Cover
Cover - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Jun. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Document Annual Report | true | |
Document Period End Date | Dec. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35134 | |
Entity Registrant Name | LEVEL 3 PARENT, LLC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-0210602 | |
Entity Address, Address Line One | 1025 Eldorado Blvd., | |
Entity Address, City or Town | Broomfield, | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80021-8869 | |
City Area Code | 720 | |
Local Phone Number | 888-1000 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
ICFR Auditor Attestation Flag | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 0 | |
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE: None. | |
Entity Public Float | $ 0 | |
Entity Central Index Key | 0000794323 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING REVENUE | |||
Total operating revenue | $ 7,933 | $ 7,773 | $ 7,839 |
OPERATING EXPENSES | |||
Cost of services and products (exclusive of depreciation and amortization) | 3,486 | 3,387 | 3,556 |
Selling, general and administrative | 1,226 | 1,258 | 1,354 |
Operating expenses - affiliates | 368 | 334 | 257 |
Depreciation and amortization | 1,689 | 1,613 | 1,704 |
Goodwill impairment | 0 | 3,708 | 0 |
Total operating expenses | 6,769 | 10,300 | 6,871 |
OPERATING INCOME (LOSS) | 1,164 | (2,527) | 968 |
OTHER (EXPENSE) INCOME | |||
Interest income - affiliate | 51 | 61 | 63 |
Interest expense | (393) | (502) | (509) |
Other income, net | 50 | 22 | 15 |
Total other expense, net | (292) | (419) | (431) |
INCOME (LOSS) BEFORE INCOME TAXES | 872 | (2,946) | 537 |
Income tax expense | (221) | (255) | (196) |
NET INCOME (LOSS) | 651 | (3,201) | 341 |
Non-Affiliate Services | |||
OPERATING REVENUE | |||
Total operating revenue | 7,725 | 7,593 | 7,732 |
Affiliate Services | |||
OPERATING REVENUE | |||
Total operating revenue | $ 208 | $ 180 | $ 107 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME (LOSS) | $ 651 | $ (3,201) | $ 341 |
OTHER COMPREHENSIVE LOSS | |||
Defined benefit pension plan adjustment, net of $—, 1 and (1) tax | (15) | (3) | 5 |
Foreign currency translation adjustment, net of $(43), (6) and 50 tax | (40) | (5) | (200) |
Other comprehensive loss, net of tax | (55) | (8) | (195) |
COMPREHENSIVE INCOME (LOSS) | $ 596 | $ (3,209) | $ 146 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Defined benefit pension plan adjustment, tax effect | $ 0 | $ 1 | $ (1) |
Foreign currency translation adjustments, tax effect | $ (43) | $ (6) | $ 50 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 190 | $ 316 |
Accounts receivable, less allowance of $45 and $13 | 683 | 667 |
Note receivable - affiliate | 1,468 | 1,590 |
Other | 297 | 269 |
Total current assets | 2,638 | 2,842 |
Property, plant and equipment, net of accumulated depreciation $2,818 and $1,825 | 10,518 | 9,936 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 7,405 | 7,415 |
Other intangible assets, net | 6,605 | 7,334 |
Other, net | 1,410 | 1,571 |
Total goodwill and other assets | 15,420 | 16,320 |
TOTAL ASSETS | 28,576 | 29,098 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 14 | 11 |
Accounts payable | 495 | 654 |
Accounts payable - affiliates | 869 | 669 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 220 | 240 |
Income and other taxes | 111 | 152 |
Current operating lease liabilities | 241 | 249 |
Other | 159 | 162 |
Current portion of deferred revenue | 315 | 309 |
Total current liabilities | 2,424 | 2,446 |
LONG-TERM DEBT | 10,373 | 10,356 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,396 | 1,343 |
Operating lease liabilities | 903 | 854 |
Other | 575 | 554 |
Total deferred revenue and other liabilities | 2,874 | 2,751 |
COMMITMENTS AND CONTINGENCIES (Note 16) | ||
MEMBER'S EQUITY | ||
Member's equity | 13,139 | 13,724 |
Accumulated other comprehensive loss | (234) | (179) |
Total member's equity | 12,905 | 13,545 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 28,576 | $ 29,098 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 45 | $ 13 |
Accumulated depreciation | $ 2,818 | $ 1,825 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING ACTIVITIES | |||
Net income (loss) | $ 651 | $ (3,201) | $ 341 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 1,689 | 1,613 | 1,704 |
Goodwill impairment | 0 | 3,708 | 0 |
Deferred income taxes | 175 | 219 | 175 |
Changes in current assets and liabilities: | |||
Accounts receivable | (63) | 21 | 46 |
Accounts payable | (218) | (134) | (37) |
Other assets and liabilities, net | (159) | (6) | 4 |
Other assets and liabilities, affiliate | 108 | 423 | 216 |
Changes in other noncurrent assets and liabilities, net | 71 | 120 | (22) |
Other, net | 30 | (80) | (30) |
Net cash provided by operating activities | 2,284 | 2,683 | 2,397 |
INVESTING ACTIVITIES | |||
Capital expenditures | (1,432) | (1,341) | (1,038) |
Proceeds from notes receivable - affiliates | 122 | 235 | 0 |
Proceeds from sale of property, plant and equipment and other assets | 137 | 28 | 134 |
Net cash used in investing activities | (1,173) | (1,078) | (904) |
FINANCING ACTIVITIES | |||
Net proceeds from issuance of long-term debt | 2,020 | 2,479 | 0 |
Distributions | (1,200) | (1,084) | (1,545) |
Payments of long-term debt | (2,060) | (2,906) | (7) |
Other | (4) | (28) | 0 |
Net cash used in financing activities | (1,244) | (1,539) | (1,552) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (133) | 66 | (59) |
Cash, cash equivalents and restricted cash at beginning of period | 338 | 272 | 331 |
Cash, cash equivalents and restricted cash at end of period | 205 | 338 | 272 |
Supplemental cash flow information: | |||
Income taxes paid, net | (24) | (23) | (33) |
Interest paid (net of capitalized interest of $23, $15 and $1) | (382) | (531) | (542) |
Cash, cash equivalents and restricted cash: | |||
Total | $ 338 | $ 338 | $ 272 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | |||
Capitalized interest | $ 23 | $ 15 | $ 1 |
CONSOLIDATED STATEMENTS OF MEMB
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY - USD ($) $ in Millions | Total | MEMBER'S EQUITY | MEMBER'S EQUITYCumulative Effect, Period of Adoption, Adjustment | ACCUMULATED OTHER COMPREHENSIVE LOSS |
Balance at beginning of period at Dec. 31, 2017 | $ 19,254 | $ 18 | ||
Balance at beginning of period (Accounting Standards Update 2014-09) at Dec. 31, 2017 | $ 9 | |||
Balance at beginning of period (Accounting Standards Update 2018-02) at Dec. 31, 2017 | (6) | 6 | ||
MEMBER'S EQUITY | ||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | |||
Net income (loss) | $ 341 | 341 | ||
Other comprehensive loss | (195) | |||
Purchase price accounting adjustments | (5) | |||
Distributions | (1,545) | |||
Other | 0 | |||
Balance at end of period at Dec. 31, 2018 | 18,048 | (39) | (171) | |
MEMBER'S EQUITY | ||||
Member's equity | $ 17,877 | (171) | ||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||
Net income (loss) | $ (3,201) | (3,201) | ||
Other comprehensive loss | (8) | |||
Distributions | (1,084) | |||
Other | 0 | |||
Balance at end of period at Dec. 31, 2019 | 13,724 | $ (3) | (179) | |
MEMBER'S EQUITY | ||||
Member's equity | 13,545 | (179) | ||
Net income (loss) | 651 | 651 | ||
Other comprehensive loss | (55) | |||
Distributions | (1,243) | |||
Other | 10 | |||
Balance at end of period at Dec. 31, 2020 | $ 13,139 | (234) | ||
MEMBER'S EQUITY | ||||
Member's equity | $ 12,905 | $ (234) |
CONSOLIDATED STATEMENTS OF ME_2
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income tax expense (benefit) | $ 221 | $ 255 | $ 196 | |
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment | ||||
Income tax expense (benefit) | $ (2) | |||
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2014-09 | ||||
Income tax expense (benefit) | $ 3 |
Background and Summary of Signi
Background and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Background and Summary of Significant Accounting Policies | Background and Summary of Significant Accounting Policies General We are an international facilities-based technology 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. Basis of Presentation 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 (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2020. Summary of Significant Accounting Policies Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 13—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss contingency is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates. Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily fiber capacity agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services, including local voice, VPN, Ethernet, data, private line (including special access), network access, transport, voice, information technology ("IT"), video and other ancillary services. We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control of a product is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments include certain activation and certain installation charges. If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which ranges from one For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell optical capacity on our network. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 10 - 20 years. In most cases, we account for the cash consideration received on transfers of optical capacity as ASC 606 revenue which is adjusted for the time value of money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average contract life. Our deferred contract costs for our customers have average amortization periods of approximately 30 months. These deferred costs are monitored every period to reflect any significant change in assumptions. See Note 3—Revenue Recognition for additional information. Affiliate Transactions We provide services to our affiliates that we also provide to external customers. These services are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. The resulting net balance for transactions between us and our affiliates at the end of each period is reported as accounts receivables - affiliates or accounts payable - affiliates on the accompanying consolidated balance sheets. From time to time we make distributions to our parent, which reduce our capital resources for debt repayments or other purposes. Distributions are reflected on our consolidated statements of member's equity and our consolidated statements of cash flows reflects distributions made as financing activities. Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility. Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. Subject to certain exceptions, we expense these costs as the related services are received. Income Taxes Under Lumen's tax allocation policy, Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13—Income Taxes, are primarily determined as a result of the application of the separate return allocation method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 13—Income Taxes for additional information. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows. Restricted Cash Restricted cash and securities consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2020 and 2019. Accounts Receivable and Allowance for Credit Losses Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables, less an allowance for credit losses. Prior to the adoption of ASU 2016-13, the allowance for credit losses receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We implemented the new standard effective January 1, 2020, as discussed in the Recently Adopted Accounting Pronouncements - "Measurement of Credit Losses on Financial Instruments", below. For more information, see Note 5—Credit Losses on Financial Instruments. We generally consider our accounts past due if they are outstanding over 30 days. Our past due accounts are written off against our allowance for credit losses when collection is considered to be not probable. Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for credit losses approximates fair value. Concentration of Credit Risk We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized global enterprises to small early stage companies primarily in the United States, Europe and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material changes in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation. Property, Plant and Equipment We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. We depreciate our property, plant and equipment using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments evaluate the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred. We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value. Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 7 to 14 years, using straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to 7 years. We amortize our other intangible assets over an estimated life of 5 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the carrying amount of the reporting unit equity exceeds the estimated fair value of the equity of the reporting unit, limited to the goodwill balance. The impairment assessment is performed at the reporting unit level. We have determined that our operations consist of one reporting unit, consistent with our determination that our business consists of one operating segment. For more information, see Note 2—Goodwill, Customer Relationships and Other Intangible Assets. Foreign Currency Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. A significant portion of our non-U.S. subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during the years ended December 31, 2020, December 31, 2019 and December 31, 2018. We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in our consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in "Other, net" on our consolidated statements of operations. Change in Accounting Policy During the first quarter of 2020, we elected to change the presentation for taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, including federal and certain state Universal Service Fund (USF) regulatory fees, to present all such taxes on a net basis in our consolidated statements of operations. Prior to the first quarter of 2020, we assessed whether we were the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. The previous policy resulted in presenting such USF fees on a gross basis within operating revenue and cost of services and products, and all other significant taxes on a net basis. We applied this change in accounting policy retrospectively during the first quarter of 2020. As a result, we have decreased both operating revenue and cost of services and products by $398 million, $412 million and $381 million for the years ended December 31, 2020, 2019 and 2018, respectively. The change has no impact on operating income (loss) or net income (loss) in our consolidated statements of operations. Refer to our Form 8-K filing dated May 7, 2020 for further information. We changed our policy to present such taxes on the net basis and believe the new policy is preferable because of the historical and potential future regulatory rate changes outside of our control resulting in significant variability in tax and fee revenue that are not indicative of our operating performance. We believe the net presentation provides the most useful and transparent financial information and improves comparability and consistency of financial results. Recently Adopted Accounting Pronouncements During 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, "Measurement of Credit Losses on Financial Instruments.” During 2019, we adopted ASU 2016-02, "Leases (ASC 842)". During 2018, we adopted ASU 2018-02, “Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” and ASU 2014-09, “Revenue from Contracts with Customers”. Each of these is described further below. Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020, and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $2 million. Please refer to Note 5—Credit Losses on Financial Instruments for more information. Leases We adopted ASU 2016-02, "Leases (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 have not made the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we recognized 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 Financial Accounting Standards Board ("FASB") issued ASU 2019-01, "Leases (ASC 842): Codification Improvements" ("ASU 2019-01"), effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance in ASC 842 for determining fair value of the underlying asset by lessors that are not manufacturers or dealers, 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 standards 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 difference is driven principally by the netting of our existing real estate restructure reserve against the corresponding operating lease right of use asset. In addition, we recorded a $39 million cumulative adjustment to accumulated deficit as of January 1, 2019, for the impact of the new accounting standards. Our financial position for reporting periods beginning on or after January 1, 2019 is presented under the new guidance, as discussed above, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Revenue Recognition In May 2014, the FASB issued ASU 2014-09 which replaces virtually all existing generally accepted accounting principles on revenue recognition with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We adopted the new revenue recognition standard under the modified retrospective transition method. During the year ended December 31, 2018, we recorded a cumulative catch-up adjustment that increased our member's equity by $9 million, net of $3 million of income taxes. See Note 3—Revenue Recognition for additional information. Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02, which provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (the "Act") (or portion thereof) is recorded. If an entity elects to reclassify the income tax effects of the Act, the amount of that reclassification shall include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Act related to items remaining in accumulated other comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. ASU 2018-02 is effective January 1, 2019, but early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. We early adopted and applied ASU 2018-02 in the first quarter of 2018. The adoption of ASU 2018-02 resulted in a $6 million decrease to member's equity and increase to accumulated other comprehensive income. See Note 17—Accumulated Other Comprehensive Loss for additional information. Recently Issued Accounting Pronouncements In October 2020, the FASB issued ASU 2020-09, "Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762” (“ASU 2020-09”). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offe |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Goodwill, customer relationships and other intangible assets consisted of the following: As of December 31, 2020 2019 (Dollars in millions) Goodwill $ 7,405 7,415 Customer relationships, less accumulated amortization of $2,246 and $1,538 $ 6,156 6,865 Capitalized software, less accumulated amortization of $256 and $146 401 395 Trade names, less accumulated amortization of $83 and $57 48 74 Total other intangible assets, net $ 6,605 7,334 Our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We assess our goodwill for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. In reviewing the criteria for reporting units, we have determined that we are one reporting unit. At October 31, 2020, 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 comparable 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 equal to the present value of all normalized cash flows after the projection period. As of October 31, 2020, based on our assessment performed, the estimated fair value of our equity exceeded our carrying value of equity by approximately 17%. We concluded that the goodwill was not impaired as of October 31, 2020. Because Lumen's low stock price was a trigger for impairment testing, we estimated the fair value of our operations using only the market approach in the quarter ended 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. As of March 31, 2019, based on our assessments performed as described above, we concluded that the estimated fair value of equity 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 in the quarter ended March 31, 2019. The market multiples approach that we used in the quarter ended March 31, 2019 incorporated significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain cost synergies. In developing the market multiple, we also considered observed trends of our industry participants. 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. At October 31, 2019, we estimated the fair value of equity by considering both a market approach and a discounted cash flow method. As of October 31, 2019, based on our assessment performed, the estimated fair value of our equity exceeded our carrying value of equity by approximately 26%. We concluded that the goodwill was not impaired as of October 31, 2019. The following table shows the rollforward of goodwill from December 31, 2018 through December 31, 2020: (Dollars in millions) As of December 31, 2018 $ 11,119 Goodwill Impairment (3,708) Effect of foreign currency exchange rate changes and other 4 As of December 31, 2019 (1) 7,415 Effect of foreign currency exchange rate changes and other (10) As of December 31, 2020 (1) $ 7,405 _______________________________________________________________________________ (1) Goodwill at December 31, 2020 and December 31, 2019 is net of accumulated impairment loss of $3.7 billion. Total amortization expense for intangible assets for the years ended December 31, 2020, 2019 and 2018 was $838 million, $809 million and $798 million, respectively. As of December 31, 2020, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $16.6 billion. As of December 31, 2020, the weighted average remaining useful lives of our finite-lived intangible assets was approximately 9 years in total; 9 years for customer relationships, 2 years for trade names, and 4 years for developed technology. We estimate that total amortization expense for intangible assets for the years ending 2021 through 2025 will be as follows: (Dollars in millions) 2021 $ 843 2022 783 2023 755 2024 743 2025 679 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2020 | |
Revenues [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregated Revenue by Service Offering The following tables provide disaggregation of revenue from contracts with customers based on service offering for the years ended December 31, 2020, 2019 and 2018. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Year Ended December 31, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,587 — 3,587 Transport and Infrastructure (2) 2,615 (703) 1,912 Voice and Collaboration (3) 1,423 — 1,423 Other (4) 100 (8) 92 Affiliate Services (5) 208 (208) — Total Revenue $ 7,933 (919) 7,014 Timing of revenue: Goods transferred at a point in time $ 15 Services performed over time 6,999 Total revenue from contracts with customers $ 7,014 Year Ended December 31, 2019 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,655 — 3,655 Transport and Infrastructure (2) 2,544 (704) 1,840 Voice and Collaboration (3) 1,385 — 1,385 Other (4) 9 (9) — Affiliate Services (5) 180 (180) — Total Revenue $ 7,773 (893) 6,880 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 6,880 Total revenue from contracts with customers $ 6,880 Year Ended December 31, 2018 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,728 — 3,728 Transport and Infrastructure (2) 2,591 (189) 2,402 Voice and Collaboration (3) 1,413 — 1,413 Other (4) — (3) (3) Affiliate Services (5) 107 (107) — Total Revenue $ 7,839 (299) 7,540 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 7,540 Total revenue from contracts with customers $ 7,540 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes lease revenue which is not within the scope of ASC 606. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2020 and 2019: December 31, 2020 December 31, 2019 (Dollars in millions) Customer receivables (1) $ 683 678 Contract assets 38 32 Contract liabilities 385 423 _______________________________________________________________________________ (1) Gross customer receivables of $728 million and $691 million, net of allowance for credit losses of $45 million and $13 million, as of December 31, 2020 and 2019, respectively. Contract liabilities are consideration we have received from our customers in advance of providing the goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one Performance Obligations As of December 31, 2020, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $4.0 billion. We expect to recognize approximately 91% of this revenue through 2023, with the balance recognized thereafter. We do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (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 tables provide changes in our contract acquisition costs and fulfillment costs for the years ended: Year Ended December 31, 2020 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 79 121 Costs incurred 61 88 Amortization (62) (87) End of period balance $ 78 122 Year Ended December 31, 2019 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 64 84 Costs incurred 60 103 Amortization (45) (66) End of period balance $ 79 121 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 approximately 30 months for our business customers. 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 anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. At December 31, 2020, we categorized our products, services and revenue among the following five categories: • IP and Data Services , which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services; • Transport and Infrastructure , which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services; • Voice and Collaboration , which includes primarily TDM voice services, VoIP and other ancillary services; • Other , which includes sublease rental income and IT services and managed services, which may be purchased in conjunction with our other network services; and • Affiliate Services, which includes telecommunication services provided to our affiliates that we also provide to our 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: Years Ended December 31, 2020 2019 2018 (Dollars in millions) IP and Data Services $ 3,587 3,655 3,728 Transport and Infrastructure 2,615 2,544 2,591 Voice and Collaboration 1,423 1,385 1,413 Other 100 9 — Affiliate Services 208 180 107 Total operating revenue $ 7,933 7,773 7,839 The following tables present total assets as of the years ended December 31, 2020 and 2019 as well as operating revenue for the years ended December 31, 2020, 2019 and 2018 by geographic region: Total Assets As of December 31, 2020 2019 (Dollars in millions) North America $ 23,511 24,144 Europe, Middle East and Africa 3,059 2,842 Latin America 2,006 2,112 Total $ 28,576 29,098 Revenue Years Ended December 31, 2020 2019 2018 (Dollars in millions) North America $ 6,411 6,307 6,358 Europe, Middle East and Africa 785 719 744 Latin America 737 747 737 Total $ 7,933 7,773 7,839 Our operations are integrated into and reported as part of the consolidated segment data of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we have one reportable segment. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 16%, 16% and 20% of our revenue for the years ended December 31, 2020, 2019 and 2018, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases Our financial position for reporting periods beginning on or after January 1, 2019 is presented under the new accounting guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance, as discussed in Note 1—Background and Summary of Significant Accounting Policies. We primarily lease to or from third parties various office facilities, colocation facilities, dark fiber and equipment. 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. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. 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, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance 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: Years Ended December 31, 2020 2019 (Dollars in millions) Operating and short-term lease cost $ 440 388 Finance lease cost: Amortization of right-of-use assets 19 14 Interest on lease liability 11 10 Total finance lease cost 30 24 Total lease cost $ 470 412 We lease various equipment, office facilities, retail outlets, switching facilities and other network sites. These leases, with few exceptions, provide for renewal options and escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. For the years ended December 31, 2020, 2019 and 2018, our gross rental expense was $470 million, $412 million and $524 million, respectively. We also received sublease rental income for the years ended December 31, 2020, 2019 and 2018 of $8 million, $9 million and $9 million, respectively. Supplemental consolidated balance sheet information and other information related to leases: Years Ended December 31, Leases Classification on the Balance Sheet 2020 2019 (Dollars in millions) Assets Operating lease assets Other, net $ 1,091 1,060 Finance lease assets Property, plant and equipment, net of accumulated depreciation 235 154 Total leased assets $ 1,326 1,214 Liabilities Current Operating Current operating lease liabilities $ 241 249 Finance Current maturities of long-term debt 14 11 Noncurrent Operating Operating lease liabilities 903 854 Finance Long-term debt 241 160 Total lease liabilities $ 1,399 1,274 Weighted-average remaining lease term (years) Operating leases 7.2 7.5 Finance leases 12.5 13.1 Weighted-average discount rate Operating leases 5.85 % 6.19 % Finance leases 5.01 % 5.60 % Supplemental unaudited consolidated cash flow statement information related to leases: Years Ended December 31, 2020 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 350 387 Operating cash flows for finance leases 13 11 Financing cash flows for finance leases 18 5 Supplemental lease cash flow disclosures: Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 151 206 Right-of-use assets obtained in exchange for new finance lease liabilities 100 12 As of December 31, 2020, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2021 $ 297 26 2022 249 25 2023 213 26 2024 154 26 2025 107 27 Thereafter 410 218 Total lease payments 1,430 348 Less: interest (286) (93) Total 1,144 255 Less: current portion (241) (14) Long-term portion $ 903 241 As of December 31, 2020, we had no material operating or finance leases that had not yet commenced. Operating Lease Income We lease various office facilities, colocation facilities and dark fiber to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. For the years ended December 31, 2020, 2019 and 2018 our gross rental income was $760 million or 10%, $798 million or 10%, and $192 million or 2% respectively, of our operating revenue. |
Leases | Leases Our financial position for reporting periods beginning on or after January 1, 2019 is presented under the new accounting guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance, as discussed in Note 1—Background and Summary of Significant Accounting Policies. We primarily lease to or from third parties various office facilities, colocation facilities, dark fiber and equipment. 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. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. 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, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance 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: Years Ended December 31, 2020 2019 (Dollars in millions) Operating and short-term lease cost $ 440 388 Finance lease cost: Amortization of right-of-use assets 19 14 Interest on lease liability 11 10 Total finance lease cost 30 24 Total lease cost $ 470 412 We lease various equipment, office facilities, retail outlets, switching facilities and other network sites. These leases, with few exceptions, provide for renewal options and escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. For the years ended December 31, 2020, 2019 and 2018, our gross rental expense was $470 million, $412 million and $524 million, respectively. We also received sublease rental income for the years ended December 31, 2020, 2019 and 2018 of $8 million, $9 million and $9 million, respectively. Supplemental consolidated balance sheet information and other information related to leases: Years Ended December 31, Leases Classification on the Balance Sheet 2020 2019 (Dollars in millions) Assets Operating lease assets Other, net $ 1,091 1,060 Finance lease assets Property, plant and equipment, net of accumulated depreciation 235 154 Total leased assets $ 1,326 1,214 Liabilities Current Operating Current operating lease liabilities $ 241 249 Finance Current maturities of long-term debt 14 11 Noncurrent Operating Operating lease liabilities 903 854 Finance Long-term debt 241 160 Total lease liabilities $ 1,399 1,274 Weighted-average remaining lease term (years) Operating leases 7.2 7.5 Finance leases 12.5 13.1 Weighted-average discount rate Operating leases 5.85 % 6.19 % Finance leases 5.01 % 5.60 % Supplemental unaudited consolidated cash flow statement information related to leases: Years Ended December 31, 2020 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 350 387 Operating cash flows for finance leases 13 11 Financing cash flows for finance leases 18 5 Supplemental lease cash flow disclosures: Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 151 206 Right-of-use assets obtained in exchange for new finance lease liabilities 100 12 As of December 31, 2020, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2021 $ 297 26 2022 249 25 2023 213 26 2024 154 26 2025 107 27 Thereafter 410 218 Total lease payments 1,430 348 Less: interest (286) (93) Total 1,144 255 Less: current portion (241) (14) Long-term portion $ 903 241 As of December 31, 2020, we had no material operating or finance leases that had not yet commenced. Operating Lease Income We lease various office facilities, colocation facilities and dark fiber to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. For the years ended December 31, 2020, 2019 and 2018 our gross rental income was $760 million or 10%, $798 million or 10%, and $192 million or 2% respectively, of our operating revenue. |
