LEVEL 3 PARENT, LLC, 10-K filed on 3/1/2018
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Jun. 30, 2017
Document and Entity Information
 
 
Entity Registrant Name
LEVEL 3 PARENT, LLC 
 
Entity Central Index Key
0000794323 
 
Document Type
10-K 
 
Document Period End Date
Dec. 31, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
Yes 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Public Float
 
$ 17.5 
Entity Common Stock, Shares Outstanding
0 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
FY 
 
Consolidated Statements of Operations (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
OPERATING REVENUES
 
 
 
 
Operating revenues
$ 1,391 
$ 6,870 
$ 8,173 
$ 8,230 
Operating revenues - affiliate
16 
0 
0 
0 
Total operating revenues
1,407 
6,870 
8,173 
8,230 
OPERATING EXPENSES
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
690 
3,493 
4,162 
4,349 
Selling, general and administrative
253 
1,208 
1,407 
1,469 
Operating expenses - affiliate
24 
0 
0 
0 
Depreciation and amortization
282 
1,018 
1,159 
1,082 
Total operating expenses
1,249 
5,719 
6,728 
6,900 
OPERATING INCOME
158 
1,151 
1,445 
1,330 
OTHER INCOME (EXPENSE)
 
 
 
 
Interest income
1 
13 
4 
1 
Interest income - affiliate
11 
0 
0 
0 
Interest expense
(80)
(441)
(544)
(640)
Loss on modification and extinguishment of debt
0 
(44)
(40)
(218)
Venezuela deconsolidation charge
0 
0 
0 
(171)
Other income (expense), net
3 
14 
(23)
(19)
Total other expense, net
(65)
(458)
(603)
(1,047)
INCOME BEFORE INCOME TAX (EXPENSE) BENEFIT
93 
693 
842 
283 
Income tax (expense) benefit
(234)
(268)
(165)
3,150 
NET (LOSS) INCOME
$ (141)
$ 425 
$ 677 
$ 3,433 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
NET (LOSS) INCOME
$ (141)
$ 425 
$ 677 
$ 3,433 
OTHER COMPREHENSIVE (LOSS) INCOME:
 
 
 
 
Defined benefit pension plan adjustment, net of $0, ($3), $4 and ($2) tax.
0 
(1)
(6)
8 
Foreign currency translation adjustment, net of ($17), ($46), $39 and $13 tax.
18 
81 
(80)
(162)
Other comprehensive (loss) income
18 
80 
(86)
(154)
COMPREHENSIVE (LOSS) INCOME
$ (123)
$ 505 
$ 591 
$ 3,279 
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Defined benefit pension plan adjustments, tax effect
$ 0 
$ (3)
$ 4 
$ (2)
Foreign currency translation adjustments, tax effect
$ (17)
$ (46)
$ 39 
$ 13 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Predecessor
ASSETS
 
 
Cash and cash equivalents
$ 297 
$ 1,819 
Restricted cash and securities
5 
7 
Assets held for sale
140 
0 
Accounts receivable, less allowance of $3 and $29
748 
712 
Accounts receivable - affiliate
13 
0 
Note receivable - affiliate
1,825 
0 
Other
117 
115 
Total current assets
3,145 
2,653 
NET PROPERTY, PLANT AND EQUIPMENT
 
 
Property, plant and equipment
9,555 
21,388 
Accumulated depreciation
(143)
(11,249)
Net property, plant and equipment
9,412 
10,139 
Restricted cash and securities
29 
31 
GOODWILL AND OTHER ASSETS
 
 
Goodwill
10,837 
7,729 
Customer relationships, net
8,845 
860 
Other intangible assets, net
378 
55 
Deferred tax assets
426 
3,370 
Other, net
63 
51 
Total goodwill and other assets
20,549 
12,065 
TOTAL ASSETS
33,135 
24,888 
CURRENT LIABILITIES
 
 
Current maturities of long-term debt
8 
7 
Accounts payable
695 
706 
Accounts payable - affiliate
41 
0 
Accrued expenses and other liabilities
 
 
Income and other taxes
100 
116 
Salaries and benefits
136 
195 
Interest
109 
129 
Current portion of deferred revenue
258 
266 
Current portion of deferred revenue - affiliate
2 
0 
Other
57 
52 
Total current liabilities
1,406 
1,471 
LONG-TERM DEBT
10,882 
10,877 
DEFERRED CREDITS AND OTHER LIABILITIES
 
 
Deferred credits
1,093 
1,001 
Deferred credits - affiliate
6 
0 
Deferred tax liability
212 
248 
Other
264 
374 
Total deferred credits and other liabilities
1,575 
1,623 
COMMITMENTS AND CONTINGENCIES (Note 14)
   
   
MEMBER'S/STOCKHOLDERS' EQUITY
 
 
Member's equity
19,254 
0 
Preferred stock, $.01 par value, authorized 0 and 10,000,000 shares, no shares issued or outstanding
0 
0 
Common stock, $.01 par value, authorized 0 and 433,333,333 shares, issued and outstanding 0 and 360,021,098 shares
0 
4 
Additional paid-in capital
0 
19,800 
Accumulated other comprehensive gain (loss)
18 
(387)
(Accumulated deficit)
0 
(8,500)
Total member's/stockholders’ equity
19,272 
10,917 
TOTAL LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY
$ 33,135 
$ 24,888 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Predecessor
Allowance for doubtful accounts
$ 3 
$ 29 
Preferred stock, par value (in USD per share)
   
$ 0.01 
Preferred stock, shares authorized
   
10,000,000 
Preferred stock, shares issued
   
0 
Preferred stock, shares outstanding
   
0 
Common stock, par value (in USD per share)
    
$ 0.01 
Common stock, shares authorized
   
433,333,333 
Common stock, shares issued
   
356,374,473 
Common stock, shares outstanding
   
356,374,473 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
OPERATING ACTIVITIES
 
 
 
 
Net (loss) income
$ (141)
$ 425 
$ 677 
$ 3,433 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
282 
1,018 
1,159 
1,082 
Share-based compensation
26 
132 
156 
141 
Loss on modification and extinguishment of debt
0 
44 
40 
218 
Venezuela deconsolidation charge
0 
0 
0 
171 
Net long-term debt issuance costs and premium amortization
(5)
14 
21 
24 
Accrued interest on long-term debt, net
27 
(47)
21 
(57)
Deferred income taxes
270 
217 
123 
(3,202)
Other, net
(14)
13 
(12)
36 
Changes in current assets and liabilities:
 
 
 
 
Accounts receivable
(1)
(16)
31 
(87)
Accounts payable
35 
(102)
83 
4 
Deferred revenue
(15)
146 
18 
88 
Other current assets and liabilities
(138)
70 
26 
4 
Other current assets and liabilities, affiliate
(17)
0 
0 
0 
Affiliate obligations
(1)
0 
0 
0 
Net cash provided by operating activities
308 
1,914 
2,343 
1,855 
INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
(207)
(1,119)
(1,334)
(1,229)
Cash related to deconsolidated Venezuela operations
0 
0 
0 
(83)
Purchase of marketable securities
0 
(1,127)
0 
0 
Maturity of marketable securities
0 
1,127 
0 
0 
Proceeds from sale of property, plant and equipment and other assets
0 
1 
3 
4 
Note receivable - affiliate
(1,825)
0 
0 
0 
Other, net
0 
0 
0 
(14)
Net cash used in investing activities
(2,032)
(1,118)
(1,331)
(1,322)
FINANCING ACTIVITIES
 
 
 
 
Net proceeds from issuance of long-term debt
0 
4,569 
764 
4,832 
Payments of long-term debt
(1)
(4,917)
(820)
(5,051)
Distributions
(250)
0 
0 
0 
Net cash used in financing activities
(251)
(348)
(56)
(219)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
(2)
3 
(3)
(18)
Net increase (decrease) in cash, cash equivalents and restricted cash and securities
(1,977)
451 
953 
296 
Cash, cash equivalents and restricted cash and securities at beginning of period
2,308 
1,857 
904 
608 
Cash, cash equivalents and restricted cash and securities at end of period
331 
2,308 
1,857 
904 
Supplemental cash flow information:
 
 
 
 
Income taxes paid, net
10 
49 
35 
50 
Interest paid
56 
468 
508 
668 
Non-cash investing and financing activities:
 
 
 
 
Long-term debt conversion into equity
0 
0 
0 
333 
Accrued interest conversion into equity
$ 0 
$ 0 
$ 0 
$ 10 
Consolidated Statements of Member's/Stockholders' Equity (USD $)
In Millions, unless otherwise specified
Total
Predecessor
MEMBER'S EQUITY
MEMBER'S EQUITY
Predecessor
COMMON STOCK
COMMON STOCK
Predecessor
ADDITIONAL PAID-IN CAPITAL
ADDITIONAL PAID-IN CAPITAL
Predecessor
ACCUMULATED OTHER COMPREHENSIVE LOSS
ACCUMULATED OTHER COMPREHENSIVE LOSS
Predecessor
ACCUMULATED DEFICIT
ACCUMULATED DEFICIT
Predecessor
Beginning balance at Dec. 31, 2014
 
 
 
$ 0 
 
$ 3 
 
$ 19,159 
 
$ (147)
 
$ (12,652)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Contributions
 
 
 
0 
 
 
 
 
 
 
 
 
Distributions
 
 
 
0 
 
 
 
 
 
 
 
 
Issuance of common stock through conversion of debt to equity
 
 
 
 
 
1 
 
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
 
 
 
 
 
 
 
35 
 
 
 
 
Share-based compensation
 
 
 
 
 
 
 
106 
 
 
 
 
Conversion of debt to equity
 
 
 
 
 
 
 
342 
 
 
 
 
Contribution from affiliate
 
 
 
 
 
 
 
0 
 
 
 
 
Other comprehensive (loss) income
 
 
 
 
 
 
 
 
 
(154)
 
 
Net (loss) income
 
3,433 
 
0 
 
 
 
 
 
 
 
3,433 
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
 
 
 
 
 
 
 
 
 
 
 
42 
Ending balance at Dec. 31, 2015
 
10,126 
 
0 
 
4 
 
19,642 
 
(301)
 
(9,219)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
128 
 
 
 
 
 
 
 
 
 
 
Ending balance at Mar. 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance at Dec. 31, 2015
 
10,126 
 
0 
 
4 
 
19,642 
 
(301)
 
(9,219)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Contributions
 
 
 
0 
 
 
 
 
 
 
 
 
Distributions
 
 
 
0 
 
 
 
 
 
 
 
 
Issuance of common stock through conversion of debt to equity
 
 
 
 
 
0 
 
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
 
 
 
 
 
 
 
37 
 
 
 
 
Share-based compensation
 
 
 
 
 
 
 
121 
 
 
 
 
Conversion of debt to equity
 
 
 
 
 
 
 
0 
 
 
 
 
Contribution from affiliate
 
 
 
 
 
 
 
0 
 
 
 
 
Other comprehensive (loss) income
 
 
 
 
 
 
 
 
 
(86)
 
 
Net (loss) income
 
677 
 
0 
 
 
 
 
 
 
 
677 
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
 
 
 
 
 
 
 
 
 
 
 
0 
Ending balance at Dec. 31, 2016
 
10,917 
 
0 
 
4 
 
19,800 
 
(387)
 
(8,500)
Beginning balance at Sep. 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
250 
 
 
 
 
 
 
 
 
 
 
Ending balance at Dec. 31, 2016
 
10,917 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
95 
 
 
 
 
 
 
 
 
 
 
Ending balance at Mar. 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance at Dec. 31, 2016
 
10,917 
 
0 
 
4 
 
19,800 
 
(387)
 
(8,500)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Contributions
 
 
 
0 
 
 
 
 
 
 
 
 
Distributions
 
 
 
0 
 
 
 
 
 
 
 
 
Issuance of common stock through conversion of debt to equity
 
 
 
 
 
0 
 
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
 
 
 
 
 
 
 
30 
 
 
 
 
Share-based compensation
 
 
 
 
 
 
 
102 
 
 
 
 
Conversion of debt to equity
 
 
 
 
 
 
 
0 
 
 
 
 
Contribution from affiliate
 
 
 
 
 
 
 
0 
 
 
 
 
Other comprehensive (loss) income
 
 
 
 
 
 
 
 
 
80 
 
 
Net (loss) income
 
425 
 
0 
 
 
 
 
 
 
 
425 
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
 
 
 
 
 
 
 
 
 
 
0 
 
Ending balance at Oct. 31, 2017
 
11,554 
 
0 
 
4 
 
19,932 
 
(307)
 
(8,075)
Beginning balance at Sep. 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
19 
 
 
 
 
 
 
 
 
 
 
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
 
 
 
 
 
 
 
 
 
 
0 
 
Ending balance at Oct. 31, 2017
 
11,554 
 
 
 
 
 
 
 
 
 
 
Beginning balance at Nov. 01, 2017
 
 
19,617 
 
0 
 
0 
 
0 
 
0 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
Contributions
 
 
28 
 
 
 
 
 
 
 
 
 
Distributions
 
 
(250)
 
 
 
 
 
 
 
 
 
Issuance of common stock through conversion of debt to equity
 
 
 
 
0 
 
 
 
 
 
 
 
Common stock issued under employee stock benefit plans and other
 
 
 
 
 
 
0 
 
 
 
 
 
Share-based compensation
 
 
 
 
 
 
0 
 
 
 
 
 
Conversion of debt to equity
 
 
 
 
 
 
0 
 
 
 
 
 
Contribution from affiliate
 
 
 
 
 
 
0 
 
 
 
 
 
Other comprehensive (loss) income
 
 
 
 
 
 
 
 
18 
 
 
 
Net (loss) income
 
 
(141)
 
 
 
 
 
 
 
0 
 
Ending balance at Dec. 31, 2017
 
 
$ 19,254 
 
$ 0 
 
$ 0 
 
$ 18 
 
$ 0 
 
Background and Summary of Significant Accounting Policies
Background and Summary of Significant Accounting Policies
Background and Summary of Significant Accounting Policies

General

We are a facilities-based provider (that is, a provider that owns or leases a substantial portion of the property, plant and equipment necessary to provide our services) of a broad range of integrated communications services. We created our communications network by constructing our own assets and through a combination of purchasing other companies and purchasing or leasing facilities from others. Our network is an international, facilities-based communications network. 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

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 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 will not be 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. 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 and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2017. 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.

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 $11 million, $0 million and $2 million from other income (expense) to selling, general and administrative for the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively. These revisions also resulted in the reclassification of $77 million, $91 million and $84 million from depreciation and amortization to cost of services and products for the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively. Although we continued as a surviving corporation and legal entity after the acquisition, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and member's/stockholder's equity (deficit) 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.
These expense classifications may not be comparable to those of other companies. We also have reclassified certain other prior period amounts to conform to the current period presentation. These changes had no impact on net income (loss) for any period.

Foreign Currency Translation

Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average exchange rates prevailing during the year. A significant portion of our non-United States subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during 2017, 2016 and 2015. Foreign currency translation gains and losses are recognized as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in the consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our non-United States exchange transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in Other, net on the consolidated statements of operations.

Summary of Significant Accounting Policies

Use of Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters, including, but not limited to, revenue recognition, revenue reserves, network access costs, network access cost dispute reserves, allowance for doubtful accounts, depreciation, amortization, asset valuations, recoverability of assets (including deferred tax assets), impairment assessments, taxes, certain liabilities and other provisions and contingencies, are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's/stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenues, expenses and components of cash flows during the periods presented in our other consolidated financial statements.

For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.

For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions.

For all of these and other matters, actual results could differ materially from our estimates.

Revenue Recognition

Revenue is recognized monthly as the services are provided based on contractual amounts expected to be collected. Management establishes appropriate revenue reserves at the time services are rendered based on an analysis of historical credit activity to address, where significant, situations in which collection is not reasonably assured as a result of credit risk, potential billing disputes or other reasons. Actual results may differ from these estimates under different assumptions or conditions and these differences could be material.

Intercarrier compensation revenue is recognized when an interconnection agreement is in place with another carrier, or if an agreement has expired, when the parties have agreed to continue operating under the previous agreement until a new agreement is negotiated and executed, or at rates mandated by the Federal Communications Commission (the "FCC").

For certain sale contracts, including and long-term indefeasible right of use, or IRUs, involving private line, wavelengths and certain leases for dark fiber, we may receive upfront payments for services to be delivered for a period of up to 25 years. In these situations, we defer the revenue and amortize it on a straight-line basis to earnings over the term of the contract.

Termination revenue is recognized when a customer discontinues service prior to the end of the contract period for which we had previously received consideration and for which revenue recognition was deferred. Termination revenue also is recognized when customers are required to make termination penalty payments to us to settle contractually committed purchase amounts that the customer no longer expects to meet or when a customer and we renegotiate a contract under which we are no longer obligated to provide services for consideration previously received and for which revenue recognition has been deferred.

We are obligated under dark fiber IRUs and other capacity agreements to maintain our network in efficient working order and in accordance with industry standards. Customers are obligated for the term of the agreement to pay for their estimated share of the costs for operating and maintaining the network. We recognize this revenue monthly as services are provided.

Our customer contracts require us to meet certain service level commitments. If we do not meet the required service levels, we may be obligated to provide billing credits. The credits are a reduction to revenue and, to date, have not been material.

Affiliate Transactions

We provide to our affiliates telecommunications services that we also provide to external customers. Services provided by us to our affiliates are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented.

We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates.

From time to time we make distributions to CenturyLink. Distributions are reflected on our consolidated statements of member's/stockholders' equity and the consolidated statements of cash flows reflects distributions made as financing activities.

USF Surcharges, Gross Receipts Taxes and Other Surcharges

In determining whether to include in our revenues and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF surcharges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenues and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenues and costs of services and products. Total revenue and cost of services and products on the consolidated statements of operations include USF contributions totaled $71 million, $331 million, $414 million and $364 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively.

Income Taxes

Until November 1, 2017, we filed a consolidated federal income tax return with our eligible subsidiaries. Since CenturyLink's acquisition of us on November 1, 2017, we have been included in the consolidated federal income tax return of CenturyLink. Under CenturyLink's tax allocation policy, CenturyLink treats our consolidated results as if we were a separate taxpayer. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by CenturyLink and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating loss carryforwards ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax bases of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.

We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.
Restricted Cash and Securities

Restricted cash and securities consists primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2017 and 2016.

Accounts Receivable and Allowance for Doubtful Accounts

For predecessor periods, accounts receivable balances were recorded at the invoiced amount. We establish an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. We determine the allowance for doubtful accounts based on the aging of our accounts receivable balances, the credit quality of our customers and an analysis of our historical experience of bad debt write-offs. For predecessor periods, accounts receivable balances were written off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. For the successor period, accounts receivable balances were recorded at fair value for all balances receivable at the acquisition date and at the invoiced amount for those amounts invoiced after the acquisition date. We recognized bad debt expense, net of recoveries, of approximately $3 million for the successor period ended December 31, 2017, $16 million for the predecessor period ended October 31, 2017, $18 million for the predecessor year ended December 31, 2016 and $23 million in the predecessor year ended December 31, 2015. Accounts receivable for all periods can bear interest.

Concentration of Credit Risk

We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe, and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach consumer and enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material change in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operations. Fair values of accounts receivable approximate carrying amount due to the short period of time to collection.

A relatively small number of customers account for a significant percentage of our revenue. Our top ten customers accounted for approximately 19%, 18%, 16% and 16% for the successor period ended December 31, 2017, for the predecessor period ended October 31, 2017 and for the predecessor years ended December 31, 2016 and 2015, respectively.

Property, Plant and Equipment

As a result of CenturyLink's acquisition of us, the purchase price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values at the date of acquisition. Therefore, the allocated fair values of the assets represent their new basis of accounting in our consolidated financial statements. This resulted in adjustments to our property, plant and equipment accounts, including accumulated depreciation at the acquisition date. The adjustments related to CenturyLink's acquisition of us are described in Note 2—CenturyLink Merger and Note 6—Property, Plant and Equipment.

Property, plant and equipment acquired since the acquisition date is stated at original cost plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase.

We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, assumptions about technology evolution and, in certain instances, actuarially determined probabilities to estimate the remaining useful life of our asset base. Our remaining useful life assessments anticipate the loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers leave the network. However, the asset is not retired until all customers no longer utilize the asset and we determine there is no alternative use for the asset.

Capitalized labor and related costs associated with employees and contract labor working on capital projects were approximately $45 million for the successor period ended December 31, 2017, $239 million for the predecessor period ended October 31, 2017, $271 million for the predecessor year ended December 31, 2016 and $244 million for the predecessor year ended December 31, 2015.

We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. We determine fair values by using a combination of comparable market values and discounted cash flows, as appropriate.

Goodwill and Other Indefinite-Lived Intangible Assets

Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 7 to 14 years, depending on the type of customer, using the straight-line method. We amortize our other intangible assets over an estimated life of 5 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized.

Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, other indefinite-lived intangible assets are reduced to their estimated fair value through an impairment charge to our consolidated statements of operations.

We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded amount of goodwill exceeds the implied fair value of goodwill. Our reporting units are not discrete legal entities with discrete financial statements. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment assessment is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies. Certain estimates, judgments and assumptions are required to perform these assignments. We believe these estimates, judgments and assumptions to be reasonable, but changes in many of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment.

At the time of each impairment assessment date in 2017, 2016, and 2015, our reporting units consisted of three regional operating units in: North America; Europe, the Middle East and Africa ("EMEA"); and Latin America. We conducted our annual goodwill impairment analysis as of October 1, and concluded that our goodwill was not impaired in 2017 and 2016. As a result of the deconsolidation of our Venezuelan subsidiary, we completed an assessment of the Latin American and our other reporting units' goodwill as of September 30, 2015 and concluded there was no impairment in 2015. Note that as a result of the merger the impairment testing date will change to October 31 for future successor periods.

We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. As a result of CenturyLink's acquisition of us, we are now comprised of one reporting unit.

See Note 3—Goodwill, Customer Relationships and Other Intangible Assets for additional information.

Recently Adopted Accounting Pronouncements

Restricted Cash

On November 17, 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents as compared to the previous presentation, which explains only the change in cash and cash equivalents. ASU 2016-18 is effective January 1, 2018, but early adoption is permitted and requires retrospective application of the requirements to all previous periods presented. We early adopted ASU 2016-18 in the fourth quarter of 2017.

Share-based Compensation

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update were effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, but all of the amendments must be adopted in the same period.

We elected to early adopt ASU 2016-09 in the third quarter of 2016, which required adjustments to be reflected as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. Upon adoption, we recognized previously unrecognized excess tax benefits using the modified retrospective transition method, which resulted in a cumulative-effect adjustment of $42 million recorded to accumulated deficit as of January 1, 2016.

This ASU amended the definition of assumed proceeds when applying the treasury stock method of computing earnings per share to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital.

The new presentation requirements for excess tax benefits to be shown on the statement of cash flows as an operating activity and presenting employee taxes paid where the employer withholds shares for tax-withholding purposes as a financing activity had no effect to any of the periods presented in our consolidated statements of cash flows as there had been no such activities in the consolidated statements of cash flows.

Adoption of the new standard also resulted in the recognition of excess tax benefits as a reduction to income tax expense of $22 million for 2016.

Recent 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 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.

Income Taxes

On October 24, 2016, the FASB issued Accounting Standards Update 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 this ASU, 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 the provisions of ASU 2016-16 on January 1, 2018. The impact of adopting ASU 2016-16 had no material impact to our consolidated financial statements.

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 any 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 annual report, we have not yet determined the date we will adopt ASU 2016-13.

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 completed our initial assessment of our business and system requirements and we are currently developing and implementing a new lease accounting and administrative system to comply with the requirements of ASU 2016-02. We plan to adopt the standard when it becomes effective for us beginning January 1, 2019 and the adoption of the standard will result in the recognition of right of use assets and lease liabilities that have not previously been 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, we do expect that it will have a material impact on our consolidated financial statements.

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.
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 adopted the new revenue recognition standard under the modified retrospective transition method.
Upon adoption, we will defer (i.e. capitalize) incremental contract acquisition costs and recognize (i.e. amortize) them over the term of the initial contract and anticipated renewal contracts to which the costs relate. Our deferred contract costs for our customers have average amortization periods of approximately 30 months and are subject to being monitored every period to reflect any significant change in assumptions. In addition, we will assess our deferred contract cost asset for impairment on a periodic basis.
We have material obligations to our customers in our indefeasible right of use arrangements, including certain long-term prepaid customer capacity arrangements, which are accounted for as operating leases and service contracts. As our service contracts contain a significant financing component that are not separately accounted for, we are required to estimate and record incremental revenue and interest cost associated with these contractual terms. Most of our indefeasible right of use arrangements are accounted for as operating leases.
We are in the process of implementing new processes and internal controls over revenue recognition to assist us in the application of the new standard.
The cumulative effect of initially applying the new revenue standard on January 1, 2018 is not material.
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, Customer Relationships and Other Intangible Assets

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

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Goodwill
$
10,837

 
 
7,729

Customer relationships, less accumulated amortization of $126 and $1,113
8,845

 
 
860

Other indefinite-life intangible assets
—

 
 
15

Other intangible assets subject to amortization:
 
 
 
 
Trade names, less accumulated amortization of $4 and $0
126

 
 
—

Developed technology, less accumulated amortization of $9 and $189
252

 
 
40

Total other intangible assets, net
$
378

 
 
55



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 period ended December 31, 2017, the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015 was $139 million, $168 million, $211 million and $227 million, respectively. As of December 31, 2017, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $20.199 billion. As of the successor date of December 31, 2017, the weighted average remaining useful lives of our finite-lived intangible assets was 11.9 years in total; 12.2 years for customer contracts and relationships, 4.8 years for trademarks, and 4.8 years for developed technology.

