Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2021shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2021 |
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 Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 0 |
Entity Central Index Key | 0000794323 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q1 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING REVENUE | ||
Operating revenues | $ 1,989 | $ 1,980 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 878 | 876 |
Selling, general and administrative | 294 | 310 |
Operating expenses - affiliates | 107 | 93 |
Depreciation and amortization | 437 | 416 |
Total operating expenses | 1,716 | 1,695 |
OPERATING INCOME | 273 | 285 |
OTHER (EXPENSE) INCOME | ||
Interest income - affiliate | 18 | 13 |
Interest expense | (93) | (106) |
Other income (expense), net | 4 | (34) |
Total other expense, net | (71) | (127) |
INCOME BEFORE INCOME TAXES | 202 | 158 |
Income tax expense | 51 | 45 |
NET INCOME | 151 | 113 |
Non-Affiliate Revenue | ||
OPERATING REVENUE | ||
Operating revenues | 1,934 | 1,932 |
Affiliate Services | ||
OPERATING REVENUE | ||
Operating revenues | $ 55 | $ 48 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
NET INCOME | $ 151 | $ 113 |
OTHER COMPREHENSIVE LOSS | ||
Foreign currency translation adjustments, net of $7 and $23 tax | (88) | (228) |
Other comprehensive loss, net of tax | (88) | (228) |
COMPREHENSIVE INCOME (LOSS) | $ 63 | $ (115) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustments, tax effect | $ 7 | $ 23 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 234 | $ 190 |
Accounts receivable, less allowance of $44 and $45 | 673 | 683 |
Note receivable - affiliate | 1,468 | 1,468 |
Other | 354 | 297 |
Total current assets | 2,729 | 2,638 |
Property, plant and equipment, net of accumulated depreciation of $3,018 and $2,818 | 10,477 | 10,518 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 7,389 | 7,405 |
Other intangible assets, net | 6,413 | 6,605 |
Other, net | 1,458 | 1,410 |
Total goodwill and other assets | 15,260 | 15,420 |
TOTAL ASSETS | 28,466 | 28,576 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 29 | 14 |
Accounts payable | 500 | 495 |
Accounts payable - affiliates | 694 | 869 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 155 | 220 |
Income and other taxes | 106 | 111 |
Current operating lease liabilities | 265 | 241 |
Other | 134 | 159 |
Current portion of deferred revenue | 325 | 315 |
Total current liabilities | 2,208 | 2,424 |
LONG-TERM DEBT | 10,339 | 10,373 |
DEFERRED REVENUE AND OTHER LIABILITIES | ||
Deferred revenue | 1,401 | 1,396 |
Operating lease liabilities | 973 | 903 |
Other | 577 | 575 |
Total deferred revenue and other liabilities | 2,951 | 2,874 |
COMMITMENTS AND CONTINGENCIES (Note 7) | ||
MEMBER'S EQUITY | ||
Member's equity | 13,290 | 13,139 |
Accumulated other comprehensive loss | (322) | (234) |
Total member's equity | 12,968 | 12,905 |
TOTAL LIABILITIES AND MEMBER'S EQUITY | $ 28,466 | $ 28,576 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 44 | $ 45 |
Accumulated depreciation | $ 3,018 | $ 2,818 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING ACTIVITIES | ||
Net income | $ 151 | $ 113 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 437 | 416 |
Deferred income taxes | 42 | 38 |
Changes in current assets and liabilities: | ||
Accounts receivable | 1 | (80) |
Accounts payable | (1) | 22 |
Other assets and liabilities, net | (159) | (188) |
Other assets and liabilities, affiliate | (161) | 105 |
Changes in other noncurrent assets and liabilities, net | 37 | (10) |
Other, net | (19) | (21) |
Net cash provided by operating activities | 328 | 395 |
INVESTING ACTIVITIES | ||
Capital expenditures | (297) | (349) |
Payments of notes receivable - affiliates | 0 | 122 |
Proceeds from sale of property, plant and equipment and other assets | 25 | 33 |
Net cash used in investing activities | (272) | (194) |
FINANCING ACTIVITIES | ||
Net proceeds from issuance of long-term debt | 891 | 0 |
Distributions | 0 | (275) |
Payments of long-term debt | (904) | (4) |
Other | (2) | 0 |
Net cash used in financing activities | (15) | (279) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 41 | (78) |
Cash, cash equivalents and restricted cash at beginning of period | 205 | 338 |
Cash, cash equivalents and restricted cash at end of period | 246 | 260 |
Supplemental cash flow information: | ||
Income taxes paid, net | (7) | (5) |
Interest paid (net of capitalized interest of $4 and $6) | (126) | (115) |
Cash, cash equivalents and restricted cash: | ||
Total | $ 246 | $ 260 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 4 | $ 6 |
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, 2019 | $ 13,724 | $ (3) | $ (179) | |
MEMBER'S EQUITY | ||||
Net income | $ 113 | 113 | ||
Distributions | (318) | |||
Other | 8 | |||
Other comprehensive loss | (228) | (228) | ||
Balance at end of period at Mar. 31, 2020 | 13,117 | 13,524 | (407) | |
Balance at beginning of period at Dec. 31, 2020 | 12,905 | 13,139 | (234) | |
MEMBER'S EQUITY | ||||
Net income | 151 | 151 | ||
Distributions | 0 | |||
Other | 0 | |||
Other comprehensive loss | (88) | (88) | ||
