8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2020

Qwest Corporation

(Exact name of registrant as specified in its charter)

Colorado	001-03040	84-0273800
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

100 CenturyLink Drive
Monroe, Louisiana	71203
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (318) 388-9000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
6.125% Notes due 2053	CTY	New York Stock Exchange
6.875% Notes due 2054	CTV	New York Stock Exchange
6.625% Notes due 2055	CTZ	New York Stock Exchange
7.00% Notes due 2056	CTAA	New York Stock Exchange
6.5% Notes due 2056	CTBB	New York Stock Exchange
6.75% Notes due 2057	CTDD	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 8.01 Other Events.

During the first quarter of 2020, Qwest Corporation (“we” or “our”) made certain changes to our financial reporting as detailed below.

We have elected to change the presentation for taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, including federal and certain state Universal Service Fund (USF) regulatory fees, to present all such taxes on a net basis in our Consolidated Statements of Operations. Prior to the first quarter of 2020, we presented such USF fees on a gross basis within operating revenue and costs of services and products, and all other significant taxes on a net basis. We changed our policy to present such taxes on the net basis and believe the new policy is preferable because of the historical and potential future regulatory rate changes outside of our control resulting in significant variability in tax and fee revenue that is not indicative of our operating performance. We believe that the net presentation provides the most useful and transparent financial information and improves comparability and consistency of financial results. As a result of this decision, the amount of operating revenue and cost of services and products being reported will be lower than in prior years. These changes do not affect Operating Income (Loss) or Net Income (Loss) on the Consolidated Statements of Operations. Commencing in the first quarter of 2020, this change in accounting policy will be applied retrospectively.

In addition to these changes, we reclassified certain products and services within our six primary categories used to report products and services revenue: IP and Data Services, Transport and Infrastructure, Voice and Collaboration, IT and Managed Services, Regulatory Revenue, and Affiliate Services. The product and service reclassifications do not have any impact on the total revenue previously reported. The impact of these reclassifications has been applied retrospectively and was immaterial to reported product and service offering revenue results.

To enable a comparison between the information to be presented in our first quarter 2020 Form 10-Q filing with prior periods’ filings, we have furnished herewith as Exhibit 99.1 unaudited supplemental financial information that recasts our historical operating revenue and cost of services and products and select revenue and product disclosures to reflect the above-described changes for each of the four quarters comprising the year ended December 31, 2019 and full year periods ended December 31, 2019 and 2018.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.		Description
	99.1	Unaudited supplemental historical financial information
	104	Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101)

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Qwest Corporation has duly caused this Current Report to be signed on its behalf by the undersigned officer hereunto duly authorized.

QWEST CORPORATION
By:	/s/ Eric J. Mortensen
	Eric J. Mortensen
	Senior Vice President and Controller

Dated: May 7, 2020

EX-99.1

Exhibit 99.1

Qwest Corporation    

(Unaudited)    

The following table reflects the retrospective impacts to consolidated financial statement captions and additional disclosures resulting from the change in accounting policy (including USF fees) and product reclassifications:    

$ in millions	1Q19			2Q19			3Q19			4Q19			2019			2018
Operating revenue, as reported	$	2,055			2,051			2,039			2,012			8,157			8,493
Reclassifications:
Change in accounting policy		(25	)		(23	)		(28	)		(29	)		(105	)		(98	)
Product reclassifications		0			0			0			0			0			0
Operating revenue, as adjusted	$	2,030			2,028			2,011			1,983			8,052			8,395
Revenue from contracts with customers, as reported	$	1,928			1,926			1,916			1,890			7,660			7,962
Reclassifications:
Change in accounting policy		(25	)		(23	)		(28	)		(29	)		(105	)		(98	)
Product reclassifications		0			0			0			0			0			0
Revenue from contracts with customers, as adjusted	$	1,903			1,903			1,888			1,861			7,555			7,864
Cost of services and products, as reported	$	607			588			630			613			2,438			2,767
Reclassifications:
Change in accounting policy		(25	)		(23	)		(28	)		(29	)		(105	)		(98	)
Product reclassifications		0			0			0			0			0			0
Cost of services and products, as adjusted	$	582			565			602			584			2,333			2,669
Operating expenses, as reported	$	1,295			1,301			1,291			1,386			5,273			5,833
Reclassifications:
Change in accounting policy		(25	)		(23	)		(28	)		(29	)		(105	)		(98	)
Product reclassifications		0			0			0			0			0			0
Operating expenses, as adjusted	$	1,270			1,278			1,263			1,357			5,168			5,735

The change in accounting policy and product reclassifications had no impact on Consolidated Operating Income (Loss) or Net Income (Loss).    

Qwest Corporation    

(Unaudited)    

The following table reflects the retrospective impacts to revenue by product and service offering resulting from the change in accounting policy (including USF fees) and product reclassifications:    

$ in millions		1Q19			2Q19			3Q19			4Q19			2019			2018
IP and Data Services	Reported	$	147			151			169			157			624			615
	Change in accounting policy		(8	)		(7	)		(8	)		(8	)		(31	)		(28	)
	Product reclassifications		1			1			0			0			2			0
	Adjusted/New	$	140			145			161			149			595			587
Transport and Infrastructure	Reported	$	715			709			716			689			2,829			2,925
	Change in accounting policy		(6	)		(6	)		(8	)		(8	)		(28	)		(25	)
	Product reclassifications		(8	)		(7	)		(5	)		(8	)		(28	)		(30	)
	Adjusted/New	$	701			696			703			673			2,773			2,870
Voice and Collaboration	Reported	$	422			423			405			389			1,639			1,798
	Change in accounting policy		(11	)		(10	)		(12	)		(13	)		(46	)		(45	)
	Product reclassifications		7			6			4			8			25			30
	Adjusted/New	$	418			419			397			384			1,618			1,783
IT and Managed Services	Reported	$	1			1			0			1			3			6
	Change in accounting policy		0			0			0			0			0			0
	Product reclassifications		0			0			1			0			1			0
	Adjusted/New	$	1			1			1			1			4			6
Regulatory	Reported	$	48			47			48			46			189			214
	Change in accounting policy		0			0			0			0			0			0
	Product reclassifications		0			0			0			0			0			0
	Adjusted/New	$	48			47			48			46			189			214
Affiliate Services	Reported	$	722			720			701			730			2,873			2,935
	Change in accounting policy		0			0			0			0			0			0
	Product reclassifications		0			0			0			0			0			0
	Adjusted/New	$	722			720			701			730			2,873			2,935
Total	Reported	$	2,055		$	2,051		$	2,039		$	2,012		$	8,157			8,493
	Change in accounting policy		(25	)		(23	)		(28	)		(29	)		(105	)		(98	)
	Product reclassifications		0			0			0			0			0			0
	Adjusted/New	$	2,030			2,028			2,011			1,983			8,052			8,395

XML

Document and Entity Information	May 07, 2020
Document And Entity Information [Line Items]
Entity Registrant Name	QWEST CORP
Amendment Flag	false
Entity Central Index Key	0000068622
Document Type	8-K
Document Period End Date	May 07, 2020
Entity Incorporation State Country Code	CO
Entity File Number	001-03040
Entity Tax Identification Number	84-0273800
Entity Address, Address Line One	100 CenturyLink Drive
Entity Address, City or Town	Monroe
Entity Address, State or Province	LA
Entity Address, Postal Zip Code	71203
City Area Code	(318)
Local Phone Number	388-9000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
A 6.125 Notes Due 2053 [Member]
Document And Entity Information [Line Items]
Security 12b Title	6.125% Notes due 2053
Trading Symbol	CTY
Security Exchange Name	NYSE
A 6.875 Notes Due 2054 [Member]
Document And Entity Information [Line Items]
Security 12b Title	6.875% Notes due 2054
Trading Symbol	CTV
Security Exchange Name	NYSE
A 6.625 Notes Due 2055 [Member]
Document And Entity Information [Line Items]
Security 12b Title	6.625% Notes due 2055
Trading Symbol	CTZ
Security Exchange Name	NYSE
A 7.00 Notes Due 2056 [Member]
Document And Entity Information [Line Items]
Security 12b Title	7.00% Notes due 2056
Trading Symbol	CTAA
Security Exchange Name	NYSE
A 6.5 Notes Due 2056 [Member]
Document And Entity Information [Line Items]
Security 12b Title	6.5% Notes due 2056
Trading Symbol	CTBB
Security Exchange Name	NYSE
A 6.75 Notes Due 2057 [Member]
Document And Entity Information [Line Items]
Security 12b Title	6.75% Notes due 2057
Trading Symbol	CTDD
Security Exchange Name	NYSE