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
$
829

2019
829

2020
829

2021
829

2022
816

Long-Term Debt
Long-Term Debt
Long-Term Debt

The following chart reflects our consolidated long-term debt, including unamortized discounts, premiums and debt issuance costs, but excluding intercompany debt:

 
 
 
 
 
Successor
 
 
Predecessor
 
Interest Rates
 
Maturities
 
December 31,
2017
 
 
December 31,
2016
 
 
 
 
 
(Dollars in millions)
Level 3 Parent, LLC
 
 
 
 
 
 
 
 
5.750% Senior Notes due 2022 (3)
5.750%
 
2022
 
$
600

 
 
600

Subsidiaries
 
 
 
 
 
 
 
 
Level 3 Financing, Inc.
 
 
 
 
 
 
 
 
Senior Notes:
 
 
 
 
 
 
 
 
Floating Rate Senior Notes due 2018 (2)(4)
6-Month LIBOR + 3.50%
 
2018
 
—

 
 
300

6.125% Senior Notes due 2021 (2)
6.125%
 
2021
 
640

 
 
640

5.375% Senior Notes due 2022 (2)
5.375%
 
2022
 
1,000

 
 
1,000

5.625% Senior Notes due 2023 (2)
5.625%
 
2023
 
500

 
 
500

5.125% Senior Notes due 2023 (2)
5.125%
 
2023
 
700

 
 
700

5.375% Senior Notes due 2025 (2)
5.375%
 
2025
 
800

 
 
800

5.375% Senior Notes due 2024 (2)
5.375%
 
2024
 
900

 
 
900

5.25% Senior Notes due 2026 (2)
5.250%
 
2026
 
775

 
 
775

Term Loans:
 
 
 
 
 
 
 
 
Tranche B-III 2019 Term Loan (1)(4)
LIBOR + 3.00%
 
2019
 
—

 
 
815

Tranche B 2020 Term Loan(1)(4)
LIBOR + 3.00%
 
2020
 
—

 
 
1,796

Tranche B-II 2022 Term Loan(1)(4)
LIBOR + 2.75%
 
2022
 
—

 
 
2,000

Tranche B 2024 Term Loan (4)(5)
LIBOR + 2.25%
 
2024
 
4,611

 
 
—

Capital Leases and other debt
Various
 
Various
 
179

 
 
183

Unamortized premiums (discounts), net
 
 
 
 
185

 
 
(13
)
Unamortized debt issuance costs
 
 
 
 
—

 
 
(112
)
Total long-term debt
 
 
 
 
10,890

 
 
10,884

Less current maturities
 
 
 
 
(8
)
 
 
(7
)
Long-term debt, excluding current maturities
 
 
 
 
$
10,882

 
 
10,877

(1) The term loans were secured obligations and guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC and certain other 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 notes are not guaranteed by any of Level 3 Parent, LLC's subsidiaries.
(4) The Tranche B 2024 Term Loan had an interest rate of 3.557% as of December 31, 2017. All other term loans were refinanced on February 22, 2017 as described below. The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of the predecessor date of December 31, 2016. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of the predecessor date of December 31, 2016. The interest rate on the Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan were set with a minimum LIBOR of 1.00%. The interest rate on the Tranche B-II 2022 Term Loan was set with a minimum LIBOR of 0.75% and the interest rate on the Tranche B 2024 Term Loan is set with a minimum LIBOR of zero percent. The Floating Rate Senior Notes due 2018 had an interest rate of 4.762% as of the predecessor date of December 31, 2016.
(5) The Tranche B 2024 Term Loan is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain of its non-regulated subsidiaries.

Senior Secured Term Loans

As of the successor date of December 31, 2017, Level 3 Financing, Inc., Level 3 Parent, LLC's direct wholly owned subsidiary ("Level 3 Financing") had a senior secured credit facility consisting of a $4.611 billion Tranche B Term Loan due 2024. The Tranche B 2024 Term Loan carries an interest rate, in the case of base rate borrowings, equal to (i) the greater of the Prime Rate, the Federal Funds Effective Rate plus 50 basis points, or LIBOR plus 100 basis points (with all such terms and calculations as defined or further specified in the applicable credit agreement) plus (ii) 1.25% per annum. Any Eurodollar borrowings under the Tranche B 2024 Term Loan bear interest at LIBOR plus 2.25% per annum.

The Tranche B 2024 Term Loan requires certain specified mandatory prepayments in connection with certain asset sales and other transactions, subject to certain significant exceptions. The obligations of Level 3 Financing, under the Tranche B 2024 Term Loan are, subject to certain exceptions, secured by certain assets of Level 3 Parent, LLC and, subject to pending regulatory approvals, certain of its material domestic telecommunication subsidiaries. Also, Level 3 Parent, LLC has guaranteed and, upon receipt of pending regulatory approvals, certain of its subsidiaries will guarantee the obligations of Level 3 Financing, under the Tranche B 2024 Term Loan. Subject to the receipt of pending regulatory approvals, Level 3 Communications, LLC and its material domestic subsidiaries will guarantee and, subject to certain exceptions, will pledge certain of their assets to secure the obligations of Level 3 Financing, under the Tranche B 2024 Term Loan.

Senior Notes

All of the notes reflected in the table above pay interest semiannually, and allow for the redemption of the notes at the option of the issuer upon not less than 30 or more than 60 days’ prior notice by paying the greater of 101% of the principal amount or a “make whole” amount, plus accrued interest. In addition, the notes also have a provision that allows for an additional right of optional redemption using cash proceeds received from the sale of equity securities. For specific details of these features and requirements, including the applicable premiums and timing, refer to the indentures for the respective senior notes in connection with the original issuances.

Capital Leases

As of the successor date of December 31, 2017, we had $179 million of capital leases. We lease property, equipment, certain dark fiber facilities and metro fiber under non-cancelable IRU agreements that are accounted for as capital leases. Interest rates on these capital leases approximated 6.0% on average as of the successor date of December 31, 2017.

Debt Issuance Costs

For the successor period ended December 31, 2017, the predecessor period ended October 31, 2017, the predecessor years ended 2016 and 2015, we deferred costs of $0, $40 million, $11 million and $50 million, respectively, in connection with debt issuances. At the predecessor date of December 31, 2016, there was $112 million of unamortized debt issuance costs.

New Issuances

On the predecessor date of February 22, 2017, we completed the refinancing of all of our then outstanding $4.611 billion senior secured term loans through the issuance of a new Tranche B 2024 Term Loan in the principal amount of $4.611 billion. The term loans refinanced were our Tranche B-III 2019 Term Loan, Tranche B 2020 Term Loan, and the Tranche B-II 2022 Term Loan. The new Tranche B 2024 Term Loan bears interest at LIBOR plus 2.25 percent, with a zero percent minimum LIBOR, and will mature on February 22, 2024. The Tranche B 2024 Term Loan was priced to lenders at par, with the payment to the lenders at closing of an upfront 25 basis point fee. We recognized a charge of approximately $44 million for modification and extinguishment in the first quarter of 2017 related to this refinancing.

Repayments

On the predecessor date of September 29, 2017, the $300 million aggregate principal amount plus accrued and unpaid interest due under the Floating Rate Senior Notes due 2018 was paid and we recognized a loss on extinguishment of less than $1 million.

Aggregate Maturities of Long-Term Debt

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)(1)
2018
$
8

2019
7

2020
8

2021
650

2022
1,610

2023 and thereafter
8,422

Total long-term debt
$
10,705

(1)
Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.

Covenants

The term loan and senior notes of Level 3 Parent, LLC and 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. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument.

Compliance

At the successor date of December 31, 2017 and the predecessor date of December 31, 2016, we believe we were in compliance with the financial covenants contained in their respective material debt agreements.
Accounts Receivable
Accounts Receivable
Accounts Receivable

The following table presents details of our accounts receivable balances:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Trade and purchased receivables
$
562

 
 
588

Earned and unbilled receivables
165

 
 
140

Other
24

 
 
13

Total accounts receivable
751

 
 
741

Less: allowance for doubtful accounts (1)
(3
)
 
 
(29
)
Accounts receivable, less allowance
$
748

 
 
712


(1) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in the allowance for doubtful accounts being reset as of the date of acquisition.

We are exposed to concentrations of credit risk from our customers and other telecommunications service providers. We generally do not require collateral to secure our receivable balances.

The following table presents details of our allowance for doubtful accounts:

 
Beginning Balance
Additions
Deductions
Ending Balance
 
(Dollars in millions)
December 31, 2017 (Successor)
$
—

3

—

3

October 31, 2017 (Predecessor)
29

16

(12
)
33

2016 (Predecessor)
32

18

(21
)
29

2015 (Predecessor)
$
30

23

(21
)
32

Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment

Net property, plant and equipment is composed of the following:

 
 
 
Successor
 
 
Predecessor
 
Depreciable Lives
 
December 31,
2017
 
 
December 31,
2016
 
 
 
(Dollars in millions)
Land
N/A
 
$
348

 
 
179

Fiber conduit and other outside plant(1)
15-45 years
 
4,750

 
 
9,110

Central office and other network electronics(2)
3-10 years
 
2,134

 
 
8,846

Support assets(3)
3-30 years
 
2,019

 
 
3,023

Construction-in-progress(4)
N/A
 
304

 
 
230

Gross property, plant and equipment
 
 
9,555

 
 
21,388

Accumulated depreciation(5)
 
 
(143
)
 
 
(11,249
)
Net property, plant and equipment
 
 
$
9,412

 
 
10,139


(1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
(2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
(3) Support assets consist of buildings, data centers, computers and other administrative and support equipment.
(4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
(5) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in accumulated depreciation being reset as of the date of acquisition.


Depreciation expense was $143 million for the successor period ended December 31, 2017, $850 million for the predecessor period ended October 31, 2017, $948 million for the predecessor year ended December 31, 2016 and $855 million for the predecessor year ended December 31, 2015.

Asset Retirement Obligations

At the successor date of December 31, 2017, our asset retirement obligations consisted of restoration requirements for leased facilities. At the predecessor dates of December 31, 2016 and 2015, our asset retirement obligations balance was primarily related to estimated future costs to remove certain of our network infrastructure at the expiration of the underlying right-of-way ("ROW") term and restoration requirements for leased facilities. We recognize our estimate of the fair value of our asset retirement obligations in the period incurred in other long-term liabilities. The fair value of the asset retirement obligation is also capitalized as property, plant and equipment and then depreciated over the estimated remaining useful life of the associated asset.

The following table provides asset retirement obligation activity:
 
 
Successor
 
 
Predecessor
 
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
 
(Dollars in millions)
Balance at beginning of period (1)
 
$
45

 
 
89

 
90

 
85

Accretion expense
 
1

 
 
12

 
10

 
9

Liabilities settled
 
(1
)
 
 
(7
)
 
(9
)
 
(8
)
Revision in estimated cash flows
 
—

 
 
—

 
—

 
5

Effect of foreign currency rate change
 
—

 
 
—

 
(2
)
 
(1
)
Balance at end of period
 
$
45

 
 
94

 
89

 
90


(1) CenturyLink's acquisition of us caused our assets and liabilities, including our asset retirement obligations, to be recognized at fair value as of the date of acquisition.
Employee Benefits
Employee Benefits
Employee Benefits

Defined Contribution Plans

Prior to the CenturyLink acquisition on November 1, 2017, we offered our qualified employees the opportunity to participate in a defined contribution retirement plan qualifying under the provisions of Section 401(k) of the Internal Revenue Code ("401(k) Plan"). Each employee was eligible to contribute, on a tax deferred basis, a portion of annual earnings generally not to exceed $18,000 in 2017 and $18,000 in 2016. We matched 100% of employee contributions up to 4% of eligible earnings or applicable regulatory limits.

Prior to the CenturyLink acquisition on November 1, 2017, our matching contributions were made with Level 3 common stock based on the closing stock price on each pay date. After our acquisition, matching contributions were made in cash. We made 401(k) Plan matching contributions of $7 million, $30 million, $37 million and $36 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017, and for the predecessor years ended December 31, 2016 and 2015, respectively. Our matching contributions are recorded as compensation and included in cost of services of $1 million, $4 million, $5 million and $5 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017 and for the predecessor years ended December 31, 2016 and 2015, respectively, and in selling, general and administrative expenses of $5 million, $26 million, $32 million and $31 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017, and for the predecessor years ended December 31, 2016 and 2015, respectively.

Other defined contribution plans we sponsored are individually not significant. On an aggregate basis, the expenses we recorded relating to these plans were approximately $1 million, $5 million, $6 million and $6 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017, and for the predecessor years ended December 31, 2016 and 2015, respectively.

Defined Benefit Plans

We have certain contributory and non-contributory employee pension plans, which are not significant to our financial position or operating results. We recognize in our balance sheet the funded status of our defined benefit post-retirement plans, which is measured as the difference between the fair value of the plan assets and the plan benefit obligations. We are also required to recognize changes in the funded status within accumulated other comprehensive income, net of tax to the extent such changes are not recognized in earnings as components of periodic net benefit cost. The fair value of the plan assets was $147 million and $136 million as of December 31, 2017 and 2016, respectively. The total plan benefit obligations were $165 million and $158 million as of December 31, 2017 and 2016, respectively. Therefore, the total funded status was an obligation of $18 million and $22 million as of December 31, 2017 and 2016, respectively.
Share-based Compensation
Share-based Compensation
Share-based Compensation

Prior to our acquisition by CenturyLink on November 1, 2017, we recorded share-based compensation expense for our performance restricted stock units, restricted stock units, 401(k) matching contributions and prior to October 1, 2016, outperform stock appreciation rights. Due to CenturyLink's acquisition of us, we now record share-based compensation expense that is allocated to us from CenturyLink. Based on many factors that affect the allocation, the amount of share-based compensation expense recorded at CenturyLink and ultimately allocated to us may fluctuate. We cash settle the share-based compensation expense allocated to us from CenturyLink.

 Share-based compensation expenses were included in cost of services and products, and selling, general, and administrative expenses in our consolidated statements of operations. During our predecessor period and years, we recognized compensation expense relating to awards granted to our employees under the Level 3 Communications, Inc. Stock Incentive Plan, as amended (the "Stock Plan"). The Stock Plan provided for accelerated vesting of stock awards upon retirement if an employee met certain age and years of service requirements and certain other requirements. Under the Stock Compensation guidance, if an employee meets the age and years of service requirements under the accelerated vesting provision, the award would be expensed at grant or expensed over the period from the grant date to the date the employee meets the requirements, even if the employee has not actually retired.
        
For the successor period ended December 31, 2017, the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016, and 2015, our total share-based compensation expense was approximately $26 million, $132 million, $156 million and $141 million, respectively.

Annual Discretionary Bonus Grant

Our annual discretionary bonus program is intended to motivate employees to achieve our financial and business goals. Each participant is provided a target award expressed as a percentage of base salary. For the predecessor period, actual awards under the program were based on corporate results as well as achievement of specific individual performance criteria during the bonus program period, and were paid in cash, at the sole discretion of the Compensation Committee of Level 3's predecessor Board of Directors. The annual discretionary bonus for the period through the closing of the merger on November 1, 2017 was paid in cash in November 2017 and the discretionary bonus awarded for the last two months of 2017 will be paid in cash in 2018 at the sole discretion of the Compensation Committee of CenturyLink's Board of Directors. The annual discretionary bonus was paid in cash for the 2016 and 2015 bonus programs.
Products and Services Revenues
Products and Services Revenues
Products and Services Revenues

We are an integrated communications company engaged primarily in providing an array of communications services, including local voice, broadband, private line (including special access), network access, Ethernet, information technology, video and other ancillary services. We strive to maintain our customer relationships by, among other things, bundling our service offerings to provide our customers with a complete offering of integrated communications services.

Since the November 1, 2017 closing of CenturyLink's acquisition of us, our operations are integrated into and are reported as part of the segments of CenturyLink. CenturyLink's chief operating decision maker ("CODM") has become 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 ("SEC"). Otherwise, we do not provide our discrete financial information to the CODM on a regular basis. As such, we now have one reportable segment and we have reclassified our prior period results to conform to our current view.

Total revenue consists of:

• Core Network Services revenue from Internet Protocol ("IP") and data services; transport and fiber; local and enterprise voice services; colocation and data center services; and security services.

• Wholesale Voice Services revenue from sales to our carrier of long distance voice services.

•
Affiliate revenues.

Core Network Services revenue represents higher profit services and Wholesale Voice Services revenue represents lower profit services. Core Network Services revenue requires different levels of investment and focus and provides different contributions to our operating results than Wholesale Voice Services revenue. Management believes that growth in revenue from our Core Network Services is critical to the long-term success of our business. We also believe we must continue to effectively manage the profitability of the Wholesale Voice Services revenue. We believe performance in our communications business is best gauged by analyzing revenue changes in Core Network Services.

Core Network Services

IP and data services primarily include our Internet services, Virtual Private Network ("VPN"), Content Delivery Network ("CDN"), media delivery, Vyvx broadcast and Managed Services. Our IP and high speed IP service is high quality and is offered in a variety of capacities. Our VPN service permits businesses of any size to replace multiple networks with a single, cost-effective solution that greatly simplifies the converged transmission of voice, video, and data. This convergence to a single platform can be obtained without sacrificing the quality of service or security levels of traditional ATM and frame relay offerings. VPN service also permits customers to prioritize network application traffic so that high priority applications, such as voice and video, are not compromised in performance by the flow of low priority applications such as email.

Growth in transport (such as private line and wavelengths) and fiber revenue is largely dependent on increased demand for bandwidth services and available capital of companies requiring communications capacity for their own use or in providing capacity as a service provider to their customers. These expenditures may be in the form of monthly payments or, in the case of private line, wavelength or dark fiber services, either monthly payments or upfront payments. We are focused on providing end-to-end transport and fiber services to our customers to directly connect customer locations with a private network.

Voice services comprise a broad range of local and enterprise voice services using VoIP and traditional circuit switch based technologies, including VoIP enhanced local service, SIP Trunking, local inbound service, Primary Rate Interface service, long distance service and toll-free service. Our voice services also include our comprehensive suite of audio, Web and video collaboration services.

Colocation and data center services allow customers to place their network equipment and servers in suitable environments maintained by us with high-speed links providing on-net access to more than 60 countries. These services are secure, redundant and flexible to fit the varying needs of our customers. Services, which vary by location, include hosting network equipment used to transport high speed data and voice over our global network; providing managed IT services, installation, maintenance, storage and monitoring of enterprise services; and providing comprehensive IT outsource solutions.

Security Services can be used to enable customers to address the growing threat of cyber-attack and allow customers to create a secure network, safeguard brand value, enable business continuity, and avoid complexity and cost. Our Security Services include: Secure Access which provides secure and encrypted connectivity for mobile users or remote offices; Cloud and Premises based Managed Firewall and Unified Threat Management Services including Intrusion Prevention and Detection service and Web Content filtering; network-based Distributed Denial of Service (DDoS) Mitigation, which protects against Internet based DDoS attacks; and Security Consulting services for Governance, Risk Management and Compliance. Security Services are sold stand-alone or in conjunction with Data Services.

We believe a source of future incremental demand for our Core Network Services will be from customers that are seeking to distribute their feature rich content or video over the Internet. Revenue growth in this area is dependent on the continued increase in demand from customers and the pricing environment. An increase in the reliability and security of information transmitted over the Internet and declines in the cost to transmit data have resulted in increased utilization of e-commerce or Web-based services by businesses. Although the pricing for data services is currently relatively stable, the IP market is generally characterized by price compression and high unit growth rates depending upon the type of service. We have continued to experience price compression in the high-speed IP and voice services markets.

Wholesale Voice Services

We offer wholesale voice services that target large and existing markets. The revenue potential for wholesale voice services is large; however, pricing is expected to continue to decline over time as a result of the new low-cost IP and optical-based technologies. In addition, the market for wholesale voice services is being targeted by many competitors, several of which are larger and have more financial resources than us.

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

 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Core network services revenues
$
1,331

 
 
6,543

 
7,767

 
7,757

Wholesale voice services
60

 
 
327

 
406

 
473

Affiliate revenues
16

 
 
—

 
—

 
—

Total operating revenues
$
1,407

 
 
6,870


8,173


8,230



The following table presents operating revenues for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017 as well as total assets as of the successor date of December 31, 2017 by geographic region:

 
Total Assets
 
Revenues
 
Successor
 
Successor
 
 
Predecessor
 
December 31, 2017
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
(Dollars in millions)
North America
$
27,776

 
1,155

 
 
5,651

EMEA
1,192

 
128

 
 
607

Latin America
4,167

 
124

 
 
612

Total
$
33,135

 
1,407

 
 
6,870

Affiliate Transactions
Affiliate Transactions
Affiliate Transactions

We provide to our affiliates telecommunications services that we also provide to external customers.

Whenever possible, costs are directly assigned to our affiliates for the services they use. If costs cannot be directly assigned, they are allocated among all affiliates based upon cost causative measures; or if no cost causative measure is available, these costs are allocated based on a general allocator. These cost allocation methodologies are reasonable. From time to time, we adjust the basis for allocating the costs of a shared service among affiliates. Such changes in allocation methodologies are generally billed prospectively.

We also purchase services from our affiliates including telecommunication services, insurance, flight services and other support services such as legal, regulatory, finance and accounting, tax, human resources and executive support.

Subsequent Event

In January 2018, we distributed $150 million to CenturyLink.
Fair Value Disclosure
Fair Value Disclosure
Fair Value Disclosure

Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, note receivable-affiliate 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, restricted cash, accounts receivable and accounts payable approximate their fair values.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB.

We determined the fair values of our long-term debt, including the current portion, based primarily on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates.

The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:

Input Level
 
Description of Input
Level 1
 
Observable inputs such as quoted market prices in active markets.
Level 2
 
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
 
Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below:

 
 
 
As of December 31, 2017 (Successor)
 
 
As of December 31, 2016 (Predecessor)
 
Input Level
 
Carrying Amount
Fair Value
 
 
Carrying Amount
Fair Value
 
 
 
(Dollars in million)
Liabilities-Long-term debt, excluding capital lease and other obligations
2
 
$
10,711

10,528

 
 
10,701

10,954

Income Taxes
Income Taxes
Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act significantly changes U.S. tax law. The Tax Act reduces the U.S. corporate income tax rate from a maximum of 35% to 21% for all corporations, effective January 1, 2018, and makes certain changes to U.S. taxation of income earned by foreign subsidiaries, capital expenditures, interest expense and various other items.

As a result of the reduction in the U.S. corporate income tax rate from 35% to 21%, we revalued our net deferred tax assets at December 31, 2017 and recognized a provisional $195 million tax expense in our consolidated statement of operations for the year ended December 31, 2017.

The Tax Act imposed a one-time repatriation tax on certain earnings of foreign subsidiaries. The Tax Act also includes certain anti-abuse and base erosion provisions that may impact the amount of U.S. tax that we pay with respect to income earned by our foreign subsidiaries. We have not yet been able to make a reasonable estimate of the impact of these provisions and continue to account for these items based on our existing accounting under U.S. GAAP and the provisions of the tax laws that were in effect prior to the Tax Act's enactment.

On December 22, 2017, the SEC staff addressed the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. We have provisionally recognized the tax impacts related to the revaluation of deferred tax assets and liabilities in the amount noted above in our consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from our provisional amount 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 Tax Act. The change from our current provisional estimates will be reflected in our future statements of operations and could be material. We expect to complete the accounting by the time CenturyLink files its 2017 U.S. corporate income tax return in the fourth quarter of 2018, although we cannot assure you of this.

 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Income tax expense (benefit) was as follows:
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
Current
$
—

 
 
—

 
—

 
—

Deferred
231

 
 
193

 
177

 
(2,941
)
State
 
 
 
 
 
 
 
 
Current
2

 
 
7

 
4

 
3

Deferred
6

 
 
16

 
27

 
(246
)
Foreign
 
 
 
 
 
 
 
 
Current
4

 
 
39

 
41

 
33

Deferred
(9
)
 
 
13

 
(84
)
 
1

Total income tax expense (benefit)
$
234

 
 
268

 
165

 
(3,150
)


 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Income tax expense was allocated as follows:
 
 
 
 
 
 
 
 
Income tax expense in the consolidated statements of operations:
 
 
 
 
 
 
 
 
Attributable to income
$
234

 
 
268

 
165

 
(3,150
)
Member's/Stockholders' equity:
 
 
 
 
 
 
 
 
Tax effect of the change in accumulated other comprehensive loss
$
17

 
 
49

 
(43
)
 
(11
)


The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Statutory federal income tax rate
35.0
 %
 
 
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal income tax benefit
3.6
 %
 
 
2.9
 %
 
3.7
 %
 
5.2
 %
Tax Reform/US Federal Law Changes
210.6
 %
 
 
—
 %
 
(13.2
)%
 
—
 %
Transaction costs
11.3
 %
 
 
—
 %
 
—
 %
 
—
 %
Change in liability of unrecognized tax position
1.2
 %
 
 
0.1
 %
 
0.1
 %
 
(0.1
)%
Net foreign income tax
(19.3
)%
 
 
0.9
 %
 
(6.7
)%
 
26.6
 %
Permanent items
5.0
 %
 
 
1.8
 %
 
1.2
 %
 
2.6
 %
Change in US valuation allowance
—
 %
 
 
—
 %
 
—
 %
 
(1,199.8
)%
Adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
0.1
 %
 
 
(0.5
)%
 
(2.4
)%
 
—
 %
Research and development costs
(0.9
)%
 
 
(1.2
)%
 
—
 %
 
—
 %
Non-deductible loss on deconsolidation
—
 %
 
 
—
 %
 
—
 %
 
20.2
 %
Other, net
5.0
 %
 
 
(0.3
)%
 
1.9
 %
 
(2.7
)%
Effective income tax rate
251.6
 %
 
 
38.7
 %
 
19.6
 %
 
(1,113.0
)%


The successor period ended December 31, 2017 effective tax rate is 251.6% compared to 38.7% for the predecessor period ended October 31, 2017, 19.6% for the predecessor year ended December 31, 2016 and (1,113)% for the predecessor year ended December 31, 2015. The effective tax rate for the successor period ended December 31, 2017 reflects $195 million of an estimated one-time income tax expense related to income tax law changes under the Tax Act enacted in 2017. The predecessor year ended December 31, 2016 reflects a $110 million estimated one-time income tax benefit related to newly issued regulations under Internal Revenue Code Section 987 addressing the taxation of foreign currency translations gains and losses arising from foreign branches, as well as $82 million of income tax benefit related to the release of foreign valuation allowances, primarily in Germany, Brazil and Mexico. The predecessor year ended December 31, 2015 effective tax rate reflects an estimated $3.3 billion income tax benefit related to the release of the majority of the valuation allowance against our U.S. federal and state deferred tax assets.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Deferred tax assets
 
 
 
 
Deferred revenue
$
256

 
 
364

Net operating loss carry forwards
3,633

 
 
4,550

Property, plant and equipment
63

 
 
95

Other
282

 
 
471

Gross deferred tax assets
4,234

 
 
5,480

Less valuation allowance
(942
)
 
 
(862
)
Net deferred tax assets
3,292

 
 
4,618

Deferred tax liabilities
 
 
 
 
Deferred revenue
(44
)
 
 
(57
)
Property, plant and equipment
(689
)
 
 
(962
)
Intangible assets
(2,329
)
 
 
(357
)
Other
(16
)
 
 
(120
)
Gross deferred tax liabilities
(3,078
)
 
 
(1,496
)
Net deferred tax assets
$
214

 
 
3,122


Of the $214 million and $3.122 billion net deferred tax assets at December 31, 2017 and 2016, respectively, $212 million and $248 million is reflected as a long-term liability and $426 million and $3.370 billion is reflected as a net noncurrent deferred tax asset at December 31, 2017 and 2016, respectively.

During the twelve months ended December 31, 2017, we completed an extensive analysis of our Internal Revenue Code ("IRC") Section 382 limitation that resulted in an increase of the amount of net operating loss carry forwards as of December 31, 2017 by approximately $1.0 billion on a pre-tax basis that was recorded in purchase accounting. At December 31, 2017, we had federal NOLs of $9.9 billion and state NOLs of $10 billion. If unused, the NOLs will expire between 2022 and 2035. At the successor date of December 31, 2017, we had $15 million of federal tax credits. At December 31, 2017, we had foreign NOLs of $5.8 billion.

We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2017, a valuation allowance of $0.9 billion was established as it is more likely than not that this amount of net operating loss and tax credit carryforwards will not be utilized prior to expiration. Our valuation allowance at December 31, 2017 and 2016 is primarily related to foreign and state NOL carryforwards. This valuation allowance increased by $80 million during 2017.

We recognize deferred tax assets and liabilities for our domestic and non-U.S. operations, for operating loss and other credit carry forwards and the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns, and future profitability by tax jurisdiction. We have historically provided a valuation allowance to reduce our U.S. federal and state and foreign deferred tax assets to the amount that is more likely than not to be realized. We monitor our cumulative loss position and other evidence each quarter to determine the appropriateness of our valuation allowance. Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgment.

In the fourth quarter of 2015, we released the majority of the valuation allowance against our U.S. federal and state deferred tax assets, resulting in a non-cash benefit to income tax expense of approximately $3.3 billion, $3.1 billion of which was related to future years’ earnings. In making the determination to release the valuation allowance against U.S. federal and state deferred tax assets, we took into consideration our movement into a cumulative income position for the most recent 3-year period, including pro forma adjustments for acquired entities, our 8 out of 9 consecutive quarters of pre-tax operating income, and forecasts of future earnings for our U.S. business. We expect to continue to generate income before taxes in the United States in future periods.

During 2016, we recognized a $22 million income tax benefit from the vesting of share based compensation due to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. We also recognized $82 million of income tax benefit related to the release of deferred tax asset valuation allowances primarily in Germany, Brazil, and Mexico. The determinations to release the foreign valuation allowances were driven by our projection of future profitability for each legal entity due to the recapitalization of our German subsidiary, the planned action to restructure our Brazilian business, and the merger of our Mexican subsidiaries.

With respect to our foreign corporate subsidiaries, we provide for U.S. income taxes on the undistributed earnings and the other outside basis temporary differences (differences between a parent's book and tax basis in a subsidiary, including currency translation adjustments) unless they are considered indefinitely reinvested outside the United States. The amount of temporary differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which U.S. income taxes have not been provided was immaterial.

With respect to our foreign branches, we had historically established deferred tax liabilities for foreign branches with an overall cumulative translation gain, but had not established deferred tax assets for those with an overall translation loss as we had no plans to trigger realization of the losses in the foreseeable future. On December 7, 2016, the Internal Revenue Service issued regulations under Internal Revenue Code Section 987 addressing the taxation of foreign currency translations gains and losses arising from foreign branches. The new regulations require a “fresh start” recalculation of the unrealized gains and losses as of the adoption date. The regulations provide that the tax bases of specified assets, such as fixed assets, will be translated at historic foreign exchange rates. As a result, the deferred taxes related to such foreign currency translation are expected to reverse through the operations of the branch thereby allowing the recognition of deferred tax assets arising from translation losses as well. The issuance of the regulations resulted in us recognizing an estimated one-time tax benefit of $110 million during the fourth quarter 2016.

A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from the successor period November 1 to December 31, 2017, the predecessor period January 1 to October 31, 2017 and the predecessor year ended December 31, 2016 is as follows:

 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
(Dollars in millions)
Unrecognized tax benefits at beginning of period
$
20

 
 
18

 
18

Tax positions of prior periods netted against deferred tax assets
—

 
 
—

 
(1
)
Increase (decrease) in tax positions taken in the prior period
1

 
 
—

 
(1
)
Increase in tax positions taken in the current period
—

 
 
2

 
2

Decrease from the lapse of statute of limitations
—

 
 
—

 
—

Unrecognized tax benefits at end of period
$
21

 
 
20

 
18



The total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $20 million, $19 million and $17 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017 and the predecessor year ended 2016, respectively.

Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $20 million and $18 million at December 31, 2017 and 2016, respectively.

We, or at least one of our affiliates, file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003. The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carry forwards are available.

Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $3 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control.

We incur tax expense attributable to income in various subsidiaries that are required to file state or foreign income tax returns on a separate legal entity basis. We also recognize accrued interest and penalties in income tax expense related to uncertain tax benefits. Our tax rate is volatile and may move up or down with changes in, among other things, the amount and source of income or loss, our ability to utilize foreign tax credits, changes in tax laws, and the movement of liabilities established for uncertain tax positions as statutes of limitations expire or positions are otherwise effectively settled.
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)

 
Operating Revenues
 
Operating Income
 
Net Income (Loss)
 
(Dollars in millions)
2016
 
 
 
 
 
First quarter (predecessor)
$
2,051

 
362

 
128

Second quarter (predecessor)
2,057

 
375

 
156

Third quarter (predecessor)
2,033

 
354

 
143

Fourth quarter (predecessor)
2,032

 
354

 
250

Total
$
8,173

 
1,445

 
677

2017
 
 
 
 
 
First quarter (predecessor)
$
2,048

 
337

 
95

Second quarter (predecessor)
2,062

 
353

 
154

Third quarter (predecessor)
2,059

 
349

 
157

Month ended October 31 (predecessor)
701

 
112

 
19

Two months ended December 31 (successor)
1,407

 
158

 
(141
)
Total
$
8,277

 
1,309

 
284



During the second quarter of 2016, we recognized a loss on modification and extinguishment of debt of $40 million, related to the redemption of the 7% Senior Notes due 2020.

In the second quarter of 2016, we recognized approximately $40 million income tax benefit related to the release of our German deferred tax valuation allowance.

In the fourth quarter of 2016, we recognized a $110 million income tax benefit related to the issuance of new regulations under Internal Revenue Code Section 987 addressing the taxation of foreign currency translation gains and losses arising from foreign branches.

In the fourth quarter of 2016, we recognized a $35 million income tax benefit related to releases of deferred tax valuation allowances primarily in Brazil.

In the fourth quarter of 2016, we recognized $16 million income tax expense related to income tax rate changes.

In the two months ended December 31, 2017 we recognized a $195 million income tax expense related to the Tax Act.
Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items
Commitments, Contingencies and Other Items

We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. Amounts accrued for such contingencies aggregate to $88 million and are included in “Other” current liabilities and “Other Liabilities” in our consolidated balance sheet at the successor date of December 31, 2017. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued would have no effect on our results of operations but could materially adversely affect our cash flows for the affected period.

We review our accruals at least quarterly and adjust them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Below is a description of material legal proceedings and other contingencies pending at December 31, 2017. Although we believe we have accrued for these matters in accordance with the accounting guidance for contingencies, contingencies are inherently unpredictable and it is possible that results of operations or cash flows could be materially and adversely affected in any particular period by unfavorable developments in, or resolution or disposition of, one or more of these matters. For those contingencies in respect of which we believe it is reasonably possible that a loss may result that is materially in excess of the accrual (if any) established for the matter, we have either provided an estimate of such possible loss or range of loss or included a statement that such an estimate cannot be made. In addition to the contingencies described below, we are party to many other legal proceedings and contingencies, the resolution of which are not expected to materially affect our financial condition or future results of operations beyond the amounts accrued.

Rights-of-Way Litigation

We have been party to a number of purported class action lawsuits involving our right to install fiber optic cable network in railroad right-of-ways adjacent to plaintiffs' land. In general, we obtained the rights to construct our networks from railroads, utilities, and others, and have installed our networks along the rights-of-way so granted. Plaintiffs in the purported class actions asserted that they are the owners of lands over which the fiber optic cable networks pass, and that the railroads, utilities and others who granted us the right to construct and maintain our network did not have the legal authority to do so. The complaints sought damages on theories of trespass, unjust enrichment and slander of title and property, as well as punitive damages. We also received, and may in the future receive, claims and demands related to rights-of-way issues similar to the issues in these cases that may be based on similar or different legal theories. We have defeated motions for class certification in a number of these actions but expected that, absent settlement of these actions, plaintiffs in the pending lawsuits would continue to seek certification of statewide or multi-state classes. The only lawsuit in which a class was certified against us, absent an agreed upon settlement, occurred in Koyle, et. al. v. Level 3 Communications, Inc., et. al., a purported two state class action filed in the United States District Court for the District of Idaho. The Koyle lawsuit has been dismissed pursuant to a settlement reached in November 2010 as described further below.

We negotiated a series of class settlements affecting all persons who own or owned land next to or near railroad rights of way in which we have installed our fiber optic cable networks. The United States District Court for the District of Massachusetts in Kingsborough v. Sprint Communications Co. L.P. granted preliminary approval of the proposed settlement; however, on September 10, 2009, the court denied a motion for final approval of the settlement on the basis that the court lacked subject matter jurisdiction and dismissed the case.

In November 2010, we negotiated revised settlement terms for a series of state class settlements affecting all persons who own or owned land next to or near railroad rights of way in which we have installed our fiber optic cable networks and thereafter presented these proposed settlements to the applicable courts. The settlements, affecting current and former landowners, have received final federal court approval in all but one of the applicable states and the parties are actively engaged in, or have completed, the claims process for the vast majority of the applicable states, including payment of claims. We continue to seek approval in the remaining state.

Management believes that we have substantial defenses to the claims asserted in the remaining action and intends to defend it vigorously if a satisfactory settlement is not ultimately approved for all affected landowners. Additionally, given the now-final resolution of all but the last of these matters, management anticipates excluding specific discussion of them in our future reports.

Peruvian Tax Litigation

Beginning in 2005, one of our Peruvian subsidiaries received a number of assessments for tax, penalties and interest for calendar years 2001 and 2002. Peruvian tax authorities ("SUNAT") took the position that the Peruvian subsidiary incorrectly documented its importations resulting in additional income tax withholding and value-added taxes ("VAT"). The total amount of the asserted claims, including potential interest and penalties, was $26 million, consisting of $3 million for income tax withholding in connection with the import of services for calendar years 2001 and 2002, $7 million for VAT in connection with the import of services for calendar years 2001 and 2002, and $16 million in connection with the disallowance of VAT credits for periods beginning in 2005. After taking into account the developments described below, as well as the accrued interest and foreign exchange effects, the total amount of exposure is $15 million at the successor date of December 31, 2017.

We challenged the 2002 tax period assessments via administrative and then judicial review processes. In October 2011, the highest administrative review tribunal (the Tribunal) decided the central issue underlying the 2002 tax period assessments in the government's favor, while denying a portion of the assessment on procedural grounds. We then appealed the Tribunal's decision to the judicial court in Peru. After further development of the record, the first judicial level decided the central issue in our favor. We and SUNAT filed cross-appeals. In May 2017, the court of appeal issued a decision reversing the first judicial level. In June 2017, we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. A final decision on this case is pending.

In October 2013, the Tribunal decided the central issue underlying the year 2001 tax period assessments in the government's favor, while denying a portion of the assessment on procedural grounds. We appealed that decision to the judicial court in Peru. After further development of the record, the first judicial court issued a ruling against us. In June 2017, we filed an appeal with the court of appeal. An oral hearing took place before the court of appeals on October 18, 2017. In November 2017, the court of appeals issued a decision affirming the lower court’s decision and we filed an appeal of the decision to the Supreme Court of Justice, the final judicial level. That appeal is pending.

Employee Severance and Contractor Termination Disputes

A number of former employees and third-party contractors have asserted a variety of claims in litigation against certain of our Latin American subsidiaries for separation pay, severance, commissions, pension benefits, unpaid vacation pay, breach of employment contracts, unpaid performance bonuses, property damages, moral damages and related statutory penalties, fines, costs and expenses (including accrued interest, attorneys' fees and statutorily mandated inflation adjustments) as a result of their separation from us or termination of service relationships. We are vigorously defending against the asserted claims, which aggregate to approximately $29 million at the successor date of December 31, 2017.

Brazilian Tax Claims

In December 2004, March 2009, April 2009 and July 2014, the São Paulo state tax authorities issued tax assessments against one of our Brazilian subsidiaries for the Tax on Distribution of Goods and Services (“ICMS”) with respect to revenue from leasing movable properties (in the case of the December 2004, March 2009 and July 2014 assessments) and revenue from the provision of Internet access services (in the case of the April 2009 and July 2014 assessments), by treating such activities as the provision of communications services, to which the ICMS tax applies. During the third quarter of 2014, we released an accrual of $6 million for tax, penalty and associated interest corresponding to the ICMS applicable on the provision of Internet access services due to the expiration of the statute of limitations for the January 2008 to June 2009 tax periods. In September 2002, July 2009 and May 2012, the Rio de Janeiro state tax authorities issued tax assessments to the same Brazilian subsidiary on similar issues. We have filed objections to these assessments, arguing that the lease of assets and the provision of Internet access are not communication services subject to ICMS. The objections to the September 2002, December 2004 and March 2009 assessments were rejected by the respective state administrative courts, and we have appealed those decisions to the judicial courts. In October 2012 and June 2014, we received favorable rulings from the lower court on the December 2004 and March 2009 assessments regarding equipment leasing, but those rulings are subject to appeal by the state. No ruling has been obtained with respect to the September 2002 assessment. The objections to the April and July 2009 and May 2012 assessments are still pending final administrative decisions. The July 2014 assessment was confirmed during the fourth quarter of 2014 at the first administrative level and we appealed this decision to the second administrative level. During the fourth quarter of 2014, we entered into an amnesty with the Rio de Janeiro state tax authorities with respect to potential ICMS liability for the 2008 tax period. As a result, we paid $5 million and released an accrual of $3 million of tax corresponding to the ICMS applicable on the provision of Internet access services in the fourth quarter of 2014.

We are vigorously contesting all such assessments in both states and, in particular, view the assessment of ICMS on revenue from leasing movable properties to be without merit. Nevertheless, we believe it is reasonably possible that these assessments could result in a loss of up to $53 million at the successor date of December 31, 2017 in excess of the accruals established for these matters.

Other Matters

We have recently been notified of a qui tam action pending against Level 3 Communications, Inc., certain former employees and others in the United States District Court for the Eastern District of Virginia, captioned United States of America ex rel., Stephen Bishop v. Level 3 Communications, Inc. et al. The original qui tam complaint was filed under seal on November 26, 2013, and an amended complaint was filed under seal on June 16, 2014. The court unsealed the complaints on October 26, 2017.

The amended complaint alleges that we, principally through two former employees, submitted false claims and made false statements to the government in connection with two government contracts. The relator seeks damages in this lawsuit of approximately $50 million, subject to trebling, plus statutory penalties, pre-and-post judgment interest, and attorney’s fees. The case is currently stayed.

We are evaluating our defenses to the claims. At this time, we do not believe it is probable we will incur a material loss. If, contrary to our expectations, the relator prevails in this matter and proves damages at or near $50 million, and is successful in having those damages trebled, the outcome could have a material adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid.

The two former Level 3 employees named in the qui tam amended complaint and others were also indicted in the United States District Court for the Eastern District of Virginia on October 3, 2017, and charged with, among other things, accepting kickbacks from a subcontractor, who was also indicted, for work to be performed under a prime government contract. We are fully cooperating in the government’s investigations in this matter.

Letters of Credit

It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of December 31, 2017 and December 31, 2016, we had outstanding letters of credit or other similar obligations of approximately $36 million and $39 million, respectively, of which $30 million and $33 million are collateralized by cash that is reflected on the consolidated balance sheets as restricted cash and securities. We do not believe exposure to loss related to our letters of credit is material.

Operating Leases

We are leasing rights-of-way, facilities and other assets under various operating leases which, in addition to rental payments, may require payments for insurance, maintenance, property taxes and other executory costs related to the lease.

The right-of-way agreements and leases have various expiration dates through 2118. Payments under these right-of-way agreements were $35 million in the successor period ended December 31, 2017, $164 million in the predecessor period ended October 31, 2017, $205 million in the predecessor year ended December 31, 2016 and $211 million in the predecessor year ended December 31, 2015.

We have obligations under non-cancelable operating leases for certain colocation, office facilities and other assets, including lease obligations for which facility related restructuring charges have been recorded. The lease agreements have various expiration dates through 2150. Rent expense, including common area maintenance, under non-cancelable lease agreements was $60 million in the successor period ended December 31, 2017, $283 million in the predecessor period ended October 31, 2017, $347 million in the predecessor year ended December 31, 2016 and $357 million in the predecessor year ended December 31, 2015.

Future minimum payments for the next five years and thereafter under network and related right-of-way agreements and non-cancelable operating leases for facilities and other assets consist of the following as of December 31, 2017 (dollars in millions):

 
 
Right-of-Way
Agreements
 
Operating Leases
 
Total
 
Future Minimum Sublease Receipts
2018
 
$
173

 
288

 
461

 
3

2019
 
90

 
251

 
341

 
2

2020
 
77

 
217

 
294

 
1

2021
 
60

 
151

 
211

 
1

2022
 
56

 
128

 
184

 
1

Thereafter
 
464

 
507

 
971

 
1

 
 
$
920

 
1,542

 
2,462

 
9



Certain right-of-way agreements include provisions for increases in payments in future periods based on the rate of inflation as measured by various price indexes. We have not included estimates for these increases in future periods in the amounts included above.

Certain non-cancelable right of way agreements provide for automatic renewal on a periodic basis. We include payments due during these automatic renewal periods given the significant cost to relocate our network and other facilities.

Certain other right-of-way agreements are currently cancelable or can be terminated under certain conditions by us. We include the payments under such cancelable right-of-way agreements in the table above for a period of 1 year from January 1, 2018, if we do not consider it likely that we will cancel the right of way agreement within the next year.

Environmental Contingencies

In connection with largely historical operations, we have responded to or been notified of potential environmental liability at approximately 180 properties. We are engaged in addressing or have litigated environmental liabilities at many of those properties. We could potentially be held liable, jointly, or severally, and without regard to fault, for the costs of investigation and remediation of these sites. The discovery of additional environmental liabilities or changes in existing environmental requirements could have a material adverse effect on our business.

Cost of Access and Third-Party Maintenance

In addition, we have purchase commitments with third-party access vendors that require us to make payments to purchase network services, capacity and telecommunications equipment. Some of these access vendor commitments require us to maintain minimum monthly and/or annual billings, in certain cases based on usage.

The following table summarizes our purchase commitments at December 31, 2017 (dollars in millions):

 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Cost of Access Services
 
$
115

 
52

 
35

 
15

 
7

 
2

 
226

Third-Party Maintenance Services
 
60

 
41

 
32

 
19

 
18

 
68

 
238

 
 
$
175

 
93

 
67

 
34

 
25

 
70

 
464

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss

The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheet by component for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017:


 
Pension Plans
 
Foreign Currency Translation Adjustments and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2016 (predecessor)
$
(34
)
 
(353
)
 
(387
)
Other comprehensive (loss) income before reclassifications
(3
)
 
81

 
78

Amounts reclassified from accumulated other comprehensive loss
2

 
—

 
2

Net other comprehensive (loss) income
(1
)
 
81

 
80

Balance at October 31, 2017 (predecessor)
$
(35
)
 
(272
)
 
(307
)
 
 
 
 
 
 
Balance at November 1, 2017 (successor)
$
—

 
—

 
—

Other comprehensive income before reclassifications
—

 
18

 
18

Amounts reclassified from accumulated other comprehensive loss
—

 
—

 
—

Net other comprehensive income
—

 
18

 
18

Balance at December 31, 2017 (successor)
$
—

 
18

 
18

Other Financial Information
Other Financial Information
Other Financial Information

Other Current Assets

The following table presents details of other current assets in our consolidated balance sheets:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Prepaid expenses
$
68

 
 
82

Material, supplies and inventory
3

 
 
3

Deferred activation and installation charges
17

 
 
5

Other
29

 
 
25

Total other current assets
$
117

 
 
115



Other Current Liabilities

The following table presents details of other current liabilities in our consolidated balance sheets:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Self insurance
$
11

 
 
12

Legal and tax reserves
31

 
 
18

Other
15

 
 
22

Total other current liabilities
$
57

 
 
52

Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information

Level 3 Financing, Inc., a wholly owned subsidiary, has issued Senior Notes that are unsecured obligations of Level 3 Financing, Inc.; however, they are also fully and unconditionally and jointly and severally guaranteed on an unsecured senior basis by Level 3 Parent, LLC and Level 3 Communications, LLC.

In conjunction with the registration of the Level 3 Financing, Inc. Senior Notes, the accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 "Financial statements of guarantors and affiliates whose securities collateralize an issue registered or being registered."

The operating activities of the separate legal entities included in our consolidated financial statements are interdependent. The accompanying condensed consolidating financial information presents the statements of comprehensive income (loss), balance sheets and statements of cash flows of each legal entity and, on an aggregate basis, the other non-guarantor subsidiaries based on amounts incurred by such entities, and is not intended to present the operating results of those legal entities on a stand-alone basis. Level 3 Communications, LLC leases equipment and certain facilities from other wholly owned subsidiaries of Level 3 Parent, LLC. These transactions are eliminated in our consolidated results.
Condensed Consolidating Statements of Comprehensive Income (Loss)
For the period ended December 31, 2017 (Successor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUE
 
 
 
 
 
 
 
 
 
 


Operating revenues
$
—

 
—

 
748

 
671

 
(28
)
 
1,391

Operating revenues - affiliate
—

 
—

 
16

 
—

 
—

 
16

Total operating revenues
—

 
—

 
764

 
671

 
(28
)
 
1,407

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
418

 
300

 
(28
)
 
690

Selling, general and administrative
1

 
3

 
179

 
70

 
—

 
253

Operating expenses - affiliate
—

 
—

 
24

 
—

 
—

 
24

Depreciation and amortization
—

 
—

 
117

 
165

 
—

 
282

Total costs and expenses
1

 
3

 
738

 
535

 
(28
)
 
1,249

OPERATING (LOSS) INCOME
(1
)
 
(3
)
 
26

 
136

 
—

 
158

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest income - affiliate
11

 
—

 
—

 
—

 
—

 
11

Interest expense
(5
)
 
(72
)
 
—

 
(3
)
 
—

 
(80
)
Interest income (expense) - affiliates, net
251

 
368

 
(578
)
 
(41
)
 
—

 
—

Equity in net (losses) earnings of subsidiaries
(827
)
 
(15
)
 
71

 
—

 
771

 
—

Other income, net
1

 
—

 
2

 
—

 
—

 
3

Total other expense, net
(569
)
 
281

 
(504
)
 
(44
)
 
771

 
(65
)
(LOSS) INCOME BEFORE INCOME TAXES
(570
)
 
278

 
(478
)
 
92

 
771

 
93

Income tax benefit (expense)
429

 
(1,105
)
 
433

 
9

 
—

 
(234
)
NET INCOME (LOSS)
(141
)
 
(827
)
 
(45
)
 
101

 
771

 
(141
)
Other comprehensive income, net of income taxes
18

 
—

 
—

 
18

 
(18
)
 
18

COMPREHENSIVE INCOME (LOSS)
$
(123
)
 
$
(827
)
 
$
(45
)
 
$
119

 
$
753

 
$
(123
)
Condensed Consolidating Statements of Comprehensive Income (Loss)
For the period ended October 31, 2017 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
—

 
3,108

 
3,891

 
(129
)
 
6,870

Total operating revenues
—

 
—

 
3,108

 
3,891

 
(129
)
 
6,870

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
1,942

 
1,680

 
(129
)
 
3,493

Selling, general and administrative
4

 
3

 
942

 
259

 
—

 
1,208

Depreciation and amortization
—

 
—

 
356

 
662

 
—

 
1,018

Total costs and expenses
4

 
3

 
3,240

 
2,601

 
(129
)
 
5,719

OPERATING (LOSS) INCOME
(4
)
 
(3
)
 
(132
)
 
1,290

 
—

 
1,151

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
12

 
1

 
—

 
13

Interest income (expense) - affiliate, net
1,260

 
1,890

 
(2,896
)
 
(254
)
 
—

 
—

Interest expense
(30
)
 
(397
)
 
(2
)
 
(12
)
 
—

 
(441
)
Loss on modification and extinguishment of debt
—

 
(44
)
 
—

 
—

 
—

 
(44
)
Equity in net (losses) earnings of subsidiaries
(815
)
 
(2,138
)
 
692

 
—

 
2,261

 
—

Other income (expense) , net
3

 
—

 
15

 
(4
)
 
—

 
14

Total other expense, net
418

 
(689
)
 
(2,179
)
 
(269
)
 
2,261

 
(458
)
INCOME (LOSS) BEFORE INCOME TAXES
414

 
(692
)
 
(2,311
)
 
1,021

 
2,261

 
693

Income tax benefit (expense)
11

 
(123
)
 
(2
)
 
(154
)
 
—

 
(268
)
NET INCOME (LOSS)
425

 
(815
)
 
(2,313
)
 
867

 
2,261

 
425

Other comprehensive income, net of income taxes
80

 
—

 
—

 
—

 
—

 
80

COMPREHENSIVE INCOME (LOSS)
$
505

 
(815
)
 
(2,313
)
 
867

 
2,261

 
505



Condensed Consolidating Statements of Comprehensive Income (Loss)
For the year ended December 31, 2016 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
$
—

 
$
3,558

 
$
4,747

 
$
(132
)
 
8,173

Total operating revenues
—

 
—

 
3,558

 
4,747

 
(132
)
 
8,173

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
2,249

 
2,045

 
(132
)
 
4,162

Selling, general and administrative
16

 
5

 
1,025

 
361

 
—

 
1,407

Depreciation and amortization
—

 
—

 
372

 
787

 
—

 
1,159

Total costs and expenses
16

 
5

 
3,646

 
3,193

 
(132
)
 
6,728

OPERATING (LOSS) INCOME
(16
)
 
(5
)
 
(88
)
 
1,554

 
—

 
1,445

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
3

 
1

 
—

 
4

Interest income (expense) - affiliate, net
1,385

 
2,113

 
(3,215
)
 
(283
)
 
—

 
—

Interest expense
(36
)
 
(505
)
 
(2
)
 
(1
)
 
—

 
(544
)
Equity in net (losses) earnings of subsidiaries
(669
)
 
(2,033
)
 
757

 
—

 
1,945

 
—

Other (expense) income, net
(1
)
 
(39
)
 
2

 
(25
)
 
—

 
(63
)
Total other income (expense), net
679

 
(464
)
 
(2,455
)
 
(308
)
 
1,945

 
(603
)
INCOME (LOSS) BEFORE INCOME TAXES
663

 
(469
)
 
(2,543
)
 
1,246

 
1,945

 
842

Income tax benefit (expense)
14

 
(200
)
 
(2
)
 
23

 
—

 
(165
)
NET INCOME (LOSS)
677

 
(669
)
 
(2,545
)
 
1,269

 
1,945

 
677

Other comprehensive (loss) income, net of income taxes
(86
)
 
—

 
—

 
(86
)
 
86

 
(86
)
COMPREHENSIVE INCOME (LOSS)
$
591

 
(669
)
 
(2,545
)
 
1,183

 
2,031

 
591

Condensed Consolidating Statements of Comprehensive Income (Loss)
For the year ended December 31, 2015 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
—

 
3,326

 
5,077

 
(173
)
 
8,230

Total operating revenues
—

 
—

 
3,326

 
5,077

 
(173
)
 
8,230

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
2,201

 
2,321

 
(173
)
 
4,349

Selling, general and administrative
4

 
—

 
1,064

 
401

 
—

 
1,469

Depreciation and amortization
—

 
—

 
298

 
784

 
—

 
1,082

Total costs and expenses
4

 
—

 
3,563

 
3,506

 
(173
)
 
6,900

OPERATING (LOSS) INCOME
(4
)
 
—

 
(237
)
 
1,571

 
—

 
1,330

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest income (expense) - affiliates, net
1,310

 
1,984

 
(3,041
)
 
(253
)
 
—

 
—

Interest expense
(51
)
 
(574
)
 
(3
)
 
(12
)
 
—

 
(640
)
Equity in net earnings (losses) of subsidiaries
2,162

 
(1,693
)
 
177

 
—

 
(646
)
 
—

Other (expense) income, net
(18
)
 
(200
)
 
2

 
(192
)
 
—

 
(408
)
Total other income (expense), net
3,403

 
(483
)
 
(2,865
)
 
(456
)
 
(646
)
 
(1,047
)
INCOME (LOSS) BEFORE INCOME TAXES
3,399

 
(483
)
 
(3,102
)
 
1,115

 
(646
)
 
283

Income tax benefit (expense)
34

 
2,645

 
(1
)
 
472

 
—

 
3,150

NET INCOME (LOSS)
3,433

 
2,162

 
(3,103
)
 
1,587

 
(646
)
 
3,433

Other comprehensive (loss) income, net of income taxes
(154
)
 
—

 
—

 
(154
)
 
154

 
(154
)
COMPREHENSIVE INCOME (LOSS)
$
3,279

 
2,162

 
(3,103
)
 
1,433

 
(492
)
 
3,279

Condensed Consolidating Balance Sheets
December 31, 2017 (Successor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
13

 
—

 
175

 
109

 
—

 
297

Restricted cash and securities
—

 
—

 
1

 
4

 
—

 
5

Assets held for sale
68

 
—

 
5

 
67

 
—

 
140

Accounts receivable
—

 
—

 
26

 
722

 
—

 
748

Accounts receivable - affiliate
—

 
—

 
60

 
4

 
(51
)
 
13

Advances to affiliates
16,251

 
21,032

 
—

 
5,200

 
(42,483
)
 
—

Note receivable - affiliate
1,825

 
—

 
—

 
—

 
—

 
1,825

Other
—

 
—

 
54

 
63

 
—

 
117

Total Current Assets
18,157

 
21,032

 
321

 
6,169

 
(42,534
)
 
3,145

NET PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 


Property, plant and equipment
—

 
—

 
3,285

 
6,270

 
—

 
9,555

Accumulated depreciation
—

 
—

 
(48
)
 
(95
)
 
—

 
(143
)
Net property, plant and equipment
—

 
—

 
3,237

 
6,175

 
—

 
9,412

Restricted cash and securities
19

 
—

 
10

 
—

 
—

 
29

GOODWILL AND OTHER ASSETS
 
 
 
 
 
 
 
 
 
 


Goodwill
—

 
—

 
1,200

 
9,637

 
—

 
10,837

Customer relationships, net
—

 
—

 
4,324

 
4,521

 
—

 
8,845

Other intangible assets, net
—

 
—

 
378

 
—

 
—

 
378

Investment in subsidiaries
16,954

 
18,403

 
3,616

 
—

 
(38,973
)
 
—

Deferred tax assets
280

 
1,795

 
—

 
122

 
(1,771
)
 
426

Other, net
—

 
—

 
32

 
31

 
—

 
63

Total goodwill and other assets
17,234

 
20,198

 
9,550

 
14,311

 
(40,744
)
 
20,549

TOTAL ASSETS
35,410

 
41,230

 
13,118

 
26,655

 
(83,278
)
 
33,135

 
 
 
 
 
 
 
 
 
 
 


LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 


CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
—

Current maturities of long-term debt
—

 
—

 
2

 
6

 
—

 
8

Accounts payable
—

 
1

 
323

 
371

 
—

 
695

Accounts payable - affiliate
11

 
—

 
—

 
81

 
(51
)
 
41

Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
 
 


Income and other taxes
—

 
—

 
55

 
45

 
—

 
100

Salaries and benefits
—

 
—

 
109

 
27

 
—

 
136

Interest
11

 
91

 
—

 
7

 
—

 
109

Current portion of deferred revenue
—

 
—

 
127

 
131

 
—

 
258

Current portion of deferred revenue - affiliate
—

 
—

 
2

 
—

 
—

 
2

Other
16

 
—

 
23

 
18

 
—

 
57

Due to affiliates
—

 
—

 
42,483

 
—

 
(42,483
)
 
—

Total current liabilities
38

 
92

 
43,124

 
686

 
(42,534
)
 
1,406

LONG-TERM DEBT
616

 
10,096

 
13

 
157

 
—

 
10,882

DEFERRED CREDITS AND OTHER LIABILITES
 
 
 
 
 
 
 
 
 
 


Deferred credits
—

 
—

 
841

 
252

 
—

 
1,093

Deferred credits - affiliate
—

 
—

 
5

 
1

 
—

 
6

Deferred tax liability
648

 
—

 
870

 
465

 
(1,771
)
 
212

Other
1

 
1

 
98

 
164

 
—

 
264

Total deferred revenues and other liabilities
649

 
1

 
1,814

 
882

 
(1,771
)
 
1,575

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 


MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
34,107

 
31,041

 
(31,833
)
 
24,930

 
(38,973
)
 
19,272

TOTAL LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
$
35,410

 
41,230

 
13,118

 
26,655

 
(83,278
)
 
33,135


Condensed Consolidating Balance Sheets
December 31, 2016 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
15

 
—

 
1,700

 
104

 
—

 
1,819

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Accounts receivable
—

 
—

 
26

 
686

 
—

 
712

Advances to affiliates
17,032

 
21,715

 
—

 
2,180

 
(40,927
)
 
—

Other
—

 
—

 
87

 
28

 
—

 
115

Total Current Assets
17,047

 
21,715

 
1,814

 
3,004

 
(40,927
)
 
2,653

NET PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
—

 
—

 
10,424

 
10,964

 
—

 
21,388

Accumulated Depreciation
—

 
—

 
(6,555
)
 
(4,694
)
 
—

 
(11,249
)
Net property, plant and equipment
—

 
—

 
3,869

 
6,270

 
—

 
10,139

Restricted cash and securities
22

 
—

 
9

 
—

 
—

 
31

GOODWILL AND OTHER ASSETS
 
 
 
 
 
 
 
 
 
 
 
Goodwill
—

 
—

 
352

 
7,377

 
—

 
7,729

Customer relationships, net
—

 
—

 
—

 
860

 
—

 
860

Other intangible assets, net
—

 
—

 
1

 
54

 
 
 
55

Investment in subsidiaries
16,869

 
17,599

 
3,674

 
—

 
(38,142
)
 
—

Deferred tax assets
51

 
2,687

 
—

 
632

 
—

 
3,370

Other, net
—

 
—

 
16

 
35

 
—

 
51

Total goodwill and other assets
16,920

 
20,286

 
4,043

 
8,958

 
(38,142
)
 
12,065

TOTAL ASSETS
$
33,989

 
42,001

 
9,735

 
18,232

 
(79,069
)
 
24,888

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accounts payable
—

 
—

 
307

 
399

 
—

 
706

Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
 
 


Income and other taxes
—

 
—

 
103

 
13

 
—

 
116

Salaries and benefits
—

 
—

 
160

 
35

 
—

 
195

Interest
11

 
110

 
—

 
8

 
—

 
129

Due to affiliates
—

 
—

 
40,927

 
—

 
(40,927
)
 
—

Current portion of deferred revenue
—

 
—

 
116

 
150

 
—

 
266

Other
—

 
—

 
24

 
28

 
—

 
52

Total current liabilities
11

 
110

 
41,639

 
638

 
(40,927
)
 
1,471

LONG-TERM DEBT
592

 
10,108

 
13

 
164

 
—

 
10,877

DEFERRED REVENUES AND OTHER LIABILITES
 
 
 
 
 
 
 
 
 
 
 
Deferred credits
—

 
—

 
719

 
282

 
—

 
1,001

Deferred tax liability
—

 
—

 
—

 
248

 
—

 
248

Other
16

 
—

 
155

 
203

 
—

 
374

Total deferred revenues and other liabilities
16

 
—

 
874

 
733

 
—

 
1,623

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY (DEFICIT)
33,370

 
31,783

 
(32,791
)
 
16,697

 
(38,142
)
 
10,917

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$
33,989

 
42,001

 
9,735

 
18,232

 
(79,069
)
 
24,888

Condensed Consolidating Statements of Cash Flows
For the period ended December 31, 2017 (Successor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(1
)
 
—

 
172

 
137

 
—

 
308

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(110
)
 
(97
)
 
—

 
(207
)
Note receivable - affiliate
—

 
—

 
(1,825
)
 
—

 
—

 
(1,825
)
Net cash used in investing activities
—

 
—

 
(1,935
)
 
(97
)
 
—

 
(2,032
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Payments of long-term debt
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Distributions
(250
)
 
—

 
—

 
—

 
—

 
(250
)
Increase (decrease) due to from affiliate, net
250

 
—

 
(250
)
 
—

 
—

 
—

Net cash used in financing activities
—

 
—

 
(250
)
 
(1
)
 
—

 
(251
)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Net increase (decrease) in cash, cash equivalents and restricted cash and securities
(1
)
 
—

 
(2,013
)
 
37

 
—

 
(1,977
)
Cash, cash equivalents and restricted cash and securities at beginning of period
33

 
—

 
2,199

 
76

 
—

 
2,308

Cash, cash equivalents and restricted cash and securities at end of period
$
32

 
—

 
186

 
113

 
—

 
331

Condensed Consolidating Statements of Cash Flows
For the period ended October 31, 2017 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(61
)
 
(401
)
 
1,615

 
761

 
—

 
1,914

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(667
)
 
(452
)
 
—

 
(1,119
)
Purchase of marketable securities
—

 
—

 
(1,127
)
 
—

 
—

 
(1,127
)
Maturity of marketable securities
—

 
—

 
1,127

 
—

 
—

 
1,127

Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
1

 
—

 
—

 
1

Net cash used in investing activities
—

 
—

 
(666
)
 
(452
)
 
—

 
(1,118
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
4,569

 
—

 
—

 
—

 
4,569

Payments of long-term debt
—

 
(4,911
)
 
1

 
(7
)
 
—

 
(4,917
)
Increase (decrease) due from/to affiliates, net
57

 
743

 
(460
)
 
(340
)
 
—

 
—

Net cash provided by (used in) financing activities
57

 
401

 
(459
)
 
(347
)
 
—

 
(348
)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
—

 
—

 
—

 
3

 
—

 
3

Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
(4
)
 
—

 
490

 
(35
)
 
—

 
451

Cash, cash equivalents and restricted cash and securities at beginning of period
37

 
—

 
1,710

 
110

 
—

 
1,857

Cash, cash equivalents and restricted cash and securities at end of period
$
33

 
—

 
2,200

 
75

 
—

 
2,308


Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2016 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(49
)
 
(468
)
 
565

 
2,295

 
—

 
2,343

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(704
)
 
(630
)
 
—

 
(1,334
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
1

 
2

 
—

 
3

Net cash used in investing activities
—

 
—

 
(703
)
 
(628
)
 
—

 
(1,331
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
764

 
—

 
—

 
—

 
764

Payments of long-term debt
—

 
(806
)
 
(1
)
 
(13
)
 
—

 
(820
)
Increase (decrease) due from/to affiliates, net
47

 
504

 
1,107

 
(1,658
)
 
—

 
—

Net cash provided by (used in) financing activities
47

 
462

 
1,106

 
(1,671
)
 
—

 
(56
)
Effect of exchange rates on cash, cash equivalents, restricted cash and securities
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
(2
)
 
(6
)
 
968

 
(7
)
 
—

 
953

Cash, cash equivalents and restricted cash and securities at beginning of period
39

 
6

 
742

 
117

 
—

 
904

Cash, cash equivalents and restricted cash and securities at end of period
$
37

 
—

 
1,710

 
110

 
—

 
1,857

Condensed Consolidating Statements of Cash Flows
For the year ended December 31, 2015 (Predecessor)

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(41
)
 
(617
)
 
193

 
2,320

 
—

 
1,855

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(453
)
 
(776
)
 
—

 
(1,229
)
Cash related to deconsolidated Venezuela operations
—

 
—

 
—

 
(83
)
 
—

 
(83
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
—

 
4

 
—

 
4

Other
—

 
—

 
(14
)
 
—

 
—

 
(14
)
Net cash used in investing activities
—

 
—

 
(467
)
 
(855
)
 
—

 
(1,322
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
4,832

 
—

 
—

 
—

 
4,832

Payments of long-term debt
(313
)
 
(4,725
)
 
(2
)
 
(11
)
 
—

 
(5,051
)
Increase (decrease) due from/to affiliates, net
383

 
511

 
693

 
(1,587
)
 
—

 
—

Net cash provided by (used in) financing activities
70

 
618

 
691

 
(1,598
)
 
—

 
(219
)
Effect of exchange rates on cash, cash equivalents, restricted cash and securities
—

 
—

 
—

 
(18
)
 
—

 
(18
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
29

 
1

 
417

 
(151
)
 
—

 
296

Cash, cash equivalents and restricted cash and securities at beginning of period
10

 
5

 
325

 
268

 
—

 
608

Cash, cash equivalents and restricted cash and securities at end of period
$
39

 
6

 
742

 
117

 
—

 
904

Background and Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation

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 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 will not be 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. 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 and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. The factors that led to our conclusions at the end of the third quarter of 2015 continued to exist through the end of 2017. 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.
Reclassifications 
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 $11 million, $0 million and $2 million from other income (expense) to selling, general and administrative for the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively. These revisions also resulted in the reclassification of $77 million, $91 million and $84 million from depreciation and amortization to cost of services and products for the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively. Although we continued as a surviving corporation and legal entity after the acquisition, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and member's/stockholder's equity (deficit) 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.
These expense classifications may not be comparable to those of other companies. We also have reclassified certain other prior period amounts to conform to the current period presentation. These changes had no impact on net income (loss) for any period.
Foreign Currency Translation 
Foreign Currency Translation

Local currencies of foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries in Latin America. For operations outside the United States that have functional currencies other than the U.S. dollar, assets and liabilities are translated to U.S. dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average exchange rates prevailing during the year. A significant portion of our non-United States subsidiaries have either the British pound, the euro or the Brazilian real as the functional currency, each of which experienced significant fluctuations against the U.S. dollar during 2017, 2016 and 2015. Foreign currency translation gains and losses are recognized as a component of accumulated other comprehensive income (loss) in member's/stockholders' equity and in the consolidated statements of comprehensive income (loss) in accordance with accounting guidance for foreign currency translation. We consider the majority of our investments in our foreign subsidiaries to be long-term in nature. Our non-United States exchange transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense) in Other, net on the consolidated statements of operations.
Use of Estimates 
Use of Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters, including, but not limited to, revenue recognition, revenue reserves, network access costs, network access cost dispute reserves, allowance for doubtful accounts, depreciation, amortization, asset valuations, recoverability of assets (including deferred tax assets), impairment assessments, taxes, certain liabilities and other provisions and contingencies, are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of member's/stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenues, expenses and components of cash flows during the periods presented in our other consolidated financial statements.

For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.

For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions.

For all of these and other matters, actual results could differ materially from our estimates.

Revenue Recognition 

Revenue Recognition

Revenue is recognized monthly as the services are provided based on contractual amounts expected to be collected. Management establishes appropriate revenue reserves at the time services are rendered based on an analysis of historical credit activity to address, where significant, situations in which collection is not reasonably assured as a result of credit risk, potential billing disputes or other reasons. Actual results may differ from these estimates under different assumptions or conditions and these differences could be material.

Intercarrier compensation revenue is recognized when an interconnection agreement is in place with another carrier, or if an agreement has expired, when the parties have agreed to continue operating under the previous agreement until a new agreement is negotiated and executed, or at rates mandated by the Federal Communications Commission (the "FCC").

For certain sale contracts, including and long-term indefeasible right of use, or IRUs, involving private line, wavelengths and certain leases for dark fiber, we may receive upfront payments for services to be delivered for a period of up to 25 years. In these situations, we defer the revenue and amortize it on a straight-line basis to earnings over the term of the contract.

Termination revenue is recognized when a customer discontinues service prior to the end of the contract period for which we had previously received consideration and for which revenue recognition was deferred. Termination revenue also is recognized when customers are required to make termination penalty payments to us to settle contractually committed purchase amounts that the customer no longer expects to meet or when a customer and we renegotiate a contract under which we are no longer obligated to provide services for consideration previously received and for which revenue recognition has been deferred.

We are obligated under dark fiber IRUs and other capacity agreements to maintain our network in efficient working order and in accordance with industry standards. Customers are obligated for the term of the agreement to pay for their estimated share of the costs for operating and maintaining the network. We recognize this revenue monthly as services are provided.

Our customer contracts require us to meet certain service level commitments. If we do not meet the required service levels, we may be obligated to provide billing credits. The credits are a reduction to revenue and, to date, have not been material.

Affiliate Transactions 
Affiliate Transactions

We provide to our affiliates telecommunications services that we also provide to external customers. Services provided by us to our affiliates are recognized as operating revenue-affiliates in our consolidated statements of operations. Services provided to us from our affiliates are recognized as operating expenses-affiliates on our consolidated statements of operations. Because of the significance of the services we provide to our affiliates and our affiliates provide to us, the results of operations, financial position and cash flows presented herein are not necessarily indicative of the results of operations, financial position and cash flows we would have achieved had we operated as a stand-alone entity during the periods presented.

We recognize intercompany charges at the amounts billed to us by our affiliates and we recognize intercompany revenue for services we bill to our affiliates.

From time to time we make distributions to CenturyLink. Distributions are reflected on our consolidated statements of member's/stockholders' equity and the consolidated statements of cash flows reflects distributions made as financing activities.

USF and Gross Receipts Taxes 
USF Surcharges, Gross Receipts Taxes and Other Surcharges

In determining whether to include in our revenues and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF surcharges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenues and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenues and costs of services and products. Total revenue and cost of services and products on the consolidated statements of operations include USF contributions totaled $71 million, $331 million, $414 million and $364 million for the successor period ended December 31, 2017, the predecessor period ended October 31, 2017 and the predecessor years ended December 31, 2016 and 2015, respectively.
Income Taxes 
Income Taxes

Until November 1, 2017, we filed a consolidated federal income tax return with our eligible subsidiaries. Since CenturyLink's acquisition of us on November 1, 2017, we have been included in the consolidated federal income tax return of CenturyLink. Under CenturyLink's tax allocation policy, CenturyLink treats our consolidated results as if we were a separate taxpayer. The policy requires us to pay our tax liabilities in cash based upon our separate return taxable income. We are also included in the combined state tax returns filed by CenturyLink and the same payment and allocation policy applies. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating loss carryforwards ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax bases of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.

We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets.

Cash and Cash Equivalents 
Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.
Restricted Cash and Securities 
Restricted Cash and Securities

Restricted cash and securities consists primarily of cash and investments that serve to collateralize our outstanding letters of credit and certain performance and operating obligations. Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists. Restricted securities are stated at cost which approximates fair value as of December 31, 2017 and 2016.
Accounts Receivable and Allowance for Doubtful Accounts 
Accounts Receivable and Allowance for Doubtful Accounts

For predecessor periods, accounts receivable balances were recorded at the invoiced amount. We establish an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. We determine the allowance for doubtful accounts based on the aging of our accounts receivable balances, the credit quality of our customers and an analysis of our historical experience of bad debt write-offs. For predecessor periods, accounts receivable balances were written off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. For the successor period, accounts receivable balances were recorded at fair value for all balances receivable at the acquisition date and at the invoiced amount for those amounts invoiced after the acquisition date.
Concentration of Credit Risk 
Concentration of Credit Risk

We provide communications services to a wide range of wholesale and enterprise customers, ranging from well capitalized national carriers to small early stage companies primarily in the United States, Europe, and Latin America. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographical regions. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers, although letters of credit and deposits are required in certain limited circumstances. We have, from time to time, entered into agreements with value added resellers and other channel partners to reach consumer and enterprise markets for voice services. We have policies and procedures in place to evaluate the financial condition of these resellers prior to initiating service to the final customer. We are not able to predict changes in the financial stability of our customers. Any material change in the financial status of any one or a particular group of customers may cause us to adjust our estimate of the recoverability of receivables and could have a material effect on our results of operations. Fair values of accounts receivable approximate carrying amount due to the short period of time to collection.
Property, Plant and Equipment 
Property, Plant and Equipment

As a result of CenturyLink's acquisition of us, the purchase price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values at the date of acquisition. Therefore, the allocated fair values of the assets represent their new basis of accounting in our consolidated financial statements. This resulted in adjustments to our property, plant and equipment accounts, including accumulated depreciation at the acquisition date. The adjustments related to CenturyLink's acquisition of us are described in Note 2—CenturyLink Merger and Note 6—Property, Plant and Equipment.

Property, plant and equipment acquired since the acquisition date is stated at original cost plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated using the straight-line method. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase.

We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, assumptions about technology evolution and, in certain instances, actuarially determined probabilities to estimate the remaining useful life of our asset base. Our remaining useful life assessments anticipate the loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers leave the network. However, the asset is not retired until all customers no longer utilize the asset and we determine there is no alternative use for the asset.

Capitalized labor and related costs associated with employees and contract labor working on capital projects were approximately $45 million for the successor period ended December 31, 2017, $239 million for the predecessor period ended October 31, 2017, $271 million for the predecessor year ended December 31, 2016 and $244 million for the predecessor year ended December 31, 2015.

We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. We determine fair values by using a combination of comparable market values and discounted cash flows, as appropriate.

Goodwill and Other Indefinite-Lived Intangible Assets 
Goodwill and Other Indefinite-Lived Intangible Assets

Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 7 to 14 years, depending on the type of customer, using the straight-line method. We amortize our other intangible assets over an estimated life of 5 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized.

Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, other indefinite-lived intangible assets are reduced to their estimated fair value through an impairment charge to our consolidated statements of operations.

We are required to assess goodwill for impairment at least annually, or more frequently, if an event occurs or circumstances change that would indicate an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded amount of goodwill exceeds the implied fair value of goodwill. Our reporting units are not discrete legal entities with discrete financial statements. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment assessment is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies. Certain estimates, judgments and assumptions are required to perform these assignments. We believe these estimates, judgments and assumptions to be reasonable, but changes in many of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment.

At the time of each impairment assessment date in 2017, 2016, and 2015, our reporting units consisted of three regional operating units in: North America; Europe, the Middle East and Africa ("EMEA"); and Latin America. We conducted our annual goodwill impairment analysis as of October 1, and concluded that our goodwill was not impaired in 2017 and 2016. As a result of the deconsolidation of our Venezuelan subsidiary, we completed an assessment of the Latin American and our other reporting units' goodwill as of September 30, 2015 and concluded there was no impairment in 2015. Note that as a result of the merger the impairment testing date will change to October 31 for future successor periods.

We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. As a result of CenturyLink's acquisition of us, we are now comprised of one reporting unit.

See Note 3—Goodwill, Customer Relationships and Other Intangible Assets for additional information.
Recently Adopted Accounting Pronouncements 
Recently Adopted Accounting Pronouncements

Restricted Cash

On November 17, 2016, the FASB issued ASU 2016-18, which requires that a statement of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents as compared to the previous presentation, which explains only the change in cash and cash equivalents. ASU 2016-18 is effective January 1, 2018, but early adoption is permitted and requires retrospective application of the requirements to all previous periods presented. We early adopted ASU 2016-18 in the fourth quarter of 2017.

Share-based Compensation

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update were effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, but all of the amendments must be adopted in the same period.

We elected to early adopt ASU 2016-09 in the third quarter of 2016, which required adjustments to be reflected as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. Upon adoption, we recognized previously unrecognized excess tax benefits using the modified retrospective transition method, which resulted in a cumulative-effect adjustment of $42 million recorded to accumulated deficit as of January 1, 2016.

This ASU amended the definition of assumed proceeds when applying the treasury stock method of computing earnings per share to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital.

The new presentation requirements for excess tax benefits to be shown on the statement of cash flows as an operating activity and presenting employee taxes paid where the employer withholds shares for tax-withholding purposes as a financing activity had no effect to any of the periods presented in our consolidated statements of cash flows as there had been no such activities in the consolidated statements of cash flows.

Adoption of the new standard also resulted in the recognition of excess tax benefits as a reduction to income tax expense of $22 million for 2016.

Recent 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 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.

Income Taxes

On October 24, 2016, the FASB issued Accounting Standards Update 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 this ASU, 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 the provisions of ASU 2016-16 on January 1, 2018. The impact of adopting ASU 2016-16 had no material impact to our consolidated financial statements.

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 any 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 annual report, we have not yet determined the date we will adopt ASU 2016-13.

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 completed our initial assessment of our business and system requirements and we are currently developing and implementing a new lease accounting and administrative system to comply with the requirements of ASU 2016-02. We plan to adopt the standard when it becomes effective for us beginning January 1, 2019 and the adoption of the standard will result in the recognition of right of use assets and lease liabilities that have not previously been 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, we do expect that it will have a material impact on our consolidated financial statements.

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.
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 adopted the new revenue recognition standard under the modified retrospective transition method.
Upon adoption, we will defer (i.e. capitalize) incremental contract acquisition costs and recognize (i.e. amortize) them over the term of the initial contract and anticipated renewal contracts to which the costs relate. Our deferred contract costs for our customers have average amortization periods of approximately 30 months and are subject to being monitored every period to reflect any significant change in assumptions. In addition, we will assess our deferred contract cost asset for impairment on a periodic basis.
We have material obligations to our customers in our indefeasible right of use arrangements, including certain long-term prepaid customer capacity arrangements, which are accounted for as operating leases and service contracts. As our service contracts contain a significant financing component that are not separately accounted for, we are required to estimate and record incremental revenue and interest cost associated with these contractual terms. Most of our indefeasible right of use arrangements are accounted for as operating leases.
We are in the process of implementing new processes and internal controls over revenue recognition to assist us in the application of the new standard.
The cumulative effect of initially applying the new revenue standard on January 1, 2018 is not material.
Goodwill, Customer Relationships and Other Intangible Assets (Tables)
Schedule of goodwill, customer relationships and other intangible assets 
Goodwill, customer relationships and other intangible assets consisted of the following:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Goodwill
$
10,837

 
 
7,729

Customer relationships, less accumulated amortization of $126 and $1,113
8,845

 
 
860

Other indefinite-life intangible assets
—

 
 
15

Other intangible assets subject to amortization:
 
 
 
 
Trade names, less accumulated amortization of $4 and $0
126

 
 
—

Developed technology, less accumulated amortization of $9 and $189
252

 
 
40

Total other intangible assets, net
$
378

 
 
55

Schedule of estimated amortization expense of intangible asset 
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
$
829

2019
829

2020
829

2021
829

2022
816

Long-Term Debt (Tables)
Schedule of long-term debt 
The following chart reflects our consolidated long-term debt, including unamortized discounts, premiums and debt issuance costs, but excluding intercompany debt:

 
 
 
 
 
Successor
 
 
Predecessor
 
Interest Rates
 
Maturities
 
December 31,
2017
 
 
December 31,
2016
 
 
 
 
 
(Dollars in millions)
Level 3 Parent, LLC
 
 
 
 
 
 
 
 
5.750% Senior Notes due 2022 (3)
5.750%
 
2022
 
$
600

 
 
600

Subsidiaries
 
 
 
 
 
 
 
 
Level 3 Financing, Inc.
 
 
 
 
 
 
 
 
Senior Notes:
 
 
 
 
 
 
 
 
Floating Rate Senior Notes due 2018 (2)(4)
6-Month LIBOR + 3.50%
 
2018
 
—

 
 
300

6.125% Senior Notes due 2021 (2)
6.125%
 
2021
 
640

 
 
640

5.375% Senior Notes due 2022 (2)
5.375%
 
2022
 
1,000

 
 
1,000

5.625% Senior Notes due 2023 (2)
5.625%
 
2023
 
500

 
 
500

5.125% Senior Notes due 2023 (2)
5.125%
 
2023
 
700

 
 
700

5.375% Senior Notes due 2025 (2)
5.375%
 
2025
 
800

 
 
800

5.375% Senior Notes due 2024 (2)
5.375%
 
2024
 
900

 
 
900

5.25% Senior Notes due 2026 (2)
5.250%
 
2026
 
775

 
 
775

Term Loans:
 
 
 
 
 
 
 
 
Tranche B-III 2019 Term Loan (1)(4)
LIBOR + 3.00%
 
2019
 
—

 
 
815

Tranche B 2020 Term Loan(1)(4)
LIBOR + 3.00%
 
2020
 
—

 
 
1,796

Tranche B-II 2022 Term Loan(1)(4)
LIBOR + 2.75%
 
2022
 
—

 
 
2,000

Tranche B 2024 Term Loan (4)(5)
LIBOR + 2.25%
 
2024
 
4,611

 
 
—

Capital Leases and other debt
Various
 
Various
 
179

 
 
183

Unamortized premiums (discounts), net
 
 
 
 
185

 
 
(13
)
Unamortized debt issuance costs
 
 
 
 
—

 
 
(112
)
Total long-term debt
 
 
 
 
10,890

 
 
10,884

Less current maturities
 
 
 
 
(8
)
 
 
(7
)
Long-term debt, excluding current maturities
 
 
 
 
$
10,882

 
 
10,877

(1) The term loans were secured obligations and guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC and certain other 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 notes are not guaranteed by any of Level 3 Parent, LLC's subsidiaries.
(4) The Tranche B 2024 Term Loan had an interest rate of 3.557% as of December 31, 2017. All other term loans were refinanced on February 22, 2017 as described below. The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of the predecessor date of December 31, 2016. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of the predecessor date of December 31, 2016. The interest rate on the Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan were set with a minimum LIBOR of 1.00%. The interest rate on the Tranche B-II 2022 Term Loan was set with a minimum LIBOR of 0.75% and the interest rate on the Tranche B 2024 Term Loan is set with a minimum LIBOR of zero percent. The Floating Rate Senior Notes due 2018 had an interest rate of 4.762% as of the predecessor date of December 31, 2016.
(5) The Tranche B 2024 Term Loan is a secured obligation and is guaranteed by Level 3 Parent, LLC and certain of its non-regulated subsidiaries.

Schedule of aggregate future contractual maturities of long-term debt and capital leases (excluding unamortized premiums) 
Set forth below is the aggregate principal amount of our long-term debt and capital leases (excluding unamortized premiums) maturing during the following years:
 
(Dollars in millions)(1)
2018
$
8

2019
7

2020
8

2021
650

2022
1,610

2023 and thereafter
8,422

Total long-term debt
$
10,705

(1)
Actual principal paid in any year may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.
Accounts Receivable (Tables)
Schedule of Accounts Receivable 
The following table presents details of our accounts receivable balances:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Trade and purchased receivables
$
562

 
 
588

Earned and unbilled receivables
165

 
 
140

Other
24

 
 
13

Total accounts receivable
751

 
 
741

Less: allowance for doubtful accounts (1)
(3
)
 
 
(29
)
Accounts receivable, less allowance
$
748

 
 
712


(1) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in the allowance for doubtful accounts being reset as of the date of acquisition.
Allowance for Credit Losses on Financing Receivables 
The following table presents details of our allowance for doubtful accounts:

 
Beginning Balance
Additions
Deductions
Ending Balance
 
(Dollars in millions)
December 31, 2017 (Successor)
$
—

3

—

3

October 31, 2017 (Predecessor)
29

16

(12
)
33

2016 (Predecessor)
32

18

(21
)
29

2015 (Predecessor)
$
30

23

(21
)
32

Property, Plant and Equipment (Tables)
Property, Plant and Equipment 
Net property, plant and equipment is composed of the following:

 
 
 
Successor
 
 
Predecessor
 
Depreciable Lives
 
December 31,
2017
 
 
December 31,
2016
 
 
 
(Dollars in millions)
Land
N/A
 
$
348

 
 
179

Fiber conduit and other outside plant(1)
15-45 years
 
4,750

 
 
9,110

Central office and other network electronics(2)
3-10 years
 
2,134

 
 
8,846

Support assets(3)
3-30 years
 
2,019

 
 
3,023

Construction-in-progress(4)
N/A
 
304

 
 
230

Gross property, plant and equipment
 
 
9,555

 
 
21,388

Accumulated depreciation(5)
 
 
(143
)
 
 
(11,249
)
Net property, plant and equipment
 
 
$
9,412

 
 
10,139


(1) Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
(2) Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
(3) Support assets consist of buildings, data centers, computers and other administrative and support equipment.
(4) Construction in progress includes construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
(5) CenturyLink's acquisition of us caused our assets and liabilities to be recognized at fair value and resulted in accumulated depreciation being reset as of the date of acquisition.

Schedule of Change in Asset Retirement Obligation 
The following table provides asset retirement obligation activity:
 
 
Successor
 
 
Predecessor
 
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
 
(Dollars in millions)
Balance at beginning of period (1)
 
$
45

 
 
89

 
90

 
85

Accretion expense
 
1

 
 
12

 
10

 
9

Liabilities settled
 
(1
)
 
 
(7
)
 
(9
)
 
(8
)
Revision in estimated cash flows
 
—

 
 
—

 
—

 
5

Effect of foreign currency rate change
 
—

 
 
—

 
(2
)
 
(1
)
Balance at end of period
 
$
45

 
 
94

 
89

 
90


(1) CenturyLink's acquisition of us caused our assets and liabilities, including our asset retirement obligations, to be recognized at fair value as of the date of acquisition.

Products and Services Revenues (Tables)
Schedule of operating revenues by product and services 
Our total revenues for our products and services consisted of the following categories:

 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Core network services revenues
$
1,331

 
 
6,543

 
7,767

 
7,757

Wholesale voice services
60

 
 
327

 
406

 
473

Affiliate revenues
16

 
 
—

 
—

 
—

Total operating revenues
$
1,407

 
 
6,870


8,173


8,230

Schedule of operating revenues by geographic region 
The following table presents operating revenues for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017 as well as total assets as of the successor date of December 31, 2017 by geographic region:

 
Total Assets
 
Revenues
 
Successor
 
Successor
 
 
Predecessor
 
December 31, 2017
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
(Dollars in millions)
North America
$
27,776

 
1,155

 
 
5,651

EMEA
1,192

 
128

 
 
607

Latin America
4,167

 
124

 
 
612

Total
$
33,135

 
1,407

 
 
6,870

Fair Value Disclosure (Tables)
Schedule of fair value of liabilities measured on a recurring basis
The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input level used to determine the fair values indicated below:

 
 
 
As of December 31, 2017 (Successor)
 
 
As of December 31, 2016 (Predecessor)
 
Input Level
 
Carrying Amount
Fair Value
 
 
Carrying Amount
Fair Value
 
 
 
(Dollars in million)
Liabilities-Long-term debt, excluding capital lease and other obligations
2
 
$
10,711

10,528

 
 
10,701

10,954

Income Taxes (Tables)
Components of income tax expense (benefit) 
 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Income tax expense (benefit) was as follows:
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
Current
$
—

 
 
—

 
—

 
—

Deferred
231

 
 
193

 
177

 
(2,941
)
State
 
 
 
 
 
 
 
 
Current
2

 
 
7

 
4

 
3

Deferred
6

 
 
16

 
27

 
(246
)
Foreign
 
 
 
 
 
 
 
 
Current
4

 
 
39

 
41

 
33

Deferred
(9
)
 
 
13

 
(84
)
 
1

Total income tax expense (benefit)
$
234

 
 
268

 
165

 
(3,150
)
Schedule of income before income tax, domestic and foreign 
 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Income tax expense was allocated as follows:
 
 
 
 
 
 
 
 
Income tax expense in the consolidated statements of operations:
 
 
 
 
 
 
 
 
Attributable to income
$
234

 
 
268

 
165

 
(3,150
)
Member's/Stockholders' equity:
 
 
 
 
 
 
 
 
Tax effect of the change in accumulated other comprehensive loss
$
17

 
 
49

 
(43
)
 
(11
)
Schedule of effective income tax rate reconciliation 
The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
Year Ended December 31, 2015
 
(Dollars in millions)
Statutory federal income tax rate
35.0
 %
 
 
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal income tax benefit
3.6
 %
 
 
2.9
 %
 
3.7
 %
 
5.2
 %
Tax Reform/US Federal Law Changes
210.6
 %
 
 
—
 %
 
(13.2
)%
 
—
 %
Transaction costs
11.3
 %
 
 
—
 %
 
—
 %
 
—
 %
Change in liability of unrecognized tax position
1.2
 %
 
 
0.1
 %
 
0.1
 %
 
(0.1
)%
Net foreign income tax
(19.3
)%
 
 
0.9
 %
 
(6.7
)%
 
26.6
 %
Permanent items
5.0
 %
 
 
1.8
 %
 
1.2
 %
 
2.6
 %
Change in US valuation allowance
—
 %
 
 
—
 %
 
—
 %
 
(1,199.8
)%
Adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
0.1
 %
 
 
(0.5
)%
 
(2.4
)%
 
—
 %
Research and development costs
(0.9
)%
 
 
(1.2
)%
 
—
 %
 
—
 %
Non-deductible loss on deconsolidation
—
 %
 
 
—
 %
 
—
 %
 
20.2
 %
Other, net
5.0
 %
 
 
(0.3
)%
 
1.9
 %
 
(2.7
)%
Effective income tax rate
251.6
 %
 
 
38.7
 %
 
19.6
 %
 
(1,113.0
)%
Deferred tax assets and liabilities 
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Deferred tax assets
 
 
 
 
Deferred revenue
$
256

 
 
364

Net operating loss carry forwards
3,633

 
 
4,550

Property, plant and equipment
63

 
 
95

Other
282

 
 
471

Gross deferred tax assets
4,234

 
 
5,480

Less valuation allowance
(942
)
 
 
(862
)
Net deferred tax assets
3,292

 
 
4,618

Deferred tax liabilities
 
 
 
 
Deferred revenue
(44
)
 
 
(57
)
Property, plant and equipment
(689
)
 
 
(962
)
Intangible assets
(2,329
)
 
 
(357
)
Other
(16
)
 
 
(120
)
Gross deferred tax liabilities
(3,078
)
 
 
(1,496
)
Net deferred tax assets
$
214

 
 
3,122


Schedule of unrecognized tax benefits 
A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from the successor period November 1 to December 31, 2017, the predecessor period January 1 to October 31, 2017 and the predecessor year ended December 31, 2016 is as follows:

 
Successor
 
 
Predecessor
 
Period Ended December 31, 2017
 
 
Period Ended October 31, 2017
 
Year Ended December 31, 2016
 
(Dollars in millions)
Unrecognized tax benefits at beginning of period
$
20

 
 
18

 
18

Tax positions of prior periods netted against deferred tax assets
—

 
 
—

 
(1
)
Increase (decrease) in tax positions taken in the prior period
1

 
 
—

 
(1
)
Increase in tax positions taken in the current period
—

 
 
2

 
2

Decrease from the lapse of statute of limitations
—

 
 
—

 
—

Unrecognized tax benefits at end of period
$
21

 
 
20

 
18

Quarterly Financial Data (Unaudited) (Tables)
Schedule of quarterly financial data (unaudited)
 
Operating Revenues
 
Operating Income
 
Net Income (Loss)
 
(Dollars in millions)
2016
 
 
 
 
 
First quarter (predecessor)
$
2,051

 
362

 
128

Second quarter (predecessor)
2,057

 
375

 
156

Third quarter (predecessor)
2,033

 
354

 
143

Fourth quarter (predecessor)
2,032

 
354

 
250

Total
$
8,173

 
1,445

 
677

2017
 
 
 
 
 
First quarter (predecessor)
$
2,048

 
337

 
95

Second quarter (predecessor)
2,062

 
353

 
154

Third quarter (predecessor)
2,059

 
349

 
157

Month ended October 31 (predecessor)
701

 
112

 
19

Two months ended December 31 (successor)
1,407

 
158

 
(141
)
Total
$
8,277

 
1,309

 
284



Commitments, Contingencies and Other Items (Tables)
Schedule of operating leases, future minimum payments due and unrecorded unconditional purchase obligation 
Future minimum payments for the next five years and thereafter under network and related right-of-way agreements and non-cancelable operating leases for facilities and other assets consist of the following as of December 31, 2017 (dollars in millions):

 
 
Right-of-Way
Agreements
 
Operating Leases
 
Total
 
Future Minimum Sublease Receipts
2018
 
$
173

 
288

 
461

 
3

2019
 
90

 
251

 
341

 
2

2020
 
77

 
217

 
294

 
1

2021
 
60

 
151

 
211

 
1

2022
 
56

 
128

 
184

 
1

Thereafter
 
464

 
507

 
971

 
1

 
 
$
920

 
1,542

 
2,462

 
9

Schedule of long-term purchase commitments 
The following table summarizes our purchase commitments at December 31, 2017 (dollars in millions):

 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
Cost of Access Services
 
$
115

 
52

 
35

 
15

 
7

 
2

 
226

Third-Party Maintenance Services
 
60

 
41

 
32

 
19

 
18

 
68

 
238

 
 
$
175

 
93

 
67

 
34

 
25

 
70

 
464

Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]
The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheet by component for the predecessor period ended October 31, 2017 and the successor period ended December 31, 2017:


 
Pension Plans
 
Foreign Currency Translation Adjustments and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2016 (predecessor)
$
(34
)
 
(353
)
 
(387
)
Other comprehensive (loss) income before reclassifications
(3
)
 
81

 
78

Amounts reclassified from accumulated other comprehensive loss
2

 
—

 
2

Net other comprehensive (loss) income
(1
)
 
81

 
80

Balance at October 31, 2017 (predecessor)
$
(35
)
 
(272
)
 
(307
)
 
 
 
 
 
 
Balance at November 1, 2017 (successor)
$
—

 
—

 
—

Other comprehensive income before reclassifications
—

 
18

 
18

Amounts reclassified from accumulated other comprehensive loss
—

 
—

 
—

Net other comprehensive income
—

 
18

 
18

Balance at December 31, 2017 (successor)
$
—

 
18

 
18

Other Financial Information (Tables)
Other Current Assets 
The following table presents details of other current assets in our consolidated balance sheets:

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Prepaid expenses
$
68

 
 
82

Material, supplies and inventory
3

 
 
3

Deferred activation and installation charges
17

 
 
5

Other
29

 
 
25

Total other current assets
$
117

 
 
115

Selected Current Liabilities 

 
Successor
 
 
Predecessor
 
December 31,
2017
 
 
December 31,
2016
 
(Dollars in millions)
Self insurance
$
11

 
 
12

Legal and tax reserves
31

 
 
18

Other
15

 
 
22

Total other current liabilities
$
57

 
 
52

Condensed Consolidating Financial Information (Tables)
Schedule of Condensed Consolidating Statements of Operations 
 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUE
 
 
 
 
 
 
 
 
 
 


Operating revenues
$
—

 
—

 
748

 
671

 
(28
)
 
1,391

Operating revenues - affiliate
—

 
—

 
16

 
—

 
—

 
16

Total operating revenues
—

 
—

 
764

 
671

 
(28
)
 
1,407

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
418

 
300

 
(28
)
 
690

Selling, general and administrative
1

 
3

 
179

 
70

 
—

 
253

Operating expenses - affiliate
—

 
—

 
24

 
—

 
—

 
24

Depreciation and amortization
—

 
—

 
117

 
165

 
—

 
282

Total costs and expenses
1

 
3

 
738

 
535

 
(28
)
 
1,249

OPERATING (LOSS) INCOME
(1
)
 
(3
)
 
26

 
136

 
—

 
158

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
1

 
—

 
—

 
1

Interest income - affiliate
11

 
—

 
—

 
—

 
—

 
11

Interest expense
(5
)
 
(72
)
 
—

 
(3
)
 
—

 
(80
)
Interest income (expense) - affiliates, net
251

 
368

 
(578
)
 
(41
)
 
—

 
—

Equity in net (losses) earnings of subsidiaries
(827
)
 
(15
)
 
71

 
—

 
771

 
—

Other income, net
1

 
—

 
2

 
—

 
—

 
3

Total other expense, net
(569
)
 
281

 
(504
)
 
(44
)
 
771

 
(65
)
(LOSS) INCOME BEFORE INCOME TAXES
(570
)
 
278

 
(478
)
 
92

 
771

 
93

Income tax benefit (expense)
429

 
(1,105
)
 
433

 
9

 
—

 
(234
)
NET INCOME (LOSS)
(141
)
 
(827
)
 
(45
)
 
101

 
771

 
(141
)
Other comprehensive income, net of income taxes
18

 
—

 
—

 
18

 
(18
)
 
18

COMPREHENSIVE INCOME (LOSS)
$
(123
)
 
$
(827
)
 
$
(45
)
 
$
119

 
$
753

 
$
(123
)
 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
—

 
3,108

 
3,891

 
(129
)
 
6,870

Total operating revenues
—

 
—

 
3,108

 
3,891

 
(129
)
 
6,870

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
1,942

 
1,680

 
(129
)
 
3,493

Selling, general and administrative
4

 
3

 
942

 
259

 
—

 
1,208

Depreciation and amortization
—

 
—

 
356

 
662

 
—

 
1,018

Total costs and expenses
4

 
3

 
3,240

 
2,601

 
(129
)
 
5,719

OPERATING (LOSS) INCOME
(4
)
 
(3
)
 
(132
)
 
1,290

 
—

 
1,151

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
12

 
1

 
—

 
13

Interest income (expense) - affiliate, net
1,260

 
1,890

 
(2,896
)
 
(254
)
 
—

 
—

Interest expense
(30
)
 
(397
)
 
(2
)
 
(12
)
 
—

 
(441
)
Loss on modification and extinguishment of debt
—

 
(44
)
 
—

 
—

 
—

 
(44
)
Equity in net (losses) earnings of subsidiaries
(815
)
 
(2,138
)
 
692

 
—

 
2,261

 
—

Other income (expense) , net
3

 
—

 
15

 
(4
)
 
—

 
14

Total other expense, net
418

 
(689
)
 
(2,179
)
 
(269
)
 
2,261

 
(458
)
INCOME (LOSS) BEFORE INCOME TAXES
414

 
(692
)
 
(2,311
)
 
1,021

 
2,261

 
693

Income tax benefit (expense)
11

 
(123
)
 
(2
)
 
(154
)
 
—

 
(268
)
NET INCOME (LOSS)
425

 
(815
)
 
(2,313
)
 
867

 
2,261

 
425

Other comprehensive income, net of income taxes
80

 
—

 
—

 
—

 
—

 
80

COMPREHENSIVE INCOME (LOSS)
$
505

 
(815
)
 
(2,313
)
 
867

 
2,261

 
505

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
$
—

 
$
3,558

 
$
4,747

 
$
(132
)
 
8,173

Total operating revenues
—

 
—

 
3,558

 
4,747

 
(132
)
 
8,173

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
2,249

 
2,045

 
(132
)
 
4,162

Selling, general and administrative
16

 
5

 
1,025

 
361

 
—

 
1,407

Depreciation and amortization
—

 
—

 
372

 
787

 
—

 
1,159

Total costs and expenses
16

 
5

 
3,646

 
3,193

 
(132
)
 
6,728

OPERATING (LOSS) INCOME
(16
)
 
(5
)
 
(88
)
 
1,554

 
—

 
1,445

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
3

 
1

 
—

 
4

Interest income (expense) - affiliate, net
1,385

 
2,113

 
(3,215
)
 
(283
)
 
—

 
—

Interest expense
(36
)
 
(505
)
 
(2
)
 
(1
)
 
—

 
(544
)
Equity in net (losses) earnings of subsidiaries
(669
)
 
(2,033
)
 
757

 
—

 
1,945

 
—

Other (expense) income, net
(1
)
 
(39
)
 
2

 
(25
)
 
—

 
(63
)
Total other income (expense), net
679

 
(464
)
 
(2,455
)
 
(308
)
 
1,945

 
(603
)
INCOME (LOSS) BEFORE INCOME TAXES
663

 
(469
)
 
(2,543
)
 
1,246

 
1,945

 
842

Income tax benefit (expense)
14

 
(200
)
 
(2
)
 
23

 
—

 
(165
)
NET INCOME (LOSS)
677

 
(669
)
 
(2,545
)
 
1,269

 
1,945

 
677

Other comprehensive (loss) income, net of income taxes
(86
)
 
—

 
—

 
(86
)
 
86

 
(86
)
COMPREHENSIVE INCOME (LOSS)
$
591

 
(669
)
 
(2,545
)
 
1,183

 
2,031

 
591

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$
—

 
—

 
3,326

 
5,077

 
(173
)
 
8,230

Total operating revenues
—

 
—

 
3,326

 
5,077

 
(173
)
 
8,230

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
—

 
—

 
2,201

 
2,321

 
(173
)
 
4,349

Selling, general and administrative
4

 
—

 
1,064

 
401

 
—

 
1,469

Depreciation and amortization
—

 
—

 
298

 
784

 
—

 
1,082

Total costs and expenses
4

 
—

 
3,563

 
3,506

 
(173
)
 
6,900

OPERATING (LOSS) INCOME
(4
)
 
—

 
(237
)
 
1,571

 
—

 
1,330

OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
—

 
1

 
—

 
1

Interest income (expense) - affiliates, net
1,310

 
1,984

 
(3,041
)
 
(253
)
 
—

 
—

Interest expense
(51
)
 
(574
)
 
(3
)
 
(12
)
 
—

 
(640
)
Equity in net earnings (losses) of subsidiaries
2,162

 
(1,693
)
 
177

 
—

 
(646
)
 
—

Other (expense) income, net
(18
)
 
(200
)
 
2

 
(192
)
 
—

 
(408
)
Total other income (expense), net
3,403

 
(483
)
 
(2,865
)
 
(456
)
 
(646
)
 
(1,047
)
INCOME (LOSS) BEFORE INCOME TAXES
3,399

 
(483
)
 
(3,102
)
 
1,115

 
(646
)
 
283

Income tax benefit (expense)
34

 
2,645

 
(1
)
 
472

 
—

 
3,150

NET INCOME (LOSS)
3,433

 
2,162

 
(3,103
)
 
1,587

 
(646
)
 
3,433

Other comprehensive (loss) income, net of income taxes
(154
)
 
—

 
—

 
(154
)
 
154

 
(154
)
COMPREHENSIVE INCOME (LOSS)
$
3,279

 
2,162

 
(3,103
)
 
1,433

 
(492
)
 
3,279



Schedule of Condensed Consolidating Balance Sheets 
 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
13

 
—

 
175

 
109

 
—

 
297

Restricted cash and securities
—

 
—

 
1

 
4

 
—

 
5

Assets held for sale
68

 
—

 
5

 
67

 
—

 
140

Accounts receivable
—

 
—

 
26

 
722

 
—

 
748

Accounts receivable - affiliate
—

 
—

 
60

 
4

 
(51
)
 
13

Advances to affiliates
16,251

 
21,032

 
—

 
5,200

 
(42,483
)
 
—

Note receivable - affiliate
1,825

 
—

 
—

 
—

 
—

 
1,825

Other
—

 
—

 
54

 
63

 
—

 
117

Total Current Assets
18,157

 
21,032

 
321

 
6,169

 
(42,534
)
 
3,145

NET PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 


Property, plant and equipment
—

 
—

 
3,285

 
6,270

 
—

 
9,555

Accumulated depreciation
—

 
—

 
(48
)
 
(95
)
 
—

 
(143
)
Net property, plant and equipment
—

 
—

 
3,237

 
6,175

 
—

 
9,412

Restricted cash and securities
19

 
—

 
10

 
—

 
—

 
29

GOODWILL AND OTHER ASSETS
 
 
 
 
 
 
 
 
 
 


Goodwill
—

 
—

 
1,200

 
9,637

 
—

 
10,837

Customer relationships, net
—

 
—

 
4,324

 
4,521

 
—

 
8,845

Other intangible assets, net
—

 
—

 
378

 
—

 
—

 
378

Investment in subsidiaries
16,954

 
18,403

 
3,616

 
—

 
(38,973
)
 
—

Deferred tax assets
280

 
1,795

 
—

 
122

 
(1,771
)
 
426

Other, net
—

 
—

 
32

 
31

 
—

 
63

Total goodwill and other assets
17,234

 
20,198

 
9,550

 
14,311

 
(40,744
)
 
20,549

TOTAL ASSETS
35,410

 
41,230

 
13,118

 
26,655

 
(83,278
)
 
33,135

 
 
 
 
 
 
 
 
 
 
 


LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 


CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
—

Current maturities of long-term debt
—

 
—

 
2

 
6

 
—

 
8

Accounts payable
—

 
1

 
323

 
371

 
—

 
695

Accounts payable - affiliate
11

 
—

 
—

 
81

 
(51
)
 
41

Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
 
 


Income and other taxes
—

 
—

 
55

 
45

 
—

 
100

Salaries and benefits
—

 
—

 
109

 
27

 
—

 
136

Interest
11

 
91

 
—

 
7

 
—

 
109

Current portion of deferred revenue
—

 
—

 
127

 
131

 
—

 
258

Current portion of deferred revenue - affiliate
—

 
—

 
2

 
—

 
—

 
2

Other
16

 
—

 
23

 
18

 
—

 
57

Due to affiliates
—

 
—

 
42,483

 
—

 
(42,483
)
 
—

Total current liabilities
38

 
92

 
43,124

 
686

 
(42,534
)
 
1,406

LONG-TERM DEBT
616

 
10,096

 
13

 
157

 
—

 
10,882

DEFERRED CREDITS AND OTHER LIABILITES
 
 
 
 
 
 
 
 
 
 


Deferred credits
—

 
—

 
841

 
252

 
—

 
1,093

Deferred credits - affiliate
—

 
—

 
5

 
1

 
—

 
6

Deferred tax liability
648

 
—

 
870

 
465

 
(1,771
)
 
212

Other
1

 
1

 
98

 
164

 
—

 
264

Total deferred revenues and other liabilities
649

 
1

 
1,814

 
882

 
(1,771
)
 
1,575

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 


MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
34,107

 
31,041

 
(31,833
)
 
24,930

 
(38,973
)
 
19,272

TOTAL LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
$
35,410

 
41,230

 
13,118

 
26,655

 
(83,278
)
 
33,135


 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
15

 
—

 
1,700

 
104

 
—

 
1,819

Restricted cash and securities
—

 
—

 
1

 
6

 
—

 
7

Accounts receivable
—

 
—

 
26

 
686

 
—

 
712

Advances to affiliates
17,032

 
21,715

 
—

 
2,180

 
(40,927
)
 
—

Other
—

 
—

 
87

 
28

 
—

 
115

Total Current Assets
17,047

 
21,715

 
1,814

 
3,004

 
(40,927
)
 
2,653

NET PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
—

 
—

 
10,424

 
10,964

 
—

 
21,388

Accumulated Depreciation
—

 
—

 
(6,555
)
 
(4,694
)
 
—

 
(11,249
)
Net property, plant and equipment
—

 
—

 
3,869

 
6,270

 
—

 
10,139

Restricted cash and securities
22

 
—

 
9

 
—

 
—

 
31

GOODWILL AND OTHER ASSETS
 
 
 
 
 
 
 
 
 
 
 
Goodwill
—

 
—

 
352

 
7,377

 
—

 
7,729

Customer relationships, net
—

 
—

 
—

 
860

 
—

 
860

Other intangible assets, net
—

 
—

 
1

 
54

 
 
 
55

Investment in subsidiaries
16,869

 
17,599

 
3,674

 
—

 
(38,142
)
 
—

Deferred tax assets
51

 
2,687

 
—

 
632

 
—

 
3,370

Other, net
—

 
—

 
16

 
35

 
—

 
51

Total goodwill and other assets
16,920

 
20,286

 
4,043

 
8,958

 
(38,142
)
 
12,065

TOTAL ASSETS
$
33,989

 
42,001

 
9,735

 
18,232

 
(79,069
)
 
24,888

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
—

 
—

 
2

 
5

 
—

 
7

Accounts payable
—

 
—

 
307

 
399

 
—

 
706

Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
 
 


Income and other taxes
—

 
—

 
103

 
13

 
—

 
116

Salaries and benefits
—

 
—

 
160

 
35

 
—

 
195

Interest
11

 
110

 
—

 
8

 
—

 
129

Due to affiliates
—

 
—

 
40,927

 
—

 
(40,927
)
 
—

Current portion of deferred revenue
—

 
—

 
116

 
150

 
—

 
266

Other
—

 
—

 
24

 
28

 
—

 
52

Total current liabilities
11

 
110

 
41,639

 
638

 
(40,927
)
 
1,471

LONG-TERM DEBT
592

 
10,108

 
13

 
164

 
—

 
10,877

DEFERRED REVENUES AND OTHER LIABILITES
 
 
 
 
 
 
 
 
 
 
 
Deferred credits
—

 
—

 
719

 
282

 
—

 
1,001

Deferred tax liability
—

 
—

 
—

 
248

 
—

 
248

Other
16

 
—

 
155

 
203

 
—

 
374

Total deferred revenues and other liabilities
16

 
—

 
874

 
733

 
—

 
1,623

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY (DEFICIT)
33,370

 
31,783

 
(32,791
)
 
16,697

 
(38,142
)
 
10,917

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
$
33,989

 
42,001

 
9,735

 
18,232

 
(79,069
)
 
24,888

Schedule of Condensed Consolidating Statements of Cash Flows 
 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(1
)
 
—

 
172

 
137

 
—

 
308

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(110
)
 
(97
)
 
—

 
(207
)
Note receivable - affiliate
—

 
—

 
(1,825
)
 
—

 
—

 
(1,825
)
Net cash used in investing activities
—

 
—

 
(1,935
)
 
(97
)
 
—

 
(2,032
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Payments of long-term debt
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Distributions
(250
)
 
—

 
—

 
—

 
—

 
(250
)
Increase (decrease) due to from affiliate, net
250

 
—

 
(250
)
 
—

 
—

 
—

Net cash used in financing activities
—

 
—

 
(250
)
 
(1
)
 
—

 
(251
)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Net increase (decrease) in cash, cash equivalents and restricted cash and securities
(1
)
 
—

 
(2,013
)
 
37

 
—

 
(1,977
)
Cash, cash equivalents and restricted cash and securities at beginning of period
33

 
—

 
2,199

 
76

 
—

 
2,308

Cash, cash equivalents and restricted cash and securities at end of period
$
32

 
—

 
186

 
113

 
—

 
331

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(61
)
 
(401
)
 
1,615

 
761

 
—

 
1,914

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(667
)
 
(452
)
 
—

 
(1,119
)
Purchase of marketable securities
—

 
—

 
(1,127
)
 
—

 
—

 
(1,127
)
Maturity of marketable securities
—

 
—

 
1,127

 
—

 
—

 
1,127

Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
1

 
—

 
—

 
1

Net cash used in investing activities
—

 
—

 
(666
)
 
(452
)
 
—

 
(1,118
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
4,569

 
—

 
—

 
—

 
4,569

Payments of long-term debt
—

 
(4,911
)
 
1

 
(7
)
 
—

 
(4,917
)
Increase (decrease) due from/to affiliates, net
57

 
743

 
(460
)
 
(340
)
 
—

 
—

Net cash provided by (used in) financing activities
57

 
401

 
(459
)
 
(347
)
 
—

 
(348
)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
—

 
—

 
—

 
3

 
—

 
3

Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
(4
)
 
—

 
490

 
(35
)
 
—

 
451

Cash, cash equivalents and restricted cash and securities at beginning of period
37

 
—

 
1,710

 
110

 
—

 
1,857

Cash, cash equivalents and restricted cash and securities at end of period
$
33

 
—

 
2,200

 
75

 
—

 
2,308


 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(49
)
 
(468
)
 
565

 
2,295

 
—

 
2,343

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(704
)
 
(630
)
 
—

 
(1,334
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
1

 
2

 
—

 
3

Net cash used in investing activities
—

 
—

 
(703
)
 
(628
)
 
—

 
(1,331
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
764

 
—

 
—

 
—

 
764

Payments of long-term debt
—

 
(806
)
 
(1
)
 
(13
)
 
—

 
(820
)
Increase (decrease) due from/to affiliates, net
47

 
504

 
1,107

 
(1,658
)
 
—

 
—

Net cash provided by (used in) financing activities
47

 
462

 
1,106

 
(1,671
)
 
—

 
(56
)
Effect of exchange rates on cash, cash equivalents, restricted cash and securities
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
(2
)
 
(6
)
 
968

 
(7
)
 
—

 
953

Cash, cash equivalents and restricted cash and securities at beginning of period
39

 
6

 
742

 
117

 
—

 
904

Cash, cash equivalents and restricted cash and securities at end of period
$
37

 
—

 
1,710

 
110

 
—

 
1,857

 
Level 3 Parent, LLC
 
Level 3 Financing, Inc.
 
Level 3 Communications, LLC
 
Other Non-Guarantor Subsidiaries
 
Eliminations
 
Total
 
(Dollars in millions)
OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
(41
)
 
(617
)
 
193

 
2,320

 
—

 
1,855

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
—

 
(453
)
 
(776
)
 
—

 
(1,229
)
Cash related to deconsolidated Venezuela operations
—

 
—

 
—

 
(83
)
 
—

 
(83
)
Proceeds from sale of property, plant and equipment and other assets
—

 
—

 
—

 
4

 
—

 
4

Other
—

 
—

 
(14
)
 
—

 
—

 
(14
)
Net cash used in investing activities
—

 
—

 
(467
)
 
(855
)
 
—

 
(1,322
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
—

 
4,832

 
—

 
—

 
—

 
4,832

Payments of long-term debt
(313
)
 
(4,725
)
 
(2
)
 
(11
)
 
—

 
(5,051
)
Increase (decrease) due from/to affiliates, net
383

 
511

 
693

 
(1,587
)
 
—

 
—

Net cash provided by (used in) financing activities
70

 
618

 
691

 
(1,598
)
 
—

 
(219
)
Effect of exchange rates on cash, cash equivalents, restricted cash and securities
—

 
—

 
—

 
(18
)
 
—

 
(18
)
Net increase (decrease) in cash, cash equivalents, and restricted cash and securities
29

 
1

 
417

 
(151
)
 
—

 
296

Cash, cash equivalents and restricted cash and securities at beginning of period
10

 
5

 
325

 
268

 
—

 
608

Cash, cash equivalents and restricted cash and securities at end of period
$
39

 
6

 
742

 
117

 
—

 
904

Background and Summary of Significant Accounting Policies (Details) (USD $)
2 Months Ended 12 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
year
Dec. 31, 2016
Dec. 31, 2015
Oct. 31, 2017
Accumulated deficit
Dec. 31, 2015
Accumulated deficit
ASU 2016-09
Dec. 31, 2017
Customer relationships
Dec. 31, 2017
Customer relationships
Minimum
Dec. 31, 2017
Customer relationships
Maximum
Dec. 31, 2017
Other
Dec. 31, 2017
Sales Revenue
Customer Concentration Risk
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2016
Predecessor
Accumulated deficit
Dec. 31, 2015
Predecessor
Accumulated deficit
Dec. 31, 2014
Predecessor
Accumulated deficit
Oct. 31, 2017
Predecessor
Sales Revenue
Customer Concentration Risk
Dec. 31, 2016
Predecessor
Sales Revenue
Customer Concentration Risk
Dec. 31, 2015
Predecessor
Sales Revenue
Customer Concentration Risk
Oct. 31, 2017
Predecessor
Other income (expense)
Dec. 31, 2016
Predecessor
Other income (expense)
Dec. 31, 2015
Predecessor
Other income (expense)
Oct. 31, 2017
Predecessor
Selling, general and administrative expense
Dec. 31, 2016
Predecessor
Selling, general and administrative expense
Dec. 31, 2015
Predecessor
Selling, general and administrative expense
Oct. 31, 2017
Predecessor
Depreciation and amortization expense
Dec. 31, 2016
Predecessor
Depreciation and amortization expense
Dec. 31, 2015
Predecessor
Depreciation and amortization expense
Oct. 31, 2017
Predecessor
Cost of services and products
Dec. 31, 2016
Predecessor
Cost of services and products
Dec. 31, 2015
Predecessor
Cost of services and products
Description of Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification (from) to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ (11,000,000)
$ 0 
$ (2,000,000)
$ 11,000,000 
$ 0 
$ 2,000,000 
$ (77,000,000)
$ (91,000,000)
$ (84,000,000)
$ 65,000,000 
$ 57,000,000 
$ 84,000,000 
Period company may receive up front payments for services to be provided in the future (in years)
 
25 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
USF contributions
71,000,000 
 
 
 
 
 
 
 
 
 
 
331,000,000 
414,000,000 
364,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bad debt expense
3,000,000 
 
 
 
 
 
 
 
 
 
 
16,000,000 
18,000,000 
23,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of communications revenue from top ten customers
 
 
 
 
 
 
 
 
 
 
19.00% 
 
 
 
 
 
 
18.00% 
16.00% 
16.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalized labor and related costs associated with employee and contract labor working on capital projects
45,000,000 
 
 
 
 
 
 
 
 
 
 
239,000,000 
271,000,000 
244,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, useful life
 
11 years 10 months 24 days 
 
 
 
 
12 years 2 months 12 days 
7 years 
14 years 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment
 
0 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative effect of adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
 
 
 
 
0 
42,000,000 
 
 
 
 
 
 
 
 
0 
42,000,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New accounting pronouncement or change in accounting principle, effect of adoption, quantification
 
 
$ 22,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred customer contract amortization period
 
30 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CenturyLink Merger - Narrative (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Nov. 1, 2017
Level 3 Parent, LLC
Level 3 Communications, Inc.
Nov. 1, 2017
Level 3 Parent, LLC
CenturyLink
dark_fiber
city
Nov. 1, 2017
Level 3 Parent, LLC
CenturyLink
Restricted stock awards
Nov. 1, 2017
Level 3 Parent, LLC
CenturyLink
Unsecured Debt
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
Common stock, par value (in USD per share)
    
 
 
$ 0.01 
$ 0.01 
$ 1.00 
 
 
Cash consideration per share (in dollars per share)
 
 
 
 
$ 26.50 
 
 
 
Stock conversion ratio
 
 
 
 
 
1.4286 
 
 
Long-term debt
 
 
 
 
 
 
 
$ 1,825 
Stated interest rate (as a percent)
 
 
 
 
 
 
 
3.50% 
Number of strands of dark fiber divested
 
 
 
 
 
24 
 
 
Number of cities connected by dark fiber
 
 
 
 
 
30 
 
 
Acquisition-related expenses
 
28 
85 
15 
 
 
 
 
Goodwill
10,837 
 
 
7,729 
 
10,821 
1 
 
Transaction costs
 
 
 
 
 
$ 47 
 
 
CenturyLink Merger - Consideration (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Nov. 1, 2017
CenturyLink
Level 3 Parent, LLC
Nov. 1, 2017
CenturyLink
Level 3 Parent, LLC
Customer relationships
Nov. 1, 2017
CenturyLink
Level 3 Parent, LLC
Other
Business Acquisition [Line Items]
 
 
 
 
Cash, accounts receivable and other current assets
 
$ 3,317 
 
 
Property, plant and equipment
 
9,311 
 
 
Identifiable intangible assets
 
 
8,964 
391 
Other non-current assets
 
782 
 
 
Current liabilities, excluding the current portion of long-term debt
 
(1,461)
 
 
Current portion of long-term debt
 
(7)
 
 
Long-term debt
 
(10,888)
 
 
Deferred credits and other liabilities
 
(1,613)
 
 
Goodwill
10,837 
10,821 
 
 
Aggregate consideration
 
$ 19,617 
 
 
Goodwill, Customer Relationships and Other Intangible Assets - Schedule of Goodwill and Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
Customer relationships
Dec. 31, 2016
Customer relationships
Predecessor
Dec. 31, 2017
Trade names
Dec. 31, 2016
Trade names
Predecessor
Dec. 31, 2017
Developed technology
Dec. 31, 2016
Developed technology
Predecessor
Finite-Lived and Indefinite-Lived Intangible Assets
 
 
 
 
 
 
 
 
 
 
 
