Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2019 | May 13, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | LEVEL 3 PARENT, LLC | |
Entity Central Index Key | 0000794323 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING REVENUE | ||
Operating revenues | $ 2,046 | $ 2,087 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 967 | 998 |
Selling, general and administrative | 328 | 344 |
Operating expenses - affiliates | 46 | 53 |
Depreciation and amortization | 390 | 431 |
Goodwill impairment | 3,708 | 0 |
Total operating expenses | 5,439 | 1,826 |
OPERATING (LOSS) INCOME | (3,393) | 261 |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 16 | 16 |
Interest expense | (131) | (120) |
Other income, net | 12 | 7 |
Total other income (expense), net | (103) | (97) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,496) | 164 |
Income tax expense | 89 | 102 |
NET (LOSS) INCOME | (3,585) | 62 |
Non-Affiliate Revenue | ||
OPERATING REVENUE | ||
Operating revenues | 1,991 | 2,062 |
Affiliate Revenues | ||
OPERATING REVENUE | ||
Operating revenues | $ 55 | $ 25 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
NET (LOSS) INCOME | $ (3,585) | $ 62 |
OTHER COMPREHENSIVE INCOME: | ||
Foreign currency translation adjustment, net of ($1) and ($14) tax | 3 | 72 |
Other comprehensive income, net of tax | 3 | 72 |
COMPREHENSIVE (LOSS) INCOME | $ (3,582) | $ 134 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustments, tax effect | $ (1) | $ (14) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 217 | $ 243 |
Restricted cash | 2 | 4 |
Accounts receivable, less allowance of $17 and $11 | 699 | 712 |
Note receivable - affiliate | 1,825 | 1,825 |
Other | 282 | 234 |
Total current assets | 3,025 | 3,018 |
Property, plant and equipment, net of accumulated depreciation of $1,214 and $1,021 | 9,487 | 9,453 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 7,412 | 11,119 |
Operating lease assets | 1,246 | |
Restricted cash | 25 | 25 |
Other, net | 657 | 699 |
Total goodwill and other assets | 17,160 | 19,820 |
TOTAL ASSETS | 29,672 | 32,291 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 7 | 6 |
Accounts payable | 654 | 726 |
Accounts payable - affiliates | 365 | 246 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 151 | 233 |
Income and other taxes | 105 | 130 |
Current operating lease liabilities | 324 | |
Interest | 94 | 95 |
Other | 62 | 78 |
Current portion of deferred revenue | 310 | 310 |
Total current liabilities | 2,072 | 1,824 |
LONG-TERM DEBT | 10,828 | 10,838 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,175 | 1,181 |
Deferred income taxes, net | 253 | 202 |
Noncurrent operating lease liabilities | 969 | |
Other | 305 | 369 |
Total deferred revenue and other liabilities | 2,702 | 1,752 |
COMMITMENTS AND CONTINGENCIES (Note 9) | ||
MEMBER'S EQUITY | ||
Member's equity | 14,238 | 18,048 |
Accumulated other comprehensive loss | (168) | (171) |
Total member's equity | 14,070 | 17,877 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 29,672 | 32,291 |
Customer Contracts And Relationships | ||
GOODWILL AND OTHER ASSETS | ||
Intangible assets, net | 7,398 | 7,567 |
Other Intangible Assets | ||
GOODWILL AND OTHER ASSETS | ||
Intangible assets, net | $ 422 | $ 410 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 17 | $ 11 |
Accumulated depreciation | $ 1,214 | $ 1,021 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net (loss) income | $ (3,585) | $ 62 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 390 | 431 |
Impairment of goodwill | 3,708 | 0 |
Deferred income taxes | 79 | 104 |
Changes in current assets and liabilities: | ||
Accounts receivable | 4 | 21 |
Accounts payable | (48) | (18) |
Other assets and liabilities, net | (161) | (50) |
Other assets and liabilities, affiliate | 119 | 37 |
Changes in other noncurrent assets and liabilities, net | (23) | (25) |
Other, net | 0 | 9 |
Net cash provided by operating activities | 483 | 571 |
INVESTING ACTIVITIES | ||
Capital expenditures | (285) | (252) |
Proceeds from sale of property, plant and equipment and other assets | 0 | 1 |
Deposits received on assets held for sale | 0 | 34 |
Net cash used in investing activities | (285) | (217) |
FINANCING ACTIVITIES | ||
Distributions | (225) | (390) |
Other | (1) | (2) |
Net cash used in financing activities | (226) | (392) |
Net decrease in cash, cash equivalents and restricted cash | (28) | (38) |
Cash, cash equivalents and restricted cash at beginning of period | 272 | 331 |
Cash, cash equivalents and restricted cash at end of period | 244 | 293 |
Supplemental cash flow information | ||
Income taxes paid, net | 7 | 8 |
Interest paid | $ 139 | $ 129 |
Consolidated Statements of Memb
Consolidated Statements of Member's Equity - USD ($) $ in Millions | Total | AOCI Attributable to Parent | Member Units |
Balance at beginning of period at Dec. 31, 2017 | $ 18 | $ 19,254 | |
MEMBER'S EQUITY | |||
Net (loss) income | $ 62 | ||
Other comprehensive income | 72 | ||
Purchase price accounting adjustments | (5) | ||
Distributions | (390) | ||
Balance at end of period at Mar. 31, 2018 | 96 | 18,924 | |
Balance at beginning of period at Dec. 31, 2018 | (171) | 18,048 | |
MEMBER'S EQUITY | |||
Net (loss) income | (3,585) | ||
Other comprehensive income | $ 3 | ||
Purchase price accounting adjustments | 0 | ||
Distributions | (225) | ||
Balance at end of period at Mar. 31, 2019 | $ (168) | $ 14,238 |
Consolidated Statements of Me_2
Consolidated Statements of Member's Equity (Parenthetical) $ in Millions | Dec. 31, 2018USD ($) |
Member Units | Accounting Standards Update 2014-09 | |
Cumulative effect of new accounting, tax | $ 0 |
Background
Background | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Background | (1) Background 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"). Basis of Presentation Our consolidated balance sheet as of December 31, 2018 , which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2018 . 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 first quarter of 2019 . We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue for three months ended March 31, 2019 and 2018 . Segments Our operations are integrated into and reported as part 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 have one reportable segment. Recently Adopted Accounting Pronouncements We adopted Accounting Standards Update ("ASU") 2016-02, Leases (Accounting Standard Codification "ASC" 842) , as of January 1, 2019, using the non-comparative transition option pursuant to ASU 2018-11. Therefore, we have not restated comparative period financial information for the effects of ASC 842, and we will not make the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we will recognize ASC 842's cumulative effect transition adjustment (discussed below) as of January 1, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things (i) allowed us to carry forward the historical lease classification; (ii) did not require us to reassess whether any expired or existing contracts are or contain leases under the new definition of a lease; and (iii) did not require us to reassess whether previously capitalized initial direct costs for any existing leases would qualify for capitalization under ASC 842. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We did not elect the hindsight practical expedient regarding the likelihood of exercising a lessee purchase option or assessing any impairment of right-of-use assets for existing leases. On March 5, 2019, the FASB issued ASU 2019-01 - Leases (ASC 842): Codification Improvements, effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in ASC 842, with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in ASC 820, Fair Value Measurement) should be applied. More importantly, the ASU also exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. Early adoption permits public companies to adopt concurrent with the transition to ASC 842 on leases. We adopted ASU 2019-01 as of January 1, 2019. Adoption of the new standard resulted in the recording of operating lease assets and operating lease liabilities of approximately $1.3 billion and $1.4 billion , respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings in the first quarter of 2019 and had no impact on cash flows. 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 are required to adopt the provisions of ASU 2016-13 no later than January 1, 2020. We expect to adopt ASU 2016-13 on January 1, 2020 and recognize the impacts through a cumulative adjustment to retained earnings as of the date of adoption. Subsequent Event As of the date of this report, $90 million of distributions were made to our parent in the second quarter of 2019. |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Customer Relationships and Other Intangible Assets | (2) Goodwill, Customer Relationships and Other Intangible Assets Goodwill, customer relationships and other intangible assets consisted of the following: March 31, 2019 December 31, 2018 (Dollars in millions) Goodwill $ 7,412 11,119 Customer relationships, less accumulated amortization of $1,006 and $833 $ 7,398 7,567 Other intangible assets subject to amortization: Trade names, less accumulated amortization of $37 and $30 93 100 Developed technology, less accumulated amortization of $84 and $67 329 310 Total other intangible assets, net $ 422 410 Our goodwill was derived from CenturyLink's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We are required to perform an impairment test related to our goodwill annually, which we perform as of October 31, or sooner if an indicator of impairment occurs. Due to the decline in CenturyLink's stock price, we incurred an event in the first quarter of 2019 that triggered impairment testing. Due to this impairment indicator, we evaluated our goodwill as of March 31, 2019. When we performed our October 31, 2018 annual impairment test, we estimated the fair value of equity by considering both a market approach and a discounted cash flow method. The market approach method includes the use of multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows beyond the cash flows from the discrete projection period. Because CenturyLink's low stock price was a trigger for impairment testing, we estimated the fair value of our operations using only the market approach as of March 31, 2019 . Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which have historically supported a range of fair values of annualized revenue and EBITDA multiples between 2.1x and 4.9x and 4.9x and 9.8x, respectively. We selected a revenue and EBITDA multiple within this range. For the three months ended March 31, 2019, based on our assessments performed as described above, we concluded that the estimated fair value was less than our carrying value of equity as of the date of our triggering event during the first quarter. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $3.7 billion for the three months ended March 31, 2019. The market multiples approach that we used incorporates significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of other cost synergies. In developing the market multiple, we also considered observed trends of our industry participants. Our failure to attain these forecasted results or changes in trends could result in future impairments. Our assessment included many qualitative factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the size of our impairments. Continued declines in our profitability, cash flows or the sustained, historically low trading prices of CenturyLink's common stock, may result in further impairment. Total amortization expense for intangible assets for the three months ended March 31, 2019 and 2018 was $193 million and $194 million , respectively. As of March 31, 2019 , the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $16.4 billion . We estimate that total amortization expense for intangible assets for the years ending December 31, 2019 through 2023 will be as follows: (Dollars in millions) 2019 (remaining nine months) $ 599 2020 800 2021 800 2022 796 2023 766 The following table shows the rollforward of goodwill from December 31, 2018 through March 31, 2019 : (Dollars in millions) As of December 31, 2018 $ 11,119 Effect of foreign currency rate change 1 Impairment (3,708 ) As of March 31, 2019 $ 7,412 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | (3) Revenue Recognition Refer to the Revenue Recognition section of Note 1—Background and Summary of Significant Accounting Policies and Note 4—Revenue Recognition in our annual report on Form 10-K for the year ended December 31, 2018 for further information regarding our application of ASC 606, “Revenue from Contracts with Customers”, including practical expedients and judgments applied in determining the amounts and timing of revenue from contracts with customers. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Total revenue $ 2,046 2,087 Adjustments for non-ASC 606 revenue (1) (50 ) (44 ) Total revenue from contracts with customers $ 1,996 2,043 _____________________________________________________________________ (1) 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 March 31, 2019 and January 1, 2019: March 31, 2019 December 31, 2018 (Dollars in millions) Customer receivables (1) $ 699 712 Contract assets 18 19 Contract liabilities 399 393 (1) Gross customer receivables of $716 and $723 million , net of allowance for doubtful accounts of $17 and $11 million , at March 31, 2019 and December 31, 2018 , respectively. Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue 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 three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) $ 95 97 Performance obligations satisfied in previous periods — — Performance Obligations As of March 31, 2019 , our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts (including affiliates) that are unsatisfied (or partially satisfied) is approximately $5.0 billion . We expect to recognize approximately 75% of this revenue through 2021 , with the balance recognized thereafter. We do not disclose the value of unsatisfied performance obligations for contracts for 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: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 64 84 13 14 Costs incurred 18 26 15 23 Amortization (8 ) (13 ) (2 ) (2 ) End of period balance $ 74 97 26 35 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 statements of operations. The amount of these deferred costs that are expected 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 the next 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. (7) 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 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 our affiliates with 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: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) IP and Data Services $ 979 1,003 Transport and Infrastructure 658 676 Voice and Collaboration 352 382 Other 2 1 Affiliate Services 55 25 Total operating revenue $ 2,046 2,087 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 $109 million and $107 million for the three months ended March 31, 2019 and March 31, 2018 , 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. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | (4) Leases Effective January 1, 2019, we adopted ASC 842 using the non-comparative transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional net operating lease assets and operating lease liabilities of approximately $1.3 billion and $1.4 billion , respectively, as of January 1, 2019. Additionally, the new standard resulted in the recording of approximately $30 million for both net lease assets and net lease liabilities with affiliates as of January 1, 2019, which are included in the lease balances. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We primarily lease various office facilities, switching and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Some of our lease arrangements contain lease components (including fixed payments including rent, real estate taxes and insurance costs) and non-lease components (including common-area maintenance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following: Three Months Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 104 Finance lease cost: Amortization of right-of-use assets 3 Interest on lease liability 3 Total finance lease cost 6 Total lease cost $ 110 Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,246 Finance lease assets Property, plant and equipment, net of accumulated depreciation 154 Total leased assets $ 1,400 Liabilities Current Operating Other current liabilities $ 324 Finance Current portion of long-term debt 7 Noncurrent Operating Noncurrent operating lease liabilities 969 Finance Long-term debt 155 Total lease liabilities $ 1,455 Weighted-average remaining lease term (years) Operating leases 9.0 Finance leases 13.9 Weighted-average discount rate Operating leases 6.56 % Finance leases 5.68 % Supplemental unaudited consolidated cash flow statement information related to leases: Three Months Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 110 Operating cash flows from finance leases 2 Financing cash flows from finance leases 1 As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 269 12 2020 285 15 2021 244 16 2022 188 16 2023 155 17 Thereafter 590 164 Total lease payments 1,731 240 Less: interest (438 ) (78 ) Total 1,293 162 Less: current portion (324 ) (7 ) Long-term portion $ 969 155 As of March 31, 2019, we had no material operating or finance leases that had not yet commenced. For the three months ended March 31, 2019 and 2018, our gross rental income was $50 million and $43 million , respectively. We adopted ASU 2016-02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. The future annual minimum payments under capital lease agreements 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 At December 31, 2018, our future rental commitments for operating leases were as follows: Operating Leases (Dollars in millions) 2019 $ 396 2020 259 2021 219 2022 164 2023 137 2024 and thereafter 613 Total future minimum payments (1) $ 1,788 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $29 million due in the future under non-cancelable subleases. |
Leases | (4) Leases Effective January 1, 2019, we adopted ASC 842 using the non-comparative transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional net operating lease assets and operating lease liabilities of approximately $1.3 billion and $1.4 billion , respectively, as of January 1, 2019. Additionally, the new standard resulted in the recording of approximately $30 million for both net lease assets and net lease liabilities with affiliates as of January 1, 2019, which are included in the lease balances. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We primarily lease various office facilities, switching and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Some of our lease arrangements contain lease components (including fixed payments including rent, real estate taxes and insurance costs) and non-lease components (including common-area maintenance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following: Three Months Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 104 Finance lease cost: Amortization of right-of-use assets 3 Interest on lease liability 3 Total finance lease cost 6 Total lease cost $ 110 Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,246 Finance lease assets Property, plant and equipment, net of accumulated depreciation 154 Total leased assets $ 1,400 Liabilities Current Operating Other current liabilities $ 324 Finance Current portion of long-term debt 7 Noncurrent Operating Noncurrent operating lease liabilities 969 Finance Long-term debt 155 Total lease liabilities $ 1,455 Weighted-average remaining lease term (years) Operating leases 9.0 Finance leases 13.9 Weighted-average discount rate Operating leases 6.56 % Finance leases 5.68 % Supplemental unaudited consolidated cash flow statement information related to leases: Three Months Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 110 Operating cash flows from finance leases 2 Financing cash flows from finance leases 1 As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 269 12 2020 285 15 2021 244 16 2022 188 16 2023 155 17 Thereafter 590 164 Total lease payments 1,731 240 Less: interest (438 ) (78 ) Total 1,293 162 Less: current portion (324 ) (7 ) Long-term portion $ 969 155 As of March 31, 2019, we had no material operating or finance leases that had not yet commenced. For the three months ended March 31, 2019 and 2018, our gross rental income was $50 million and $43 million , respectively. We adopted ASU 2016-02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. The future annual minimum payments under capital lease agreements 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 At December 31, 2018, our future rental commitments for operating leases were as follows: Operating Leases (Dollars in millions) 2019 $ 396 2020 259 2021 219 2022 164 2023 137 2024 and thereafter 613 Total future minimum payments (1) $ 1,788 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $29 million due in the future under non-cancelable subleases. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | (5) Long-Term Debt The following table summarizes our long-term debt: Interest Rates Maturities March 31, 2019 December 31, 2018 (Dollars in millions) Level 3 Parent, LLC Senior notes (1) 5.750% 2022 $ 600 600 Subsidiaries Level 3 Financing, Inc. Senior notes (2) 5.125%-6.125% 2021 - 2026 5,315 5,315 Term loan (3) LIBOR + 2.25% 2024 4,611 4,611 Finance leases Various Various 162 163 Total long-term debt, excluding unamortized premiums 10,688 10,689 Unamortized premiums, net 147 155 Total long-term debt 10,835 10,844 Less current maturities (7 ) (6 ) Long-term debt, excluding current maturities $ 10,828 10,838 (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 is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain other subsidiaries. The Tranche B 2024 Term Loan had an interest rate of 4.736% as of March 31, 2019 and 4.754% as of December 31, 2018 . The interest rate on the Tranche B 2024 Term Loan is set with a minimum London Interbank Offered Rate ("LIBOR") of zero percent. Aggregate Maturities of Long-Term Debt Set forth below is the aggregate principal amount of our long-term debt and finance leases (excluding unamortized premiums) maturing during the following years: (Dollars in millions) (1) 2019 (remaining nine months) $ 5 2020 6 2021 648 2022 1,609 2023 1,209 2023 and thereafter 7,211 Total long-term debt $ 10,688 (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. 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 March 31, 2019 , we believe we were in compliance with the financial covenants contained in our debt agreements in all material respects. Other For additional information on our long-term debt, see Note 5 - Long Term Debt to our consolidated financial statements in Item 8 of Part II of our annual report on Form 10-K for the year ended December 31, 2018. |
