CENTURYLINK, INC, 10-Q filed on 11/4/2016
Quarterly Report
v3.5.0.2
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2016
Oct. 27, 2016
Document and Entity Information    
Entity Registrant Name CENTURYLINK, INC  
Entity Central Index Key 0000018926  
Document Type 10-Q  
Document Period End Date Sep. 30, 2016  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   546,690,239
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q3  
v3.5.0.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Statement [Abstract]        
OPERATING REVENUES $ 4,382 $ 4,554 $ 13,181 $ 13,424
OPERATING EXPENSES        
Cost of services and products (exclusive of depreciation and amortization) 1,996 1,993 5,845 5,863
Selling, general and administrative 796 857 2,439 2,571
Depreciation and amortization 995 1,048 2,958 3,136
Total operating expenses 3,787 3,898 11,242 11,570
OPERATING INCOME 595 656 1,939 1,854
OTHER (EXPENSE) INCOME        
Interest expense (327) (329) (998) (984)
Other (expense) income, net (19) 2 5 16
Total other expense, net (346) (327) (993) (968)
INCOME BEFORE INCOME TAX EXPENSE 249 329 946 886
Income tax expense 97 124 362 346
NET INCOME $ 152 $ 205 $ 584 $ 540
BASIC AND DILUTED EARNINGS PER COMMON SHARE        
BASIC (in dollars per share) $ 0.28 $ 0.37 $ 1.08 $ 0.97
DILUTED (in dollars per share) 0.28 0.37 1.08 0.97
DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) $ 0.54 $ 0.54 $ 1.62 $ 1.62
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING        
BASIC (in shares) 539,806 554,897 539,411 558,502
DILUTED (in shares) 540,917 555,156 540,493 559,293
v3.5.0.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]        
Net income $ 152 $ 205 $ 584 $ 540
Items related to employee benefit plans:        
Change in net actuarial loss, net of $(16), $(16), $(49) and $(46) tax 28 24 82 74
Change in net prior service costs, net of $(1), $(3), $(3) and $(8) tax 2 4 6 12
Foreign currency translation adjustment and other, net of $—, $—, $— and $— tax (4) (10) (9) (10)
Other comprehensive income 26 18 79 76
COMPREHENSIVE INCOME $ 178 $ 223 $ 663 $ 616
v3.5.0.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]        
Change in net actuarial loss, tax $ (16) $ (16) $ (49) $ (46)
Change in net prior service costs, tax (1) (3) (3) (8)
Foreign currency translation adjustment and other, tax $ 0 $ 0 $ 0 $ 0
v3.5.0.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Sep. 30, 2016
Dec. 31, 2015
CURRENT ASSETS    
Cash and cash equivalents $ 140 $ 126
Accounts receivable, less allowance of $173 and $152 1,957 1,943
Other 631 581
Total current assets 2,728 2,650
NET PROPERTY, PLANT AND EQUIPMENT    
Property, plant and equipment 40,304 38,785
Accumulated depreciation (22,464) (20,716)
Net property, plant and equipment 17,840 18,069
GOODWILL AND OTHER ASSETS    
Goodwill 20,766 20,742
Other intangible assets, less accumulated amortization of $1,980 and $1,798 1,518 1,555
Other, net 690 660
Total goodwill and other assets 26,228 26,885
TOTAL ASSETS 46,796 47,604
CURRENT LIABILITIES    
Current maturities of long-term debt 1,534 1,503
Accounts payable 1,036 968
Accrued expenses and other liabilities    
Salaries and benefits 548 602
Income and other taxes 330 318
Interest 320 250
Other 255 220
Advance billings and customer deposits 710 743
Total current liabilities 4,733 4,604
LONG-TERM DEBT 18,184 18,722
DEFERRED CREDITS AND OTHER LIABILITIES    
Deferred income taxes, net 3,653 3,569
Benefit plan obligations, net 5,228 5,511
Other 1,106 1,138
Total deferred credits and other liabilities 9,987 10,218
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY    
Preferred stock—non-redeemable, $25.00 par value, authorized 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 546,690 and 543,800 shares 547 544
Additional paid-in capital 15,121 15,178
Accumulated other comprehensive loss (1,855) (1,934)
Retained earnings 79 272
Total stockholders' equity 13,892 14,060
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 46,796 47,604
Customer relationships    
Customer relationships, less accumulated amortization of $6,322 and $5,648 $ 3,254 $ 3,928
v3.5.0.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
shares in Thousands, $ in Millions
Sep. 30, 2016
Dec. 31, 2015
Accounts receivable, allowance $ 173 $ 152
Preferred stock-non-redeemable, par value $ 25.00 $ 25.00
Preferred stock-non-redeemable, authorized shares 2,000 2,000
Preferred stock-non-redeemable, issued shares 7 7
Preferred stock-non-redeemable, outstanding shares 7 7
Common stock, par value $ 1.00 $ 1.00
Common stock, authorized shares 1,600,000 1,600,000
Common stock, issued shares 546,690 543,800
Common stock, outstanding shares 546,690 543,800
Customer relationships    
Finite-lived intangible assets, accumulated amortization $ 6,322 $ 5,648
Other intangible assets    
Finite-lived intangible assets, accumulated amortization $ 1,980 $ 1,798
v3.5.0.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
OPERATING ACTIVITIES    
Net income $ 584 $ 540
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 2,958 3,136
Impairment of assets 1 9
Deferred income taxes 32 93
Provision for uncollectible accounts 144 128
Net long-term debt issuance costs and premium amortization 2 (3)
Net loss on early retirement of debt (27) 0
Share-based compensation 60 57
Changes in current assets and liabilities:    
Accounts receivable (158) (91)
Accounts payable 52 (84)
Accrued income and other taxes 1 250
Other current assets and liabilities, net (24) 123
Retirement benefits (143) (134)
Changes in other noncurrent assets and liabilities, net (41) (54)
Other, net 17 (14)
Net cash provided by operating activities 3,512 3,956
INVESTING ACTIVITIES    
Payments for property, plant and equipment and capitalized software (2,010) (2,039)
Cash paid for acquisitions (24) (4)
Proceeds from sale of property 22 29
Other, net 0 (8)
Net cash used in investing activities (2,012) (2,022)
FINANCING ACTIVITIES    
Net proceeds from issuance of long-term debt 2,161 990
Payments of long-term debt (2,436) (535)
Net payments on credit facility and revolving line of credit (325) (725)
Dividends paid (876) (905)
Proceeds from issuance of common stock 5 11
Repurchase of common stock and shares withheld to satisfy tax withholdings (15) (541)
Other, net 0 (2)
Net cash used in financing activities (1,486) (1,707)
Net increase in cash and cash equivalents 14 227
Cash and cash equivalents at beginning of period 126 128
Cash and cash equivalents at end of period 140 355
Supplemental cash flow information:    
Income taxes paid, net (344) (54)
Interest paid (net of capitalized interest of $38 and $41) $ (922) $ (914)
v3.5.0.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Statement of Cash Flows [Abstract]    
Interest paid, capitalized interest $ 38 $ 41
v3.5.0.2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Millions
Total
COMMON STOCK
ACCUMULATED OTHER COMPREHENSIVE LOSS
ADDITIONAL PAID-IN CAPITAL
RETAINED EARNINGS
Balance at beginning of period at Dec. 31, 2014   $ 569 $ (2,017) $ 16,324 $ 147
Increase (Decrease) in Stockholders' Equity          
Issuance of common stock through dividend reinvestment, incentive and benefit plans   2   9  
Repurchase of common stock   (17)   (518)  
Shares withheld to satisfy tax withholdings       (18)  
Share-based compensation and other, net       58  
Dividends declared       (395) (510)
Other comprehensive income $ 76   76    
Net income 540       540
Balance at end of period at Sep. 30, 2015 14,250 554 (1,941) 15,460 177
Balance at beginning of period at Dec. 31, 2015 14,060 544 (1,934) 15,178 272
Increase (Decrease) in Stockholders' Equity          
Issuance of common stock through dividend reinvestment, incentive and benefit plans   3   5  
Repurchase of common stock   0   0  
Shares withheld to satisfy tax withholdings       (15)  
Share-based compensation and other, net       59  
Dividends declared       (106) (777)
Other comprehensive income 79   79    
Net income 584       584
Balance at end of period at Sep. 30, 2016 $ 13,892 $ 547 $ (1,855) $ 15,121 $ 79
v3.5.0.2
Basis of Presentation
9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation
General
We are an integrated communications company engaged primarily in providing an array of services to our residential and business customers. Our communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching ("MPLS"), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol ("VoIP"), information technology and other ancillary services.
Our consolidated balance sheet as of December 31, 2015, 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 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 for the first nine months of the year are not necessarily indicative of the consolidated results of operations that might be expected for the entire year, and the net cash provided by operating activities for the first nine months of the year, in particular, may not be indicative of the net cash that will be provided by operating activities in the last three months of the year. These consolidated financial statements 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, 2015.
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. 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 (expense) income, 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 pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital.
We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 7—Segment Information for additional information. These changes had no impact on total operating revenues, total operating expenses or net income for any period.
Connect America Fund
In 2015, we accepted funding from the Federal Communications Commission's ("FCC") Connect America Fund ("CAF") of approximately $500 million per year for six years to fund the deployment of voice and broadband capable infrastructure for approximately 1.2 million rural households and businesses in 33 states under the CAF Phase 2 high-cost support program. The funding from the CAF Phase 2 support program in these 33 states will substantially supplant funding from the interstate Universal Service Fund ("USF") high-cost program that we previously utilized to support voice services in high-cost rural markets. In late 2015, we began receiving these support payments from the FCC under the new CAF Phase 2 support program, which included monthly support payments at a higher rate than under the interstate USF support program. We received a substantial one-time transitional payment of $127 million from the FCC in the third quarter of 2015, of which $112 million was attributable to the first six months of 2015. The transitional payment was designed to align the prior USF payments with the new CAF Phase 2 payments for the full year 2015. Consequently, we do not expect funding from the CAF Phase 2 support program (including the prior USF funding) to materially change our other operating revenues for the full year 2016 when compared to the full year 2015.
Recent Accounting Pronouncements
Financial Instruments
On June 16, 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 effective January 1, 2020, but could elect to early adopt the provisions as of January 1, 2019. We expect to recognize the impacts of adopting ASU 2016-13 through a cumulative adjustment to retained earnings as of the date of adoption.
Share-based Compensation
On March 30, 2016, the FASB issued ASU 2016-09, “Improvement to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies the accounting and associated income tax accounting for share-based compensation in order to reduce the cost and complexity associated with current generally accepted accounting principles. ASU 2016-09 is effective as of January 1, 2017, but early adoption may be elected. ASU 2016-09 includes different transition requirements for the different changes implemented, including some provisions which allow retrospective application. We will implement this new standard on its effective date, but we have not determined if we will retrospectively apply the requirements when allowed.
The primary provisions of ASU 2016-09 that we expect will affect our financial statements are: 1) a reclassification of the tax effect associated with the difference between the expense recognized for share-based payments and the associated tax deduction from additional paid-in capital to income tax expense; 2) a reclassification of the tax effect associated with the difference between compensation expense and associated deduction from financing cash flow to operating cash flow; and 3) an optional accounting policy election to account for forfeitures of share-based payment grants as they occur as opposed to our current policy of estimating the forfeitures on the grant date. Although these provisions would not have had a material impact on our previously-issued financial statements, we cannot provide any assurance regarding their future impacts. Adoption of ASU 2016-09 may increase the volatility of income tax expense and cash flow from operating activities.
Leases
On February 25, 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 will require lessees to present right-of-use assets and lease liabilities on their balance sheets for operating leases, which are currently not reflected on their balance sheets.
ASU 2016-02 is effective for annual and interim periods beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. Upon adoption of ASU 2016-02, we are required to recognize and measure leases at the beginning of the earliest period presented in our consolidated financial statements using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. We have not yet decided when we will adopt ASU 2016-02 or which practical expedient options we will elect.
We are currently evaluating our existing lease accounting systems to determine whether our current systems will support the new accounting requirements or if upgrades or new systems will be required, and we are in the process of developing an implementation plan. We are also currently evaluating and assessing the impact ASU 2016-02 will have on us and our consolidated financial statements. As of the date of this report, we cannot provide any estimate of the impact of adopting ASU 2016-02.
Revenue Recognition
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 replaces virtually all existing generally accepted accounting principles (“GAAP”) on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs and we defer contract fulfillment costs only up to the extent of any revenue deferred.
On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year until January 1, 2018, which is the date we plan to adopt this standard. ASU 2014-09 may be adopted by applying the provisions of this standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2018. We have not yet decided which implementation method we will adopt. We have completed our initial assessment of our business and systems requirements and we are currently developing and implementing a new revenue recognition system to comply with the requirements of ASU 2014-09. We continue to work on developing estimates of the impact of ASU 2014-09 on the timing of our revenue recognition but cannot currently provide a reasonably accurate estimate of its impact.
v3.5.0.2
Long-Term Debt and Credit Facilities
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Long-Term Debt and Credit Facilities
Long-Term Debt and Credit Facilities
Long-term debt, including unamortized discounts and premiums and unamortized debt issuance costs, consisting of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including Qwest Corporation, Qwest Capital Funding, Inc. and Embarq Corporation and its subsidiaries ("Embarq"), were as follows:
 
Interest Rates
 
Maturities
 
As of
September 30, 2016
 
As of
December 31, 2015
 
 
 
 
 
(Dollars in millions)
CenturyLink, Inc.
 
 
 
 
 
 
 
Senior notes
5.150% - 7.650%
 
2017 - 2042
 
$
8,975

 
7,975

Credit facility and revolving line of credit(1)
2.274% - 4.250%
 
2019
 
85

 
410

Term loan
2.280%
 
2019
 
341

 
358

Subsidiaries
 
 
 
 
 
 
 
Qwest Corporation
 
 
 
 
 
 
 
Senior notes
6.125% - 7.750%
 
2017 - 2056
 
7,259

 
7,229

Term loan
2.280%
 
2025
 
100

 
100

Qwest Capital Funding, Inc.
 
 
 
 
 
 
 
Senior notes
6.500% - 7.750%
 
2018 - 2031
 
981

 
981

Embarq Corporation and subsidiaries
 
 
 
 
 
 
 
Senior note
7.995%
 
2036
 
1,485

 
2,669

First mortgage bonds
7.125% - 8.770%
 
2017 - 2025
 
228

 
232

Other
9.000%
 
2019
 
150

 
150

Capital lease and other obligations
Various
 
Various
 
441

 
425

Unamortized discounts, net
 
 
 
 
(131
)
 
(125
)
Unamortized debt issuance costs
 
 
 
 
(196
)
 
(179
)
Total long-term debt
 
 
 
 
19,718

 
20,225

Less current maturities
 
 
 
 
(1,534
)
 
(1,503
)
Long-term debt, excluding current maturities
 
 
 
 
$
18,184

 
18,722

______________________________________________________________________ 
(1) 
The aggregate amount outstanding on our Credit Facility and revolving line of credit borrowings at September 30, 2016 and December 31, 2015 was $85 million and $410 million, respectively, with a weighted-average interest rate of 2.507% and 2.756%, respectively. These amounts change on a regular basis.
New Issuances
On August 22, 2016, Qwest Corporation issued $978 million aggregate principal amount of 6.5% Notes due 2056, including $128 million principal amount that was sold pursuant to an over-allotment option, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of $946 million. All of the 6.5% Notes are unsecured obligations and may be redeemed by Qwest Corporation, in whole or in part, on or after September 1, 2021, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.
On April 6, 2016, CenturyLink, Inc. issued $1 billion aggregate principal amount of 7.5% Notes due 2024, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of $988 million. All of the 7.5% Notes are unsecured obligations and may be redeemed by CenturyLink, Inc., in whole or in part, on or after January 1, 2024, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. At any time before January 1, 2024, the Notes are redeemable, in whole or in part, at CenturyLink, Inc.'s option, at a redemption price equal to the greater of 100% of the principal amount of the Notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed, discounted to the redemption date in the manner described in the Notes, plus accrued and unpaid interest to the redemption date. In addition, at any time on or prior to April 1, 2019, CenturyLink, Inc. may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price of 107.5% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of certain equity offerings. Under certain circumstances, CenturyLink, Inc. will be required to make an offer to repurchase the Notes at a price of 101% of the aggregate principal amount plus accrued and unpaid interest to the repurchase date.
On January 29, 2016, Qwest Corporation issued $235 million aggregate principal amount of 7% Notes due 2056, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of $227 million. All of the 7% Notes are unsecured obligations and may be redeemed by Qwest Corporation, in whole or in part, on or after February 1, 2021, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.
Repayments
On September 19, 2016, a subsidiary of Embarq Corporation redeemed all of the less than $4 million of its 8.77% Notes due 2017, which resulted in an immaterial loss.
On September 15, 2016, Qwest Corporation redeemed $287 million of its 7.5% Notes due 2051, which resulted in a loss of $9 million.
On August 29, 2016, Qwest Corporation redeemed all $661 million of its 7.375% Notes due 2051, which resulted in a loss of $18 million.
On June 1, 2016, Embarq Corporation paid at maturity the $1.184 billion principal amount and accrued and unpaid interest due under its 7.082% Notes.
On May 2, 2016, Qwest Corporation paid at maturity the $235 million principal amount and accrued and unpaid interest due under its 8.375% Notes.
Covenants
As of September 30, 2016, we believe we were in compliance with the provisions and covenants contained in our Credit Facility and other material debt agreements.
v3.5.0.2
Severance and Leased Real Estate
9 Months Ended
Sep. 30, 2016
Restructuring and Related Activities [Abstract]  
Severance and Leased Real Estate
Severance and Leased Real Estate
Periodically, we have reductions in our workforce and have accrued liabilities for the related severance costs. These workforce reductions resulted primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workload demands due to the loss of customers purchasing certain services.
We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our consolidated balance sheets and report severance expenses in selling, general and administrative expenses in our consolidated statements of operations. As noted in Note 7—Segment Information, we do not allocate these severance expenses to our segments.
We have recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate which we have ceased using, net of estimated sublease rentals. Our fair value estimates were determined using discounted cash flow methods. We recognize expense to reflect accretion of the discounted liabilities and periodically we adjust the expense when our actual subleasing experience differs from our initial estimates. We report the current portion of liabilities for ceased-use real estate leases in accrued expenses and other liabilities - other and report the noncurrent portion in deferred credits and other liabilities - other in our consolidated balance sheets. We report the related expenses in selling, general and administrative expenses in our consolidated statements of operations. At September 30, 2016, the current and noncurrent portions of our leased real estate accrual were $8 million and $61 million, respectively. The remaining lease terms range from 0.1 to 9.2 years, with a weighted-average of 8.0 years.
Changes in our accrued liabilities for severance expenses and leased real estate were as follows:
 
Severance
 
Real Estate
 
(Dollars in millions)
Balance at December 31, 2015
$
14

 
80

Accrued to expense
25

 
3

Payments, net
(30
)
 
(16
)
Reversals and adjustments

 
2

Balance at September 30, 2016
$
9

 
69

v3.5.0.2
Employee Benefits
9 Months Ended
Sep. 30, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Benefits
Employee Benefits
Net periodic (income) expense for our qualified and non-qualified pension plans included the following components:
 
Pension Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Service cost
$
16

 
20

 
48

 
62

Interest cost
107

 
142

 
321

 
425

Expected return on plan assets
(183
)
 
(224
)
 
(550
)
 
(673
)
Recognition of prior service (credit) cost
(2
)
 
1

 
(6
)
 
4

Recognition of actuarial loss
44

 
40

 
131

 
120

Net periodic pension benefit income
$
(18
)
 
(21
)
 
(56
)
 
(62
)

Net periodic expense (income) for our post-retirement benefit plans included the following components:
 
Post-Retirement Benefit Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Service cost
$
4

 
6

 
14

 
18

Interest cost
29

 
35

 
84

 
105

Expected return on plan assets
(2
)
 
(6
)
 
(6
)
 
(16
)
Recognition of prior service cost
5

 
6

 
15

 
16

Net periodic post-retirement benefit expense
$
36

 
41

 
107

 
123


We report net periodic benefit (income) expense for our qualified pension, non-qualified pension and post-retirement benefit plans in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations.
Benefits paid by our qualified pension plan are paid through a trust that holds all plan assets. Based on current laws and circumstances, we do not expect any contributions to be required for our qualified pension plan during the remainder of 2016. However, we made a voluntary contribution to the trust of $100 million during the third quarter of 2016.
v3.5.0.2
Earnings Per Common Share
9 Months Ended
Sep. 30, 2016
Earnings Per Share [Abstract]  
Earnings per Common Share
Earnings Per Common Share
Basic and diluted earnings per common share for the three and nine months ended September 30, 2016 and 2015 were calculated as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions, except per share amounts, shares in thousands)
Income (Numerator):
 
 
 
 
 
 
 
Net income
$
152

 
205

 
584

 
540

Earnings applicable to non-vested restricted stock

 

 

 

Net income applicable to common stock for computing basic earnings per common share
152

 
205

 
584

 
540

Net income as adjusted for purposes of computing diluted earnings per common share
$
152

