CENTURYLINK, INC, 10-K filed on 2/24/2015
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Feb. 17, 2015
Jun. 30, 2014
Document and Entity Information
 
 
 
Entity Registrant Name
CENTURYLINK, INC 
 
 
Entity Central Index Key
0000018926 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2014 
 
 
Amendment Flag
false 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
$ 18.0 
Entity Common Stock, Shares Outstanding (shares)
 
566,483,129 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Statement [Abstract]
 
 
 
Operating revenues
$ 18,031 
$ 18,095 
$ 18,376 
OPERATING EXPENSES
 
 
 
Cost of services and products (exclusive of depreciation and amortization)
7,846 
7,507 
7,639 
Selling, general and administrative
3,347 
3,502 
3,244 
Depreciation and amortization
4,428 
4,541 
4,780 
Impairment of goodwill (Note 2)
0 
1,092 
0 
Total operating expenses
15,621 
16,642 
15,663 
OPERATING INCOME
2,410 
1,453 
2,713 
OTHER (EXPENSE) INCOME
 
 
 
Interest expense
(1,311)
(1,298)
(1,319)
Net gain (loss) on early retirement of debt
0 
10 
(179)
Other income, net
11 
59 
35 
Total other (expense) income
(1,300)
(1,229)
(1,463)
INCOME BEFORE INCOME TAX EXPENSE
1,110 
224 
1,250 
Income tax expense
338 
463 
473 
NET INCOME (LOSS)
$ 772 
$ (239)
$ 777 
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
 
 
 
Basic earnings (loss) per common share (in dollars per share)
$ 1.36 
$ (0.40)
$ 1.25 
Diluted earnings (loss) per common share (in dollars per share)
$ 1.36 1
$ (0.40)1
$ 1.25 1
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
 
 
 
BASIC (in shares)
568,435 
600,892 
620,205 
DILUTED (in shares)
569,739 
600,892 
622,285 
[1] Years Ended December 31, 2014 2013 2012 (Dollars in millions, except per share amounts, shares in thousands)Income (Loss) (Numerator): Net income (loss)$772 (239) 777Earnings applicable to non-vested restricted stock— — (1)Net income (loss) applicable to common stock for computing basic earnings (loss) per common share772 (239) 776Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share$772 (239) 776Shares (Denominator): Weighted average number of shares: Outstanding during period572,748 604,404 622,139Non-vested restricted stock(4,313) (3,512) (2,796)Non-vested restricted stock units— — 862Weighted average shares outstanding for computing basic earnings (loss) per common share568,435 600,892 620,205Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities10 — 12Shares issuable under incentive compensation plans1,294 — 2,068Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share569,739 600,892 622,285Basic earnings (loss) per common share$1.36 (0.40) 1.25Diluted earnings (loss) per common share$1.36 (0.40) 1.25
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
NET INCOME (LOSS)
$ 772 
$ (239)
$ 777 
Other Comprehensive Income (Loss), AOCI, Pension and Postretirement Benefit Plans, Reclassification Adjustment for Net Gain (Loss) and Net Unamortized Gain (Loss) Arising During Period, Net of Tax
(1,200)
981 
(694)
Other Comprehensive (Income) Loss, Pension and Postretirement Benefit Plans, Net Prior Service Cost (Credit) Amortization Adjustment and Arising During Period, Net of Tax
(1)
(84)
(6)
OTHER COMPREHENSIVE (LOSS) INCOME:
 
 
 
Auction rate securities marked to market, net of $—, $— and $(1) tax
0 
0 
2 
Auction rate securities settlements reclassified to net income, net of $—, $— and $(1) tax
0 
0 
3 
Foreign currency translation adjustment and other, net of $(1), $- and $- tax
(14)
2 
6 
Net current-period other comprehensive income (loss)
(1,215)
899 
(689)
COMPREHENSIVE (LOSS) INCOME
$ (443)
$ 660 
$ 88 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
Other Comprehensive Income (Loss), AOCI, Pension and Postretirement Benefit Plans, Reclassification Adjustment for Net Gain (Loss) and Net Unamortized Gain (Loss) Arising During Period, Net of Tax
$ 742 
$ (606)
$ 432 
Other Comprehensive (Income) Loss, Pension and Postretirement Benefit Plans, Net Prior Service Cost (Credit) Amortization Adjustment and Arising During Period, Tax
1 
52 
4 
Auction rate securities marked to market, tax
0 
0 
1 
Auction rate securities settlements reclassified to net income, tax
(1)
0 
1 
Foreign currency translation adjustment and other, tax
$ 1 
$ 0 
$ 0 
CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
CURRENT ASSETS
 
 
Cash and cash equivalents
$ 128 
$ 168 
Accounts receivable, less allowance of $162 and $155
1,988 
1,977 
Deferred income taxes, net
880 
1,165 
Other
580 
597 
Total current assets
3,576 
3,907 
NET PROPERTY, PLANT AND EQUIPMENT
 
 
Property, plant and equipment
36,718 
34,307 
Accumulated depreciation
(18,285)
(15,661)
Net property, plant and equipment
18,433 
18,646 
GOODWILL AND OTHER ASSETS
 
 
Goodwill
20,755 
20,674 
Customer relationships, net
4,893 
5,935 
Other intangible assets, net
1,647 
1,802 
Other, net
843 
823 
Total goodwill and other assets
28,138 
29,234 
TOTAL ASSETS
50,147 
51,787 
CURRENT LIABILITIES
 
 
Current maturities of long-term debt
550 
785 
Accounts payable
1,226 
1,111 
Accrued expenses and other liabilities
 
 
Salaries and benefits
641 
650 
Taxes Payable, Current
309 
339 
Interest
256 
273 
Other
210 
514 
Advance billings and customer deposits
726 
737 
Total current liabilities
3,918 
4,409 
LONG-TERM DEBT
20,121 
20,181 
DEFERRED CREDITS AND OTHER LIABILITIES
 
 
Deferred income taxes, net
4,030 
4,753 
Benefit plan obligations, net
5,808 
4,049 
Other
1,247 
1,204 
Total deferred credits and other liabilities
11,085 
10,006 
COMMITMENTS AND CONTINGENCIES (Note 14)
   
   
STOCKHOLDERS' EQUITY
 
 
Preferred stock — non-redeemable, $25.00 par value, authorized 2,000 shares, issued and outstanding 7 and 7 shares
0 
0 
Common stock, $1.00 par value, authorized 1,600,000 and 1,600,000 shares, issued and outstanding 568,517 and 583,637 shares
569 
584 
Additional paid-in capital
16,324 
17,343 
Accumulated other comprehensive loss
(2,017)
(802)
Retained earnings
147 
66 
Total stockholders' equity
15,023 
17,191 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 50,147 
$ 51,787 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]
 
 
Accounts receivable, allowance
$ 162 
$ 155 
Preferred stock- non-redeemable, par value (in dollars per share)
$ 25.00 
$ 25.00 
Preferred stock- non-redeemable, authorized shares (shares)
2,000 
2,000 
Preferred stock- non-redeemable, issued shares (shares)
7 
7 
Preferred stock- non-redeemable, outstanding shares (shares)
7 
7 
Common stock, par value (in dollars per share)
$ 1.00 
$ 1.00 
Common stock, authorized shares (shares)
1,600,000 
1,600,000 
Common stock, issued shares (shares)
568,517 
583,637 
Common stock, outstanding shares (shares)
568,517 
583,637 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
OPERATING ACTIVITIES
 
 
 
Net income (loss)
$ 772 
$ (239)
$ 777 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
4,428 
4,541 
4,780 
Impairment of goodwill (Note 2)
0 
1,092 
0 
Impairment of assets
32 
0 
0 
Deferred income taxes
291 
391 
394 
Provision for uncollectible accounts
159 
152 
187 
Gain on sale of intangible assets
0 
(32)
0 
Net long-term debt premium amortization
(33)
(57)
(88)
Net (gain) loss on early retirement of debt
0 
(10)
179 
Share-based Compensation
79 
71 
110 
Changes in current assets and liabilities:
 
 
 
Accounts receivable
(163)
(212)
(154)
Accounts payable
70 
(76)
(72)
Accrued income and other taxes
(84)
28 
(14)
Other current assets and liabilities, net
(270)
263 
16 
Retirement benefits
(184)
(342)
(169)
Changes in other noncurrent assets and liabilities, net
99 
19 
161 
Other, net
(8)
(30)
(42)
Net cash provided by operating activities
5,188 
5,559 
6,065 
INVESTING ACTIVITIES
 
 
 
Payments for property, plant and equipment and capitalized software
3,047 
3,048 
2,919 
Cash paid for acquisitions
93 
160 
0 
Proceeds from sale of property and intangible assets
63 
80 
191 
Other, net
0 
(20)
38 
Net cash used in investing activities
(3,077)
(3,148)
(2,690)
FINANCING ACTIVITIES
 
 
 
Net proceeds from issuance of long-term debt
483 
2,481 
3,362 
Payments of long-term debt
(800)
(2,010)
(5,118)
Net (payments) borrowings on credit facility
4 
95 
(543)
Early retirement of debt costs
0 
(31)
(346)
Dividends paid
(1,228)
(1,301)
(1,811)
Net proceeds from issuance of common stock
50 
73 
110 
Repurchase of common stock
(650)
(1,586)
(37)
Other, net
(2)
15 
2 
Net cash used in financing activities
(2,151)
(2,454)
(3,295)
Effect of exchange rate changes on cash and cash equivalents
0 
0 
3 
Net (decrease) increase in cash and cash equivalents
(40)
(43)
83 
Cash and cash equivalents at beginning of period
168 
211 
128 
Cash and cash equivalents at end of period
128 
168 
211 
Supplemental cash flow information:
 
 
 
Income taxes paid, net
(27)
(48)
(82)
Interest paid (net of capitalized interest of $47, $41 and $43)
$ (1,338)
$ (1,333)
$ (1,405)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Cash Flows [Abstract]
 
 
 
Interest (paid) capitalized interest
$ 47 
$ 41 
$ 43 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
In Millions, unless otherwise specified
Total
COMMON STOCK
ADDITIONAL PAID-IN CAPITAL
ACCUMULATED OTHER COMPREHENSIVE LOSS
RETAINED EARNINGS
Balance at beginning of period at Dec. 31, 2011
 
$ 619 
$ 18,901 
$ (1,012)
$ 2,319 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Issuance of common stock through dividend reinvestment, incentive and benefit plans
 
8 
102 
 
 
Repurchase of common stock
 
0 
0 
 
 
Shares withheld to satisfy tax withholdings
 
(1)
(34)
 
 
Share-based compensation and other, net
 
 
(110)
 
 
Other comprehensive (loss) income
(689)
 
 
(689)
 
Net income (loss)
777 
 
 
 
777 
Dividends declared
 
 
0 
 
(1,811)
Balance at end of period at Dec. 31, 2012
19,289 
626 
19,079 
(1,701)
1,285 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Issuance of common stock through dividend reinvestment, incentive and benefit plans
 
4 
69 
 
 
Repurchase of common stock
 
46 
1,551 
 
 
Shares withheld to satisfy tax withholdings
 
0 
(18)
 
 
Share-based compensation and other, net
 
 
(85)
 
 
Other comprehensive (loss) income
899 
 
 
899 
 
Net income (loss)
(239)
 
 
 
(239)
Dividends declared
 
 
(321)
 
(980)
Balance at end of period at Dec. 31, 2013
17,191 
584 
17,343 
(802)
66 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Issuance of common stock through dividend reinvestment, incentive and benefit plans
 
4 
46 
 
 
Repurchase of common stock
 
19 
591 
 
 
Shares withheld to satisfy tax withholdings
 
0 
(16)
 
 
Share-based compensation and other, net
 
 
(82)
 
 
Other comprehensive (loss) income
(1,215)
 
 
(1,215)
 
Net income (loss)
772 
 
 
 
772 
Dividends declared
 
 
(540)
 
(691)
Balance at end of period at Dec. 31, 2014
$ 15,023 
$ 569 
$ 16,324 
$ (2,017)
$ 147 
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
We are an integrated communications company engaged primarily in providing an array of communications services to our residential, business, governmental and wholesale customers. Our communications services include local and long-distance, broadband, private line (including special access), Multi-Protocol Label Switching ("MPLS"), data integration, managed hosting (including cloud hosting), colocation, Ethernet, network access, public access, wireless, video and other ancillary services.
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.
To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other income (expense), (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities.
We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 12—Segment Information for additional information. These changes had no impact on total revenues, total operating expenses or net income (loss) for any period.
In January 2013, we sold $43 million of our wireless spectrum assets held for sale. The sale resulted in a gain of $32 million, which is recorded as other income on our consolidated statements of operations.
Changes in Estimates
As a result of our annual reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment, effective January 2014, we changed the estimates of the remaining economic lives of certain switch and circuit network equipment. These changes resulted in a net increase in depreciation expense of approximately $78 million for the year ended December 31, 2014. This net increase in depreciation expense, net of tax, reduced consolidated net income by approximately $48 million, or $0.08 per basic and diluted common share, for the year ended December 31, 2014.
Additionally, during the third quarter of 2014, we developed a plan to migrate customers from one of our networks to another between the fourth quarter of 2014 through the fourth quarter of 2015. As a result, we implemented changes in estimates that reduced the remaining economic lives of certain network assets. These changes increased depreciation expense of approximately $12 million for the year ended December 31, 2014 and is expected to increase depreciation expense by approximately $48 million for 2015. The increase in depreciation expense, net of tax, reduced consolidated net income by approximately $7 million, or $0.01 per basic and diluted common share, for the year ended December 31, 2014.
During the fourth quarter 2013, we changed the estimates of the remaining economic lives of certain intangible assets, specifically, the Savvis trade name, which is no longer being utilized, and certain Savvis cloud software, which has been replaced by cloud software acquired through our more recent acquisitions. These changes resulted in an increase in amortization expense of approximately $23 million for the year ended December 31, 2014. This increase in amortization expense, net of tax, reduced consolidated net income by approximately $14 million, or $0.02 per basic and diluted common share, for the year ended December 31, 2014. As of December 31, 2014, the Savvis trade name and the Savvis cloud software were fully amortized.
Summary of Significant Accounting Policies
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for items and matters such as, but not limited to, investments, long-term contracts, customer retention patterns, allowance for doubtful accounts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets (including deferred tax assets), impairment assessments, pension, post-retirement and other post-employment benefits, taxes, certain liabilities and other provisions and contingencies are reasonable, based on information available at the time they were made. These estimates, judgments and assumptions can affect the reported amounts of assets, liabilities and components of stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenues, expenses and components of cash flows during the periods presented in our consolidated statements of operations, our consolidated statements of comprehensive (loss) income and our consolidated statements of cash flows. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 11—Income Taxes and Note 14—Commitments and Contingencies for additional information.
For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions.
For all of these and other matters, actual results could differ from our estimates.
Revenue Recognition
We recognize revenue for services when the related services are provided. Recognition of certain payments received in advance of services being provided is deferred until the service is provided. These advance payments include activation and installation charges, which we recognize as revenue over the expected customer relationship period, which ranges from eighteen months to over ten years depending on the service. We also defer costs for customer activations and installations. The deferral of customer activation and installation costs is limited to the amount of revenue deferred on advance payments. Costs in excess of advance payments are recorded as expense in the period such costs are incurred. Expected customer relationship periods are estimated using historical experience. Termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term.
We offer bundle discounts to our customers who receive certain groupings of services. These bundle discounts are recognized concurrently with the associated revenue and are allocated to the various services in the bundled offering based on the estimated selling price of services included in each bundled combination.
Customer arrangements that include both equipment and services are evaluated to determine whether the elements are separable. If the elements are deemed separable and separate earnings processes exist, the revenue associated with the customer arrangement is allocated to each element based on the relative estimated selling price of the separate elements. We have estimated the selling prices of each element by reference to vendor-specific objective evidence of selling prices when the elements are sold separately. The revenue associated with each element is then recognized as earned. For example, if we receive an advance payment when we sell equipment and continuing service together, we immediately recognize as revenue the amount allocated to the equipment as long as all the conditions for revenue recognition have been satisfied. The portion of the advance payment allocated to the service based upon its relative selling price is recognized ratably over the longer of the contractual period or the expected customer relationship period.
We periodically transfer optical capacity assets on our network to other telecommunications service carriers. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years. We account for the cash consideration received on transfers of optical capacity assets and on all of the other elements deliverable under an IRU, as revenue ratably over the term of the agreement. We have not recognized revenue on any contemporaneous exchanges of our optical capacity assets for other optical capacity assets.
In connection with offering products and services provided by third-party vendors, we review the relationship between us, the vendor and the end customer to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction, take title to the products, have risk and rewards of ownership or act as an agent or broker. Based on our agreements with DIRECTV and Verizon Wireless, we offer these services through sales agency relationships which are reported on a net basis.
For our hosting operations, we have service level commitments pursuant to contracts with certain of our clients. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a reduction to revenues, with a corresponding increase in the credit reserve.
USF, Gross Receipts Taxes and Other Surcharges
In determining whether to include in our revenues and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF charges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenues and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenues and costs of services and products.
Advertising Costs
Costs related to advertising are expensed as incurred and included in selling, general and administrative expenses in our consolidated statements of operations. Our advertising expense was $214 million, $210 million and $189 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Legal Costs
In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
Income Taxes
We file a consolidated federal income tax return with our eligible subsidiaries. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods, adjustments to our liabilities for uncertain tax positions and amortization of investment tax credits. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating losses ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax bases of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.
We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. A significant portion of our net deferred tax assets relate to tax benefits attributable to NOLs. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 11—Income Taxes for additional information.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.
Book overdrafts occur when checks have been issued but have not been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for purchased and other receivables less an allowance for doubtful accounts. The allowance for doubtful accounts receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We generally consider our accounts past due if they are outstanding over 30 days. Our collection process varies by the customer segment, amount of the receivable, and our evaluation of the customer's credit risk. Our past due accounts are written off against our allowance for doubtful accounts when collection is considered to be not probable. Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for doubtful accounts approximates fair value.
Property, Plant and Equipment
Property, plant and equipment acquired in connection with our acquisitions was recorded based on its estimated fair value as of its acquisition date plus the estimated value of any associated legally or contractually required retirement obligations. Purchased and constructed property, plant and equipment is recorded at cost, plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated primarily using the straight-line group method. Under the straight-line group method, assets dedicated to providing telecommunications services (which comprise the majority of our property, plant and equipment) that have similar physical characteristics, use and expected useful lives are pooled for purposes of depreciation and tracking. The equal life group procedure is used to establish each pool's average remaining useful life. Generally, under the straight-line group method, when an asset is sold or retired in the course of normal business activities, the cost is deducted from property, plant and equipment and charged to accumulated depreciation without recognition of a gain or loss. A gain or loss is recognized in our consolidated statements of operations only if a disposal is abnormal or unusual. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items for which cost is based on specific identification.
We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, assumptions about technology evolution and, in certain instances, actuarially determined probabilities to estimate the remaining useful life of our asset base. Our remaining useful life assessments anticipate the loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers leave the network. However, the asset is not retired until all customers no longer utilize the asset.
We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred.
We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. We determine fair values by using a combination of comparable market values and discounted cash flows, as appropriate.
Goodwill, Customer Relationships and Other Intangible Assets
Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 10 to 15 years, using either the sum-of-the-years-digits or the straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to 7 years, except for approximately $237 million of our capitalized software costs, which represents costs to develop an integrated billing and customer care system which is amortized using the straight-line method over a 20 year period. We amortize our other intangible assets predominantly using the sum-of-the-years-digits method over an estimated life of 4 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized.
Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.
Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, other indefinite-lived intangible assets are reduced to their estimated fair value through an impairment charge to our consolidated statements of operations.
We annually review the estimated lives and methods used to amortize our other intangible assets. The actual amounts of amortization expense may differ materially from our estimates, depending on the results of our annual review.
We are required to assess goodwill for impairment at least annually, or more frequently if events or a change in circumstances indicate that an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded amount of goodwill exceeds the implied fair value of goodwill. Our reporting units are not discrete legal entities with discrete financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment assessment is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies. Certain estimates, judgments and assumptions are required to perform these assignments. We believe these estimates, judgments and assumptions to be reasonable, but changes in many of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment.
During the fourth quarter of 2013, we elected to change the date of our annual assessment of goodwill impairment from September 30 to October 31. This is a change in method of applying an accounting principle which management believes is a preferable alternative as the new date of the assessment is more closely aligned with our strategic planning process. The change in the assessment date did not delay, accelerate or avoid a potential impairment charge in 2013. We performed our annual goodwill impairment assessment at September 30, 2013, prior to the change in our annual assessment date. We then performed a qualitative assessment of our goodwill as of October 31, 2013 and concluded that our goodwill for consumer, wholesale and business reporting units was not impaired and our goodwill for hosting reporting unit was not further impaired as of that date.
We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. Goodwill is reassigned to the reporting units using a relative fair value approach. We utilize the earnings before interest, taxes, depreciation and amortization as our allocation methodology as it represents a reasonable proxy for the fair value of the operations being reorganized.
See Note 2—Goodwill, Customer Relationships and Other Intangible Assets for additional information.
Pension and Post-Retirement Benefits
We recognize the funded status of our defined benefit and post-retirement plans as an asset or a liability on our consolidated balance sheet. Each year's actuarial gains or losses are a component of our other comprehensive (loss) income, which is then included in our accumulated other comprehensive loss. Pension and post-retirement benefit expenses are recognized over the period in which the employee renders service and becomes eligible to receive benefits. We make significant assumptions (including the discount rate, expected rate of return on plan assets, mortality and health care trend rates) in computing the pension and post-retirement benefits expense and obligations. See Note 7—Employee Benefits for additional information.
Foreign Currency
Our results of operations include foreign subsidiaries, which are translated from the applicable functional currency to the United States Dollar using the average exchange rates during the reporting period, while assets and liabilities are translated at the reporting date. We include gains or losses from foreign currency remeasurement in other income, net in our consolidated statements of operations. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and we record the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and include them as a component of accumulated other comprehensive loss in our consolidated balance sheets.
Common Stock
At December 31, 2014, we had 4 million unissued shares of CenturyLink common stock reserved for acquisitions. In addition, we had 27 million shares authorized for future issuance under our equity incentive plans.
Preferred stock
Holders of outstanding CenturyLink preferred stock are entitled to receive cumulative dividends, receive preferential distributions equal to $25 per share plus unpaid dividends upon CenturyLink's liquidation and vote as a single class with the holders of common stock.
Dividends
We pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital.
Recent Accounting Pronouncements
On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09” or “new standard”). The new standard is effective for annual and interim periods beginning January 1, 2017, and early adoption is prohibited. ASU 2014-09 may be adopted by applying the provisions of the new standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2017. We have not yet decided which implementation method we will adopt.
The new standard replaces virtually all existing generally accepted accounting principles (“GAAP”) on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs and defer contract fulfillment costs only up to the extent of any revenue deferred.
We are studying the new standard and are in the early stages of assessing the impact the new standard will have on us and our consolidated financial statements. We cannot, however, provide any estimate of the impact of adopting the new standard at this time.
Out-of-Period Adjustments
During the year ended December 31, 2012, we discovered and corrected an error that resulted in an overstatement of depreciation expense in 2011. We evaluated the error considering both quantitative and qualitative factors and concluded that the error was immaterial to our previously issued and current period consolidated financial statements. Therefore, we recognized a $30 million reduction in depreciation expense during the year ended December 31, 2012. The correction of the error resulted in an increase in net income of $19 million, or approximately $0.03 per basic and diluted common share, for the year ended December 31, 2012.
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill, customer relationships and other intangible assets consisted of the following:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Goodwill
$
20,755

 
20,674

Customer relationships, less accumulated amortization of $4,682 and $3,641
4,893

 
5,935

Indefinite-life intangible assets
268

 
321

Other intangible assets subject to amortization
 
 
 
Capitalized software, less accumulated amortization of $1,533 and $1,193
1,338

 
1,415

Trade names and patents, less accumulated amortization of $196 and $208
41

 
66

Total other intangible assets, net
$
1,647

 
1,802


Total amortization expense for intangible assets for the years ended December 31, 2014, 2013 and 2012 was $1.470 billion, $1.589 billion and $1.710 billion, respectively. As of December 31, 2014, the gross carrying amount of goodwill, customer relationships, indefinite-life and other intangible assets was $33.706 billion.
We estimate that total amortization expense for intangible assets for the years ending December 31, 2015 through 2019 will be as follows:
 
(Dollars in millions)
2015
$
1,244

2016
1,145

2017
1,036

2018
922

2019
805


Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired.
During the first quarter of 2013, we reorganized our operating segments to support our then operating structure. As a result, we reassigned goodwill to our reporting units using a relative fair value allocation approach. As of January 3, 2013, we assigned our aggregate goodwill balance to our then four reportable segments as follows.
 
As of
January 3, 2013
 
(Dollars in millions)
Business
6,363

Consumer
10,348

Wholesale
3,274

Hosting
1,642

Total goodwill
$
21,627


We assess our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the recorded amount of goodwill exceeds the fair value. For 2014, our annual goodwill impairment assessment date was October 31, at which date we assessed goodwill at our reporting units, which were our then four reportable segments (consumer, business, wholesale and hosting). See Note 1—Basis of Presentation and Summary of Significant Accounting Policies, for information about the change in our goodwill impairment assessment date. Our annual impairment assessment date for indefinite-lived intangible assets other than goodwill is December 31.
Our reporting units are not discrete legal entities with discrete financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. For each reporting unit, we compare its estimated fair value of equity to its carrying value of equity that we assign to the reporting unit. If the estimated fair value of the reporting unit is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the carrying value, a second calculation is required in which the implied fair value of goodwill is compared to the carrying value of goodwill that we assigned to the reporting unit. If the implied fair value of goodwill is less than its carrying value, goodwill must be written down to its implied fair value.
As of October 31, 2014, we estimated the fair value of our then consumer, business and wholesale reporting units by considering both a market approach and a discounted cash flow method and our then hosting reporting unit by considering only a discounted cash flow method, which resulted in a Level 3 fair value measurement. The market approach method includes the use of comparable multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value, which represents the expected normalized cash flows of the reporting units beyond the cash flows from the discrete projection period. We discounted the estimated cash flows for our then consumer, wholesale and business reporting units using a rate that represents our estimated weighted average cost of capital, which we determined to be approximately 6.0% as of the assessment date (which was comprised of an after-tax cost of debt of 2.9% and a cost of equity of 8.2%). We discounted the estimated cash flows of our then hosting reporting unit using a rate that represents our estimated weighted average cost of capital, which we determined to be approximately 11.0% as of the assessment date (which was comprised of an after-tax cost of debt of 2.9% and a cost of equity of 12.4%). We also reconciled the estimated fair values of the reporting units to our market capitalization as of October 31, 2014 and concluded that the indicated implied control premium of approximately 4.3% was reasonable based on recent transactions in the market place.
As of October 31, 2014, based on our assessment performed with respect to these reporting units as described above, we concluded that our goodwill for our then four reporting units was not impaired as of that date. During 2013, our then hosting reporting unit experienced slower than previously projected revenues and margin growth and greater than anticipated competitive pressures and as a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $1.092 billion for goodwill assigned to our then hosting reporting unit.
The following table shows the rollforward of goodwill assigned to our reportable segments from the January 3, 2013 reorganization through December 31, 2014.
 
Business
 
Consumer
 
Wholesale
 
Hosting
 
Total
 
(Dollars in millions)
As of January 3, 2013
$
6,363

 
10,348

 
3,274

 
1,642

 
21,627

Acquisitions
—

 
—

 
—

 
139

 
139

Impairment
—

 
—

 
—

 
(1,092
)
 
(1,092
)
As of December 31, 2013
$
6,363

 
10,348

 
3,274

 
689

 
20,674

Purchase accounting adjustments
—

 
—

 
—

 
(11
)
 
(11
)
November 1, 2014 reorganization
4,022

 
(70
)
 
(3,274
)
 
(678
)
 
—

Acquisitions
92

 
—

 
—

 
—

 
92

As of December 31, 2014
$
10,477

 
10,278

 
—

 
—

 
20,755


During the year ended December 31, 2014, we acquired all of the outstanding stock of two companies for total consideration of $95 million, net of $2 million acquired cash and including immaterial future cash payments of which $92 million was attributed to goodwill and the remainder to various assets and liabilities. The valuation for both acquisitions is preliminary and subject to change during the measurement period which ends in December of 2015. The acquisitions were consummated to expand the product offerings of our business segment and therefore the goodwill has been assigned to that segment. The goodwill is attributed primarily to expected future increases in business segment revenue from the sale of new products. The goodwill is not deductible for tax purposes.
During the year ended December 31, 2013, we acquired all of the outstanding stock of two companies for total cash consideration of $160 million, of which $139 million was attributed to goodwill and the remainder to various other assets and liabilities. During 2014, we finalized the valuation for one entity resulting in an increase in other intangibles assets of $19 million with a corresponding reduction in goodwill of $11 million and deferred taxes of $8 million. The acquisitions were consummated to expand the product offerings of our business segment and therefore the goodwill has been assigned to that segment. The goodwill is primarily attributable to expected future increases in business segment revenue from the sale of new products to existing customers as well as the acquisition of new customers due to the products acquired. The goodwill is not deductible for tax purposes.
The acquisitions did not materially impact the consolidated results of operations from the dates of the acquisitions in either 2014 or 2013 and would not materially impact pro forma results of operations.
For additional information on the reorganization of our segments see Note 12—Segment Information.
We completed our qualitative assessment of our indefinite-lived intangible assets other than goodwill as of December 31, 2014 and concluded it is more likely than not that our indefinite-lived intangible assets are not impaired; thus, no impairment charge was recorded in 2014.
Long-Term Debt and Credit Facilities
Long-Term Debt and Credit Facilities
Long-Term Debt and Credit Facilities
Long-term debt, including unamortized discounts and premiums, consisted of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including Qwest Corporation ("QC"), Qwest Capital Funding, Inc. and Embarq Corporation and subsidiaries ("Embarq"), were as follows:
 
 
 
 
 
As of December 31,
 
Interest Rates
 
Maturities
 
2014
 
2013
 
 
 
 
 
(Dollars in millions)
CenturyLink, Inc.
 
 
 
 
 
 
 
Senior notes
5.000% - 7.650%
 
2015 - 2042
 
$
7,825

 
7,825

Credit facility (1)
1.910% - 4.000%
 
2019
 
725

 
725

Term loan
2.420%
 
2019
 
380

 
402

Subsidiaries
 
 
 
 
 
 
 
Qwest Corporation
 
 
 
 
 
 
 
Senior notes
6.125% - 8.375%
 
2015 - 2054
 
7,311

 
7,411

Qwest Capital Funding, Inc.
 
 
 
 
 
 
 
Senior notes
6.500% - 7.750%
 
2018 - 2031
 
981

 
981

Embarq Corporation and subsidiaries
 
 
 
 
 
 
 
Senior notes
7.082% - 7.995%
 
2016 - 2036
 
2,669

 
2,669

First mortgage bonds
7.125% - 8.770%
 
2017 - 2025
 
232

 
262

Other
9.000%
 
  2019
 
150

 
150

Capital lease and other obligations
Various
 
Various
 
509

 
619

Unamortized discounts, net
 
 
 
 
(111
)
 
(78
)
Total long-term debt
 
 
 
 
20,671

 
20,966

Less current maturities
 
 
 
 
(550
)
 
(785
)
Long-term debt, excluding current maturities
 
 
 
 
$
20,121

 
20,181

_______________________________________________________________________________
(1) 
The outstanding amount of our Credit Facility borrowings at both December 31, 2014 and 2013 was $725 million, with weighted average interest rates of 2.270% and 2.176%, respectively. These amounts change on a regular basis.
New Issuances
2014
On September 29, 2014, QC issued $500 million aggregate principal amount of 6.875% Notes due 2054, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of $483 million. The Notes are senior unsecured obligations and may be redeemed, in whole or in part, on or after October 1, 2019, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.
2013
On November 27, 2013, CenturyLink, Inc. issued $750 million aggregate principal amount of 6.75% Notes due 2023, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of approximately $742 million. The Notes are unsecured obligations and may be redeemed, in whole or in part, at any time at a redemption price equal to the greater of par or a "make-whole" rate specified in the Notes, plus accrued and unpaid interest to the redemption date. In addition, at any time on or prior to December 1, 2016, we may redeem up to 35% of the principal amount of the Notes at a redemption price equal to 106.75% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of certain equity offerings. Under certain circumstances, we will be required to make an offer to repurchase the Notes at a price of 101% of their aggregate principal amount plus accrued and unpaid interest to the repurchase date.
On May 23, 2013, QC issued $775 million aggregate principal amount of 6.125% Notes due 2053, including $25 million principal amount that was sold pursuant to an over-allotment option granted to the underwriters for the offering, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of approximately $752 million. The Notes are unsecured obligations and may be redeemed, in whole or in part, on or after June 1, 2018 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.
On March 21, 2013, CenturyLink, Inc. issued $1 billion aggregate principal amount of 5.625% Notes due 2020 in exchange for net proceeds, after deducting underwriting discounts and other expenses, of approximately $988 million. The Notes are unsecured obligations and may be redeemed, in whole or in part, at any time at a redemption price equal to the greater of par or a "make-whole" rate specified in the Notes, plus accrued and unpaid interest to the redemption date. In addition, at any time on or prior to April 1, 2016, we may redeem up to 35% of the principal amount of the Notes at a redemption price equal to 105.625% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of certain equity offerings. Under certain circumstances, we will be required to make an offer to repurchase the Notes at a price of 101% of their aggregate principal amount plus accrued and unpaid interest to the repurchase date.
Repayments
2014
On October 1, 2014, QC paid at maturity the $600 million principal amount of its 7.50% Notes.
On April 1, 2014, a subsidiary of Embarq paid at maturity the $30 million principal amount of its 7.46% first mortgage bonds.
2013
On December 27, 2013, Qwest Communications International Inc. ("QCII") redeemed $186 million of its 7.125% Notes due 2018 for $196 million including premium, fees and accrued interest, which resulted in a $3 million gain.
On November 27, 2013, QCII completed a cash tender offer with respect to $800 million of its 7.125% Notes due 2018. QCII received and accepted tenders of approximately $614 million aggregate principal amount of these notes, or 77%, for $646 million including premium, fees and accrued interest, which resulted in a $7 million gain.
On August 15, 2013, a subsidiary of Embarq paid at maturity the $50 million principal amount of its 6.75% Notes.
On July 15, 2013, a subsidiary of Embarq paid at maturity the $59 million principal amount of its 6.875% Notes.
On June 17, 2013, QC paid at maturity the $750 million principal amount of its floating rate Notes.
On April 1, 2013, CenturyLink, Inc. paid at maturity the $176 million principal amount of its 5.50% Notes.
Credit Facilities
On December 3, 2014, we amended our existing $2 billion revolving credit facility to extend the maturity date to December 3, 2019. The amended Credit Facility (the "Credit Facility") has 16 lenders, with commitments ranging from $3.5 million to $198.5 million and allows us to obtain revolving loans and to issue up to $400 million of letters of credit, which upon issuance reduce the amount available for other extensions of credit. Interest is assessed on borrowings using either the LIBOR or the base rate (each as defined in the Credit Facility) plus an applicable margin between 1.00% and 2.25% per annum for LIBOR loans and 0.00% and 1.25% per annum for base rate loans depending on our then current senior unsecured long-term debt rating. Our obligations under the Credit Facility are guaranteed by nine of our subsidiaries.
In April 2011, we entered into a $160 million uncommitted revolving letter of credit facility which enables us to provide letters of credit under terms that may be more favorable than those under the Credit Facility. At December 31, 2014 and 2013, our outstanding letters of credit totaled $124 million and $132 million, respectively, under this facility.
In January 2015, we entered into a $100 million uncommitted revolving line of credit with one of the lenders under the Credit Facility.
Aggregate Maturities of Long-Term Debt
Aggregate maturities of our long-term debt (excluding unamortized premiums, discounts and other, net):
 
(Dollars in millions)(1)
2015
$
550

2016
1,494

2017
1,497

2018
248

2019
1,474

2020 and thereafter
15,519

Total long-term debt
$
20,782

_______________________________________________________________________________
(1) 
Actual principal paid in all years may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.
Interest Expense
Interest expense includes interest on long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Interest expense:
 
 
 
 
 
Gross interest expense
$
1,358

 
1,339

 
1,362

Capitalized interest
(47
)
 
(41
)
 
(43
)
Total interest expense
$
1,311

 
1,298

 
1,319


Covenants
Certain of our loan agreements contain various restrictions, as described more fully below. Under current circumstances, we believe the covenants currently in place result in no significant restriction to the transfer of funds from our consolidated subsidiaries to CenturyLink.
The senior notes of CenturyLink were issued under an indenture dated March 31, 1994. This indenture does not contain any financial covenants, but does include restrictions that limit our ability to (i) incur, issue or create liens upon our property and (ii) consolidate with or merge into, or transfer or lease all or substantially all of our assets to any other party. The indenture does not contain any provisions that are impacted by our credit ratings or that restrict the issuance of new securities in the event of a material adverse change to us. However, if the credit ratings relating to certain of our long-term debt securities issued under this indenture are downgraded in the manner specified thereunder in connection with a "change of control" of CenturyLink, then we will be required to offer to repurchase such debt securities.
The senior notes of QC were issued under indentures dated April 15, 1990 and October 15, 1999. These indentures do not contain any financial covenants, but do contain restrictions on the incurrence of liens and the consummation of certain transactions substantially similar to the above-described covenants in CenturyLink's March 31, 1994 indenture. The senior notes of Qwest Capital Funding, Inc. were issued under an indenture dated June 29, 1998 containing terms substantially similar to those set forth in QC's indentures.
Embarq's senior notes were issued pursuant to an indenture dated as of May 17, 2006. While Embarq is generally prohibited from creating liens on its property unless its senior notes are secured equally and ratably, Embarq can create liens on its property without equally and ratably securing its senior notes so long as the sum of all indebtedness so secured does not exceed 15% of Embarq's consolidated net tangible assets. The indenture contains customary events of default, none of which are impacted by Embarq's credit rating. None of the above-listed indentures contain any financial covenants or restrictions on the ability to issue new securities in accordance with the terms of the indenture.
Several of our Embarq subsidiaries have outstanding first mortgage bonds. Each issue of these first mortgage bonds is secured by substantially all of the property, plant and equipment of the issuing subsidiary. Approximately 10% of our net property, plant and equipment is pledged to secure the long-term debt of subsidiaries.
Under the Credit Facility, we, and our indirect subsidiary, Qwest Corporation, must maintain a debt to EBITDA (earnings before interest, taxes, depreciation and amortization, as defined in our Credit Facility) ratio of not more than 4.0:1.0 and 2.85:1.0, respectively, as of the last day of each fiscal quarter for the four quarters then ended. The Credit Facility also contains a negative pledge covenant, which generally requires us to secure equally and ratably any advances under the Credit Facility if we pledge assets or permit liens on our property for the benefit of other debtholders. The Credit Facility also has a cross payment default provision, and the Credit Facility and certain of our debt securities also have cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. To the extent that our EBITDA (as defined in our Credit Facility) is reduced by cash settlements or judgments, including in respect of any of the matters discussed in Note 14—Commitments and Contingencies, our debt to EBITDA ratios under certain debt agreements will be adversely affected. This could reduce our financing flexibility due to potential restrictions on incurring additional debt under certain provisions of our debt agreements or, in certain circumstances, could result in a default under certain provisions of such agreements.
At December 31, 2014, we believe we were in compliance with all of the provisions and covenants contained in our Credit Facility and other material debt agreements.
Subsequent Event
On February 17, 2015, CenturyLink paid at maturity the $350 million principal and amount due under its Series M 5.00% Notes.
On February 20, 2015, QC entered into a new credit agreement with several lenders that allows QC to borrow up to $100 million under a term loan. Under this new credit agreement, QC borrowed $100 million under a ten-year term note that expires on February 20, 2025.
Accounts Receivable
Accounts Receivable
Accounts Receivable
The following table presents details of our accounts receivable balances:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Trade and purchased receivables
$
1,821

 
1,862

Earned and unbilled receivables
307

 
252

Other
22

 
18

Total accounts receivable
2,150

 
2,132

Less: allowance for doubtful accounts
(162
)
 
(155
)
Accounts receivable, less allowance
$
1,988

 
1,977


We are exposed to concentrations of credit risk from residential and business customers within our local service area, business customers outside of our local service area and from other telecommunications service providers. We generally do not require collateral to secure our receivable balances. We have agreements with other telecommunications service providers whereby we agree to bill and collect on their behalf for services rendered by those providers to our customers within our local service area. We purchase accounts receivable from other telecommunications service providers primarily on a recourse basis and include these amounts in our accounts receivable balance. We have not experienced any significant loss associated with these purchased receivables.
The following table presents details of our allowance for doubtful accounts:
 
Beginning
Balance
 
Additions
 
Deductions
 
Ending
Balance
 
(Dollars in millions)
2014
$
155

 
159

 
(152
)
 
162

2013
$
158

 
152

 
(155
)
 
155

2012
$
145

 
187

 
(174
)
 
158

Property, Plant and Equipment
Property, Plant and Equipment
Property, Plant and Equipment
Net property, plant and equipment is composed of the following:
 
Depreciable
Lives
 
As of December 31,
 
 
2014
 
2013
 
 
 
(Dollars in millions)
Land
n/a
 
$
575

 
585

Fiber, conduit and other outside plant (1)
15-45
 
15,151

 
14,187

Central office and other network electronics (2)
3-10
 
13,248

 
12,178

Support assets (3)
3-30
 
6,578

 
6,420

Construction in progress (4)
n/a
 
1,166

 
937

Gross property, plant and equipment
 
 
36,718

 
34,307

Accumulated depreciation
 
 
(18,285
)
 
(15,661
)
Net property, plant and equipment
 
 
$
18,433

 
18,646

_______________________________________________________________________________
(1) 
Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
(2) 
Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
(3) 
Support assets consist of buildings, data centers, computers and other administrative and support equipment.
(4) 
Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
We recorded depreciation expense of $2.958 billion, $2.952 billion and $3.070 billion for the years ended December 31, 2014, 2013 and 2012, respectively.
In 2014, we recorded an impairment charge of $17 million in connection with a sale-leaseback transaction involving an office building which closed in the fourth quarter of 2014. This impairment charge is included in selling, general and administrative expense in our consolidated statements of operations for the year ended December 31, 2014.
In the second quarter of 2014, we entered into a separate definitive agreement to sell an office building for $12 million, which closed during the fourth quarter of 2014.
Asset Retirement Obligations
At December 31, 2014, our asset retirement obligations balance was primarily related to estimated future costs of removing equipment from leased properties and estimated future costs of properly disposing of asbestos and other hazardous materials upon remodeling or demolishing buildings. Asset retirement obligations are included in other long-term liabilities on our consolidated balance sheets.
The following table provides asset retirement obligation activity:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Balance at beginning of year
$
106