Severance and Leased Real Estat
Severance and Leased Real Estate | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Severance and Leased Real Estate | (6) 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 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. In accordance with transitional guidance under the new lease standard (ASC 842), the existing lease obligation of $47 million as of January 1, 2019 has been netted against the operating lease right of use assets at adoption. For additional information, see Note 4—Leases to our consolidated financial statements in Item 1 of Part I of this report. Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at January 1, 2019 $ 19 Accrued to expense — Payments, net (4 ) Balance at March 31, 2019 $ 15 |
Products and Services Revenue
Products and Services Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Products and Services Revenue | (3) Revenue Recognition Refer to the Revenue Recognition section of Note 1—Background and Summary of Significant Accounting Policies and Note 4—Revenue Recognition in our annual report on Form 10-K for the year ended December 31, 2018 for further information regarding our application of ASC 606, “Revenue from Contracts with Customers”, including practical expedients and judgments applied in determining the amounts and timing of revenue from contracts with customers. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Total revenue $ 2,046 2,087 Adjustments for non-ASC 606 revenue (1) (50 ) (44 ) Total revenue from contracts with customers $ 1,996 2,043 _____________________________________________________________________ (1) 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 March 31, 2019 and January 1, 2019: March 31, 2019 December 31, 2018 (Dollars in millions) Customer receivables (1) $ 699 712 Contract assets 18 19 Contract liabilities 399 393 (1) Gross customer receivables of $716 and $723 million , net of allowance for doubtful accounts of $17 and $11 million , at March 31, 2019 and December 31, 2018 , respectively. Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue 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 three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) $ 95 97 Performance obligations satisfied in previous periods — — Performance Obligations As of March 31, 2019 , our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts (including affiliates) that are unsatisfied (or partially satisfied) is approximately $5.0 billion . We expect to recognize approximately 75% of this revenue through 2021 , with the balance recognized thereafter. We do not disclose the value of unsatisfied performance obligations for contracts for 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: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 64 84 13 14 Costs incurred 18 26 15 23 Amortization (8 ) (13 ) (2 ) (2 ) End of period balance $ 74 97 26 35 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 statements of operations. The amount of these deferred costs that are expected 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 the next 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. (7) 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 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 our affiliates with 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: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) IP and Data Services $ 979 1,003 Transport and Infrastructure 658 676 Voice and Collaboration 352 382 Other 2 1 Affiliate Services 55 25 Total operating revenue $ 2,046 2,087 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 $109 million and $107 million for the three months ended March 31, 2019 and March 31, 2018 , 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. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | (8) Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance lease and other obligations, as well as the input level used to determine the fair values indicated below: March 31, 2019 December 31, 2018 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance lease and other obligations 2 $ 10,673 10,503 10,681 10,089 |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Items | (9) 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 contingencies at March 31, 2019 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. In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. 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 $10 million at March 31, 2019 . 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 March 31, 2019 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 a plea agreement, and the other is deceased. We are fully cooperating in the government’s investigations in this matter. 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 which are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of both March 31, 2019 and December 31, 2018, we had outstanding letters of credit or other similar obligations of approximately $30 million and $30 million , respectively, of which $24 million and $24 million are collateralized by cash that is reflected on the consolidated balance sheets as restricted cash and securities. 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 or proceedings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial in the coming 24 months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none individually is reasonably expected to exceed $100,000 in fines and penalties. The outcome of these other proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us. The matters listed above in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16 - Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our annual report on Form 10-K for the year ended December 31, 2018. 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | (10) Accumulated Other Comprehensive Loss The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2019 : Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2018 $ 5 $ (176 ) (171 ) Other comprehensive income before reclassifications, net of tax — 3 3 Net other comprehensive income — 3 3 Balance at March 31, 2019 $ 5 $ (173 ) (168 ) The table below summarizes changes in accumulated other comprehensive income recorded on our consolidated balance sheets by component for the three months ended March 31, 2018 : Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2017 $ 18 18 Other comprehensive income before reclassifications, net of tax 72 72 Amounts reclassified from accumulated other comprehensive income 6 6 Net other comprehensive income 78 78 Balance at March 31, 2018 $ 96 96 |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 3 Months Ended |
Mar. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Consolidating Financial Information | (11) 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) Three Months Ended March 31, 2019 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 $ — — 955 1,036 — 1,991 Operating revenue - affiliates — — 55 202 (202 ) 55 Total operating revenue — — 1,010 1,238 (202 ) 2,046 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 504 463 — 967 Selling, general and administrative — 1 369 160 (202 ) 328 Operating expenses - affiliates — — 22 24 — 46 Depreciation and amortization — — 145 245 — 390 Goodwill Impairment — — 1,369 2,339 — 3,708 Total operating expenses — 1 2,409 3,231 (202 ) 5,439 OPERATING (LOSS) INCOME — (1 ) (1,399 ) (1,993 ) — (3,393 ) OTHER (EXPENSE) INCOME Interest income - affiliate 16 — — — — 16 Interest expense (8 ) (119 ) — (4 ) — (131 ) Interest income (expense) - intercompany, net 933 164 (1,760 ) 663 — — Equity in net (losses) earnings of subsidiaries (4,519 ) (4,593 ) (1,797 ) — 10,909 — Other (expense) income, net (8 ) — 13 7 — 12 Total other (expense) income, net (3,586 ) (4,548 ) (3,544 ) 666 10,909 (103 ) (LOSS) INCOME BEFORE INCOME TAXES (3,586 ) (4,549 ) (4,943 ) (1,327 ) 10,909 (3,496 ) Income tax (benefit) expense — (30 ) 18 101 — 89 NET (LOSS) INCOME (3,586 ) (4,519 ) (4,961 ) (1,428 ) 10,909 (3,585 ) Other comprehensive income (loss), net of income taxes 3 — — 3 (3 ) 3 COMPREHENSIVE (LOSS) INCOME $ (3,583 ) (4,519 ) (4,961 ) (1,425 ) 10,906 (3,582 ) Condensed Consolidating Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2018 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 $ — — 956 1,106 — 2,062 Operating revenue - affiliates — — 25 40 (40 ) 25 Total operating revenue — — 981 1,146 (40 ) 2,087 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 589 409 — 998 Selling, general and administrative expenses — 1 259 124 (40 ) 344 Operating expenses - affiliates — — 53 — — 53 Depreciation and amortization — — 170 261 — 431 Total operating expenses — 1 1,071 794 (40 ) 1,826 OPERATING INCOME (LOSS) — (1 ) (90 ) 352 — 261 OTHER INCOME (EXPENSE) Interest income - affiliate 16 — — — — 16 Interest expense (8 ) (108 ) (1 ) (3 ) — (120 ) Interest income (expense) - intercompany, net 355 608 (881 ) (82 ) — — Equity in net earnings (losses) of subsidiaries (315 ) (839 ) (1 ) — 1,155 — Other income, net — — 1 6 — 7 Total other income (expense), net 48 (339 ) (882 ) (79 ) 1,155 (97 ) INCOME (LOSS) BEFORE INCOME TAXES 48 (340 ) (972 ) 273 1,155 164 Income tax (benefit) expense (14 ) (25 ) 47 94 — 102 NET INCOME (LOSS) 62 (315 ) (1,019 ) 179 1,155 62 Other comprehensive income (loss), net of income taxes 72 — — 72 (72 ) 72 COMPREHENSIVE INCOME (LOSS) $ 134 (315 ) (1,019 ) 251 1,083 134 Condensed Consolidating Balance Sheets March 31, 2019 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 $ 18 — 140 59 — 217 Restricted cash — — — 2 — 2 Accounts receivable — — 45 654 — 699 Intercompany advances 17,556 24,004 7,829 2,887 (52,276 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other — 9 138 135 — 282 Total current assets 19,399 24,013 8,152 3,737 (52,276 ) 3,025 Property, plant, and equipment, net — — 3,225 6,262 — 9,487 GOODWILL AND OTHER ASSETS Goodwill — — 362 7,050 — 7,412 Operating lease assets — — 1,294 500 (548 ) 1,246 Restricted cash 16 — 8 1 — 25 Customer relationships, net — — 3,627 3,771 — 7,398 Other intangible assets, net — — 420 2 — 422 Investment in subsidiaries 11,023 13,322 2,064 — (26,409 ) — Other, net 274 1,450 102 221 (1,390 ) 657 Total