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Recently Completed Divestiture of the Latin American Business and Planned Divestiture of ILEC Businesses | 6 Months Ended
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Jun. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Recently Completed Divestiture of the Latin American Business and Planned Divestiture of ILEC Businesses | Recently Completed Divestiture of the Latin American Business and Planned Divestiture of ILEC Business On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., sold Lumen’s Latin American business pursuant to a definitive agreement dated July 25, 2021. See Note 17—Subsequent Events for additional information regarding this divestiture. On August 3, 2021, we and certain of our affiliates entered into a definitive agreement to divest our incumbent local exchange ("ILEC") business conducted within 20 Midwestern and Southern states to an affiliate of funds advised by Apollo Global Management, Inc. In exchange, we would receive $7.5 billion, subject to offsets for (i) assumed indebtedness (expected to be approximately $1.4 billion) and (ii) certain purchaser’s transaction expenses along with working capital, tax, other customary purchase price adjustments and related transaction expenses (estimated to be approximately $1.7 billion). We anticipate closing the transaction during the second half of 2022 upon receipt of all regulatory approvals and the satisfaction of other customary closing conditions. The actual amount of our net after-tax proceeds from these divestitures could vary substantially from the amounts we currently estimate, particularly if we experience delays in completing our pending ILEC divestiture or if any of our other assumptions prove to be incorrect. We do not believe these divestitures represent a strategic shift for Lumen. Therefore, neither divested business meets the criteria to be classified as a discontinued operation. As a result, we continue to report our operating results for the Latin American and ILEC businesses (the "disposal groups") in our consolidated operating results through their respective disposal dates. Level 3 Parent, LLC closed the sale of the Latin American business on August 1, 2022 (see Note 17—Subsequent Events for additional information regarding the close of this sale). The pre-tax net income of the disposal groups is estimated to be as follows in the tables below:
| Three Months Ended June 30,
| 2022 |  | 2021
| (Dollars in millions)
Latin American business pre-tax net income | $ | 95 |  |  | 47 |
ILEC business pre-tax net income | 168 |  |  | 149 |
Total disposal groups pre-tax net income | $ | 263 |  |  | 196 |
| Six Months Ended June 30,
| 2022 |  | 2021
| (Dollars in millions)
Latin American business pre-tax net income | $ | 178 |  |  | 75 |
ILEC business pre-tax net income | 412 |  |  | 294 |
Total disposal groups pre-tax net income | $ | 590 |  |  | 369 |
As of June 30, 2022 in the accompanying consolidated balance sheet, the assets and liabilities of our Latin American and ILEC businesses are classified as held for sale and are measured at the lower of (i) the carrying value of the disposal groups and (ii) the fair value of the disposal groups, less costs to sell. Effective with the designation of both disposal groups as held for sale on July 25, 2021 and August 3, 2021, respectively, we suspended recording depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets while these assets are classified as held for sale. We estimate that we would have recorded an additional $163 million and $333 million of depreciation, intangible amortization, and amortization of right-of-use assets for the three and six months ended June 30, 2022, respectively, if the Latin American and ILEC businesses did not meet the held for sale criteria, of which $48 million and $97 million relates to the Latin American business and $115 million and $236 million relates to the ILEC business. As a result of our evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, we did not record any estimated loss on disposal during the six months ended June 30, 2022. We re-evaluate the recoverability of each disposal group each reporting period through their respective disposal dates. For information on the August 1, 2022 disposal of the Latin American business, see Note 17—Subsequent Events. The principal components of the held for sale assets and liabilities as of the dates below are as follows:
| June 30, 2022 |  | December 31, 2021
| Latin American Business |  | ILEC Business |  | Total |  | Latin American Business |  | ILEC Business |  | Total
| (Dollars in millions)
Assets held for sale |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 48 |  |  | — |  |  | 48 |  |  | 39 |  |  | 1 |  |  | 40 |
Accounts receivable, less allowance of $2, $17, $19, $3, $21 and $24 | 94 |  |  | 197 |  |  | 291 |  |  | 83 |  |  | 227 |  |  | 310 |
Other current assets | 79 |  |  | 42 |  |  | 121 |  |  | 81 |  |  | 45 |  |  | 126 |
Property, plant and equipment, net accumulated depreciation of $431, $8,251, $8,682, $434, $8,303 and $8,737 | 1,714 |  |  | 3,582 |  |  | 5,296 |  |  | 1,591 |  |  | 3,491 |  |  | 5,082 |
Goodwill(1) | 246 |  |  | 2,581 |  |  | 2,827 |  |  | 239 |  |  | 2,615 |  |  | 2,854 |
Other intangible assets, net | 130 |  |  | 158 |  |  | 288 |  |  | 126 |  |  | 158 |  |  | 284 |
Other non-current assets | 80 |  |  | 45 |  |  | 125 |  |  | 75 |  |  | 38 |  |  | 113 |
Total assets held for sale | $ | 2,391 |  |  | 6,605 |  |  | 8,996 |  |  | 2,234 |  |  | 6,575 |  |  | 8,809 |
Liabilities held for sale |  |  |  |  |  |  |  |  |  |  |
Accounts payable | $ | 110 |  |  | 56 |  |  | 166 |  |  | 101 |  |  | 64 |  |  | 165 |
Salaries and benefits | 21 |  |  | 21 |  |  | 42 |  |  | 23 |  |  | 25 |  |  | 48 |
Income and other taxes | 37 |  |  | 29 |  |  | 66 |  |  | 27 |  |  | 24 |  |  | 51 |
Interest | — |  |  | 10 |  |  | 10 |  |  | — |  |  | 10 |  |  | 10 |
Current portion of deferred revenue | 27 |  |  | 81 |  |  | 108 |  |  | 26 |  |  | 90 |  |  | 116 |
Other current liabilities | 7 |  |  | 26 |  |  | 33 |  |  | 7 |  |  | 35 |  |  | 42 |
Long-term debt, net of discounts(2) | — |  |  | 1,395 |  |  | 1,395 |  |  | — |  |  | 1,377 |  |  | 1,377 |
Deferred income taxes, net | 149 |  |  | — |  |  | 149 |  |  | 129 |  |  | — |  |  | 129 |
Pension and other post-retirement benefits(3) | 3 |  |  | 56 |  |  | 59 |  |  | 2 |  |  | 56 |  |  | 58 |
Other non-current liabilities | 125 |  |  | 94 |  |  | 219 |  |  | 120 |  |  | 141 |  |  | 261 |
Total liabilities held for sale | $ | 479 |  |  | 1,768 |  |  | 2,247 |  |  | 435 |  |  | 1,822 |  |  | 2,257 |
______________________________________________________________________ (1)The assignment of goodwill was based on the relative fair values of the applicable reporting units prior to being reclassified as held for sale. (2)Long-term debt, net of discounts, as of June 30, 2022 and December 31, 2021 includes (i) $1.4 billion of 7.995% Embarq senior notes maturing in 2036, (ii) $115 million and $117 million of related unamortized discounts, respectively, and (iii) $73 million and $57 million of long-term finance lease obligations, respectively. (3)Excludes pension obligation of approximately $2.5 billion for the ILEC business as of both June 30, 2022 and December 31, 2021, which will be transferred to the purchaser of the ILEC business upon closing. As of January 1, 2022, a new pension plan (the "Lumen Pension Plan") was spun off in anticipation of this transfer. Along with the transfer of the $2.5 billion pension benefit obligation, $2.2 billion of assets were allocated to the new plan. The remaining portion of the obligation is expected to be separately funded with cash paid by Lumen at the time of closing. See Note 8—Employee Benefits for additional information.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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