 
205

 
584

 
540

Shares (Denominator):
 
 
 
 
 
 
 
Weighted-average number of shares:
 
 
 
 
 
 
 
Outstanding during period
546,310

 
559,991

 
545,715

 
563,391

Non-vested restricted stock
(6,504
)
 
(5,094
)
 
(6,304
)
 
(4,889
)
Weighted-average shares outstanding for computing basic earnings per common share
539,806

 
554,897

 
539,411

 
558,502

Incremental common shares attributable to dilutive securities:
 
 
 
 
 
 
 
Shares issuable under convertible securities
10

 
10

 
10

 
10

Shares issuable under incentive compensation plans
1,101

 
249

 
1,072

 
781

Number of shares as adjusted for purposes of computing diluted earnings per common share
540,917

 
555,156

 
540,493

 
559,293

Basic earnings per common share
$
0.28

 
0.37

 
1.08

 
0.97

Diluted earnings per common share
$
0.28

 
0.37

 
1.08

 
0.97


Our calculation of diluted 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 2.7 million and 3.1 million for the three months ended September 30, 2016 and 2015, respectively, and averaged 3.3 million and 2.5 million for the nine months ended September 30, 2016 and 2015, respectively.
v3.5.0.2
Fair Value Disclosure
9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Disclosure
Fair Value Disclosure
Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt, excluding capital lease and other obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, accounts receivable and accounts payable approximate their fair values.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB.
We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on discounted future cash flows using current market interest rates.
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
Input Level
 
Description of Input
Level 1
 
Observable inputs such as quoted market prices in active markets.
Level 2
 
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
 
Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below:
 
 
 
As of September 30, 2016
 
As of December 31, 2015
 
Input
Level
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
 
 
(Dollars in millions)
Liabilities—Long-term debt, excluding capital lease and other obligations
2
 
$
19,277

 
20,076

 
19,800

 
19,473

v3.5.0.2
Segment Information
9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information
Segment Data
We are organized into operating segments based on customer type, business and consumer. These operating segments are our two reportable segments in our consolidated financial statements:
Business Segment. Consists generally of providing strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers. Our strategic products and services offered to these customers include our MPLS, Ethernet, colocation, hosting (including cloud hosting and managed hosting), broadband, VoIP, information technology and other ancillary services. Our legacy services offered to these customers primarily include local and long-distance voice, including the sale of unbundled network elements ("UNEs"), which allow our wholesale customers to use all or part of our network to provide voice and data services to their customers, private line (including special access), switched access and other ancillary services. Our data integration offerings include the sale of telecommunications equipment located on customers' premises and related products and professional services, all of which are described further below under the heading "Product and Service Categories"; and
Consumer Segment. Consists generally of providing strategic and legacy products and services to residential customers. Our strategic products and services offered to these customers include our broadband, video (including our Prism TV services) and other ancillary services. Our legacy services offered to these customers include local and long-distance voice and other ancillary services.
The results of our business and consumer segments are summarized below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016

2015
 
(Dollars in millions)
Total segment revenues
$
4,078

 
4,145

 
12,262

 
12,500

Total segment expenses
2,200

 
2,165

 
6,392

 
6,376

Total segment income
$
1,878

 
1,980

 
5,870

 
6,124

Total margin percentage
46
%
 
48
%
 
48
%
 
49
%
 
 
 
 
 
 
 
 
Business segment:
 
 
 
 
 
 
 
Revenues
$
2,606

 
2,636

 
7,807

 
7,991

Expenses
1,544

 
1,528

 
4,458

 
4,495

Income
$
1,062

 
1,108

 
3,349

 
3,496

Margin percentage
41
%
 
42
%
 
43
%
 
44
%
Consumer segment:
 
 
 
 
 
 
 
Revenues
$
1,472

 
1,509

 
4,455

 
4,509

Expenses
656

 
637

 
1,934

 
1,881

Income
$
816

 
872

 
2,521

 
2,628

Margin percentage
55
%
 
58
%
 
57
%
 
58
%



Changes in Segment Reporting
We continually review, evaluate and refine our expense allocations to better reflect how we view and manage our operations, and as a result, during the first half of 2016, we implemented several changes with respect to the assignment of certain expenses to our reportable segments. We have recast our previously-reported segment results for the three and nine months ended September 30, 2015, to conform to the current presentation. The nature of the most significant changes to segment expenses are as follows:
Certain marketing and advertising expenses were reassigned from the business segment to the consumer segment;
Certain service delivery costs were reassigned from the consumer segment to the business segment;
Centralized human resources training costs were reassigned from the business and consumer segments to corporate overhead; and
Marketing direct mail costs and certain printing expenses were reassigned from corporate overhead to the business and consumer segments.
For the three months ended September 30, 2015, the segment expense recast resulted in an increase in consumer expenses of $15 million and a decrease in business expenses of $13 million. For the nine months ended September 30, 2015, the segment expense recast resulted in an increase in consumer expenses of $53 million and a decrease in business expenses of $55 million.
Product and Service Categories
From time to time, we may change the categorization of our products and services. During the second quarter of 2016, we determined that because of declines due to customer migration to other strategic products and services, certain of our business low-bandwidth data services, specifically our private line (including special access) services in our business segment, are more closely aligned with our legacy services than with our strategic services. As a result, we reflect these operating revenues as legacy services, and we have reclassified certain prior period amounts to conform to this change. The revision resulted in a reduction of revenue from strategic services and a corresponding increase in revenue from legacy services of $389 million and $1.207 billion (net of $2 million and $6 million of deferred revenue included in other business legacy services) for the three and nine months ended September 30, 2015, respectively. In addition, our business broadband services remain a strategic service and are included in our other business strategic services.
We categorize our products, services and revenues among the following four categories:
Strategic services, which include primarily broadband, MPLS, Ethernet, colocation, hosting (including cloud hosting and managed hosting), video (including our facilities-based video services, which we offer in 16 markets), VoIP, information technology and other ancillary services;
Legacy services, which include primarily local and long-distance voice services, including the sale of UNEs, private line (including special access), Integrated Services Digital Network ("ISDN") (which use regular telephone lines to support voice, video and data applications), switched access and other ancillary services;
Data integration, which includes the sale of telecommunications equipment located on customers' premises and related products and professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and
Other operating revenues, which consist primarily of CAF support payments, USF support payments and USF surcharges. We receive federal support payments from both CAF Phase 1 and CAF Phase 2 programs, and support payments from both federal and state USF programs. These support payments are government subsidies designed to reimburse us for various costs related to certain telecommunications services, including the costs of deploying, maintaining and operating voice and broadband infrastructure in high-cost rural areas where we are not able to fully recover our costs from our customers. USF surcharges are the amounts we collect based on specific items we list on our customers' invoices to fund the FCC's universal service programs. We also generate other operating revenues from the leasing and subleasing of space in our office buildings, warehouses and other properties. Because we centrally manage the activities that generate these other operating revenues, these revenues are not included in our segment revenues.


Our operating revenue detail for our products and services consisted of the following categories:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Strategic services
 
 
 
 
 
 
 
Business high-bandwidth data services (1)
$
744

 
699

 
2,235

 
2,083

Business hosting services (2)
303

 
324

 
915

 
961

Other business strategic services (3)
179

 
143

 
521

 
458

Consumer broadband services (4)
674

 
658

 
2,023

 
1,945

Other consumer strategic services (5)
115

 
105

 
340

 
314

Total strategic services revenues
2,015

 
1,929

 
6,034

 
5,761

 
 
 
 
 
 
 
 
Legacy services
 
 
 
 
 
 
 
Business voice services (6)
601

 
638

 
1,834

 
1,956

Business low-bandwidth data services (7)
339

 
391

 
1,057

 
1,213

Other business legacy services (8)
277

 
288

 
844

 
885

Consumer voice services (6)
605

 
664

 
1,854

 
2,027

Other consumer legacy services (9)
78

 
81

 
237

 
221

Total legacy services revenues
1,900

 
2,062

 
5,826

 
6,302

 
 
 
 
 
 
 
 
Data integration
 
 
 
 
 
 
 
  Business data integration
163

 
153

 
401

 
435

  Consumer data integration

 
1

 
1

 
2

Total data integration revenues
163

 
154

 
402

 
437

 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
  High-cost support revenue (10)
171

 
284

 
518

 
550

  Other revenue (11)
133

 
125

 
401

 
374

Total other revenues
304

 
409

 
919

 
924

 
 
 
 
 
 
 
 
Total revenues
$
4,382

 
4,554

 
13,181

 
13,424

______________________________________________________________________ 
(1)
Includes MPLS and Ethernet revenue
(2)
Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue
(3)
Includes primarily broadband, VoIP, video and IT services revenue
(4)
Includes broadband and related services revenue
(5)
Includes video and other revenue
(6)
Includes local and long-distance voice revenue
(7)
Includes private line (including special access) revenue
(8)
Includes UNEs, public access, switched access and other ancillary revenue
(9)
Includes other ancillary revenue
(10)
Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue
(11)
Includes USF surcharges

We recognize revenues 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 $144 million and $137 million for the three months ended September 30, 2016 and 2015, respectively, and $435 million and $411 million for the nine months ended September 30, 2016 and 2015, respectively. These USF surcharges, where we record revenue, are included in "other" operating revenues and these transaction taxes are included in "legacy services" revenues. 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.
Allocations of Revenues and Expenses
Our segment revenues include all revenues from our strategic, legacy and data integration operations as described in more detail above. Segment revenues are based upon each customer's classification as either business or consumer. We report our segment revenues based upon all services provided to that segment's customers. Our segment expenses for our two reportable segments include specific expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are (i) directly associated with specific segment customers or activities and (ii) allocated expenses, which include network expenses, facilities expenses and other expenses such as fleet and real estate expenses. 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 chief operating decision maker ("CODM") by segment. Generally speaking, severance expenses, restructuring expenses and certain centrally managed administrative functions (such as finance, information technology, legal and human resources) are not assigned to our segments. 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. 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 segment income to net income:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Total segment income
$
1,878

 
1,980

 
5,870

 
6,124

Other operating revenues
304

 
409

 
919

 
924

Depreciation and amortization
(995
)
 
(1,048
)
 
(2,958
)
 
(3,136
)
Other unassigned operating expenses
(592
)
 
(685
)
 
(1,892
)
 
(2,058
)
Interest expense and other (expense) income, net
(346
)
 
(327
)
 
(993
)
 
(968
)
Income tax expense
(97
)
 
(124
)
 
(362
)
 