goodwill and other assets 11,313 14,772 7,877 11,545 (28,347 ) 17,160 TOTAL ASSETS $ 30,712 38,785 19,254 21,544 (80,623 ) 29,672 LIABILITIES AND MEMBER'S EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ — — — 7 — 7 Accounts payable — — 336 318 — 654 Accounts payable - affiliates 80 16 283 (14 ) — 365 Accrued expenses and other liabilities Salaries and benefits — — 120 31 — 151 Income and other taxes — 6 57 42 — 105 Current operating lease liabilities — — 288 153 (117 ) 324 Interest 3 86 1 4 — 94 Intercompany payables — — 47,248 5,028 (52,276 ) — Other 2 1 4 55 — 62 Current portion of deferred revenue — — 162 148 — 310 Total current liabilities 85 109 48,499 5,772 (52,393 ) 2,072 LONG-TERM DEBT 612 10,061 6 149 — 10,828 DEFERRED REVENUE AND OTHER LIABILITIES Deferred revenue — — 964 211 — 1,175 Deferred income taxes, net 56 — 817 770 (1,390 ) 253 Noncurrent operating lease liabilities — — 1,037 363 (431 ) 969 Other — — 148 157 — 305 Total deferred revenue and other liabilities 56 — 2,966 1,501 (1,821 ) 2,702 MEMBER'S EQUITY (DEFICIT) 29,959 28,615 (32,217 ) 14,122 (26,409 ) 14,070 TOTAL LIABILITIES AND MEMBER'S EQUITY $ 30,712 38,785 19,254 21,544 (80,623 ) 29,672 Condensed Consolidating Balance Sheets December 31, 2018 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 — — — 4 — 4 Accounts receivable — — 70 642 — 712 Intercompany advances 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 Property, plant, and equipment, net — — 3,136 6,317 — 9,453 GOODWILL AND OTHER ASSETS Goodwill — — 1,665 9,454 — 11,119 Restricted cash 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 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 Intercompany payables — — 45,347 5,913 (51,260 ) — Other 3 1 8 66 — 78 Current portion of deferred revenue — — 168 142 — 310 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 LIABILITIES Deferred revenue — — 971 210 — 1,181 Deferred income taxes, net 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 MEMBER'S EQUITY (DEFICIT) 33,766 33,134 (27,256 ) 15,550 (37,317 ) 17,877 TOTAL LIABILITIES AND MEMBER'S EQUITY $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 Condensed Consolidating Statements of Cash Flows Three Months Ended March 31, 2019 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 provided by operating activities $ 17 — 389 77 — 483 INVESTING ACTIVITIES Capital expenditures — — (189 ) (96 ) — (285 ) Net cash used in investing activities — — (189 ) (96 ) — (285 ) FINANCING ACTIVITIES Distributions (225 ) — — — — (225 ) Other — — — (1 ) — (1 ) Increase (decrease) due from affiliate, net 225 — (225 ) — — — Net cash used in financing activities — — (225 ) (1 ) — (226 ) Net increase (decrease) in cash, cash equivalents and restricted cash 17 — (25 ) (20 ) — (28 ) Cash, cash equivalents and restricted cash at beginning of period 17 — 173 82 — 272 Cash, cash equivalents and restricted cash at end of period $ 34 — 148 62 — 244 Condensed Consolidating Statements of Cash Flows Three Months Ended March 31, 2018 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 $ (8 ) — 490 89 — 571 INVESTING ACTIVITIES Capital expenditures — — (142 ) (110 ) — (252 ) Proceeds from sale of property, plant and equipment and other assets — — — 1 — 1 Deposits received on assets held for sale 34 — — — — 34 Net cash provided by (used in) investing activities 34 — (142 ) (109 ) — (217 ) FINANCING ACTIVITIES Distributions (390 ) — — — — (390 ) Other — — — (2 ) — (2 ) Increase (decrease) due from/to affiliates, net 390 — (390 ) — — — Net cash used in financing activities — — (390 ) (2 ) — (392 ) Net increase (decrease) in cash, cash equivalents and restricted cash 26 — (42 ) (22 ) — (38 ) Cash, cash equivalents and restricted cash at beginning of period 32 — 186 113 — 331 Cash, cash equivalents and restricted cash at end of period $ 58 — 144 91 — 293 |
Background (Policies)
Background (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our consolidated balance sheet as of December 31, 2018 , which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2018 . 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 first quarter of 2019 . We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue for three months ended March 31, 2019 and 2018 . |
Segments | Segments Our operations are integrated into and reported as part 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 have one reportable segment. |
New Accounting Pronouncements | Recently Adopted Accounting Pronouncements We adopted Accounting Standards Update ("ASU") 2016-02, Leases (Accounting Standard Codification "ASC" 842) , as of January 1, 2019, using the non-comparative transition option pursuant to ASU 2018-11. Therefore, we have not restated comparative period financial information for the effects of ASC 842, and we will not make the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we will recognize ASC 842's cumulative effect transition adjustment (discussed below) as of January 1, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things (i) allowed us to carry forward the historical lease classification; (ii) did not require us to reassess whether any expired or existing contracts are or contain leases under the new definition of a lease; and (iii) did not require us to reassess whether previously capitalized initial direct costs for any existing leases would qualify for capitalization under ASC 842. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We did not elect the hindsight practical expedient regarding the likelihood of exercising a lessee purchase option or assessing any impairment of right-of-use assets for existing leases. On March 5, 2019, the FASB issued ASU 2019-01 - Leases (ASC 842): Codification Improvements, effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in ASC 842, with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in ASC 820, Fair Value Measurement) should be applied. More importantly, the ASU also exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. Early adoption permits public companies to adopt concurrent with the transition to ASC 842 on leases. We adopted ASU 2019-01 as of January 1, 2019. Adoption of the new standard resulted in the recording of operating lease assets and operating lease liabilities of approximately $1.3 billion and $1.4 billion , respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings in the first quarter of 2019 and had no impact on cash flows. 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 are required to adopt the provisions of ASU 2016-13 no later than January 1, 2020. We expect to adopt ASU 2016-13 on January 1, 2020 and recognize the impacts through a cumulative adjustment to retained earnings as of the date of adoption. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of acquisition-related intangible assets | Goodwill, customer relationships and other intangible assets consisted of the following: March 31, 2019 December 31, 2018 (Dollars in millions) Goodwill $ 7,412 11,119 Customer relationships, less accumulated amortization of $1,006 and $833 $ 7,398 7,567 Other intangible assets subject to amortization: Trade names, less accumulated amortization of $37 and $30 93 100 Developed technology, less accumulated amortization of $84 and $67 329 310 Total other intangible assets, net $ 422 410 |
Schedule of estimated amortization expense of finite-lived acquisition-related intangible assets | We estimate that total amortization expense for intangible assets for the years ending December 31, 2019 through 2023 will be as follows: (Dollars in millions) 2019 (remaining nine months) $ 599 2020 800 2021 800 2022 796 2023 766 |
Schedule of Goodwill | The following table shows the rollforward of goodwill from December 31, 2018 through March 31, 2019 : (Dollars in millions) As of December 31, 2018 $ 11,119 Effect of foreign currency rate change 1 Impairment (3,708 ) As of March 31, 2019 $ 7,412 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from External Customers by Products and Services | The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Total revenue $ 2,046 2,087 Adjustments for non-ASC 606 revenue (1) (50 ) (44 ) Total revenue from contracts with customers $ 1,996 2,043 _____________________________________________________________________ (1) 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 March 31, 2019 and January 1, 2019: March 31, 2019 December 31, 2018 (Dollars in millions) Customer receivables (1) $ 699 712 Contract assets 18 19 Contract liabilities 399 393 (1) Gross customer receivables of $716 and $723 million , net of allowance for doubtful accounts of $17 and $11 million , at March 31, 2019 and December 31, 2018 , respectively. The following table provides information about revenue recognized for the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) $ 95 97 Performance obligations satisfied in previous periods — — |
Capitalized Contract Cost | The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 64 84 13 14 Costs incurred 18 26 15 23 Amortization (8 ) (13 ) (2 ) (2 ) End of period balance $ 74 97 26 35 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease, Cost | Lease expense consisted of the following: Three Months Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 104 Finance lease cost: Amortization of right-of-use assets 3 Interest on lease liability 3 Total finance lease cost 6 Total lease cost $ 110 Supplemental unaudited consolidated cash flow statement information related to leases: Three Months Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 110 Operating cash flows from finance leases 2 Financing cash flows from finance leases 1 |
Assets And Liabilities, Lessee | Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,246 Finance lease assets Property, plant and equipment, net of accumulated depreciation 154 Total leased assets $ 1,400 Liabilities Current Operating Other current liabilities $ 324 Finance Current portion of long-term debt 7 Noncurrent Operating Noncurrent operating lease liabilities 969 Finance Long-term debt 155 Total lease liabilities $ 1,455 Weighted-average remaining lease term (years) Operating leases 9.0 Finance leases 13.9 Weighted-average discount rate Operating leases 6.56 % Finance leases 5.68 % |
Lessee, Operating Lease, Liability, Maturity | As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 269 12 2020 285 15 2021 244 16 2022 188 16 2023 155 17 Thereafter 590 164 Total lease payments 1,731 240 Less: interest (438 ) (78 ) Total 1,293 162 Less: current portion (324 ) (7 ) Long-term portion $ 969 155 |
Finance Lease, Liability, Maturity | As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 269 12 2020 285 15 2021 244 16 2022 188 16 2023 155 17 Thereafter 590 164 Total lease payments 1,731 240 Less: interest (438 ) (78 ) Total 1,293 162 Less: current portion (324 ) (7 ) Long-term portion $ 969 155 |
Schedule of Future Minimum Lease Payments for Capital Leases | The future annual minimum payments under capital lease agreements 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 Rental Payments for Operating Leases | At December 31, 2018, our future rental commitments for operating leases were as follows: Operating Leases (Dollars in millions) 2019 $ 396 2020 259 2021 219 2022 164 2023 137 2024 and thereafter 613 Total future minimum payments (1) $ 1,788 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $29 million due in the future under non-cancelable subleases. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following table summarizes our long-term debt: Interest Rates Maturities March 31, 2019 December 31, 2018 (Dollars in millions) Level 3 Parent, LLC Senior notes (1) 5.750% 2022 $ 600 600 Subsidiaries Level 3 Financing, Inc. Senior notes (2) 5.125%-6.125% 2021 - 2026 5,315 5,315 Term loan (3) LIBOR + 2.25% 2024 4,611 4,611 Finance leases Various Various 162 163 Total long-term debt, excluding unamortized premiums 10,688 10,689 Unamortized premiums, net 147 155 Total long-term debt 10,835 10,844 Less current maturities (7 ) (6 ) Long-term debt, excluding current maturities $ 10,828 10,838 (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 is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain other subsidiaries. The Tranche B 2024 Term Loan had an interest rate of 4.736% as of March 31, 2019 and 4.754% as of December 31, 2018 . The interest rate on the Tranche B 2024 Term Loan is set with a minimum London Interbank Offered Rate ("LIBOR") of zero percent. |
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) | Set forth below is the aggregate principal amount of our long-term debt and finance leases (excluding unamortized premiums) maturing during the following years: (Dollars in millions) (1) 2019 (remaining nine months) $ 5 2020 6 2021 648 2022 1,609 2023 1,209 2023 and thereafter 7,211 Total long-term debt $ 10,688 (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. |
Severance and Leased Real Est_2
Severance and Leased Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at January 1, 2019 $ 19 Accrued to expense — Payments, net (4 ) Balance at March 31, 2019 $ 15 |
Products and Services Revenue (
Products and Services Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Our operating revenue for our products and services consisted of the following categories: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) IP and Data Services $ 979 1,003 Transport and Infrastructure 658 676 Voice and Collaboration 352 382 Other 2 1 Affiliate Services 55 25 Total operating revenue $ 2,046 2,087 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
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 finance lease and other obligations, as well as the input level used to determine the fair values indicated below: March 31, 2019 December 31, 2018 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance lease and other obligations 2 $ 10,673 10,503 10,681 10,089 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2019 : Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2018 $ 5 $ (176 ) (171 ) Other comprehensive income before reclassifications, net of tax — 3 3 Net other comprehensive income — 3 3 Balance at March 31, 2019 $ 5 $ (173 ) (168 ) The table below summarizes changes in accumulated other comprehensive income recorded on our consolidated balance sheets by component for the three months ended March 31, 2018 : Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2017 $ 18 18 Other comprehensive income before reclassifications, net of tax 72 72 Amounts reclassified from accumulated other comprehensive income 6 6 Net other comprehensive income 78 78 Balance at March 31, 2018 $ 96 96 |
Condensed Consolidating Finan_2
Condensed Consolidating Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Consolidating Statements of Comprehensive Income (Loss) | Condensed Consolidating Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2019 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 $ — — 955 1,036 — 1,991 Operating revenue - affiliates — — 55 202 (202 ) 55 Total operating revenue — — 1,010 1,238 (202 ) 2,046 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 504 463 — 967 Selling, general and administrative — 1 369 160 (202 ) 328 Operating expenses - affiliates — — 22 24 — 46 Depreciation and amortization — — 145 245 — 390 Goodwill Impairment — — 1,369 2,339 — 3,708 Total operating expenses — 1 2,409 3,231 (202 ) 5,439 OPERATING (LOSS) INCOME — (1 ) (1,399 ) (1,993 ) — (3,393 ) OTHER (EXPENSE) INCOME Interest income - affiliate 16 — — — — 16 Interest expense (8 ) (119 ) — (4 ) — (131 ) Interest income (expense) - intercompany, net 933 164 (1,760 ) 663 — — Equity in net (losses) earnings of subsidiaries (4,519 ) (4,593 ) (1,797 ) — 10,909 — Other (expense) income, net (8 ) — 13 7 — 12 Total other (expense) income, net (3,586 ) (4,548 ) (3,544 ) 666 10,909 (103 ) (LOSS) INCOME BEFORE INCOME TAXES (3,586 ) (4,549 ) (4,943 ) (1,327 ) 10,909 (3,496 ) Income tax (benefit) expense — (30 ) 18 101 — 89 NET (LOSS) INCOME (3,586 ) (4,519 ) (4,961 ) (1,428 ) 10,909 (3,585 ) Other comprehensive income (loss), net of income taxes 3 — — 3 (3 ) 3 COMPREHENSIVE (LOSS) INCOME $ (3,583 ) (4,519 ) (4,961 ) (1,425 ) 10,906 (3,582 ) Condensed Consolidating Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2018 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 $ — — 956 1,106 — 2,062 Operating revenue - affiliates — — 25 40 (40 ) 25 Total operating revenue — — 981 1,146 (40 ) 2,087 OPERATING EXPENSES Cost of services and products (exclusive of depreciation and amortization) — — 589 409 — 998 Selling, general and administrative expenses — 1 259 124 (40 ) 344 Operating expenses - affiliates — — 53 — — 53 Depreciation and amortization — — 170 261 — 431 Total operating expenses — 1 1,071 794 (40 ) 1,826 OPERATING INCOME (LOSS) — (1 ) (90 ) 352 — 261 OTHER INCOME (EXPENSE) Interest income - affiliate 16 — — — — 16 Interest expense (8 ) (108 ) (1 ) (3 ) — (120 ) Interest income (expense) - intercompany, net 355 608 (881 ) (82 ) — — Equity in net earnings (losses) of subsidiaries (315 ) (839 ) (1 ) — 1,155 — Other income, net — — 1 6 — 7 Total other income (expense), net 48 (339 ) (882 ) (79 ) 1,155 (97 ) INCOME (LOSS) BEFORE INCOME TAXES 48 (340 ) (972 ) 273 1,155 164 Income tax (benefit) expense (14 ) (25 ) 47 94 — 102 NET INCOME (LOSS) 62 (315 ) (1,019 ) 179 1,155 62 Other comprehensive income (loss), net of income taxes 72 — — 72 (72 ) 72 COMPREHENSIVE INCOME (LOSS) $ 134 (315 ) (1,019 ) 251 1,083 134 |
Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheets March 31, 2019 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 $ 18 — 140 59 — 217 Restricted cash — — — 2 — 2 Accounts receivable — — 45 654 — 699 Intercompany advances 17,556 24,004 7,829 2,887 (52,276 ) — Note receivable - affiliate 1,825 — — — — 1,825 Other — 9 138 135 — 282 Total current assets 19,399 24,013 8,152 3,737 (52,276 ) 3,025 Property, plant, and equipment, net — — 3,225 6,262 — 9,487 GOODWILL AND OTHER ASSETS Goodwill — — 362 7,050 — 7,412 Operating lease assets — — 1,294 500 (548 ) 1,246 Restricted cash 16 — 8 1 — 25 Customer relationships, net — — 3,627 3,771 — 7,398 Other intangible assets, net — — 420 2 — 422 Investment in subsidiaries 11,023 13,322 2,064 — (26,409 ) — Other, net 274 1,450 102 221 (1,390 ) 657 Total goodwill and other assets 11,313 14,772 7,877 11,545 (28,347 ) 17,160 TOTAL ASSETS $ 30,712 38,785 19,254 21,544 (80,623 ) 29,672 LIABILITIES AND MEMBER'S EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ — — — 7 — 7 Accounts payable — — 336 318 — 654 Accounts payable - affiliates 80 16 283 (14 ) — 365 Accrued expenses and other liabilities Salaries and benefits — — 120 31 — 151 Income and other taxes — 6 57 42 — 105 Current operating lease liabilities — — 288 153 (117 ) 324 Interest 3 86 1 4 — 94 Intercompany payables — — 47,248 5,028 (52,276 ) — Other 2 1 4 55 — 62 Current portion of deferred revenue — — 162 148 — 310 Total current liabilities 85 109 48,499 5,772 (52,393 ) 2,072 LONG-TERM DEBT 612 10,061 6 149 — 10,828 DEFERRED REVENUE AND OTHER LIABILITIES Deferred revenue — — 964 211 — 1,175 Deferred income taxes, net 56 — 817 770 (1,390 ) 253 Noncurrent operating lease liabilities — — 1,037 363 (431 ) 969 Other — — 148 157 — 305 Total deferred revenue and other liabilities 56 — 2,966 1,501 (1,821 ) 2,702 MEMBER'S EQUITY (DEFICIT) 29,959 28,615 (32,217 ) 14,122 (26,409 ) 14,070 TOTAL LIABILITIES AND MEMBER'S EQUITY $ 30,712 38,785 19,254 21,544 (80,623 ) 29,672 Condensed Consolidating Balance Sheets December 31, 2018 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 — — — 4 — 4 Accounts receivable — — 70 642 — 712 Intercompany advances 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 Property, plant, and equipment, net — — 3,136 6,317 — 9,453 GOODWILL AND OTHER ASSETS Goodwill — — 1,665 9,454 — 11,119 Restricted cash 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 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 Intercompany payables — — 45,347 5,913 (51,260 ) — Other 3 1 8 66 — 78 Current portion of deferred revenue — — 168 142 — 310 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 LIABILITIES Deferred revenue — — 971 210 — 1,181 Deferred income taxes, net 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 MEMBER'S EQUITY (DEFICIT) 33,766 33,134 (27,256 ) 15,550 (37,317 ) 17,877 TOTAL LIABILITIES AND MEMBER'S EQUITY $ 34,511 43,296 21,088 23,305 (89,909 ) 32,291 |
Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows Three Months Ended March 31, 2019 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 provided by operating activities $ 17 — 389 77 — 483 INVESTING ACTIVITIES Capital expenditures — — (189 ) (96 ) — (285 ) Net cash used in investing activities — — (189 ) (96 ) — (285 ) FINANCING ACTIVITIES Distributions (225 ) — — — — (225 ) Other — — — (1 ) — (1 ) Increase (decrease) due from affiliate, net 225 — (225 ) — — — Net cash used in financing activities — — (225 ) (1 ) — (226 ) Net increase (decrease) in cash, cash equivalents and restricted cash 17 — (25 ) (20 ) — (28 ) Cash, cash equivalents and restricted cash at beginning of period 17 — 173 82 — 272 Cash, cash equivalents and restricted cash at end of period $ 34 — 148 62 — 244 Condensed Consolidating Statements of Cash Flows Three Months Ended March 31, 2018 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 $ (8 ) — 490 89 — 571 INVESTING ACTIVITIES Capital expenditures — — (142 ) (110 ) — (252 ) Proceeds from sale of property, plant and equipment and other assets — — — 1 — 1 Deposits received on assets held for sale 34 — — — — 34 Net cash provided by (used in) investing activities 34 — (142 ) (109 ) — (217 ) FINANCING ACTIVITIES Distributions (390 ) — — — — (390 ) Other — — — (2 ) — (2 ) Increase (decrease) due from/to affiliates, net 390 — (390 ) — — — Net cash used in financing activities — — (390 ) (2 ) — (392 ) Net increase (decrease) in cash, cash equivalents and restricted cash 26 — (42 ) (22 ) — (38 ) Cash, cash equivalents and restricted cash at beginning of period 32 — 186 113 — 331 Cash, cash equivalents and restricted cash at end of period $ 58 — 144 91 — 293 |
Background (Details)
Background (Details) $ in Millions | 1 Months Ended | 3 Months Ended | ||