Balance at end of period at Mar. 31, 2021 | $ 12,968 | $ 13,290 | $ (322) |
Consolidated Statements of Me_2
Consolidated Statements of Member's Equity (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2019 | |
Income tax expense (benefit) | $ 51 | $ 45 | |
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment | |||
Income tax expense (benefit) | $ (2) |
Background
Background | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Background | Background 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 Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the SEC. However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. 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 first quarter of 2021. We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net income for any period. Operating lease assets are included in other, net under goodwill and other assets on our consolidated balance sheets. Segments Our operations are integrated into and reported as part 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 SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment. Summary of Significant Accounting Policies The significant accounting policy below is in addition to the significant accounting policies described in Note 1 — Background and Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020. Operating Lease Income We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease income are included in operating revenue in our consolidated statements of operations. For the three months ended March 31, 2021 and 2020, our gross rental income was $197 million and $176 million, respectively, which represents approximately 10% and 9%, respectively, of our operating revenue for the three months ended March 31, 2021 and 2020. Recently Adopted Accounting Pronouncements Debt On January 1, 2021, we adopted 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 adoption of ASU 2020-09 did not have a material impact to our consolidated financial statements. Investments On January 1, 2021, we adopted 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 March 31, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements. Income taxes On January 1, 2021, we adopted ASU 2019-12, " Simplifying the Accounting for Income Taxes (Topic 740) " ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements. 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 4—Credit Losses on Financial Instruments for more information. Recently Issued Accounting Pronouncements 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. These amendments are |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
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: March 31, 2021 December 31, 2020 (Dollars in millions) Goodwill $ 7,389 7,405 Customer relationships, less accumulated amortization of $2,417 and $2,246 $ 5,972 6,156 Capitalized software, less accumulated amortization of $280 and $256 400 401 Trade names, less accumulated amortization of $89 and $83 41 48 Total other intangible assets, net $ 6,413 6,605 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. The following table shows the rollforward of goodwill from December 31, 2020 through March 31, 2021: (Dollars in millions) As of December 31, 2020 $ 7,405 Effect of foreign currency exchange rate changes (16) As of March 31, 2021 $ 7,389 _______________________________________________________________________________ (1) Goodwill at March 31, 2021 and December 31, 2020 is net of accumulated impairment loss of $3.7 billion. Total amortization expense for intangible assets for the three months ended March 31, 2021 and 2020, was $211 million and $208 million, respectively. As of March 31, 2021, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $16.6 billion. We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows: (Dollars in millions) 2021 (remaining nine months) $ 634 2022 783 2023 755 2024 744 2025 680 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Beginning in the first quarter of 2021, we categorized our products, services and revenue among the following five categories: • Compute and Application Services , which include our Edge Cloud services, IT solutions, Unified Communications and Collaboration ("UC&C"), data center, content delivery network ("CDN") and Managed Security services; • IP and Data Services , which include Ethernet, IP, and VPN data networks, including software-defined wide area networks ("SD WAN") based services, Dynamic Connections and Hyper WAN; • Fiber Infrastructure Services , which include dark fiber, optical services and equipment; • Voice and Other , which includes Time Division Multiplexing ("TDM") voice, private line and other legacy services; and • Affiliate Services, which include 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. Disaggregated Revenue by Service Offering The following tables provide disaggregation of revenue from contracts with customers based on service offering for the three months ended March 31, 2021. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Compute and Application Services $ 280 (127) 153 275 (125) 150 IP and Data Services 881 — 881 881 — 881 Fiber Infrastructure Services 397 (53) 344 369 (50) 319 Voice and Other 376 (2) 374 407 (2) 405 Affiliate Services 55 (55) — 48 (48) — Total revenue $ 1,989 (237) 1,752 1,980 (225) 1,755 _____________________________________________________________________ (1) 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 March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 (Dollars in millions) Customer receivables (1) $ 671 683 Contract assets 37 38 Contract liabilities 323 385 _____________________________________________________________________ (1) Gross customer receivables of $715 million and $728 million, net of allowance for credit losses of $44 million and $45 million, at March 31, 2021 and December 31, 2020, 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 March 31, 2021, 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 $3.7 billion. We expect to recognize approximately 90% of this revenue through 2023, with the balance recognized thereafter. These amounts exclude (i) 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), and (ii) 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: Three Months Ended March 31, 2021 2020 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 78 122 79 121 Costs incurred 14 23 23 23 Amortization (17) (22) (16) (22) End of period balance $ 75 123 86 122 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 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond 12 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. |
Credit Losses on Financial Inst
Credit Losses on Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Credit Loss [Abstract] | |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments In accordance with ASC 326, " Financial Instruments - Credit Losses " ("ASC 326"), 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 recognize accounts receivable as credit losses. 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. The historical, current, and expected credit loss rates are combined and applied to period end accounts receivable, which results in our allowance for credit losses. 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 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 December 31, 2020 $ 45 Provision for expected losses 2 Write-offs charged against the allowance (5) Recoveries collected 2 Ending balance at March 31, 2021 $ 44 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-Term DebtThe 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) March 31, 2021 December 31, 2020 (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% 2025 - 2029 5,515 5,515 Finance leases Various Various 265 255 Unamortized premiums, net 40 60 Unamortized debt issuance costs (63) (54) Total long-term debt 10,368 10,387 Less current maturities (29) (14) Long-term debt, excluding current maturities $ 10,339 10,373 ______________________________________________________________________ (1) As of March 31, 2021. (2) See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2020 for a description of certain parent or subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 1.859% at March 31, 2021 and 1.897% at December 31, 2020. (4) This debt is, or is expected to be, fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC . New Issuances 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, together with cash on hand, were used to redeem certain of its outstanding senior note indebtedness. See "—Redemption of Senior Notes" below. 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. Redemption of Senior Notes On February 12, 2021, Level 3 Financing, Inc. redeemed all $900 million aggregate principal amount of its outstanding 5.375% Senior Notes due 2024. This transaction resulted in a gain of $16 million. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt as of March 31, 2021 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years: (Dollars in millions) 2021 (remaining nine months) $ 26 2022 14 2023 15 2024 16 2025 817 2026 and thereafter 9,503 Total long-term debt $ 10,391 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. Certain of Lumen's and our debt instruments contain cross-payment default or cross-acceleration provisions. Compliance As of March 31, 2021, we believe we were in compliance with the financial covenants contained in our debt agreements in all material respects. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
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, note receivable-affiliate and accounts payable approximate their fair values. The three input levels in the hierarchy of fair value measurements are defined by the FASB are 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: March 31, 2021 December 31, 2020 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 10,103 10,212 10,132 10,340 |
Commitments, Contingencies and