Leases | Leases Our financial position for reporting periods beginning on or after January 1, 2019 is presented under the new accounting guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance, as discussed in Note 1—Background and Summary of Significant Accounting Policies. We primarily lease to or from third parties various office facilities, colocation facilities, dark fiber and equipment. 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. As part of the present value calculation for the lease liabilities, we use an incremental borrowing rate as the rates implicit in the leases are not readily determinable. The incremental borrowing rates used for lease accounting are based on our unsecured rates, adjusted to approximate the rates at which we could borrow on a collateralized basis over a term similar to the recognized lease term. We apply the incremental borrowing rates to lease components using a portfolio approach based upon the length of the lease term and the reporting entity in which the lease resides. 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, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance 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: Years Ended December 31, 2020 2019 (Dollars in millions) Operating and short-term lease cost $ 440 388 Finance lease cost: Amortization of right-of-use assets 19 14 Interest on lease liability 11 10 Total finance lease cost 30 24 Total lease cost $ 470 412 We lease various equipment, office facilities, retail outlets, switching facilities and other network sites. These leases, with few exceptions, provide for renewal options and escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. For the years ended December 31, 2020, 2019 and 2018, our gross rental expense was $470 million, $412 million and $524 million, respectively. We also received sublease rental income for the years ended December 31, 2020, 2019 and 2018 of $8 million, $9 million and $9 million, respectively. Supplemental consolidated balance sheet information and other information related to leases: Years Ended December 31, Leases Classification on the Balance Sheet 2020 2019 (Dollars in millions) Assets Operating lease assets Other, net $ 1,091 1,060 Finance lease assets Property, plant and equipment, net of accumulated depreciation 235 154 Total leased assets $ 1,326 1,214 Liabilities Current Operating Current operating lease liabilities $ 241 249 Finance Current maturities of long-term debt 14 11 Noncurrent Operating Operating lease liabilities 903 854 Finance Long-term debt 241 160 Total lease liabilities $ 1,399 1,274 Weighted-average remaining lease term (years) Operating leases 7.2 7.5 Finance leases 12.5 13.1 Weighted-average discount rate Operating leases 5.85 % 6.19 % Finance leases 5.01 % 5.60 % Supplemental unaudited consolidated cash flow statement information related to leases: Years Ended December 31, 2020 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 350 387 Operating cash flows for finance leases 13 11 Financing cash flows for finance leases 18 5 Supplemental lease cash flow disclosures: Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 151 206 Right-of-use assets obtained in exchange for new finance lease liabilities 100 12 As of December 31, 2020, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2021 $ 297 26 2022 249 25 2023 213 26 2024 154 26 2025 107 27 Thereafter 410 218 Total lease payments 1,430 348 Less: interest (286) (93) Total 1,144 255 Less: current portion (241) (14) Long-term portion $ 903 241 As of December 31, 2020, we had no material operating or finance leases that had not yet commenced. Operating Lease Income We lease various office facilities, colocation facilities and dark fiber to third parties under operating leases. Lease and sublease income are included in operating revenue in the consolidated statements of operations. For the years ended December 31, 2020, 2019 and 2018 our gross rental income was $760 million or 10%, $798 million or 10%, and $192 million or 2% respectively, of our operating revenue. |
Credit Losses on Financial Inst
Credit Losses on Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Credit Loss [Abstract] | |
Credit Losses on Financial Instrument | Credit Losses on Financial Instruments In accordance with ASC 326, "Financial Instruments - Credit Losses", we aggregate financial assets with similar risk characteristics to align our expected credit losses with the credit quality or deterioration over the life of the asset. We monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change each reporting period. Financial assets that do not share risk characteristics with other financial assets are evaluated separately. Our financial assets measured at amortized cost primarily consist of accounts receivable. In developing our accounts receivable portfolio, we pooled certain assets with similar credit risk characteristics based on the nature of our customers, their industry, policies used to grant credit terms, and their historical and expected credit loss patterns. Prior to the adoption of the new credit loss standard, the allowance for doubtful accounts receivable reflected our best estimate of probable losses inherent in our receivable portfolio determined based on historical experience, specific allowances for known troubled accounts, and other currently available evidence. We implemented the new standard effective January 1, 2020, using a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our use of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to move accounts receivable to credit loss. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to update our current loss rate, which as noted below has increased due to an increase in historic loss experience and weakening economic forecasts. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our allowance for credit losses, we combine the historical, current, and expected credit loss rates and apply them to our period end accounts receivable. If there is a deterioration of a customer's financial condition or if future default rates in general differ from currently anticipated default rates (including changes caused by COVID-19), we may need to adjust the allowance for credit losses, which would affect earnings in the period that adjustments are made. The assessment of the correlation between historical observed default rates, current conditions, and forecasted economic conditions requires substantial judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions, and forecast of economic conditions may also not be representative of the customers' actual default experience in the future. The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at January 1, 2020 (1) $ 18 Provision for expected losses 41 Write-offs charged against the allowance (23) Recoveries collected 11 Foreign currency exchange rate changes adjustment (2) Ending balance at December 31, 2020 $ 45 ______________________________________________________________________ (1) The beginning balance includes the cumulative effect of the adoption of the new credit loss standard. For the year ended December 31, 2020, we increased our allowance for credit losses for our accounts receivable portfolio due to an increase in historical and expected loss experience in certain classes of aged balances, which we believe are predominantly attributable to the current COVID-19 induced economic slowdown. The increases were partially offset by recoveries of amounts previously written off. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-Term Debt The following chart reflects our consolidated long-term debt, including finance leases, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) December 31, 2020 December 31, 2019 (Dollars in millions) Level 3 Financing, Inc. Senior Secured Debt: (2) Senior notes 3.400% - 3.875% 2027 - 2029 $ 1,500 1,500 Tranche B 2027 Term Loan (3) LIBOR + 1.750% 2027 3,111 3,111 Senior Notes and Other Debt: Senior notes (4) 3.625% - 5.375% 2024 - 2029 5,515 5,515 Finance leases Various Various 255 171 Unamortized premiums, net 60 104 Unamortized debt issuance costs (54) (34) Total long-term debt 10,387 10,367 Less current maturities (14) (11) Long-term debt, excluding current maturities $ 10,373 10,356 _______________________________________________________________________________ (1) As of December 31, 2020 (2) See the remainder of this Note for a description of certain parent and subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 1.897% as of December 31, 2020 and 3.549% as of December 31, 2019. (4) This debt is guaranteed by Level 3 Parent, LLC and Level 3 Communications, LLC . New Issuances On August 12, 2020, Level 3 Financing, Inc. issued $840 million aggregate principal amount of its 3.625% Senior Notes due 2029 (the "2029 Notes"). The net proceeds from the offering were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" below. The 2029 Notes are guaranteed by Level 3 Parent, LLC and Level 3 Communications, LLC. On June 15, 2020, Level 3 Financing, Inc. issued $1.2 billion aggregate principal amount of its 4.250% Senior Notes due 2028 (the "2028 Notes"). The net proceeds from the offering were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" below. The 2028 Notes are guaranteed by Level 3 Parent, LLC and Level 3 Communications, LLC. On November 29, 2019, Level 3 Financing, Inc. issued $750 million of its 3.400% Senior Secured Notes due 2027 and $750 million of its 3.875% Senior Secured Notes due 2029. The net proceeds from the offering were used to redeem certain of its outstanding Term Loan indebtedness. See "—Senior Secured Term Loan" below. These notes are guaranteed by Level 3 Parent, LLC and several of its material domestic subsidiaries. On September 25, 2019, Level 3 Financing, Inc. issued $1.0 billion aggregate principal amount of its 4.625% Senior Notes due 2027. The net proceeds from the offering were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" below. These notes are guaranteed by Level 3 Parent, LLC and several of its material domestic subsidiaries. Redemption of Senior Notes On September 11, 2020, Level 3 Financing, Inc. redeemed the remaining $140 million aggregate principal amount of its outstanding 5.625% Senior Notes due 2023 and all $700 million aggregate principal amount of its 5.125% Senior Notes due 2023. On July 15, 2020, Level 3 Financing, Inc. redeemed the remaining $840 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2022 and $360 million aggregate principal amount of its outstanding 5.625% Senior Notes due 2023. During the fourth quarter of 2019, Level 3 Financing, Inc. redeemed the remaining $240 million aggregate principal amount of its outstanding 6.125% Senior Notes due 2021, all $600 million aggregate principal amount of Level 3 Parent, LLC's outstanding 5.750% Senior Notes due 2022 and $160 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2022. On August 25, 2019, Level 3 Financing, Inc. redeemed $400 million aggregate principal amount of its outstanding 6.125% Senior Notes due 2021. For the year ended December 31, 2020 and 2019, redemptions of senior notes resulted in a gain of $27 million and $5 million, respectively. Interest Expense Interest expense includes interest on total long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest: Years Ended December 31, 2020 2019 2018 (Dollars in millions) Interest expense: Gross interest expense $ 416 517 510 Capitalized interest (23) (15) (1) Total interest expense $ 393 502 509 Senior Secured Term Loan As of December 31, 2020, Level 3 Financing, Inc. owed $3.1 billion under a senior secured Tranche B 2027 Term Loan, which matures on March 1, 2027. The Tranche B 2027 Term Loan carries an interest rate, in the case of base rate borrowings, equal to (i) the greater of the Prime Rate, the Federal Funds Effective Rate plus 50 basis points, or LIBOR plus 100 basis points (with all such terms and calculations as defined or further specified in the credit agreement) plus (ii) 0.75% per annum. Any Eurodollar borrowings under the Tranche B 2027 Term Loan bear interest at LIBOR plus 1.75% per annum. The Tranche B 2027 Term Loan requires certain specified mandatory prepayments in connection with certain asset sales and other transactions, subject to certain significant exceptions. The obligations of Level 3 Financing, Inc. under the Tranche B 2027 Term Loan were, subject to certain exceptions, secured by certain assets of Level 3 Parent, LLC and certain of its material domestic subsidiaries. Also, Level 3 Parent, LLC and certain of its subsidiaries have guaranteed the obligations of Level 3 Financing, Inc. under the Tranche B 2027 Term Loan. Additional secured term loans or revolving credit may in the future be extended to Level 3 Financing, Inc. under its credit agreement dated as of March 13, 2007, as amended through November 29, 2019. On November 29, 2019, the proceeds from the Senior Secured Notes due 2027 and Senior Secured Notes due 2029 together with cash on hand were used to redeem $1.5 billion of the $4.6 billion Tranche B 2024 Term Loan that was repaid on November 29, 2019. On November 29, 2019 Level 3 Financing, Inc. entered into an amendment to its credit agreement to incur $3.1 billion in aggregate borrowing under the agreement through a new Tranche B 2027 Term Loan. The net proceeds of the Tranche B 2027 Term Loan, together with the proceeds of the Senior Secured Notes and cash on hand, were used to redeem in full the Tranche B 2024 Term Loan. Senior Notes All of the notes of Level 3 Financing, Inc. reflected in the table above pay interest semiannually and allow for the redemption of the notes at the option of the issuer, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices, (ii) pursuant to a “make whole” redemption price or (iii) under certain other specified limited circumstances in connection with certain sales of equity securities. For purposes of early redemption, all of the notes reflected in the table above, excluding the Senior Notes due 2025 and Senior Notes due 2026, allow for the redemption of the notes at the option of the issuer upon not less than 10 or more than 60 days prior notice. For purposes of early redemption, the Senior Notes due 2025 and Senior Notes due 2026, allow for the redemption of the notes at the option of the issuer upon not less than 30 or more than 60 days prior notice. For specific details of these features and requirements, including the applicable premiums and timing, refer to the indentures setting forth the specific terms of each respective series of the senior notes of Level 3 Financing, Inc. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of December 31, 2020 (excluding unamortized premiums, net and unamortized debt issuance costs) maturing during the following years: (Dollars in millions) 2021 $ 14 2022 14 2023 15 2024 916 2025 817 2026 and thereafter 8,605 Total long-term debt $ 10,381 Letters of Credit It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of December 31, 2020 and 2019, we had outstanding letters of credit or other similar obligations of approximately $18 million and $23 million, respectively, of which $11 million and $18 million were collateralized by restricted cash. We do not believe exposure to loss related to our letters of credit is material. Covenants The term loan and senior notes of Level 3 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 Lumen Technologies and its other subsidiaries, dispose of assets and merge or consolidate with any other person. Also, in connection with a "change of control" of Level 3 Parent, LLC, or Level 3 Financing, Inc., Level 3 Financing will be required to offer to repurchase or repay certain of its long-term debt at a price of 101% of the principal amount of debt repurchased or repaid, plus accrued and unpaid interest. The debt covenants applicable to us and our subsidiaries could materially adversely affect their ability to operate or expand their respective businesses, to pursue strategic transactions, to transfer cash to or engage in transactions with their unconsolidated affiliates, or to otherwise pursue their plans and strategies. Certain of Lumen'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. Our ability to comply with the financial covenants in our debt instruments could be adversely impacted by a wide variety of events, including unforeseen contingencies, many of which are beyond our control. Compliance As of December 31, 2020 and December 31, 2019, we believe we were in compliance with the financial covenants contained in our debt agreements in all material respects. Subsequent Event On January 13, 2021, Level 3 Financing, Inc. issued $900 million aggregate principal amounts of its 3.750% Sustainability-Linked Senior Notes due 2029 (the "Sustainability-Linked Notes"). The net proceeds were used, together with cash on hand, to redeem all $900 million aggregate principal amount of Level 3 Financing, Inc.'s outstanding 5.375% Senior Notes due 2024 (the "5.375% Notes") on February 12, 2021. Following this redemption, there were no bonds outstanding for the 5.375% Notes. The Sustainability-Linked Notes are (i) guaranteed by Level 3 Parent, LLC and (ii) expected to be guaranteed by Level 3 Communications, LLC, upon the receipt of all requisite material governmental authorizations. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable The following table presents details of our accounts receivable balances: Years Ended December 31, 2020 2019 (Dollars in millions) Trade receivables $ 570 529 Earned and unbilled receivables 158 151 Total accounts receivable 728 680 Less: allowance for credit losses (45) (13) Accounts receivable, less allowance $ 683 667 We are exposed to concentrations of credit risk from our customers and other telecommunications service providers. We generally do not require collateral to secure our receivable balances. The following table presents details of our allowance for credit losses: Beginning Balance Additions Deductions Ending Balance (Dollars in millions) 2020 (1) $ 13 41 (9) 45 2019 11 24 (22) 13 2018 3 18 (10) 11 _______________________________________________________________________________ (1) On January 1, 2020, we adopted ASU 2016-13 "Measurement of Credit Losses on Financial Instruments" and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of $2 million tax effect. This adjustment is included within "Deductions". Please refer to Note 5—Credit Losses on Financial Instruments for more information. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Net property, plant and equipment is composed of the following: Depreciable Lives As of December 31, 2020 2019 (Dollars in millions) Land N/A $ 320 336 Fiber conduit and other outside plant (1) 15-45 years 6,186 5,226 Central office and other network electronics (2) 7-10 years 3,388 2,687 Support assets (3) 3-30 years 2,722 2,419 Construction-in-progress (4) N/A 720 1,093 Gross property, plant and equipment 13,336 11,761 Accumulated depreciation (2,818) (1,825) Net property, plant and equipment $ 10,518 9,936 _______________________________________________________________________________ (1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3) Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction. Depreciation expense was $851 million, $804 million and $906 million for the years ended December 31, 2020, 2019 and 2018, respectively. Asset Retirement Obligations As of December 31, 2020 and 2019, our asset retirement obligations consisted primarily of restoration requirements for leased facilities. We recognize our estimate of the fair value of our asset retirement obligations in the period incurred in other long-term liabilities. The fair value of the asset retirement obligation is also capitalized as property, plant and equipment and then depreciated over the estimated remaining useful life of the associated asset. The following table provides asset retirement obligation activity: Years Ended December 31, 2020 2019 2018 (Dollars in millions) Balance at beginning of period $ 113 105 45 Accretion expense 6 5 5 Purchase price adjustments (1) — — 58 Liabilities settled (7) (12) (13) Revision in estimated cash flows 10 15 10 Balance at end of period $ 122 113 105 _______________________________________________________________________________ (1) These liabilities relate to purchase price adjustments that occurred during 2018 from Lumen's acquisition of us. |
Severance
Severance | 12 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Severance | Severance Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workload demands due to the loss of customers purchasing certain services. We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our consolidated balance sheets and report severance expenses in selling, general and administrative expenses in our consolidated statements of operations. Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at December 31, 2018 $ 19 Accrued to expense 6 Payments, net (16) Balance at December 31, 2019 9 Accrued to expense 37 Payments, net (23) Balance at December 31, 2020 $ 23 |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits Defined Contribution Plans Lumen Technologies sponsors a qualified defined contribution plan covering substantially all of our employees. Under this plan, employees may contribute a percentage of their annual compensation up to certain maximums, as defined by the plan and by the Internal Revenue Service ("IRS"). Currently, we match a percentage of our employee's contributions in cash. We recognized $29 million, $29 million and $26 million in expense related to this plan for the years ended December 31, 2020, 2019, and 2018, respectively. Other defined contribution plans we sponsored are individually not significant. On an aggregate basis, the expense we recorded relating to these plans was approximately $8 million, $6 million and $5 million for the years ended December 31, 2020, 2019, and 2018, respectively. Defined Benefit Plans We have certain contributory and non-contributory employee pension plans, which are not significant to our financial position or operating results. We recognize in our balance sheet the funded status of our defined benefit post-retirement plans, which is measured as the difference between the fair value of the plan assets and the plan benefit obligations. We are also required to recognize changes in the funded status within accumulated other comprehensive income, net of tax, to the extent such changes are not recognized in earnings as components of periodic net benefit cost. The fair value of the plan assets was $128 million and $122 million as of December 31, 2020 and 2019, respectively. The total plan benefit obligations were $161 million and $140 million as of December 31, 2020 and 2019, respectively. Therefore, the net unfunded status was $33 million and $18 million as of December 31, 2020 and 2019, respectively. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation Share-based compensation expenses are included in cost of services and products, and selling, general, and administrative expenses in our consolidated statements of operations. For the years ended December 31, 2020, 2019 and 2018, we recorded share-based compensation expense of approximately $78 million, $85 million and $105 million, respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, note receivable-affiliate and long-term debt, excluding finance lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB. We determined the fair values of our long-term debt, including the current portion, based primarily on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates. The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows: Input Level Description of Input Level 1 Observable inputs such as quoted market prices in active markets. Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 Unobservable inputs in which little or no market data exists. The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance leases, as well as the input level used to determine the fair values indicated below: As of December 31, 2020 2019 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in million) Liabilities-Long-term debt, excluding finance leases 2 $ 10,132 10,340 10,196 10,244 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of the income tax expense are as follows: Years Ended December 31, 2020 2019 2018 (Dollars in millions) Income tax expense was as follows: Federal Current $ — 12 — Deferred 162 186 199 State and local Current 22 4 (9) Deferred 42 41 28 Foreign Current 19 17 30 Deferred (24) (5) (52) Total income tax expense $ 221 255 196 Years Ended December 31, 2020 2019 2018 (Dollars in millions) Income tax expense was allocated as follows: Income tax expense in the consolidated statements of operations: Attributable to income $ 221 255 196 Member's equity: Tax effect of the change in accumulated other comprehensive loss $ 43 5 (49) The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate: Years Ended December 31, 2020 2019 2018 (Percentage of pre-tax income) Statutory federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal income tax benefit 5.8 % (1.2) % 2.8 % Goodwill impairment — % (26.4) % — % Tax law changes (1.5) % (0.2) % 17.2 % Global intangible low-taxed income — % (0.4) % 1.8 % Net foreign income tax 0.9 % (0.8) % (4.8) % Executive compensation limitation — % (0.2) % 1.2 % Research and development credits (0.6) % 0.1 % (1.3) % Other, net (0.3) % (0.5) % (1.4) % Effective income tax rate 25.3 % (8.6) % 36.5 % For the year ended December 31, 2020, the effective tax rate is 25.3% compared to (8.6)% and 36.5% for the years ended December 31, 2019 and 2018, respectively. The effective tax rate for the year ended December 31, 2020 includes a $13 million favorable impact from U.S. tax law changes regarding Global Intangible Low Taxed Income regulations. The effective tax rate for the year ended December 31, 2019 includes a $779 million unfavorable impact of a non-deductible goodwill impairment. The effective tax rate for the year ended December 31, 2018 reflects $92 million of an estimated one-time income tax expense related to income tax law changes under the Tax Act enacted in 2017. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: As of December 31, 2020 2019 (Dollars in millions) Deferred tax assets Deferred revenue $ 277 306 Net operating loss carry forwards 3,503 3,233 Property, plant and equipment 65 58 Other 343 326 Gross deferred tax assets 4,188 3,923 Less valuation allowance (1,170) (892) Net deferred tax assets 3,018 3,031 Deferred tax liabilities Deferred revenue (34) (41) Property, plant and equipment (1,264) (974) Intangible assets (1,773) (1,898) Other (33) (29) Gross deferred tax liabilities (3,104) (2,942) Net deferred tax (liabilities) assets $ (86) 89 Of the $86 million net deferred tax liabilities as of December 31, 2020, $247 million is reflected as a long-term liability, in other on our consolidated balance sheets and $161 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets. Of the $89 million net deferred tax assets as of December 31, 2019, $241 million is reflected as a long-term liability, in other on our consolidated balance sheets and $330 million is reflected as a noncurrent deferred tax asset, in other, net on our consolidated balance sheets. As of December 31, 2020, we had federal NOLs of $12.9 billion before uncertain tax positions of $4.1 billion, which will expire between 2024 and 2037 if unused, and state NOLs of $8.3 billion before uncertain tax positions of $618 million. As of December 31, 2020, we had foreign NOLs of $7.2 billion. We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2020, a valuation allowance of $1.2 billion was recorded as it is more likely than not that this amount of net operating loss and tax credit carryforwards will not be utilized prior to expiration. Our valuation allowance as of December 31, 2020 and 2019 is primarily related to foreign and state NOL carryforwards. A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from January 1 to December 31 for 2020 and 2019 is as follows: 2020 2019 (Dollars in millions) Unrecognized tax benefits at beginning of period $ 952 970 Tax positions of prior periods netted against deferred tax assets (32) (24) Increase in tax positions taken in the prior period — 1 Increase in tax positions taken in the current period 4 5 Decrease due to settlement/payments (1) — Decrease from the lapse of statute of limitations — — Unrecognized tax benefits at end of period $ 923 952 The total amount (including interest and any related federal benefit) of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $33 million and $30 million for the years ended December 31, 2020 and 2019, respectively. Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $9 million and $8 million as of December 31, 2020 and 2019, respectively. We, or at least one of our affiliates, file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carry forwards are available. Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $2 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control. |
Products and Services Revenues
Products and Services Revenues | 12 Months Ended |
Dec. 31, 2020 | |
Revenues [Abstract] | |
Products and Services Revenues | Revenue Recognition Disaggregated Revenue by Service Offering The following tables provide disaggregation of revenue from contracts with customers based on service offering for the years ended December 31, 2020, 2019 and 2018. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Year Ended December 31, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,587 — 3,587 Transport and Infrastructure (2) 2,615 (703) 1,912 Voice and Collaboration (3) 1,423 — 1,423 Other (4) 100 (8) 92 Affiliate Services (5) 208 (208) — Total Revenue $ 7,933 (919) 7,014 Timing of revenue: Goods transferred at a point in time $ 15 Services performed over time 6,999 Total revenue from contracts with customers $ 7,014 Year Ended December 31, 2019 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,655 — 3,655 Transport and Infrastructure (2) 2,544 (704) 1,840 Voice and Collaboration (3) 1,385 — 1,385 Other (4) 9 (9) — Affiliate Services (5) 180 (180) — Total Revenue $ 7,773 (893) 6,880 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 6,880 Total revenue from contracts with customers $ 6,880 Year Ended December 31, 2018 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,728 — 3,728 Transport and Infrastructure (2) 2,591 (189) 2,402 Voice and Collaboration (3) 1,413 — 1,413 Other (4) — (3) (3) Affiliate Services (5) 107 (107) — Total Revenue $ 7,839 (299) 7,540 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 7,540 Total revenue from contracts with customers $ 7,540 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes lease revenue which is not within the scope of ASC 606. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2020 and 2019: December 31, 2020 December 31, 2019 (Dollars in millions) Customer receivables (1) $ 683 678 Contract assets 38 32 Contract liabilities 385 423 _______________________________________________________________________________ (1) Gross customer receivables of $728 million and $691 million, net of allowance for credit losses of $45 million and $13 million, as of December 31, 2020 and 2019, respectively. Contract liabilities are consideration we have received from our customers in advance of providing the goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one Performance Obligations As of December 31, 2020, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $4.0 billion. We expect to recognize approximately 91% of this revenue through 2023, with the balance recognized thereafter. We do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (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 tables provide changes in our contract acquisition costs and fulfillment costs for the years ended: Year Ended December 31, 2020 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 79 121 Costs incurred 61 88 Amortization (62) (87) End of period balance $ 78 122 Year Ended December 31, 2019 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 64 84 Costs incurred 60 103 Amortization (45) (66) End of period balance $ 79 121 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 approximately 30 months for our business customers. 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 anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. At December 31, 2020, we categorized our products, services and revenue among the following five categories: • IP and Data Services , which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services; • Transport and Infrastructure , which includes private line (including business data services), wavelength, colocation and data center services, including cloud, hosting and application management solutions, professional services, network security services, dark fiber services and other ancillary services; • Voice and Collaboration , which includes primarily TDM voice services, VoIP and other ancillary services; • Other , which includes sublease rental income and IT services and managed services, which may be purchased in conjunction with our other network services; and • Affiliate Services, which includes telecommunication services provided to our affiliates that we also provide to our 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: Years Ended December 31, 2020 2019 2018 (Dollars in millions) IP and Data Services $ 3,587 3,655 3,728 Transport and Infrastructure 2,615 2,544 2,591 Voice and Collaboration 1,423 1,385 1,413 Other 100 9 — Affiliate Services 208 180 107 Total operating revenue $ 7,933 7,773 7,839 The following tables present total assets as of the years ended December 31, 2020 and 2019 as well as operating revenue for the years ended December 31, 2020, 2019 and 2018 by geographic region: Total Assets As of December 31, 2020 2019 (Dollars in millions) North America $ 23,511 24,144 Europe, Middle East and Africa 3,059 2,842 Latin America 2,006 2,112 Total $ 28,576 29,098 Revenue Years Ended December 31, 2020 2019 2018 (Dollars in millions) North America $ 6,411 6,307 6,358 Europe, Middle East and Africa 785 719 744 Latin America 737 747 737 Total $ 7,933 7,773 7,839 Our operations are integrated into and reported as part of the consolidated segment data of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we have one reportable segment. A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 16%, 16% and 20% of our revenue for the years ended December 31, 2020, 2019 and 2018, respectively. |
Affiliate Transactions
