Planned Divestiture of the Latin American and ILEC Businesses (Tables)

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Components of Pre-Tax Income and Held for Sale Assets and Liabilities

The pre-tax net income of the disposal groups is estimated to be as follows in the tables below:

	Three Months Ended September 30,
	2021			2020
	Low		High	Low	High
	(Dollars in millions)
Latin American business pre-tax net income	$	59	72	36	45
ILEC business pre-tax net income	221		271	139	169
Total disposal groups pre-tax net income	$	280	343	175	214

	Nine Months Ended September 30,
	2021			2020
	Low		High	Low	High
	(Dollars in millions)
Latin American business pre-tax net income	$	131	160	108	131
ILEC business pre-tax net income	518		633	455	556
Total disposal groups pre-tax net income	$	649	793	563	687

The principal components of the held for sale assets and liabilities as of September 30, 2021 are as follows:

	September 30, 2021
	Latin American Business		ILEC Business	Total (4)
	(Dollars in millions)
Assets held for sale
Cash and cash equivalents	$	37	2	39
Accounts receivable, less allowance of $3, $21 and $24	83		230	313
Other current assets	75		46	121
Property, plant and equipment, net accumulated depreciation of $445, $10,976 and $11,421	1,545		3,386	4,931
Goodwill (1)	244		2,615	2,859
Other intangible assets, net	129		158	287
Other non-current assets	71		41	112
Total assets held for sale	$	2,184	6,478	8,662
Liabilities held for sale
Accounts payable	$	76	79	155
Salaries and benefits	22		28	50
Income and other taxes	32		31	63
Interest	—		38	38
Current portion of deferred revenue	28		90	118
Other current liabilities	10		43	53
Long-term debt, net of discounts (2)	—		1,367	1,367
Deferred income taxes, net	116		—	116
Pension and other post-retirement benefits (3)	2		56	58
Other non-current liabilities	126		147	273
Total liabilities held for sale	$	412	1,879	2,291

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(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 includes $1.4 billion of Embarq Senior notes, $118 million of related unamortized discounts and $48 million of long-term finance lease obligations.

(3)Excludes pension obligation of approximately $2.5 billion for the ILEC business as of September 30, 2021, which will be transferred to the purchaser of the ILEC business upon closing. As of September 30, 2021, approximately $2.2 billion, or 89%, of this pension obligation is expected to be funded through the transfer of Lumen pension plan assets to the purchaser. The remaining portion of the obligation is expected to be separately funded with cash paid by Lumen at the time of closing.

(4)The totals shown here exclude $20 million of assets held for sale unrelated to these divestitures.