 
106

 
109

Accretion expense
7

 
7

 
7

Liabilities incurred
6

 
—

 
1

Liabilities settled and other
(2
)
 
(4
)
 
(1
)
Change in estimate
(10
)
 
(3
)
 
(10
)
Balance at end of year
$
107

 
106

 
106


During 2014, 2013 and 2012 we revised our estimates for the cost of removal of network equipment, asbestos remediation, and other obligations by $10 million, $3 million and $10 million, respectively. These revisions resulted in a reduction of the asset retirement obligation and offsetting reduction to gross property, plant and equipment and revisions to assets specifically identified are recorded as a reduction to accretion expense.
Severance and Leased Real Estate
Severance and Leased Real Estate
Severance and Leased Real Estate
Periodically, we have reductions in our workforce and have accrued liabilities for the related severance costs. These workforce reductions resulted primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives and reduced workload demands due to the loss of customers purchasing certain legacy services.
We report severance liabilities within accrued expenses and other liabilities-salaries and benefits in our consolidated balance sheets and report severance expenses in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations. As noted in Note 12—Segment Information, we do not allocate these severance expenses to our segments.
We have recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate for which we have ceased using, net of estimated sublease rentals. Our fair value estimates were determined using discounted cash flow methods. We recognize expense to reflect accretion of the discounted liabilities and periodically, we adjust the expense when our actual subleasing experience differs from our initial estimates. We report the current portion of liabilities for ceased-use real estate leases in accrued expenses and other liabilities-other and report the noncurrent portion in deferred credits and other liabilities in our consolidated balance sheets. We report the related expenses in selling, general and administrative expenses in our consolidated statements of operations. At December 31, 2014, the current and noncurrent portions of our leased real estate accrual were $14 million and $82 million, respectively. The remaining lease terms range from 0.3 years to 11.0 years, with a weighted average of 8.5 years.
Changes in our accrued liabilities for severance expenses and leased real estate were as follows:
 
Severance
 
Real Estate
 
(Dollars in millions)
Balance at December 31, 2012
$
17

 
131

Accrued to expense
31

 
—

Payments, net
(31
)
 
(16
)
Reversals and adjustments
—

 
(2
)
Balance at December 31, 2013
17

 
113

Accrued to expense
87

 
1

Payments, net
(78
)
 
(16
)
Reversals and adjustments
—

 
(2
)
Balance at December 31, 2014
$
26

 
96

Employee Benefits
Employee Benefits
Employee Benefits
Pension, Post-Retirement and Other Post-Employment Benefits
We sponsor various defined benefit pension plans (qualified and non-qualified), which in the aggregate cover a substantial portion of our employees including legacy CenturyLink, legacy Qwest and legacy Embarq employees. On December 31, 2014, we merged our existing qualified pension plans, which included merging the Qwest Pension Plan and Embarq Retirement Pension Plan into the CenturyLink Retirement Plan. The CenturyLink Retirement Plan was renamed the CenturyLink Combined Pension Plan ("Combined Plan"). Pension benefits for participants of the new Combined Plan who are represented by a collective bargaining agreement are based on negotiated schedules. All other participants' pension benefits are based on each individual participant's years of service and compensation. We use a December 31 measurement date for all our plans. We also maintain non-qualified pension plans for certain current and former highly compensated employees. We maintain post-retirement benefit plans that provide health care and life insurance benefits for certain eligible retirees. We also provide other post-employment benefits for eligible former employees.
Pension Benefits
Current funding laws require a company with a plan shortfall to fund the annual cost of benefits earned in addition to a seven-year amortization of the shortfall. Our funding policy for our Combined Plan is to make contributions with the objective of accumulating sufficient assets to pay all qualified pension benefits when due under the terms of the plans. The accounting unfunded status of our qualified pension plans was $2.4 billion as of December 31, 2014.
In 2014, we made cash contributions of approximately $157 million to our qualified pension plans and paid approximately $6 million of benefits directly to participants of our non-qualified pension plans. Based on current laws and circumstances, we are not required to make any contributions to our qualified pension plans in 2015, but we estimate that we will pay approximately $6 million of benefits to participants of our non-qualified pension plans.
Our pension plans contain provisions that allow us, from time to time, to offer lump sum payment options to certain employees in settlement of their future retirement benefits. We record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement threshold. On December 8, 2014, lump sum pension settlement payments to terminated, but not-yet-retired participants in our Qwest qualified pension plan amounted to $460 million, which exceeded the settlement threshold of $418 million. As a result, we were required to recognize a non-cash settlement charge of $63 million in 2014 to accelerate the recognition of a portion of the previously unrecognized actuarial losses in the qualified pension plan, which has been allocated and reflected in cost of services and products (exclusive of depreciation and amortization) and selling, general and administrative in our consolidated statement of operations for the year ended December 31, 2014. This non-cash charge reduced our recorded net income and retained earnings, with an offset to accumulated other comprehensive loss in shareholders’ equity. The amount of any future non-cash settlement charges will be dependent on the level of lump sum benefit payments made in 2015 and beyond.
Post-Retirement Benefits
Our post-retirement health care plans provide post-retirement benefits to qualified retirees. The post-retirement health care plans we assumed as part of our acquisitions of Qwest and Embarq provide post-retirement benefits to qualified retirees and allow (i) eligible employees retiring before certain dates to receive benefits at no or reduced cost and (ii) eligible employees retiring after certain dates to receive benefits on a shared cost basis. The post-retirement health care plans are primarily funded by us and we expect to continue funding these post-retirement obligations as benefits are paid.
No contributions were made to the post-retirement trusts in 2014, and we do not expect to make a contribution in 2015. However, in 2014 we paid approximately $88 million of benefits (net of participant contributions and direct subsidies) that were not payable by the trusts, and we estimate that in 2015, we will pay approximately $139 million of benefits (net of participant contributions and direct subsidies) that are not payable by the trusts.
We expect our health care cost trend rate to decrease between 0.25% to 0.15% per year from 6.00% in 2015 to an ultimate rate of 4.50% in 2024. Our post-retirement health care expense, for certain eligible Legacy Qwest retirees and certain eligible Legacy CenturyLink retirees, is capped at a set dollar amount. Therefore, those health care benefit obligations are not subject to increasing health care trends after the effective date of the caps.
A change of 100 basis points in the assumed initial health care cost trend rate would have had the following effects in 2014:
 
100 Basis
Points Change
 
Increase
 
(Decrease)
 
(Dollars in millions)
Effect on the aggregate of the service and interest cost components of net periodic post-retirement benefit expense (consolidated statement of operations)
$
4

 
(3
)
Effect on benefit obligation (consolidated balance sheet)
92

 
(82
)

Expected Cash Flows
The qualified pension, non-qualified pension and post-retirement health care benefit payments and premiums and life insurance premium payments are paid by us or distributed from plan assets. The estimated benefit payments provided below are based on actuarial assumptions using the demographics of the employee and retiree populations and have been reduced by estimated participant contributions.
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Medicare Part D
Subsidy Receipts
 
(Dollars in millions)
Estimated future benefit payments:
 
 
 
 
 
2015
$
1,061

 
309

 
(7
)
2016
1,011

 
300

 
(7
)
2017
996

 
292

 
(7
)
2018
980

 
285

 
(7
)
2019
965

 
279

 
(7
)
2020 - 2024
4,568

 
1,276

 
(31
)

Net Periodic Benefit Expense
The actuarial assumptions used to compute the net periodic benefit expense for our qualified pension, non-qualified pension and post-retirement benefit plans are based upon information available as of the beginning of the year, as presented in the following table.
 