May 10, 2019USD ($) | Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | Jan. 01, 2019USD ($) | |
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Number of reportable segments | segment | 1 | |||
Operating lease assets | $ 1,246 | |||
Operating lease liability | 1,293 | |||
Payments of dividends | $ 225 | $ 390 | ||
Subsequent Event | ||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Payments of dividends | $ 90 | |||
Accounting Standards Update 2016-02 | ||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Operating lease assets | $ 1,300 | |||
Operating lease liability | $ 1,400 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 7,412 | $ 11,119 |
Customer Contracts And Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | 7,398 | 7,567 |
Accumulated amortization | 1,006 | 833 |
Trade Names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | 93 | 100 |
Accumulated amortization | 37 | 30 |
Patents and Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | 329 | 310 |
Accumulated amortization | 84 | 67 |
Other Intangible Assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 422 | $ 410 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 3,708 | $ 0 |
Acquired finite-lived intangible asset amortization expense | 193 | $ 194 |
Intangible assets, gross, including goodwill | $ 16,400 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details) $ in Millions | Mar. 31, 2019USD ($) |
Estimated amortization expense of finite-lived acquisition-related intangible assets | |
2019 (remaining nine months) | $ 599 |
2020 | 800 |
2021 | 800 |
2022 | 796 |
2023 | $ 766 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill [Roll Forward] | ||
As of December 31, 2018 | $ 11,119 | |
Effect of foreign currency rate change | 1 | |
Impairment | (3,708) | $ 0 |
As of March 31, 2019 | $ 7,412 |
Revenue Recognition - Revenue N
Revenue Recognition - Revenue Not Subject to Topic 606 (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Total revenue | $ 2,046 | $ 2,087 |
Adjustments for non-ASC 606 revenue | (50) | (44) |
Total revenue from contracts with customers | $ 1,996 | $ 2,043 |
Revenue Recognition - Contract
Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Customer receivables | $ 699 | $ 712 |
Contract assets | 18 | 19 |
Contract liabilities | 399 | 393 |
Accounts receivable, gross | 716 | 723 |
Allowance for doubtful accounts receivable | $ 17 | $ 11 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) $ in Billions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 75.00% |
Remaining performance obligation, timing of satisfaction | 2 years 9 months |
Minimum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 1 year |
Length of customer life | 12 months |
Maximum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 7 years |
Length of customer life | 60 months |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized from amounts included in contract liability at the beginning of the period (January 1, 2018) | $ 95 | $ 97 |
Revenue recognized from performance obligations satisfied in previous periods | $ 0 | $ 0 |
Revenue Recognition - Capitaliz
Revenue Recognition - Capitalized Contract Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Contract Acquisition Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | $ 64 | $ 13 |
Costs incurred | 18 | 15 |
Amortization | (8) | (2) |
End of period balance | 74 | 26 |
Contract Fulfillment Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | 84 | 14 |
Costs incurred | 26 | 23 |
Amortization | (13) | (2) |
End of period balance | $ 97 | $ 35 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 1,246 | ||
Operating lease liability | 1,293 | ||
Rental income | $ 50 | $ 43 | |
Accounting Standards Update 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 1,300 | ||
Operating lease liability | 1,400 | ||
Accounting Standards Update 2016-02 | Affiliated Entity | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease liability | 30 | ||
Accounting Standards Update 2016-02 | Retained Earnings | |||
Lessee, Lease, Description [Line Items] | |||
Cumulative effect of new accounting principle in period of adoption | $ 30 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating and short-term lease cost | $ 104 |
Finance lease cost: | |
Amortization of right-of-use assets | 3 |
Interest on lease liability | 3 |
Total finance lease cost | 6 |
Total lease cost | $ 110 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) $ in Millions | Mar. 31, 2019USD ($) |
Assets | |
Operating lease assets | $ 1,246 |
Finance lease assets | 154 |
Total leased assets | 1,400 |
Current | |
Operating | 324 |
Finance | 7 |
Noncurrent | |
Operating | 969 |
Finance | 155 |
Lease, Liability | $ 1,455 |
Weighted-average remaining lease term (years) | |
Operating leases | 9 years |
Finance leases | 13 years 10 months 24 days |
Weighted-average discount rate | |
Operating leases | 6.56% |
Finance leases | 5.68% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 110 |
Operating cash flows from finance leases | 2 |
Financing cash flows from finance leases | $ 1 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Mar. 31, 2019USD ($) |
Operating Lease Liabilities, Payments Due [Abstract] | |
2019 (remaining nine months) | $ 269 |
2020 | 285 |
2021 | 244 |
2022 | 188 |
2023 | 155 |
Thereafter | 590 |
Total lease payments | 1,731 |
Less: interest | (438) |
Total | 1,293 |
Less: current portion | (324) |
Long-term portion | 969 |
Finance Lease Liabilities, Payments, Due [Abstract] | |
2019 (remaining nine months) | 12 |
2020 | 15 |
2021 | 16 |
2022 | 16 |
2023 | 17 |
Thereafter | 164 |
Total lease payments | 240 |
Less: interest | (78) |
Total | 162 |
Less: current portion | (7) |
Long-term portion | $ 155 |
Leases - Future Capital Leases
Leases - Future Capital Leases Payments (Details) $ in Millions | Mar. 31, 2019USD ($) |
Leases [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 |
Leases - Future Right-of-Way an
Leases - Future Right-of-Way and Operating Lease Payments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 396 |
2020 | 259 |
2021 | 219 |
2022 | 164 |
2023 | 137 |
2024 and thereafter | 613 |
Total future minimum payments | 1,788 |
Future minimum sublease rentals | $ 29 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Long-term debt | ||
Total long-term debt, excluding unamortized premiums | $ 10,688 | $ 10,689 |
Unamortized premiums, net | 147 | 155 |
Total long-term debt | 10,835 | 10,844 |
Less current maturities | (7) | (6) |
Long-term debt, excluding current maturities | $ 10,828 | 10,838 |
Senior Notes, 5.75% Due 2022 | ||
Long-term debt | ||
Stated interest rate | 5.75% | |
Total long-term debt, excluding unamortized premiums | $ 600 | 600 |
Senior Notes with Varied Maturity Date | ||
Long-term debt | ||
Total long-term debt, excluding unamortized premiums | $ 5,315 | 5,315 |
Senior Notes with Varied Maturity Date | Minimum | ||
Long-term debt | ||
Stated interest rate | 5.125% | |
Senior Notes with Varied Maturity Date | Maximum | ||
Long-term debt | ||
Stated interest rate | 6.125% | |
Tranche B 2024 | ||
Long-term debt | ||
Total long-term debt, excluding unamortized premiums | $ 4,611 | $ 4,611 |
Effective percentage | 4.736% | 4.754% |
Tranche B 2024 | London Interbank Offered Rate (LIBOR) | ||
Long-term debt | ||
Basis spread on variable rate | 2.25% | |
Tranche B 2024 | London Interbank Offered Rate (LIBOR) | Minimum | ||
Long-term debt | ||
Basis spread on variable rate | 0.00% | |
Finance leases | ||
Long-term debt | ||
Total long-term debt, excluding unamortized premiums | $ 162 | $ 163 |
Long-Term Debt - Debt Maturitie
Long-Term Debt - Debt Maturities (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2019 (remaining nine months) | $ 5 | |
2020 | 6 | |
2021 | 648 | |
2022 | 1,609 | |
2023 | 1,209 | |
2023 and thereafter | 7,211 | |
Total long-term debt | $ 10,688 | $ 10,689 |
Severance and Leased Real Est_3
Severance and Leased Real Estate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Severance | ||
Restructuring Reserve [Roll Forward] | ||
Balance at January 1, 2019 | $ 19 | |
Accrued to expense | 0 | |
Payments, net | (4) | |
Balance at March 31, 2019 | $ 15 | |
Accounting Standards Update 2016-02 | ||
Restructuring Cost and Reserve [Line Items] | ||
Lease obligation | $ 47 |
Products and Services Revenue -
Products and Services Revenue - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)category | Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | ||
Number of categories of products and services | category | 5 | |
Operating revenues | $ 2,046 | $ 2,087 |
USF Surcharge and Transaction Taxes | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | $ 109 | $ 107 |
Products and Services Revenue_2
Products and Services Revenue - Operating Revenues for Products and Services (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Operating revenues | $ 2,046 | $ 2,087 |
IP & Data Services | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | 979 | 1,003 |
Transport & Infrastructure | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | 658 | 676 |
Voice & Collaboration | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | 352 | 382 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | 2 | 1 |
Affiliate Revenues | ||
Disaggregation of Revenue [Line Items] | ||
Operating revenues | $ 55 | $ 25 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Liabilities, Recurring (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance lease and other obligations | $ 10,673 | $ 10,681 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance lease and other obligations | $ 10,503 | $ 10,089 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items - Lawsuits (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($)Employeecontract | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 70 |
Peruvian Tax Litigation, Before Interest | Pending Litigation | |
Loss Contingencies [Line Items] | |
Asserted claim | 26 |
Peruvian Tax Litigation | Pending Litigation | |
Loss Contingencies [Line Items] | |
Asserted claim | 10 |
Brazilian Tax Claims | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 37 |
United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. | |
Loss Contingencies [Line Items] | |
Number of former employees names in lawsuit | Employee | 2 |
Number of government contracts in question | contract | 2 |
Damages sought, value | $ 50 |
Commitments, Contingencies an_3
Commitments, Contingencies and Other Items - Other Commitments (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Loss Contingencies [Line Items] | ||
Amount outstanding under letters of credit or other similar obligations | $ 30,000,000 | $ 30,000,000 |
Collateralized by cash, that is reflected on the consolidated balance sheets as restricted cash | 24,000,000 | $ 24,000,000 |
Unfavorable Regulatory Action | ||
Loss Contingencies [Line Items] | ||
Estimate of possible loss | $ 100,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 17,877 | |
Other comprehensive income before reclassifications, net of tax | 3 | $ 72 |
Amounts reclassified from accumulated other comprehensive income | 6 | |
Net other comprehensive income | 3 | 78 |
Balance at end of period | 14,070 | 19,020 |
Pension Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 5 | |
Other comprehensive income before reclassifications, net of tax | 0 | |
Net other comprehensive income | 0 | |
Balance at end of period | 5 | |
Foreign Currency Translation Adjustment and Other | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (176) | 18 |
Other comprehensive income before reclassifications, net of tax | 3 | 72 |
Amounts reclassified from accumulated other comprehensive income | 6 | |
Net other comprehensive income | 3 | 78 |
Balance at end of period | (173) | 96 |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (171) | 18 |
Balance at end of period | $ (168) | $ 96 |
Condensed Consolidating Finan_3
Condensed Consolidating Financial Information - Statements of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING REVENUE | ||
Operating revenues | $ 2,046 | $ 2,087 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 967 | 998 |
Selling, general and administrative | 328 | 344 |
Operating expenses - affiliates | 46 | 53 |
Depreciation and amortization | 390 | 431 |
Goodwill impairment | 3,708 | 0 |
Total operating expenses | 5,439 | 1,826 |
OPERATING (LOSS) INCOME | (3,393) | 261 |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 16 | 16 |
Interest expense | (131) | (120) |
Interest income (expense) - intercompany, net | 0 | 0 |
Equity in net (losses) earnings of subsidiaries | 0 | 0 |
Other income, net | 12 | 7 |
Total other income (expense), net | (103) | (97) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,496) | 164 |
Income tax (benefit) expense | 89 | 102 |
NET (LOSS) INCOME | (3,585) | 62 |
Other comprehensive income | 3 | 72 |
COMPREHENSIVE (LOSS) INCOME | (3,582) | 134 |
Eliminations | ||
OPERATING REVENUE | ||
Operating revenues | (202) | (40) |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 |
Selling, general and administrative | (202) | (40) |
Operating expenses - affiliates | 0 | 0 |
Depreciation and amortization | 0 | 0 |
Goodwill impairment | 0 | |
Total operating expenses | (202) | (40) |
OPERATING (LOSS) INCOME | 0 | 0 |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 0 | 0 |
Interest expense | 0 | 0 |
Interest income (expense) - intercompany, net | 0 | 0 |
Equity in net (losses) earnings of subsidiaries | 10,909 | 1,155 |
Other income, net | 0 | 0 |
Total other income (expense), net | 10,909 | 1,155 |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 10,909 | 1,155 |
Income tax (benefit) expense | 0 | 0 |
NET (LOSS) INCOME | 10,909 | 1,155 |
Other comprehensive income | (3) | (72) |
COMPREHENSIVE (LOSS) INCOME | 10,906 | 1,083 |
Level 3 Communications, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 |
Selling, general and administrative | 0 | 0 |
Operating expenses - affiliates | 0 | 0 |
Depreciation and amortization | 0 | 0 |
Goodwill impairment | 0 | |
Total operating expenses | 0 | 0 |
OPERATING (LOSS) INCOME | 0 | 0 |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 16 | 16 |
Interest expense | (8) | (8) |
Interest income (expense) - intercompany, net | 933 | 355 |
Equity in net (losses) earnings of subsidiaries | (4,519) | (315) |
Other income, net | (8) | 0 |
Total other income (expense), net | (3,586) | 48 |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (3,586) | 48 |
Income tax (benefit) expense | 0 | (14) |
NET (LOSS) INCOME | (3,586) | 62 |
Other comprehensive income | 3 | 72 |
COMPREHENSIVE (LOSS) INCOME | (3,583) | 134 |
Level 3 Financing, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 0 | 0 |
Selling, general and administrative | 1 | 1 |
Operating expenses - affiliates | 0 | 0 |
Depreciation and amortization | 0 | 0 |
Goodwill impairment | 0 | |
Total operating expenses | 1 | 1 |
OPERATING (LOSS) INCOME | (1) | (1) |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 0 | 0 |
Interest expense | (119) | (108) |
Interest income (expense) - intercompany, net | 164 | 608 |
Equity in net (losses) earnings of subsidiaries | (4,593) | (839) |
Other income, net | 0 | 0 |
Total other income (expense), net | (4,548) | (339) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (4,549) | (340) |
Income tax (benefit) expense | (30) | (25) |
NET (LOSS) INCOME | (4,519) | (315) |
Other comprehensive income | 0 | 0 |
COMPREHENSIVE (LOSS) INCOME | (4,519) | (315) |
Level 3 Communications, LLC | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 1,010 | 981 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 504 | 589 |
Selling, general and administrative | 369 | 259 |
Operating expenses - affiliates | 22 | 53 |
Depreciation and amortization | 145 | 170 |
Goodwill impairment | 1,369 | |
Total operating expenses | 2,409 | 1,071 |
OPERATING (LOSS) INCOME | (1,399) | (90) |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 0 | 0 |
Interest expense | 0 | (1) |
Interest income (expense) - intercompany, net | (1,760) | (881) |
Equity in net (losses) earnings of subsidiaries | (1,797) | (1) |
Other income, net | 13 | 1 |
Total other income (expense), net | (3,544) | (882) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (4,943) | (972) |
Income tax (benefit) expense | 18 | 47 |
NET (LOSS) INCOME | (4,961) | (1,019) |
Other comprehensive income | 0 | 0 |
COMPREHENSIVE (LOSS) INCOME | (4,961) | (1,019) |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 1,238 | 1,146 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 463 | 409 |
Selling, general and administrative | 160 | 124 |
Operating expenses - affiliates | 24 | 0 |
Depreciation and amortization | 245 | 261 |
Goodwill impairment | 2,339 | |
Total operating expenses | 3,231 | 794 |
OPERATING (LOSS) INCOME | (1,993) | 352 |
OTHER INCOME (EXPENSE) | ||
Interest income - affiliate | 0 | 0 |
Interest expense | (4) | (3) |
Interest income (expense) - intercompany, net | 663 | (82) |
Equity in net (losses) earnings of subsidiaries | 0 | 0 |
Other income, net | 7 | 6 |
Total other income (expense), net | 666 | (79) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (1,327) | 273 |
Income tax (benefit) expense | 101 | 94 |
NET (LOSS) INCOME | (1,428) | 179 |
Other comprehensive income | 3 | 72 |
COMPREHENSIVE (LOSS) INCOME | (1,425) | 251 |
Non-Affiliate Revenue | ||
OPERATING REVENUE | ||
Operating revenues | 1,991 | 2,062 |
Non-Affiliate Revenue | Eliminations | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
Non-Affiliate Revenue | Level 3 Communications, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
Non-Affiliate Revenue | Level 3 Financing, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
Non-Affiliate Revenue | Level 3 Communications, LLC | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 955 | 956 |
Non-Affiliate Revenue | Other Non-Guarantor Subsidiaries | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 1,036 | 1,106 |
Affiliate Revenues | ||
OPERATING REVENUE | ||
Operating revenues | 55 | 25 |
Affiliate Revenues | Eliminations | ||
OPERATING REVENUE | ||
Operating revenues | (202) | (40) |
Affiliate Revenues | Level 3 Communications, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
Affiliate Revenues | Level 3 Financing, Inc. | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 0 | 0 |
Affiliate Revenues | Level 3 Communications, LLC | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | 55 | 25 |
Affiliate Revenues | Other Non-Guarantor Subsidiaries | Reportable Legal Entities | ||
OPERATING REVENUE | ||
Operating revenues | $ 202 | $ 40 |
Condensed Consolidating Finan_4
Condensed Consolidating Financial Information - Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 217 | $ 243 | |
Restricted cash | 2 | 4 | |
Accounts receivable | 699 | 712 | |
Intercompany advances | 0 | 0 | |
Note receivable - affiliate | 1,825 | 1,825 | |
Other | 282 | 234 | |
Total current assets | 3,025 | 3,018 | |
Property, plant, and equipment, net | 9,487 | 9,453 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 7,412 | 11,119 | |
Operating lease assets | 1,246 | ||
Restricted cash | 25 | 25 | |
Investment in subsidiaries | 0 | 0 | |
Other, net | 657 | 699 | |
Total goodwill and other assets | 17,160 | 19,820 | |
TOTAL ASSETS | 29,672 | 32,291 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 7 | 6 | |
Accounts payable | 654 | 726 | |
Accounts payable - affiliates | 365 | 246 | |
Salaries and benefits | 151 | 233 | |
Income and other taxes | 105 | 130 | |
Current operating lease liabilities | 324 | ||
Interest | 94 | 95 | |
Intercompany payables | 0 | 0 | |
Other | 62 | 78 | |
Current portion of deferred revenue | 310 | 310 | |
Total current liabilities | 2,072 | 1,824 | |
LONG-TERM DEBT | 10,828 | 10,838 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 1,175 | 1,181 | |
Deferred income taxes, net | 253 | 202 | |
Noncurrent operating lease liabilities | 969 | ||
Other | 305 | 369 | |
Total deferred revenue and other liabilities | 2,702 | 1,752 | |
MEMBER'S EQUITY (DEFICIT) | 14,070 | 17,877 | $ 19,020 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 29,672 | 32,291 | |
Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 7,398 | 7,567 | |
Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 422 | 410 | |
Eliminations | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Intercompany advances | (52,276) | (51,260) | |
Note receivable - affiliate | 0 | 0 | |
Other | 0 | 0 | |
Total current assets | (52,276) | (51,260) | |
Property, plant, and equipment, net | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Operating lease assets | (548) | ||
Restricted cash | 0 | 0 | |
Investment in subsidiaries | (26,409) | (37,317) | |
Other, net | (1,390) | (1,332) | |
Total goodwill and other assets | (28,347) | (38,649) | |
TOTAL ASSETS | (80,623) | (89,909) | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 0 | |
Accounts payable - affiliates | 0 | 0 | |
Salaries and benefits | 0 | 0 | |
Income and other taxes | 0 | 0 | |
Current operating lease liabilities | (117) | ||
Interest | 0 | 0 | |
Intercompany payables | (52,276) | (51,260) | |
Other | 0 | 0 | |
Current portion of deferred revenue | 0 | 0 | |
Total current liabilities | (52,393) | (51,260) | |
LONG-TERM DEBT | 0 | 0 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 0 | 0 | |
Deferred income taxes, net | (1,390) | (1,332) | |
Noncurrent operating lease liabilities | (431) | ||
Other | 0 | 0 | |
Total deferred revenue and other liabilities | (1,821) | (1,332) | |
MEMBER'S EQUITY (DEFICIT) | (26,409) | (37,317) | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | (80,623) | (89,909) | |
Eliminations | Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Eliminations | Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Level 3 Communications, Inc. | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 18 | 2 | |
Restricted cash | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Intercompany advances | 17,556 | 16,852 | |
Note receivable - affiliate | 1,825 | 1,825 | |
Other | 0 | 1 | |
Total current assets | 19,399 | 18,680 | |
Property, plant, and equipment, net | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Operating lease assets | 0 | ||