Affiliate Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Affiliate Transactions | Affiliate Transactions We provide telecommunications services to our affiliates that we also provide to external customers. Whenever possible, costs are directly assigned to our affiliates for the services they use. If costs cannot be directly assigned, they are allocated among all affiliates based upon cost causative measures; or if no cost causative measure is available, these costs are allocated based on a general allocator. These cost allocation methodologies are reasonable. From time to time, we adjust the basis for allocating the costs of a shared service among affiliates. Such changes in allocation methodologies are generally billed prospectively. We also purchase services from our affiliates including telecommunication services, insurance, flight services and other support services such as legal, regulatory, finance and accounting, tax, human resources and executive support. Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility. On October 15, 2020, we agreed to refinance our notes receivable - affiliate due to mature on November 1, 2020 via a revolving credit facility that we extended to Lumen Technologies. The principal amount outstanding under such facility initially bears interest at 4.250% per annum, subject to certain adjustments as set forth in the facility. This principal amount is payable upon demand by us and prepayable by Lumen Technologies at any time, but no later than October 15, 2025, which maturity date may be extended for two additional one-year periods. The facility has covenants, including a maximum total leverage ratio, and is subject to other limitations. During 2020, Lumen Technologies repaid $122 million of the amount owed to us under our notes receivable - affiliate. As of December 31, 2020, $1.5 billion aggregate principal amount of our loan to Lumen Technologies was outstanding. |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Items | Commitments, Contingencies and Other Items We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities. Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously-established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Amounts accrued for our litigation and non-income tax contingencies as of December 31, 2020 aggregated to approximately $59 million and are included in other current liabilities and other liabilities in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. Peruvian Tax Litigation In 2005, the Peruvian tax authorities ("SUNAT") issued tax assessments against one of our Peruvian subsidiaries asserting $26 million of additional income tax withholding and value-added taxes ("VAT"), penalties and interest for calendar years 2001 and 2002 on the basis that the Peruvian subsidiary incorrectly documented its importations. After taking into account the developments described below, as well as the accrued interest and foreign exchange effects, we believe the total amount of our exposure is $2 million at December 31, 2020. 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. Oral argument was held before the Supreme Court of Justice in June 2019. A decision on this case is pending. Brazilian Tax Claims The São Paulo and Rio de Janeiro state tax authorities have issued tax assessments against our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”), mainly with respect to revenue from leasing certain assets and revenue from the provision of Internet access services by treating such activities as the provision of communications services, to which the ICMS tax applies. We filed objections to these assessments in both states, arguing among other things that neither the lease of assets nor the provision of Internet access qualifies as "communication services" subject to ICMS. We have appealed to the respective state judicial courts the decisions by the respective state administrative courts that rejected our objections to these assessments. In cases in which state lower courts ruled partially in our favor finding that the lease assets are not subject to ICMS, the State appealed those rulings. In other cases, the assessment was affirmed at the first administrative level and we have appealed to the second administrative level. Other assessments are still pending state judicial decisions. We are vigorously contesting all such assessments in both states and view the assessment of ICMS on revenue from equipment leasing and Internet access to be without merit. We estimate that these assessments, if upheld, could result in a loss of $17 million to as high as $49 million as of December 31, 2020, in excess of the reserved 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 U.S. 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 and an amended complaint were filed under seal on November 26, 2013 and June 16, 2014, respectively. 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 U.S. District Court for the Eastern District of Virginia on October 3, 2017, and charged with, among other things, accepting kickbacks from a subcontractor, who was also indicted, for work to be performed under a prime government contract. Of the two former employees, one entered into a plea agreement, and the other is deceased. We are fully cooperating in the government’s investigations in this matter. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings 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 during 2021 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 $300,000 in fines and penalties. The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. Environmental Contingencies In connection with largely historical operations, we have responded to or been notified of potential environmental liability at 175 properties. We are engaged in addressing or have litigated environmental liabilities at many of those properties. We could potentially be held liable, jointly, or severally, and without regard to fault, for the costs of investigation and remediation of these sites. The discovery of additional environmental liabilities or changes in existing environmental requirements could have a material adverse effect on our business. Right-of-Way As of December 31, 2020, our future rental commitments for right-of-way agreements were as follows: Right-of-Way (Dollars in millions) 2021 $ 109 2022 63 2023 62 2024 51 2025 44 2026 and thereafter 284 Total future minimum payments $ 613 Purchase Commitments We have several commitments primarily for marketing activities and support services from a variety of vendors to be used in the ordinary course of business totaling $335 million as of December 31, 2020. Of this amount, we expect to purchase $120 million in 2021, $116 million in 2022 through 2023, $36 million in 2024 through 2025 and $63 million in 2026 and thereafter. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we were contractually committed as of December 31, 2020. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The table below summarizes changes in accumulated other comprehensive (loss) recorded on our consolidated balance sheet by component for the years ended December 31, 2019 and December 31, 2020: Pension Plans Foreign Currency Translation Adjustments and Other Total (Dollars in millions) Balance at December 31, 2018 $ 5 (176) (171) Other comprehensive loss before reclassifications — (5) (5) Amounts reclassified from accumulated other comprehensive loss (3) — (3) Net other comprehensive loss (3) (5) (8) Balance at December 31, 2019 $ 2 (181) (179) Balance at December 31, 2019 $ 2 (181) (179) Other comprehensive loss, net of tax (15) (40) (55) Net other comprehensive loss (15) (40) (55) Balance at December 31, 2020 $ (13) (221) (234) |
Background and Summary of Sig_2
Background and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation 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 (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015 we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2020. |
Use of Estimates | Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 13—Income Taxes and Note 16—Commitments, Contingencies and Other Items for additional information. For matters not related to income taxes, if a loss contingency is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable. For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions. For all of these and other matters, actual results could differ materially from our estimates. |
Revenue Recognition | Revenue Recognition We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606. We also earn revenue from leasing arrangements (primarily fiber capacity agreements) which are not accounted for under ASC 606. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy a performance obligation. We provide an array of communications services, including local voice, VPN, Ethernet, data, private line (including special access), network access, transport, voice, information technology ("IT"), video and other ancillary services. We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business. We recognize revenue for services when we provide the applicable service or when control of a product is transferred. Recognition of certain payments received in advance of services being provided is deferred. These advance payments include certain activation and certain installation charges. If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which ranges from one For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis. Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The revenue associated with each performance obligation is then recognized as earned. We periodically sell optical capacity on our network. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 10 - 20 years. In most cases, we account for the cash consideration received on transfers of optical capacity as ASC 606 revenue which is adjusted for the time value of money and is recognized ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets. In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction. We have service level commitments pursuant to contracts with certain of our customers. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met. Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. |
Affiliate Transactions | Affiliate Transactions We provide services to our affiliates that we also provide to external customers. These services are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented. We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates. The resulting net balance for transactions between us and our affiliates at the end of each period is reported as accounts receivables - affiliates or accounts payable - affiliates on the accompanying consolidated balance sheets. From time to time we make distributions to our parent, which reduce our capital resources for debt repayments or other purposes. Distributions are reflected on our consolidated statements of member's equity and our consolidated statements of cash flows reflects distributions made as financing activities. Our ultimate parent company, Lumen Technologies, is currently indebted to us under a revolving credit facility. |
Legal Costs | Legal Costs In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. Subject to certain exceptions, we expense these costs as the related services are received. |
Income Taxes | Income Taxes Under Lumen's tax allocation policy, Lumen Technologies treats our consolidated results as if we were a separate taxpayer. Our reported deferred tax assets and liabilities, as discussed below and in Note 13—Income Taxes, are primarily determined as a result of the application of the separate return allocation method and therefore the settlement of these amounts is dependent upon our parent, Lumen Technologies, rather than tax authorities. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by Lumen Technologies and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 13—Income Taxes for additional information. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution. Book overdrafts occur when we have issued checks but they have not yet been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows. |
Restricted Cash and Securities | Restricted Cash Restricted cash and securities consist primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2020 and 2019. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for other receivables, less an allowance for credit losses. Prior to the adoption of ASU 2016-13, the allowance for credit losses receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We implemented the new standard effective January 1, 2020, as discussed in the Recently Adopted Accounting Pronouncements - "Measurement of Credit Losses on Financial Instruments", below. For more information, see Note 5—Credit Losses on Financial Instruments. |
Concentration of Credit Risk | Concentration of Credit RiskWe provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized global enterprises to small early stage companies primarily in the United States, Europe and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material changes in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operation. |
Property, Plant and Equipment | Property, Plant and Equipment We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations. We depreciate our property, plant and equipment using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost. We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews take into account actual usage, the physical condition of our property, plant, and equipment, industry data, and other relevant factors. Our remaining useful life assessments evaluate the possible loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers reduce their use of the asset. However, the asset is not retired until all customers no longer utilize the asset and we determine there is not alternative use for the asset. We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred. We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value. |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 7 to 14 years, using straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to 7 years. We amortize our other intangible assets over an estimated life of 5 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized. Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets. We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the carrying amount of the reporting unit equity exceeds the estimated fair value of the equity of the reporting unit, limited to the goodwill balance. The impairment assessment is performed at the reporting unit level. We have determined that our operations consist of one reporting unit, consistent with our determination that our business consists of one operating segment. |
Foreign Currency | Foreign Currency Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates. A significant portion of our non-U.S. subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during the years ended December 31, 2020, December 31, 2019 and December 31, 2018. We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in our consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in "Other, net" on our consolidated statements of operations. |
USF Surcharges, Gross Receipts Taxes and Other Surcharges | We changed our policy to present such taxes on the net basis and believe the new policy is preferable because of the historical and potential future regulatory rate changes outside of our control resulting in significant variability in tax and fee revenue that are not indicative of our operating performance. We believe the net presentation provides the most useful and transparent financial information and improves comparability and consistency of financial results. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements During 2020, we adopted Accounting Standards Update (“ASU”) 2016-13, "Measurement of Credit Losses on Financial Instruments.” During 2019, we adopted ASU 2016-02, "Leases (ASC 842)". During 2018, we adopted ASU 2018-02, “Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” and ASU 2014-09, “Revenue from Contracts with Customers”. Each of these is described further below. Measurement of Credit Losses on Financial Instruments We adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13") on January 1, 2020, and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of tax effect of $2 million. Please refer to Note 5—Credit Losses on Financial Instruments for more information. Leases We adopted ASU 2016-02, "Leases (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 have not made the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we recognized 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 Financial Accounting Standards Board ("FASB") issued ASU 2019-01, "Leases (ASC 842): Codification Improvements" ("ASU 2019-01"), effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance in ASC 842 for determining fair value of the underlying asset by lessors that are not manufacturers or dealers, 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 standards 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 difference is driven principally by the netting of our existing real estate restructure reserve against the corresponding operating lease right of use asset. In addition, we recorded a $39 million cumulative adjustment to accumulated deficit as of January 1, 2019, for the impact of the new accounting standards. Our financial position for reporting periods beginning on or after January 1, 2019 is presented under the new guidance, as discussed above, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance. Revenue Recognition In May 2014, the FASB issued ASU 2014-09 which replaces virtually all existing generally accepted accounting principles on revenue recognition with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We adopted the new revenue recognition standard under the modified retrospective transition method. During the year ended December 31, 2018, we recorded a cumulative catch-up adjustment that increased our member's equity by $9 million, net of $3 million of income taxes. See Note 3—Revenue Recognition for additional information. Comprehensive Income (Loss) In February 2018, the FASB issued ASU 2018-02, which provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (the "Act") (or portion thereof) is recorded. If an entity elects to reclassify the income tax effects of the Act, the amount of that reclassification shall include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Act related to items remaining in accumulated other comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. ASU 2018-02 is effective January 1, 2019, but early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. We early adopted and applied ASU 2018-02 in the first quarter of 2018. The adoption of ASU 2018-02 resulted in a $6 million decrease to member's equity and increase to accumulated other comprehensive income. See Note 17—Accumulated Other Comprehensive Loss for additional information. Recently Issued Accounting Pronouncements In October 2020, the FASB issued ASU 2020-09, "Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762” (“ASU 2020-09”). This ASU amends and supersedes various SEC paragraphs to reflect SEC Release No. 33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. The cumulative effect of initially applying ASU 2020-09 on January 4, 2021 will not have material impact to our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"), designed to ease the burden of accounting for contract modifications related to the global market-wide reference rate transition period. Subject to certain criteria, ASU 2020-04 provides qualifying entities the option to apply expedients and exceptions to contract modifications and hedging accounting relationships made until December 31, 2022. In January 2021, the FASB issued ASC 2021-01, “Reference Rate Reform (Topic 848): Scope” (“ASC 2021-01”). This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the transition. The ASU also amends the expedients and expectations in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the transition. As of December 31, 2020, we are evaluating the optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued and the related impact on our consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815" (“ASU 2020-01”). This ASU among other things clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments—Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. As of December 31, 2020, we determined there was no application or discontinuation of the equity method during the reporting periods. The cumulative effect of initially applying ASU 2020-01 on January 1, 2021 will have no material impact to our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12"). ASU 2019-12 removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 will become effective for us in the first quarter of fiscal 2021 and early adoption is permitted. We do not believe the adoption will have a significant impact on our consolidated financial statements. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill, customer relationships and other intangible assets | Goodwill, customer relationships and other intangible assets consisted of the following: As of December 31, 2020 2019 (Dollars in millions) Goodwill $ 7,405 7,415 Customer relationships, less accumulated amortization of $2,246 and $1,538 $ 6,156 6,865 Capitalized software, less accumulated amortization of $256 and $146 401 395 Trade names, less accumulated amortization of $83 and $57 48 74 Total other intangible assets, net $ 6,605 7,334 |
Schedule of goodwill | The following table shows the rollforward of goodwill from December 31, 2018 through December 31, 2020: (Dollars in millions) As of December 31, 2018 $ 11,119 Goodwill Impairment (3,708) Effect of foreign currency exchange rate changes and other 4 As of December 31, 2019 (1) 7,415 Effect of foreign currency exchange rate changes and other (10) As of December 31, 2020 (1) $ 7,405 _______________________________________________________________________________ (1) Goodwill at December 31, 2020 and December 31, 2019 is net of accumulated impairment loss of $3.7 billion. |
Schedule of estimated amortization expense of intangible asset | We estimate that total amortization expense for intangible assets for the years ending 2021 through 2025 will be as follows: (Dollars in millions) 2021 $ 843 2022 783 2023 755 2024 743 2025 679 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenues [Abstract] | |
Disaggregation of revenue | The following tables provide disaggregation of revenue from contracts with customers based on service offering for the years ended December 31, 2020, 2019 and 2018. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Year Ended December 31, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,587 — 3,587 Transport and Infrastructure (2) 2,615 (703) 1,912 Voice and Collaboration (3) 1,423 — 1,423 Other (4) 100 (8) 92 Affiliate Services (5) 208 (208) — Total Revenue $ 7,933 (919) 7,014 Timing of revenue: Goods transferred at a point in time $ 15 Services performed over time 6,999 Total revenue from contracts with customers $ 7,014 Year Ended December 31, 2019 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,655 — 3,655 Transport and Infrastructure (2) 2,544 (704) 1,840 Voice and Collaboration (3) 1,385 — 1,385 Other (4) 9 (9) — Affiliate Services (5) 180 (180) — Total Revenue $ 7,773 (893) 6,880 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 6,880 Total revenue from contracts with customers $ 6,880 Year Ended December 31, 2018 Total Revenue Adjustments for Non-ASC 606 Revenue (6) Total Revenue from Contracts with Customers (Dollars in millions) IP and Data Services (1) $ 3,728 — 3,728 Transport and Infrastructure (2) 2,591 (189) 2,402 Voice and Collaboration (3) 1,413 — 1,413 Other (4) — (3) (3) Affiliate Services (5) 107 (107) — Total Revenue $ 7,839 (299) 7,540 Timing of revenue: Goods transferred at a point in time $ — Services performed over time 7,540 Total revenue from contracts with customers $ 7,540 _______________________________________________________________________________ (1) Includes primarily VPN data network, IP, Ethernet, video and ancillary revenue. (2) Includes primarily wavelength, colocation and data center services, dark fiber, private line and professional services revenue. (3) Includes voice, Voice Over IP ("VoIP"), Collaboration. (4) Includes sublease rental income and IT services and managed services revenue. (5) Includes telecommunications and data services we bill to our affiliates. (6) Includes lease revenue which is not within the scope of ASC 606. |
Contract with customer, asset and liability | The following table provides balances of customer receivables, contract assets and contract liabilities as of December 31, 2020 and 2019: December 31, 2020 December 31, 2019 (Dollars in millions) Customer receivables (1) $ 683 678 Contract assets 38 32 Contract liabilities 385 423 _______________________________________________________________________________ (1) Gross customer receivables of $728 million and $691 million, net of allowance for credit losses of $45 million and $13 million, as of December 31, 2020 and 2019, respectively. |
Capitalized contract cost | The following tables provide changes in our contract acquisition costs and fulfillment costs for the years ended: Year Ended December 31, 2020 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 79 121 Costs incurred 61 88 Amortization (62) (87) End of period balance $ 78 122 Year Ended December 31, 2019 Acquisition Costs Fulfillment Costs (Dollars in millions) Beginning of period balance $ 64 84 Costs incurred 60 103 Amortization (45) (66) End of period balance $ 79 121 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Lease, cost | Lease expense consisted of the following: Years Ended December 31, 2020 2019 (Dollars in millions) Operating and short-term lease cost $ 440 388 Finance lease cost: Amortization of right-of-use assets 19 14 Interest on lease liability 11 10 Total finance lease cost 30 24 Total lease cost $ 470 412 Supplemental unaudited consolidated cash flow statement information related to leases: Years Ended December 31, 2020 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 350 387 Operating cash flows for finance leases 13 11 Financing cash flows for finance leases 18 5 Supplemental lease cash flow disclosures: Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 151 206 Right-of-use assets obtained in exchange for new finance lease liabilities 100 12 |
Assets and liabilities | Supplemental consolidated balance sheet information and other information related to leases: Years Ended December 31, Leases Classification on the Balance Sheet 2020 2019 (Dollars in millions) Assets Operating lease assets Other, net $ 1,091 1,060 Finance lease assets Property, plant and equipment, net of accumulated depreciation 235 154 Total leased assets $ 1,326 1,214 Liabilities Current Operating Current operating lease liabilities $ 241 249 Finance Current maturities of long-term debt 14 11 Noncurrent Operating Operating lease liabilities 903 854 Finance Long-term debt 241 160 Total lease liabilities $ 1,399 1,274 Weighted-average remaining lease term (years) Operating leases 7.2 7.5 Finance leases 12.5 13.1 Weighted-average discount rate Operating leases 5.85 % 6.19 % Finance leases 5.01 % 5.60 % |
Lessee, operating lease, liability, maturity | As of December 31, 2020, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2021 $ 297 26 2022 249 25 2023 213 26 2024 154 26 2025 107 27 Thereafter 410 218 Total lease payments 1,430 348 Less: interest (286) (93) Total 1,144 255 Less: current portion (241) (14) Long-term portion $ 903 241 |
Finance lease, liability, maturity | As of December 31, 2020, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2021 $ 297 26 2022 249 25 2023 213 26 2024 154 26 2025 107 27 Thereafter 410 218 Total lease payments 1,430 348 Less: interest (286) (93) Total 1,144 255 Less: current portion (241) (14) Long-term portion $ 903 241 |
Credit Losses on Financial In_2
Credit Losses on Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Credit Loss [Abstract] | |
Allowance for credit losses on financing receivables | The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at January 1, 2020 (1) $ 18 Provision for expected losses 41 Write-offs charged against the allowance (23) Recoveries collected 11 Foreign currency exchange rate changes adjustment (2) Ending balance at December 31, 2020 $ 45 ______________________________________________________________________ (1) The beginning balance includes the cumulative effect of the adoption of the new credit loss standard. The following table presents details of our allowance for credit losses: Beginning Balance Additions Deductions Ending Balance (Dollars in millions) 2020 (1) $ 13 41 (9) 45 2019 11 24 (22) 13 2018 3 18 (10) 11 _______________________________________________________________________________ (1) On January 1, 2020, we adopted ASU 2016-13 "Measurement of Credit Losses on Financial Instruments" and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of $2 million tax effect. This adjustment is included within "Deductions". Please refer to Note 5—Credit Losses on Financial Instruments for more information. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The following chart reflects our consolidated long-term debt, including finance leases, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities (1) December 31, 2020 December 31, 2019 (Dollars in millions) Level 3 Financing, Inc. Senior Secured Debt: (2) Senior notes 3.400% - 3.875% 2027 - 2029 $ 1,500 1,500 Tranche B 2027 Term Loan (3) LIBOR + 1.750% 2027 3,111 3,111 Senior Notes and Other Debt: Senior notes (4) 3.625% - 5.375% 2024 - 2029 5,515 5,515 Finance leases Various Various 255 171 Unamortized premiums, net 60 104 Unamortized debt issuance costs (54) (34) Total long-term debt 10,387 10,367 Less current maturities (14) (11) Long-term debt, excluding current maturities $ 10,373 10,356 _______________________________________________________________________________ (1) As of December 31, 2020 (2) See the remainder of this Note for a description of certain parent and subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 1.897% as of December 31, 2020 and 3.549% as of December 31, 2019. (4) This debt is guaranteed by Level 3 Parent, LLC and Level 3 Communications, LLC . |
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding unamortized premiums) | Set forth below is the aggregate principal amount of our long-term debt as of December 31, 2020 (excluding unamortized premiums, net and unamortized debt issuance costs) maturing during the following years: (Dollars in millions) 2021 $ 14 2022 14 2023 15 2024 916 2025 817 2026 and thereafter 8,605 Total long-term debt $ 10,381 |
Schedule of amount of gross interest expense, net of capitalized interest | The following table presents the amount of gross interest expense, net of capitalized interest: Years Ended December 31, 2020 2019 2018 (Dollars in millions) Interest expense: Gross interest expense $ 416 517 510 Capitalized interest (23) (15) (1) Total interest expense $ 393 502 509 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | The following table presents details of our accounts receivable balances: Years Ended December 31, 2020 2019 (Dollars in millions) Trade receivables $ 570 529 Earned and unbilled receivables 158 151 Total accounts receivable 728 680 Less: allowance for credit losses (45) (13) Accounts receivable, less allowance $ 683 667 |
Allowance for credit losses on financing receivables | The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at January 1, 2020 (1) $ 18 Provision for expected losses 41 Write-offs charged against the allowance (23) Recoveries collected 11 Foreign currency exchange rate changes adjustment (2) Ending balance at December 31, 2020 $ 45 ______________________________________________________________________ (1) The beginning balance includes the cumulative effect of the adoption of the new credit loss standard. The following table presents details of our allowance for credit losses: Beginning Balance Additions Deductions Ending Balance (Dollars in millions) 2020 (1) $ 13 41 (9) 45 2019 11 24 (22) 13 2018 3 18 (10) 11 _______________________________________________________________________________ (1) On January 1, 2020, we adopted ASU 2016-13 "Measurement of Credit Losses on Financial Instruments" and recognized a cumulative adjustment to our accumulated deficit as of the date of adoption of $3 million, net of $2 million tax effect. This adjustment is included within "Deductions". Please refer to Note 5—Credit Losses on Financial Instruments for more information. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, plant and equipment | Net property, plant and equipment is composed of the following: Depreciable Lives As of December 31, 2020 2019 (Dollars in millions) Land N/A $ 320 336 Fiber conduit and other outside plant (1) 15-45 years 6,186 5,226 Central office and other network electronics (2) 7-10 years 3,388 2,687 Support assets (3) 3-30 years 2,722 2,419 Construction-in-progress (4) N/A 720 1,093 Gross property, plant and equipment 13,336 11,761 Accumulated depreciation (2,818) (1,825) Net property, plant and equipment $ 10,518 9,936 _______________________________________________________________________________ (1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures. (2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers. (3) Support assets consist of buildings, data centers, computers and other administrative and support equipment. (4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction. |
Schedule of change in asset retirement obligation | The following table provides asset retirement obligation activity: Years Ended December 31, 2020 2019 2018 (Dollars in millions) Balance at beginning of period $ 113 105 45 Accretion expense 6 5 5 Purchase price adjustments (1) — — 58 Liabilities settled (7) (12) (13) Revision in estimated cash flows 10 15 10 Balance at end of period $ 122 113 105 _______________________________________________________________________________ (1) These liabilities relate to purchase price adjustments that occurred during 2018 from Lumen's acquisition of us. |
Severance (Tables)
Severance (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring reserve by type of cost | Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at December 31, 2018 $ 19 Accrued to expense 6 Payments, net (16) Balance at December 31, 2019 9 Accrued to expense 37 Payments, net (23) Balance at December 31, 2020 $ 23 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement inputs and valuation techniques | The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows: Input Level Description of Input Level 1 Observable inputs such as quoted market prices in active markets. Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable. Level 3 Unobservable inputs in which little or no market data exists. |
Schedule of fair value of liabilities measured on a recurring basis | The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding finance leases, as well as the input level used to determine the fair values indicated below: As of December 31, 2020 2019 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in million) Liabilities-Long-term debt, excluding finance leases 2 $ 10,132 10,340 10,196 10,244 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense (benefit) | Years Ended December 31, 2020 2019 2018 (Dollars in millions) Income tax expense was as follows: Federal Current $ — 12 — Deferred 162 186 199 State and local Current 22 4 (9) Deferred 42 41 28 Foreign Current 19 17 30 Deferred (24) (5) (52) Total income tax expense $ 221 255 196 |
Schedule of income before income tax, domestic and foreign | Years Ended December 31, 2020 2019 2018 (Dollars in millions) Income tax expense was allocated as follows: Income tax expense in the consolidated statements of operations: Attributable to income $ 221 255 196 Member's equity: Tax effect of the change in accumulated other comprehensive loss $ 43 5 (49) |
Schedule of effective income tax rate reconciliation | The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate: Years Ended December 31, 2020 2019 2018 (Percentage of pre-tax income) Statutory federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal income tax benefit 5.8 % (1.2) % 2.8 % Goodwill impairment — % (26.4) % — % Tax law changes (1.5) % (0.2) % 17.2 % Global intangible low-taxed income — % (0.4) % 1.8 % Net foreign income tax 0.9 % (0.8) % (4.8) % Executive compensation limitation — % (0.2) % 1.2 % Research and development credits (0.6) % 0.1 % (1.3) % Other, net (0.3) % (0.5) % (1.4) % Effective income tax rate 25.3 % (8.6) % 36.5 % |
Deferred tax assets and liabilities | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows: As of December 31, 2020 2019 (Dollars in millions) Deferred tax assets Deferred revenue $ 277 306 Net operating loss carry forwards 3,503 3,233 Property, plant and equipment 65 58 Other 343 326 Gross deferred tax assets 4,188 3,923 Less valuation allowance (1,170) (892) Net deferred tax assets 3,018 3,031 Deferred tax liabilities Deferred revenue (34) (41) Property, plant and equipment (1,264) (974) Intangible assets (1,773) (1,898) Other (33) (29) Gross deferred tax liabilities (3,104) (2,942) Net deferred tax (liabilities) assets $ (86) 89 |
Schedule of unrecognized tax benefits | A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from January 1 to December 31 for 2020 and 2019 is as follows: 2020 2019 (Dollars in millions) Unrecognized tax benefits at beginning of period $ 952 970 Tax positions of prior periods netted against deferred tax assets (32) (24) Increase in tax positions taken in the prior period — 1 Increase in tax positions taken in the current period 4 5 Decrease due to settlement/payments (1) — Decrease from the lapse of statute of limitations — — Unrecognized tax benefits at end of period $ 923 952 |
Products and Services Revenues
Products and Services Revenues (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenues [Abstract] | |
Schedule of operating revenues by product and services | Our operating revenue for our products and services consisted of the following categories: Years Ended December 31, 2020 2019 2018 (Dollars in millions) IP and Data Services $ 3,587 3,655 3,728 Transport and Infrastructure 2,615 2,544 2,591 Voice and Collaboration 1,423 1,385 1,413 Other 100 9 — Affiliate Services 208 180 107 Total operating revenue $ 7,933 7,773 7,839 |
Schedule of operating revenues by geographic region | The following tables present total assets as of the years ended December 31, 2020 and 2019 as well as operating revenue for the years ended December 31, 2020, 2019 and 2018 by geographic region: Total Assets As of December 31, 2020 2019 (Dollars in millions) North America $ 23,511 24,144 Europe, Middle East and Africa 3,059 2,842 Latin America 2,006 2,112 Total $ 28,576 29,098 Revenue Years Ended December 31, 2020 2019 2018 (Dollars in millions) North America $ 6,411 6,307 6,358 Europe, Middle East and Africa 785 719 744 Latin America 737 747 737 Total $ 7,933 7,773 7,839 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future rental commitments for right-of-way agreements | As of December 31, 2020, our future rental commitments for right-of-way agreements were as follows: Right-of-Way (Dollars in millions) 2021 $ 109 2022 63 2023 62 2024 51 2025 44 2026 and thereafter 284 Total future minimum payments $ 613 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The table below summarizes changes in accumulated other comprehensive (loss) recorded on our consolidated balance sheet by component for the years ended December 31, 2019 and December 31, 2020: Pension Plans Foreign Currency Translation Adjustments and Other Total (Dollars in millions) Balance at December 31, 2018 $ 5 (176) (171) Other comprehensive loss before reclassifications — (5) (5) Amounts reclassified from accumulated other comprehensive loss (3) — (3) Net other comprehensive loss (3) (5) (8) Balance at December 31, 2019 $ 2 (181) (179) Balance at December 31, 2019 $ 2 (181) (179) Other comprehensive loss, net of tax (15) (40) (55) Net other comprehensive loss (15) (40) (55) Balance at December 31, 2020 $ (13) (221) (234) |
Background and Summary of Sig_3
Background and Summary of Significant Accounting Policies (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2020USD ($)reporting_unitsegment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Description of Business | |||||
Past due threshold, days outstanding | 30 days | ||||
Finite-lived intangible assets, useful life | 9 years | ||||
Number of reporting units | reporting_unit | 1 | ||||
Number of operating segments | segment | 1 | ||||
Revenues | $ 7,933 | $ 7,773 | $ 7,839 | ||
Cost of services | 3,486 | 3,387 | 3,556 | ||
Income tax expense (benefit) | 221 | 255 | 196 | ||
Operating lease assets | 1,091 | 1,060 | $ 1,300 | ||
Operating lease liabilities | 1,144 | $ 1,400 | |||
Member's equity | |||||
Description of Business | |||||
Partners' capital | 13,139 | 13,724 | 18,048 | $ 19,254 | |
Accumulated other comprehensive income | |||||
Description of Business | |||||
Partners' capital | (234) | (179) | (171) | 18 | |
Accumulated other comprehensive income | Accounting Standards Update 2018-02 | |||||
Description of Business | |||||
Partners' capital | 6 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Member's equity | |||||
Description of Business | |||||
Partners' capital | (3) | (39) | |||
Income tax expense (benefit) | (2) | ||||
Cumulative Effect, Period of Adoption, Adjustment | Member's equity | Accounting Standards Update 2014-09 | |||||
Description of Business | |||||
Partners' capital | 9 | ||||
Income tax expense (benefit) | 3 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Member's equity | Accounting Standards Update 2018-02 | |||||
Description of Business | |||||
Partners' capital | $ (6) | ||||
Change in Accounting Principle, Universal Service Fund | |||||
Description of Business | |||||
Revenues | (398) | (412) | (381) | ||
Cost of services | $ (398) | $ (412) | $ (381) | ||
Customer relationships | |||||
Description of Business | |||||
Finite-lived intangible assets, useful life | 9 years | ||||
Capitalized software | |||||
Description of Business | |||||
Finite-lived intangible assets, useful life | 7 years | ||||
Other | |||||
Description of Business | |||||
Finite-lived intangible assets, useful life | 5 years | ||||
Minimum | |||||
Description of Business | |||||
Contract term | 1 year | ||||
Period company may receive up front payments for services to be provided in the future (in years) | 10 years | ||||
Minimum | Customer relationships | |||||
Description of Business | |||||
Finite-lived intangible assets, useful life | 7 years | ||||
Maximum | |||||
Description of Business | |||||
Contract term | 5 years | ||||
Period company may receive up front payments for services to be provided in the future (in years) | 20 years | ||||
Maximum | Customer relationships | |||||
Description of Business | |||||
Finite-lived intangible assets, useful life | 14 years | ||||
Weighted Average | Consumer Customers | |||||
Description of Business | |||||
Length of customer life | 30 months |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Goodwill | $ 7,405 | $ 7,415 | $ 11,119 |
Finite lived intangible assets, net | 6,605 | 7,334 | |
Customer relationships | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite lived intangible assets, net | 6,156 | 6,865 | |
Accumulated amortization | 2,246 | 1,538 | |
Capitalized software | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite lived intangible assets, net | 401 | 395 | |
Accumulated amortization | 256 | 146 | |
Trade names | |||
Finite-Lived and Indefinite-Lived Intangible Assets | |||
Finite lived intangible assets, net | 48 | 74 | |
Accumulated amortization | $ 83 | $ 57 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)reporting_unit | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2020 | Oct. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Number of reporting units | reporting_unit | 1 | |||||
Goodwill impairment (as a percent) | 17.00% | 26.00% | ||||
Goodwill impairment | $ 3,700 | $ 0 | $ 3,708 | $ 0 | ||
Acquired finite-lived intangible asset amortization expense | 838 | $ 809 | $ 798 | |||
Intangible assets and goodwill | $ 16,600 | |||||
Finite-lived intangible assets, useful life | 9 years | |||||
Customer relationships | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Finite-lived intangible assets, useful life | 9 years | |||||
Trade names | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Finite-lived intangible assets, useful life | 2 years | |||||
Developed technology | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Finite-lived intangible assets, useful life | 4 years | |||||
Minimum | Customer relationships | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Finite-lived intangible assets, useful life | 7 years | |||||
Maximum | Customer relationships | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Finite-lived intangible assets, useful life | 14 years | |||||
Revenue Multiple | Minimum | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill impairment, measurement input | 2.1 | |||||
Revenue Multiple | Maximum | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill impairment, measurement input | 4.9 | |||||
EBITDA Multiple | Minimum | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill impairment, measurement input | 4.9 | |||||
EBITDA Multiple | Maximum | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill impairment, measurement input | 9.8 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 11,119 | $ 7,415 | $ 11,119 | |
Goodwill Impairment | $ (3,700) | 0 | (3,708) | $ 0 |
Effect of foreign currency exchange rate changes and other | (10) | 4 | ||
Goodwill, ending balance | 7,405 | 7,415 | $ 11,119 | |
Goodwill, accumulated impairment loss | $ 3,700 | $ 3,700 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Future Amortization Expense (Details) $ in Millions | Dec. 31, 2020USD ($) |
Estimated amortization expense of acquired finite-lived intangible asset | |
2021 | $ 843 |
2022 | 783 |
2023 | 755 |
2024 | 743 |
2025 | $ 679 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | $ 7,933 | $ 7,773 | $ 7,839 |
Adjustments for Non-ASC 606 Revenue | (919) | (893) | (299) |
Total Revenue from Contracts with Customers | 7,014 | 6,880 | 7,540 |
Transferred at Point in Time | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue from Contracts with Customers | 15 | 0 | 0 |
Transferred over Time | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue from Contracts with Customers | 6,999 | 6,880 | 7,540 |
IP and Data Services | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | 3,587 | 3,655 | 3,728 |
Adjustments for Non-ASC 606 Revenue | 0 | 0 | 0 |
Total Revenue from Contracts with Customers | 3,587 | 3,655 | 3,728 |
Transport and Infrastructure | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | 2,615 | 2,544 | 2,591 |
Adjustments for Non-ASC 606 Revenue | (703) | (704) | (189) |
Total Revenue from Contracts with Customers | 1,912 | 1,840 | 2,402 |
Voice and Collaboration | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | 1,423 | 1,385 | 1,413 |
Adjustments for Non-ASC 606 Revenue | 0 | 0 | 0 |
Total Revenue from Contracts with Customers | 1,423 | 1,385 | 1,413 |
Other | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | 100 | 9 | 0 |
Adjustments for Non-ASC 606 Revenue | (8) | (9) | (3) |
Total Revenue from Contracts with Customers | 92 | 0 | (3) |
Affiliate Services | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Total Revenue | 208 | 180 | 107 |
Adjustments for Non-ASC 606 Revenue | (208) | (180) | (107) |
Total Revenue from Contracts with Customers | $ 0 | $ 0 | $ 0 |
Revenue Recognition - Contract
Revenue Recognition - Contract with Customer, Asset and Liability (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Revenues [Abstract] | ||
Customer receivables | $ 683 | $ 678 |
Contract assets | 38 | 32 |
Contract liabilities | 385 | 423 |
Accounts receivable, gross | 728 | 691 |
Allowance for credit loss | $ 45 | $ 13 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Amounts included in contract liability | $ 188 | $ 175 |
Minimum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract term | 1 year | |
Maximum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Contract term | 5 years | |
Weighted Average | Business Customers | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Length of customer life | 30 months |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligation (Details) $ in Billions | Dec. 31, 2020USD ($) |
Revenues [Abstract] | |
Remaining performance obligation | $ 4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 91.00% |
Remaining performance obligation, satisfaction period | 3 years |
Revenue Recognition - Capitaliz
Revenue Recognition - Capitalized Contract Costs (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Acquisition Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | $ 79 | $ 64 |
Costs incurred | 61 | 60 |
Amortization | (62) | (45) |
End of period balance | 78 | 79 |
Fulfillment Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | 121 | 84 |
Costs incurred | 88 | 103 |
Amortization | (87) | (66) |
End of period balance | $ 122 | $ 121 |
Leases - Lease expense (Details
Leases - Lease expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating and short-term lease cost | $ 440 | $ 388 |
Finance lease cost: | ||
Amortization of right-of-use assets | 19 | 14 |
Interest on lease liability | 11 | 10 |
Total finance lease cost | 30 | 24 |
Total lease cost | $ 470 | $ 412 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | |||
Gross rental expense | $ 470 | $ 412 | |
Gross rental expense | $ 524 | ||
Sublease rental income | 8 | 9 | 9 |
Gross rental income | $ 760 | $ 798 | $ 192 |
Rental income as percentage of operating revenue | 10.00% | 10.00% | 2.00% |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Assets | |||
Operating lease assets | $ 1,091 | $ 1,060 | $ 1,300 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets | ||
Finance lease assets | $ 235 | 154 | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentNet | ||
Total leased assets | $ 1,326 | 1,214 | |
Current | |||
Operating | $ 241 | 249 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseLiabilityCurrent | ||
Finance | $ 14 | 11 | |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent | ||
Noncurrent | |||
Operating | $ 903 | 854 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseLiabilityNoncurrent | ||
Finance | $ 241 | 160 | |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:LongTermDebtAndCapitalLeaseObligations | ||
Total lease liabilities | $ 1,399 | $ 1,274 | |
Weighted-average remaining lease term (years) | |||
Operating leases | 7 years 2 months 12 days | 7 years 6 months | |
Finance leases | 12 years 6 months | 13 years 1 month 6 days | |
Weighted-average discount rate | |||
Operating leases | 5.85% | 6.19% | |
Finance leases | 5.01% | 5.60% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating cash flows for operating leases | $ 350 | $ 387 |
Operating cash flows for finance leases | 13 | 11 |
Financing cash flows for finance leases | 18 | 5 |
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | 151 | 206 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 100 | $ 12 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Operating Leases | |||
2021 | $ 297 | ||
2022 | 249 | ||
2023 | 213 | ||
2024 | 154 | ||
2025 | 107 | ||
Thereafter | 410 | ||
Total lease payments | 1,430 | ||
Less: interest | (286) | ||
Total | 1,144 | $ 1,400 | |
Less: current portion | (241) | $ (249) | |
Operating lease liabilities | 903 | 854 | |
Finance Leases | |||
2021 | 26 | ||
2022 | 25 | ||
2023 | 26 | ||
2024 | 26 | ||
2025 | 27 | ||
Thereafter | 218 | ||
Total lease payments | 348 | ||
Less: interest | (93) | ||
Total | 255 | ||
Less: current portion | (14) | (11) | |
Long-term portion | $ 241 | $ 160 |
Credit Losses on Financial In_3
Credit Losses on Financial Instruments (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance at January 1, 2020 | $ 18 |
Provision for expected losses | 41 |
Write-offs charged against the allowance | (23) |
Recoveries collected | 11 |
Foreign currency exchange rate changes adjustment | (2) |
Ending balance at December 31, 2020 | $ 45 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 10,381 | |
Unamortized premiums, net | 60 | $ 104 |
Unamortized debt issuance costs | (54) | (34) |
Total long-term debt | 10,387 | 10,367 |
Less current maturities | (14) | (11) |
Long-term debt, excluding current maturities | 10,373 | 10,356 |
Senior notes | Senior Notes with Varied Maturity Date | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 1,500 | 1,500 |
Senior notes | Senior Notes with Varied Maturity Date | Minimum | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.40% | |
Senior notes | Senior Notes with Varied Maturity Date | Maximum | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.875% | |
Senior notes | 3.625% - 5,625% Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 5,515 | 5,515 |
Senior notes | 3.625% - 5,625% Senior Notes | Minimum | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.625% | |
Senior notes | 3.625% - 5,625% Senior Notes | Maximum | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.375% | |
Term loan | Tranche B 2027 Term Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 3,111 | $ 3,111 |
Effective percentage | 1.897% | 3.549% |
Term loan | Tranche B 2027 Term Loan | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (as a percent) | 1.00% | |
Term loan | Tranche B 2027 Term Loan | LIBOR and Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (as a percent) | 1.75% | |
Finance leases | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 255 | $ 171 |
Long-Term Debt - New Issuances
Long-Term Debt - New Issuances (Details) - Senior notes - USD ($) | Aug. 12, 2020 | Jun. 15, 2020 | Nov. 29, 2019 | Sep. 25, 2019 |
3.625% Senior notes due 2029 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 840,000,000 | |||
Stated interest rate | 3.625% | |||
4.250% Senior notes due 2028 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 1,200,000,000 | |||
Stated interest rate | 4.25% | |||
3.400% Senior secured notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 750,000,000 | |||
Stated interest rate | 3.40% | |||
3.875% Senior Secured Notes Due 2029 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 750,000,000 | |||
Stated interest rate | 3.875% | |||
4.625% Senior Notes Due 2027 | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 1,000,000,000 | |||
Stated interest rate | 4.625% |
Long-Term Debt - Redemption of
Long-Term Debt - Redemption of Senior Notes (Details) - USD ($) | Sep. 11, 2020 | Jul. 15, 2020 | Aug. 25, 2019 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Gain from extinguishment of debt | $ 27,000,000 | $ 5,000,000 | ||||
Senior notes | 5.625% Senior notes due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Amount of debt redeemed | $ 140,000,000 | $ 360,000,000 | ||||
Stated interest rate | 5.625% | 5.625% | ||||
Senior notes | 5.125% Senior notes due 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Amount of debt redeemed | $ 700,000,000 | |||||
Stated interest rate | 5.125% | |||||
Senior notes | 5.375% Senior notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Amount of debt redeemed | $ 840,000,000 | $ 160,000,000 | ||||
Stated interest rate | 5.375% | 5.375% | 5.375% | |||
Senior notes | 6.125% Senior Notes due 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Amount of debt redeemed | $ 400,000,000 | $ 240,000,000 | ||||
Stated interest rate | 6.125% | 6.125% | 6.125% | |||
Senior notes | 5.750% Senior notes due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Amount of debt redeemed | $ 600,000,000 | |||||
Stated interest rate | 5.75% | 5.75% |
Long-Term Debt - Interest Expen
Long-Term Debt - Interest Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |||
Gross interest expense | $ 416 | $ 517 | $ 510 |
Capitalized interest | (23) | (15) | (1) |
Total interest expense | $ 393 | $ 502 | $ 509 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Term Loan (Details) - USD ($) | Nov. 29, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Outstanding debt | $ 10,381,000,000 | ||
Term loan | Tranche B 2024 Term Loan | |||
Debt Instrument [Line Items] | |||
Amount of debt redeemed | $ 1,500,000,000 | ||
Term loan | Tranche B 2027 Term Loan | |||
Debt Instrument [Line Items] | |||
Outstanding debt | $ 3,111,000,000 | $ 3,111,000,000 | |
Borrowings | 3,100,000,000 | ||
Term loan | Tranche B 2027 Term Loan | Federal Funds Effective Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 0.50% | ||
Term loan | Tranche B 2027 Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.00% | ||
Term loan | Tranche B 2027 Term Loan | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 0.75% | ||
Term loan | Tranche B 2027 Term Loan | Eurodollar | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.75% | ||
Term loan | Tranche B 2024 Term Loan | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 4,600,000,000 |
Long-Term Debt - Senior Notes (
Long-Term Debt - Senior Notes (Details) - Senior notes | 12 Months Ended |
Dec. 31, 2020 | |
Minimum | |
Debt Instrument [Line Items] | |
Redemption period | 10 days |
Maximum | |
Debt Instrument [Line Items] | |
Redemption period | 60 days |
Senior Notes 2025 and Senior Notes 2026 | Minimum | |
Debt Instrument [Line Items] | |
Redemption period | 30 days |
Senior Notes 2025 and Senior Notes 2026 | Maximum | |
Debt Instrument [Line Items] | |
Redemption period | 60 days |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Debt (Details) $ in Millions | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 14 |
2022 | 14 |
2023 | 15 |
2024 | 916 |
2025 | 817 |
2026 and thereafter | 8,605 |
Long-term debt, gross | $ 10,381 |
Long-Term Debt - Letters of Cre
Long-Term Debt - Letters of Credit (Details) - Letter of credit - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Letters of credit outstanding, amount | $ 18 | $ 23 |
Collateralized debt obligations | ||
Debt Instrument [Line Items] | ||
Collateralized financings | $ 11 | $ 18 |
Long-Term Debt - Covenants (Det
Long-Term Debt - Covenants (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Redemption price, percentage | 101.00% |
Long-Term Debt - Subsequent Eve
Long-Term Debt - Subsequent Event (Details) - USD ($) | Feb. 12, 2021 | Jul. 15, 2020 | Dec. 31, 2019 | Jan. 13, 2021 |
Senior notes | 5.375% Senior notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.375% | 5.375% | ||
Amount of debt redeemed | $ 840,000,000 | $ 160,000,000 | ||
Senior notes | 5.375% Senior notes due 2022 | Subsequent event | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.375% | |||
Amount of debt redeemed | $ 900,000,000 | |||
Senior notes | 3.750 Sustainability-linked senior notes due 2029 | Subsequent event | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 900,000,000 | |||
Stated interest rate | 3.75% |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 728 | $ 680 |
Less: allowance for doubtful accounts | (45) | (13) |
Accounts receivable, less allowance | 683 | 667 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 570 | 529 |
Earned and unbilled receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 158 | $ 151 |
Accounts Receivable - Allowance
Accounts Receivable - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning Balance | $ 13 | $ 11 | $ 3 | |
Additions | 41 | 24 | 18 | |
Deductions | (9) | (22) | (10) | |
Ending Balance | 45 | 13 | 11 | |
Member's equity | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Partners' capital | $ 13,139 | 13,724 | 18,048 | $ 19,254 |
Cumulative Effect, Period of Adoption, Adjustment | Member's equity | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Partners' capital | (3) | $ (39) | ||
Cumulative net effect of adoption of ASU, tax | $ (2) |
Property, Plant and Equipment -
Property, Plant and Equipment - Net Property, Plant and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | $ 13,336 | $ 11,761 | |
Accumulated depreciation | (2,818) | (1,825) | |
Net property, plant and equipment | 10,518 | 9,936 | |
Depreciation expense | 851 | 804 | $ 906 |
Land | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | 320 | 336 | |
Fiber conduit and other outside plant | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | $ 6,186 | 5,226 | |
Fiber conduit and other outside plant | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 15 years | ||
Fiber conduit and other outside plant | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 45 years | ||
Central office and other network electronics | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | $ 3,388 | 2,687 | |
Central office and other network electronics | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 7 years | ||
Central office and other network electronics | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 10 years | ||
Support assets | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | $ 2,722 | 2,419 | |
Support assets | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 3 years | ||
Support assets | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Depreciable Lives | 30 years | ||
Construction-in-progress | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, plant and equipment | $ 720 | $ 1,093 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Asset Retirement Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||
Balance at beginning of period | $ 113 | $ 105 | $ 45 |
Accretion expense | 6 | 5 | 5 |
Purchase price adjustments | 0 | 0 | 58 |
Liabilities settled | (7) | (12) | (13) |
Revision in estimated cash flows | 10 | 15 | 10 |
Balance at end of period | $ 122 | $ 113 | $ 105 |
Severance (Details)
Severance (Details) - Employee Severance - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | $ 9 | $ 19 |
Accrued to expense | 37 | 6 |
Payments, net | (23) | (16) |
Restructuring reserve, ending balance | $ 23 | $ 9 |
Employee Benefits - Defined Con
Employee Benefits - Defined Contribution (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Defined contribution plan, cost | $ 29 | $ 29 | $ 26 |
All Other Defined Contribution | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Defined contribution plan, cost | $ 8 | $ 6 | $ 5 |
Employee Benefits - Defined Ben
Employee Benefits - Defined Benefits (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Retirement Benefits [Abstract] | ||
Plan assets | $ 128 | $ 122 |
Benefit obligation | 161 | 140 |
Unfunded status | $ 33 | $ 18 |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |||
Share-based compensation expense | $ 78 | $ 85 | $ 105 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Input Level 2 - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Liabilities measured on a recurring basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 10,132 | $ 10,196 |
Fair Value | ||
Liabilities measured on a recurring basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 10,340 | $ 10,244 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) by Current and Deferred (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Federal | |||
Current | $ 0 | $ 12 | $ 0 |
Deferred | 162 | 186 | 199 |
State and local | |||
Current | 22 | 4 | (9) |
Deferred | 42 | 41 | 28 |
Foreign | |||
Current | 19 | 17 | 30 |
Deferred | (24) | (5) | (52) |
Total income tax expense | $ 221 | $ 255 | $ 196 |
Income Taxes - Allocation of In
Income Taxes - Allocation of Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax expense in the consolidated statements of operations: | |||
Attributable to income | $ 221 | $ 255 | $ 196 |
Member's equity: | |||
Tax effect of the change in accumulated other comprehensive loss | $ 43 | $ 5 | $ (49) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate | 21.00% | 21.00% | 21.00% |
State income taxes, net of federal income tax benefit | 5.80% | (1.20%) | 2.80% |
Goodwill impairment | 0.00% | (26.40%) | 0.00% |
Tax law changes | (1.50%) | (0.20%) | 17.20% |
Global intangible low-taxed income | 0.00% | (0.40%) | 1.80% |
Net foreign income tax | 0.90% | (0.80%) | (4.80%) |
Executive compensation limitation | 0.00% | (0.20%) | 1.20% |
Research and development credits | (0.60%) | 0.10% | (1.30%) |
Other, net | (0.30%) | (0.50%) | (1.40%) |
Effective income tax rate | 25.30% | (8.60%) | 36.50% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of Income Tax Expense (Benefit) [Line Items] | |||
Effective income tax rate | 25.30% | (8.60%) | 36.50% |
Favorable impact of tax law changes regarding Global Intangible Low Taxes Income regulations | $ 13 | ||
Unfavorable impact of non-deductible goodwill impairment | $ 779 | ||
Tax Cuts and Jobs Act, income tax expense | $ 92 | ||
Net deferred tax liabilities | 86 | ||
Deferred tax liabilities, long-term | 247 | 241 | |
Net deferred tax assets | 89 | ||
Deferred tax assets, net, noncurrent | 161 | 330 | |
Uncertain tax benefits | 923 | 952 | $ 970 |
Deferred tax assets, valuation allowance | 1,170 | 892 | |
Unrecognized tax benefits that would impact effective tax rate | 33 | 30 | |
Unrecognized tax benefits, accrued interest | 9 | $ 8 | |
Reasonably possible decrease in unrecognized tax benefits for uncertain tax positions previously taken | (2) | ||
Federal | |||
Components of Income Tax Expense (Benefit) [Line Items] | |||
Operating loss carryforwards | 12,900 | ||
Uncertain tax benefits | 4,100 | ||
State | |||
Components of Income Tax Expense (Benefit) [Line Items] | |||
Operating loss carryforwards | 8,300 | ||
Uncertain tax benefits | 618 | ||
Foreign | |||
Components of Income Tax Expense (Benefit) [Line Items] | |||
Operating loss carryforwards | $ 7,200 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets | ||
Deferred revenue | $ 277 | $ 306 |
Net operating loss carry forwards | 3,503 | 3,233 |
Property, plant and equipment | 65 | 58 |
Other | 343 | 326 |
Gross deferred tax assets | 4,188 | 3,923 |
Less valuation allowance | (1,170) | (892) |
Net deferred tax assets | 3,018 | 3,031 |
Deferred tax liabilities | ||
Deferred revenue | (34) | (41) |
Property, plant and equipment | (1,264) | (974) |
Intangible assets | (1,773) | (1,898) |
Other | (33) | (29) |
Gross deferred tax liabilities | (3,104) | (2,942) |
Net deferred tax (liabilities) assets | $ (86) | |
Net deferred tax (liabilities) assets | $ 89 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits at beginning of period | $ 952 | $ 970 |
Tax positions of prior periods netted against deferred tax assets | (32) | (24) |
Increase in tax positions taken in the prior period | 0 | 1 |
Increase in tax positions taken in the current period | 4 | 5 |
Decrease due to settlement/payments | (1) | 0 |
Decrease from the lapse of statute of limitations | 0 | 0 |
Unrecognized tax benefits at end of period | $ 923 | $ 952 |
Products and Services Revenue_2
Products and Services Revenues - Revenue From Products and Services (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020USD ($)reporting_unitcategory | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Revenues [Abstract] | |||
Number of categories of products and services | category | 5 | ||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | $ 7,933 | $ 7,773 | $ 7,839 |
Number of reportable segments | reporting_unit | 1 | ||
Customer Concentration Risk | Sales Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk, percentage | 16.00% | 16.00% | 20.00% |
IP and Data Services | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | $ 3,587 | $ 3,655 | $ 3,728 |
Transport and Infrastructure | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | 2,615 | 2,544 | 2,591 |
Voice and Collaboration | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | 1,423 | 1,385 | 1,413 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | 100 | 9 | 0 |
Affiliate Services | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | $ 208 | $ 180 | $ 107 |
Products and Services Revenue_3
Products and Services Revenues - Assets from Geographic Region (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 28,576 | $ 29,098 |
North America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | 23,511 | 24,144 |
Europe, Middle East and Africa | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | 3,059 | 2,842 |
Latin America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Assets | $ 2,006 | $ 2,112 |
Products and Services Revenue_4
Products and Services Revenues - Revenue from Geographical Region (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | $ 7,933 | $ 7,773 | $ 7,839 |
North America | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | 6,411 | 6,307 | 6,358 |
Europe, Middle East and Africa | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | 785 | 719 | 744 |
Latin America | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenue | $ 737 | $ 747 | $ 737 |
Affiliate Transactions (Details
Affiliate Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Oct. 15, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Outstanding debt | $ 10,387 | $ 10,367 | |
Affiliated Entity | Lumen Technologies | |||
Related Party Transaction [Line Items] | |||
Proceeds from collection of notes receivable | 122 | ||
Outstanding debt | $ 1,500 | ||
Affiliated Entity | Lumen Technologies | Revolving Credit Facility | Line of Credit | |||
Related Party Transaction [Line Items] | |||
Stated interest rate | 4.25% |
Commitments, Contingencies an_3
Commitments, Contingencies and Other Items - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2020USD ($)contractsubsidiaryEmployeepatentproperty | |
Loss Contingencies | |
Estimated tax and litigation liability | $ 59,000,000 |
Loss contingency, damages sought, value | $ 50,000,000 |
Patents allegedly infringed | patent | 1 |
Number of properties with potential environmental liability | property | 175 |
Purchase commitment | $ 335,000,000 |
Purchase obligation, due in next twelve months | 120,000,000 |
Purchase obligation, due in second and third year | 116,000,000 |
Purchase obligation, due in fourth and fifth year | 36,000,000 |
Purchase obligation, due after fifth year | 63,000,000 |
Unfavorable Regulatory Action | |
Loss Contingencies | |
Estimate of possible loss | $ 300,000 |
Peruvian Tax Litigation, Before Interest | Pending Litigation | |
Loss Contingencies | |
Number of subsidiaries with tax assessment | subsidiary | 1 |
Asserted claim | $ 26,000,000 |
Estimate of possible loss | 2,000,000 |
Brazilian Tax Claims | Minimum | |
Loss Contingencies | |
Estimate of possible loss | 17,000,000 |
Brazilian Tax Claims | Maximum | |
Loss Contingencies | |
Estimate of possible loss | $ 49,000,000 |
United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. | |
Loss Contingencies | |
Number of former employees names in lawsuit | Employee | 2 |
Number of government contracts in question | contract | 2 |
Number of former employees with plea agreements | Employee | 1 |
Commitments, Contingencies an_4
Commitments, Contingencies and Other Items - Right-of-Way Agreements (Details) - Right-of-Way Agreements $ in Millions | Dec. 31, 2020USD ($) |
Other Commitments [Line Items] | |
2021 | $ 109 |
2022 | 63 |
2023 | 62 |
2024 | 51 |
2025 | 44 |
2026 and thereafter | 284 |
Total future minimum payments | $ 613 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Increase (Decrease) in Accumulated Other Comprehensive Income | |||
Beginning balance | $ 13,545 | $ 17,877 | |
Other comprehensive loss before reclassifications | (55) | (5) | |
Amounts reclassified from accumulated other comprehensive loss | (3) | ||
Other comprehensive loss, net of tax | (55) | (8) | $ (195) |
Ending balance | 12,905 | 13,545 | 17,877 |
Accumulated other comprehensive income | |||
Increase (Decrease) in Accumulated Other Comprehensive Income | |||
Beginning balance | (179) | (171) | |
Ending balance | (234) | (179) | (171) |
Pension Plans | |||
Increase (Decrease) in Accumulated Other Comprehensive Income | |||
Beginning balance | 2 | 5 | |
Other comprehensive loss before reclassifications | (15) | 0 | |
Amounts reclassified from accumulated other comprehensive loss | (3) | ||
Other comprehensive loss, net of tax | (15) | (3) | |
Ending balance | (13) | 2 | 5 |
Foreign Currency Translation Adjustments and Other | |||
Increase (Decrease) in Accumulated Other Comprehensive Income | |||
Beginning balance | (181) | (176) | |
Other comprehensive loss before reclassifications | (40) | (5) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | ||
Other comprehensive loss, net of tax | (40) | (5) | |
Ending balance | $ (221) | $ (181) | $ (176) |
Uncategorized Items - ctl-20201
Label | Element | Value |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 25,000,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 19,000,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 12,000,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 3,000,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 3,000,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 4,000,000 |