Commitments, Contingencies and Other Items | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Items | Commitments, Contingencies and Other Items We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities. Irrespective of its merits, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously-established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Amounts accrued for our litigation and non-income tax contingencies at March 31, 2021 aggregated to approximately $58 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 $1 million at March 31, 2021. 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. These assessments, if upheld, could result in a loss of $12 million to as high as $49 million as of March 31, 2021, 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. If, contrary to our expectations, the plaintiff obtains an award of the approximate magnitude he has claimed, the award would significantly exceed the reserve we have accrued for the matter. Such an 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 matters listed above in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 16—Commitments, Contingencies and Other Items to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2021: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2020 $ (13) (221) (234) Other comprehensive loss, net of tax — (88) (88) Net other comprehensive loss — (88) (88) Balance at March 31, 2021 $ (13) (309) (322) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2020: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2019 $ 2 (181) (179) Other comprehensive loss, net of tax — (228) (228) Net other comprehensive loss — (228) (228) Balance at March 31, 2020 $ 2 (409) (407) During the three month periods ended March 31, 2021 and 2020, there were no reclassifications out of accumulated other comprehensive income (loss) in our statements of operations. |
Other Financial Information
Other Financial Information | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Financial Information | Other Financial Information Other Current Assets The following table presents details of other current assets reflected in our consolidated balance sheets: March 31, 2021 December 31, 2020 (Dollars in millions) Prepaid expenses $ 165 106 Contract fulfillment costs 61 63 Contract acquisition costs 45 47 Contract assets 33 34 Other 50 47 Total other current assets $ 354 297 |
Background (Policies)
Background (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation | Our consolidated balance sheet as of December 31, 2020, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the SEC. However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020. 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 first quarter of 2021. |
Reclassification | We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. |
Segments | Our operations are integrated into and reported as part 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 SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. |
Operating lease income | We lease various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease income are included in operating revenue in our consolidated statements of operations. |
Recently adopted and issued accounting pronouncements | Debt On January 1, 2021, we adopted 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 adoption of ASU 2020-09 did not have a material impact to our consolidated financial statements. Investments On January 1, 2021, we adopted 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 March 31, 2021, we determined there was no application or discontinuation of the equity method during the reporting periods. The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements. Income taxes On January 1, 2021, we adopted ASU 2019-12, " Simplifying the Accounting for Income Taxes (Topic 740) " ("ASU 2019-12"). This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements. 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 4—Credit Losses on Financial Instruments for more information. Recently Issued Accounting Pronouncements 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. These amendments are |
Goodwill and intangible assets, goodwill | 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. |
Credit losses on financial instruments | In accordance with ASC 326, " Financial Instruments - Credit Losses " ("ASC 326"), 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. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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: March 31, 2021 December 31, 2020 (Dollars in millions) Goodwill $ 7,389 7,405 Customer relationships, less accumulated amortization of $2,417 and $2,246 $ 5,972 6,156 Capitalized software, less accumulated amortization of $280 and $256 400 401 Trade names, less accumulated amortization of $89 and $83 41 48 Total other intangible assets, net $ 6,413 6,605 |
Schedule of goodwill | The following table shows the rollforward of goodwill from December 31, 2020 through March 31, 2021: (Dollars in millions) As of December 31, 2020 $ 7,405 Effect of foreign currency exchange rate changes (16) As of March 31, 2021 $ 7,389 _______________________________________________________________________________ (1) Goodwill at March 31, 2021 and December 31, 2020 is net of accumulated impairment loss of $3.7 billion. |