Restricted cash | 16 | 15 | |
Investment in subsidiaries | 11,023 | 15,541 | |
Other, net | 274 | 275 | |
Total goodwill and other assets | 11,313 | 15,831 | |
TOTAL ASSETS | 30,712 | 34,511 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 0 | |
Accounts payable - affiliates | 80 | 62 | |
Salaries and benefits | 0 | 0 | |
Income and other taxes | 0 | 0 | |
Current operating lease liabilities | 0 | ||
Interest | 3 | 11 | |
Intercompany payables | 0 | 0 | |
Other | 2 | 3 | |
Current portion of deferred revenue | 0 | 0 | |
Total current liabilities | 85 | 76 | |
LONG-TERM DEBT | 612 | 613 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 0 | 0 | |
Deferred income taxes, net | 56 | 56 | |
Noncurrent operating lease liabilities | 0 | ||
Other | 0 | 0 | |
Total deferred revenue and other liabilities | 56 | 56 | |
MEMBER'S EQUITY (DEFICIT) | 29,959 | 33,766 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 30,712 | 34,511 | |
Level 3 Communications, Inc. | Reportable Legal Entities | Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Level 3 Communications, Inc. | Reportable Legal Entities | Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Level 3 Financing, Inc. | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash | 0 | 0 | |
Accounts receivable | 0 | 0 | |
Intercompany advances | 24,004 | 23,957 | |
Note receivable - affiliate | 0 | 0 | |
Other | 9 | 3 | |
Total current assets | 24,013 | 23,960 | |
Property, plant, and equipment, net | 0 | 0 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 0 | 0 | |
Operating lease assets | 0 | ||
Restricted cash | 0 | 0 | |
Investment in subsidiaries | 13,322 | 17,915 | |
Other, net | 1,450 | 1,421 | |
Total goodwill and other assets | 14,772 | 19,336 | |
TOTAL ASSETS | 38,785 | 43,296 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 0 | |
Accounts payable | 0 | 0 | |
Accounts payable - affiliates | 16 | 11 | |
Salaries and benefits | 0 | 0 | |
Income and other taxes | 6 | 4 | |
Current operating lease liabilities | 0 | ||
Interest | 86 | 78 | |
Intercompany payables | 0 | 0 | |
Other | 1 | 1 | |
Current portion of deferred revenue | 0 | 0 | |
Total current liabilities | 109 | 94 | |
LONG-TERM DEBT | 10,061 | 10,068 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 0 | 0 | |
Deferred income taxes, net | 0 | 0 | |
Noncurrent operating lease liabilities | 0 | ||
Other | 0 | 0 | |
Total deferred revenue and other liabilities | 0 | 0 | |
MEMBER'S EQUITY (DEFICIT) | 28,615 | 33,134 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 38,785 | 43,296 | |
Level 3 Financing, Inc. | Reportable Legal Entities | Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Level 3 Financing, Inc. | Reportable Legal Entities | Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 0 | 0 | |
Level 3 Communications, LLC | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 140 | 164 | |
Restricted cash | 0 | 0 | |
Accounts receivable | 45 | 70 | |
Intercompany advances | 7,829 | 7,744 | |
Note receivable - affiliate | 0 | 0 | |
Other | 138 | 97 | |
Total current assets | 8,152 | 8,075 | |
Property, plant, and equipment, net | 3,225 | 3,136 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 362 | 1,665 | |
Operating lease assets | 1,294 | ||
Restricted cash | 8 | 9 | |
Investment in subsidiaries | 2,064 | 3,861 | |
Other, net | 102 | 110 | |
Total goodwill and other assets | 7,877 | 9,877 | |
TOTAL ASSETS | 19,254 | 21,088 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 0 | 1 | |
Accounts payable | 336 | 380 | |
Accounts payable - affiliates | 283 | 162 | |
Salaries and benefits | 120 | 189 | |
Income and other taxes | 57 | 72 | |
Current operating lease liabilities | 288 | ||
Interest | 1 | 1 | |
Intercompany payables | 47,248 | 45,347 | |
Other | 4 | 8 | |
Current portion of deferred revenue | 162 | 168 | |
Total current liabilities | 48,499 | 46,328 | |
LONG-TERM DEBT | 6 | 7 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 964 | 971 | |
Deferred income taxes, net | 817 | 841 | |
Noncurrent operating lease liabilities | 1,037 | ||
Other | 148 | 197 | |
Total deferred revenue and other liabilities | 2,966 | 2,009 | |
MEMBER'S EQUITY (DEFICIT) | (32,217) | (27,256) | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 19,254 | 21,088 | |
Level 3 Communications, LLC | Reportable Legal Entities | Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 3,627 | 3,823 | |
Level 3 Communications, LLC | Reportable Legal Entities | Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 420 | 409 | |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 59 | 77 | |
Restricted cash | 2 | 4 | |
Accounts receivable | 654 | 642 | |
Intercompany advances | 2,887 | 2,707 | |
Note receivable - affiliate | 0 | 0 | |
Other | 135 | 133 | |
Total current assets | 3,737 | 3,563 | |
Property, plant, and equipment, net | 6,262 | 6,317 | |
GOODWILL AND OTHER ASSETS | |||
Goodwill | 7,050 | 9,454 | |
Operating lease assets | 500 | ||
Restricted cash | 1 | 1 | |
Investment in subsidiaries | 0 | 0 | |
Other, net | 221 | 225 | |
Total goodwill and other assets | 11,545 | 13,425 | |
TOTAL ASSETS | 21,544 | 23,305 | |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 7 | 5 | |
Accounts payable | 318 | 346 | |
Accounts payable - affiliates | (14) | 11 | |
Salaries and benefits | 31 | 44 | |
Income and other taxes | 42 | 54 | |
Current operating lease liabilities | 153 | ||
Interest | 4 | 5 | |
Intercompany payables | 5,028 | 5,913 | |
Other | 55 | 66 | |
Current portion of deferred revenue | 148 | 142 | |
Total current liabilities | 5,772 | 6,586 | |
LONG-TERM DEBT | 149 | 150 | |
DEFERRED REVENUE AND OTHER LIABILITIES | |||
Deferred revenue | 211 | 210 | |
Deferred income taxes, net | 770 | 637 | |
Noncurrent operating lease liabilities | 363 | ||
Other | 157 | 172 | |
Total deferred revenue and other liabilities | 1,501 | 1,019 | |
MEMBER'S EQUITY (DEFICIT) | 14,122 | 15,550 | |
TOTAL LIABILITIES AND MEMBER'S EQUITY | 21,544 | 23,305 | |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | Customer Contracts And Relationships | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | 3,771 | 3,744 | |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | Other Intangible Assets | |||
GOODWILL AND OTHER ASSETS | |||
Intangible assets, net | $ 2 | $ 1 |
Condensed Consolidating Finan_5
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | $ 483 | $ 571 |
INVESTING ACTIVITIES | ||
Capital expenditures | (285) | (252) |
Proceeds from sale of property, plant and equipment and other assets | 0 | 1 |
Deposits received on assets held for sale | 0 | 34 |
Net cash used in investing activities | (285) | (217) |
FINANCING ACTIVITIES | ||
Distributions | (225) | (390) |
Other | (1) | (2) |
Increase (decrease) due from/to affiliates, net | 0 | 0 |
Net cash used in financing activities | (226) | (392) |
Net decrease in cash, cash equivalents and restricted cash | (28) | (38) |
Cash, cash equivalents and restricted cash at beginning of period | 272 | 331 |
Cash, cash equivalents and restricted cash at end of period | 244 | 293 |
Eliminations | ||
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | 0 | 0 |
INVESTING ACTIVITIES | ||
Capital expenditures | 0 | 0 |
Proceeds from sale of property, plant and equipment and other assets | 0 | |
Deposits received on assets held for sale | 0 | |
Net cash used in investing activities | 0 | 0 |
FINANCING ACTIVITIES | ||
Distributions | 0 | 0 |
Other | 0 | 0 |
Increase (decrease) due from/to affiliates, net | 0 | 0 |
Net cash used in financing activities | 0 | 0 |
Net decrease in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash at beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash at end of period | 0 | 0 |
Level 3 Communications, Inc. | Reportable Legal Entities | ||
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | 17 | (8) |
INVESTING ACTIVITIES | ||
Capital expenditures | 0 | 0 |
Proceeds from sale of property, plant and equipment and other assets | 0 | |
Deposits received on assets held for sale | 34 | |
Net cash used in investing activities | 0 | 34 |
FINANCING ACTIVITIES | ||
Distributions | (225) | (390) |
Other | 0 | 0 |
Increase (decrease) due from/to affiliates, net | 225 | 390 |
Net cash used in financing activities | 0 | 0 |
Net decrease in cash, cash equivalents and restricted cash | 17 | 26 |
Cash, cash equivalents and restricted cash at beginning of period | 17 | 32 |
Cash, cash equivalents and restricted cash at end of period | 34 | 58 |
Level 3 Financing, Inc. | Reportable Legal Entities | ||
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | 0 | 0 |
INVESTING ACTIVITIES | ||
Capital expenditures | 0 | 0 |
Proceeds from sale of property, plant and equipment and other assets | 0 | |
Deposits received on assets held for sale | 0 | |
Net cash used in investing activities | 0 | 0 |
FINANCING ACTIVITIES | ||
Distributions | 0 | 0 |
Other | 0 | 0 |
Increase (decrease) due from/to affiliates, net | 0 | 0 |
Net cash used in financing activities | 0 | 0 |
Net decrease in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash at beginning of period | 0 | 0 |
Cash, cash equivalents and restricted cash at end of period | 0 | 0 |
Level 3 Communications, LLC | Reportable Legal Entities | ||
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | 389 | 490 |
INVESTING ACTIVITIES | ||
Capital expenditures | (189) | (142) |
Proceeds from sale of property, plant and equipment and other assets | 0 | |
Deposits received on assets held for sale | 0 | |
Net cash used in investing activities | (189) | (142) |
FINANCING ACTIVITIES | ||
Distributions | 0 | 0 |
Other | 0 | 0 |
Increase (decrease) due from/to affiliates, net | (225) | (390) |
Net cash used in financing activities | (225) | (390) |
Net decrease in cash, cash equivalents and restricted cash | (25) | (42) |
Cash, cash equivalents and restricted cash at beginning of period | 173 | 186 |
Cash, cash equivalents and restricted cash at end of period | 148 | 144 |
Other Non-Guarantor Subsidiaries | Reportable Legal Entities | ||
Condensed Consolidating Financial Information | ||
Net cash provided by operating activities | 77 | 89 |
INVESTING ACTIVITIES | ||
Capital expenditures | (96) | (110) |
Proceeds from sale of property, plant and equipment and other assets | 1 | |
Deposits received on assets held for sale | 0 | |
Net cash used in investing activities | (96) | (109) |
FINANCING ACTIVITIES | ||
Distributions | 0 | 0 |
Other | (1) | (2) |
Increase (decrease) due from/to affiliates, net | 0 | 0 |
Net cash used in financing activities | (1) | (2) |
Net decrease in cash, cash equivalents and restricted cash | (20) | (22) |
Cash, cash equivalents and restricted cash at beginning of period | 82 | 113 |
Cash, cash equivalents and restricted cash at end of period | $ 62 | $ 91 |
Uncategorized Items - ctl-20190
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 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
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) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
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 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |