [Roll Forward] | |||
Payments, net | (1) | (8) | |
Qwest Communications International Inc | Property Subject to Operating Lease | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring reserve, current | 8 | ||
Restructuring reserve, noncurrent | $ 39 | ||
Weighted average lease term | 8 years 2 months | ||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 5 | $ 4 | |
Accrued to expense | 0 | 51 | |
Restructuring reserve, ending balance | 4 | 5 | $ 47 |
Predecessor | Employee Severance | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 1 | 2 | |
Accrued to expense | 0 | ||
Payments, net | (1) | ||
Restructuring reserve, ending balance | 1 | ||
Predecessor | Property Subject to Operating Lease | |||
Restructuring Reserve [Roll Forward] | |||
Payments, net | (2) | ||
Predecessor | Qwest Communications International Inc | Property Subject to Operating Lease | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | $ 5 | 5 | |
Accrued to expense | 2 | ||
Restructuring reserve, ending balance | $ 5 | ||
Minimum | Qwest Communications International Inc | Property Subject to Operating Lease | |||
Restructuring Cost and Reserve [Line Items] | |||
Lease term | 1 year | ||
Maximum | Qwest Communications International Inc | Property Subject to Operating Lease | |||
Restructuring Cost and Reserve [Line Items] | |||
Lease term | 12 years |
Employee Benefits - Defined Con
Employee Benefits - Defined Contribution (Details) - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, maximum annual contribution per employee | $ 18,500 | $ 18,000 | |||
Defined contribution plan, maximum annual contribution per employee, percentage | 100.00% | ||||
Defined contribution plan, employer matching contribution, percentage | 4.00% | ||||
Defined contribution plan, cost | $ 7,000,000 | ||||
All Other Defined Contribution | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | 1,000,000 | $ 5,000,000 | |||
Cost of services and products | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | 1,000,000 | ||||
Selling, general and administrative expense | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | $ 5,000,000 | ||||
Predecessor | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | $ 30,000,000 | $ 37,000,000 | |||
Predecessor | All Other Defined Contribution | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | 5,000,000 | 6,000,000 | |||
Predecessor | Cost of services and products | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | 4,000,000 | 5,000,000 | |||
Predecessor | Selling, general and administrative expense | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Defined contribution plan, cost | $ 26,000,000 | $ 32,000,000 |
Employee Benefits - Defined Ben
Employee Benefits - Defined Benefits (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Retirement Benefits [Abstract] | ||
Plan assets | $ 133 | $ 147 |
Benefit obligation | 144 | 165 |
Unfunded status | $ 11 | $ 18 |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 26 | $ 105 | $ 156 | |
Predecessor | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 132 |
Products and Services Revenue_2
Products and Services Revenues - Revenue From Products and Services (Details) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||||||||
Oct. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | $ 1,407 | $ 2,071 | $ 2,010 | $ 2,052 | $ 2,087 | $ 6,870 | $ 8,220 | $ 8,277 | $ 8,173 | ||||
USF contributions | $ 71 | $ 415 | |||||||||||
Number of reportable segments | segment | 1 | ||||||||||||
Customer Concentration Risk | Sales Revenue | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Concentration risk, percentage | 19.00% | 20.00% | |||||||||||
Predecessor | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | $ 701 | $ 2,059 | $ 2,062 | $ 2,048 | 6,870 | 8,173 | |||||||
USF contributions | $ 331 | $ 414 | |||||||||||
Predecessor | Customer Concentration Risk | Sales Revenue | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Concentration risk, percentage | 18.00% | 16.00% | |||||||||||
IP and Data Services | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | $ 668 | $ 3,284 | $ 3,945 | $ 3,862 | |||||||||
Transport and Infrastructure | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | 464 | 2,272 | 2,699 | 2,703 | |||||||||
Voice and Collaboration | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | 258 | 1,308 | 1,464 | 1,600 | |||||||||
Other revenue | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | 1 | 6 | 5 | 8 | |||||||||
Affiliate revenue | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | $ 16 | 0 | $ 107 | 0 | |||||||||
Affiliate revenue | Predecessor | |||||||||||||
Revenue from External Customer [Line Items] | |||||||||||||
Total operating revenue | $ 0 | $ 0 |
Products and Services Revenue_3
Products and Services Revenues - Assets from Geographic Region (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 32,291 | $ 33,135 |
North America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | 27,520 | 27,776 |
EMEA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | 2,765 | 1,192 |
Latin America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 2,006 | $ 4,167 |
Products and Services Revenue_4
Products and Services Revenues - Revenue from Geographical Region (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,407 | $ 6,870 | $ 8,220 | $ 8,173 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,155 | 5,651 | 6,739 | 6,748 |
EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 128 | 607 | 744 | 755 |
Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 124 | $ 612 | $ 737 | $ 670 |
Affiliate Transactions (Details
Affiliate Transactions (Details) $ in Millions | 2 Months Ended |
Mar. 15, 2019USD ($) | |
Subsequent event | |
Subsequent Event [Line Items] | |
Distributions | $ 225 |
Fair Value Disclosure (Details)
Fair Value Disclosure (Details) - Input Level 2 - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Liabilities measured on a recurring basis | ||
Liabilities-Long-term debt, excluding capital lease and other obligations | $ 10,681 | $ 10,711 |
Fair Value | ||
Liabilities measured on a recurring basis | ||
Liabilities-Long-term debt, excluding capital lease and other obligations | $ 10,089 | $ 10,528 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Tax Cuts and Jobs Act, provisional tax expense | $ 195 | $ 92 | $ 195 | |||
Purchase accounting adjustment | (92) | |||||
Foreign earnings, provisional income tax expense | $ 10 | |||||
Effective income tax rate | 251.60% | 36.50% | ||||
Net deferred tax assets | $ 214 | $ 306 | 214 | |||
Deferred tax liabilities, noncurrent | 212 | 202 | 212 | |||
Deferred tax assets, noncurrent | 426 | 508 | 426 | |||
Increase in operating loss carryforwards | 1,000 | |||||
Uncertain tax benefits | 21 | $ 20 | 970 | 21 | ||
Deferred tax assets, valuation allowance | 942 | 931 | 942 | |||
Valuation allowance increase (decrease) | 11 | |||||