Goodwill
$ 10,837 
$ 10,837 
 
$ 7,729 
 
 
 
 
 
 
 
Finite-lived intangible assets, net
8,845 
8,845 
 
860 
 
8,845 
860 
126 
0 
252 
40 
Other indefinite-life intangible assets
0 
0 
 
15 
 
 
 
 
 
 
 
Total other intangible assets, net
378 
378 
 
55 
 
 
 
 
 
 
 
Impact to goodwill from business combination deferred state income tax differences
16 
16 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, accumulated amortization
 
 
 
 
 
126 
1,113 
4 
0 
9 
189 
Acquired finite-lived intangible asset amortization expense
139 
 
168 
211 
227 
 
 
 
 
 
 
Intangible assets and goodwill
$ 20,199 
$ 20,199 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets, useful life
 
11 years 10 months 24 days 
 
 
 
12 years 2 months 12 days 
 
4 years 9 months 18 days 
 
4 years 9 months 18 days 
 
Goodwill, Customer Relationships and Other Intangible Assets - Future Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Estimated amortization expense of acquired finite-lived intangible asset
 
2018
$ 829 
2019
829 
2020
829 
2021
829 
2022
$ 816 
Long-Term Debt - Schedule of Long Term Debt (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Predecessor
Dec. 31, 2017
5.750% Senior Notes due 2022
Dec. 31, 2016
5.750% Senior Notes due 2022
Predecessor
Dec. 31, 2017
Floating Rate Senior Notes due 2018
Dec. 31, 2016
Floating Rate Senior Notes due 2018
Predecessor
Sep. 29, 2017
Floating Rate Senior Notes due 2018
Predecessor
Dec. 31, 2017
6.125% Senior Notes due 2021
Dec. 31, 2016
6.125% Senior Notes due 2021
Predecessor
Dec. 31, 2017
5.375% Senior Notes due 2022
Dec. 31, 2016
5.375% Senior Notes due 2022
Predecessor
Dec. 31, 2017
5.625% Senior Notes due 2023
Dec. 31, 2016
5.625% Senior Notes due 2023
Predecessor
Dec. 31, 2017
5.125% Senior Notes due 2023
Dec. 31, 2016
5.125% Senior Notes due 2023
Predecessor
Dec. 31, 2017
5.375% Senior Notes due 2025
Dec. 31, 2016
5.375% Senior Notes due 2025
Predecessor
Dec. 31, 2017
5.375% Senior Notes due 2024
Dec. 31, 2016
5.375% Senior Notes due 2024
Predecessor
Dec. 31, 2017
5.25% Senior Notes due 2026
Dec. 31, 2016
5.25% Senior Notes due 2026
Predecessor
Dec. 31, 2017
Tranche B-III 2019 Term Loan
Dec. 31, 2016
Tranche B-III 2019 Term Loan
Predecessor
Dec. 31, 2017
Tranche B 2020 Term Loan
Dec. 31, 2016
Tranche B 2020 Term Loan
Predecessor
Dec. 31, 2017
Tranche B-II 2022 Term Loan
Dec. 31, 2016
Tranche B-II 2022 Term Loan
Predecessor
Dec. 31, 2017
Tranche B 2024 Term Loan
Feb. 22, 2017
Tranche B 2024 Term Loan
Predecessor
Dec. 31, 2016
Tranche B 2024 Term Loan
Predecessor
Dec. 31, 2017
Capital Leases and other debt
Dec. 31, 2016
Capital Leases and other debt
Predecessor
Dec. 31, 2016
Tranche B-III 2019 and Tranche B 2020 Term Loans
Predecessor
Dec. 31, 2017
LIBOR
Floating Rate Senior Notes due 2018
Dec. 31, 2017
LIBOR
Tranche B-III 2019 Term Loan
Dec. 31, 2017
LIBOR
Tranche B 2020 Term Loan
Dec. 31, 2017
LIBOR
Tranche B-II 2022 Term Loan
Dec. 31, 2017
LIBOR
Tranche B-II 2022 Term Loan
Minimum
Dec. 31, 2017
LIBOR
Tranche B 2024 Term Loan
Dec. 31, 2017
LIBOR
Tranche B 2024 Term Loan
Minimum
Feb. 22, 2017
LIBOR
Tranche B 2024 Term Loan
Predecessor
Feb. 22, 2017
LIBOR
Tranche B 2024 Term Loan
Predecessor
Minimum
Dec. 31, 2017
LIBOR
Tranche B-III 2019 and Tranche B 2020 Term Loans
Minimum
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, stated interest rate
 
 
5.75% 
 
 
 
 
6.125% 
 
5.375% 
 
5.625% 
 
5.125% 
 
5.375% 
 
5.375% 
 
5.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, interest rate spread on debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.25% 
 
 
 
 
 
3.50% 
3.00% 
3.00% 
2.75% 
0.75% 
2.25% 
1.00% 
2.25% 
0.00% 
1.00% 
Debt Obligations
 
 
$ 600 
$ 600 
$ 0 
$ 300 
$ 300 
$ 640 
$ 640 
$ 1,000 
$ 1,000 
$ 500 
$ 500 
$ 700 
$ 700 
$ 800 
$ 800 
$ 900 
$ 900 
$ 775 
$ 775 
$ 0 
$ 815 
$ 0 
$ 1,796 
$ 0 
$ 2,000 
$ 4,611 
$ 4,611 
$ 0 
$ 179 
$ 183 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premiums (discounts), net
185 
(13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized debt issuance costs
0 
(112)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
10,890 
10,884 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less current maturities
(8)
(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities
$ 10,882 
$ 10,877 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, interest rate during period
 
 
 
 
 
4.762% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.50% 
3.557% 
 
 
 
 
4.00% 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Narrative (Details) (USD $)
2 Months Ended 12 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Mar. 31, 2017
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
Tranche B 2024 Term Loan
Feb. 22, 2017
Tranche B 2024 Term Loan
Predecessor
Feb. 22, 2017
Tranche B 2024 Term Loan
Predecessor
Dec. 31, 2016
Tranche B 2024 Term Loan
Predecessor
Dec. 31, 2017
Tranche B 2024 Term Loan
Federal Funds Effective Rate
Dec. 31, 2017
Tranche B 2024 Term Loan
LIBOR
Feb. 22, 2017
Tranche B 2024 Term Loan
LIBOR
Predecessor
Dec. 31, 2017
Tranche B 2024 Term Loan
LIBOR
Minimum
Feb. 22, 2017
Tranche B 2024 Term Loan
LIBOR
Minimum
Predecessor
Dec. 31, 2017
Capital Leases and other debt
Dec. 31, 2016
Capital Leases and other debt
Predecessor
Dec. 31, 2017
Floating Rate Senior Notes due 2018
Sep. 29, 2017
Floating Rate Senior Notes due 2018
Predecessor
Sep. 29, 2017
Floating Rate Senior Notes due 2018
Predecessor
Dec. 31, 2016
Floating Rate Senior Notes due 2018
Predecessor
Dec. 31, 2017
Floating Rate Senior Notes due 2018
LIBOR
Long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Obligations
 
 
 
 
 
 
$ 4,611,000,000 
 
$ 4,611,000,000 
$ 0 
 
 
 
 
 
$ 179,000,000 
$ 183,000,000 
$ 0 
 
$ 300,000,000 
$ 300,000,000 
 
Debt instrument, interest rate spread on debt
 
 
 
 
 
 
1.25% 
 
 
 
0.50% 
2.25% 
2.25% 
1.00% 
0.00% 
 
 
 
 
 
 
3.50% 
Debt instrument, redemption period notice minimum
 
30 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption period notice maximum
 
60 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption price, percentage
 
101.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, weighted average interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
 
 
 
 
 
 
Deferred debt issuance costs, net
0 
0 
 
40,000,000 
11,000,000 
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized debt issuance costs
0 
0 
 
 
112,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Upfront basis point
 
 
 
 
 
 
 
0.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments of debt extinguishment costs
 
 
44,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on extinguishment of debt
$ 0 
 
 
$ (44,000,000)
$ (40,000,000)
$ (218,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
$ (1,000,000)
 
 
 
Long-Term Debt - Maturities of Debt (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Future contractual maturities of long-term debt and capital leases (excluding issue discounts, premiums and fair value adjustments)
 
2018
$ 8 
2019
7 
2020
8 
2021
650 
2022
1,610 
2023 and thereafter
8,422 
Total long-term debt
$ 10,705 
Accounts Receivable - Accounts Receivable (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2017
Trade and purchased receivables
Dec. 31, 2017
Earned and unbilled receivables
Dec. 31, 2017
Other
Dec. 31, 2016
Predecessor
Dec. 31, 2016
Predecessor
Trade and purchased receivables
Dec. 31, 2016
Predecessor
Earned and unbilled receivables
Dec. 31, 2016
Predecessor
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
Total accounts receivable
$ 751 
$ 562 
$ 165 
$ 24 
$ 741 
$ 588 
$ 140 
$ 13 
Less: allowance for doubtful accounts
(3)
 
 
 
(29)
 
 
 
Accounts receivable, less allowance
$ 748 
 
 
 
$ 712 
 
 
 
Accounts Receivable - Allowance for Doubtful Accounts (Details) (Allowance for Doubtful Accounts, USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Movement in Valuation Allowances and Reserves [Roll Forward]
 
 
 
 
Beginning Balance
$ 0 
$ 29 
$ 32 
$ 30 
Additions
3 
16 
18 
23 
Deductions
0 
(12)
(21)
(21)
Ending Balance
$ 3 
$ 33 
$ 29 
$ 32 
Property, Plant and Equipment - Net Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Land
Dec. 31, 2017
Fiber conduit and other outside plant
Dec. 31, 2017
Fiber conduit and other outside plant
Minimum
Dec. 31, 2017
Fiber conduit and other outside plant
Maximum
Dec. 31, 2017
Central office and other network electronics
Dec. 31, 2017
Central office and other network electronics
Minimum
Dec. 31, 2017
Central office and other network electronics
Maximum
Dec. 31, 2017
Support assets
Dec. 31, 2017
Support assets
Minimum
Dec. 31, 2017
Support assets
Maximum
Dec. 31, 2017
Construction-in-progress
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2016
Predecessor
Land
Dec. 31, 2016
Predecessor
Fiber conduit and other outside plant
Dec. 31, 2016
Predecessor
Central office and other network electronics
Dec. 31, 2016
Predecessor
Support assets
Dec. 31, 2016
Predecessor
Construction-in-progress
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciable Lives
 
 
 
15 years 
45 years 
 
3 years 
10 years 
 
3 years 
30 years 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
$ 9,555 
$ 348 
$ 4,750 
 
 
$ 2,134 
 
 
$ 2,019 
 
 
$ 304 
 
$ 21,388 
 
$ 179 
$ 9,110 
$ 8,846 
$ 3,023 
$ 230 
Accumulated depreciation
(143)
 
 
 
 
 
 
 
 
 
 
 
 
(11,249)
 
 
 
 
 
 
Net property, plant and equipment
9,412 
 
 
 
 
 
 
 
 
 
 
 
 
10,139 
 
 
 
 
 
 
Depreciation expense
$ 143 
 
 
 
 
 
 
 
 
 
 
 
$ 850 
$ 948 
$ 855 
 
 
 
 
 
Property, Plant and Equipment - Asset Retirement Obligations (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
 
 
 
 
Balance at beginning of period
$ 45 
$ 89 
$ 90 
$ 85 
Accretion expense
1 
12 
10 
9 
Liabilities settled
(1)
(7)
(9)
(8)
Revision in estimated cash flows
0 
0 
0 
5 
Effect of foreign currency rate change
0 
0 
(2)
(1)
Balance at end of period
$ 45 
$ 94 
$ 89 
$ 90 
Employee Benefits - Defined Contribution (Details) (USD $)
2 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2017
All Other Defined Contribution
Dec. 31, 2017
Cost of services and products
Dec. 31, 2017
Selling, general and administrative expense
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Oct. 31, 2017
Predecessor
All Other Defined Contribution
Dec. 31, 2016
Predecessor
All Other Defined Contribution
Dec. 31, 2015
Predecessor
All Other Defined Contribution
Oct. 31, 2017
Predecessor
Cost of services and products
Dec. 31, 2016
Predecessor
Cost of services and products
Dec. 31, 2015
Predecessor
Cost of services and products
Oct. 31, 2017
Predecessor
Selling, general and administrative expense
Dec. 31, 2016
Predecessor
Selling, general and administrative expense
Dec. 31, 2015
Predecessor
Selling, general and administrative expense
Defined Contribution Plan Disclosure [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined contribution plan, maximum annual contribution per employee
 
$ 18,000 
$ 18,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined contribution plan, maximum annual contribution per employee, percentage
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined contribution plan, employer matching contribution, percentage
 
4.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined contribution plan, cost
$ 7,000,000 
 
 
$ 1,000,000 
$ 1,000,000 
$ 5,000,000 
$ 30,000,000 
$ 37,000,000 
$ 36,000,000 
$ 5,000,000 
$ 6,000,000 
$ 6,000,000 
$ 4,000,000 
$ 5,000,000 
$ 5,000,000 
$ 26,000,000 
$ 32,000,000 
$ 31,000,000 
Employee Benefits - Defined Benefits (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Retirement Benefits [Abstract]
 
 
Defined Benefit Plan, Fair Value of Plan Assets
$ 147 
$ 136 
Defined Benefit Plan, Benefit Obligation
165 
158 
Defined Benefit Plan, Funded (Unfunded) Status of Plan
$ (18)
$ (22)
Share-based Compensation (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Share-based compensation expense
$ 26 
$ 132 
$ 156 
$ 141 
Products and Services Revenues - Revenue From Products and Services (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 12 Months Ended 2 Months Ended 1 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
segment
Dec. 31, 2017
country
Dec. 31, 2017
Core network services revenues
Dec. 31, 2017
Wholesale voice services
Oct. 31, 2017
Predecessor
Sep. 30, 2017
Predecessor
Jun. 30, 2017
Predecessor
Mar. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Sep. 30, 2016
Predecessor
Jun. 30, 2016
Predecessor
Mar. 31, 2016
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Oct. 31, 2017
Predecessor
Core network services revenues
Dec. 31, 2016
Predecessor
Core network services revenues
Dec. 31, 2015
Predecessor
Core network services revenues
Oct. 31, 2017
Predecessor
Wholesale voice services
Dec. 31, 2016
Predecessor
Wholesale voice services
Dec. 31, 2015
Predecessor
Wholesale voice services
Segment Reporting [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of reportable segments
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of countries with on-net access (more than)
 
60 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$ 1,391 
 
$ 1,331 
$ 60 
 
 
 
 
 
 
 
 
$ 6,870 
$ 8,173 
$ 8,230 
$ 6,543 
$ 7,767 
$ 7,757 
$ 327 
$ 406 
$ 473 
Affiliate revenues
16 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
 
 
 
 
 
 
Total operating revenues
$ 1,407 
$ 8,277 
 
 
$ 701 
$ 2,059 
$ 2,062 
$ 2,048 
$ 2,032 
$ 2,033 
$ 2,057 
$ 2,051 
$ 6,870 
$ 8,173 
$ 8,230 
 
 
 
 
 
 
Products and Services Revenues - Revenue from Geographic Region (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 2 Months Ended 10 Months Ended 2 Months Ended 10 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Sep. 30, 2017
Predecessor
Jun. 30, 2017
Predecessor
Mar. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Sep. 30, 2016
Predecessor
Jun. 30, 2016
Predecessor
Mar. 31, 2016
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
North America
Oct. 31, 2017
North America
Predecessor
Dec. 31, 2017
EMEA
Oct. 31, 2017
EMEA
Predecessor
Dec. 31, 2017
Latin America
Oct. 31, 2017
Latin America
Predecessor
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
$ 33,135 
$ 33,135 
 
 
 
 
$ 24,888 
 
 
 
 
$ 24,888 
 
$ 27,776 
 
$ 1,192 
 
$ 4,167 
 
Revenues
$ 1,407 
$ 8,277 
$ 701 
$ 2,059 
$ 2,062 
$ 2,048 
$ 2,032 
$ 2,033 
$ 2,057 
$ 2,051 
$ 6,870 
$ 8,173 
$ 8,230 
$ 1,155 
$ 5,651 
$ 128 
$ 607 
$ 124 
$ 612 
Affiliate Transactions (Details) (Subsequent event, USD $)
In Millions, unless otherwise specified
1 Months Ended
Jan. 31, 2018
Subsequent event
 
Subsequent Event [Line Items]
 
Distributions from subsidiaries
$ 150 
Fair Value Disclosure (Details) (Input Level 2, USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Carrying Amount
Dec. 31, 2016
Carrying Amount
Predecessor
Dec. 31, 2017
Fair Value
Dec. 31, 2016
Fair Value
Predecessor
Liabilities measured on a recurring basis
 
 
 
 
Liabilities-Long-term debt, excluding capital lease and other obligations
$ 10,711 
$ 10,701 
$ 10,528 
$ 10,954 
Income Taxes - Narrative (Details) (USD $)
2 Months Ended 12 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended 3 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Dec. 31, 2017
Foreign jurisdiction
Dec. 31, 2017
U.S. Internal Revenue Service (IRS)
Dec. 31, 2017
State jurisdiction
Dec. 31, 2016
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2016
Predecessor
Geographic distribution, foreign
Dec. 31, 2016
Predecessor
Foreign jurisdiction
Dec. 31, 2015
Predecessor
U.S. Internal Revenue Service (IRS)
Components of Income Tax Expense (Benefit) [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Tax Cuts and Jobs Act, provisional tax expense
$ 195,000,000 
$ 195,000,000 
 
 
 
 
 
 
 
 
 
 
Effective income tax rate
251.60% 
 
 
 
 
 
38.70% 
19.60% 
(1,113.00%)
 
 
 
Recognized income tax benefit
 
 
 
 
 
 
 
 
 
82,000,000 
110,000,000 
3,300,000,000 
Income tax expense (benefit) from change in valuation allowances
 
 
 
 
 
 
 
82,000,000 
3,300,000,000 
 
 
 
Net deferred tax assets
214,000,000 
214,000,000 
 
 
 
3,122,000,000 
 
3,122,000,000 
 
 
 
 
Deferred tax liabilities, noncurrent
212,000,000 
212,000,000 
 
 
 
248,000,000 
 
248,000,000 
 
 
 
 
Deferred tax assets, noncurrent
426,000,000 
426,000,000 
 
 
 
3,370,000,000 
 
3,370,000,000 
 
 
 
 
Increase in operating loss carryforwards
 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
Operating loss carryforwards
 
 
5,800,000,000 
9,900,000,000 
10,000,000,000 
 
 
 
 
 
 
 
Tax credits
 
 
15,000,000 
 
 
 
 
 
 
 
 
 
Deferred tax assets, valuation allowance
942,000,000 
942,000,000 
 
 
 
862,000,000 
 
862,000,000 
 
 
 
 
Valuation allowance increase (decrease)
 
80,000,000 
 
 
 
 
 
 
 
 
 
 
Deferred income tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
3,100,000,000 
Effective income tax rate reconciliation, share-based compensation, excess tax benefit, amount
 
 
 
 
 
 
 
22,000,000 
 
 
 
 
Effective income tax rate reconciliation, federal law changes
 
 
 
 
 
110,000,000 
 
 
 
 
 
 
Unrecognized tax benefits that would impact effective tax rate
20,000,000 
20,000,000 
 
 
 
17,000,000 
19,000,000 
17,000,000 
 
 
 
 
Unrecognized tax benefits, accrued interest
20,000,000 
20,000,000 
 
 
 
18,000,000 
 
18,000,000 
 
 
 
 
Decrease in unrecognized tax benefits is reasonably possible
$ 3,000,000 
$ 3,000,000 
 
 
 
 
 
 
 
 
 
 
Income Taxes - Income Tax Expense (Benefit) by Current and Deferred (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Jun. 30, 2016
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Federal
 
 
 
 
 
 
Current
$ 0 
 
 
$ 0 
$ 0 
$ 0 
Deferred
231 
 
 
193 
177 
(2,941)
State
 
 
 
 
 
 
Current
2 
 
 
7 
4 
3 
Deferred
6 
 
 
16 
27 
(246)
Foreign
 
 
 
 
 
 
Current
4 
 
 
39 
41 
33 
Deferred
(9)
 
 
13 
(84)
1 
Total income tax expense (benefit)
$ 234 
$ 16 
$ (40)
$ 268 
$ 165 
$ (3,150)
Income Taxes - Allocation of Income Tax Expense (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Jun. 30, 2016
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Income tax expense in the consolidated statements of operations:
 
 
 
 
 
 
Attributable to income
$ 234 
$ 16 
$ (40)
$ 268 
$ 165 
$ (3,150)
Member's/Stockholders' equity:
 
 
 
 
 
 
Tax effect of the change in accumulated other comprehensive loss
$ 17 
 
 
$ 49 
$ (43)
$ (11)
Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details)
2 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Income Tax Reconciliation [Line Items]
 
 
 
 
 
 
Statutory federal income tax rate
35.00% 
35.00% 
35.00% 
35.00% 
35.00% 
35.00% 
State income taxes, net of federal income tax benefit
3.60% 
 
 
2.90% 
3.70% 
5.20% 
Tax Reform/US Federal Law Changes
210.60% 
 
 
0.00% 
(13.20%)
0.00% 
Transaction costs
11.30% 
 
 
0.00% 
0.00% 
0.00% 
Change in liability of unrecognized tax position
1.20% 
 
 
0.10% 
0.10% 
(0.10%)
Net foreign income tax
(19.30%)
 
 
0.90% 
(6.70%)
26.60% 
Permanent items
5.00% 
 
 
1.80% 
1.20% 
2.60% 
Change in US valuation allowance
0.00% 
 
 
0.00% 
0.00% 
(1,199.80%)
Adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting
0.10% 
 
 
(0.50%)
(2.40%)
0.00% 
Research and development costs
(0.90%)
 
 
(1.20%)
0.00% 
0.00% 
Non-deductible loss on deconsolidation
0.00% 
 
 
0.00% 
0.00% 
20.20% 
Other, net
5.00% 
 
 
(0.30%)
1.90% 
(2.70%)
Effective income tax rate
251.60% 
 
 
38.70% 
19.60% 
(1,113.00%)
Income Taxes - Deferred Tax Assets (Liabilities) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Predecessor
Deferred tax assets
 
 
Deferred revenue
$ 256 
$ 364 
Net operating loss carry forwards
3,633 
4,550 
Property, plant and equipment
63 
95 
Other
282 
471 
Gross deferred tax assets
4,234 
5,480 
Less valuation allowance
(942)
(862)
Net deferred tax assets
3,292 
4,618 
Deferred tax liabilities
 
 
Deferred revenue
(44)
(57)
Property, plant and equipment
(689)
(962)
Intangible assets
(2,329)
(357)
Other
(16)
(120)
Gross deferred tax liabilities
(3,078)
(1,496)
Net deferred tax assets
$ 214 
$ 3,122 
Income Taxes - Unrecognized Tax Benefits (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Unrecognized tax benefits at beginning of period
$ 20 
$ 18 
$ 18 
Tax positions of prior periods netted against deferred tax assets
0 
0 
(1)
Increase (decrease) in tax positions taken in the prior period
1 
0 
1 
Increase in tax positions taken in the current period
0 
2 
2 
Decrease from the lapse of statute of limitations
0 
0 
0 
Unrecognized tax benefits at end of period
$ 21 
$ 20 
$ 18 
Quarterly Financial Data (Unaudited) (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Jun. 30, 2016
Dec. 31, 2017
Dec. 31, 2016
Brazil
Dec. 31, 2016
U.S. Internal Revenue Service (IRS)
Jun. 30, 2016
Senior Notes due 2020
Dec. 31, 2017
Senior Notes due 2020
Oct. 31, 2017
Predecessor
Sep. 30, 2017
Predecessor
Jun. 30, 2017
Predecessor
Mar. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Sep. 30, 2016
Predecessor
Jun. 30, 2016
Predecessor
Mar. 31, 2016
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
$ 1,407 
 
 
$ 8,277 
 
 
 
 
$ 701 
$ 2,059 
$ 2,062 
$ 2,048 
$ 2,032 
$ 2,033 
$ 2,057 
$ 2,051 
$ 6,870 
$ 8,173 
$ 8,230 
Operating Income
158 
 
 
1,309 
 
 
 
 
112 
349 
353 
337 
354 
354 
375 
362 
1,151 
1,445 
1,330 
Net (loss) income
(141)
 
 
284 
 
 
 
 
19 
157 
154 
95 
250 
143 
156 
128 
425 
677 
3,433 
Loss on modification and extinguishment of debt
0 
 
 
 
 
 
40 
 
 
 
 
 
 
 
 
 
44 
40 
218 
Debt instrument, stated interest rate
 
 
 
 
 
 
 
7.00% 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
234 
16 
(40)
 
(35)
(110)
 
 
 
 
 
 
 
 
 
 
268 
165 
(3,150)
Tax Cuts and Jobs Act, provisional tax expense
$ 195 
 
 
$ 195 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments, Contingencies and Other Items - Lawsuits (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 3 Months Ended 0 Months Ended
Dec. 31, 2017
property
Dec. 31, 2017
Peruvian Tax Litigation, Before Interest
Pending Litigation
Dec. 31, 2017
Peruvian Tax Litigation, Income Taxwitholding 2001 and 2002
Pending Litigation
Dec. 31, 2017
Peruvian Tax Litigation, Vat for 2001 and 2002
Pending Litigation
Dec. 31, 2017
Peruvian Tax Litigation, Disallowance of VAT in 2005
Pending Litigation
Dec. 31, 2017
Peruvian Tax Litigation
Pending Litigation
Dec. 31, 2017
Employee Severance and Contractor Termination Disputes
Pending Litigation
Dec. 31, 2017
Brazilian Tax Claims
Maximum
Pending Litigation
Dec. 31, 2014
Brazilian Tax Claims
Brazilian Tax Reserve Release
Pending Litigation
Sep. 30, 2014
Brazilian Tax Claims
Brazilian Tax Reserve Release
Pending Litigation
Nov. 26, 2013
United States of America ex rel., v. Level 3 Communications, Inc. et al.
Pending Litigation
Loss Contingencies
 
 
 
 
 
 
 
 
 
 
 
Estimated Litigation Liability
$ 88 
 
 
 
 
 
 
 
 
 
 
Loss Contingency, Asserted Claim
 
26 
3 
7 
16 
15 
29 
 
 
 
 
Loss Contingency Accrual, Period Increase (Decrease)
 
 
 
 
 
 
 
 
(3)
(6)
 
Loss Contingency Accrual, Payments
 
 
 
 
 
 
 
 
5 
 
 
Loss Contingency, Range of Possible Loss, Portion Not Accrued
 
 
 
 
 
 
 
53 
 
 
 
Loss contingency, damages sought, value
 
 
 
 
 
 
 
 
 
 
$ 50 
Number of properties with potential environmental liability
180 
 
 
 
 
 
 
 
 
 
 
Commitments, Contingencies and Other Items - Other Commitments (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 12 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Dec. 31, 2016
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Commitments and Contingencies Disclosure [Abstract]
 
 
 
 
 
 
Amount outstanding under letters of credit
$ 36 
$ 36 
$ 39 
 
 
 
Collateralized Financings
30 
30 
33 
 
 
 
Operating Leased Assets [Line Items]
 
 
 
 
 
 
Payments under these right-of-way agreements
35 
 
 
164 
205 
211 
Rent expense, including common area maintenance, under non-cancelable lease agreements
60 
 
 
283 
347 
357 
Right-of-Way Agreements
 
 
 
 
 
 
Right-of-Way Agreements, 2018
173 
173 
 
 
 
 
Right-of-Way Agreements, 2019
90 
90 
 
 
 
 
Right-of-Way Agreements, 2020
77 
77 
 
 
 
 
Right-of-Way Agreements, 2021
60 
60 
 
 
 
 
Right-of-Way Agreements, 2022
56 
56 
 
 
 
 
Right-of-Way Agreements, Thereafter
464 
464 
 
 
 
 
Right-of-Way Agreements, Total
920 
920 
 
 
 
 
Operating Leases
 
 
 
 
 
 
Operating Leases, 2018
288 
288 
 
 
 
 
Operating Leases, 2019
251 
251 
 
 
 
 
Operating Leases, 2020
217 
217 
 
 
 
 
Operating Leases, 2021
151 
151 
 
 
 
 
Operating Leases, 2022
128 
128 
 
 
 
 
Operating Leases, Thereafter
507 
507 
 
 
 
 
Operating Leases, Total
1,542 
1,542 
 
 
 
 
Total
 
 
 
 
 
 
Right-of-Way Agreements and Facilities, 2018
461 
461 
 
 
 
 
Right-of-Way Agreements and Facilities, 2019
341 
341 
 
 
 
 
Right-of-Way Agreements and Facilities, 2020
294 
294 
 
 
 
 
Right-of-Way Agreements and Facilities, 2021
211 
211 
 
 
 
 
Right-of-Way Agreements and Facilities, 2022
184 
184 
 
 
 
 
Right-of-Way Agreements and Facilities, Thereafter
971 
971 
 
 
 
 
Right-of-Way Agreements and Facilities, Total
2,462 
2,462 
 
 
 
 
Future Minimum Sublease Receipts
 
 
 
 
 
 
2018
3 
3 
 
 
 
 
2019
2 
2 
 
 
 
 
2020
1 
1 
 
 
 
 
2021
1 
1 
 
 
 
 
2022
1 
1 
 
 
 
 
Thereafter
1 
1 
 
 
 
 
Total
$ 9 
$ 9 
 
 
 
 
Period of Right-of-Way Agreements with cancelable agreements (in years)
 
1 year 
 
 
 
 
Commitments, Contingencies and Other Items - Purchase Commitments (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Long-term Purchase Commitment
 
2018
$ 175 
2019
93 
2020
67 
2021
34 
2022
25 
Thereafter
70 
Total
464 
Cost of Access Services
 
Long-term Purchase Commitment
 
2018
115 
2019
52 
2020
35 
2021
15 
2022
7 
Thereafter
2 
Total
226 
Third-Party Maintenance Services
 
Long-term Purchase Commitment
 
2018
60 
2019
41 
2020
32 
2021
19 
2022
18 
Thereafter
68 
Total
$ 238 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended 10 Months Ended
Dec. 31, 2017
Dec. 31, 2017
Pension Plans
Dec. 31, 2017
Foreign Currency Translation Adjustments and Other
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Oct. 31, 2017
Predecessor
Pension Plans
Oct. 31, 2017
Predecessor
Foreign Currency Translation Adjustments and Other
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
 
 
 
 
Beginning balance
$ 0 
$ 0 
$ 0 
$ (387)
 
 
$ (34)
$ (353)
Other comprehensive (loss) income before reclassifications
18 
0 
18 
78 
 
 
(3)
81 
Amounts reclassified from accumulated other comprehensive loss
0 
0 
0 
2 
 
 
2 
0 
Net other comprehensive (loss) income
18 
0 
18 
80 
(86)
(154)
(1)
81 
Ending balance
$ 18 
$ 0 
$ 18 
$ (307)
$ (387)
 
$ (35)
$ (272)
Other Financial Information - Other Current Assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Predecessor
Other Current Assets [Line Items]
 
 
Prepaid expenses
$ 68 
$ 82 
Material, supplies and inventory
3 
3 
Deferred activation and installation charges
17 
5 
Other
29 
25 
Total other current assets
$ 117 
$ 115 
Other Financial Information - Other Current Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Predecessor
Other Current Liabilities [Line Items]
 
 
Self insurance
$ 11 
$ 12 
Legal and tax reserves
31 
18 
Other
15 
22 
Total other current liabilities
$ 57 
$ 52 
Condensed Consolidating Financial Information - Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Jun. 30, 2016
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Sep. 30, 2017
Predecessor
Jun. 30, 2017
Predecessor
Mar. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Sep. 30, 2016
Predecessor
Jun. 30, 2016
Predecessor
Mar. 31, 2016
Predecessor
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
Eliminations
Oct. 31, 2017
Eliminations
Predecessor
Dec. 31, 2016
Eliminations
Predecessor
Dec. 31, 2015
Eliminations
Predecessor
Dec. 31, 2017
Level 3 Parent, LLC
Reportable Legal Entities
Oct. 31, 2017
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Financing, Inc.
Reportable Legal Entities
Oct. 31, 2017
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Communications, LLC
Reportable Legal Entities
Oct. 31, 2017
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Oct. 31, 2017
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
OPERATING REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$ 1,391 
 
 
 
 
 
 
 
 
 
 
 
$ 6,870 
$ 8,173 
$ 8,230 
$ (28)
$ (129)
$ (132)
$ (173)
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
$ 0 
$ 748 
$ 3,108 
$ 3,558 
$ 3,326 
$ 671 
$ 3,891 
$ 4,747 
$ 5,077 
Operating revenues - affiliate
16 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
0 
 
 
 
0 
 
 
 
0 
 
 
 
16 
 
 
 
0 
 
 
 
Total operating revenues
1,407 
 
 
8,277 
701 
2,059 
2,062 
2,048 
2,032 
2,033 
2,057 
2,051 
6,870 
8,173 
8,230 
(28)
(129)
(132)
(173)
0 
0 
0 
0 
0 
0 
0 
0 
764 
3,108 
3,558 
3,326 
671 
3,891 
4,747 
5,077 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
690 
 
 
 
 
 
 
 
 
 
 
 
3,493 
4,162 
4,349 
(28)
(129)
(132)
(173)
0 
0 
0 
0 
0 
0 
0 
0 
418 
1,942 
2,249 
2,201 
300 
1,680 
2,045 
2,321 
Selling, general and administrative
253 
 
 
 
 
 
 
 
 
 
 
 
1,208 
1,407 
1,469 
0 
0 
0 
0 
1 
4 
16 
4 
3 
3 
5 
0 
179 
942 
1,025 
1,064 
70 
259 
361 
401 
Operating expenses - affiliate
24 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
0 
 
 
 
0 
 
 
 
0 
 
 
 
24 
 
 
 
0 
 
 
 
Depreciation and amortization
282 
 
 
 
 
 
 
 
 
 
 
 
1,018 
1,159 
1,082 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
117 
356 
372 
298 
165 
662 
787 
784 
Total operating expenses
1,249 
 
 
 
 
 
 
 
 
 
 
 
5,719 
6,728 
6,900 
(28)
(129)
(132)
(173)
1 
4 
16 
4 
3 
3 
5 
0 
738 
3,240 
3,646 
3,563 
535 
2,601 
3,193 
3,506 
OPERATING INCOME
158 
 
 
1,309 
112 
349 
353 
337 
354 
354 
375 
362 
1,151 
1,445 
1,330 
0 
0 
0 
0 
(1)
(4)
(16)
(4)
(3)
(3)
(5)
0 
26 
(132)
(88)
(237)
136 
1,290 
1,554 
1,571 
OTHER INCOME (EXPENSE)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
1 
 
 
 
 
 
 
 
 
 
 
 
13 
4 
1 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1 
12 
3 
0 
0 
1 
1 
1 
Interest income - affiliate
11 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
0 
0 
0 
0 
11 
1,260 
1,385 
1,310 
0 
1,890 
2,113 
1,984 
0 
(2,896)
(3,215)
(3,041)
0 
(254)
(283)
(253)
Interest expense
(80)
 
 
 
 
 
 
 
 
 
 
 
(441)
(544)
(640)
0 
0 
0 
0 
(5)
(30)
(36)
(51)
(72)
(397)
(505)
(574)
0 
(2)
(2)
(3)
(3)
(12)
(1)
(12)
Interest income (expense) - affiliates, net
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
251 
 
 
 
368 
 
 
 
(578)
 
 
 
(41)
 
 
 
Loss on modification and extinguishment of debt
0 
 
 
 
 
 
 
 
 
 
 
 
(44)
(40)
(218)
 
0 
 
 
 
0 
 
 
 
(44)
 
 
 
0 
 
 
 
0 
 
 
Equity in net (losses) earnings of subsidiaries
0 
 
 
 
 
 
 
 
 
 
 
 
0 
0 
0 
771 
2,261 
1,945 
(646)
(827)
(815)
(669)
2,162 
(15)
(2,138)
(2,033)
(1,693)
71 
692 
757 
177 
0 
0 
0 
0 
Other income, net
3 
 
 
 
 
 
 
 
 
 
 
 
14 
(63)
(408)
0 
0 
0 
0 
1 
3 
(1)
(18)
0 
0 
(39)
(200)
2 
15 
2 
2 
0 
(4)
(25)
(192)
Total other expense, net
(65)
 
 
 
 
 
 
 
 
 
 
 
(458)
(603)
(1,047)
771 
2,261 
1,945 
(646)
(569)
418 
679 
3,403 
281 
(689)
(464)
(483)
(504)
(2,179)
(2,455)
(2,865)
(44)
(269)
(308)
(456)
INCOME BEFORE INCOME TAX (EXPENSE) BENEFIT
93 
 
 
 
 
 
 
 
 
 
 
 
693 
842 
283 
771 
2,261 
1,945 
(646)
(570)
414 
663 
3,399 
278 
(692)
(469)
(483)
(478)
(2,311)
(2,543)
(3,102)
92 
1,021 
1,246 
1,115 
Income tax (expense) benefit
(234)
(16)
40 
 
 
 
 
 
 
 
 
 
(268)
(165)
3,150 
0 
0 
0 
0 
429 
11 
14 
34 
(1,105)
(123)
(200)
2,645 
433 
(2)
(2)
(1)
9 
(154)
23 
472 
NET (LOSS) INCOME
(141)
 
 
284 
19 
157 
154 
95 
250 
143 
156 
128 
425 
677 
3,433 
771 
2,261 
1,945 
(646)
(141)
425 
677 
3,433 
(827)
(815)
(669)
2,162 
(45)
(2,313)
(2,545)
(3,103)
101 
867 
1,269 
1,587 
Other comprehensive income, net of income taxes
18 
 
 
 
 
 
 
 
 
 
 
 
80 
(86)
(154)
(18)
0 
86 
154 
18 
80 
(86)
(154)
0 
0 
0 
0 
0 
0 
0 
0 
18 
0 
(86)
(154)
COMPREHENSIVE (LOSS) INCOME
$ (123)
 
 
 
 
 
 
 
 
 
 
 
$ 505 
$ 591 
$ 3,279 
$ 753 
$ 2,261 
$ 2,031 
$ (492)
$ (123)
$ 505 
$ 591 
$ 3,279 
$ (827)
$ (815)
$ (669)
$ 2,162 
$ (45)
$ (2,313)
$ (2,545)
$ (3,103)
$ 119 
$ 867 
$ 1,183 
$ 1,433 
Condensed Consolidating Financial Information - Balance Sheets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
Eliminations
Dec. 31, 2016
Eliminations
Predecessor
Dec. 31, 2017
Level 3 Parent, LLC
Reportable Legal Entities
Dec. 31, 2016
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Financing, Inc.
Reportable Legal Entities
Dec. 31, 2016
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Communications, LLC
Reportable Legal Entities
Dec. 31, 2016
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Dec. 31, 2016
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$ 297 
 
$ 1,819 
 
$ 0 
$ 0 
$ 13 
$ 15 
$ 0 
$ 0 
$ 175 
$ 1,700 
$ 109 
$ 104 
Restricted cash and securities
5 
 
7 
 
0 
0 
0 
0 
0 
0 
1 
1 
4 
6 
Assets held for sale
140 
 
0 
 
0 
 
68 
 
0 
 
5 
 
67 
 
Accounts receivable
748 
 
712 
 
0 
0 
0 
0 
0 
0 
26 
26 
722 
686 
Accounts receivable - affiliate
13 
 
0 
 
(51)
 
0 
 
0 
 
60 
 
4 
 
Advances to affiliates
0 
 
0 
 
(42,483)
(40,927)
16,251 
17,032 
21,032 
21,715 
0 
0 
5,200 
2,180 
Note receivable - affiliate
1,825 
 
0 
 
0 
 
1,825 
 
0 
 
0 
 
0 
 
Other
117 
 
115 
 
0 
0 
0 
0 
0 
0 
54 
87 
63 
28 
Total current assets
3,145 
 
2,653 
 
(42,534)
(40,927)
18,157 
17,047 
21,032 
21,715 
321 
1,814 
6,169 
3,004 
NET PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
9,555 
 
21,388 
 
0 
0 
0 
0 
0 
0 
3,285 
10,424 
6,270 
10,964 
Accumulated depreciation
(143)
 
(11,249)
 
0 
0 
0 
0 
0 
0 
(48)
(6,555)
(95)
(4,694)
Net property, plant and equipment
9,412 
 
10,139 
 
0 
0 
0 
0 
0 
0 
3,237 
3,869 
6,175 
6,270 
Restricted cash and securities
29 
 
31 
 
0 
0 
19 
22 
0 
0 
10 
9 
0 
0 
GOODWILL AND OTHER ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
10,837 
 
7,729 
 
0 
0 
0 
0 
0 
0 
1,200 
352 
9,637 
7,377 
Customer relationships, net
8,845 
 
860 
 
0 
0 
0 
0 
0 
0 
4,324 
0 
4,521 
860 
Other intangible assets, net
378 
 
55 
 
0 
 
0 
0 
0 
0 
378 
1 
0 
54 
Investment in subsidiaries
0 
 
0 
 
(38,973)
(38,142)
16,954 
16,869 
18,403 
17,599 
3,616 
3,674 
0 
0 
Deferred tax assets
426 
 
3,370 
 
(1,771)
0 
280 
51 
1,795 
2,687 
0 
0 
122 
632 
Other, net
63 
 
51 
 
0 
0 
0 
0 
0 
0 
32 
16 
31 
35 
Total goodwill and other assets
20,549 
 
12,065 
 
(40,744)
(38,142)
17,234 
16,920 
20,198 
20,286 
9,550 
4,043 
14,311 
8,958 
TOTAL ASSETS
33,135 
 
24,888 
 
(83,278)
(79,069)
35,410 
33,989 
41,230 
42,001 
13,118 
9,735 
26,655 
18,232 
CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
8 
 
7 
 
0 
0 
0 
0 
0 
0 
2 
2 
6 
5 
Accounts payable
695 
 
706 
 
0 
0 
0 
0 
1 
0 
323 
307 
371 
399 
Accounts payable - affiliate
41 
 
0 
 
(51)
 
11 
 
0 
 
0 
 
81 
 
Accrued expenses and other liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income and other taxes
100 
 
116 
 
0 
0 
0 
0 
0 
0 
55 
103 
45 
13 
Salaries and benefits
136 
 
195 
 
0 
0 
0 
0 
0 
0 
109 
160 
27 
35 
Interest
109 
 
129 
 
0 
0 
11 
11 
91 
110 
0 
0 
7 
8 
Current portion of deferred revenue
258 
 
266 
 
0 
0 
0 
0 
0 
0 
127 
116 
131 
150 
Current portion of deferred revenue - affiliate
2 
 
0 
 
0 
 
0 
 
0 
 
2 
 
0 
 
Other
57 
 
52 
 
0 
0 
16 
0 
0 
0 
23 
24 
18 
28 
Due to affiliates
0 
 
0 
 
(42,483)
(40,927)
0 
0 
0 
0 
42,483 
40,927 
0 
0 
Total current liabilities
1,406 
 
1,471 
 
(42,534)
(40,927)
38 
11 
92 
110 
43,124 
41,639 
686 
638 
LONG-TERM DEBT
10,882 
 
10,877 
 
0 
0 
616 
592 
10,096 
10,108 
13 
13 
157 
164 
DEFERRED CREDITS AND OTHER LIABILITES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred credits
1,093 
 
1,001 
 
0 
0 
0 
0 
0 
0 
841 
719 
252 
282 
Deferred credits - affiliate
6 
 
0 
 
0 
 
0 
 
0 
 
5 
 
1 
 
Deferred tax liability
212 
 
248 
 
(1,771)
0 
648 
0 
0 
0 
870 
0 
465 
248 
Other
264 
 
374 
 
0 
0 
1 
16 
1 
0 
98 
155 
164 
203 
Total deferred credits and other liabilities
1,575 
 
1,623 
 
(1,771)
0 
649 
16 
1 
0 
1,814 
874 
882 
733 
COMMITMENTS AND CONTINGENCIES
   
 
   
 
 
 
 
 
 
 
 
 
 
 
MEMBER'S/STOCKHOLDERS' EQUITY (DEFICIT)
19,272 
11,554 
10,917 
10,126 
(38,973)
(38,142)
34,107 
33,370 
31,041 
31,783 
(31,833)
(32,791)
24,930 
16,697 
TOTAL LIABILITIES AND MEMBER'S/STOCKHOLDERS' EQUITY
$ 33,135 
 
$ 24,888 
 
$ (83,278)
$ (79,069)
$ 35,410 
$ 33,989 
$ 41,230 
$ 42,001 
$ 13,118 
$ 9,735 
$ 26,655 
$ 18,232 
Condensed Consolidating Financial Information - Statements of Cash Flows (Details) (USD $)
In Millions, unless otherwise specified
2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended 2 Months Ended 10 Months Ended 12 Months Ended
Dec. 31, 2017
Oct. 31, 2017
Predecessor
Dec. 31, 2016
Predecessor
Dec. 31, 2015
Predecessor
Dec. 31, 2017
Eliminations
Oct. 31, 2017
Eliminations
Predecessor
Dec. 31, 2016
Eliminations
Predecessor
Dec. 31, 2015
Eliminations
Predecessor
Dec. 31, 2017
Level 3 Parent, LLC
Reportable Legal Entities
Oct. 31, 2017
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Parent, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Financing, Inc.
Reportable Legal Entities
Oct. 31, 2017
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Financing, Inc.
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Level 3 Communications, LLC
Reportable Legal Entities
Oct. 31, 2017
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Level 3 Communications, LLC
Reportable Legal Entities
Predecessor
Dec. 31, 2017
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Oct. 31, 2017
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
Dec. 31, 2016
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
Dec. 31, 2015
Other Non-Guarantor Subsidiaries
Reportable Legal Entities
Predecessor
Condensed Consolidating Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$ 308 
$ 1,914 
$ 2,343 
$ 1,855 
$ 0 
$ 0 
$ 0 
$ 0 
$ (1)
$ (61)
$ (49)
$ (41)
$ 0 
$ (401)
$ (468)
$ (617)
$ 172 
$ 1,615 
$ 565 
$ 193 
$ 137 
$ 761 
$ 2,295 
$ 2,320 
INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(207)
(1,119)
(1,334)
(1,229)
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
(110)
(667)
(704)
(453)
(97)
(452)
(630)
(776)
Note receivable - affiliate
(1,825)
0 
0 
0 
0 
 
 
 
0 
 
 
 
0 
 
 
 
(1,825)
 
 
 
0 
 
 
 
Cash related to deconsolidated Venezuela operations
0 
0 
0 
(83)
 
 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
(83)
Purchase of marketable securities
0 
(1,127)
0 
0 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
(1,127)
 
 
 
0 
 
 
Maturity of marketable securities
0 
1,127 
0 
0 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
1,127 
 
 
 
0 
 
 
Proceeds from sale of property, plant and equipment and other assets
0 
1 
3 
4 
 
0 
0 
0 
 
0 
0 
0 
 
0 
0 
0 
 
1 
1 
0 
 
0 
2 
4 
Other, net
0 
0 
0 
(14)
 
 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
(14)
 
 
 
0 
Net cash used in investing activities
(2,032)
(1,118)
(1,331)
(1,322)
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
(1,935)
(666)
(703)
(467)
(97)
(452)
(628)
(855)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from issuance of long-term debt
0 
4,569 
764 
4,832 
 
0 
0 
0 
 
0 
0 
0 
 
4,569 
764 
4,832 
 
0 
0 
0 
 
0 
0 
0 
Payments of long-term debt
(1)
(4,917)
(820)
(5,051)
0 
0 
0 
0 
0 
0 
0 
(313)
0 
(4,911)
(806)
(4,725)
0 
1 
(1)
(2)
(1)
(7)
(13)
(11)
Distributions
(250)
0 
0 
0 
0 
 
 
 
(250)
 
 
 
0 
 
 
 
0 
 
 
 
0 
 
 
 
Increase (decrease) due from/to affiliates, net
0 
0 
0 
0 
0 
0 
0 
0 
250 
57 
47 
383 
0 
743 
504 
511 
(250)
(460)
1,107 
693 
0 
(340)
(1,658)
(1,587)
Net cash used in financing activities
(251)
(348)
(56)
(219)
0 
0 
0 
0 
0 
57 
47 
70 
0 
401 
462 
618 
(250)
(459)
1,106 
691 
(1)
(347)
(1,671)
(1,598)
Effect of exchange rates on cash, cash equivalents and restricted cash and securities
(2)
3 
(3)
(18)
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
(2)
3 
(3)
(18)
Net increase (decrease) in cash, cash equivalents and restricted cash and securities
(1,977)
451 
953 
296 
0 
0 
0 
0 
(1)
(4)
(2)
29 
0 
0 
(6)
1 
(2,013)
490 
968 
417 
37 
(35)
(7)
(151)
Cash, cash equivalents and restricted cash and securities at beginning of period
2,308 
1,857 
904 
608 
0 
0 
0 
0 
33 
37 
39 
10 
0 
0 
6 
5 
2,199 
1,710 
742 
325 
76 
110 
117 
268 
Cash, cash equivalents and restricted cash and securities at end of period
$ 331 
$ 2,308 
$ 1,857 
$ 904 
$ 0 
$ 0 
$ 0 
$ 0 
$ 32 
$ 33 
$ 37 
$ 39 
$ 0 
$ 0 
$ 0 
$ 6 
$ 186 
$ 2,200 
$ 1,710 
$ 742 
$ 113 
$ 75 
$ 110 
$ 117