Segment Information (Notes)

9 Months Ended

Sep. 30, 2016

Segment Reporting Information [Line Items]

Segment Reporting Disclosure [Text Block]

Segment Information

Operating segments are defined under GAAP as components of an enterprise for which separate financial information is available and evaluated regularly by the Company's chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company's reportable segments consist of 1) North America, 2) Europe, the Middle East and Africa (EMEA) and 3) Latin America. Other separate business interests that are not segments include interest, certain corporate assets and overhead costs, and certain other general and administrative costs that are not allocated to any of the operating segments.

The CODM measures and evaluates segment performance primarily based upon revenue, revenue growth and Adjusted EBITDA. Adjusted EBITDA, as defined by the Company, is equal to net income from the Consolidated Statements of Income before (1) income tax expense, (2) total other expense, (3) non-cash impairment charges included within selling, general and administrative expenses and network related expenses, (4) depreciation and amortization expense, and (5) non-cash stock-based compensation expense included within selling, general and administrative expenses and network related expenses.

Adjusted EBITDA is not a measurement under GAAP and may not be used in the same way by other companies. Management believes that Adjusted EBITDA is an important part of the Company's internal reporting and is a key measure used by management to evaluate profitability and operating performance of the Company and to make resource allocation decisions. Management believes such measurement is especially important in a capital-intensive industry such as telecommunications. Management also uses Adjusted EBITDA to compare the Company's performance to that of its competitors and to eliminate certain non-cash and non-operating items in order to consistently measure from period to period its ability to fund capital expenditures, fund growth, service debt and determine bonuses.

Adjusted EBITDA excludes non-cash impairment charges and non-cash stock-based compensation expense because of the non-cash nature of these items. Adjusted EBITDA also excludes interest income, interest expense and income tax expense because these items are associated with the Company's capitalization and tax structures. Adjusted EBITDA also excludes depreciation and amortization expense because these non-cash expenses reflect the effect of capital investments which management believes are better evaluated through cash flow measures. Adjusted EBITDA excludes net other expense because these items are not related to the primary operations of the Company.

There are limitations to using non-GAAP financial measures such as Adjusted EBITDA, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from the Company's calculations. Additionally, this financial measure does not include certain significant items such as interest income, interest expense, income tax expense, depreciation and amortization expense, non-cash impairment charges, non-cash stock-based compensation expense, and net other expense. Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP.

The following table presents revenue by segment:

	Three Months Ended				Nine Months Ended
(dollars in millions)	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Core Network Services Revenue:
North America	$	1,572	$	1,551	$	4,778	$	4,636
EMEA	182		211		564		623
Latin America	176		183		491		555
Total Core Network Services Revenue	1,930		1,945		5,833		5,814
Wholesale Voice Services Revenue:
North America	99		110		293		342
EMEA	2		3		8		10
Latin America	2		4		6		10
Total Wholesale Voice Services Revenue	103		117		307		362
Total Revenue	$	2,033	$	2,062	$	6,140	$	6,176

The following table presents Adjusted EBITDA by segment and reconciles Adjusted EBITDA to net income:

	Three Months Ended						Nine Months Ended
(dollars in millions)	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Adjusted EBITDA:
North America	$	784		$	760		$	2,415		$	2,267
EMEA	56			63			162			176
Latin America	80			78			218			237
Unallocated Corporate Expenses	(204		)	(244		)	(654		)	(723		)
Adjusted EBITDA	716			657			2,141			1,957
Income Tax Expense	(74		)	(16		)	(198		)	(39		)
Total Other Expense	(137		)	(310		)	(465		)	(844		)
Depreciation and Amortization	(319		)	(296		)	(930		)	(872		)
Non-Cash Stock Compensation Attributable to Stock Awards	(43		)	(34		)	(121		)	(92		)
Net Income	$	143		$	1		$	427		$	110

The following table presents capital expenditures by segment and reconciles capital expenditures by segment to total capital expenditures:

	Three Months Ended				Nine Months Ended
(dollars in millions)	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Capital Expenditures:
North America	$	245	$	202	$	677	$	560
EMEA	38		41		117		114
Latin America	44		48		118		122
Unallocated Corporate Capital Expenditures	37		37		116		103
Total Capital Expenditures	$	364	$	328	$	1,028	$	899

The following table presents total assets by segment:

(dollars in millions)	September 30, 2016		December 31, 2015
Assets:
North America	$	20,618	$	19,961
EMEA	1,760		1,796
Latin America	2,238		2,131
Other	130		129
Total Assets	$	24,746	$	24,017

The changes in the carrying amount of goodwill by segment during the nine months ended September 30, 2016 were as follows (in millions):

	North America		EMEA			Latin America		Total
Balance at December 31, 2015	$	7,024	$	129		$	596	$	7,749
Effect of foreign currency rate change	—		(13		)	—		(13		)
Balance at September 30, 2016	$	7,024	$	116		$	596	$	7,736

There were no events or changes in circumstances during the first nine months of 2016 that indicated the carrying value of goodwill may not be recoverable.