Schedule of estimated amortization expense for intangible assets | We estimate that total amortization expense for intangible assets for the years ending December 31, 2021 through 2025 will be as follows: (Dollars in millions) 2021 (remaining nine months) $ 634 2022 783 2023 755 2024 744 2025 680 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following tables provide disaggregation of revenue from contracts with customers based on service offering for the three months ended March 31, 2021. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers Total Revenue Adjustments for Non-ASC 606 Revenue (1) Total Revenue from Contracts with Customers (Dollars in millions) Compute and Application Services $ 280 (127) 153 275 (125) 150 IP and Data Services 881 — 881 881 — 881 Fiber Infrastructure Services 397 (53) 344 369 (50) 319 Voice and Other 376 (2) 374 407 (2) 405 Affiliate Services 55 (55) — 48 (48) — Total revenue $ 1,989 (237) 1,752 1,980 (225) 1,755 _____________________________________________________________________ (1) 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 March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 (Dollars in millions) Customer receivables (1) $ 671 683 Contract assets 37 38 Contract liabilities 323 385 _____________________________________________________________________ (1) Gross customer receivables of $715 million and $728 million, net of allowance for credit losses of $44 million and $45 million, at March 31, 2021 and December 31, 2020, respectively. |
Capitalized contract cost | The following tables provide changes in our contract acquisition costs and fulfillment costs for: Three Months Ended March 31, 2021 2020 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 78 122 79 121 Costs incurred 14 23 23 23 Amortization (17) (22) (16) (22) End of period balance $ 75 123 86 122 |
Credit Losses on Financial In_2
Credit Losses on Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Credit Loss [Abstract] | |
Activity in allowance for credit losses | The following table presents the activity of our allowance for credit losses for our accounts receivable portfolio: (Dollars in millions) Beginning balance at December 31, 2020 $ 45 Provision for expected losses 2 Write-offs charged against the allowance (5) Recoveries collected 2 Ending balance at March 31, 2021 $ 44 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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) March 31, 2021 December 31, 2020 (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% 2025 - 2029 5,515 5,515 Finance leases Various Various 265 255 Unamortized premiums, net 40 60 Unamortized debt issuance costs (63) (54) Total long-term debt 10,368 10,387 Less current maturities (29) (14) Long-term debt, excluding current maturities $ 10,339 10,373 ______________________________________________________________________ (1) As of March 31, 2021. (2) See Note 6—Long-Term Debt in our Annual Report on Form 10-K for the year ended December 31, 2020 for a description of certain parent or subsidiary guarantees and liens securing this debt. (3) The Tranche B 2027 Term Loan had an interest rate of 1.859% at March 31, 2021 and 1.897% at December 31, 2020. (4) This debt is, or is expected to be, fully and unconditionally guaranteed by certain affiliates of Level 3 Financing, Inc., including Level 3 Parent, LLC and Level 3 Communications, LLC . |
Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding discounts) | Set forth below is the aggregate principal amount of our long-term debt as of March 31, 2021 (excluding unamortized premiums, net, and unamortized debt issuance costs), maturing during the following years: (Dollars in millions) 2021 (remaining nine months) $ 26 2022 14 2023 15 2024 16 2025 817 2026 and thereafter 9,503 Total long-term debt $ 10,391 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input levels to determine fair values | 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: March 31, 2021 December 31, 2020 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Liabilities-Long-term debt, excluding finance leases 2 $ 10,103 10,212 10,132 10,340 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2021: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2020 $ (13) (221) (234) Other comprehensive loss, net of tax — (88) (88) Net other comprehensive loss — (88) (88) Balance at March 31, 2021 $ (13) (309) (322) The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2020: Pension Plans Foreign Currency Translation Adjustment and Other Total (Dollars in millions) Balance at December 31, 2019 $ 2 (181) (179) Other comprehensive loss, net of tax — (228) (228) Net other comprehensive loss — (228) (228) Balance at March 31, 2020 $ 2 (409) (407) |
Other Financial Information (Ta
Other Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of components other current assets | The following table presents details of other current assets reflected in our consolidated balance sheets: March 31, 2021 December 31, 2020 (Dollars in millions) Prepaid expenses $ 165 106 Contract fulfillment costs 61 63 Contract acquisition costs 45 47 Contract assets 33 34 Other 50 47 Total other current assets $ 354 297 |
Background - Segments (Details)
Background - Segments (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Background - Operating Lease In
Background - Operating Lease Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Rental income | $ 197 | $ 176 |
Percent of operating revenue | 10.00% | 9.00% |
Background - Recently Adopted A
Background - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | |
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Member's equity | $ (12,968) | $ (13,117) | $ (12,905) | |
Income tax expense (benefit) | 51 | 45 | ||
MEMBER'S EQUITY | ||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Member's equity | $ (13,290) | $ (13,524) | $ (13,724) | $ (13,139) |
MEMBER'S EQUITY | Cumulative Effect, Period of Adoption, Adjustment | ||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Member's equity | 3 | |||
Income tax expense (benefit) | $ (2) |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 7,389 | $ 7,405 |
Other intangible assets, net | 6,413 | 6,605 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 5,972 | 6,156 |
Accumulated amortization | 2,417 | 2,246 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 400 | 401 |
Accumulated amortization | 280 | 256 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets, net | 41 | 48 |
Accumulated amortization | $ 89 | $ 83 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)reporting_unit | Mar. 31, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of reporting units | reporting_unit | 1 | |
Acquired finite-lived intangible asset amortization expense | $ 211 | $ 208 |
Intangible assets, gross, including goodwill | $ 16,600 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Activity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
As of December 31, 2020 | $ 7,405 | |
Effect of foreign currency exchange rate changes | (16) | |
As of March 31, 2021 | 7,389 | |
Goodwill, accumulated impairment loss | $ 3,700 | $ 3,700 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Amortization Expense (Details) $ in Millions | Mar. 31, 2021USD ($) |
Estimated amortization expense of finite-lived acquisition-related intangible assets | |
2021 (remaining nine months) | $ 634 |
2022 | 783 |
2023 | 755 |
2024 | 744 |
2025 | $ 680 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information - Categories (Details) | 3 Months Ended |
Mar. 31, 2021category | |
Revenue from Contract with Customer [Abstract] | |
Number of categories of products and services | 5 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 1,989 | $ 1,980 |
Adjustments for non-ASC 606 revenue | (237) | (225) |
Total revenue from contracts with customers | 1,752 | 1,755 |
Compute and Application Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 280 | 275 |
Adjustments for non-ASC 606 revenue | (127) | (125) |
Total revenue from contracts with customers | 153 | 150 |
IP and Data Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 881 | 881 |
Adjustments for non-ASC 606 revenue | 0 | 0 |
Total revenue from contracts with customers | 881 | 881 |
Fiber Infrastructure Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 397 | 369 |
Adjustments for non-ASC 606 revenue | (53) | (50) |
Total revenue from contracts with customers | 344 | 319 |
Voice and Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 376 | 407 |
Adjustments for non-ASC 606 revenue | (2) | (2) |
Total revenue from contracts with customers | 374 | 405 |
Affiliate Services | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 55 | 48 |
Adjustments for non-ASC 606 revenue | (55) | (48) |
Total revenue from contracts with customers | $ 0 | $ 0 |
Revenue Recognition - Customer
Revenue Recognition - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Customer receivables | $ 671 | $ 683 |
Contract assets | 37 | 38 |
Contract liabilities | 323 | 385 |
Accounts receivable, gross | 715 | 728 |
Allowance for credit losses | $ 44 | $ 45 |
Revenue Recognition - Additio_2
Revenue Recognition - Additional Information - Customer Receivables and Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Customer Receivables and Contract Balances [Line Items] | ||
Revenue recognized | $ 93 | $ 99 |
Minimum | ||
Customer Receivables and Contract Balances [Line Items] | ||
Contract term | 1 year | |
Maximum | ||
Customer Receivables and Contract Balances [Line Items] | ||
Contract term | 5 years |
Revenue Recognition - Additio_3
Revenue Recognition - Additional Information - Remaining Performance Obligation (Details) $ in Billions | Mar. 31, 2021USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 3.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 90.00% |
Expected timing of satisfaction, period | 2 years 9 months |
Revenue Recognition - Contract
Revenue Recognition - Contract Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Acquisition Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | $ 78 | $ 79 |
Costs incurred | 14 | 23 |
Amortization | (17) | (16) |
End of period balance | 75 | 86 |
Fulfillment Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | 122 | 121 |
Costs incurred | 23 | 23 |
Amortization | (22) | (22) |
End of period balance | $ 123 | $ 122 |
Revenue Recognition - Additio_4
Revenue Recognition - Additional Information - Contract Costs (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Business Customers | Weighted Average | |
Contract Costs [Line Items] | |
Length of customer life | 30 months |
Credit Losses on Financial In_3
Credit Losses on Financial Instruments (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance at January 1, 2020 | $ 45 |
Provision for expected losses | 2 |
Write-offs charged against the allowance | (5) |
Recoveries collected | 2 |