Unrecognized tax benefits that would impact effective tax rate | 28 | 23 | 28 | |||
Unrecognized tax benefits, accrued interest | $ 20 | 6 | $ 20 | |||
Decrease in unrecognized tax benefits is reasonably possible | 2 | |||||
U.S. Internal Revenue Service (IRS) | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Operating loss carryforwards | 13,800 | |||||
Domestic Tax Authority | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Uncertain tax benefits | 4,300 | |||||
State jurisdiction | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Operating loss carryforwards | 10,000 | |||||
Foreign jurisdiction | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Operating loss carryforwards | 6,000 | |||||
Tax credits | $ 31 | |||||
Predecessor | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Effective income tax rate | 38.70% | 19.60% | ||||
Income tax expense (benefit) from change in valuation allowances | $ 82 | |||||
Uncertain tax benefits | $ 18 | $ 20 | 18 | |||
Effective income tax rate reconciliation, share-based compensation, excess tax benefit, amount | 22 | |||||
Effective income tax rate reconciliation, federal law changes | $ 110 | |||||
Unrecognized tax benefits that would impact effective tax rate | $ 27 | |||||
Predecessor | Geographic distribution, foreign | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Recognized income tax benefit | 82 | |||||
Predecessor | Foreign jurisdiction | ||||||
Components of Income Tax Expense (Benefit) [Line Items] | ||||||
Recognized income tax benefit | $ 110 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) by Current and Deferred (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Federal | ||||
Current | $ 0 | $ 0 | ||
Deferred | 231 | 199 | ||
State | ||||
Current | 2 | (9) | ||
Deferred | 6 | 28 | ||
Foreign | ||||
Current | 4 | 30 | ||
Deferred | (9) | (52) | ||
Total income tax expense | $ 234 | $ 196 | ||
Predecessor | ||||
Federal | ||||
Current | $ 0 | $ 0 | ||
Deferred | 193 | 177 | ||
State | ||||
Current | 7 | 4 | ||
Deferred | 16 | 27 | ||
Foreign | ||||
Current | 39 | 41 | ||
Deferred | 13 | (84) | ||
Total income tax expense | $ 268 | $ 165 |
Income Taxes - Allocation of In
Income Taxes - Allocation of Income Tax Expense (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Income tax expense in the consolidated statements of operations: | ||||
Attributable to income | $ 234 | $ 196 | ||
Member's/Stockholders' equity: | ||||
Tax effect of the change in accumulated other comprehensive loss | $ 17 | $ (49) | ||
Predecessor | ||||
Income tax expense in the consolidated statements of operations: | ||||
Attributable to income | $ 268 | $ 165 | ||
Member's/Stockholders' equity: | ||||
Tax effect of the change in accumulated other comprehensive loss | $ 49 | $ (43) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details) | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Income Tax Reconciliation [Line Items] | ||||
Statutory federal income tax rate | 35.00% | 21.00% | ||
State income taxes, net of federal income tax benefit | 3.60% | 2.80% | ||
Tax Reform | 210.60% | 17.20% | ||
Global intangible low-taxed income | 0.00% | 1.80% | ||
CenturyLink acquisition transaction costs | 11.30% | 0.00% | ||
Uncertain tax positions | 1.20% | 0.50% | ||
Net foreign income tax | (19.30%) | (4.80%) | ||
Executive compensation limitation | 5.40% | 1.20% | ||
Research and development credits | (0.90%) | (1.30%) | ||
Other, net | 4.70% | (1.90%) | ||
Effective income tax rate | 251.60% | 36.50% | ||
Predecessor | ||||
Income Tax Reconciliation [Line Items] | ||||
Statutory federal income tax rate | 35.00% | 35.00% | ||
State income taxes, net of federal income tax benefit | 2.90% | 3.70% | ||
Tax Reform | 0.00% | (13.20%) | ||
Global intangible low-taxed income | 0.00% | 0.00% | ||
CenturyLink acquisition transaction costs | 0.00% | 0.00% | ||
Uncertain tax positions | 0.10% | 0.10% | ||
Net foreign income tax | 0.90% | (6.70%) | ||
Executive compensation limitation | 0.90% | 1.10% | ||
Research and development credits | (1.20%) | (0.00%) | ||
Other, net | 0.10% | (0.40%) | ||
Effective income tax rate | 38.70% | 19.60% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets | ||
Deferred revenue | $ 298 | $ 256 |
Net operating loss carry forwards | 3,494 | 3,633 |
Property, plant and equipment | 57 | 63 |
Other | 309 | 282 |
Gross deferred tax assets | 4,158 | 4,234 |
Less valuation allowance | (931) | (942) |
Net deferred tax assets | 3,227 | 3,292 |
Deferred tax liabilities | ||
Deferred revenue | (45) | (44) |
Property, plant and equipment | (853) | (689) |
Intangible assets | (1,998) | (2,329) |
Other | (25) | (16) |
Gross deferred tax liabilities | (2,921) | (3,078) |
Net deferred tax assets | $ 306 | $ 214 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits at beginning of period | $ 20 | $ 21 | |
Tax positions of prior periods netted against deferred tax assets | 0 | 950 | |
(Decrease) increase in tax positions taken in the prior period | 1 | (1) | |
Increase in tax positions taken in the current period | 0 | 3 | |
Decrease due to settlement/payments | 0 | (1) | |
Decrease from the lapse of statute of limitations | 0 | (2) | |
Unrecognized tax benefits at end of period | 21 | $ 20 | $ 970 |
Predecessor | |||
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits at beginning of period | $ 20 | 18 | |
Tax positions of prior periods netted against deferred tax assets | 0 | ||
(Decrease) increase in tax positions taken in the prior period | 0 | ||
Increase in tax positions taken in the current period | 2 | ||
Decrease due to settlement/payments | 0 | ||
Decrease from the lapse of statute of limitations | 0 | ||
Unrecognized tax benefits at end of period | $ 20 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||||||||
Oct. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||||
Operating Revenue | $ 1,407 | $ 2,071 | $ 2,010 | $ 2,052 | $ 2,087 | $ 6,870 | $ 8,220 | $ 8,277 | $ 8,173 | ||||
Operating Income | 158 | 284 | 227 | 196 | 261 | 968 | 1,309 | ||||||
Net income (loss) | (141) | $ 151 | $ 88 | $ 40 | $ 62 | 341 | 284 | ||||||
Tax Cuts and Jobs Act, provisional tax expense | $ 195 | $ 92 | $ 195 | ||||||||||
Predecessor | |||||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||||
Operating Revenue | $ 701 | $ 2,059 | $ 2,062 | $ 2,048 | 6,870 | 8,173 | |||||||
Operating Income | 112 | 349 | 353 | 337 | 1,151 | 1,445 | |||||||
Net income (loss) | $ 19 | $ 157 | $ 154 | $ 95 | $ 425 | $ 677 |
Commitments, Contingencies an_3
Commitments, Contingencies and Other Items - Additional Information (Details) $ in Thousands | 2 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2018USD ($)patentproperty | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Loss Contingencies | |||||
Estimated litigation liability | $ 70,000 | ||||
Loss contingency, damages sought, value | $ 50,000 | ||||
Patents allegedly infringed | patent | 1 | ||||
Number of properties with potential environmental liability | property | 175 | ||||
Rent expense, including common area maintenance, under non-cancelable lease agreements | $ 95,000 | $ 524,000 | |||
Sublease revenue | $ 2,000 | 9,000 | |||
Purchase commitment | 339,000 | ||||
Purchase obligation, due in next twelve months | 132,000 | ||||
Purchase obligation, due in second and third year | 130,000 | ||||
Purchase obligation, due in fourth and fifth year | 41,000 | ||||
Purchase obligation, due after fifth year | 36,000 | ||||
Predecessor | |||||
Loss Contingencies | |||||
Rent expense, including common area maintenance, under non-cancelable lease agreements | $ 447,000 | $ 552,000 | |||
Sublease revenue | $ 7,000 | $ 8,000 | |||
Unfavorable Regulatory Action | |||||
Loss Contingencies | |||||
Estimate of possible loss | 100 | ||||
Peruvian Tax Litigation, Before Interest | Pending Litigation | |||||
Loss Contingencies | |||||
Loss contingency, asserted claim | $ 26,000 | ||||
Peruvian Tax Litigation | Pending Litigation | |||||
Loss Contingencies | |||||
Loss contingency, asserted claim | 11,000 | ||||
Brazilian Tax Claims | Maximum | Pending Litigation | |||||
Loss Contingencies | |||||
Range of possible loss, not accrued | $ 37,000 |
Commitments, Contingencies an_4
Commitments, Contingencies and Other Items - Capital Leases (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Capital Leased Assets [Line Items] | ||||
Assets acquired through capital leases | $ 0 | $ 7 | ||
Depreciation expense | 0 | 0 | ||
Cash payments towards capital leases | 0 | 14 | ||
Assets included in property, plant and equipment | 0 | 0 | ||
Accumulated depreciation | $ 0 | 0 | ||
Capital Leases, Future Minimum Payments, Net Minimum Payments, Fiscal Year Maturity [Abstract] | ||||
2019 | 16 | |||
2020 | 15 | |||
2021 | 16 | |||
2022 | 16 | |||
2023 | 17 | |||
2024 and thereafter | 164 | |||
Total minimum payments | 244 | |||
Less: amount representing interest and executory costs | (81) | |||
Present value of minimum payments | 163 | |||
Less: current portion | (6) | |||
Long-term portion | $ 157 | |||
Predecessor | ||||
Capital Leased Assets [Line Items] | ||||
Assets acquired through capital leases | $ 0 | $ 19 | ||
Depreciation expense | 2 | 5 | ||
Cash payments towards capital leases | $ 1 | $ 10 |
Commitments, Contingencies an_5
Commitments, Contingencies and Other Items - Operating lease income (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Operating Leased Assets [Line Items] | ||||
Rental income | $ 28 | $ 192 | $ 165 | |
Future Minimum Receipts | ||||
2019 | 135 | |||
2020 | 90 | |||
2021 | 78 | |||
2022 | 73 | |||
2023 | $ 69 | |||
Predecessor | ||||
Operating Leased Assets [Line Items] | ||||
Rental income | $ 138 |
Commitments, Contingencies an_6
Commitments, Contingencies and Other Items - Operating lease expense (Details) $ in Millions | Dec. 31, 2018USD ($) |
Right-of-Way Agreements | |
Right-of-Way Agreements, 2019 | $ 77 |
Right-of-Way Agreements, 2020 | 51 |
Right-of-Way Agreements, 2021 | 38 |
Right-of-Way Agreements, 2022 | 37 |
Right-of-Way Agreements, 2023 | 37 |
Right-of-Way Agreements, Thereafter | 225 |
Right-of-Way Agreements, Total | 465 |
Operating Leases | |
Operating Leases, 2019 | 396 |
Operating Leases, 2020 | 259 |
Operating Leases, 2021 | 219 |
Operating Leases, 2022 | 164 |
Operating Leases, 2023 | 137 |
Operating Leases, Thereafter | 613 |
Operating Leases, Total | 1,788 |
Total | |
Right-of-Way Agreements and Facilities, 2019 | 473 |
Right-of-Way Agreements and Facilities, 2020 | 310 |
Right-of-Way Agreements and Facilities, 2021 | 257 |
Right-of-Way Agreements and Facilities, 2022 | 201 |
Right-of-Way Agreements and Facilities, 2023 | 174 |
Right-of-Way Agreements and Facilities, Thereafter | 838 |
Right-of-Way Agreements and Facilities, Total | 2,253 |
Future minimum sublease rentals | $ 29 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Changes in AOCI (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2016 | |
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | $ 0 | $ 18 | ||
Other comprehensive (loss) income before reclassifications | 18 | (200) | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 5 | ||
Cumulative effect of adoption of ASU 2018-02, Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income | 6 | |||
Net other comprehensive (loss) income | 18 | (195) | ||
Ending balance | 18 | $ 0 | (171) | |
Pension Plans | ||||
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | 0 | 0 | ||
Other comprehensive (loss) income before reclassifications | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 5 | ||
Cumulative effect of adoption of ASU 2018-02, Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income | 0 | |||
Net other comprehensive (loss) income | 0 | 5 | ||
Ending balance | 0 | 0 | 5 | |
Foreign Currency Translation Adjustments and Other | ||||
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | 0 | 18 | ||
Other comprehensive (loss) income before reclassifications | 18 | (200) | ||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | ||
Cumulative effect of adoption of ASU 2018-02, Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated other Comprehensive Income | 6 | |||
Net other comprehensive (loss) income | 18 | (200) | ||
Ending balance | 18 | 0 | $ (176) | |
Predecessor | ||||
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | (307) | (387) | ||
Other comprehensive (loss) income before reclassifications | 78 | |||
Amounts reclassified from accumulated other comprehensive loss | 2 | |||
Net other comprehensive (loss) income | 80 | $ (86) | ||
Ending balance | (307) | (387) | ||
Predecessor | Pension Plans | ||||
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | (35) | (34) | ||
Other comprehensive (loss) income before reclassifications | (3) | |||
Amounts reclassified from accumulated other comprehensive loss | 2 | |||
Net other comprehensive (loss) income | (1) | |||
Ending balance | (35) | (34) | ||
Predecessor | Foreign Currency Translation Adjustments and Other | ||||
Increase (Decrease) in Accumulated Other Comprehensive Income | ||||
Beginning balance | $ (272) | (353) | ||
Other comprehensive (loss) income before reclassifications | 81 | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | |||
Net other comprehensive (loss) income | 81 | |||
Ending balance | $ (272) | $ (353) |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information - Statements of Operations (Details) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||||||||
Oct. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING REVENUE | |||||||||||||
Total operating revenue | $ 1,407 | $ 2,071 | $ 2,010 | $ 2,052 | $ 2,087 | $ 6,870 | $ 8,220 | $ 8,277 | $ 8,173 | ||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 690 | 3,937 | |||||||||||
Selling, general and administrative | 253 | 1,354 | |||||||||||
Operating expenses - affiliates | 24 | 257 | |||||||||||
Depreciation and amortization | 282 | 1,704 | |||||||||||
Total operating expenses | 1,249 | 7,252 | |||||||||||
OPERATING INCOME | 158 | 284 | 227 | 196 | 261 | 968 | 1,309 | ||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 1 | 0 | |||||||||||
Interest income - affiliate | 11 | 67 | |||||||||||
Interest expense | (80) | (509) | |||||||||||
Loss on modification and extinguishment of debt | 0 | 0 | |||||||||||
Equity in net (losses) earnings of subsidiaries | 0 | 0 | |||||||||||
Other (expense) income, net | 3 | 11 | |||||||||||
Total other expense, net | (65) | (431) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 93 | 537 | |||||||||||
Income tax expense | (234) | (196) | |||||||||||
NET INCOME (LOSS) | (141) | $ 151 | $ 88 | $ 40 | $ 62 | 341 | $ 284 | ||||||
Other comprehensive loss, net of income taxes | 18 | (195) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (123) | 146 | |||||||||||
Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | $ 701 | $ 2,059 | $ 2,062 | $ 2,048 | 6,870 | 8,173 | |||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 3,493 | 4,162 | |||||||||||
Selling, general and administrative | 1,208 | 1,407 | |||||||||||
Operating expenses - affiliates | 0 | 0 | |||||||||||
Depreciation and amortization | 1,018 | 1,159 | |||||||||||
Total operating expenses | 5,719 | 6,728 | |||||||||||
OPERATING INCOME | 112 | 349 | 353 | 337 | 1,151 | 1,445 | |||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 13 | 4 | |||||||||||
Interest income - affiliate | 0 | 0 | |||||||||||
Interest expense | (441) | (544) | |||||||||||
Loss on modification and extinguishment of debt | (44) | (40) | |||||||||||
Equity in net (losses) earnings of subsidiaries | 0 | 0 | |||||||||||
Other (expense) income, net | 14 | (63) | |||||||||||
Total other expense, net | (458) | (603) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 693 | 842 | |||||||||||
Income tax expense | (268) | (165) | |||||||||||
NET INCOME (LOSS) | $ 19 | $ 157 | $ 154 | $ 95 | 425 | 677 | |||||||
Other comprehensive loss, net of income taxes | 80 | (86) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 505 | 591 | |||||||||||
Eliminations | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | (28) | (308) | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | (28) | 0 | |||||||||||
Selling, general and administrative | 0 | (308) | |||||||||||
Operating expenses - affiliates | 0 | 0 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | (28) | (308) | |||||||||||
OPERATING INCOME | 0 | 0 | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | ||||||||||||
Interest income - affiliate | 0 | 0 | |||||||||||
Interest expense | 0 | 0 | |||||||||||
Equity in net (losses) earnings of subsidiaries | 771 | 5,047 | |||||||||||
Other (expense) income, net | 0 | 0 | |||||||||||
Total other expense, net | 771 | 5,047 | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 771 | 5,047 | |||||||||||
Income tax expense | 0 | 0 | |||||||||||
NET INCOME (LOSS) | 771 | 5,047 | |||||||||||
Other comprehensive loss, net of income taxes | (18) | 195 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 753 | 5,242 | |||||||||||
Eliminations | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | (129) | (132) | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | (129) | (132) | |||||||||||
Selling, general and administrative | 0 | 0 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | (129) | (132) | |||||||||||
OPERATING INCOME | 0 | 0 | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | 0 | |||||||||||
Interest income - affiliate | 0 | 0 | |||||||||||
Interest expense | 0 | 0 | |||||||||||
Loss on modification and extinguishment of debt | 0 | ||||||||||||
Equity in net (losses) earnings of subsidiaries | 2,261 | 1,945 | |||||||||||
Other (expense) income, net | 0 | 0 | |||||||||||
Total other expense, net | 2,261 | 1,945 | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 2,261 | 1,945 | |||||||||||
Income tax expense | 0 | 0 | |||||||||||
NET INCOME (LOSS) | 2,261 | 1,945 | |||||||||||
Other comprehensive loss, net of income taxes | 0 | 86 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 2,261 | 2,031 | |||||||||||
Level 3 Parent, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 | |||||||||||
Selling, general and administrative | 1 | 12 | |||||||||||
Operating expenses - affiliates | 0 | 0 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | 1 | 12 | |||||||||||
OPERATING INCOME | (1) | (12) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | ||||||||||||
Interest income - affiliate | 262 | 2,430 | |||||||||||
Interest expense | (5) | (33) | |||||||||||
Equity in net (losses) earnings of subsidiaries | (827) | (2,044) | |||||||||||
Other (expense) income, net | 1 | (9) | |||||||||||
Total other expense, net | (569) | 344 | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | (570) | 332 | |||||||||||
Income tax expense | 429 | 10 | |||||||||||
NET INCOME (LOSS) | (141) | 342 | |||||||||||
Other comprehensive loss, net of income taxes | 18 | (195) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (123) | 147 | |||||||||||
Level 3 Parent, LLC | Reportable Legal Entities | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 | |||||||||||
Selling, general and administrative | 4 | 16 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | 4 | 16 | |||||||||||
OPERATING INCOME | (4) | (16) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | 0 | |||||||||||
Interest income - affiliate | 1,260 | 1,385 | |||||||||||
Interest expense | (30) | (36) | |||||||||||
Loss on modification and extinguishment of debt | 0 | ||||||||||||
Equity in net (losses) earnings of subsidiaries | (815) | (669) | |||||||||||
Other (expense) income, net | 3 | (1) | |||||||||||
Total other expense, net | 418 | 679 | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 414 | 663 | |||||||||||
Income tax expense | 11 | 14 | |||||||||||
NET INCOME (LOSS) | 425 | 677 | |||||||||||
Other comprehensive loss, net of income taxes | 80 | (86) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 505 | 591 | |||||||||||
Level 3 Financing, Inc. | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 | |||||||||||
Selling, general and administrative | 3 | 3 | |||||||||||
Operating expenses - affiliates | 0 | 0 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | 3 | 3 | |||||||||||
OPERATING INCOME | (3) | (3) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | ||||||||||||
Interest income - affiliate | 368 | 1,562 | |||||||||||
Interest expense | (72) | (457) | |||||||||||
Equity in net (losses) earnings of subsidiaries | (15) | (3,257) | |||||||||||
Other (expense) income, net | 0 | 0 | |||||||||||
Total other expense, net | 281 | (2,152) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 278 | (2,155) | |||||||||||
Income tax expense | (1,105) | 111 | |||||||||||
NET INCOME (LOSS) | (827) | (2,044) | |||||||||||
Other comprehensive loss, net of income taxes | 0 | 0 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (827) | (2,044) | |||||||||||
Level 3 Financing, Inc. | Reportable Legal Entities | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 | |||||||||||
Selling, general and administrative | 3 | 5 | |||||||||||
Depreciation and amortization | 0 | 0 | |||||||||||
Total operating expenses | 3 | 5 | |||||||||||
OPERATING INCOME | (3) | (5) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | 0 | |||||||||||
Interest income - affiliate | 1,890 | 2,113 | |||||||||||
Interest expense | (397) | (505) | |||||||||||
Loss on modification and extinguishment of debt | (44) | ||||||||||||
Equity in net (losses) earnings of subsidiaries | (2,138) | (2,033) | |||||||||||
Other (expense) income, net | 0 | (39) | |||||||||||
Total other expense, net | (689) | (464) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | (692) | (469) | |||||||||||
Income tax expense | (123) | (200) | |||||||||||
NET INCOME (LOSS) | (815) | (669) | |||||||||||
Other comprehensive loss, net of income taxes | 0 | 0 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (815) | (669) | |||||||||||
Level 3 Communications, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 764 | 4,014 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 418 | 2,209 | |||||||||||
Selling, general and administrative | 179 | 392 | |||||||||||
Operating expenses - affiliates | 24 | 176 | |||||||||||
Depreciation and amortization | 117 | 688 | |||||||||||
Total operating expenses | 738 | 3,465 | |||||||||||
OPERATING INCOME | 26 | 549 | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 1 | ||||||||||||
Interest income - affiliate | (578) | (3,800) | |||||||||||
Interest expense | 0 | (3) | |||||||||||
Equity in net (losses) earnings of subsidiaries | 71 | 254 | |||||||||||
Other (expense) income, net | 2 | 1 | |||||||||||
Total other expense, net | (504) | (3,548) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | (478) | (2,999) | |||||||||||
Income tax expense | 433 | (232) | |||||||||||
NET INCOME (LOSS) | (45) | (3,231) | |||||||||||
Other comprehensive loss, net of income taxes | 0 | 0 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (45) | (3,231) | |||||||||||
Level 3 Communications, LLC | Reportable Legal Entities | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 3,108 | 3,558 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 1,942 | 2,249 | |||||||||||
Selling, general and administrative | 942 | 1,025 | |||||||||||
Depreciation and amortization | 356 | 372 | |||||||||||
Total operating expenses | 3,240 | 3,646 | |||||||||||
OPERATING INCOME | (132) | (88) | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 12 | 3 | |||||||||||
Interest income - affiliate | (2,896) | (3,215) | |||||||||||
Interest expense | (2) | (2) | |||||||||||
Loss on modification and extinguishment of debt | 0 | ||||||||||||
Equity in net (losses) earnings of subsidiaries | 692 | 757 | |||||||||||
Other (expense) income, net | 15 | 2 | |||||||||||
Total other expense, net | (2,179) | (2,455) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | (2,311) | (2,543) | |||||||||||
Income tax expense | (2) | (2) | |||||||||||
NET INCOME (LOSS) | (2,313) | (2,545) | |||||||||||
Other comprehensive loss, net of income taxes | 0 | 0 | |||||||||||
COMPREHENSIVE INCOME (LOSS) | (2,313) | (2,545) | |||||||||||
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 671 | 4,514 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 300 | 1,728 | |||||||||||
Selling, general and administrative | 70 | 1,255 | |||||||||||
Operating expenses - affiliates | 0 | 81 | |||||||||||
Depreciation and amortization | 165 | 1,016 | |||||||||||
Total operating expenses | 535 | 4,080 | |||||||||||
OPERATING INCOME | 136 | 434 | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 0 | ||||||||||||
Interest income - affiliate | (41) | (125) | |||||||||||
Interest expense | (3) | (16) | |||||||||||
Equity in net (losses) earnings of subsidiaries | 0 | 0 | |||||||||||
Other (expense) income, net | 0 | 19 | |||||||||||
Total other expense, net | (44) | (122) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 92 | 312 | |||||||||||
Income tax expense | 9 | (85) | |||||||||||
NET INCOME (LOSS) | 101 | 227 | |||||||||||
Other comprehensive loss, net of income taxes | 18 | (195) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 119 | 32 | |||||||||||
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 3,891 | 4,747 | |||||||||||
OPERATING EXPENSES | |||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 1,680 | 2,045 | |||||||||||
Selling, general and administrative | 259 | 361 | |||||||||||
Depreciation and amortization | 662 | 787 | |||||||||||
Total operating expenses | 2,601 | 3,193 | |||||||||||
OPERATING INCOME | 1,290 | 1,554 | |||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||
Interest income | 1 | 1 | |||||||||||
Interest income - affiliate | (254) | (283) | |||||||||||
Interest expense | (12) | (1) | |||||||||||
Loss on modification and extinguishment of debt | 0 | ||||||||||||
Equity in net (losses) earnings of subsidiaries | 0 | 0 | |||||||||||
Other (expense) income, net | (4) | (25) | |||||||||||
Total other expense, net | (269) | (308) | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 1,021 | 1,246 | |||||||||||
Income tax expense | (154) | 23 | |||||||||||
NET INCOME (LOSS) | 867 | 1,269 | |||||||||||
Other comprehensive loss, net of income taxes | 0 | (86) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 867 | 1,183 | |||||||||||
Non-Affiliate Services | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 1,391 | 6,870 | 8,113 | 8,173 | |||||||||
Non-Affiliate Services | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 6,870 | 8,173 | |||||||||||
Non-Affiliate Services | Eliminations | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | (28) | (129) | 0 | (132) | |||||||||
Non-Affiliate Services | Level 3 Parent, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | 0 | 0 | |||||||||
Non-Affiliate Services | Level 3 Financing, Inc. | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | 0 | 0 | |||||||||
Non-Affiliate Services | Level 3 Communications, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 748 | 3,108 | 3,884 | 3,558 | |||||||||
Non-Affiliate Services | Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 671 | 3,891 | 4,229 | 4,747 | |||||||||
Affiliate revenue | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 16 | 0 | 107 | 0 | |||||||||
Affiliate revenue | Predecessor | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | $ 0 | $ 0 | |||||||||||
Affiliate revenue | Eliminations | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | (308) | |||||||||||
Affiliate revenue | Level 3 Parent, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
Affiliate revenue | Level 3 Financing, Inc. | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 0 | 0 | |||||||||||
Affiliate revenue | Level 3 Communications, LLC | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | 16 | 130 | |||||||||||
Affiliate revenue | Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||||||||
OPERATING REVENUE | |||||||||||||
Total operating revenue | $ 0 | $ 285 |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information - Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 31, 2017 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 243 | $ 297 | |
Restricted cash and securities - current | 4 | 5 | |
Accounts receivable | 712 | 748 | |
Accounts receivable - affiliates | 0 | 13 | |
Assets held for sale | 0 | 140 | |
Advances to affiliates | 0 | 0 | |
Note receivable - affiliate | 1,825 | 1,825 | |
Other | 234 | 117 | |
Total current assets | 3,018 | 3,145 | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 10,474 | 9,555 | |
Accumulated depreciation | (1,021) | (143) | |
Net property, plant and equipment | 9,453 | 9,412 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 11,119 | 10,837 | $ 10,821 |
Restricted cash and securities | 25 | 29 | |
Customer relationships, net | 7,567 | 8,845 | |
Other intangible assets, net | 410 | 378 | |
Investment in subsidiaries | 0 | 0 | |
Other, net | 699 | 489 | |
Total goodwill and other assets | 19,820 | 20,578 | |
TOTAL ASSETS | 32,291 | 33,135 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 6 | 8 | |
Accounts payable | 726 | 695 | |
Accounts payable - affiliates | 246 | 41 | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 233 | 136 | |
Income and other taxes | 130 | 100 | |
Interest | 95 | 109 | |
Other | 78 | 59 | |
Advance billings and customer deposits | 310 | 258 | |
Due to affiliates | 0 | 0 | |
Total current liabilities | 1,824 | 1,406 | |
LONG-TERM DEBT | 10,838 | 10,882 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 1,181 | 1,093 | |
Deferred tax liability | 202 | 212 | |
Other | 369 | 270 | |
Total deferred revenue and other liabilities | 1,752 | 1,575 | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | 17,877 | 19,272 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 32,291 | 33,135 | |
Eliminations | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and securities - current | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Accounts receivable - affiliates | (51) | ||
Assets held for sale | 0 | ||
Advances to affiliates | (51,260) | (42,483) | |
Note receivable - affiliate | 0 | 0 | |
Other | 0 | 0 | |
Total current assets | (51,260) | (42,534) | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 0 | 0 | |
Accumulated depreciation | 0 | 0 | |
Net property, plant and equipment | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Restricted cash and securities | 0 | 0 | |
Customer relationships, net | 0 | 0 | |
Other intangible assets, net | 0 | 0 | |
Investment in subsidiaries | (37,317) | (38,973) | |
Other, net | (1,332) | (1,771) | |
Total goodwill and other assets | (38,649) | (40,744) | |
TOTAL ASSETS | (89,909) | (83,278) | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 0 | |
Accounts payable - affiliates | 0 | (51) | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 0 | 0 | |
Income and other taxes | 0 | 0 | |
Interest | 0 | 0 | |
Other | 0 | 0 | |
Advance billings and customer deposits | 0 | 0 | |
Due to affiliates | (51,260) | (42,483) | |
Total current liabilities | (51,260) | (42,534) | |
LONG-TERM DEBT | 0 | 0 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 0 | 0 | |
Deferred tax liability | (1,332) | (1,771) | |
Other | 0 | 0 | |
Total deferred revenue and other liabilities | (1,332) | (1,771) | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | (37,317) | (38,973) | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | (89,909) | (83,278) | |
Level 3 Parent, LLC | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 2 | 13 | |
Restricted cash and securities - current | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Accounts receivable - affiliates | 0 | ||
Assets held for sale | 68 | ||
Advances to affiliates | 16,852 | 16,251 | |
Note receivable - affiliate | 1,825 | 1,825 | |
Other | 1 | 0 | |
Total current assets | 18,680 | 18,157 | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 0 | 0 | |
Accumulated depreciation | 0 | 0 | |
Net property, plant and equipment | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Restricted cash and securities | 15 | 19 | |
Customer relationships, net | 0 | 0 | |
Other intangible assets, net | 0 | 0 | |
Investment in subsidiaries | 15,541 | 16,954 | |
Other, net | 275 | 280 | |
Total goodwill and other assets | 15,831 | 17,253 | |
TOTAL ASSETS | 34,511 | 35,410 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 0 | |
Accounts payable - affiliates | 62 | 11 | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 0 | 0 | |
Income and other taxes | 0 | 0 | |
Interest | 11 | 11 | |
Other | 3 | 16 | |
Advance billings and customer deposits | 0 | 0 | |
Due to affiliates | 0 | 0 | |
Total current liabilities | 76 | 38 | |
LONG-TERM DEBT | 613 | 616 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 0 | 0 | |
Deferred tax liability | 56 | 648 | |
Other | 0 | 1 | |
Total deferred revenue and other liabilities | 56 | 649 | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | 33,766 | 34,107 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 34,511 | 35,410 | |
Level 3 Financing, Inc. | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash and securities - current | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Accounts receivable - affiliates | 0 | ||
Assets held for sale | 0 | ||
Advances to affiliates | 23,957 | 21,032 | |
Note receivable - affiliate | 0 | 0 | |
Other | 3 | 0 | |
Total current assets | 23,960 | 21,032 | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 0 | 0 | |
Accumulated depreciation | 0 | 0 | |
Net property, plant and equipment | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Restricted cash and securities | 0 | 0 | |
Customer relationships, net | 0 | 0 | |
Other intangible assets, net | 0 | 0 | |
Investment in subsidiaries | 17,915 | 18,403 | |
Other, net | 1,421 | 1,795 | |
Total goodwill and other assets | 19,336 | 20,198 | |
TOTAL ASSETS | 43,296 | 41,230 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 1 | |
Accounts payable - affiliates | 11 | 0 | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 0 | 0 | |
Income and other taxes | 4 | 0 | |
Interest | 78 | 91 | |
Other | 1 | 0 | |
Advance billings and customer deposits | 0 | 0 | |
Due to affiliates | 0 | 0 | |
Total current liabilities | 94 | 92 | |
LONG-TERM DEBT | 10,068 | 10,096 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 0 | 0 | |
Deferred tax liability | 0 | 0 | |
Other | 0 | 1 | |
Total deferred revenue and other liabilities | 0 | 1 | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | 33,134 | 31,041 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 43,296 | 41,230 | |
Level 3 Communications, LLC | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 164 | 175 | |
Restricted cash and securities - current | 0 | 1 | |
Accounts receivable | 70 | 26 | |
Accounts receivable - affiliates | 60 | ||
Assets held for sale | 5 | ||
Advances to affiliates | 7,744 | 0 | |
Note receivable - affiliate | 0 | 0 | |
Other | 97 | 54 | |
Total current assets | 8,075 | 321 | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 3,456 | 3,285 | |
Accumulated depreciation | (320) | (48) | |
Net property, plant and equipment | 3,136 | 3,237 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 1,665 | 1,200 | |
Restricted cash and securities | 9 | 10 | |
Customer relationships, net | 3,823 | 4,324 | |
Other intangible assets, net | 409 | 378 | |
Investment in subsidiaries | 3,861 | 3,616 | |
Other, net | 110 | 32 | |
Total goodwill and other assets | 9,877 | 9,560 | |
TOTAL ASSETS | 21,088 | 13,118 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 1 | 2 | |
Accounts payable | 380 | 323 | |
Accounts payable - affiliates | 162 | 0 | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 189 | 109 | |
Income and other taxes | 72 | 55 | |
Interest | 1 | 0 | |
Other | 8 | 25 | |
Advance billings and customer deposits | 168 | 127 | |
Due to affiliates | 45,347 | 42,483 | |
Total current liabilities | 46,328 | 43,124 | |
LONG-TERM DEBT | 7 | 13 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 971 | 841 | |
Deferred tax liability | 841 | 870 | |
Other | 197 | 103 | |
Total deferred revenue and other liabilities | 2,009 | 1,814 | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | (27,256) | (31,833) | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 21,088 | 13,118 | |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 77 | 109 | |
Restricted cash and securities - current | 4 | 4 | |
Accounts receivable | 642 | 722 | |
Accounts receivable - affiliates | 4 | ||
Assets held for sale | 67 | ||
Advances to affiliates | 2,707 | 5,200 | |
Note receivable - affiliate | 0 | 0 | |
Other | 133 | 63 | |
Total current assets | 3,563 | 6,169 | |
NET PROPERTY, PLANT AND EQUIPMENT | |||
Property, plant and equipment | 7,018 | 6,270 | |
Accumulated depreciation | (701) | (95) | |
Net property, plant and equipment | 6,317 | 6,175 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 9,454 | 9,637 | |
Restricted cash and securities | 1 | 0 | |
Customer relationships, net | 3,744 | 4,521 | |
Other intangible assets, net | 1 | 0 | |
Investment in subsidiaries | 0 | 0 | |
Other, net | 225 | 153 | |
Total goodwill and other assets | 13,425 | 14,311 | |
TOTAL ASSETS | 23,305 | 26,655 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 5 | 6 | |
Accounts payable | 346 | 371 | |
Accounts payable - affiliates | 11 | 81 | |
Accrued expenses and other liabilities | |||
Salaries and benefits | 44 | 27 | |
Income and other taxes | 54 | 45 | |
Interest | 5 | 7 | |
Other | 66 | 18 | |
Advance billings and customer deposits | 142 | 131 | |
Due to affiliates | 5,913 | 0 | |
Total current liabilities | 6,586 | 686 | |
LONG-TERM DEBT | 150 | 157 | |
DEFERRED REVENUE AND OTHER LIABILITES | |||
Deferred revenue | 210 | 252 | |
Deferred tax liability | 637 | 465 | |
Other | 172 | 165 | |
Total deferred revenue and other liabilities | 1,019 | 882 | |
COMMITMENTS AND CONTINGENCIES | |||
MEMBER'S EQUITY (DEFICIT) | 15,550 | 24,930 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 23,305 | $ 26,655 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) - USD ($) $ in Millions | 2 Months Ended | 10 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | $ 308 | $ 2,397 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (207) | (1,038) | |||
Purchase of marketable securities | 0 | 0 | |||
Purchase of marketable securities | (1,825) | 0 | |||
Maturity of marketable securities | 0 | 0 | |||
Proceeds from sale of property, plant and equipment and other assets | 0 | 134 | |||
Net cash used in investing activities | (2,032) | (904) | |||
Net proceeds from issuance of long-term debt | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | (1) | (7) | |||
Distributions | (250) | (1,545) | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | (2) | 0 | |||
Net cash used in financing activities | (253) | (1,552) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (1,977) | (59) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,308 | 331 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 331 | $ 2,308 | 272 | $ 331 | |
Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 1,914 | $ 2,343 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (1,119) | (1,334) | |||
Purchase of marketable securities | (1,127) | 0 | |||
Purchase of marketable securities | 0 | 0 | |||
Maturity of marketable securities | 1,127 | 0 | |||
Proceeds from sale of property, plant and equipment and other assets | 1 | 3 | |||
Net cash used in investing activities | (1,118) | (1,331) | |||
Net proceeds from issuance of long-term debt | 4,569 | 764 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | (4,917) | (820) | |||
Distributions | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | 3 | (3) | |||
Net cash used in financing activities | (345) | (59) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 451 | 953 | 953 | ||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,308 | 1,857 | 1,857 | 904 | |
Cash, cash equivalents, restricted cash and securities at end of period | 2,308 | 1,857 | |||
Eliminations | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 0 | 0 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | ||||
Net cash used in investing activities | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Distributions | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | 0 | ||||
Net cash used in financing activities | 0 | 0 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 0 | 0 | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 0 | 0 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 0 | 0 | 0 | 0 | |
Eliminations | Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 0 | 0 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Maturity of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | 0 | |||
Net cash used in investing activities | 0 | 0 | |||
Net proceeds from issuance of long-term debt | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | 0 | 0 | |||
Net cash used in financing activities | 0 | 0 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 0 | 0 | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 0 | 0 | 0 | 0 | |
Cash, cash equivalents, restricted cash and securities at end of period | 0 | 0 | |||
