XML 25 R11.htm IDEA: XBRL DOCUMENT
v3.23.1

Planned Divestiture of the EMEA Business | 3 Months Ended
--- | ---
Mar. 31, 2023
Discontinued Operations and Disposal Groups [Abstract] |
Planned Divestiture of the EMEA Business | Planned Divestiture of the EMEA Business On November 2, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., granted an option to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, to purchase certain of their operations in Europe, the Middle East and Africa (the "EMEA business"), in exchange for $1.8 billion in cash, subject to certain working capital and other purchase price adjustments. Following the completion of a French consultative process, Colt exercised its option and on February 8, 2023, the parties entered into a definitive purchase agreement, which contains various customary covenants for transactions of this type including various indemnities. Level 3 Parent, LLC expects to close the transaction as early as late 2023, subject to receiving all requisite regulatory approvals in the U.S. and certain countries where the EMEA business operates, as well as the satisfaction of other customary conditions. The actual amount of our net after-tax proceeds from this divestiture could vary substantially from the amounts we currently estimate, particularly if we experience delays in completing the transaction or if any of our other assumptions prove to be incorrect. We do not believe this divestiture represents a strategic shift for Lumen. Therefore, the planned divestiture of the EMEA business does not meet the criteria to be classified as discontinued operations. As a result, we will continue to report our operating results for the EMEA business (the "disposal group") in our consolidated operating results until the transaction is closed. As of March 31, 2023 in the accompanying consolidated balance sheet, the assets and liabilities of our EMEA business are classified as held for sale and measured at the lower of (i) the carrying value when we classified the disposal group as held for sale and (ii) the fair value of the disposal group, less costs to sell. Effective with the designation of the disposal group as held for sale on November 2, 2022, 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 $72 million of depreciation, intangible amortization, and amortization of right-of-use assets for the three months ended March 31, 2023 if the EMEA business did not meet the held for sale criteria. The classification of the EMEA business as held for sale was considered an event or change in circumstance which requires an assessment of the goodwill of the disposal group for impairment each reporting period until disposal. We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3—Goodwill, Customer Relationships and Other Intangible Assets in our Annual Report on Form 10-K for the year ended December 31, 2022. As a result of our impairment tests, we determined the EMEA business disposal group was impaired resulting in a non-cash, non-tax-deductible goodwill impairment charge of $43 million. We evaluated 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, and recorded an estimated loss on disposal of $660 million during the year ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in assets held for sale on the consolidated balance sheet. As a result of our evaluation of the recoverability of the carrying value of the EMEA assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, as of March 31, 2023, we recorded an additional $77 million estimated loss on disposal during the three months ended March 31, 2023 and increased the valuation allowance by the same amount. In future quarters, we will conduct similar evaluations and to adjust the valuation allowance for the EMEA assets held for sale, as necessary. The principal components of the held for sale assets and liabilities of the EMEA business as of the dates below are as follows:
| March 31, 2023 |  | December 31, 2022 |  |
| (Dollars in millions)
Assets held for sale |  |  |  |  |
Cash and cash equivalents | $ | 40 |  |  | 43 |  |  |
Accounts receivable, less allowance of $5 and $5 | 85 |  |  | 76 |  |  |
Other current assets | 70 |  |  | 59 |  |  |
Property, plant and equipment, net of accumulated depreciation of $1,047 and $1,033 | 1,934 |  |  | 1,873 |  |  |
Customer relationships and other intangible assets, net | 103 |  |  | 100 |  |  |
Operating lease assets | 170 |  |  | 156 |  |  |
Valuation allowance on assets held for sale(1) | (737) |  |  | (660) |  |  |
Deferred tax assets | 154 |  |  | 138 |  |  |
Other non-current assets | 39 |  |  | 38 |  |  |
Total assets held for sale | $ | 1,858 |  |  | 1,823 |  |  |
Liabilities held for sale |  |  |  |  |
Accounts payable | $ | 74 |  |  | 78 |  |  |
Salaries and benefits | 13 |  |  | 23 |  |  |
Current portion of deferred revenue | 37 |  |  | 28 |  |  |
Current operating lease liabilities | 38 |  |  | 33 |  |  |
Other current liabilities | 33 |  |  | 28 |  |  |
Deferred income taxes, net | 45 |  |  | 38 |  |  |
Asset retirement obligations | 31 |  |  | 30 |  |  |
Deferred revenue, non-current | 96 |  |  | 85 |  |  |
Operating lease liabilities, non-current | 100 |  |  | 103 |  |  |
Total liabilities held for sale | $ | 467 |  |  | 446 |  |  |
______________________________________________________________________ (1)Includes the impact of $369 million and $365 million as of March 31, 2023 and December 31, 2022, respectively, primarily related to loss on foreign currency translation, expected to be reclassified out of accumulated other comprehensive loss upon close of the sale.

X
- References No definition available. + Details
Name: | us-gaap_DiscontinuedOperationsAndDisposalGroupsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration