Document and Entity Information Document - shares	9 Months Ended
Document and Entity Information Document - shares	Sep. 30, 2018	Nov. 08, 2018
Document and Entity Information
Entity Registrant Name	LEVEL 3 PARENT, LLC
Entity Central Index Key	0000794323
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		0
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
OPERATING REVENUES
Operating revenues	$ 2,010		$ 6,149
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)	976		2,954
Selling, general and administrative	311		1,043
Operating expenses - affiliates	65		173
Depreciation and amortization	431		1,295
Total operating expenses	1,783		5,465
OPERATING INCOME	227		684
OTHER INCOME (EXPENSE)
Interest income	(1)		0
Interest income - affiliate	18		50
Interest expense	(137)		(381)
Loss on modification and extinguishment of debt	0		0
Other income, net	19		21
Total other expense, net	(101)		(310)
INCOME BEFORE INCOME TAX EXPENSE	126		374
Income tax expense	(38)		(184)
NET INCOME	88		190
Predecessor
OPERATING REVENUES
Operating revenues		$ 2,059		$ 6,169
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)		1,046		3,132
Selling, general and administrative		354		1,085
Operating expenses - affiliates		0		0
Depreciation and amortization		310		913
Total operating expenses		1,710		5,130
OPERATING INCOME		349		1,039
OTHER INCOME (EXPENSE)
Interest income		6		11
Interest income - affiliate		0		0
Interest expense		(134)		(399)
Loss on modification and extinguishment of debt		0		(44)
Other income, net		12		14
Total other expense, net		(116)		(418)
INCOME BEFORE INCOME TAX EXPENSE		233		621
Income tax expense		(76)		(215)
NET INCOME		157		406
Non-Affiliate Revenue
OPERATING REVENUES
Operating revenues	1,984		6,071
Non-Affiliate Revenue \| Predecessor
OPERATING REVENUES
Operating revenues		2,059		6,169
Affiliate Revenues
OPERATING REVENUES
Operating revenues	$ 26		$ 78
Affiliate Revenues \| Predecessor
OPERATING REVENUES
Operating revenues		$ 0		$ 0

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
NET INCOME	$ 88		$ 190
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustments, net of ($1), $29, ($18) and ($55) tax	(1)		(164)
Other comprehensive (loss) income, net of tax	(1)		(164)
COMPREHENSIVE INCOME	$ 87		$ 26
Predecessor
NET INCOME		$ 157		$ 406
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustments, net of ($1), $29, ($18) and ($55) tax		44		106
Other comprehensive (loss) income, net of tax		44		106
COMPREHENSIVE INCOME		$ 201		$ 512

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Foreign currency translation adjustments, tax effect	$ (1)		$ 29
Predecessor
Foreign currency translation adjustments, tax effect		$ (18)		$ (55)

Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 188	$ 297
Restricted cash and securities	3	5
Assets held for sale	15	140
Accounts receivable, less allowance of $10 and $3	715	748
Accounts receivable - affiliate	0	13
Note receivable - affiliate	1,825	1,825
Other	290	117
Total current assets	3,036	3,145
Property, plant and equipment, net of accumulated depreciation of $798 and $143	9,274	9,412
Restricted cash and securities	25	29
GOODWILL AND OTHER ASSETS
Goodwill	11,132	10,837
Deferred tax assets	463	426
Other, net	132	63
Total goodwill and other assets	19,929	20,549
TOTAL ASSETS	32,264	33,135
CURRENT LIABILITIES
Current maturities of long-term debt	6	8
Accounts payable	619	695
Accounts payable - affiliate	88	41
Accrued expenses and other liabilities
Income and other taxes	114	100
Salaries and benefits	233	136
Interest	96	109
Current portion of deferred revenue	288	260
Other	72	57
Total current liabilities	1,516	1,406
LONG-TERM DEBT	10,848	10,882
DEFERRED REVENUE AND OTHER LIABILITIES
Deferred revenue	1,181	1,099
Deferred income taxes	189	212
Other	358	264
Total deferred revenue and other liabilities	1,728	1,575
COMMITMENTS AND CONTINGENCIES (Note 9)
MEMBER'S EQUITY
Member's equity	18,312	19,254
Accumulated other comprehensive (loss) income	(140)	18
Total member's equity	18,172	19,272
TOTAL LIABILITIES AND MEMBER'S EQUITY	32,264	33,135
Customer Contracts And Relationships
GOODWILL AND OTHER ASSETS
Intangible assets, net	7,801	8,845
Other Intangible Assets
GOODWILL AND OTHER ASSETS
Intangible assets, net	$ 401	$ 378

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 10	$ 3
Accumulated depreciation	$ 798	$ 143

Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
OPERATING ACTIVITIES
NET INCOME	$ 190
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,295
Deferred income taxes	175
Share-based compensation	82
Loss on modification and extinguishment of debt	0
Net long-term debt issuance costs and premium amortization	(23)
Accrued interest on long-term debt, net	(13)
Loss on sale of property, plant and equipment and other assets	1
Other, net	(41)
Changes in current assets and liabilities:
Accounts receivable	51
Accounts payable	(64)
Deferred revenue	37
Other assets and liabilities, net	(118)
Other assets and liabilities, affiliate	(55)
Net cash provided by operating activities	1,627
INVESTING ACTIVITIES
Capital expenditures	(726)
Proceeds from sale of property, plant and equipment and other assets	119
Purchase of marketable securities	0
Maturity of marketable securities	0
Net cash used in investing activities	(607)
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt	0
Payments of long-term debt	(5)
Distributions	(1,130)
Net cash used in financing activities	(1,135)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities	0
Net (decrease) increase in cash, cash equivalents and restricted cash and securities	(115)
Cash, cash equivalents and restricted cash and securities at beginning of period	331
Cash, cash equivalents and restricted cash and securities at end of period	216
Supplemental cash flow information
Interest paid	404
Income taxes paid, net	$ 24
Predecessor
OPERATING ACTIVITIES
NET INCOME		$ 406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		913
Deferred income taxes		189
Share-based compensation		120
Loss on modification and extinguishment of debt		44
Net long-term debt issuance costs and premium amortization		13
Accrued interest on long-term debt, net		(34)
Loss on sale of property, plant and equipment and other assets		6
Other, net		75
Changes in current assets and liabilities:
Accounts receivable		(34)
Accounts payable		(10)
Deferred revenue		134
Other assets and liabilities, net		(31)
Other assets and liabilities, affiliate		0
Net cash provided by operating activities		1,791
INVESTING ACTIVITIES
Capital expenditures		(1,018)
Proceeds from sale of property, plant and equipment and other assets		1
Purchase of marketable securities		(1,127)
Maturity of marketable securities		1,127
Net cash used in investing activities		(1,017)
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		4,569
Payments of long-term debt		(4,917)
Distributions		0
Net cash used in financing activities		(348)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities		3
Net (decrease) increase in cash, cash equivalents and restricted cash and securities		429
Cash, cash equivalents and restricted cash and securities at beginning of period		1,857
Cash, cash equivalents and restricted cash and securities at end of period		2,286
Supplemental cash flow information
Interest paid		412
Income taxes paid, net		$ 47

Consolidated Statements of Member's/Stockholders' Equity - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	AOCI Attributable to Parent	Accumulated Deficit	Member Units
MEMBER'S EQUITY
Cumulative effect of new accounting principle in period of adoption \| Predecessor \| Accounting Standards Update 2014-09						$ 0
Cumulative effect of new accounting principle in period of adoption \| Predecessor \| Accounting Standards Update 2018-02				$ 0		0
Balance at beginning of period (Predecessor) at Dec. 31, 2016				(387)		0
MEMBER'S EQUITY
Net income \| Predecessor					$ 406
Balance at end of period (Predecessor) at Jun. 30, 2017				(325)		0
Balance at beginning of period (Predecessor) at Dec. 31, 2016		$ 4	$ 19,800		(8,500)
Balance at beginning of period at Dec. 31, 2016				(387)
Balance at end of period (Predecessor) at Jun. 30, 2017		4	19,887		(8,251)
Balance at beginning of period (Predecessor) at Dec. 31, 2016				(387)		0
MEMBER'S EQUITY
Net income \| Predecessor	$ 406					0
Other comprehensive (loss) income \| Predecessor	106			106
Purchase price accounting adjustments \| Predecessor						0
Distributions to CenturyLink \| Predecessor						0
Balance at end of period (Predecessor) at Sep. 30, 2017				(281)		0
Balance at beginning of period (Predecessor) at Dec. 31, 2016		4	19,800		(8,500)
Balance at beginning of period at Dec. 31, 2016				(387)
STOCKHOLDERS' EQUITY
Common stock issued under employee stock benefit plans and other \| Predecessor			27
Share-based compensation \| Predecessor			94
Balance at end of period (Predecessor) at Sep. 30, 2017	11,550	4	19,921		(8,094)
Balance at end of period at Sep. 30, 2017				(281)
MEMBER'S EQUITY
Cumulative effect of new accounting principle in period of adoption \| Predecessor \| Accounting Standards Update 2014-09						0
Cumulative effect of new accounting principle in period of adoption \| Predecessor \| Accounting Standards Update 2018-02				0		0
Balance at beginning of period (Predecessor) at Jun. 30, 2017				(325)		0
MEMBER'S EQUITY
Net income \| Predecessor	157				157	0
Other comprehensive (loss) income \| Predecessor	44			44
Purchase price accounting adjustments \| Predecessor						0
Distributions to CenturyLink \| Predecessor						0
Balance at end of period (Predecessor) at Sep. 30, 2017				(281)		0
Balance at beginning of period (Predecessor) at Jun. 30, 2017		4	19,887		(8,251)
STOCKHOLDERS' EQUITY
Common stock issued under employee stock benefit plans and other \| Predecessor			8
Share-based compensation \| Predecessor			26
Balance at end of period (Predecessor) at Sep. 30, 2017	11,550	4	19,921		(8,094)
Balance at end of period at Sep. 30, 2017				(281)
MEMBER'S EQUITY
Cumulative effect of new accounting principle in period of adoption \| Accounting Standards Update 2014-09					9	9
Cumulative effect of new accounting principle in period of adoption \| Accounting Standards Update 2018-02				6		(6)
Balance at beginning of period at Dec. 31, 2017				18		19,254
MEMBER'S EQUITY
Net income	190				0	190
Other comprehensive (loss) income	(164)			(164)
Purchase price accounting adjustments						(5)
Distributions to CenturyLink						(1,130)
Balance at end of period at Sep. 30, 2018				(140)		18,312
Balance at beginning of period at Dec. 31, 2017	19,272	0	0	18	0
STOCKHOLDERS' EQUITY
Common stock issued under employee stock benefit plans and other			0
Share-based compensation			0
Balance at end of period at Sep. 30, 2018	18,172	0	0	(140)	0
MEMBER'S EQUITY
Cumulative effect of new accounting principle in period of adoption \| Accounting Standards Update 2014-09						0
Cumulative effect of new accounting principle in period of adoption \| Accounting Standards Update 2018-02				0		0
Balance at beginning of period at Jun. 30, 2018				(139)		18,749
MEMBER'S EQUITY
Net income	88				0	88
Other comprehensive (loss) income	(1)			(1)
Purchase price accounting adjustments						0
Distributions to CenturyLink						(525)
Balance at end of period at Sep. 30, 2018				(140)		$ 18,312
Balance at beginning of period at Jun. 30, 2018		0	0		0
STOCKHOLDERS' EQUITY
Common stock issued under employee stock benefit plans and other			0
Share-based compensation			0
Balance at end of period at Sep. 30, 2018	$ 18,172	$ 0	$ 0	$ (140)	$ 0

Consolidated Statements of Member's/Stockholders' Equity Consolidated Statements of Member's/Stockholders' Equity (Parenthetical) $ in Millions	Dec. 31, 2017 USD ($)
Member Units \| Accounting Standards Update 2014-09
Cumulative effect of new accounting, tax	$ 3

Background

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Background

(1) Background

General

We are an international facilities-based communications company engaged in providing a broad array of integrated communication services to our business customers. We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. We designed our network to provide communications services that employ and take advantage of rapidly improving underlying optical, Internet Protocol, computing and storage technologies.

On October 31, 2016, we entered into an agreement and plan of merger (the "Merger Agreement") with CenturyLink, Inc., a Louisiana corporation ("CenturyLink"), Wildcat Merger Sub 1 LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 1"), and WWG Merger Sub LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of CenturyLink ("Merger Sub 2"), pursuant to which, effective November 1, 2017, we were acquired by CenturyLink in a cash and stock transaction, including the assumption of our debt (the "CenturyLink Merger"). See Note 2 - CenturyLink Merger.

Basis of Presentation

Our consolidated balance sheet as of December 31, 2017, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first nine months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017.

On November 1, 2017, we became a wholly owned subsidiary of CenturyLink. On the date of the acquisition, our assets and liabilities were recognized at CenturyLink's preliminary estimates of fair value. This revaluation has been reflected in our financial statements and, therefore, has resulted in a new basis of accounting for the successor period beginning on November 1, 2017. This new basis of accounting means that our financial statements for the successor periods are not comparable to our previously reported financial statements, including the predecessor period financial statements in this report.

The consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. All significant intercompany accounts and transactions have been eliminated. Transactions with our non-consolidated affiliates (CenturyLink and its other subsidiaries, referred to herein as affiliates) have not been eliminated. As part of our consolidation policy, we consider our controlled subsidiaries, investments in businesses in which we are not the primary beneficiary or do not have effective control but have the ability to significantly influence operating and financial policies, and variable interests resulting from economic arrangements that give us rights to economic risks or rewards of a legal entity. We do not have variable interests in a variable interest entity where we are required to consolidate the entity as the primary beneficiary. Due to exchange restrictions and other conditions, effective at the end of the third quarter of 2015, we deconsolidated our Venezuelan subsidiary. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the third quarter of 2018.

In conjunction with our acquisition on November 1, 2017, we changed the definitions we use to classify expenses as cost of services and products and selling, general and administrative, and as a result, we reclassified previously reported amounts to conform to the current period presentation. We revised our definitions so that our expense classifications are more consistent with the expense classifications used by our new ultimate parent company, CenturyLink. These revisions resulted in the reclassification of $70 million from depreciation and amortization to cost of services and products for the predecessor nine months ended September 30, 2017. Although we continued as a surviving corporation and legal entity after the acquisition, the accompanying consolidated statements of operations, comprehensive income, member's/stockholders' equity and cash flows are presented for two periods: predecessor and successor, which relates to the period preceding the acquisition and the period succeeding the acquisition. Our current definitions are as follows:

•

Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing products and services to our customers. These expenses include: employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which are third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers); rents and utilities expenses; costs for universal service funds ("USF") (which are federal and state funds that are established to promote the availability of telecommunications services to all consumers at reasonable and affordable rates, among other things, and to which we are often required to contribute); taxes (such as property and other taxes); and other expenses directly related to our network.

•

Selling, general and administrative expenses are expenses incurred in selling products and services to our customers, corporate overhead and other operating expenses. These expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions; marketing and advertising; taxes (such as state and local franchise taxes and sales and use taxes) and fees; external commissions; bad debt expense; and other selling, general and administrative expenses.

Segments

Our operations are integrated into and reported as part of the consolidated segment data of CenturyLink. CenturyLink's chief operating decision maker ("CODM") is our CODM but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment.

Income Taxes

As of September 30, 2018, we had not completed our accounting for the tax effects of the Tax Cuts and Jobs Act (the "Act"), which was signed into law in late December 2017. In order to complete our accounting for the impact of the Act, we continue to obtain, analyze and interpret additional guidance as such guidance becomes available from the U.S. Treasury Department, the Internal Revenue Service (“IRS”), state taxing jurisdictions, the Financial Accounting Standards Board ("FASB"), and other standard-setting and regulatory bodies. Guidance issued by these bodies to date does not allow us to definitively calculate the tax effects of the Act. New guidance or interpretations may materially impact our provision for income taxes in future periods.

Additional information that is needed to complete the analysis but is currently unavailable includes, but is not limited to, the amount of earnings of foreign subsidiaries, the final determination of certain net deferred tax assets subject to remeasurement due to purchase accounting adjustments and other matters and the tax treatment of such provisions of the Act by various state tax authorities. We have provisionally recognized the tax impacts related to the remeasurement of deferred tax assets and liabilities. The ultimate impact may differ from our current provisional estimate due to additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Act. The change from our current provisional estimates will be reflected in our fourth quarter 2018 statement of operations and could be material. We expect to complete the accounting in the fourth quarter of 2018.

The Act reduced the U.S. corporate income tax rate from a maximum of 35% to 21% for all C corporations, effective January 1, 2018, introduced further limitations on the deductibility of interest expense, made certain changes to capital expenditures and various other items, and imposed a one-time repatriation tax on certain earnings of certain foreign subsidiaries. In addition, the Tax Act introduces additional base-broadening measures, including Global Intangible Low-Taxed Income and the Base-Erosion Anti-Abuse Tax. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21%, we provisionally re-measured our net deferred tax assets at December 31, 2017 and recognized a tax expense of $195 million in our consolidated statement of operations for the year ended December 31, 2017. During the first nine months of 2018, we increased the tax expense from tax reform by $83 million due to changes in certain purchase accounting adjustments related to CenturyLink’s acquisition of us.

During the third quarter of 2018, we continued to evaluate and analyze the tax impacts of the Act. While we have not finalized our analysis, we do not expect the provisions of the Act, exclusive of the rate reduction, to materially impact us in 2018. However, we cannot provide any assurance that, upon completion of our analysis, the impact will not be material or that there will not be material tax impacts in future years. Accordingly, we have not made any additional adjustments related to the Act in our financial statements.

Based on current circumstances, we do not expect to experience a material near term reduction in the amount of cash income taxes paid by us from the Act due to utilization of net operating loss carryforwards. However, we anticipate that the provisions of the Act may reduce our cash income taxes in future years.

Recently Adopted Accounting Pronouncements

In the first quarter of 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” and ASU 2018-02, “Income Statement-Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”.

Each of these is described further below.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09 which replaces virtually all existing generally accepted accounting principles 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 adopted the new revenue recognition standard under the modified retrospective transition method. On January 1, 2018, we recorded a cumulative catch-up adjustment that increased our retained earnings by $9 million, net of $3 million of income taxes.

Under ASU 2014-09, we are now deferring (i.e. capitalizing) incremental contract acquisition and fulfillment costs and are recognizing (or amortizing) such costs over either the initial contract (plus and anticipated renewal contracts to which the costs relate) or the average customer life. Our deferred contract costs for our customers have average amortization periods of approximately 30 months. These deferred costs are monitored every period to reflect any significant change in assumptions.

See Note 4 - Revenue Recognition for additional information.

Comprehensive Income

ASU 2018-02 provides an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act (or portion thereof) is recorded. If an entity elects to reclassify the income tax effects of the Act, the amount of that reclassification shall include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of enactment of the Act related to items remaining in accumulated other comprehensive income. The effect of the change in the U.S. federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. ASU 2018-02 is effective January 1, 2019, but early adoption is permitted and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. We early adopted ASU 2018-02 in the first quarter of 2018 and applied it in the period of adoption. The adoption of ASU 2018-02 resulted in a $6 million decrease to member's equity and increase to accumulated other comprehensive income. See Note 11 - Accumulated Other Comprehensive Loss for additional information.

Income Taxes

On October 24, 2016, FASB issued ASU 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory” ("ASU 2016-16"). ASU 2016-16 eliminates the current prohibition on the recognition of the income tax effects on the transfer of assets among our subsidiaries. After adoption of ASU 2016-16, the income tax effects associated with these asset transfers, except for the transfer of inventory, will be recognized in the period the asset is transferred versus the current deferral and recognition upon either the sale of the asset to a third party or over the remaining useful life of the asset. We adopted ASU 2016-16 on January 1, 2018. The adoption of ASU 2016-16 did not have a material impact to our consolidated financial statements.

Recently Issued Accounting Pronouncements

Goodwill Impairment

On January 26, 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the impairment testing for goodwill by changing the measurement for goodwill impairment. Under current rules, we are required to compute the implied fair value of goodwill to measure the impairment amount if the carrying value of a reporting unit exceeds its fair value. Under ASU 2017-04, the goodwill impairment charge will equal the excess of the reporting unit carrying value above its fair value, limited to the amount of goodwill assigned to the reporting unit.

We are required to adopt the provisions of ASU 2017-04 for any goodwill impairment tests, including our required annual test, occurring after January 1, 2020, but have the option to early adopt for any impairment test that we are required to perform. We have not determined if we will elect to early adopt the provisions of ASU 2017-04. The provisions of ASU 2017-04 would not have affected our last goodwill impairment assessment, but no assurance can be provided that the simplified testing methodology will not affect our goodwill impairment assessment in the future.

Financial Instruments

On June 16, 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The primary impact of ASU 2016-13 for us is a change in the model for the recognition of credit losses related to our financial instruments from an incurred loss model, which recognized credit losses only if it was probable that a loss had been incurred, to an expected loss model, which requires our management team to estimate the total credit losses expected on the portfolio of financial instruments. We are currently reviewing the requirements of the standard and evaluating the impact on our consolidated financial statements.

We are required to adopt the provisions of ASU 2016-13 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. As of the date of this report, we have not yet determined the date we will adopt ASU 2016-13.

Leases

In February 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. 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 transition approach includes a number of optional practical expedients that we may elect to apply.

In January 2018, the FASB issued ASU 2018-01, “Leases: Land Easement Practical Expedient for Transition to ASU 2016-02". ASU 2018-01 permits the election of an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of ASC 2016-02 and that were not previously accounted for as leases. We plan to adopt ASU 2018-01 at the same time we adopt ASU 2016-02.

In July 2018, the FASB issued ASU 2018-11, "Leases: Targeted Improvements" ("ASU 2018-11"). ASU 2018-11 provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We have not yet determined whether we will use ASU 2018-11's newly permitted adoption method.

We are in the process of implementing a new lease administration and accounting system. We plan to adopt ASU 2016-02 and ASU 2018-01 effective January 1, 2019. The adoption of ASU 2016-02 and ASU 2018-01 will result in our recognition of right of use assets and lease liabilities that we have not previously recorded. Although we believe it is premature as of the date of this report to provide any estimate of the impact of adopting ASU 2016-02 and ASU 2018-01, we do expect that it will have a material impact on our consolidated financial statements.

CenturyLink Merger

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

CenturyLink Merger

(2) CenturyLink Merger

On November 1, 2017, CenturyLink acquired us through successive merger transactions, including a merger of Level 3 with and into a merger subsidiary, which survived such merger as CenturyLink's indirect wholly-owned subsidiary under the name of Level 3 Parent, LLC. Our results of operations have been included in the consolidated results of operations of CenturyLink since November 1, 2017.

As of September 30, 2018, the preliminary estimated amount of aggregate consideration was $19.6 billion.

The U.S. Department of Justice approved the acquisition subject to conditions of a consent decree on October 2, 2017, which required the combined company to divest (i) certain Level 3 metro network assets in the markets located in Albuquerque, New Mexico; Boise, Idaho; and Tucson, Arizona and (ii) 24 strands of dark fiber connecting 30 specified city-pairs across the United States in the form of an indefeasible right of use agreement.

During the second quarter of 2018, we sold network assets in Boise, Idaho and Albuquerque, New Mexico that we were required to divest as a condition of the merger. The proceeds from these sales were included in the proceeds from sale of property, plant and equipment in our consolidated statements of cash flows. No gain or loss was recognized with these transactions. All of the metro network assets were classified as assets held for sale on our consolidated balance sheet as of December 31, 2017. The Tucson, Arizona assets continued to be classified as assets held for sale on our consolidated balance sheet as of September 30, 2018. In October 2018, we sold the Tucson, Arizona assets for its net book value.

CenturyLink recognized our assets and liabilities based on CenturyLink’s preliminary estimates of the fair value of the acquired tangible and intangible assets and assumed liabilities of us as of November 1, 2017, the consummation date of the acquisition, with the excess aggregate consideration recorded as goodwill. The final determination of the allocation of the aggregate consideration paid by CenturyLink in the combination is based on the fair value of such assets and liabilities as of the acquisition date with any excess aggregate consideration to be recorded as goodwill. The estimation of such fair values and the estimation of lives of depreciable tangible assets and amortizable intangible assets require significant judgment. CenturyLink is reviewing its valuation analysis along with the related allocation to goodwill. CenturyLink expects to complete its final fair value determinations during the fourth quarter of 2018. CenturyLink is also reviewing its calculations of the estimates of the fair value of Level 3’s deferred tax assets acquired and liabilities assumed and performing related final controls. CenturyLink’s final fair value determinations may be different than those reflected in our consolidated financial statements at September 30, 2018, however we do not expect that any subsequent modifications to the preliminary purchase price allocation will be material. The recognition of assets and liabilities at fair value are reflected in our financial statements and result in a new basis of accounting for the “successor period” beginning on November 1, 2017. This new basis of accounting means that our financial statements for the successor periods will not be comparable to our previously reported financial statements, including the financial statements in this report.

Based solely on CenturyLink’s preliminary estimates through September 30, 2018, the aggregate consideration exceeds the aggregate estimated fair value of the acquired assets and assumed liabilities by $11.2 billion, which we have recognized as goodwill. The goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that CenturyLink expects to realize. None of the goodwill associated with this acquisition is deductible for income tax purposes.

As of September 30, 2018, the following is our updated assignment of the preliminary estimated aggregate consideration:



	Adjusted November 1, 2017 Balance as of December 31, 2017			Purchase Price Adjustments⁽³⁾		Adjusted November 1, 2017 Balance as of September 30, 2018
	(Dollars in millions)
Cash, accounts receivable and other current assets ⁽¹⁾	$	3,317		(25	)	3,292
Property, plant and equipment	9,311			86		9,397
Identifiable intangible assets ⁽²⁾
Customer relationships	8,964			(476	)	8,488
Other	391			(13	)	378
Other noncurrent assets	782			203		985
Current liabilities, excluding current maturities of long-term debt	(1,461		)	(31	)	(1,492	)
Current maturities of long-term debt	(7		)	—		(7	)
Long-term debt	(10,888		)	—		(10,888	)
Deferred revenue and other liabilities	(1,613		)	(102	)	(1,715	)
Goodwill	10,837			353		11,190
Total estimated aggregate consideration	$	19,633		(5	)	19,628

(1) Includes accounts receivable, which had a gross contractual value of $884 million on November 1, 2017 and September 30, 2018.

(2) The preliminary estimate of the weighted-average amortization period for the acquired intangible assets is approximately 12.0 years.

(3) All purchase price adjustments occurred during the nine months ended September 30, 2018.

Acquisition-Related Expenses

We have incurred acquisition-related expenses related to our activities surrounding the CenturyLink Merger. The table below summarizes our acquisition-related expenses, which consist of integration-related expenses, including severance and retention compensation expenses, and transaction-related expenses:



	Successor			Predecessor
	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018	Three Months Ended September 30, 2017	Nine Months Ended September 30, 2017
	(Dollars in millions)
Transaction-related expenses	$	—	—	7	12
Integration-related expenses	16		94	24	62
Total acquisition-related expenses	$	16	94	31	74

Goodwill, Customer Relationships and Other Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Customer Relationships and Other Intangible Assets

(3) Goodwill, Customer Relationships and Other Intangible Assets

Goodwill, customer relationships and other intangible assets consisted of the following:



	September 30, 2018		December 31, 2017
	(Dollars in millions)
Goodwill	$	11,132	10,837
Customer relationships, less accumulated amortization of $659 and $126	$	7,801	8,845
Other intangible assets subject to amortization:
Trade names, less accumulated amortization of $24 and $4	106		126
Developed technology, less accumulated amortization of $51 and $9	295		252
Total other intangible assets, net	$	401	378

Our goodwill balance at December 31, 2017 includes $16 million of goodwill that was allocated to us from CenturyLink associated with differences in the deferred state income taxes that CenturyLink expects to realize due to its consolidation of our results of operations into its state tax returns.

Total amortization expense for intangible assets for the successor three and nine months ended September 30, 2018 was $204 million and $595 million, respectively, and the predecessor three and nine months ended September 30, 2017 was $49 million and $153 million, respectively. As of the successor date of September 30, 2018, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $20.1 billion.

We estimate that total amortization expense for intangible assets for the successor years ending December 31, 2018 through 2022 will be as follows:



	(Dollars in millions)
2018 (remaining three months)	$	202
2019	805
2020	805
2021	805
2022	794

The following table shows the rollforward of goodwill from December 31, 2017 through September 30, 2018:



	(Dollars in millions)
As of December 31, 2017	$	10,837
Purchase accounting and other adjustments	353
Effect of foreign currency rate change	(58		)
As of September 30, 2018	$	11,132

Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

(4) Revenue Recognition

We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606, which we adopted on January 1, 2018 using the modified retrospective approach. We also earn revenues from leasing arrangements (primarily fiber capacity agreements) and governmental subsidy payments, neither of which are accounted for under ASC 606.

Under ASC 606, revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model:


•	Identification of the contract with a customer;


•	Identification of the performance obligations in the contract;


•	Determination of the transaction price;


•	Allocation of the transaction price to the performance obligations in the contract; and,


•	Recognition of revenue when, or as, we satisfy a performance obligation.

We provide an array of communications services, including local voice, VPN, Ethernet, data, broadband, private line (including special access), network access, Ethernet, transport, voice, information technology, video and other ancillary services. We provide these services to a wide range of businesses, including global/international, enterprise, wholesale, government, small and medium business customers. Certain contracts also include the sale of equipment, which is not significant to our business.

For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service. For usage, installation and other ancillary services, we generally bill in arrears and recognize revenue as usage or delivery occurs. In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis.

Under ASC 606, we recognize revenue for services when we provide the applicable service or when control is transferred. Recognition of certain payments received in advance of services being provided is deferred until the service is provided. These advance payments include certain activation and certain installation charges. If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which ranges from one year to seven years depending on the service. A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer. We recognize revenue for services when we satisfy our performance obligation. In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term.

A performance obligation is a promise in a contract with a customer to provide a good or service to the customer. We recognize revenue for services when we satisfy our performance obligation.

Promotional or performance-based incentive payments are estimated at contract inception (and updated on a periodic basis as needed) and accounted for as variable consideration. In certain cases, customers may be permitted to modify their contracts without incurring a penalty. We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, whether the modification is a termination of the existing contract and creation of a new contract, or if it is a change to the existing contract. The impact of contract modifications has not been significant to our results in 2018.

Customer contracts are evaluated to determine whether the performance obligations are separable. If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price. The standalone selling price is the price we sell to similar customers. The revenue associated with each performance obligation is then recognized as earned. The portion of any advance payment allocated to the service based upon its relative selling price is recognized ratably over the contract term.

We periodically sell optical capacity on our network. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 10 - 20 years. In most cases, we account for the cash consideration received on transfers of optical capacity as ASC 606 revenue which we recognize ratably over the term of the agreement. Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement. We do not recognize revenue on any contemporaneous exchanges of our optical capacity assets for other non-owned optical capacity assets.

In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction.

We have service level commitments pursuant to contracts with certain of our customers. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a corresponding reduction to revenues in the period that the service level commitment was not met.

Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis. For certain products or services and customer types, payment is required before products or services are provided.

Comparative Results

The following tables present our reported results under ASC 606 and a reconciliation to results using the historical accounting method:



	Three Months Ended September 30, 2018					Nine Months Ended September 30, 2018
	(Dollars in millions)
	Reported Balances as of September 30, 2018		Impact of ASC 606		ASC 605 Historical Adjusted Balances	Reported Balances as of September 30, 2018	Impact of ASC 606		ASC 605 Historical Adjusted Balances
Operating revenues	$	2,010	(4	)	2,006	6,149	(4	)	6,145
Cost of services and products (exclusive of depreciation and amortization)	976		—		976	2,954	—		2,954
Selling, general and administrative	311		12		323	1,043	32		1,075
Interest expense	137		(7	)	130	381	(7	)	374
Income tax expense	38		(2	)	36	184	(8	)	176
Net income	88		(7	)	81	190	(21	)	169

The following table presents a reconciliation of certain consolidated balance sheet captions under ASC 606 to the balance sheet results using the historical accounting method:



	September 30, 2018
	(Dollars in millions)
	Reported Balances as of September 30, 2018		Impact of ASC 606		ASC 605 Historical Adjusted Balances
Other current assets	$	290	(22	)	268
Other long-term assets, net	132		(22	)	110
Deferred revenue	1,469		(3	)	1,466
Deferred income tax assets, net	274		10		284
Member's equity	18,312		(31	)	18,281

Disaggregated Revenue by Service Offering

The following table provides disaggregation of revenue from contracts with customers based on service offering for the three and nine months ended September 30, 2018, respectively. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards.



	Successor						Successor
	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	(Dollars in millions)						(Dollars in millions)
	Total Revenues		Adjustments⁽⁷⁾		Total Revenue from Contracts with Customers		Total Revenues	Adjustments⁽⁷⁾		Total Revenue from Contracts with Customers
IP & Data Services ⁽¹⁾	$	969	—		969		2,959	—		2,959
Transport & Infrastructure ⁽²⁾	664		(45	)	619		2,012	(140	)	1,872
Voice & Collaboration ⁽³⁾	349		—		349		1,093	—		1,093
IT and Managed Services ⁽⁴⁾	1		—		1		3	—		3
Other revenues ⁽⁵⁾	1		(1	)	—		4	(3	)	1
Affiliate revenues ⁽⁶⁾	26		(26	)	—		78	(78	)	—
Total revenues	$	2,010	(72	)	1,938		6,149	(221	)	5,928

Timing of revenue
Goods transferred at a point in time					$	—				$	—
Services performed over time					1,938					5,928
Total revenue from contracts with customers					$	1,938				$	5,928

(1) Includes primarily VPN data network, Ethernet, IP, video and ancillary revenues.

(2) Includes primarily broadband and equipment sales and professional services revenues.

(3) Includes local, long-distance and other ancillary revenues.

(4) Includes IT services and managed services revenues.

(5) Includes sublease rental income.

(6) Includes telecommunications and data services we bill to our affiliates.

(7) Includes sublease rental income and revenue from fiber capacity lease arrangements which are not within the scope of ASC 606.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables and contract liabilities as of September 30, 2018 and January 1, 2018:



	Successor
	September 30, 2018		January 1, 2018
	(Dollars in millions)
Customer receivables ⁽¹⁾	$	715	748
Contract liabilities	413		353


(1)	Gross customer receivables of $725 and $751, net of allowance for doubtful accounts of $10 and $3, at September 30, 2018 and January 1, 2018, respectively.

Contract liabilities are consideration we have received from our customers in advance of providing the goods or services promised in the contract. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from one to seven years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheet.

The following table provides information about revenues recognized for the three and nine months ended September 30, 2018:



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
	(Dollars in millions)
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period (January 1, 2018)	$	22	135
Performance obligations satisfied in previous periods	—		—

Performance Obligations

As of September 30, 2018, our estimated revenue expected to be recognized in the future related to performance obligations associated with customer contracts (including affiliates) that are unsatisfied (or partially satisfied) is approximately $6.3 billion. We expect to recognize approximately 67% of this revenue through 2020, with the balance recognized thereafter.

We do not disclose the amount of unsatisfied performance obligations for contracts under which we are contractually entitled to bill pre-determined amounts for future services (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), or contracts that are classified as leasing arrangements that are not subject to ASC 606.

Contract Costs

The following table provides changes in our contract acquisition costs and fulfillment costs for the three and nine months ended September 30, 2018:



	Successor
	Three Months Ended September 30, 2018					Nine Months Ended September 30, 2018
	(Dollars in millions)
	Acquisition Costs			Fulfillment Costs		Acquisition Costs		Fulfillment Costs
Beginning of period balance	$	34		52		13		14
Costs incurred	16			22		42		70
Amortization	(5		)	(8	)	(10	)	(18	)
End of period balance	$	45		66		45		66

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of telecommunications services to customers, including labor and materials consumed for these activities. Acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis to which the assets relate and are included in cost of services and products and selling, general and administrative expenses in our consolidated statement of operations. A portion of these costs are amortized on a portfolio basis using an average expected contract term of 30 months. The amounts of these capitalized costs that are anticipated to be amortized in the next twelve months are included in other current assets on our consolidated balance sheets. We recognize incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is less than one year. Deferred acquisition and fulfillment costs are assessed for impairment on a quarterly basis.

(7) Products and Services Revenues

We categorize our products, services and revenues among the following six categories:


•	IP and data services, which include primarily VPN data networks, Ethernet, IP, video (including our facilities-based video services, CDN services and Vyvx broadcast services) and other ancillary services;


•	Transport and infrastructure, which include broadband, private line (including business data services), data center facilities and services, including cloud, hosting and application management solutions, wavelength, equipment sales and professional services, network security services, dark fiber services and other ancillary services;


•	Voice and collaboration, which includes primarily local voice, including wholesale voice, and other ancillary services;


•	IT and managed services, which include information technology services and managed services, which may be purchased in conjunction with our other network services;


•	Other, which includes sublease rental income; and


•	Affiliates services, we provide to our affiliates, telecommunication services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services, network support and technical services.

From time to time, we may change the categorization of our products and services.

Our operating revenues for our products and services consisted of the following categories:



	Successor			Predecessor
	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018	Three Months Ended September 30, 2017	Nine Months Ended September 30, 2017
	(Dollars in millions)
IP and data services	$	969	2,959	988	2,947
Transport and infrastructure	664		2,012	677	2,042
Voice and collaboration	349		1,093	392	1,174
IT and managed services	1		3	—	—
Other	1		4	2	6
Affiliate	26		78	—	—
Total revenues	$	2,010	6,149	2,059	6,169

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 $96 million and $97 million for the successor three months ended September 30, 2018 and the predecessor three months ended September 30, 2017, respectively, and $301 million and $295 million for the successor nine months ended September 30, 2018 and the predecessor nine months ended September 30, 2017, respectively. These USF surcharges, where we record revenue and transaction taxes, are assigned to the products and services categories based on the underlying 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.

Long-Term Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-term Debt

(5) Long-Term Debt

The following table summarizes our long-term debt:



	Interest Rates	Maturities	September 30, 2018			December 31, 2017
			(Dollars in millions)
Level 3 Parent, LLC
Senior notes ⁽¹⁾	5.750%	2022	$	600		600
Subsidiaries
Level 3 Financing, Inc.
Senior notes ⁽²⁾	5.125%-6.125%	2021 - 2026	5,315			5,315
Term loan ⁽³⁾	LIBOR + 2.25%	2024	4,611			4,611
Capital leases	Various	Various	165			179
Total long-term debt, excluding unamortized premiums			10,691			10,705
Unamortized premiums, net			163			185
Total long-term debt			10,854			10,890
Less current maturities			(6		)	(8	)
Long-term debt, excluding current maturities			$	10,848		10,882

(1) The notes are not guaranteed by any of Level 3 Parent, LLC's subsidiaries.

(2) The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Parent, LLC and Level 3 Communications, LLC.

(3) The Tranche B 2024 Term Loan is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain other subsidiaries. The Tranche B 2024 Term Loan had an interest rate of 4.432% as of September 30, 2018 and 3.557% as of December 31, 2017. The interest rate on the Tranche B 2024 Term Loan is set with a minimum London Interbank Offered Rate ("LIBOR") of zero percent.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt and capital leases (excluding unamortized premiums) maturing during the following years:



	(Dollars in millions)
2018 (remaining three months)	$	2
2019	6
2020	6
2021	647
2022	1,609
2023 and thereafter	8,421
Total long-term debt	$	10,691

Covenants

The senior notes of Level 3 Parent, LLC and term loan and senior notes of Level 3 Financing, Inc. contain extensive affirmative and negative covenants. Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with their affiliates including CenturyLink and its other subsidiaries, dispose of assets and merge or consolidate with any other person. Also, Level 3 Parent, LLC, as well as Level 3 Financing, Inc., will be required to offer to purchase certain of its long-term debt securities under certain circumstances in connection with a "change of control" of Level 3 Parent, LLC.

Certain of CenturyLink's and our debt instruments contain cross acceleration provisions.

Compliance

At September 30, 2018, we were in compliance with the provisions and financial covenants contained in our respective material debt agreements.

Other

For additional information on our long-term debt, see Note 4 - Long Term Debt to our consolidated financial statements in Item 8 of Part II of our annual report on Form 10-K for the year ended December 31, 2017.

Severance and Restructuring Costs

9 Months Ended

Sep. 30, 2018

Restructuring and Related Activities [Abstract]

Severance and Restructuring Costs

(6) Severance and Restructuring Costs

Changes in our accrued liabilities for severance expenses and restructuring costs were as follows:



	Successor
	Severance			Restructuring
	(Dollars in millions)
Balance at January 1, 2018	$	5		4
Accrued to expense	15			48
Payments, net	(18		)	(5	)
Balance at September 30, 2018	$	2		47

Products and Services Revenues

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Products and Services Revenues

(4) Revenue Recognition

We earn most of our consolidated revenue from contracts with customers, primarily through the provision of telecommunications and other services. Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606, which we adopted on January 1, 2018 using the modified retrospective approach. We also earn revenues from leasing arrangements (primarily fiber capacity agreements) and governmental subsidy payments, neither of which are accounted for under ASC 606.

Under ASC 606, revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Revenue is recognized based on the following five-step model:


•	Identification of the contract with a customer;


•	Identification of the performance obligations in the contract;


•	Determination of the transaction price;


•	Allocation of the transaction price to the performance obligations in the contract; and,


•	Recognition of revenue when, or as, we satisfy a performance obligation.