Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Mar. 31, 2019 | May 03, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | CENTURYLINK, INC | |
Entity Central Index Key | 0000018926 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,090,313,414 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
OPERATING REVENUE | $ 5,647 | $ 5,945 |
OPERATING EXPENSES | ||
Cost of services and products (exclusive of depreciation and amortization) | 2,520 | 2,803 |
Selling, general and administrative | 932 | 1,109 |
Depreciation and amortization | 1,188 | 1,283 |
Goodwill impairment | 6,506 | 0 |
Total operating expenses | 11,146 | 5,195 |
OPERATING (LOSS) INCOME | (5,499) | 750 |
OTHER (EXPENSE) INCOME | ||
Interest expense | (523) | (535) |
Other (expense) income, net | (5) | 21 |
Total other expense, net | (528) | (514) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (6,027) | 236 |
Income tax expense | 138 | 121 |
NET (LOSS) INCOME | $ (6,165) | $ 115 |
BASIC AND DILUTED (LOSS) EARNINGS PER COMMON SHARE | ||
BASIC (in dollars per share) | $ (5.77) | $ 0.11 |
DILUTED (in dollars per share) | $ (5.77) | $ 0.11 |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | ||
BASIC (in shares) | 1,068,878 | 1,065,796 |
DILUTED (in shares) | 1,068,878 | 1,069,183 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
NET (LOSS) INCOME | $ (6,165) | $ 115 |
Items related to employee benefit plans: | ||
Change in net actuarial loss, net of ($14) and ($11) tax | 43 | 33 |
Change in net prior service credit, net of ($1) and ($1) tax | 1 | 2 |
Unrealized holding loss on interest rate swaps, net of $6 and $— tax | (17) | |
Foreign currency translation adjustment and other net of ($1) and ($14) tax | 5 | 79 |
Other comprehensive income | 32 | 114 |
COMPREHENSIVE (LOSS) INCOME | $ (6,133) | $ 229 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Change in net actuarial loss, tax | $ (14) | $ (11) |
Change in net prior service costs, tax | (1) | (1) |
Unrealized holding loss on interest rate swaps, tax | 6 | |
Foreign currency translation adjustment and other, tax | $ (1) | $ (14) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 441 | $ 488 |
Restricted cash | 3 | 4 |
Accounts receivable, less allowance of $156 and $142 | 2,347 | 2,398 |
Assets held for sale | 3 | 12 |
Other | 1,026 | 918 |
Total current assets | 3,820 | 3,820 |
Property, plant and equipment, net of accumulated depreciation of $27,385 and $26,859 | 25,793 | 26,408 |
GOODWILL AND OTHER ASSETS | ||
Goodwill | 21,526 | 28,031 |
Operating lease assets | 1,952 | |
Restricted cash | 30 | 26 |
Customer relationships, net | 8,580 | 8,911 |
Other intangibles, net | 1,929 | 1,868 |
Other, net | 1,158 | 1,192 |
Total goodwill and other assets | 35,175 | 40,028 |
TOTAL ASSETS | 64,788 | 70,256 |
CURRENT LIABILITIES | ||
Current maturities of long-term debt | 632 | 652 |
Accounts payable | 1,481 | 1,933 |
Accrued expenses and other liabilities | ||
Salaries and benefits | 823 | 1,104 |
Income and other taxes | 386 | 337 |
Current operating lease liabilities | 561 | |
Interest | 352 | 316 |
Other | 297 | 357 |
Current portion of deferred revenue | 841 | 832 |
Total current liabilities | 5,373 | 5,531 |
LONG-TERM DEBT | 34,858 | 35,409 |
DEFERRED CREDITS AND OTHER LIABILITIES | ||
Deferred income taxes, net | 2,701 | 2,527 |
Benefit plan obligations, net | 4,265 | 4,319 |
Noncurrent operating lease liabilities | 1,501 | |
Other | 2,547 | 2,642 |
Total deferred credits and other liabilities | 11,014 | 9,488 |
COMMITMENTS AND CONTINGENCIES (Note 12) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock—non-redeemable, $25.00 par value, authorized 2,000 and 2,000 shares, issued and outstanding 7 and 7 shares | 0 | 0 |
Common stock, $1.00 par value, authorized 1,600,000 and 1,600,000 shares, issued and outstanding 1,090,445 and 1,080,167 shares | 1,090 | 1,080 |
Additional paid-in capital | 22,575 | 22,852 |
Accumulated other comprehensive loss | (2,429) | (2,461) |
Accumulated deficit | (7,693) | (1,643) |
Total stockholders' equity | 13,543 | 19,828 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 64,788 | $ 70,256 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 156 | $ 142 |
PP&E, accumulated depreciation | $ 27,385 | $ 26,859 |
Preferred stock-non-redeemable, par value (in dollars per share) | $ 25 | $ 25 |
Preferred stock-non-redeemable, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock-non-redeemable, shares issued (in shares) | 7,000 | 7,000 |
Preferred stock-non-redeemable, shares outstanding (in shares) | 7,000 | 7,000 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued (in shares) | 1,090,445,000 | 1,080,167,000 |
Common stock, shares outstanding (in shares) | 1,090,445,000 | 1,080,167,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net (loss) income | $ (6,165) | $ 115 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,188 | 1,283 |
Impairment of goodwill and other assets | 6,508 | 27 |
Deferred income taxes | 126 | 123 |
Provision for uncollectible accounts | 46 | 47 |
Net (gain) loss on early retirement of debt | (9) | 1 |
Share-based compensation | 33 | 41 |
Changes in current assets and liabilities: | ||
Accounts receivable | 5 | 117 |
Accounts payable | (239) | (14) |
Accrued income and other taxes | 45 | 20 |
Other current assets and liabilities, net | (336) | (262) |
Retirement benefits | (14) | (49) |
Changes in other noncurrent assets and liabilities, net | (4) | 145 |
Other, net | (2) | 73 |
Net cash provided by operating activities | 1,182 | 1,667 |
INVESTING ACTIVITIES | ||
Capital expenditures | (931) | (805) |
Proceeds from sale of property, plant and equipment | 25 | 3 |
Other, net | 0 | 34 |
Net cash used in investing activities | (906) | (768) |
FINANCING ACTIVITIES | ||
Net proceeds from issuance of long-term debt | 0 | 130 |
Payments of long-term debt | (153) | (68) |
Net proceeds (payments) on revolving line of credit | 145 | (405) |
Dividends paid | (285) | (580) |
Other, net | (27) | (26) |
Net cash used in financing activities | (320) | (949) |
Net decrease in cash, cash equivalents and restricted cash | (44) | (50) |
Cash, cash equivalents and restricted cash at beginning of period | 518 | 587 |
Cash, cash equivalents and restricted cash at end of period | 474 | 537 |
Supplemental cash flow information: | ||
Income taxes paid, net | (7) | (2) |
Interest paid (net of capitalized interest of $15 and $15) | $ (480) | $ (491) |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 15 | $ 15 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED OTHER COMPREHENSIVE LOSS | RETAINED EARNINGS (ACCUMULATED DEFICIT) |
Balance at beginning of period at Dec. 31, 2017 | $ 1,069 | $ 23,314 | $ (1,995) | $ 1,103 | |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock through dividend reinvestment, incentive and benefit plans | 10 | (6) | |||
Shares withheld to satisfy tax withholdings | (25) | ||||
Share-based compensation and other, net | 33 | ||||
Dividends declared | 0 | (586) | |||
Other comprehensive income | $ 114 | 114 | |||
Net (loss) income | 115 | 115 | |||
Balance at end of period at Mar. 31, 2018 | $ 23,443 | 1,079 | 23,316 | (2,288) | 1,336 |
Increase (Decrease) in Stockholders' Equity | |||||
DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) | $ 0.54 | ||||
Balance at beginning of period at Dec. 31, 2018 | $ 19,828 | 1,080 | 22,852 | (2,461) | (1,643) |
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock through dividend reinvestment, incentive and benefit plans | 10 | (13) | |||
Shares withheld to satisfy tax withholdings | (26) | ||||
Share-based compensation and other, net | 34 | ||||
Dividends declared | (272) | 0 | |||
Other comprehensive income | 32 | 32 | |||
Net (loss) income | (6,165) | (6,165) | |||
Balance at end of period at Mar. 31, 2019 | $ 13,543 | $ 1,090 | $ 22,575 | $ (2,429) | $ (7,693) |
Increase (Decrease) in Stockholders' Equity | |||||
DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) | $ 0.25 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - RETAINED EARNINGS (ACCUMULATED DEFICIT) - USD ($) $ in Millions | Jan. 01, 2019 | Jan. 01, 2018 |
Accounting Standards Update 2016-02 | ||
Cumulative net effect of adoption, tax | $ 37 | |
Accounting Standards Update 2014-09 | ||
Cumulative net effect of adoption, tax | $ 101 |
Background
Background | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | Background General We are an international facilities-based communications company engaged primarily in providing an integrated array of services to our residential and business customers. Basis of Presentation Our consolidated balance sheet as of December 31, 2018 , which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2018 . The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other income (expense), net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities. We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue and expenses in our segment reporting. See Note 11—Segment Information for additional information. These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period. Included in accounts payable at March 31, 2019 and December 31, 2018 , were $2 million and $86 million , respectively, representing book overdrafts. Recently Adopted Accounting Pronouncements We adopted Accounting Standards Update ("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 will not make the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we will recognize ASC 842's cumulative effect transition adjustment (discussed below) as of January 1, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things (i) allowed us to carry forward the historical lease classification; (ii) did not require us to reassess whether any expired or existing contracts are or contain leases under the new definition of a lease; and (iii) did not require us to reassess whether previously capitalized initial direct costs for any existing leases would qualify for capitalization under ASC 842. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We did not elect the hindsight practical expedient regarding the likelihood of exercising a lessee purchase option or assessing any impairment of right-of-use assets for existing leases. On March 5, 2019, the FASB issued ASU 2019-01 - Leases (ASC 842): Codification Improvements, effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in ASC 842, with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in ASC 820, Fair Value Measurement) should be applied. More importantly, the ASU also exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. Early adoption permits public companies to adopt concurrent with the transition to ASC 842 on leases. We adopted ASU 2019-01 as of January 1, 2019. Adoption of the new standard resulted in the recording of operating lease assets and operating lease liabilities of approximately $2.1 billion and $2.2 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 $115 million cumulative adjustment to accumulated deficit as of January 1, 2019, for the impact of the new accounting standard. The adjustment to accumulated deficit was driven by the derecognition of our prior failed sale leaseback transaction discussed in our prior periodic reports. The standard did not materially impact our consolidated net earnings or our cash flows in the first quarter of 2019. Effective January 1, 2019, we adopted ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 amends current guidance on accounting for hedges mainly to align more closely an entity’s risk management activities and financial reporting relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. In addition, amendments in ASU 2017-12 simplify the application of hedge accounting by allowing more time to prepare hedge documentation and perform effectiveness assessments on a qualitative basis after hedges are implemented. The adoption of this standard will be applied prospectively and did not have an impact on us. See Note 10—Derivative Financial Instruments to our consolidated financial statements in Item 1 of Part I of this report for additional disclosure regarding our hedging arrangements. Recently Issued Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU 2016-13, " Measurement of Credit Losses on Financial Instruments " ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires our management team to estimate the total credit losses expected on the portfolio of financial instruments. We are currently reviewing the requirements of the standard and evaluating the impact on our consolidated financial statements. We are required to adopt the provisions of ASU 2016-13 no later than January 1, 2020. We expect to adopt ASU 2016-13 on January 1, 2020 and recognize the impacts through a cumulative adjustment to accumulated deficit as of the date of adoption. |
Goodwill, Customer Relationship
Goodwill, Customer Relationships and Other Intangible Assets Goodwill, Customer Relationships and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill, Customer Relationships and Other Intangible Assets Goodwill, customer relationships and other intangible assets consisted of the following: March 31, 2019 December 31, 2018 (Dollars in millions) Goodwill $ 21,526 28,031 Customer relationships, less accumulated amortization of $8,825 and $8,492 $ 8,580 8,911 Indefinite-life intangible assets $ 269 269 Other intangible assets subject to amortization: Capitalized software, less accumulated amortization of $2,687 and $2,616 $ 1,536 1,468 Trade names and patents, less accumulated amortization of $69 and $61 124 131 Total other intangible assets, net $ 1,929 1,868 We are required to perform impairment tests related to our goodwill annually, which we perform as of October 31, or sooner if an indicator of impairment occurs. Due to our January 2019 internal reorganization and the decline in our stock price, we incurred two events in the first quarter of 2019 that triggered impairment testing. Due to the impairment indicators noted as a result of these triggering events, we evaluated our goodwill for the internal reorganization in January, and again as of March 31, 2019 as a result of the decline in our stock price. Our reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. For each reporting unit, we compare its estimated fair value of equity to its carrying value of equity that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the carrying value, we record an impairment equal to the excess amount. When we performed our October 31, 2018 annual impairment test, we estimated the fair value of our reporting units by considering both a market approach and a discounted cash flow method. The market approach method includes the use of multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period. Because our low stock price was a trigger for impairment testing, we estimated the fair value of our operations using only the market approach. 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 for each of our reporting units within this range. We reconciled the estimated fair values of the reporting units to our market capitalization as of the date of each of our triggering events during the first quarter and concluded that the indicated control premium of approximately 4.1% was reasonable based on recent transactions in the market place. For the three months ended March 31, 2019, based on our assessments performed with respect to the reporting units as described above, we concluded that the estimated fair value of certain of our reporting units was less than our carrying value of equity as of the date of each of our triggering events during the first quarter. As a result, we recorded non-cash, non-tax-deductible goodwill impairment charges aggregating to $6.5 billion for the three months ended March 31, 2019. The following table shows the March 31, 2019 impairments at each of our reportable segments: Impairments (Dollars in millions) International and Global Accounts $ 934 Enterprise 1,471 Small and Medium Business 896 Wholesale 3,019 Consumer 186 Total $ 6,506 The market multiples approach that we used incorporates significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of other cost synergies. In developing the market multiple, we also considered observed trends of our industry participants. Our failure to attain these forecasted results or changes in trends could result in future impairments. Our assessment included many qualitative factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the size of our impairments. Continued declines in our profitability, cash flows or the sustained, historically low trading prices of our common stock, may result in further impairment. Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired. Amortization expense for intangible assets for the three months ended March 31, 2019 and 2018 totaled $429 million and $444 million , respectively. As of March 31, 2019 , the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $43.6 billion . We estimate that total amortization expense for intangible assets for the years ending December 31, 2019 through 2023 will be as follows: (Dollars in millions) 2019 (remaining nine months) $ 1,260 2020 1,600 2021 1,158 2022 978 2023 900 In January 2019, Jeff Storey, our Chief Operating Decision Maker ("CODM"), announced a new organization structure and began managing our operations in the following five segments: international and global accounts, enterprise, small and medium business, wholesale and consumer. As a result of this decision, we reclassified certain prior period amounts to conform to the current period presentation. The following table shows the rollforward of goodwill assigned to our reportable segments from December 31, 2018 through March 31, 2019 : International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total (Dollars in millions) As of December 31, 2018 $ 3,595 5,222 5,193 6,437 7,584 28,031 January 2019 reorganization — 987 (1,038 ) 395 (344 ) — Effect of foreign currency rate change 1 — — — — 1 Impairments (934 ) (1,471 ) (896 ) (3,019 ) (186 ) (6,506 ) As of March 31, 2019 $ 2,662 4,738 3,259 3,813 7,054 21,526 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Refer to the Revenue Recognition section of Note 1—Background and Summary of Significant Accounting Policies and Note 5—Revenue Recognition in our annual report on Form 10-K for the year ended December 31, 2018 for further information regarding our application of ASC 606, “Revenue from Contracts with Customers”, including practical expedients and judgments applied in determining the amounts and timing of revenue from contracts with customers. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Total revenue $ 5,647 5,945 Adjustments for non-ASC 606 revenue (1) (358 ) (312 ) Total revenue from contracts with customers $ 5,289 5,633 ______________________________________________________________________ (1) Includes regulatory revenue, lease revenue, sublease rental income, revenue from fiber capacity lease arrangements and failed sale leaseback income, which are not within the scope of ASC 606. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 (Dollars in millions) Customer receivables (1) $ 2,286 2,346 Contract assets 134 140 Contract liabilities 869 860 (1) Gross customer receivables of $2.4 billion and $2.5 billion , net of allowance for doubtful accounts of $145 million and $132 million , at March 31, 2019 and December 31, 2018, respectively. Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to seven years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. The following table provides information about revenue recognized for the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) $ 490 523 Performance obligations satisfied in previous periods — — Performance Obligations As of March 31, 2019 , our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts that are unsatisfied (or partially satisfied) is approximately $6.4 billion . We expect to recognize approximately 77% of this revenue through 2021, with the balance recognized thereafter. We do not disclose the value of unsatisfied performance obligations for contracts for which we 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 table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 322 187 268 133 Costs incurred 57 34 52 29 Amortization (50 ) (23 ) (39 ) (12 ) End of period balance $ 329 198 281 150 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 customer life of 30 months for consumer customers and 12 to 60 months for 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 the next twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases Effective January 1, 2019, we adopted ASC 842 using the non-comparative transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional operating lease right of use assets and operating lease liabilities of approximately $2.1 billion and $2.2 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 $115 million cumulative adjustment, net of deferred taxes, to accumulated deficit as of January 1, 2019, for the impact of the new accounting standard. The adjustment to accumulated deficit was driven by the derecognition of our prior failed sales leaseback transaction discussed in our prior periodic reports. The standard did not materially impact our consolidated net earnings or our cash flows in the first quarter of 2019. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We primarily lease various office facilities, switching and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Some of our lease arrangements contain lease components (including fixed payments including rent, real estate taxes and insurance costs) and non-lease components (including common-area maintenance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following: Three Month Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 169 Finance lease cost: Amortization of right-of-use assets 12 Interest on lease liability 4 Total finance lease cost 16 Total lease cost $ 185 Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,952 Finance lease assets Property, plant and equipment, net of accumulated depreciation $ 271 Total leased assets $ 2,223 Liabilities Current Operating Other current liabilities $ 561 Finance Current portion of long-term debt $ 36 Noncurrent Operating Noncurrent operating lease liabilities $ 1,501 Finance Long-term debt $ 190 Total lease liabilities $ 2,288 Weighted-average remaining lease term (years) Operating leases 8.1 Finance leases 11.1 Weighted-average discount rate Operating leases 6.73 % Finance leases 5.45 % Supplemental unaudited consolidated cash flow statement information related to leases: Three Month Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 182 Operating cash flows from finance leases 3 Finance cash flows from finance leases 8 As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 463 38 2020 462 35 2021 381 22 2022 301 20 2023 260 19 Thereafter 878 179 Total lease payments 2,745 313 Less: interest (683 ) (87 ) Total $ 2,062 226 Less: current portion (561 ) (36 ) Long-term portion $ 1,501 190 As of March 31, 2019, we had no material operating or finance leases that had not yet commenced. Operating Lease Income CenturyLink leases various IRUs, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease income is included in operating revenue in the consolidated statements of operations. For the three months ended March 31, 2019 and 2018, our gross rental income was $199 million and $219 million , respectively. We adopted ASU 2016-02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. The future annual minimum payments under capital lease agreements as of December 31, 2018 were as follows: (Dollars in millions) Capital lease obligations: 2019 $ 51 2020 36 2021 23 2022 21 2023 20 2024 and thereafter 183 Total minimum payments 334 Less: amount representing interest and executory costs (100 ) Present value of minimum payments 234 Less: current portion (38 ) Long-term portion $ 196 At December 31, 2018 , our future rental commitments for Right-of-Way agreements and operating leases were as follows: Right-of-Way Agreements Operating Leases Total (Dollars in millions) 2019 $ 157 675 832 2020 134 443 577 2021 112 355 467 2022 120 279 399 2023 115 241 356 2024 and thereafter 755 969 1,724 Total future minimum payments (1) $ 1,393 2,962 4,355 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $101 million due in the future under non-cancelable subleases. |
Leases | Leases Effective January 1, 2019, we adopted ASC 842 using the non-comparative transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional operating lease right of use assets and operating lease liabilities of approximately $2.1 billion and $2.2 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 $115 million cumulative adjustment, net of deferred taxes, to accumulated deficit as of January 1, 2019, for the impact of the new accounting standard. The adjustment to accumulated deficit was driven by the derecognition of our prior failed sales leaseback transaction discussed in our prior periodic reports. The standard did not materially impact our consolidated net earnings or our cash flows in the first quarter of 2019. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We primarily lease various office facilities, switching and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Some of our lease arrangements contain lease components (including fixed payments including rent, real estate taxes and insurance costs) and non-lease components (including common-area maintenance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following: Three Month Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 169 Finance lease cost: Amortization of right-of-use assets 12 Interest on lease liability 4 Total finance lease cost 16 Total lease cost $ 185 Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,952 Finance lease assets Property, plant and equipment, net of accumulated depreciation $ 271 Total leased assets $ 2,223 Liabilities Current Operating Other current liabilities $ 561 Finance Current portion of long-term debt $ 36 Noncurrent Operating Noncurrent operating lease liabilities $ 1,501 Finance Long-term debt $ 190 Total lease liabilities $ 2,288 Weighted-average remaining lease term (years) Operating leases 8.1 Finance leases 11.1 Weighted-average discount rate Operating leases 6.73 % Finance leases 5.45 % Supplemental unaudited consolidated cash flow statement information related to leases: Three Month Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 182 Operating cash flows from finance leases 3 Finance cash flows from finance leases 8 As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 463 38 2020 462 35 2021 381 22 2022 301 20 2023 260 19 Thereafter 878 179 Total lease payments 2,745 313 Less: interest (683 ) (87 ) Total $ 2,062 226 Less: current portion (561 ) (36 ) Long-term portion $ 1,501 190 As of March 31, 2019, we had no material operating or finance leases that had not yet commenced. Operating Lease Income CenturyLink leases various IRUs, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease income is included in operating revenue in the consolidated statements of operations. For the three months ended March 31, 2019 and 2018, our gross rental income was $199 million and $219 million , respectively. We adopted ASU 2016-02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. The future annual minimum payments under capital lease agreements as of December 31, 2018 were as follows: (Dollars in millions) Capital lease obligations: 2019 $ 51 2020 36 2021 23 2022 21 2023 20 2024 and thereafter 183 Total minimum payments 334 Less: amount representing interest and executory costs (100 ) Present value of minimum payments 234 Less: current portion (38 ) Long-term portion $ 196 At December 31, 2018 , our future rental commitments for Right-of-Way agreements and operating leases were as follows: Right-of-Way Agreements Operating Leases Total (Dollars in millions) 2019 $ 157 675 832 2020 134 443 577 2021 112 355 467 2022 120 279 399 2023 115 241 356 2024 and thereafter 755 969 1,724 Total future minimum payments (1) $ 1,393 2,962 4,355 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $101 million due in the future under non-cancelable subleases. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Credit Facilities | Long-Term Debt and Credit Facilities The following chart reflects the consolidated long-term debt of CenturyLink, Inc. and its subsidiaries, including unamortized discounts and premiums and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities March 31, 2019 December 31, 2018 (Dollars in millions) Senior Secured Debt: (2) CenturyLink, Inc. 2017 Revolving Credit Facility 5.234% - 5.237% 2022 $ 695 550 Term Loan A (3) LIBOR + 2.75% 2022 1,600 1,622 Term Loan A-1 (3) LIBOR + 2.75% 2022 347 351 Term Loan B (3) LIBOR + 2.75% 2025 5,925 5,940 Subsidiaries: Level 3 Financing, Inc. Tranche B 2024 Term Loan (4) LIBOR + 2.25% 2024 4,611 4,611 Embarq Corporation subsidiaries First mortgage bonds 7.125% - 8.375% 2023 - 2025 138 138 Senior Notes and Other Debt: CenturyLink, Inc. Senior notes 5.625% - 7.650% 2019 - 2042 8,010 8,036 Subsidiaries: Level 3 Financing, Inc. Senior notes 5.125% - 6.125% 2021 - 2026 5,315 5,315 Level 3 Parent, LLC Senior notes 5.750% 2022 600 600 Qwest Corporation Senior notes 6.125% - 7.750% 2021 - 2057 5,956 5,956 Term loan 4.500% 2025 100 100 Qwest Capital Funding, Inc. Senior notes 6.875% - 7.750% 2021 - 2031 637 697 Embarq Corporation and subsidiary Senior note 7.995% 2036 1,460 1,485 Other 9.000% 2019 150 150 Finance lease and other obligations Various Various 231 801 Unamortized discounts and other, net (11 ) (8 ) Unamortized debt issuance costs (274 ) (283 ) Total long-term debt 35,490 36,061 Less current maturities (632 ) (652 ) Long-term debt, excluding current maturities $ 34,858 35,409 ______________________________________________________________________ (1) As of March 31, 2019 . (2) For information on certain parent or subsidiary guarantees and liens securing this debt, see "Other" below. (3) Term Loans A, A-1 and B have interest rates of 5.249% and 5.272% as of March 31, 2019 and December 31, 2018, respectively. (4) The Tranche B 2024 Term Loan had an interest rate of 4.736% as of March 31, 2019 and 4.754% as of December 31, 2018. Long-Term Debt Maturities Set forth below is the aggregate principal amount of our long-term debt (excluding unamortized discounts, net and unamortized debt issuance costs) maturing during the following years: (Dollars in millions) (1) 2019 (remaining nine months) $ 556 2020 1,189 2021 3,115 2022 5,428 2023 2,095 2024 and thereafter 23,392 Total long-term debt $ 35,775 ______________________________________________________________________ (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. The projected amounts in the table also exclude any impacts from any further acquisitions. Repayments During the three months ended March 31, 2019 , CenturyLink and its affiliates repurchased approximately $111 million of their respective debt securities. Covenants Certain of our debt instruments contain affirmative and negative covenants. Debt at CenturyLink, Inc., Level 3 Parent, LLC, and Level 3 Financing, Inc. contain more extensive covenants including, among other things and subject to certain 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, dispose of assets and merge or consolidate with any other person. Also, CenturyLink, Inc. and certain of its affiliates will be required to offer to purchase certain of their respective outstanding debt under certain circumstances in connection with certain specified "change of control" transactions. Certain of our debt instruments contain cross acceleration provisions. Compliance As of March 31, 2019 , CenturyLink, Inc. believes it and its subsidiaries were in compliance with the provisions and financial covenants in their respective material debt agreements in all material respects. Other In February 2019, we entered into five variable-to-fixed interest rate swap agreements to hedge the interest payments on $2.5 billion notional amount of floating rate debt, see Note 10 — Derivative Financial Instruments. For additional information on our long-term debt and credit facilities, see Note 6 — Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of our annual report on Form 10-K for the year ended December 31, 2018. |
Severance and Leased Real Estat
Severance and Leased Real Estate | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Severance and Leased Real Estate | Severance and Leased Real Estate Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workload demands due to the loss of customers purchasing certain services. Under prior GAAP, we had previously recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate which we have ceased using, net of estimated sublease rentals. In accordance with transitional guidance under the new lease standard (ASC 842), the existing lease obligation of $110 million as of January 1, 2019 has been netted against the operating lease right of use assets at adoption. For additional information, see Note 4—Leases to our consolidated financial statements in Item 1 of Part I of this report. Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at December 31, 2018 $ 87 Accrued to expense 4 Payments, net (31 ) Balance at March 31, 2019 $ 60 |
Employee Benefits