Ending balance at March 31, 2021 | $ 44 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Long-term debt | ||
Long-term debt, gross | $ 10,391 | |
Unamortized premiums, net | 40 | $ 60 |
Unamortized debt issuance costs | (63) | (54) |
Total long-term debt | 10,368 | 10,387 |
Less current maturities | (29) | (14) |
Long-term debt, excluding current maturities | 10,339 | 10,373 |
Senior notes | Senior Notes with Varied Maturity Date | ||
Long-term debt | ||
Long-term debt, gross | $ 1,500 | 1,500 |
Senior notes | Senior Notes with Varied Maturity Date | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.40% | |
Senior notes | Senior Notes with Varied Maturity Date | Maximum | ||
Long-term debt | ||
Stated interest rate | 3.875% | |
Senior notes | 3.625% - 5.375% Senior Notes | ||
Long-term debt | ||
Long-term debt, gross | $ 5,515 | 5,515 |
Senior notes | 3.625% - 5.375% Senior Notes | Minimum | ||
Long-term debt | ||
Stated interest rate | 3.625% | |
Senior notes | 3.625% - 5.375% Senior Notes | Maximum | ||
Long-term debt | ||
Stated interest rate | 5.375% | |
Term loan | Tranche B 2027 Term Loan | ||
Long-term debt | ||
Long-term debt, gross | $ 3,111 | $ 3,111 |
Effective percentage | 1.859% | 1.897% |
Term loan | Tranche B 2027 Term Loan | LIBOR | ||
Long-term debt | ||
Basis spread on variable rate | 1.75% | |
Finance leases | ||
Long-term debt | ||
Long-term debt, gross | $ 265 | $ 255 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | Feb. 12, 2021 | Mar. 31, 2021 | Jan. 13, 2021 |
Long-term debt | |||
Redemption price, percentage | 101.00% | ||
Senior notes | 5.375% Senior Notes Due 2024 | |||
Long-term debt | |||
Stated interest rate | 5.375% | ||
Amount of debt redeemed | $ 900,000,000 | ||
Gain from extinguishment of debt | $ 16,000,000 | ||
Senior notes | 3.750% Sustainability-Linked Senior Notes Due 2029 | |||
Long-term debt | |||
Debt instrument, face amount | $ 900,000,000 | ||
Stated interest rate | 3.75% |
Long-Term Debt - Debt Maturitie
Long-Term Debt - Debt Maturities (Details) $ in Millions | Mar. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 (remaining nine months) | $ 26 |
2022 | 14 |
2023 | 15 |
2024 | 16 |
2025 | 817 |
2026 and thereafter | 9,503 |
Total long-term debt | $ 10,391 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - Significant Other Observable Inputs (Level 2) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 10,103 | $ 10,132 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Liabilities-Long-term debt, excluding finance leases | $ 10,212 | $ 10,340 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Items (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)Employeesubsidiarycontractpatent | |
Loss Contingencies [Line Items] | |
Estimated litigation liability | $ 58,000,000 |
Number of patents allegedly infringed | patent | 1 |
Unfavorable Regulatory Action | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 300,000 |
Peruvian Tax Litigation, Before Interest | Pending Litigation | |
Loss Contingencies [Line Items] | |
Number of subsidiaries with tax assessment | subsidiary | 1 |
Asserted claim | $ 26,000,000 |
Estimate of possible loss | 1,000,000 |
Brazilian Tax Claims | Minimum | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | 12,000,000 |
Brazilian Tax Claims | Maximum | |
Loss Contingencies [Line Items] | |
Estimate of possible loss | $ 49,000,000 |
United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. | |
Loss Contingencies [Line Items] | |
Number of former employees names in lawsuit | Employee | 2 |
Number of government contracts in question | contract | 2 |
Damages sought, value | $ 50,000,000 |
Number of former employees with plea agreements | Employee | 1 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 12,905 | |
Other comprehensive loss, net of tax | (88) | $ (228) |
Net other comprehensive loss | (88) | (228) |
Balance at end of period | 12,968 | 13,117 |
Pension Plans | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (13) | 2 |
Other comprehensive loss, net of tax | 0 | 0 |
Net other comprehensive loss | 0 | 0 |
Balance at end of period | (13) | 2 |
Foreign Currency Translation Adjustment and Other | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (221) | (181) |
Other comprehensive loss, net of tax | (88) | (228) |
Net other comprehensive loss | (88) | (228) |
Balance at end of period | (309) | (409) |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (234) | (179) |
Balance at end of period | $ (322) | $ (407) |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 165 | $ 106 |
Contract assets | 33 | 34 |
Other | 50 | 47 |
Total other current assets | 354 | 297 |
Fulfillment Costs | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | 61 | 63 |
Acquisition Costs | ||
Prepaid Expense and Other Assets, Current [Abstract] | ||
Contract costs | $ 45 | $ 47 |
Uncategorized Items - lumn-2021
Label | Element | Value |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 2,000,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 3,000,000 |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201613Member |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 10,000,000 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 18,000,000 |