(346
)
Net income
$
152

 
205

 
584

 
540


We do not have any single customer that provides more than 10% of our total consolidated operating revenues. Substantially all of our consolidated revenues come from customers located in the United States.
v3.5.0.2
Commitments and Contingencies
9 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
We are vigorously defending against all of the matters described below under the headings "Pending Matters" and "Other Proceedings and Disputes." As a matter of course, we are prepared both to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. 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. We have established accrued liabilities for these matters described below where losses are deemed probable and reasonably estimable.
Pending Matters
In William Douglas Fulghum, et al. v. Embarq Corporation, et al., filed on December 28, 2007 in the United States District Court for the District of Kansas, a group of retirees filed a class action lawsuit challenging the decision to make certain modifications in retiree benefits programs relating to life insurance, medical insurance and prescription drug benefits, generally effective January 1, 2006 and January 1, 2008 (which, at the time of the modifications, was expected to reduce estimated future expenses for the subject benefits by more than $300 million). Defendants include Embarq, certain of its benefit plans, its Employee Benefits Committee and the individual plan administrator of certain of its benefits plans. Additional defendants include Sprint Nextel and certain of its benefit plans. The court certified classes on the claims for vested benefits and age discrimination, but rejected class certification on the claims for breach of fiduciary duty. On October 14, 2011, the Fulghum lawyers filed a new, related lawsuit, Abbott et al. v. Sprint Nextel et al. In Abbott, approximately 1,500 plaintiffs alleged breach of fiduciary duty in connection with the changes in retiree benefits that were at issue in Fulghum. After extensive district court proceedings in Fulghum, and an interlocutory appeal to the United States Court of Appeals for the Tenth Circuit, defendants prevailed in 2015 on all age discrimination claims and on the majority of claims for vested benefits. The district court in Fulghum subsequently granted judgment in favor of defendants on all remaining vested benefits claims, and in July 2016 ordered that any affected class members could appeal this ruling. No appeal was taken, and all claims for vested benefits thus have lapsed. On August 31, 2016, the parties reached a settlement in principle on all remaining claims in Fulghum and Abbott. Assuming its terms are successfully implemented, we believe the settlement is likely to be final in mid 2017. We have accrued a liability that we believe is probable for these matters; the amount is not material to our consolidated financial statements.
On July 16, 2013, Comcast MO Group, Inc. ("Comcast") filed a lawsuit in Colorado state court against Qwest Communications International, Inc. ("Qwest"). Comcast alleges Qwest breached the parties' 1998 tax sharing agreement ("TSA") when it refused to partially indemnify Comcast for a tax liability settlement Comcast reached with the Commonwealth of Massachusetts in a dispute to which we were not a party. Comcast seeks approximately $80 million in damages, excluding interest. Qwest and Comcast are parties to the TSA in their capacities as successors to the TSA's original parties, U S WEST, Inc., a telecommunications company, and MediaOne Group, Inc., a cable television company, respectively. In October 2014, the state court granted summary judgment in Qwest's favor. In December 2015, the Colorado Court of Appeals affirmed the judgment. On October 3, 2016, the Colorado Supreme Court denied Comcast's petition to review the Court of Appeals judgment. We have not accrued a liability for this matter because we do not believe that liability is probable.
Subsidiaries of CenturyLink, Inc. are among hundreds of companies 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 District of Northern 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, three IXCs, Sprint Communications Company L.P. ("Sprint"), affiliates of Verizon Communications Inc. ("Verizon") and affiliates of Level 3 Communications LLC ("Level 3"), 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 addition, Level 3 has ceased paying switched access charges on these calls.
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 Federal Communications Commission to address these issues on an industry-wide basis.
As both an IXC and a LEC, we both 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. If we are required to stop assessing these charges or to pay refunds of any such charges, our financial results could be negatively affected.
CenturyLink, Inc. and several of its subsidiaries are defendants in lawsuits filed over the past few years in the Circuit Court of St. Louis County, Missouri by numerous Missouri municipalities alleging underpayment of taxes. These municipalities are seeking, among other things, (i) a declaratory judgment regarding the extent of our obligations to pay certain business license and gross receipts taxes and (ii) a monetary award of back taxes covering 2007 to the present, plus penalties and interest. In an April 2016 ruling in connection with 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. Following further proceedings at the district court, we plan to file an appeal and continue to vigorously defend against these claims. For a variety of reasons, we expect the outcome of our appeal to significantly reduce our ultimate exposure, although we can provide no assurances to this effect.
Other Proceedings and Disputes
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 whom are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial in the coming 24 months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.
We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $100,000 in fines and penalties.
The outcome of these other proceedings 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 our financial position, results of operations or cash flows.
v3.5.0.2
Other Financial Information
9 Months Ended
Sep. 30, 2016
Additional Financial Information Disclosure [Abstract]  
Other financial information
Other Financial Information
Other Current Assets
The following table presents details of other current assets in our consolidated balance sheets:
 
As of
September 30, 2016
 
As of
December 31, 2015
 
(Dollars in millions)
Prepaid expenses
$
271

 
238

Materials, supplies and inventory
136

 
144

Assets held for sale
1

 
8

Deferred activation and installation charges
111

 
105

Other
112

 
86

Total other current assets
$
631

 
581


Selected Current Liabilities
Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows:
 
As of
September 30, 2016
 
As of
December 31, 2015
 
(Dollars in millions)
Accounts payable
$
1,036

 
968

Other current liabilities:
 
 
 
Accrued rent
$
29

 
32

Legal contingencies
46

 
20

Other
180

 
168

Total other current liabilities
$
255

 
220


Included in accounts payable at September 30, 2016 and December 31, 2015, were (i) $59 million and $68 million, respectively, representing book overdrafts and (ii) $110 million and $94 million, respectively, associated with capital expenditures.
Other Information
During the nine months ended September 30, 2016, we made three small acquisitions for total consideration of $24 million, including immaterial future cash payments, of which substantially all of the $24 million has initially been attributed to goodwill. These acquisitions were consummated to expand the product offerings of our business segment and therefore the goodwill has been assigned to that segment. The majority of the goodwill is attributed primarily to expected future increases in business segment revenue from the sale of new products. The majority of the goodwill from these acquisitions is expected to be deductible for tax purposes.
v3.5.0.2
Accumulated Other Comprehensive Loss
9 Months Ended
Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
Information Relating to 2016
The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and nine months ended September 30, 2016:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at June 30, 2016
$
(1,663
)
 
(174
)
 
(44
)
 
(1,881
)
Other comprehensive income (loss) before reclassifications

 

 
(4
)
 
(4
)
Amounts reclassified from accumulated other comprehensive income
26

 
4

 

 
30

Net current-period other comprehensive income
26

 
4

 
(4
)
 
26

Balance at September 30, 2016
$
(1,637
)
 
(170
)
 
(48
)
 
(1,855
)
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2015
$
(1,715
)
 
(180
)
 
(39
)
 
(1,934
)
Other comprehensive income (loss) before reclassifications

 

 
(9
)
 
(9
)
Amounts reclassified from accumulated other comprehensive income
78

 
10

 

 
88

Net current-period other comprehensive income
78

 
10

 
(9
)
 
79

Balance at September 30, 2016
$
(1,637
)
 
(170
)
 
(48
)
 
(1,855
)


The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and nine months ended September 30, 2016:
Three Months Ended September 30, 2016
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(44
)
 
See Note 4-Employee Benefits
Prior service cost
 
(3
)
 
See Note 4-Employee Benefits
Total before tax
 
(47
)
 
 
Income tax benefit
 
17

 
Income tax expense
Net of tax
 
$
(30
)
 
 
Nine Months Ended September 30, 2016
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(131
)
 
See Note 4-Employee Benefits
Prior service cost
 
(9
)
 
See Note 4-Employee Benefits
Total before tax
 
(140
)
 
 
Income tax benefit
 
52

 
Income tax expense
Net of tax
 
$
(88
)
 
 

Information Relating to 2015
The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and nine months ended months ended September 30, 2015:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at June 30, 2015
$
(1,668
)
 
(266
)
 
(25
)
 
(1,959
)
Other comprehensive income (loss) before reclassifications

 

 
(10
)
 
(10
)
Amounts reclassified from accumulated other comprehensive income
24

 
4

 

 
28

Net current-period other comprehensive income
24

 
4

 
(10
)
 
18

Balance at September 30, 2015
$
(1,644
)
 
(262
)
 
(35
)
 
(1,941
)
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2014
$
(1,720
)
 
(272
)
 
(25
)
 
(2,017
)
Other comprehensive income (loss) before reclassifications

 

 
(10
)
 
(10
)
Amounts reclassified from accumulated other comprehensive income
76

 
10

 

 
86

Net current-period other comprehensive income
76

 
10

 
(10
)
 
76

Balance at September 30, 2015
$
(1,644
)
 
(262
)
 
(35
)
 
(1,941
)

The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and nine months ended months ended September 30, 2015:
Three Months Ended September 30, 2015
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(40
)
 
See Note 4-Employee Benefits
Prior service cost
 
(7
)
 
See Note 4-Employee Benefits
Total before tax
 
(47
)
 
 
Income tax benefit
 
19

 
Income tax expense
Net of tax
 
$
(28
)
 
 


Nine Months Ended September 30, 2015
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(120
)
 
See Note 4-Employee Benefits
Prior service cost
 
(20
)
 
See Note 4-Employee Benefits
Total before tax
 
(140
)
 
 
Income tax benefit
 
54

 
Income tax expense
Net of tax
 
$
(86
)
 
 
v3.5.0.2
Labor Union Contracts
9 Months Ended
Sep. 30, 2016
Labor Union Contracts [Abstract]  
Concentration risk disclosure
Labor Union Contracts
Over 37% of our employees are members of various bargaining units represented by the Communication Workers of America and the International Brotherhood of Electrical Workers. Approximately 11,000, or 26%, of our employees are subject to collective bargaining agreements that are scheduled to expire October 7, 2017.
v3.5.0.2
Subsequent Events
9 Months Ended
Sep. 30, 2016
Subsequent Events [Abstract]  
Subsequent events
Subsequent Events
Colocation Transaction
On November 3, 2016, we entered into a definitive stock purchase agreement with a consortium led by BC Partners, Inc. and Medina Capital ("Purchaser") under which we propose to sell our data centers and colocation business for cash and equity valued at $2.3 billion, subject to offsets for the capital lease obligations described below and various working capital and other adjustments. The assets that will be sold and the liabilities to be assumed are currently included in our continuing operations. As part of the transaction, Purchaser will assume our capital lease obligations, which amounted to $320 million as of September 30, 2016, related to the properties that we will sell. The parties anticipate closing the transaction in the first quarter of 2017. The transaction is subject to regulatory approvals, including filings under the Hart-Scott-Robino Antitrust Improvement Act and a review by the Committee of Foreign Investments in the United States, as well as other customary closing conditions.
The transaction will result in Purchaser acquiring 57 data centers. This business generated revenues of $626 million, excluding revenue with affiliates, for us in 2015. We have not yet determined the final pre-tax gain or loss on the transaction as a result of various allocations, primarily attributable to intangibles and goodwill, required as part of carving these assets out of CenturyLink. However, it is possible that the transaction could result in a pre-tax loss that is material. Additionally, as a result of the final structure of the agreement, we are in the process of determining the total tax impact of the divestiture and related restructuring, which is likely to be material, but we are unable to currently estimate a reasonably accurate estimate of its impact.
Level 3 Transaction
On October 31, 2016, we entered into a definitive merger agreement under which we propose to acquire Level 3 Communications, Inc. (“Level 3”) in a cash and stock transaction. Under the terms of the agreement, Level 3 shareholders will receive $26.50 per share in cash and a fixed exchange ratio of 1.4286 CenturyLink shares for each share of Level 3 common stock they own at closing. CenturyLink shareholders are expected to own 51% and Level 3 shareholders are expected to own 49% of the combined company at closing. On September 30, 2016, Level 3 had outstanding $10.9 billion of long-term debt. 
Completion of the transaction is subject to the receipt of regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as well as approvals from the Federal Communications Commission and certain state regulatory approvals. The transaction is also subject to the approval of CenturyLink and Level 3 shareholders, as well as other customary closing conditions. Subject to these conditions, we anticipate closing this transaction by the end of the third quarter 2017. If the merger agreement is terminated under certain circumstances, we may be obligated to pay Level 3 a termination fee of $472 million and Level 3 may be obligated to pay CenturyLink a termination fee of $738 million.
v3.5.0.2
Basis of Presentation Basis of Presentation (Policies)
9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidation policy
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. 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 (expense) income, 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.
Dividends
We pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital.
Reclassification policy
We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 7—Segment Information for additional information. These changes had no impact on total operating revenues, total operating expenses or net income for any period.
Recent accounting pronouncements
Recent Accounting Pronouncements
Financial Instruments
On June 16, 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 effective January 1, 2020, but could elect to early adopt the provisions as of January 1, 2019. We expect to recognize the impacts of adopting ASU 2016-13 through a cumulative adjustment to retained earnings as of the date of adoption.
Share-based Compensation
On March 30, 2016, the FASB issued ASU 2016-09, “Improvement to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 modifies the accounting and associated income tax accounting for share-based compensation in order to reduce the cost and complexity associated with current generally accepted accounting principles. ASU 2016-09 is effective as of January 1, 2017, but early adoption may be elected. ASU 2016-09 includes different transition requirements for the different changes implemented, including some provisions which allow retrospective application. We will implement this new standard on its effective date, but we have not determined if we will retrospectively apply the requirements when allowed.
The primary provisions of ASU 2016-09 that we expect will affect our financial statements are: 1) a reclassification of the tax effect associated with the difference between the expense recognized for share-based payments and the associated tax deduction from additional paid-in capital to income tax expense; 2) a reclassification of the tax effect associated with the difference between compensation expense and associated deduction from financing cash flow to operating cash flow; and 3) an optional accounting policy election to account for forfeitures of share-based payment grants as they occur as opposed to our current policy of estimating the forfeitures on the grant date. Although these provisions would not have had a material impact on our previously-issued financial statements, we cannot provide any assurance regarding their future impacts. Adoption of ASU 2016-09 may increase the volatility of income tax expense and cash flow from operating activities.
Leases
On February 25, 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 will require lessees to present right-of-use assets and lease liabilities on their balance sheets for operating leases, which are currently not reflected on their balance sheets.
ASU 2016-02 is effective for annual and interim periods beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. Upon adoption of ASU 2016-02, we are required to recognize and measure leases at the beginning of the earliest period presented in our consolidated financial statements using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that we may elect to apply. We have not yet decided when we will adopt ASU 2016-02 or which practical expedient options we will elect.
We are currently evaluating our existing lease accounting systems to determine whether our current systems will support the new accounting requirements or if upgrades or new systems will be required, and we are in the process of developing an implementation plan. We are also currently evaluating and assessing the impact ASU 2016-02 will have on us and our consolidated financial statements. As of the date of this report, we cannot provide any estimate of the impact of adopting ASU 2016-02.
Revenue Recognition
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 replaces virtually all existing generally accepted accounting principles (“GAAP”) on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs and we defer contract fulfillment costs only up to the extent of any revenue deferred.
On July 9, 2015, the FASB approved the deferral of the effective date of ASU 2014-09 by one year until January 1, 2018, which is the date we plan to adopt this standard. ASU 2014-09 may be adopted by applying the provisions of this standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2018. We have not yet decided which implementation method we will adopt. We have completed our initial assessment of our business and systems requirements and we are currently developing and implementing a new revenue recognition system to comply with the requirements of ASU 2014-09. We continue to work on developing estimates of the impact of ASU 2014-09 on the timing of our revenue recognition but cannot currently provide a reasonably accurate estimate of its impact.
v3.5.0.2
Long-Term Debt and Credit Facilities (Tables)
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
Schedule of long-term debt including unamortized discounts and premiums
Long-term debt, including unamortized discounts and premiums and unamortized debt issuance costs, consisting of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including Qwest Corporation, Qwest Capital Funding, Inc. and Embarq Corporation and its subsidiaries ("Embarq"), were as follows:
 
Interest Rates
 
Maturities
 
As of
September 30, 2016
 
As of
December 31, 2015
 
 
 
 
 
(Dollars in millions)
CenturyLink, Inc.
 
 
 
 
 
 
 
Senior notes
5.150% - 7.650%
 
2017 - 2042
 
$
8,975

 
7,975

Credit facility and revolving line of credit(1)
2.274% - 4.250%
 
2019
 
85

 
410

Term loan
2.280%
 
2019
 
341

 
358

Subsidiaries
 
 
 
 
 
 
 
Qwest Corporation
 
 
 
 
 
 
 
Senior notes
6.125% - 7.750%
 
2017 - 2056
 
7,259

 
7,229

Term loan
2.280%
 
2025
 
100

 
100

Qwest Capital Funding, Inc.
 
 
 
 
 
 
 
Senior notes
6.500% - 7.750%
 
2018 - 2031
 
981

 
981

Embarq Corporation and subsidiaries
 
 
 
 
 
 
 
Senior note
7.995%
 
2036
 
1,485

 
2,669

First mortgage bonds
7.125% - 8.770%
 
2017 - 2025
 
228

 
232

Other
9.000%
 
2019
 
150

 
150

Capital lease and other obligations
Various
 
Various
 
441

 
425

Unamortized discounts, net
 
 
 
 
(131
)
 
(125
)
Unamortized debt issuance costs
 
 
 
 
(196
)
 
(179
)
Total long-term debt
 
 
 
 
19,718

 
20,225

Less current maturities
 
 
 
 
(1,534
)
 
(1,503
)
Long-term debt, excluding current maturities
 
 
 
 
$
18,184

 
18,722

______________________________________________________________________ 
(1) 
The aggregate amount outstanding on our Credit Facility and revolving line of credit borrowings at September 30, 2016 and December 31, 2015 was $85 million and $410 million, respectively, with a weighted-average interest rate of 2.507% and 2.756%, respectively. These amounts change on a regular basis.
v3.5.0.2
Severance and Leased Real Estate (Tables)
9 Months Ended
Sep. 30, 2016
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 and leased real estate were as follows:
 
Severance
 
Real Estate
 
(Dollars in millions)
Balance at December 31, 2015
$
14

 
80

Accrued to expense
25

 
3

Payments, net
(30
)
 
(16
)
Reversals and adjustments

 
2

Balance at September 30, 2016
$
9

 
69

v3.5.0.2
Employee Benefits (Tables)
9 Months Ended
Sep. 30, 2016
Compensation and Retirement Disclosure [Abstract]  
Schedule of components of net periodic pension benefit (income) expense and post-retirement benefit expense
Net periodic (income) expense for our qualified and non-qualified pension plans included the following components:
 
Pension Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Service cost
$
16

 
20

 
48

 
62

Interest cost
107

 
142

 
321

 
425

Expected return on plan assets
(183
)
 
(224
)
 
(550
)
 
(673
)
Recognition of prior service (credit) cost
(2
)
 
1

 
(6
)
 
4

Recognition of actuarial loss
44

 
40

 
131

 
120

Net periodic pension benefit income
$
(18
)
 
(21
)
 
(56
)
 
(62
)

Net periodic expense (income) for our post-retirement benefit plans included the following components:
 
Post-Retirement Benefit Plans
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Service cost
$
4

 
6

 
14

 
18

Interest cost
29

 
35

 
84

 
105

Expected return on plan assets
(2
)
 
(6
)
 
(6
)
 
(16
)
Recognition of prior service cost
5

 
6

 
15

 
16

Net periodic post-retirement benefit expense
$
36

 
41

 
107

 
123

v3.5.0.2
Earnings Per Common Share (Tables)
9 Months Ended
Sep. 30, 2016
Earnings Per Share [Abstract]  
Schedule of basic and diluted earnings per common share
Basic and diluted earnings per common share for the three and nine months ended September 30, 2016 and 2015 were calculated as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions, except per share amounts, shares in thousands)
Income (Numerator):
 
 
 
 
 
 
 
Net income
$
152

 
205

 
584

 
540

Earnings applicable to non-vested restricted stock

 

 

 

Net income applicable to common stock for computing basic earnings per common share
152

 
205

 
584

 
540

Net income as adjusted for purposes of computing diluted earnings per common share
$
152

 
205

 
584

 
540

Shares (Denominator):
 
 
 
 
 
 
 
Weighted-average number of shares:
 
 
 
 
 
 
 
Outstanding during period
546,310

 
559,991

 
545,715

 
563,391

Non-vested restricted stock
(6,504
)
 
(5,094
)
 
(6,304
)
 
(4,889
)
Weighted-average shares outstanding for computing basic earnings per common share
539,806

 
554,897

 
539,411

 
558,502

Incremental common shares attributable to dilutive securities:
 
 
 
 
 
 
 
Shares issuable under convertible securities
10

 
10

 
10

 
10

Shares issuable under incentive compensation plans
1,101

 
249

 
1,072

 
781

Number of shares as adjusted for purposes of computing diluted earnings per common share
540,917

 
555,156

 
540,493

 
559,293

Basic earnings per common share
$
0.28

 
0.37

 
1.08

 
0.97

Diluted earnings per common share
$
0.28

 
0.37

 
1.08

 
0.97

v3.5.0.2
Fair Value Disclosure (Tables)
9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Schedule of the three input levels in the hierarchy of fair value measurements
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
Input Level
 
Description of Input
Level 1
 
Observable inputs such as quoted market prices in active markets.
Level 2
 
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
 
Unobservable inputs in which little or no market data exists.
Schedule of 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 our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below:
 
 
 
As of September 30, 2016
 
As of December 31, 2015
 
Input
Level
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
 
 
(Dollars in millions)
Liabilities—Long-term debt, excluding capital lease and other obligations
2
 
$
19,277

 
20,076

 
19,800

 
19,473

v3.5.0.2
Segment Information (Tables)
9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Schedule of segment results
The results of our business and consumer segments are summarized below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016

2015
 
(Dollars in millions)
Total segment revenues
$
4,078

 
4,145

 
12,262

 
12,500

Total segment expenses
2,200

 
2,165

 
6,392

 
6,376

Total segment income
$
1,878

 
1,980

 
5,870

 
6,124

Total margin percentage
46
%
 
48
%
 
48
%
 
49
%
 
 
 
 
 
 
 
 
Business segment:
 
 
 
 
 
 
 
Revenues
$
2,606

 
2,636

 
7,807

 
7,991

Expenses
1,544

 
1,528

 
4,458

 
4,495

Income
$
1,062

 
1,108

 
3,349

 
3,496

Margin percentage
41
%
 
42
%
 
43
%
 
44
%
Consumer segment:
 
 
 
 
 
 
 
Revenues
$
1,472

 
1,509

 
4,455

 
4,509

Expenses
656

 
637

 
1,934

 
1,881

Income
$
816

 
872

 
2,521

 
2,628

Margin percentage
55
%
 
58
%
 
57
%
 
58
%



Schedule of operating revenues by products and services
Our operating revenue detail for our products and services consisted of the following categories:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Strategic services
 
 
 
 
 
 
 
Business high-bandwidth data services (1)
$
744

 
699

 
2,235

 
2,083

Business hosting services (2)
303

 
324

 
915

 
961

Other business strategic services (3)
179

 
143

 
521

 
458

Consumer broadband services (4)
674

 
658

 
2,023

 
1,945

Other consumer strategic services (5)
115

 
105

 
340

 
314

Total strategic services revenues
2,015

 
1,929

 
6,034

 
5,761

 
 
 
 
 
 
 
 
Legacy services
 
 
 
 
 
 
 
Business voice services (6)
601

 
638

 
1,834

 
1,956

Business low-bandwidth data services (7)
339

 
391

 
1,057

 
1,213

Other business legacy services (8)
277

 
288

 
844

 
885

Consumer voice services (6)
605

 
664

 
1,854

 
2,027

Other consumer legacy services (9)
78

 
81

 
237

 
221

Total legacy services revenues
1,900

 
2,062

 
5,826

 
6,302

 
 
 
 
 
 
 
 
Data integration
 
 
 
 
 
 
 
  Business data integration
163

 
153

 
401

 
435

  Consumer data integration

 
1

 
1

 
2

Total data integration revenues
163

 
154

 
402

 
437

 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
  High-cost support revenue (10)
171

 
284

 
518

 
550

  Other revenue (11)
133

 
125

 
401

 
374

Total other revenues
304

 
409

 
919

 
924

 
 
 
 
 
 
 
 
Total revenues
$
4,382

 
4,554

 
13,181

 
13,424

______________________________________________________________________ 
(1)
Includes MPLS and Ethernet revenue
(2)
Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue
(3)
Includes primarily broadband, VoIP, video and IT services revenue
(4)
Includes broadband and related services revenue
(5)
Includes video and other revenue
(6)
Includes local and long-distance voice revenue
(7)
Includes private line (including special access) revenue
(8)
Includes UNEs, public access, switched access and other ancillary revenue
(9)
Includes other ancillary revenue
(10)
Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue
(11)
Includes USF surcharges
Reconciliation of operating profit (loss) from segments to consolidated net income
The following table reconciles segment income to net income:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(Dollars in millions)
Total segment income
$
1,878

 
1,980

 
5,870

 
6,124

Other operating revenues
304

 
409

 
919

 
924

Depreciation and amortization
(995
)
 
(1,048
)
 
(2,958
)
 
(3,136
)
Other unassigned operating expenses
(592
)
 
(685
)
 
(1,892
)
 
(2,058
)
Interest expense and other (expense) income, net
(346
)
 
(327
)
 
(993
)
 
(968
)
Income tax expense
(97
)
 
(124
)
 
(362
)
 
(346
)
Net income
$
152

 
205

 
584

 
540

v3.5.0.2
Other Financial Information (Tables)
9 Months Ended
Sep. 30, 2016
Additional Financial Information Disclosure [Abstract]  
Schedule of components of other current assets
The following table presents details of other current assets in our consolidated balance sheets:
 
As of
September 30, 2016
 
As of
December 31, 2015
 
(Dollars in millions)
Prepaid expenses
$
271

 
238

Materials, supplies and inventory
136

 
144

Assets held for sale
1

 
8

Deferred activation and installation charges
111

 
105

Other
112

 
86

Total other current assets
$
631

 
581

Schedule of current liabilities including accounts payable and other current liabilities
Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows:
 
As of
September 30, 2016
 
As of
December 31, 2015
 
(Dollars in millions)
Accounts payable
$
1,036

 
968

Other current liabilities:
 
 
 
Accrued rent
$
29

 
32

Legal contingencies
46

 
20

Other
180

 
168

Total other current liabilities
$
255

 
220

v3.5.0.2
Accumulated Other Comprehensive Loss (Tables)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]    
Summary of the entity's accumulated other comprehensive income (loss) by component
The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and nine months ended September 30, 2016:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at June 30, 2016
$
(1,663
)
 
(174
)
 
(44
)
 
(1,881
)
Other comprehensive income (loss) before reclassifications

 

 
(4
)
 
(4
)
Amounts reclassified from accumulated other comprehensive income
26

 
4

 

 
30

Net current-period other comprehensive income
26

 
4

 
(4
)
 
26

Balance at September 30, 2016
$
(1,637
)
 
(170
)
 
(48
)
 
(1,855
)
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2015
$
(1,715
)
 
(180
)
 
(39
)
 
(1,934
)
Other comprehensive income (loss) before reclassifications

 

 
(9
)
 
(9
)
Amounts reclassified from accumulated other comprehensive income
78

 
10

 

 
88

Net current-period other comprehensive income
78

 
10

 
(9
)
 
79

Balance at September 30, 2016
$
(1,637
)
 
(170
)
 
(48
)
 
(1,855
)
The tables below summarize changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three and nine months ended months ended September 30, 2015:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at June 30, 2015
$
(1,668
)
 
(266
)
 
(25
)
 
(1,959
)
Other comprehensive income (loss) before reclassifications

 

 
(10
)
 
(10
)
Amounts reclassified from accumulated other comprehensive income
24

 
4

 

 
28

Net current-period other comprehensive income
24

 
4

 
(10
)
 
18

Balance at September 30, 2015
$
(1,644
)
 
(262
)
 
(35
)
 
(1,941
)
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2014
$
(1,720
)
 
(272
)
 
(25
)
 
(2,017
)
Other comprehensive income (loss) before reclassifications

 

 
(10
)
 
(10
)
Amounts reclassified from accumulated other comprehensive income
76

 
10

 

 
86

Net current-period other comprehensive income
76

 
10

 
(10
)
 
76

Balance at September 30, 2015
$
(1,644
)
 
(262
)
 
(35
)
 
(1,941
)
Schedule of reclassifications out of accumulated other comprehensive income (loss) by component
The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and nine months ended September 30, 2016:
Three Months Ended September 30, 2016
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(44
)
 
See Note 4-Employee Benefits
Prior service cost
 
(3
)
 
See Note 4-Employee Benefits
Total before tax
 
(47
)
 
 
Income tax benefit
 
17

 
Income tax expense
Net of tax
 
$
(30
)
 
 
Nine Months Ended September 30, 2016
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(131
)
 
See Note 4-Employee Benefits
Prior service cost
 
(9
)
 
See Note 4-Employee Benefits
Total before tax
 
(140
)
 
 
Income tax benefit
 
52

 
Income tax expense
Net of tax
 
$
(88
)
 
 
The tables below present further information about our reclassifications out of accumulated other comprehensive loss by component for the three and nine months ended months ended September 30, 2015:
Three Months Ended September 30, 2015
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(40
)
 
See Note 4-Employee Benefits
Prior service cost
 
(7
)
 
See Note 4-Employee Benefits
Total before tax
 
(47
)
 
 
Income tax benefit
 
19

 
Income tax expense
Net of tax
 
$
(28
)
 
 


Nine Months Ended September 30, 2015
 
(Decrease) Increase
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(120
)
 
See Note 4-Employee Benefits
Prior service cost
 
(20
)
 
See Note 4-Employee Benefits
Total before tax
 
(140
)
 
 
Income tax benefit
 
54

 
Income tax expense
Net of tax
 
$
(86
)
 
 
v3.5.0.2
Basis of Presentation (Details) - CAF Phase 2 Support
number in Millions, $ in Millions
3 Months Ended 6 Months Ended
Aug. 27, 2015
USD ($)
Sep. 30, 2015
USD ($)
Jun. 30, 2015
USD ($)
Sep. 30, 2016
state
Operating revenues by products and services        
Federal support, total amount per agreement $ 500      
Contract or agreement term 6 years      
Number of rural households and businesses 1.2      
Number of states in which service is provided (states) | state       33
Transitional payment   $ 127 $ 112  
v3.5.0.2
Long-Term Debt and Credit Facilities (Details) - USD ($)
$ in Millions
Sep. 30, 2016
Dec. 31, 2015
Long-term Debt and Credit Facilities    
Capital lease and other obligations $ 441 $ 425
Unamortized discounts, net (131) (125)
Unamortized debt issuance costs (196) (179)
Total long-term debt 19,718 20,225
Less current maturities (1,534) (1,503)
Long-term debt, excluding current maturities 18,184 18,722
CenturyLink, Inc. | Senior notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross 8,975 7,975
CenturyLink, Inc. | Line of credit    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 85 $ 410
Long-term debt, weighted average interest rate (percent) 2.507% 2.756%
CenturyLink, Inc. | Medium-term notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 341 $ 358
Stated interest rate (percent) 2.28%  
CenturyLink, Inc. | Minimum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 5.15%  
CenturyLink, Inc. | Minimum | Line of credit    
Long-term Debt and Credit Facilities    
Interest rate at period end - Credit facility and revolving line of credit (percent) 2.274%  
CenturyLink, Inc. | Maximum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 7.65%  
CenturyLink, Inc. | Maximum | Line of credit    
Long-term Debt and Credit Facilities    
Interest rate at period end - Credit facility and revolving line of credit (percent) 4.25%  
Qwest Corporation | Senior notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 7,259 7,229
Qwest Corporation | Medium-term notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 100 100
Stated interest rate (percent) 2.28%  
Qwest Corporation | Minimum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 6.125%  
Qwest Corporation | Maximum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 7.75%  
Qwest Capital Funding, Inc. | Senior notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 981 981
Qwest Capital Funding, Inc. | Minimum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 6.50%  
Qwest Capital Funding, Inc. | Maximum | Senior notes    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 7.75%  
Embarq Corporation | Senior notes    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 1,485 2,669
Stated interest rate (percent) 7.995%  
Embarq Corporation | First mortgage bonds    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 228 232
Embarq Corporation | Other    
Long-term Debt and Credit Facilities    
Long-term debt, gross $ 150 $ 150
Stated interest rate (percent) 9.00%  
Embarq Corporation | Minimum | First mortgage bonds    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 7.125%  
Embarq Corporation | Maximum | First mortgage bonds    
Long-term Debt and Credit Facilities    
Stated interest rate (percent) 8.77%  
v3.5.0.2
Long-Term Debt and Credit Facilities Long-Term Debt and Credit Facilities (Details 2) - USD ($)
$ in Millions
9 Months Ended
Sep. 15, 2016
Aug. 29, 2016
Aug. 22, 2016
Apr. 06, 2016
Jan. 29, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 19, 2016
Jun. 01, 2016
May 02, 2016
Long-term Debt and Credit Facilities                    
Loss on early retirement of debt           $ 27 $ 0      
Qwest Corporation | Senior notes | 6.5% Notes due 2056                    
Long-term Debt and Credit Facilities                    
Debt instrument, face amount     $ 978              
Stated interest rate (percent)     6.50%              
Debt instrument, face amount, over-allotment     $ 128              
Proceeds from debt, net of issuance costs     $ 946              
Qwest Corporation | Senior notes | 7.00% Notes due 2056                    
Long-term Debt and Credit Facilities                    
Debt instrument, face amount         $ 235          
Stated interest rate (percent)         7.00%          
Proceeds from debt, net of issuance costs         $ 227          
Qwest Corporation | Senior notes | 7.5% Notes due 2051                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent) 7.50%                  
Debt instrument, repurchased face amount $ 287                  
Loss on early retirement of debt $ 9                  
Qwest Corporation | Senior notes | 7.375% Notes Due 2051                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent)   7.375%                
Debt instrument, repurchased face amount   $ 661                
Loss on early retirement of debt   $ 18                
Qwest Corporation | Senior notes | 8.375% Notes due 2016                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent)                   8.375%
Debt instrument, repurchased face amount                   $ 235
CenturyLink, Inc. | Senior notes | 7.5% Notes due 2024                    
Long-term Debt and Credit Facilities                    
Debt instrument, face amount       $ 1,000            
Stated interest rate (percent)       7.50%            
Proceeds from debt, net of issuance costs       $ 988            
Embarq Corporation | Senior notes                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent)           7.995%        
Embarq Corporation | Senior notes | 7.082% Notes due 2016                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent)                 7.082%  
Debt instrument, repurchased face amount                 $ 1,184  
Embarq Corporation | First mortgage bonds | 8.77% Notes due 2017                    
Long-term Debt and Credit Facilities                    
Stated interest rate (percent)               8.77%    
Debt instrument, repurchased face amount               $ 4    
v3.5.0.2
Long-Term Debt and Credit Facilities Long-Term Debt and Credit Facilities (Details 3) - Senior notes
Aug. 22, 2016
Apr. 06, 2016
Jan. 29, 2016
Qwest Corporation | 6.5% Notes due 2056 | Debt instrument, redemption, period one      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description on or after September 1, 2021, at a redemption price equal to 100% of the principal amount redeemed    
Qwest Corporation | 7.00% Notes due 2056 | Debt instrument, redemption, period one      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description     on or after February 1, 2021, at a redemption price equal to 100% of the principal amount redeemed
CenturyLink, Inc. | 7.5% Notes due 2024 | Debt instrument, redemption, period one      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description   on or after January 1, 2024, at a redemption price equal to 100% of the principal amount redeemed  
CenturyLink, Inc. | 7.5% Notes due 2024 | Debt instrument, redemption, period two      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description   before January 1, 2024, the Notes are redeemable, in whole or in part, at CenturyLink, Inc.'s option, at a redemption price equal to the greater of 100% of the principal amount of the Notes to be redeemed or the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed, discounted to the redemption date in the manner described in the Notes,  
CenturyLink, Inc. | 7.5% Notes due 2024 | Debt instrument, redemption, period three      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description   on or prior to April 1, 2019, CenturyLink, Inc. may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price of 107.5% of the principal amount  
CenturyLink, Inc. | 7.5% Notes due 2024 | Debt instrument, redemption, period four      
Debt Instrument, Redemption [Line Items]      
Debt Instrument, redemption, description   Under certain circumstances, CenturyLink, Inc. will be required to make an offer to repurchase the Notes at a price of 101% of the aggregate principal amount  
v3.5.0.2
Severance and Leased Real Estate (Details)
$ in Millions
9 Months Ended
Sep. 30, 2016
USD ($)
Employee severance  
Restructuring reserve  
Balance at the beginning of the period $ 14
Accrued to expense 25
Payments, net (30)
Reversals and adjustments 0
Balance at the end of the period 9
Qwest Communications International Inc. | Leased real estate  
Leased Real Estate  
Current portion of leased real estate accrual 8
Noncurrent portion of leased real estate accrual $ 61
Weighted average lease terms 8 years
Restructuring reserve  
Balance at the beginning of the period $ 80
Accrued to expense 3
Payments, net (16)
Reversals and adjustments 2
Balance at the end of the period $ 69
Qwest Communications International Inc. | Leased real estate | Minimum  
Leased Real Estate  
Remaining lease terms 1 month
Qwest Communications International Inc. | Leased real estate | Maximum  
Leased Real Estate  
Remaining lease terms 9 years 2 months
v3.5.0.2
Employee Benefits (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Pension plans        
Employee Benefits        
Voluntary contributions to plan by employer $ 100      
Components of net periodic (benefit) expense        
Service cost 16 $ 20 $ 48 $ 62
Interest cost 107 142 321 425
Expected return on plan assets (183) (224) (550) (673)
Recognition of prior service (credit) cost (2) 1 (6) 4
Recognition of actuarial loss 44 40 131 120
Net periodic benefit (income) expense (18) (21) (56) (62)
Post-retirement benefit plans        
Components of net periodic (benefit) expense        
Service cost 4 6 14 18
Interest cost 29 35 84 105
Expected return on plan assets (2) (6) (6) (16)
Recognition of prior service (credit) cost 5 6 15 16
Net periodic benefit (income) expense $ 36 $ 41 $ 107 $ 123
v3.5.0.2
Earnings Per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income (Numerator):        
Net income $ 152 $ 205 $ 584 $ 540
Weighted average number of shares:        
Weighted average shares outstanding for computing basic earnings per common share (in shares) 539,806 554,897 539,411 558,502
Incremental common shares attributable to dilutive securities:        
Number of shares as adjusted for purposes of computing diluted earnings per common share (in shares) 540,917 555,156 540,493 559,293
Basic earnings per common share (in dollars per share) $ 0.28 $ 0.37 $ 1.08 $ 0.97
Diluted earnings per common share (in dollars per share) $ 0.28 $ 0.37 $ 1.08 $ 0.97
Common Class A        
Income (Numerator):        
Net income $ 152 $ 205 $ 584 $ 540
Earnings applicable to non-vested restricted stock 0 0 0 0
Net income applicable to common stock for computing basic earnings per common share 152 205 584 540
Net income as adjusted for purposes of computing diluted earnings per common share $ 152 $ 205 $ 584 $ 540
Weighted average number of shares:        
Outstanding during period (in shares) 546,310 559,991 545,715 563,391
Non-vested restricted stock (in shares) (6,504) (5,094) (6,304) (4,889)
Weighted average shares outstanding for computing basic earnings per common share (in shares) 539,806 554,897 539,411 558,502
Incremental common shares attributable to dilutive securities:        
Shares issuable under convertible securities (in shares) 10 10 10 10
Shares issuable under incentive compensation plans (in shares) 1,101 249 1,072 781
Number of shares as adjusted for purposes of computing diluted earnings per common share (in shares) 540,917 555,156 540,493 559,293
Basic earnings per common share (in dollars per share) $ 0.28 $ 0.37 $ 1.08 $ 0.97
Diluted earnings per common share (in dollars per share) $ 0.28 $ 0.37 $ 1.08 $ 0.97
Number of shares of common stock excluded from the computation of diluted earnings per share (in shares) 2,700 3,100 3,300 2,500
v3.5.0.2
Fair Value Disclosure (Details) - Fair value measurements determined on a nonrecurring basis - Fair value inputs, Level 2 - USD ($)
$ in Millions
Sep. 30, 2016
Dec. 31, 2015
Carrying amount    
Liabilities    
Liabilities - Long-term debt, excluding capital lease and other obligations $ 19,277 $ 19,800
Fair value    
Liabilities    
Liabilities - Long-term debt, excluding capital lease and other obligations $ 20,076 $ 19,473
v3.5.0.2
Segment Information (Details)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 30, 2016
USD ($)
segment
Sep. 30, 2015
USD ($)
Segment information        
Number of reportable segments (segments) | segment     2  
Revenues $ 4,382 $ 4,554 $ 13,181 $ 13,424
Expenses 3,787 3,898 11,242 11,570
Total segment income 595 656 1,939 1,854
Operating segments        
Segment information        
Revenues 4,078 4,145 12,262 12,500
Expenses 2,200 2,165 6,392 6,376
Total segment income $ 1,878 $ 1,980 $ 5,870 $ 6,124
Margin percentage (percent) 46.00% 48.00% 48.00% 49.00%
Business        
Segment information        
Revenues $ 2,606 $ 2,636 $ 7,807 $ 7,991
Expenses 1,544 1,528 4,458 4,495
Total segment income $ 1,062 $ 1,108 $ 3,349 $ 3,496
Margin percentage (percent) 41.00% 42.00% 43.00% 44.00%
Business | Business | Restatement adjustment        
Segment information        
Expenses   $ (13)   $ (55)
Consumer        
Segment information        
Revenues $ 1,472 1,509 $ 4,455 4,509
Expenses 656 637 1,934 1,881
Total segment income $ 816 $ 872 $ 2,521 $ 2,628
Margin percentage (percent) 55.00% 58.00% 57.00% 58.00%
Consumer | Consumer | Restatement adjustment        
Segment information        
Expenses   $ 15   $ 53
v3.5.0.2
Segment Information (Details 2)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 30, 2016
USD ($)
category
Sep. 30, 2015
USD ($)
Operating revenues by products and services        
Number of categories of products and services (categories) | category     4  
Revenues $ 4,382 $ 4,554 $ 13,181 $ 13,424
Surcharge amount on customers' bills 144 137 $ 435 411
Individual customers accounting for more than 10% of total operating revenues     We do not have any single customer that provides more than 10% of our total consolidated operating revenues.  
Strategic services        
Operating revenues by products and services        
Revenues $ 2,015 1,929 $ 6,034 5,761
Facilities-based video services        
Operating revenues by products and services        
Number of markets 16   16  
Legacy services        
Operating revenues by products and services        
Revenues $ 1,900 2,062 $ 5,826 6,302
Data integration        
Operating revenues by products and services        
Revenues 163 154 402 437
Other revenues        
Operating revenues by products and services        
Revenues 304 409 919 924
High cost support revenue        
Operating revenues by products and services        
Revenues 171 284 518 550
Other revenue        
Operating revenues by products and services        
Revenues 133 125 401 374
Business        
Operating revenues by products and services        
Revenues 2,606 2,636 7,807 7,991
Business | Business high-bandwidth data services        
Operating revenues by products and services        
Revenues 744 699 2,235 2,083
Business | Business hosting services        
Operating revenues by products and services        
Revenues 303 324 915 961
Business | Other business strategic services        
Operating revenues by products and services        
Revenues 179 143 521 458
Business | Voice services        
Operating revenues by products and services        
Revenues 601 638 1,834 1,956
Business | Business low-bandwidth data services        
Operating revenues by products and services        
Revenues 339 391 1,057 1,213
Business | Other business legacy services        
Operating revenues by products and services        
Revenues 277 288 844 885
Business | Data integration        
Operating revenues by products and services        
Revenues 163 153 401 435
Consumer        
Operating revenues by products and services        
Revenues 1,472 1,509 4,455 4,509
Consumer | Consumer broadband services        
Operating revenues by products and services        
Revenues 674 658 2,023 1,945
Consumer | Other consumer strategic services        
Operating revenues by products and services        
Revenues 115 105 340 314
Consumer | Voice services        
Operating revenues by products and services        
Revenues 605 664 1,854 2,027
Consumer | Other consumer legacy services        
Operating revenues by products and services        
Revenues 78 81 237 221
Consumer | Data integration        
Operating revenues by products and services        
Revenues $ 0 1 $ 1 2
Business low-bandwidth data services | Restatement adjustment | Business | Strategic services        
Operating revenues by products and services        
Revenues   (389)   (1,207)
Business low-bandwidth data services | Restatement adjustment | Business | Legacy services        
Operating revenues by products and services        
Revenues   389   1,207
Other business strategic services | Restatement adjustment | Business | Strategic services        
Operating revenues by products and services        
Revenues   2   6
Other business legacy services | Restatement adjustment | Business | Legacy services        
Operating revenues by products and services        
Revenues   $ (2)   $ (6)
v3.5.0.2
Segment Information (Details 3) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Total segment income $ 595 $ 656 $ 1,939 $ 1,854
Depreciation and amortization (995) (1,048) (2,958) (3,136)
Other unassigned operating expenses (796) (857) (2,439) (2,571)
Interest expense and other (expense) income, net (346) (327) (993) (968)
Income tax expense (97) (124) (362) (346)
Net income 152 205 584 540
Operating segments        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Total segment income 1,878 1,980 5,870 6,124
Segment reconciling items        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]        
Other operating revenues 304 409 919 924
Depreciation and amortization (995) (1,048) (2,958) (3,136)
Other unassigned operating expenses (592) (685) (1,892) (2,058)
Interest expense and other (expense) income, net (346) (327) (993) (968)
Income tax expense $ (97) $ (124) $ (362) $ (346)
v3.5.0.2
Commitments and Contingencies (Details)
9 Months Ended 24 Months Ended
Apr. 30, 2016
Jul. 17, 2013
USD ($)
Oct. 14, 2011
plaintiff
Sep. 30, 2016
USD ($)
plaintiff
lawsuit
Dec. 31, 2007
USD ($)
Loss Contingencies          
Patents allegedly infringed (at least)       1  
Unfavorable regulatory action          
Loss Contingencies          
Estimate of possible loss (per proceeding)       $ 100,000  
William Douglas Fulghum, et al. v. Embarq Corporation          
Loss Contingencies          
Effect of modifications made to Embarq's benefits program (greater than)         $ 300,000,000
Abbott et al. v. Sprint Nextel et al.          
Loss Contingencies          
Number of plaintiffs | plaintiff     1,500    
Comcast | Qwest Communications International Inc.          
Loss Contingencies          
Damages sought by plaintiff   $ 80,000,000      
Interexchange Carriers | Subsidiaries of CenturyLInk, Inc.          
Loss Contingencies          
Number of plaintiffs | plaintiff       3  
Number of lawsuits (approximately) | lawsuit       100  
Missouri municipalities          
Loss Contingencies          
Opinion of counsel on ruling on one pending case In an April 2016 ruling in connection with 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. Following further proceedings at the district court, we plan to file an appeal and continue to vigorously defend against these claims. For a variety of reasons, we expect the outcome of our appeal to significantly reduce our ultimate exposure, although we can provide no assurances to this effect.        
v3.5.0.2
Other Financial Information (Details) - USD ($)
$ in Millions
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Prepaid Expenses and Other Current Assets [Abstract]    
Prepaid expenses $ 271 $ 238
Materials, supplies and inventory 136 144
Assets held for sale 1 8
Deferred activation and installation charges 111 105
Other 112 86
Total other current assets 631 581
Accounts Payable, Current [Abstract]    
Accounts payable 1,036 968
Book overdraft balance 59 68
Capital expenditures incurred but not yet paid 110 94
Other Current Liabilities    
Accrued rent 29 32
Legal contingencies 46 20
Other 180 168
Total other current liabilities $ 255 $ 220
v3.5.0.2
Other Financial Information (Details 2) - Business - Individually immaterial business acquisitions
$ in Millions
9 Months Ended
Sep. 30, 2016
USD ($)
Business acquisition  
Total consideration to acquire businesses $ 24
Acquisition price attributable to goodwill $ 24
v3.5.0.2
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Accumulated other comprehensive income (loss) by component        
Balance at the beginning of the period $ (1,881) $ (1,959) $ (1,934) $ (2,017)
Other comprehensive income (loss) before reclassifications (4) (10) (9) (10)
Amounts reclassified from accumulated other comprehensive income 30 28 88 86
Other comprehensive income 26 18 79 76
Balance at the end of the period (1,855) (1,941) (1,855) (1,941)
Defined benefit plan | Pension plans        
Accumulated other comprehensive income (loss) by component        
Balance at the beginning of the period (1,663) (1,668) (1,715) (1,720)
Other comprehensive income (loss) before reclassifications 0 0 0 0
Amounts reclassified from accumulated other comprehensive income 26 24 78 76
Other comprehensive income 26 24 78 76
Balance at the end of the period (1,637) (1,644) (1,637) (1,644)
Defined benefit plan | Post-retirement benefit plans        
Accumulated other comprehensive income (loss) by component        
Balance at the beginning of the period (174) (266) (180) (272)
Other comprehensive income (loss) before reclassifications 0 0 0 0
Amounts reclassified from accumulated other comprehensive income 4 4 10 10
Other comprehensive income 4 4 10 10
Balance at the end of the period (170) (262) (170) (262)
Foreign currency translation adjustment and other        
Accumulated other comprehensive income (loss) by component        
Balance at the beginning of the period (44) (25) (39) (25)
Other comprehensive income (loss) before reclassifications (4) (10) (9) (10)
Amounts reclassified from accumulated other comprehensive income 0 0 0 0
Other comprehensive income (4) (10) (9) (10)
Balance at the end of the period $ (48) $ (35) $ (48) $ (35)
v3.5.0.2
Accumulated Other Comprehensive Loss (Details 2) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Reclassifications out of accumulated other comprehensive income loss by component        
INCOME BEFORE INCOME TAX EXPENSE $ 249 $ 329 $ 946 $ 886
Income tax benefit (97) (124) (362) (346)
Net income 152 205 584 540
Amount reclassified from accumulated other comprehensive loss        
Reclassifications out of accumulated other comprehensive income loss by component        
Net actuarial loss (44) (40) (131) (120)
Prior service cost (3) (7) (9) (20)
INCOME BEFORE INCOME TAX EXPENSE (47) (47) (140) (140)
Income tax benefit 17 19 52 54
Net income $ (30) $ (28) $ (88) $ (86)
v3.5.0.2
Labor Union Contracts (Details)
9 Months Ended
Sep. 30, 2016
Employees subject to collective bargaining arrangements, expiring within subsequent calendar year  
Concentration risk  
Number of unionized employees 11,000
Total number of employees | Unionized employees concentration risk  
Concentration risk  
Concentration risk (percent) 37.00%
Total number of employees | Unionized employees concentration risk | Employees subject to collective bargaining arrangements, expiring within subsequent calendar year  
Concentration risk  
Concentration risk (percent) 26.00%
v3.5.0.2
Subsequent Events (Details)
$ / shares in Units, $ in Millions
1 Months Ended 12 Months Ended
Oct. 31, 2016
USD ($)
$ / shares
shares
Dec. 31, 2015
USD ($)
Nov. 03, 2016
USD ($)
Sep. 30, 2016
USD ($)
Subsequent event        
Outstanding long-term debt   $ 20,225   $ 19,718
Level 3 Communications, Inc.        
Subsequent event        
Outstanding long-term debt       10,900
Data centers        
Subsequent event        
Capital lease obligations       $ 320
Data centers | Colocation services        
Subsequent event        
Colocation operating revenues   $ 626    
Subsequent event | Level 3 Communications, Inc.        
Subsequent event        
Cash consideration to be paid to acquiree's shareholders (per share) | $ / shares $ 26.50      
Parent Company shares to be exchanged for each Acquiree share | shares 1.4286      
Subsequent event | Level 3 Communications, Inc. | CenturyLink, Inc.        
Subsequent event        
Acquiror stockholders percentage of ownership in Parent Company 51.00%      
Merger agreement termination fees $ 472      
Subsequent event | Level 3 Communications, Inc. | Level 3 Communications, Inc.        
Subsequent event        
Acquiree stockholders percentage of ownership in Parent Company 49.00%      
Merger agreement termination fees $ 738      
Subsequent event | Data centers        
Subsequent event        
Divestiture of data centers, consideration received     $ 2,300  
Number of data centers     57