Employee Benefits | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits Net periodic benefit (income) expense for our combined pension plan includes the following components: Combined Pension Plan Three Months Ended March 31, 2019 2018 (Dollars in millions) Service cost $ 14 16 Interest cost 110 100 Expected return on plan assets (156 ) (173 ) Recognition of prior service credit (2 ) (2 ) Recognition of actuarial loss 57 44 Net periodic pension benefit expense (income) $ 23 (15 ) Net periodic benefit expense for our post-retirement benefit plans includes the following components: Post-Retirement Benefit Plans Three Months Ended March 31, 2019 2018 (Dollars in millions) Service cost $ 4 4 Interest cost 27 24 Recognition of prior service cost 4 5 Net periodic post-retirement benefit expense $ 35 33 Service costs are included in the cost of services and products and selling, general and administrative line items on the Statement of Operations and all other costs listed above are included in the other (expense) income, net line item on the Statement of Operations. Benefits paid by our qualified pension plan are paid through a trust that holds all of the plan's assets. Based on current laws and circumstances, we do not expect any contributions to be required for our qualified pension plan during 2019. The amount of required contributions to our qualified pension plan in 2020 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. We occasionally make voluntary contributions in addition to required contributions. Based on current circumstances, we do not anticipate making a voluntary contribution to the trust for our qualified pension plan in 2019. |
(Loss) Earnings Per Common Shar
(Loss) Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings Per Common Share | Earnings Per Common Share Basic and diluted (loss) earnings per common share were calculated as follows: Three Months Ended March 31, 2019 2018 (Dollars in millions, except per share amounts, shares in thousands) (Loss) Income (Numerator): Net (loss) income $ (6,165 ) 115 Net (loss) income applicable to common stock for computing basic earnings per common share (6,165 ) 115 Net (loss) income as adjusted for purposes of computing diluted earnings per common share $ (6,165 ) 115 Shares (Denominator): Weighted-average number of shares: Outstanding during period 1,083,588 1,073,560 Non-vested restricted stock (14,710 ) (7,764 ) Weighted-average shares outstanding for computing basic earnings per common share 1,068,878 1,065,796 Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities — 10 Shares issuable under incentive compensation plans — 3,377 Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share 1,068,878 1,069,183 Basic (loss) earnings per common share $ (5.77 ) 0.11 Diluted (loss) earnings per common share (1) $ (5.77 ) 0.11 ______________________________________________________________________ (1) For the three months ended March 31, 2019, we excluded from the calculation of diluted loss per share 3.3 million shares potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive. Our calculation of diluted (loss) earnings per common share excludes shares of common stock that are issuable upon exercise of stock options when the exercise price is greater than the average market price of our common stock. We also exclude unvested restricted stock awards that are antidilutive as a result of unrecognized compensation cost. Such shares averaged 5.4 million and 4.3 million for the three months ended March 31, 2019 and 2018 , respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Fair Value Measurement and Disclosure framework provides a three-tiered fair value hierarchy based on the reliability of the inputs used to determine fair value. Input Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Input Level 2 refers to fair values estimated using significant other observable inputs and Input Level 3 includes fair values estimated using significant unobservable inputs. The following table presents the carrying amounts and estimated fair values of CenturyLink, Inc.'s financial liabilities as of March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Long-term debt, excluding finance lease and other obligations 2 $ 35,259 35,069 35,260 32,915 Interest rate swap contracts (see Note 10) 2 $ 23 23 — — |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments From time to time, CenturyLink, Inc. uses derivative financial instruments, primarily interest rate swaps, to manage our exposure to fluctuations in interest rates. Our primary objective in managing interest rate risk is to decrease the volatility of our earnings and cash flows affected by changes in the underlying rates. We have floating rate long-term debt (see Note 5—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 1 of Part I of this report). These obligations expose us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense also decreases. We have designated our interest rate swap agreements as cash flow hedges. Swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the lives of the agreements without exchange of the underlying notional amount. The change in the fair value of the interest rate swap agreements is reflected in Accumulated Other Comprehensive Income (Loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings, due to the fact that the interest rate swap agreements qualify as effective cash flow hedges. We do not use derivative financial instruments for speculative purposes. In February 2019, we entered into five variable-to-fixed interest rate swap agreements to hedge the interest payments on $2.5 billion notional amount of floating rate debt. The five interest rate swap agreements are with different counterparties; one for $700 million and the other four for $450 million each. The transactions were effective beginning March 31, 2019 and mature March 31, 2022. Under the terms of the interest rate swap transactions, we receive interest payments based on one month floating LIBOR terms and pay interest at the fixed rate of 2.48% . We evaluate the effectiveness of the hedges qualitatively on a quarterly basis. CenturyLink, Inc. is exposed to credit related losses in the event of non-performance by counterparties. The counterparties to any of the financial derivatives we enter into are major institutions with investment grade credit ratings. We evaluate counterparty credit risk before entering into any hedge transaction and continue to closely monitor the financial market and the risk that our counterparties will default on their obligations. This credit risk is generally limited to the unrealized losses in such contracts, should any of these counterparties fail to perform as contracted. Amounts accumulated in AOCI related to derivatives are indirectly recognized in earnings as periodic settlements occur throughout the term of the swaps, when the related interest payments are made on our variable-rate debt. The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheets as follows (in millions): Liability Derivatives March 31, 2019 Derivatives designated as Balance Sheet Location Fair Value Cash flow hedging contracts Other current and noncurrent liabilities $ 23 The amount of losses recognized in AOCI consists of the following (in millions): Derivatives designated as hedging instruments 2019 Cash flow hedging contracts Three months ended March 31, $ 23 Amounts currently included in AOCI will be reflected as earnings prior to the settlement of these cash flow hedging contracts in 2022. We estimate that $2.3 million of net losses on the interest rate swaps (based on the estimated LIBOR curve as of March 31, 2019) will be reflected as earnings within the next twelve months. Our interest rate swap agreements designated as cash flow hedging contracts qualify as effective hedge relationships. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information In January 2019, Jeff Storey, our CODM, announced a new organization structure and began managing our operations in the following five segments: International and Global Accounts Management, Enterprise, Small and Medium Business, Wholesale and Consumer. In addition, our segments are managed based on the direct costs of providing services to their customers and the associated selling, general and administrative costs (primarily salaries and commissions). Shared costs that were previously reported in segments are managed separately and included in operations and other. We reclassified certain prior period amounts to conform to the current period presentation. At March 31, 2019 , we had the following five reportable segments: • International and Global Accounts Management ("IGAM") Segment. Under our IGAM segment, we provide our products and services to approximately 200 global enterprise customers and to enterprises and carriers in three operating regions: Asia Pacific, Latin America, Europe Middle East and Africa. IGAM is responsible for working with large multinational organizations in support of their business and IT transformation strategies. We provide a portfolio of services inclusive of dark fiber; content delivery; private and public networking; hybrid IT solutions including private and public cloud services as well as consulting and professional services; and security services; all of which are described further under "Products and Services Categories"; and • Enterprise Segment. Under our enterprise segment, we provide our products and services to large and medium domestic and global enterprises, federal, state and local governments. Our products and services offered to these customers include our IP and Data Services suite of products, which includes VPN and hybrid networking, Ethernet and IP services; Transport and Infrastructure, which includes wavelengths and private line, dark fiber, colocation and data center services, and professional services; Voice Services, which includes local, long-distance, toll-free and unified communications services; and IT and Managed services, all of which are described further under "Products and Services Categories"; and • Small and Medium Business ("SMB") Segment. Under our SMB segment, we provide our products and services to small and medium businesses directly and through our indirect channel partners. We designate businesses as small or medium based on company employee count. Our products and services offered to these customers include our IP and Data Services suite of products, primarily VPN, IP and Ethernet services; Transport and Infrastructure, which includes broadband, wavelengths and private line services; Voice Services, which includes local, long-distance, national public access, VoIP and toll-free services; and IT and Managed services, all of which are described further under "Products and Services Categories"; and • Wholesale Segment. Under our wholesale segment, we provide our products and services to a wide range of other communication providers across the wireline, wireless, cable, voice and data center sectors. Customers range from large global telecom providers to small regional providers. Our products and services offered to these customers include our IP and Data Services suite of products, primarily Ethernet, VPN and IP services; Transport and Infrastructure, which includes private line, wavelengths, UNE, dark fiber, colocation and data center, and wholesale broadband services; and Voice Services, which includes long-distance, local, toll-free and contact center, and intercarrier tandem services, all of which are described further under "Products and Services Categories"; and • Consumer Segment. Under our consumer segment, we provide our products and services to residential customers. Our products and services offered to these customers include our broadband, local and long-distance voice, and other ancillary services. Additionally, Universal Service Fund ("USF") federal and state support payments, Connect America Fund ("CAF") federal support revenue, and other revenue from leasing and subleasing including prior year rental income associated with the 2017 failed-sale-leaseback is reported in our consumer segment as regulatory revenue in 2018. Product and Service Categories We categorize our products and services revenue among the following four categories for the International and Global Accounts Management, Enterprise, Small and Medium Business and Wholesale segments: • IP and Data Services , which includes 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 broadband, private line (including business data services), data center facilities and services, including cloud, hosting and application management solutions, wavelength, equipment sales and professional services, network security services, dark fiber services and other ancillary services; • Voice and Collaboration , which includes primarily local and long-distance voice, including wholesale voice, and other ancillary services; • IT and Managed Services , which includes information technology services and managed services, which may be purchased in conjunction with our other network services; and We categorize our products and services revenue among the following four categories for the consumer segment: • Broadband , which includes consumer broadband revenue; and • Voice , which includes consumer local and long-distance revenue; and • Regulatory Revenue, which consists of (i) Universal Service Fund, Connect America Fund and other support payments designed to reimburse us for various costs related to certain telecommunications services and (ii) other operating revenue from the leasing and subleasing of space; and • Other, which includes consumer retail video revenue (including our facilities-based video revenue), professional services and other ancillary services. The following table summarizes our segment results and operating revenue detail for our product and services for the three months ended March 31, 2019 . Three Months Ended March 31, 2019 International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total Segments Operations and Other Total (Dollars in millions) Revenue: IP and Data Services $ 420 688 300 341 — 1,749 — 1,749 Transport and Infrastructure 320 364 107 499 — 1,290 — 1,290 Voice and Collaboration 94 397 336 196 — 1,023 — 1,023 IT and Managed Services 57 74 12 1 — 144 — 144 Broadband — — — — 722 722 — 722 Voice — — — — 489 489 — 489 Regulatory — — — — 159 159 — 159 Other — — — — 71 71 — 71 Total Revenue $ 891 1,523 755 1,037 1,441 5,647 — 5,647 Expenses: Cost of Services and Products 259 496 153 141 87 1,136 1,384 2,520 Selling, general and administrative 68 149 132 20 109 478 454 932 Less: Share-based compensation — — — — — — (33 ) (33 ) Total expense 327 645 285 161 196 1,614 1,805 3,419 Total adjusted EBITDA $ 564 878 470 876 1,245 4,033 (1,805 ) 2,228 The following table summarizes our segment results and operating revenue detail for our product and services for the three months ended March 31, 2018 . Three Months Ended March 31, 2018 International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total Segments Operations and Other Total (Dollars in millions) Revenue: IP and Data Services $ 440 665 291 339 — 1,735 — 1,735 Transport and Infrastructure 321 399 110 538 — 1,368 — 1,368 Voice and Collaboration 101 410 369 231 — 1,111 — 1,111 IT and Managed Services 73 73 14 2 — 162 — 162 Broadband — — — — 712 712 — 712 Voice — — — — 557 557 — 557 Regulatory — — — — 183 183 — 183 Other — — — — 117 117 — 117 Total Revenue $ 935 1,547 784 1,110 1,569 5,945 — 5,945 Expenses: Cost of Services and Products 272 514 153 176 158 1,273 1,530 2,803 Selling, general and administrative 68 152 127 24 135 506 603 1,109 Less: Share-based compensation — — — — — — (41 ) (41 ) Total expense 340 666 280 200 293 1,779 2,092 3,871 Total adjusted EBITDA $ 595 881 504 910 1,276 4,166 (2,092 ) 2,074 We recognize revenue in our consolidated statements of operations for certain USF surcharges and transaction taxes that we bill to our customers. Our consolidated statements of operations also reflect the offsetting expense for the amounts we remit to the government agencies. The total amount of such surcharges and transaction taxes that we included in revenues aggregated to $248 million and $246 million for the three months ended March 31, 2019 and 2018 , respectively. These USF surcharges, where we record revenue and transaction taxes, are assigned to the product and service categories of each segment based on the underlying revenue. We also act as a collection agent for certain other USF and transaction taxes that we are required by government agencies to bill our customers, for which we do not record any revenue or expense because we only act as a pass-through agent. Revenue and Expenses Our segment revenue includes all revenue from our International and Global Accounts Management, Enterprise, Small and Medium Business, Wholesale and Consumer segments as described in more detail above. Our segment revenue is based upon each customer's classification. We report our segment revenue based upon all services provided to that segment's customers. Our segment expenses include specific cost of service expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities. Network expenses not incurred as a direct result of providing services and products to segment customers and centrally managed expenses such as Operations, Finance, Human Resources, Legal, Marketing, Product Management and IT are not assigned to segments as they are managed separately; they are reported as "Operations and Other". We do not assign depreciation and amortization expense or impairments to our segments, as the related assets and capital expenditures are centrally managed and are not monitored by or reported to the CODM by segment. Interest expense is also excluded from segment results because we manage our financing on a consolidated basis and have not allocated assets or debt to specific segments. Stock-based compensation and other income and expense items are not monitored as a part of our segment operations and are therefore excluded from our segment results. The following table reconciles total segment adjusted EBITDA to net (loss) income: Three Months Ended March 31, 2019 2018 (Dollars in millions) Total segment adjusted EBITDA $ 4,033 4,166 Depreciation and amortization (1,188 ) (1,283 ) Impairment of goodwill (6,506 ) — Other operating expenses (1,805 ) (2,092 ) Stock-based compensation (33 ) (41 ) Operating (loss) income (5,499 ) 750 Total other expense, net (528 ) (514 ) Income (loss) before income tax expense (6,027 ) 236 Income tax expense (138 ) (121 ) Net (loss) income $ (6,165 ) 115 |
Commitments and Contingencies a
Commitments and Contingencies and Other Items | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies and Other Items | Commitments and 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, 2019 aggregated to approximately $121 million and are included in other current liabilities and other liabilities in our consolidated balance sheet as of such date. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows. In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. Principal Proceedings Shareholder Class Action Suits CenturyLink and certain members of the CenturyLink Board of Directors have been named as defendants in a putative shareholder class action lawsuit filed on January 11, 2017 in the 4th Judicial District Court of the State of Louisiana, Ouachita Parish, captioned Jeffery Tomasulo v. CenturyLink, Inc., et al. The complaint asserts, among other things, that the members of CenturyLink’s Board allegedly breached their fiduciary duties to the CenturyLink shareholders in approving the Level 3 merger agreement and, more particularly, that: the consideration that CenturyLink agreed to pay to Level 3 stockholders in the transaction is allegedly unfairly high; the CenturyLink directors allegedly had conflicts of interest in negotiating and approving the transaction; and the disclosures set forth in our preliminary joint proxy statement/prospectus filed in December 2016 are insufficient in that they allegedly fail to contain material information concerning the transaction. The complaint seeks, among other things, a declaration that the members of the CenturyLink Board have breached their fiduciary duties, corrective disclosure, rescissory or other damages and equitable relief, including rescission of the transaction. On February 13, 2017, the parties entered into a memorandum of understanding providing for the settlement of the lawsuit. In January 2019, the court approved the settlement and entered final judgment. An objector filed an appeal, and that appeal is pending. The costs of the settlement are not material to our consolidated financial statements. CenturyLink and certain CenturyLink board members and officers were named as defendants in a putative shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of Colorado, captioned Houser et al. v. CenturyLink, et al. The complaint asserts claims on behalf of a putative class of former Level 3 shareholders who became CenturyLink shareholders as a result of the transaction. It alleges that the proxy statement provided to the Level 3 shareholders failed to disclose material information of several kinds, including information about strategic revenue, customer loss rates, and customer account issues, among other items. The complaint seeks damages, costs and fees, rescission, rescissory damages, and other equitable relief. Switched Access Disputes Subsidiaries of CenturyLink, Inc. are among hundreds of companies involved in an industry-wide dispute, raised in nearly 100 federal lawsuits (filed between 2014 and 2016) that have been consolidated in the United States District Court for the Northern District of Texas for pretrial procedures. The disputes relate to switched access charges that local exchange carriers ("LECs") collect from interexchange carriers ("IXCs") for IXCs' use of LEC's access services. In the lawsuits, IXCs, including Sprint Communications Company L.P. ("Sprint") and various affiliates of Verizon Communications Inc. ("Verizon"), assert that federal and state laws bar LECs from collecting access charges when IXCs exchange certain types of calls between mobile and wireline devices that are routed through an IXC. Some of these IXCs have asserted claims seeking refunds of payments for access charges previously paid and relief from future access charges. In November 2015, the federal court agreed with the LECs and rejected the IXCs' contention that federal law prohibits these particular access charges, and also allowed the IXCs to refile state-law claims. Since then, many of the LECs and IXCs have filed revised pleadings and additional motions, which remain pending. Separately, some of the defendants, including CenturyLink, Inc.'s LECs, have petitioned the FCC to address these issues on an industry-wide basis. Our subsidiaries include both IXCs and LECs which respectively pay and assess significant amounts of the charges in question. The outcome of these disputes and lawsuits, as well as any related regulatory proceedings that could ensue, are currently not predictable. State Tax Suits Several Missouri municipalities have, beginning in May 2012, asserted claims alleging underpayment of taxes against CenturyLink, Inc. and several of its subsidiaries in a number of proceedings filed in the Circuit Court of St. Louis County, Missouri. These municipalities are seeking, among other things, declaratory relief regarding the application of business license and gross receipts taxes and back taxes from 2007 to the present, plus penalties and interest. In a February 2017 ruling in connection with one of these pending cases, the court entered an order awarding plaintiffs $4 million and broadening the tax base on a going-forward basis. We have appealed that ruling. In a June 2017 ruling in connection with another one of these pending cases, the court made findings which, if not overturned, will result in a tax liability to us well in excess of the contingent liability we have established. In due course, we plan to appeal that decision. We continue to vigorously defend against these claims. Billing Practices Suits In June 2017, a former employee filed an employment lawsuit against us claiming that she was wrongfully terminated for alleging that we charged some of our retail customers for products and services they did not authorize. Starting shortly thereafter and continuing since then, and based in part on the allegations made by the former employee, several legal proceedings have been filed. In June 2017, McLeod v. CenturyLink, a putative consumer class action, was filed against us in the U.S. District Court for the Central District of California alleging that we charged some of our retail customers for products and services they did not authorize. A number of other complaints asserting similar claims have been filed in other federal and state courts, as well. The lawsuits assert claims including fraud, unfair competition, and unjust enrichment. Also in June 2017, Craig. v. CenturyLink, Inc., et al., a putative securities investor class action, was filed in U.S. District Court for the Southern District of New York, alleging that we failed to disclose material information regarding improper sales practices, and asserting federal securities law claims. A number of other cases asserting similar claims have also been filed. Beginning June 2017, we also received several shareholder derivative demands addressing related topics. In August 2017, the Board of Directors formed a special litigation committee of outside directors to address the allegations of impropriety contained in the shareholder derivative demands. In April 2018, the special litigation committee concluded its review of the derivative demands and declined to take further action. Since then, derivative cases were filed. Two of these cases, Castagna v. Post and Pinsly v. Post, were filed in Louisiana state court in the Fourth Judicial District Court for the Parish of Ouachita. The remaining derivative cases were filed in federal court in Louisiana and Minnesota. These cases have been brought on behalf of CenturyLink against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties. The consumer putative class actions, the securities investor putative class actions, and the federal derivative actions have been transferred to the U.S. District Court for the District of Minnesota for coordinated and consolidated pretrial proceedings as In Re: CenturyLink Sales Practices and Securities Litigation. In July 2017, the Minnesota state attorney general filed State of Minnesota v. CenturyTel Broadband Services LLC, et al. in the Anoka County Minnesota District Court, alleging claims of fraud and deceptive trade practices relating to improper consumer sales practices. The suit seeks an order of restitution on behalf of all CenturyLink customers, civil penalties, injunctive relief, and costs and fees. Additionally, we have received and responded to information requests and inquiries from other states. 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 $10 million at March 31, 2019 . We challenged the assessments via administrative and then judicial review processes. In October 2011, the highest administrative review tribunal (the Tribunal) decided the central issue underlying the 2002 assessments in SUNAT's favor. We appealed the Tribunal's decision to the first judicial level, which decided the central issue in favor of Level 3. SUNAT and we filed cross-appeals with the court of appeal. In May 2017, the court of appeal issued a decision reversing the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. Oral argument was held before the Supreme Court of Justice in October 2018. A decision on this case is pending. In October 2013, the Tribunal decided the central issue underlying the 2001 assessments in SUNAT’s favor. We appealed that decision to the first judicial level in Peru, which decided the central issue in favor of SUNAT. In June 2017, we filed an appeal with the court of appeal. In November 2017, the court of appeals issued a decision affirming the first judicial level and we filed an appeal of the decision to the Supreme Court of Justice. That appeal is pending. Brazilian Tax Claims In December 2004, March 2009, April 2009 and July 2014, the São Paulo state tax authorities issued tax assessments against one of our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenue from leasing certain assets (in the case of the December 2004, March 2009 and July 2014 assessments) and revenue from the provision of Internet access services (in the case of the April 2009 and July 2014 assessments), by treating such activities as the provision of communications services, to which the ICMS tax applies. In September 2002, July 2009 and May 2012, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on similar issues. We have filed objections to these assessments, arguing that the lease of assets and the provision of Internet access are not communication services subject to ICMS. The objections to the September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and we have appealed those decisions to the judicial courts. In October 2012 and June 2014, we received favorable rulings from the lower court on the December 2004 and March 2009 assessments regarding equipment leasing, but those rulings are subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the April and July 2009 and May 2012 assessments are still pending final administrative decisions. The July 2014 assessment was confirmed during the fourth quarter of 2014 at the first administrative level, and we appealed this decision to the second administrative level. We are vigorously contesting all such assessments in both states and, in particular, view the assessment of ICMS on revenue from equipment leasing to be without merit. These assessments, if upheld, could result in a loss of up to $37 million at March 31, 2019 in excess of the accruals established for these matters. Qui Tam Action Level 3 was notified in late 2017 of a qui tam action pending against Level 3 Communications, Inc. and others in the United States District Court for the Eastern District of Virginia, captioned United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. The original qui tam complaint was filed under seal on November 26, 2013, and an amended complaint was filed under seal on June 16, 2014. The court unsealed the complaints on October 26, 2017. The amended complaint alleges that Level 3, 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. Level 3 is evaluating its defenses to the claims. At this time, Level 3 does not believe it is probable Level 3 will incur a material loss. If, contrary to its expectations, the plaintiff prevails in this matter and proves damages at or near $50 million , and is successful in having those damages trebled, the outcome could have a material adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid. Several people, including two former Level 3 employees were indicted in the United States District Court for the Eastern District of Virginia on October 3, 2017, and charged with, among other things, accepting kickbacks from a subcontractor, who was also indicted, for work to be performed under a prime government contract. Of the two former employees, one entered into a plea agreement, and the other is deceased. Level 3 is fully cooperating in the government’s investigations in this matter. Other Proceedings, Disputes and Contingencies From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third party tort actions. We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial in the coming 24 months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none individually is reasonably expected to exceed $100,000 in fines and penalties. The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. Environmental Contingencies In connection with our largely historical operations, we have responded to or been notified of potential environmental liability at approximately 200 properties. We are engaged in addressing or have liquidated 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. |
Other Financial Information
Other Financial Information | 3 Months Ended |
Mar. 31, 2019 | |
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, 2019 December 31, 2018 (Dollars in millions) Prepaid expenses $ 386 307 Income tax receivable 69 82 Materials, supplies and inventory 154 120 Contract assets 58 52 Contract acquisition costs 173 167 Contract fulfillment costs 88 82 Other 98 108 Total other current assets $ 1,026 918 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Information Relating to 2019 The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the three months ended March 31, 2019 : Pension Plans Post-Retirement Foreign Currency Interest Rate Hedges Total (Dollars in millions) Balance at December 31, 2018 $ (2,173 ) (58 ) (230 ) — (2,461 ) Other comprehensive income (loss) before reclassifications — — 5 (17 ) (12 ) Amounts reclassified from accumulated other comprehensive income 41 3 — — 44 Net current-period other comprehensive income (loss) 41 3 5 (17 ) 32 Balance at March 31, 2019 $ (2,132 ) (55 ) (225 ) (17 ) (2,429 ) The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the three months ended March 31, 2019 : Three Months Ended March 31, 2019 Decrease (Increase) Affected Line Item in Consolidated Statement of Operations (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 57 Other income (expense), net Prior service cost 2 Other income (expense), net Total before tax 59 Income tax benefit (15 ) Income tax expense Net of tax $ 44 ________________________________________________________________________ (1) See Note 7—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. Information Relating to 2018 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, 2018 : Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2017 $ (1,731 ) (235 ) (29 ) (1,995 ) Other comprehensive income before reclassifications — — 79 79 Amounts reclassified from accumulated other comprehensive income 31 4 — 35 Net current-period other comprehensive income 31 4 79 114 Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (375 ) (32 ) — (407 ) Balance at March 31, 2018 $ (2,075 ) $ (263 ) $ 50 (2,288 ) The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the three months ended March 31, 2018 : Three Months Ended March 31, 2018 Decrease (Increase) Affected Line Item in Consolidated Statement of Operations (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 44 Other income (expense), net Prior service cost 3 Other income (expense), net Total before tax 47 Income tax benefit (12 ) Income tax expense Net of tax $ 35 ________________________________________________________________________ (1) See Note 7—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. |
Labor Union Contracts
Labor Union Contracts | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Labor Union Contracts | Labor Union Contracts As of March 31, 2019, approximately 26% of our employees were members of various bargaining units represented by the Communication Workers of America ("CWA") and the International Brotherhood of Electrical Workers ("IBEW"). We believe that relations with our employees continue to be generally good. Approximately 80 of our employees were subject to collective bargaining agreements that expired on or prior to March 31, 2019 and are currently being renegotiated. Approximately 6% of our union employees are subject to collective bargaining agreements that are scheduled to expire in 2019. |
Background (Policies)
Background (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation policy | Basis of Presentation Our consolidated balance sheet as of December 31, 2018 , which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2018 . The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated. To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other income (expense), net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities. |
Reclassification policy | We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenue and expenses in our segment reporting. See Note 11—Segment Information for additional information. These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period. |
Recently adopted accounting pronouncements and recent accounting pronouncements | Recently Adopted Accounting Pronouncements We adopted Accounting Standards Update ("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 will not make the new required lease disclosures for comparative periods beginning before January 1, 2019. Instead, we will recognize ASC 842's cumulative effect transition adjustment (discussed below) as of January 1, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things (i) allowed us to carry forward the historical lease classification; (ii) did not require us to reassess whether any expired or existing contracts are or contain leases under the new definition of a lease; and (iii) did not require us to reassess whether previously capitalized initial direct costs for any existing leases would qualify for capitalization under ASC 842. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We did not elect the hindsight practical expedient regarding the likelihood of exercising a lessee purchase option or assessing any impairment of right-of-use assets for existing leases. On March 5, 2019, the FASB issued ASU 2019-01 - Leases (ASC 842): Codification Improvements, effective for public companies for fiscal years beginning after December 15, 2019. The new ASU aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in ASC 842, with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in ASC 820, Fair Value Measurement) should be applied. More importantly, the ASU also exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. Early adoption permits public companies to adopt concurrent with the transition to ASC 842 on leases. We adopted ASU 2019-01 as of January 1, 2019. Adoption of the new standard resulted in the recording of operating lease assets and operating lease liabilities of approximately $2.1 billion and $2.2 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 $115 million cumulative adjustment to accumulated deficit as of January 1, 2019, for the impact of the new accounting standard. The adjustment to accumulated deficit was driven by the derecognition of our prior failed sale leaseback transaction discussed in our prior periodic reports. The standard did not materially impact our consolidated net earnings or our cash flows in the first quarter of 2019. Effective January 1, 2019, we adopted ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 amends current guidance on accounting for hedges mainly to align more closely an entity’s risk management activities and financial reporting relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. In addition, amendments in ASU 2017-12 simplify the application of hedge accounting by allowing more time to prepare hedge documentation and perform effectiveness assessments on a qualitative basis after hedges are implemented. The adoption of this standard will be applied prospectively and did not have an impact on us. See Note 10—Derivative Financial Instruments to our consolidated financial statements in Item 1 of Part I of this report for additional disclosure regarding our hedging arrangements. Recently Issued Accounting Pronouncements Financial Instruments In June 2016, the FASB issued ASU 2016-13, " Measurement of Credit Losses on Financial Instruments " ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires our management team to estimate the total credit losses expected on the portfolio of financial instruments. We are currently reviewing the requirements of the standard and evaluating the impact on our consolidated financial statements. We are required to adopt the provisions of ASU 2016-13 no later than January 1, 2020. We expect to adopt ASU 2016-13 on January 1, 2020 and recognize the impacts through a cumulative adjustment to accumulated deficit as of the date of adoption. |
Goodwill, Customer Relationsh_2
Goodwill, Customer Relationships and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Goodwill, customer relationships and other intangible assets consisted of the following: March 31, 2019 December 31, 2018 (Dollars in millions) Goodwill $ 21,526 28,031 Customer relationships, less accumulated amortization of $8,825 and $8,492 $ 8,580 8,911 Indefinite-life intangible assets $ 269 269 Other intangible assets subject to amortization: Capitalized software, less accumulated amortization of $2,687 and $2,616 $ 1,536 1,468 Trade names and patents, less accumulated amortization of $69 and $61 124 131 Total other intangible assets, net $ 1,929 1,868 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | We estimate that total amortization expense for intangible assets for the years ending December 31, 2019 through 2023 will be as follows: (Dollars in millions) 2019 (remaining nine months) $ 1,260 2020 1,600 2021 1,158 2022 978 2023 900 |
Schedule of Goodwill | The following table shows the rollforward of goodwill assigned to our reportable segments from December 31, 2018 through March 31, 2019 : International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total (Dollars in millions) As of December 31, 2018 $ 3,595 5,222 5,193 6,437 7,584 28,031 January 2019 reorganization — 987 (1,038 ) 395 (344 ) — Effect of foreign currency rate change 1 — — — — 1 Impairments (934 ) (1,471 ) (896 ) (3,019 ) (186 ) (6,506 ) As of March 31, 2019 $ 2,662 4,738 3,259 3,813 7,054 21,526 The following table shows the March 31, 2019 impairments at each of our reportable segments: Impairments (Dollars in millions) International and Global Accounts $ 934 Enterprise 1,471 Small and Medium Business 896 Wholesale 3,019 Consumer 186 Total $ 6,506 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue | The following table provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards: Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Total revenue $ 5,647 5,945 Adjustments for non-ASC 606 revenue (1) (358 ) (312 ) Total revenue from contracts with customers $ 5,289 5,633 ______________________________________________________________________ (1) Includes regulatory revenue, lease revenue, sublease rental income, revenue from fiber capacity lease arrangements and failed sale leaseback income, which are not within the scope of ASC 606. |
Contract with Customer, Asset and Liability | The following table provides information about revenue recognized for the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 March 31, 2018 (Dollars in millions) Revenue recognized in the period from: Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) $ 490 523 Performance obligations satisfied in previous periods — — The following table provides balances of customer receivables, contract assets and contract liabilities as of March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 (Dollars in millions) Customer receivables (1) $ 2,286 2,346 Contract assets 134 140 Contract liabilities 869 860 (1) Gross customer receivables of $2.4 billion and $2.5 billion , net of allowance for doubtful accounts of $145 million and $132 million , at March 31, 2019 and December 31, 2018, respectively. |
Capitalized Contract Cost | The following table provides changes in our contract acquisition costs and fulfillment costs: Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 (Dollars in millions) Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs Beginning of period balance $ 322 187 268 133 Costs incurred 57 34 52 29 Amortization (50 ) (23 ) (39 ) (12 ) End of period balance $ 329 198 281 150 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease, Cost | Lease expense consisted of the following: Three Month Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 169 Finance lease cost: Amortization of right-of-use assets 12 Interest on lease liability 4 Total finance lease cost 16 Total lease cost $ 185 Supplemental unaudited consolidated cash flow statement information related to leases: Three Month Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 182 Operating cash flows from finance leases 3 Finance cash flows from finance leases 8 |
Assets And Liabilities, Lessee | Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,952 Finance lease assets Property, plant and equipment, net of accumulated depreciation $ 271 Total leased assets $ 2,223 Liabilities Current Operating Other current liabilities $ 561 Finance Current portion of long-term debt $ 36 Noncurrent Operating Noncurrent operating lease liabilities $ 1,501 Finance Long-term debt $ 190 Total lease liabilities $ 2,288 Weighted-average remaining lease term (years) Operating leases 8.1 Finance leases 11.1 Weighted-average discount rate Operating leases 6.73 % Finance leases 5.45 % |
Lessee, Operating Lease, Liability, Maturity | As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 463 38 2020 462 35 2021 381 22 2022 301 20 2023 260 19 Thereafter 878 179 Total lease payments 2,745 313 Less: interest (683 ) (87 ) Total $ 2,062 226 Less: current portion (561 ) (36 ) Long-term portion $ 1,501 190 |
Finance Lease, Liability, Maturity | As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 463 38 2020 462 35 2021 381 22 2022 301 20 2023 260 19 Thereafter 878 179 Total lease payments 2,745 313 Less: interest (683 ) (87 ) Total $ 2,062 226 Less: current portion (561 ) (36 ) Long-term portion $ 1,501 190 |
Schedule of Future Minimum Lease Payments for Capital Leases | The future annual minimum payments under capital lease agreements as of December 31, 2018 were as follows: (Dollars in millions) Capital lease obligations: 2019 $ 51 2020 36 2021 23 2022 21 2023 20 2024 and thereafter 183 Total minimum payments 334 Less: amount representing interest and executory costs (100 ) Present value of minimum payments 234 Less: current portion (38 ) Long-term portion $ 196 |
Schedule of Future Minimum Rental Payments for Operating Leases | Leases Effective January 1, 2019, we adopted ASC 842 using the non-comparative transition option of applying the new standard at the adoption date. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard. This allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional operating lease right of use assets and operating lease liabilities of approximately $2.1 billion and $2.2 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 $115 million cumulative adjustment, net of deferred taxes, to accumulated deficit as of January 1, 2019, for the impact of the new accounting standard. The adjustment to accumulated deficit was driven by the derecognition of our prior failed sales leaseback transaction discussed in our prior periodic reports. The standard did not materially impact our consolidated net earnings or our cash flows in the first quarter of 2019. Financial position for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance. We primarily lease various office facilities, switching and colocation facilities, equipment and dark fiber. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rates. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Some of our lease arrangements contain lease components (including fixed payments including rent, real estate taxes and insurance costs) and non-lease components (including common-area maintenance costs). We generally account for each component separately based on the estimated standalone price of each component. For colocation leases, we account for the lease and non-lease components as a single lease component. Many of our lease agreements contain renewal options; however, we do not recognize right-of-use assets or lease liabilities for renewal periods unless it is determined that we are reasonably certain of renewing the lease at inception or when a triggering event occurs. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain to be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense consisted of the following: Three Month Ended March 31, 2019 (Dollars in millions) Operating and short-term lease cost $ 169 Finance lease cost: Amortization of right-of-use assets 12 Interest on lease liability 4 Total finance lease cost 16 Total lease cost $ 185 Supplemental unaudited consolidated balance sheet information and other information related to leases: March 31, Leases (millions) Classification on the Balance Sheet 2019 Assets Operating lease assets Operating lease assets $ 1,952 Finance lease assets Property, plant and equipment, net of accumulated depreciation $ 271 Total leased assets $ 2,223 Liabilities Current Operating Other current liabilities $ 561 Finance Current portion of long-term debt $ 36 Noncurrent Operating Noncurrent operating lease liabilities $ 1,501 Finance Long-term debt $ 190 Total lease liabilities $ 2,288 Weighted-average remaining lease term (years) Operating leases 8.1 Finance leases 11.1 Weighted-average discount rate Operating leases 6.73 % Finance leases 5.45 % Supplemental unaudited consolidated cash flow statement information related to leases: Three Month Ended March 31, 2019 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 182 Operating cash flows from finance leases 3 Finance cash flows from finance leases 8 As of March 31, 2019, maturities of lease liabilities were as follows: Operating Leases Finance Leases (Dollars in millions) 2019 (remaining nine months) $ 463 38 2020 462 35 2021 381 22 2022 301 20 2023 260 19 Thereafter 878 179 Total lease payments 2,745 313 Less: interest (683 ) (87 ) Total $ 2,062 226 Less: current portion (561 ) (36 ) Long-term portion $ 1,501 190 As of March 31, 2019, we had no material operating or finance leases that had not yet commenced. Operating Lease Income CenturyLink leases various IRUs, office facilities, switching facilities and other network sites to third parties under operating leases. Lease and sublease income is included in operating revenue in the consolidated statements of operations. For the three months ended March 31, 2019 and 2018, our gross rental income was $199 million and $219 million , respectively. We adopted ASU 2016-02 on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. The future annual minimum payments under capital lease agreements as of December 31, 2018 were as follows: (Dollars in millions) Capital lease obligations: 2019 $ 51 2020 36 2021 23 2022 21 2023 20 2024 and thereafter 183 Total minimum payments 334 Less: amount representing interest and executory costs (100 ) Present value of minimum payments 234 Less: current portion (38 ) Long-term portion $ 196 At December 31, 2018 , our future rental commitments for Right-of-Way agreements and operating leases were as follows: Right-of-Way Agreements Operating Leases Total (Dollars in millions) 2019 $ 157 675 832 2020 134 443 577 2021 112 355 467 2022 120 279 399 2023 115 241 356 2024 and thereafter 755 969 1,724 Total future minimum payments (1) $ 1,393 2,962 4,355 _______________________________________________________________________________ (1) Minimum payments have not been reduced by minimum sublease rentals of $101 million due in the future under non-cancelable subleases. |
Long-Term Debt and Credit Fac_2
Long-Term Debt and Credit Facilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt including unamortized discounts and premiums | The following chart reflects the consolidated long-term debt of CenturyLink, Inc. and its subsidiaries, including unamortized discounts and premiums and unamortized debt issuance costs, but excluding intercompany debt: Interest Rates (1) Maturities March 31, 2019 December 31, 2018 (Dollars in millions) Senior Secured Debt: (2) CenturyLink, Inc. 2017 Revolving Credit Facility 5.234% - 5.237% 2022 $ 695 550 Term Loan A (3) LIBOR + 2.75% 2022 1,600 1,622 Term Loan A-1 (3) LIBOR + 2.75% 2022 347 351 Term Loan B (3) LIBOR + 2.75% 2025 5,925 5,940 Subsidiaries: Level 3 Financing, Inc. Tranche B 2024 Term Loan (4) LIBOR + 2.25% 2024 4,611 4,611 Embarq Corporation subsidiaries First mortgage bonds 7.125% - 8.375% 2023 - 2025 138 138 Senior Notes and Other Debt: CenturyLink, Inc. Senior notes 5.625% - 7.650% 2019 - 2042 8,010 8,036 Subsidiaries: Level 3 Financing, Inc. Senior notes 5.125% - 6.125% 2021 - 2026 5,315 5,315 Level 3 Parent, LLC Senior notes 5.750% 2022 600 600 Qwest Corporation Senior notes 6.125% - 7.750% 2021 - 2057 5,956 5,956 Term loan 4.500% 2025 100 100 Qwest Capital Funding, Inc. Senior notes 6.875% - 7.750% 2021 - 2031 637 697 Embarq Corporation and subsidiary Senior note 7.995% 2036 1,460 1,485 Other 9.000% 2019 150 150 Finance lease and other obligations Various Various 231 801 Unamortized discounts and other, net (11 ) (8 ) Unamortized debt issuance costs (274 ) (283 ) Total long-term debt 35,490 36,061 Less current maturities (632 ) (652 ) Long-term debt, excluding current maturities $ 34,858 35,409 ______________________________________________________________________ (1) As of March 31, 2019 . (2) For information on certain parent or subsidiary guarantees and liens securing this debt, see "Other" below. (3) Term Loans A, A-1 and B have interest rates of 5.249% and 5.272% as of March 31, 2019 and December 31, 2018, respectively. (4) The Tranche B 2024 Term Loan had an interest rate of 4.736% as of March 31, 2019 and 4.754% as of December 31, 2018. |
Schedule of maturities of long-term debt | Set forth below is the aggregate principal amount of our long-term debt (excluding unamortized discounts, net and unamortized debt issuance costs) maturing during the following years: (Dollars in millions) (1) 2019 (remaining nine months) $ 556 2020 1,189 2021 3,115 2022 5,428 2023 2,095 2024 and thereafter 23,392 Total long-term debt $ 35,775 ______________________________________________________________________ (1) Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt. The projected amounts in the table also exclude any impacts from any further acquisitions. |
Severance and Leased Real Est_2
Severance and Leased Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of changes in accrued liabilities for severance expenses and leased real estate | Changes in our accrued liabilities for severance expenses were as follows: Severance (Dollars in millions) Balance at December 31, 2018 $ 87 Accrued to expense 4 Payments, net (31 ) Balance at March 31, 2019 $ 60 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic pension benefit (income) expense and post-retirement benefit expense | Net periodic benefit (income) expense for our combined pension plan includes the following components: Combined Pension Plan Three Months Ended March 31, 2019 2018 (Dollars in millions) Service cost $ 14 16 Interest cost 110 100 Expected return on plan assets (156 ) (173 ) Recognition of prior service credit (2 ) (2 ) Recognition of actuarial loss 57 44 Net periodic pension benefit expense (income) $ 23 (15 ) Net periodic benefit expense for our post-retirement benefit plans includes the following components: Post-Retirement Benefit Plans Three Months Ended March 31, 2019 2018 (Dollars in millions) Service cost $ 4 4 Interest cost 27 24 Recognition of prior service cost 4 5 Net periodic post-retirement benefit expense $ 35 33 |
(Loss) Earnings Per Common Sh_2
(Loss) Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per common share | Basic and diluted (loss) earnings per common share were calculated as follows: Three Months Ended March 31, 2019 2018 (Dollars in millions, except per share amounts, shares in thousands) (Loss) Income (Numerator): Net (loss) income $ (6,165 ) 115 Net (loss) income applicable to common stock for computing basic earnings per common share (6,165 ) 115 Net (loss) income as adjusted for purposes of computing diluted earnings per common share $ (6,165 ) 115 Shares (Denominator): Weighted-average number of shares: Outstanding during period 1,083,588 1,073,560 Non-vested restricted stock (14,710 ) (7,764 ) Weighted-average shares outstanding for computing basic earnings per common share 1,068,878 1,065,796 Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities — 10 Shares issuable under incentive compensation plans — 3,377 Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share 1,068,878 1,069,183 Basic (loss) earnings per common share $ (5.77 ) 0.11 Diluted (loss) earnings per common share (1) $ (5.77 ) 0.11 ______________________________________________________________________ (1) For the three months ended March 31, 2019, we excluded from the calculation of diluted loss per share 3.3 million shares potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input level to determine fair values | The following table presents the carrying amounts and estimated fair values of CenturyLink, Inc.'s financial liabilities as of March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Input Level Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Long-term debt, excluding finance lease and other obligations 2 $ 35,259 35,069 35,260 32,915 Interest rate swap contracts (see Note 10) 2 $ 23 23 — — |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The table below presents the fair value of our derivative financial instruments as well as their classification on the consolidated balance sheets as follows (in millions): Liability Derivatives March 31, 2019 Derivatives designated as Balance Sheet Location Fair Value Cash flow hedging contracts Other current and noncurrent liabilities $ 23 |
Derivative Instruments, Gain (Loss) | The amount of losses recognized in AOCI consists of the following (in millions): Derivatives designated as hedging instruments 2019 Cash flow hedging contracts Three months ended March 31, $ 23 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment results | The following table summarizes our segment results and operating revenue detail for our product and services for the three months ended March 31, 2019 . Three Months Ended March 31, 2019 International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total Segments Operations and Other Total (Dollars in millions) Revenue: IP and Data Services $ 420 688 300 341 — 1,749 — 1,749 Transport and Infrastructure 320 364 107 499 — 1,290 — 1,290 Voice and Collaboration 94 397 336 196 — 1,023 — 1,023 IT and Managed Services 57 74 12 1 — 144 — 144 Broadband — — — — 722 722 — 722 Voice — — — — 489 489 — 489 Regulatory — — — — 159 159 — 159 Other — — — — 71 71 — 71 Total Revenue $ 891 1,523 755 1,037 1,441 5,647 — 5,647 Expenses: Cost of Services and Products 259 496 153 141 87 1,136 1,384 2,520 Selling, general and administrative 68 149 132 20 109 478 454 932 Less: Share-based compensation — — — — — — (33 ) (33 ) Total expense 327 645 285 161 196 1,614 1,805 3,419 Total adjusted EBITDA $ 564 878 470 876 1,245 4,033 (1,805 ) 2,228 The following table summarizes our segment results and operating revenue detail for our product and services for the three months ended March 31, 2018 . Three Months Ended March 31, 2018 International and Global Accounts Enterprise Small and Medium Business Wholesale Consumer Total Segments Operations and Other Total (Dollars in millions) Revenue: IP and Data Services $ 440 665 291 339 — 1,735 — 1,735 Transport and Infrastructure 321 399 110 538 — 1,368 — 1,368 Voice and Collaboration 101 410 369 231 — 1,111 — 1,111 IT and Managed Services 73 73 14 2 — 162 — 162 Broadband — — — — 712 712 — 712 Voice — — — — 557 557 — 557 Regulatory — — — — 183 183 — 183 Other — — — — 117 117 — 117 Total Revenue $ 935 1,547 784 1,110 1,569 5,945 — 5,945 Expenses: Cost of Services and Products 272 514 153 176 158 1,273 1,530 2,803 Selling, general and administrative 68 152 127 24 135 506 603 1,109 Less: Share-based compensation — — — — — — (41 ) (41 ) Total expense 340 666 280 200 293 1,779 2,092 3,871 Total adjusted EBITDA $ 595 881 504 910 1,276 4,166 (2,092 ) 2,074 |
Reconciliation of operating profit (loss) from segments to consolidated net income | The following table reconciles total segment adjusted EBITDA to net (loss) income: Three Months Ended March 31, 2019 2018 (Dollars in millions) Total segment adjusted EBITDA $ 4,033 4,166 Depreciation and amortization (1,188 ) (1,283 ) Impairment of goodwill (6,506 ) — Other operating expenses (1,805 ) (2,092 ) Stock-based compensation (33 ) (41 ) Operating (loss) income (5,499 ) 750 Total other expense, net (528 ) (514 ) Income (loss) before income tax expense (6,027 ) 236 Income tax expense (138 ) (121 ) Net (loss) income $ (6,165 ) 115 |
Other Financial Information (Ta
Other Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of components of other current assets | The following table presents details of other current assets reflected in our consolidated balance sheets: March 31, 2019 December 31, 2018 (Dollars in millions) Prepaid expenses $ 386 307 Income tax receivable 69 82 Materials, supplies and inventory 154 120 Contract assets 58 52 Contract acquisition costs 173 167 Contract fulfillment costs 88 82 Other 98 108 Total other current assets $ 1,026 918 |
Schedule of current liabilities including accounts payable and other current liabilities | March 31, 2019 December 31, 2018 (Dollars in millions) Prepaid expenses $ 386 307 Income tax receivable 69 82 Materials, supplies and inventory 154 120 Contract assets 58 52 Contract acquisition costs 173 167 Contract fulfillment costs 88 82 Other 98 108 Total other current assets $ 1,026 918 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Summary of the entity's accumulated other comprehensive income (loss) by component | The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the three months ended March 31, 2019 : Pension Plans Post-Retirement Foreign Currency Interest Rate Hedges Total (Dollars in millions) Balance at December 31, 2018 $ (2,173 ) (58 ) (230 ) — (2,461 ) Other comprehensive income (loss) before reclassifications — — 5 (17 ) (12 ) Amounts reclassified from accumulated other comprehensive income 41 3 — — 44 Net current-period other comprehensive income (loss) 41 3 5 (17 ) 32 Balance at March 31, 2019 $ (2,132 ) (55 ) (225 ) (17 ) (2,429 ) 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, 2018 : Pension Plans Post-Retirement Foreign Currency Total (Dollars in millions) Balance at December 31, 2017 $ (1,731 ) (235 ) (29 ) (1,995 ) Other comprehensive income before reclassifications — — 79 79 Amounts reclassified from accumulated other comprehensive income 31 4 — 35 Net current-period other comprehensive income 31 4 79 114 Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (375 ) (32 ) — (407 ) Balance at March 31, 2018 $ (2,075 ) $ (263 ) $ 50 (2,288 ) |
Schedule of reclassifications out of accumulated other comprehensive income (loss) by component | The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the three months ended March 31, 2019 : Three Months Ended March 31, 2019 Decrease (Increase) Affected Line Item in Consolidated Statement of Operations (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 57 Other income (expense), net Prior service cost 2 Other income (expense), net Total before tax 59 Income tax benefit (15 ) Income tax expense Net of tax $ 44 ________________________________________________________________________ (1) See Note 7—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the three months ended March 31, 2018 : Three Months Ended March 31, 2018 Decrease (Increase) Affected Line Item in Consolidated Statement of Operations (Dollars in millions) Amortization of pension & post-retirement plans (1) Net actuarial loss $ 44 Other income (expense), net Prior service cost 3 Other income (expense), net Total before tax 47 Income tax benefit (12 ) Income tax expense Net of tax $ 35 ________________________________________________________________________ (1) See Note 7—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans. |
Background (Details)
Background (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Book overdraft balance | $ 2 | $ 86 | |
Operating lease assets | 1,952 | ||
Operating lease liabilities | $ 2,062 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease assets | $ 2,100 | ||
Operating lease liabilities | 2,200 | ||
Retained Earnings | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of adoption of ASU | $ 115 |
Goodwill, Customer Relationsh_3
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill, Customer Relationships, and Other Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill [Line Items] | ||
Goodwill | $ 21,526 | $ 28,031 |
Finite-lived intangible assets, net | 8,580 | 8,911 |
Indefinite-life intangible assets | 269 | 269 |
Total other intangible assets, net | 1,929 | 1,868 |
Customer relationships | ||
Goodwill [Line Items] | ||
Finite-lived intangible assets, net | 8,580 | 8,911 |
Accumulated amortization | 8,825 | 8,492 |
Computer Software, Intangible Asset | ||
Goodwill [Line Items] | ||
Finite-lived intangible assets, net | 1,536 | 1,468 |
Accumulated amortization | 2,678 | 2,616 |
Trade Names and Patents | ||
Goodwill [Line Items] | ||
Finite-lived intangible assets, net | 124 | 131 |
Accumulated amortization | $ 69 | $ 61 |
Goodwill, Customer Relationsh_4
Goodwill, Customer Relationships and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Control premium, percent | 4.10% | |
Goodwill impairment | $ 6,506 | $ 0 |
Amortization of intangible assets | 429 | $ 444 |
Intangible assets, gross (including goodwill) | $ 43,600 |
Goodwill, Customer Relationsh_5
Goodwill, Customer Relationships and Other Intangible Assets - Goodwill Impairment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill [Line Items] | ||
Goodwill impairment | $ 6,506 | $ 0 |
International and Global Accounts | ||
Goodwill [Line Items] | ||
Goodwill impairment | 934 | |
Enterprise | ||
Goodwill [Line Items] | ||
Goodwill impairment | 1,471 | |
Small and Medium Business | ||
Goodwill [Line Items] | ||
Goodwill impairment | 896 | |
Wholesale | ||
Goodwill [Line Items] | ||
Goodwill impairment | 3,019 | |
Consumer | ||
Goodwill [Line Items] | ||
Goodwill impairment | $ 186 |
Goodwill, Customer Relationsh_6
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Amortization Expense (Details) $ in Millions | Mar. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 (remaining nine months) | $ 1,260 |
2020 | 1,600 |
2021 | 1,158 |
2022 | 978 |
2023 | $ 900 |
Goodwill, Customer Relationsh_7
Goodwill, Customer Relationships and Other Intangible Assets - Rollforward of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill [Roll Forward] | ||
As of December 31, 2018 | $ 28,031,000 | |
January 2019 reorganization | 0 | |
Effect of foreign currency rate change | 1,000 | |
Impairment of goodwill | (6,506,000) | $ 0 |
As of March 31, 2019 | 21,526,000 | |
International and Global Accounts | ||
Goodwill [Roll Forward] | ||
As of December 31, 2018 | 3,595,000 | |
January 2019 reorganization | 0 | |
Effect of foreign currency rate change | 1,000 | |
Impairment of goodwill | (934,000) | |
As of March 31, 2019 | 2,662,000 | |
Enterprise | ||
Goodwill [Roll Forward] | ||
As of December 31, 2018 | 5,222,000 | |
January 2019 reorganization | 987,000 | |
Effect of foreign currency rate change | 0 | |
Impairment of goodwill | (1,471,000) | |
As of March 31, 2019 | 4,738,000 | |
Small and Medium Business | ||
Goodwill [Roll Forward] | ||
As of December 31, 2018 | 5,193,000 | |
January 2019 reorganization | (1,038,000) | |
Effect of foreign currency rate change | 0 | |
Impairment of goodwill | (896,000) | |
As of March 31, 2019 | 3,259,000 | |
Wholesale | ||
Goodwill [Roll Forward] | ||
As of December 31, 2018 | 6,437,000 | |
January 2019 reorganization | 395,000 | |
Effect of foreign currency rate change | 0 | |
Impairment of goodwill | (3,019,000) | |
As of March 31, 2019 | 3,813,000 | |
Consumer | ||
Goodwill [Roll Forward] | ||
As of December 31, 2018 | 7,584,000 | |
January 2019 reorganization | (344,000) | |
Effect of foreign currency rate change | 0 | |
Impairment of goodwill | (186,000) | |
As of March 31, 2019 | $ 7,054,000 |
Revenue Recognition - Revenue n
Revenue Recognition - Revenue not Under ASC 606 (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Total revenues | $ 5,647 | $ 5,945 |
Adjustments for non-ASC 606 revenue | (358) | (312) |
Total revenue from contracts with customers | $ 5,289 | $ 5,633 |
Revenue Recognition - Contract
Revenue Recognition - Contract with Customer, Asset and Liability (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Customer receivables | $ 2,286 | $ 2,346 |
Contract assets | 134 | 140 |
Contract liabilities | 869 | 860 |
Accounts receivable, gross | 2,400 | 2,500 |
Allowance for doubtful accounts receivable | $ 145 | $ 132 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Minimum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 1 year |
Minimum | Business Customer | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Length of customer life | 12 months |
Maximum | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Contract term | 7 years |
Maximum | Business Customer | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Length of customer life | 60 months |
Weighted Average | Consumer Customers | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Length of customer life | 30 months |
Revenue Recognition - Revenue R
Revenue Recognition - Revenue Recognized (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Amounts included in contract liability at the beginning of the period (January 1, 2019 and 2018, respectively) | $ 490 | $ 523 |
Performance obligations satisfied in previous periods | $ 0 | $ 0 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligation (Details) $ in Billions | Mar. 31, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 6.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 77.00% |
Remaining performance obligation, satisfaction period | 2 years 9 months |
Revenue Recognition - Capitaliz
Revenue Recognition - Capitalized Contract Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Contract Acquisition Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | $ 322 | $ 268 |
Costs incurred | 57 | 52 |
Amortization | (50) | (39) |
End of period balance | 329 | 281 |
Contract Fulfillment Costs | ||
Capitalized Contract Cost [Roll Forward] | ||
Beginning of period balance | 187 | 133 |
Costs incurred | 34 | 29 |
Amortization | (23) | (12) |
End of period balance | $ 198 | $ 150 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 1,952 | ||
Operating lease liabilities | 2,062 | ||
Lease income | $ 199 | $ 219 | |
Accounting Standards Update 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease assets | $ 2,100 | ||
Operating lease liabilities | 2,200 | ||
RETAINED EARNINGS (ACCUMULATED DEFICIT) | Accounting Standards Update 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Cumulative effect of adoption of ASU | $ 115 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating and short-term lease cost | $ 169 |
Finance lease cost: | |
Amortization of right-of-use assets | 12 |
Interest on lease liability | 4 |
Total finance lease cost | 16 |
Total lease cost | $ 185 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) $ in Millions | Mar. 31, 2019USD ($) |
Assets | |
Operating lease assets | $ 1,952 |
Finance lease assets | 271 |
Total leased assets | 2,223 |
Current | |
Operating | 561 |
Finance | 36 |
Noncurrent | |
Operating | 1,501 |
Finance | 190 |
Total lease liabilities | $ 2,288 |
Weighted-average remaining lease term (years) | |
Operating leases | 8 years 1 month 6 days |
Finance leases | 11 years 1 month 6 days |
Weighted-average discount rate | |
Operating leases | 6.73% |
Finance leases | 5.45% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flows (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 182 |
Operating cash flows from finance leases | 3 |
Finance cash flows from finance leases | $ 8 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Mar. 31, 2019USD ($) |
Operating Leases | |
2019 | $ 463 |
2020 | 462 |
2021 | 381 |
2022 | 301 |
2023 | 260 |
Thereafter | 878 |
Total lease payments | 2,745 |
Less: interest | (683) |
Total | 2,062 |
Less: current portion | (561) |
Long-term portion | 1,501 |
Finance Leases | |
2019 | 38 |
2020 | 35 |
2021 | 22 |
2022 | 20 |
2023 | 19 |
Thereafter | 179 |
Total lease payments | 313 |
Less: interest | (87) |
Total | 226 |
Less: current portion | (36) |
Long-term portion | $ 190 |
Leases - Capital Lease Maturiti
Leases - Capital Lease Maturities Under Topic 840 (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 51 |
2020 | 36 |
2021 | 23 |
2022 | 21 |
2023 | 20 |
2024 and thereafter | 183 |
Total minimum payments | 334 |
Less: amount representing interest and executory costs | (100) |
Present value of minimum payments | 234 |
Less: current portion | (38) |
Long-term portion | $ 196 |
Leases - Right-of-Way and Opera
Leases - Right-of-Way and Operating Lease Maturities Under Topic 840 (Details) $ in Millions | Dec. 31, 2018USD ($) |
Lessee, Lease, Description [Line Items] | |
2019 | $ 832 |
2020 | 577 |
2021 | 467 |
2022 | 399 |
2023 | 356 |
2024 | 1,724 |
Total future minimum payments | 4,355 |
Future minimum sublease rentals | 101 |
Right-of-Way Agreements | |
Lessee, Lease, Description [Line Items] | |
2019 | 157 |
2020 | 134 |
2021 | 112 |
2022 | 120 |
2023 | 115 |
2024 | 755 |
Total future minimum payments | 1,393 |
Operating Leases | |
Lessee, Lease, Description [Line Items] | |
2019 | 675 |
2020 | 443 |
2021 | 355 |
2022 | 279 |
2023 | 241 |
2024 | 969 |
Total future minimum payments | $ 2,962 |
Long-Term Debt and Credit Fac_3
Long-Term Debt and Credit Facilities - Schedule of Long Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Long-term Debt and Credit Facilities | ||
Capital lease and other obligations | $ 231 | $ 801 |
Unamortized discounts and other, net | (11) | (8) |
Unamortized debt issuance costs | (274) | (283) |
Total long-term debt | 35,490 | 36,061 |
Less current maturities | (632) | (652) |
Long-term debt, excluding current maturities | 34,858 | 35,409 |
CenturyLink, Inc. | Line of credit | New Revolving Credit Facility | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 695 | $ 550 |
CenturyLink, Inc. | Line of credit | New Revolving Credit Facility | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 5.234% | |
CenturyLink, Inc. | Line of credit | New Revolving Credit Facility | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 5.237% | |
CenturyLink, Inc. | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, weighted average interest rate | 5.249% | 5.272% |
CenturyLink, Inc. | Medium-term notes | Term Loan A | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 1,600 | $ 1,622 |
CenturyLink, Inc. | Medium-term notes | Term Loan A-1 | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | 347 | 351 |
CenturyLink, Inc. | Medium-term notes | Term Loan B | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | 5,925 | 5,940 |
CenturyLink, Inc. | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 8,010 | 8,036 |
CenturyLink, Inc. | Senior notes | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 5.625% | |
CenturyLink, Inc. | Senior notes | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 7.65% | |
Level 3 Financing, Inc. | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 4,611 | $ 4,611 |
Long-term debt, weighted average interest rate | 4.736% | 4.754% |
Level 3 Financing, Inc. | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 5,315 | $ 5,315 |
Level 3 Financing, Inc. | Senior notes | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 5.125% | |
Level 3 Financing, Inc. | Senior notes | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 6.125% | |
Embarq Corporation | First mortgage bonds | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 138 | 138 |
Embarq Corporation | First mortgage bonds | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 7.125% | |
Embarq Corporation | First mortgage bonds | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 8.375% | |
Embarq Corporation | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 7.995% | |
Long-term debt, gross | $ 1,460 | 1,485 |
Embarq Corporation | Other | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 9.00% | |
Long-term debt, gross | $ 150 | 150 |
Level 3 Parent, LLC | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 5.75% | |
Long-term debt, gross | $ 600 | 600 |
Qwest Corporation | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 4.50% | |
Long-term debt, gross | $ 100 | 100 |
Qwest Corporation | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 5,956 | 5,956 |
Qwest Corporation | Senior notes | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 6.125% | |
Qwest Corporation | Senior notes | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 7.75% | |
Qwest Capital Funding, Inc. | Senior notes | ||
Long-term Debt and Credit Facilities | ||
Long-term debt, gross | $ 637 | $ 697 |
Qwest Capital Funding, Inc. | Senior notes | Minimum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 6.875% | |
Qwest Capital Funding, Inc. | Senior notes | Maximum | ||
Long-term Debt and Credit Facilities | ||
Stated interest rate | 7.75% | |
London Interbank Offered Rate (LIBOR) | CenturyLink, Inc. | Medium-term notes | Term Loan A | ||
Long-term Debt and Credit Facilities | ||
Basis spread | 2.75% | |
London Interbank Offered Rate (LIBOR) | CenturyLink, Inc. | Medium-term notes | Term Loan A-1 | ||
Long-term Debt and Credit Facilities | ||
Basis spread | 2.75% | |
London Interbank Offered Rate (LIBOR) | CenturyLink, Inc. | Medium-term notes | Term Loan B | ||
Long-term Debt and Credit Facilities | ||
Basis spread | 2.75% | |
London Interbank Offered Rate (LIBOR) | Level 3 Financing, Inc. | Medium-term notes | ||
Long-term Debt and Credit Facilities | ||
Basis spread | 2.25% |
Long-Term Debt and Credit Fac_4
Long-Term Debt and Credit Facilities - Schedule of Maturities of Long Term Debt (Details) $ in Millions | Mar. 31, 2019USD ($) |
Long-term Debt, Fiscal Year Maturity | |
2019 (remaining nine months) | $ 556 |
2020 | 1,189 |
2021 | 3,115 |
2022 | 5,428 |
2023 | 2,095 |
2024 and thereafter | 23,392 |
Total long-term debt | $ 35,775 |
Long-Term Debt and Credit Fac_5
Long-Term Debt and Credit Facilities - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($) | Feb. 28, 2019USD ($)derivative_agreement | |
Derivative [Line Items] | ||
Repayments of debt | $ 111 | |
Designated as Hedging Instrument | Interest Rate Swap | ||
Derivative [Line Items] | ||
Number of instruments | derivative_agreement | 5 | |
Cash Flow Hedging | Designated as Hedging Instrument | Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional | $ 2,500 |
Severance and Leased Real Est_3
Severance and Leased Real Estate - Additional Information (Details) $ in Millions | Jan. 01, 2019USD ($) |
Property Subject to Operating Lease | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring reserve | $ 110 |
Severance and Leased Real Est_4
Severance and Leased Real Estate - Schedule of Severance Expenses (Details) - Severance $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Restructuring reserve | |
Balance at the beginning of the period | $ 87 |
Accrued to expense | 4 |
Payments, net | (31) |
Balance at the end of the period | $ 60 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Pension plans | ||
Components of net periodic (benefit) expense | ||
Service cost | $ 14 | $ 16 |
Interest cost | 110 | 100 |
Expected return on plan assets | (156) | (173) |
Recognition of prior service credit | (2) | (2) |
Recognition of actuarial loss | 57 | 44 |
Net periodic pension benefit expense (income) | 23 | (15) |
Post-retirement benefit plans | ||
Components of net periodic (benefit) expense | ||
Service cost | 4 | 4 |
Interest cost | 27 | 24 |
Recognition of prior service credit | 4 | 5 |
Net periodic pension benefit expense (income) | $ 35 | $ 33 |
(Loss) Earnings Per Common Sh_3
(Loss) Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
(Loss) Income (Numerator): | ||
Net (loss) income | $ (6,165) | $ 115 |
Weighted-average number of shares: | ||
Weighted average shares outstanding for computing basic earnings per common share (in shares) | 1,068,878 | 1,065,796 |
Incremental common shares attributable to dilutive securities: | ||
Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share (in shares) | 1,068,878 | 1,069,183 |
Basic (loss) earnings per common share (in dollars per share) | $ (5.77) | $ 0.11 |
Diluted (loss) earnings per common share (in dollars per share) | $ (5.77) | $ 0.11 |
Convertible Debt Securities | ||
Incremental common shares attributable to dilutive securities: | ||
Number of shares of common stock excluded from the computation of diluted earnings per share (in shares) | 3,300 | |
Common Class A | ||
(Loss) Income (Numerator): | ||
Net (loss) income | $ (6,165) | $ 115 |
Net (loss) income applicable to common stock for computing basic earnings per common share | (6,165) | 115 |
Net (loss) income as adjusted for purposes of computing diluted earnings per common share | $ (6,165) | $ 115 |
Weighted-average number of shares: | ||
Outstanding during period (in shares) | 1,083,588 | 1,073,560 |
Non-vested restricted stock (in shares) | (14,710) | (7,764) |
Weighted average shares outstanding for computing basic earnings per common share (in shares) | 1,068,878 | 1,065,796 |
Incremental common shares attributable to dilutive securities: | ||
Shares issuable under convertible securities (in shares) | 0 | 10 |
Shares issuable under incentive compensation plans (in shares) | 0 | 3,377 |
Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share (in shares) | 1,068,878 | 1,069,183 |
Basic (loss) earnings per common share (in dollars per share) | $ (5.77) | $ 0.11 |
Diluted (loss) earnings per common share (in dollars per share) | $ (5.77) | $ 0.11 |
Number of shares of common stock excluded from the computation of diluted earnings per share (in shares) | 5,400 | 4,300 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Fair value measurements determined on a nonrecurring basis - Fair value inputs, Level 2 - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Carrying amount | ||
Fair value disclosure | ||
Long-term debt, excluding finance lease and other obligations | $ 35,259 | $ 35,260 |
Interest rate swap contracts | 23 | 0 |
Fair value | ||
Fair value disclosure | ||
Long-term debt, excluding finance lease and other obligations | 35,069 | 32,915 |
Interest rate swap contracts | $ 23 | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Details) - Interest Rate Swap $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($) | Feb. 28, 2019USD ($)derivative_agreement | |
Derivative [Line Items] | ||
Reclassification in next twelve months | $ 2.3 | |
Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Number of instruments | derivative_agreement | 5 | |
Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Notional | $ 2,500 | |
One Counterparty | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Notional | $ 700 | |
Fixed interest rate | 2.48% | |
Three Counterparties | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative [Line Items] | ||
Notional | $ 450 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Interest Rate Derivative (Details) - Interest Rate Swap - Designated as Hedging Instrument $ in Billions | Feb. 28, 2019USD ($)derivative_agreement |
Derivative [Line Items] | |
Number of Instruments | derivative_agreement | 5 |
Cash Flow Hedging | |
Derivative [Line Items] | |
Notional | $ | $ 2.5 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Value of Derivatives (Details) $ in Millions | Mar. 31, 2019USD ($) |
Cash Flow Hedging | Interest Rate Swap | Designated as Hedging Instrument | |
Derivatives, Fair Value [Line Items] | |
Fair Value | $ 23 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Losses Recognized in OCI (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Interest Rate Swap | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Loss recognized in other comprehensive income | $ 23 |
Segment Information - Additiona
Segment Information - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 5 | |
Universal service taxes and surcharges | $ | $ 248 | $ 246 |
Segment Information - Segment R
Segment Information - Segment Results and Operating Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating revenues by products and services | ||
Revenues | $ 5,647,000,000 | $ 5,945,000,000 |
Cost of Services and Products | 2,520,000,000 | 2,803,000,000 |
Selling, general and administrative | 932,000,000 | 1,109,000,000 |
Share-based compensation | 33,000,000 | 41,000,000 |
Total expense | 3,419,000,000 | 3,871,000,000 |
Total adjusted EBITDA | 2,228,000,000 | 2,074,000,000 |
IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 1,749,000,000 | 1,735,000,000 |
Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 1,290,000,000 | 1,368,000,000 |
Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 1,023,000,000 | 1,111,000,000 |
IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 144,000,000 | 162,000,000 |
Broadband | ||
Operating revenues by products and services | ||
Revenues | 722,000,000 | 712,000,000 |
Voice | ||
Operating revenues by products and services | ||
Revenues | 489,000,000 | 557,000,000 |
Regulatory | ||
Operating revenues by products and services | ||
Revenues | 159,000,000 | 183,000,000 |
Other | ||
Operating revenues by products and services | ||
Revenues | 71,000,000 | 117,000,000 |
Operating segments | ||
Operating revenues by products and services | ||
Revenues | 5,647,000,000 | 5,945,000,000 |
Cost of Services and Products | 1,136,000,000 | 1,273,000,000 |
Selling, general and administrative | 478,000,000 | 506,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 1,614,000,000 | 1,779,000,000 |
Total adjusted EBITDA | 4,033,000,000 | 4,166,000,000 |
Operating segments | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 1,749,000,000 | 1,735,000,000 |
Operating segments | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 1,290,000,000 | 1,368,000,000 |
Operating segments | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 1,023,000,000 | 1,111,000,000 |
Operating segments | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 144,000,000 | 162,000,000 |
Operating segments | Broadband | ||
Operating revenues by products and services | ||
Revenues | 722,000,000 | 712,000,000 |
Operating segments | Voice | ||
Operating revenues by products and services | ||
Revenues | 489,000,000 | 557,000,000 |
Operating segments | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 159,000,000 | 183,000,000 |
Operating segments | Other | ||
Operating revenues by products and services | ||
Revenues | 71,000,000 | 117,000,000 |
Operating segments | Small and Medium Business | ||
Operating revenues by products and services | ||
Revenues | 755,000,000 | 784,000,000 |
Cost of Services and Products | 153,000,000 | 153,000,000 |
Selling, general and administrative | 132,000,000 | 127,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 285,000,000 | 280,000,000 |
Total adjusted EBITDA | 470,000,000 | 504,000,000 |
Operating segments | Small and Medium Business | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 300,000,000 | 291,000,000 |
Operating segments | Small and Medium Business | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 107,000,000 | 110,000,000 |
Operating segments | Small and Medium Business | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 336,000,000 | 369,000,000 |
Operating segments | Small and Medium Business | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 12,000,000 | 14,000,000 |
Operating segments | Small and Medium Business | Broadband | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Small and Medium Business | Voice | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Small and Medium Business | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Small and Medium Business | Other | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Enterprise | ||
Operating revenues by products and services | ||
Revenues | 1,523,000,000 | 1,547,000,000 |
Cost of Services and Products | 496,000,000 | 514,000,000 |
Selling, general and administrative | 149,000,000 | 152,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 645,000,000 | 666,000,000 |
Total adjusted EBITDA | 878,000,000 | 881,000,000 |
Operating segments | Enterprise | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 688,000,000 | 665,000,000 |
Operating segments | Enterprise | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 364,000,000 | 399,000,000 |
Operating segments | Enterprise | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 397,000,000 | 410,000,000 |
Operating segments | Enterprise | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 74,000,000 | 73,000,000 |
Operating segments | Enterprise | Broadband | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Enterprise | Voice | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Enterprise | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Enterprise | Other | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | International and Global Accounts | ||
Operating revenues by products and services | ||
Revenues | 891,000,000 | 935,000,000 |
Cost of Services and Products | 259,000,000 | 272,000,000 |
Selling, general and administrative | 68,000,000 | 68,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 327,000,000 | 340,000,000 |
Total adjusted EBITDA | 564,000,000 | 595,000,000 |
Operating segments | International and Global Accounts | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 420,000,000 | 440,000,000 |
Operating segments | International and Global Accounts | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 320,000,000 | 321,000,000 |
Operating segments | International and Global Accounts | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 94,000,000 | 101,000,000 |
Operating segments | International and Global Accounts | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 57,000,000 | 73,000,000 |
Operating segments | International and Global Accounts | Broadband | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | International and Global Accounts | Voice | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | International and Global Accounts | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | International and Global Accounts | Other | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Wholesale | ||
Operating revenues by products and services | ||
Revenues | 1,037,000,000 | 1,110,000,000 |
Cost of Services and Products | 141,000,000 | 176,000,000 |
Selling, general and administrative | 20,000,000 | 24,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 161,000,000 | 200,000,000 |
Total adjusted EBITDA | 876,000,000 | 910,000,000 |
Operating segments | Wholesale | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 341,000,000 | 339,000,000 |
Operating segments | Wholesale | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 499,000,000 | 538,000,000 |
Operating segments | Wholesale | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 196,000,000 | 231,000,000 |
Operating segments | Wholesale | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 1,000,000 | 2,000,000 |
Operating segments | Wholesale | Broadband | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Wholesale | Voice | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Wholesale | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Wholesale | Other | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Consumer | ||
Operating revenues by products and services | ||
Revenues | 1,441,000,000 | 1,569,000,000 |
Cost of Services and Products | 87,000,000 | 158,000,000 |
Selling, general and administrative | 109,000,000 | 135,000,000 |
Share-based compensation | 0 | 0 |
Total expense | 196,000,000 | 293,000,000 |
Total adjusted EBITDA | 1,245,000,000 | 1,276,000,000 |
Operating segments | Consumer | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Consumer | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Consumer | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Consumer | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Operating segments | Consumer | Broadband | ||
Operating revenues by products and services | ||
Revenues | 722,000,000 | 712,000,000 |
Operating segments | Consumer | Voice | ||
Operating revenues by products and services | ||
Revenues | 489,000,000 | 557,000,000 |
Operating segments | Consumer | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 159,000,000 | 183,000,000 |
Operating segments | Consumer | Other | ||
Operating revenues by products and services | ||
Revenues | 71,000,000 | 117,000,000 |
Segment Reconciling Items | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Cost of Services and Products | 1,384,000,000 | 1,530,000,000 |
Selling, general and administrative | 454,000,000 | 603,000,000 |
Share-based compensation | 33,000,000 | 41,000,000 |
Total expense | 1,805,000,000 | 2,092,000,000 |
Total adjusted EBITDA | (1,805,000,000) | (2,092,000,000) |
Segment Reconciling Items | IP & Data Services | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Transport & Infrastructure | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Voice & Collaboration | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | IT & Managed Services | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Broadband | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Voice | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Regulatory | ||
Operating revenues by products and services | ||
Revenues | 0 | 0 |
Segment Reconciling Items | Other | ||
Operating revenues by products and services | ||
Revenues | $ 0 | $ 0 |
Segment Information - Reconcili
Segment Information - Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Total segment adjusted EBITDA | $ 2,228 | $ 2,074 |
Depreciation and amortization | (1,188) | (1,283) |
Impairment of goodwill | (6,506) | 0 |
Total other expense, net | (528) | (514) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | (6,027) | 236 |
Income tax expense | (138) | (121) |
NET (LOSS) INCOME | (6,165) | 115 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Total segment adjusted EBITDA | 4,033 | 4,166 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total segment adjusted EBITDA | (1,805) | (2,092) |
Depreciation and amortization | (1,188) | (1,283) |
Impairment of goodwill | (6,506) | 0 |
Other operating expenses | (1,805) | (2,092) |
Stock-based compensation | (33) | (41) |
Operating (loss) income | (5,499) | 750 |
Total other expense, net | $ (528) | $ (514) |
Commitments and Contingencies_2
Commitments and Contingencies and Other Items (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Feb. 28, 2017USD ($)lawsuit | Mar. 31, 2019USD ($)lawsuitproperty | Mar. 31, 2019USD ($)lawsuit | Dec. 31, 2005USD ($) | |
Loss Contingencies | ||||
Estimate of possible loss | $ 121,000 | $ 121,000 | ||
Patents allegedly infringed | lawsuit | 1 | |||
Number of properties with potential environmental liability | property | 200 | |||
Unfavorable Regulatory Action | ||||
Loss Contingencies | ||||
Estimate of possible loss | $ 100,000 | $ 100,000 | ||
Louisiana State Court | ||||
Loss Contingencies | ||||
New claims filed, number | lawsuit | 2 | |||
Missouri municipalities | Judicial ruling | ||||
Loss Contingencies | ||||
Number of cases, final court order | lawsuit | 1 | |||
Litigation settlement amount | $ 4,000 | |||
CenturyLink, Inc. | Interexchange Carriers | ||||
Loss Contingencies | ||||
Number of lawsuits | lawsuit | 100 | 100 | ||
Level 3 Parent, LLC | ||||
Loss Contingencies | ||||
Loss contingency, damages sought, value | $ 50,000 | |||
Level 3 Parent, LLC | Pending litigation | Peruvian Tax Litigation, Before Interest | ||||
Loss Contingencies | ||||
Loss contingency, asserted claim | $ 26,000 | |||
Level 3 Parent, LLC | Pending litigation | Peruvian Tax Litigation | ||||
Loss Contingencies | ||||
Loss contingency, asserted claim | 10,000 | $ 10,000 | ||
Level 3 Parent, LLC | Pending litigation | Brazilian Tax Claims | Maximum | ||||
Loss Contingencies | ||||
Loss contingency, range of possible loss, portion not accrued | $ 37,000 | $ 37,000 |
Other Financial Information (De
Other Financial Information (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses and Other Current Assets [Abstract] | ||
Prepaid expenses | $ 386 | $ 307 |
Income tax receivable | 69 | 82 |
Materials, supplies and inventory | 154 | 120 |
Contract assets | 58 | 52 |
Other | 98 | 108 |
Total other current assets | 1,026 | 918 |
Contract Acquisition Costs | ||
Prepaid Expenses and Other Current Assets [Abstract] | ||
Contract costs | 173 | 167 |
Contract Fulfillment Costs | ||
Prepaid Expenses and Other Current Assets [Abstract] | ||
Contract costs | $ 88 | $ 82 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 19,828 | ||
Other comprehensive income (loss) before reclassifications | (12) | $ 79 | |
Amounts reclassified from accumulated other comprehensive income | 44 | 35 | |
Other comprehensive income | 32 | 114 | |
Balance at end of period | 13,543 | 23,443 | |
Defined benefit plan | Pension plans | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (2,173) | (1,731) | |
Other comprehensive income (loss) before reclassifications | 0 | 0 | |
Amounts reclassified from accumulated other comprehensive income | 41 | 31 | |
Other comprehensive income | 41 | 31 | |
Balance at end of period | (2,132) | (2,075) | |
Defined benefit plan | Pension plans | Accounting Standards Update 2018-02 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | $ (375) | ||
Defined benefit plan | Post-retirement benefit plans | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (58) | (235) | |
Other comprehensive income (loss) before reclassifications | 0 | 0 | |
Amounts reclassified from accumulated other comprehensive income | 3 | 4 | |
Other comprehensive income | 3 | 4 | |
Balance at end of period | (55) | (263) | |
Defined benefit plan | Post-retirement benefit plans | Accounting Standards Update 2018-02 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | (32) | ||
Foreign currency translation adjustment and other | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (230) | (29) | |
Other comprehensive income (loss) before reclassifications | 5 | 79 | |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | |
Other comprehensive income | 5 | 79 | |
Balance at end of period | (225) | 50 | |
Foreign currency translation adjustment and other | Accounting Standards Update 2018-02 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | 0 | ||
Interest rate hedges | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | 0 | ||
Other comprehensive income (loss) before reclassifications | (17) | ||
Amounts reclassified from accumulated other comprehensive income | 0 | ||
Other comprehensive income | (17) | ||
Balance at end of period | (17) | ||
Accumulated other comprehensive income | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (2,461) | (1,995) | |
Other comprehensive income | 32 | 114 | |
Balance at end of period | $ (2,429) | $ (2,288) | |
Accumulated other comprehensive income | Accounting Standards Update 2018-02 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Cumulative effect of adoption of ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | $ (407) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Reclassifications out of accumulated other comprehensive income loss by component | ||
Other income (expense), net | $ (5) | $ 21 |
Total before tax | (6,027) | 236 |
Income tax benefit | (138) | (121) |
Net (loss) income | (6,165) | 115 |
Decrease (Increase) in Net Income | Net actuarial loss | ||
Reclassifications out of accumulated other comprehensive income loss by component | ||
Other income (expense), net | 57 | 44 |
Decrease (Increase) in Net Income | Prior service cost | ||
Reclassifications out of accumulated other comprehensive income loss by component | ||
Other income (expense), net | 2 | 3 |
Decrease (Increase) in Net Income | Defined benefit plan | ||
Reclassifications out of accumulated other comprehensive income loss by component | ||
Total before tax | 59 | 47 |
Income tax benefit | (15) | (12) |
Net (loss) income | $ 44 | $ 35 |
Labor Union Contracts (Details)
Labor Union Contracts (Details) | 3 Months Ended |
Mar. 31, 2019Employee | |
Concentration risk | |
Number of unionized employees (less than) | 80 |
Total number of employees | Unionized employees concentration risk | |
Concentration risk | |
Concentration risk, percent | 26.00% |
Workforce Subject to Collective Bargaining Arrangements Expiring within One Year | Unionized employees concentration risk | |
Concentration risk | |
Concentration risk, percent | 6.00% |
Uncategorized Items - ctl-20190
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 297,000,000 |
Accounting Standards Update 2018-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 407,000,000 |