Level 3 Parent, LLC | Reportable Legal Entities | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | (1) | (98) | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 83 | ||||
Net cash used in investing activities | 0 | 83 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Distributions | (250) | (1,545) | |||
Increase (decrease) due from/to affiliates, net | 250 | 1,545 | |||
Other | 0 | ||||
Net cash used in financing activities | 0 | 0 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (1) | (15) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 33 | 32 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 32 | 33 | 17 | 32 | |
Level 3 Parent, LLC | Reportable Legal Entities | Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | (61) | (49) | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Maturity of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | 0 | |||
Net cash used in investing activities | 0 | 0 | |||
Net proceeds from issuance of long-term debt | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 57 | 47 | |||
Other | 0 | 0 | |||
Net cash used in financing activities | 57 | 47 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (4) | (2) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 33 | 37 | 37 | 39 | |
Cash, cash equivalents, restricted cash and securities at end of period | 33 | 37 | |||
Level 3 Financing, Inc. | Reportable Legal Entities | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 0 | 0 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | ||||
Net cash used in investing activities | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Distributions | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | 0 | ||||
Net cash used in financing activities | 0 | 0 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 0 | 0 | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 0 | 0 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 0 | 0 | 0 | 0 | |
Level 3 Financing, Inc. | Reportable Legal Entities | Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | (401) | (468) | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | 0 | 0 | |||
Purchase of marketable securities | 0 | ||||
Maturity of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | 0 | |||
Net cash used in investing activities | 0 | 0 | |||
Net proceeds from issuance of long-term debt | 4,569 | 764 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | (4,911) | (806) | |||
Increase (decrease) due from/to affiliates, net | 743 | 504 | |||
Other | 0 | 0 | |||
Net cash used in financing activities | 401 | 462 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 0 | (6) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 0 | 0 | 0 | 6 | |
Cash, cash equivalents, restricted cash and securities at end of period | 0 | 0 | |||
Level 3 Communications, LLC | Reportable Legal Entities | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 172 | 2,059 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (110) | (527) | |||
Purchase of marketable securities | (1,825) | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | ||||
Net cash used in investing activities | (1,935) | (527) | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 0 | 0 | |||
Distributions | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | (250) | (1,545) | |||
Other | 0 | ||||
Net cash used in financing activities | (250) | (1,545) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (2,013) | (13) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,199 | 186 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 186 | 2,199 | 173 | 186 | |
Level 3 Communications, LLC | Reportable Legal Entities | Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 1,615 | 565 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (667) | (704) | |||
Purchase of marketable securities | (1,127) | ||||
Maturity of marketable securities | 1,127 | ||||
Proceeds from sale of property, plant and equipment and other assets | 1 | 1 | |||
Net cash used in investing activities | (666) | (703) | |||
Net proceeds from issuance of long-term debt | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | 1 | (1) | |||
Increase (decrease) due from/to affiliates, net | (460) | 1,107 | |||
Other | 0 | 0 | |||
Net cash used in financing activities | (459) | 1,106 | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 490 | 968 | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 2,200 | 1,710 | 1,710 | 742 | |
Cash, cash equivalents, restricted cash and securities at end of period | 2,200 | 1,710 | |||
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 137 | 436 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (97) | (511) | |||
Purchase of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 51 | ||||
Net cash used in investing activities | (97) | (460) | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | (1) | (7) | |||
Distributions | 0 | 0 | |||
Increase (decrease) due from/to affiliates, net | 0 | 0 | |||
Other | (2) | ||||
Net cash used in financing activities | (3) | (7) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | 37 | (31) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | 76 | 113 | |||
Cash, cash equivalents, restricted cash and securities at end of period | 113 | 76 | $ 82 | 113 | |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | Predecessor | |||||
Condensed Consolidating Financial Information | |||||
Net cash (used in) provided by operating activities | 761 | 2,295 | |||
INVESTING ACTIVITIES | |||||
Capital expenditures | (452) | (630) | |||
Purchase of marketable securities | 0 | ||||
Maturity of marketable securities | 0 | ||||
Proceeds from sale of property, plant and equipment and other assets | 0 | 2 | |||
Net cash used in investing activities | (452) | (628) | |||
Net proceeds from issuance of long-term debt | 0 | 0 | |||
FINANCING ACTIVITIES | |||||
Payments of long-term debt | (7) | (13) | |||
Increase (decrease) due from/to affiliates, net | (340) | (1,658) | |||
Other | 3 | (3) | |||
Net cash used in financing activities | (344) | (1,674) | |||
Net (decrease) increase in cash, cash equivalents, restricted cash and securities | (35) | (7) | |||
Cash, cash equivalents, restricted cash and securities at beginning of period | $ 75 | 110 | $ 110 | 117 | |
Cash, cash equivalents, restricted cash and securities at end of period | $ 75 | $ 110 |
Uncategorized Items - lvlt-2018
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | Member Units [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 9,000,000 |
Accounting Standards Update 2016-09 [Member] | Retained Earnings [Member] | Predecessor [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 42,000,000 |
Accounting Standards Update 2018-02 [Member] | Member Units [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (6,000,000) |
Accounting Standards Update 2018-02 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 6,000,000 |