Pension Plans
 
Post-Retirement Benefit Plans
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Actuarial assumptions at beginning of year:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.20% - 5.10%

 
3.50% - 4.20%

 
4.25% - 5.10%

 
4.50
%
 
3.60
%
 
4.60% - 4.80%

Rate of compensation increase
3.25
%
 
3.25
%
 
3.25
%
 
N/A

 
N/A

 
N/A

Expected long-term rate of return on plan assets
7.50
%
 
7.50
%
 
7.50
%
 
6.00% - 7.50%

 
6.00% - 7.30%

 
6.00% - 7.50%

Initial health care cost trend rate
N/A

 
N/A

 
N/A

 
6.00% - 6.50%

 
6.50% - 7.00%

 
8.00
%
Ultimate health care cost trend rate
N/A

 
N/A

 
N/A

 
4.50
%
 
4.50
%
 
5.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2024

 
2022

 
2018

_______________________________________________________________________________
N/A-Not applicable
Net periodic (income) expense for our qualified and non-qualified pension plans include the following components:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Service cost
$
77

 
91

 
87

Interest cost
602

 
544

 
625

Expected return on plan assets
(891
)
 
(896
)
 
(847
)
Settlements
63

 
—

 
—

Recognition of prior service cost
5

 
5

 
4

Recognition of actuarial loss
22

 
84

 
35

Net periodic pension benefit income
$
(122
)
 
(172
)
 
(96
)

Net periodic expense (income) for our post-retirement benefit plans include the following components:
 
Post-Retirement Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Service cost
$
22

 
24

 
22

Interest cost
159

 
140

 
173

Expected return on plan assets
(33
)
 
(39
)
 
(45
)
Recognition of prior service cost
20

 
—

 
—

Recognition of actuarial loss
—

 
4

 
—

Net periodic post-retirement benefit expense
$
168

 
129

 
150


We report net periodic benefit (income) expense for our qualified pension, non-qualified pension and post-retirement benefit plans in both cost of services and products and selling, general and administrative expenses on our consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012.
Benefit Obligations
The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2014 and 2013 and are as follows:
 
Pension Plans
 
Post-Retirement Benefit Plans
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
Actuarial assumptions at end of year:
 
 
 
 
 
 
 
Discount rate
3.50% - 4.10%

 
4.20% - 5.10%

 
3.80
%
 
4.50
%
Rate of compensation increase
3.25
%
 
3.25
%
 
N/A

 
N/A

Initial health care cost trend rate
N/A

 
N/A

 
6.00% / 6.50%

 
6.50% / 7.00%

Ultimate health care cost trend rate
N/A

 
N/A

 
4.50
%
 
4.50
%
Year ultimate trend rate is reached
N/A

 
N/A

 
2024

 
2022 / 2024

_______________________________________________________________________________
N/A-Not applicable
For our defined benefit plans, we adopted a new mortality rate table in 2014 to better reflect the expected lifetimes of our plan participants. The table used is based on Society of Actuaries tables and increases the projected benefit obligation by approximately $1.3 billion. The increase in the projected obligation was recognized as part of the net actuarial loss and is included in the other comprehensive loss, a portion of which is subject to be amortized over the remaining estimated life of plan participants (approximately 8 years).
The following tables summarize the change in the benefit obligations for the pension and post-retirement benefit plans:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
13,401

 
14,881

 
13,596

Service cost
77

 
91

 
87

Interest cost
602

 
544

 
625

Plan amendments
4

 
—

 
14

Actuarial loss (gain)
2,269

 
(1,179
)
 
1,565

Settlements
(460
)
 
—

 
—

Benefits paid by company
(6
)
 
(5
)
 
(5
)
Benefits paid from plan assets
(845
)
 
(931
)
 
(1,001
)
Benefit obligation at end of year
$
15,042

 
13,401

 
14,881


 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
3,688

 
4,075

 
3,930

Service cost
22

 
24

 
22

Interest cost
159

 
140

 
173

Participant contributions
69

 
96

 
86

Plan amendments
23

 
141

 
—

Direct subsidy receipts
9

 
13

 
19

Actuarial loss (gain)
245

 
(399
)
 
260

Benefits paid by company
(166
)
 
(266
)
 
(268
)
Benefits paid from plan assets
(219
)
 
(136
)
 
(147
)
Benefit obligation at end of year
$
3,830

 
3,688

 
4,075


Our aggregate benefit obligation as of December 31, 2014, 2013 and 2012 was $18.872 billion, $17.089 billion and $18.956 billion, respectively.
Plan Assets
We maintain plan assets for our qualified pension plans and certain post-retirement benefit plans. The qualified pension plan assets are used for the payment of pension benefits and certain eligible plan expenses. The post-retirement benefit plan's assets are used to pay health care benefits and premiums on behalf of eligible retirees and to pay certain eligible plan expenses. The expected rate of return on plan assets is the long-term rate of return we expect to earn on the plans' assets. The rate of return is determined by the strategic allocation of plan assets and the long-term risk and return forecast for each asset class. The forecasts for each asset class are generated primarily from an analysis of the long-term expectations of various third party investment management organizations. The expected rate of return on plan assets is reviewed annually and revised, as necessary, to reflect changes in the financial markets and our investment strategy.
The following tables summarize the change in the fair value of plan assets for the pension and post-retirement benefit plans:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
12,346

 
12,321

 
11,814

Return on plan assets
1,373

 
810

 
1,476

Employer contributions
157

 
146

 
32

Settlements
(460
)
 
—

 
—

Benefits paid from plan assets
(845
)
 
(931
)
 
(1,001
)
Fair value of plan assets at end of year
$
12,571

 
12,346

 
12,321


 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
535

 
626

 
693

Return on plan assets
37

 
45

 
80

Benefits paid from plan assets
(219
)
 
(136
)
 
(147
)
Fair value of plan assets at end of year
$
353

 
535

 
626


Pension Plans: Our investment objective for the pension plan assets is to achieve an attractive risk-adjusted return over time that will provide for the payment of benefits and minimize the risk of large losses. Our pension plan investment strategy is designed to meet this objective by broadly diversifying plan assets across numerous strategies with differing expected returns, volatilities and correlations. The pension plan assets have target allocations of 41.5% to interest rate sensitive investments and 58.5% to investments designed to provide higher expected returns than the interest rate sensitive investments. Interest rate sensitive investments include 26% of plan assets targeted primarily to long-duration investment grade bonds, 10.5% targeted to high yield and emerging market bonds and 5% targeted to diversified strategies, which primarily have exposures to global bonds, as well as some exposures to global stocks and commodities. Assets expected to provide higher returns than the interest rate sensitive assets include broadly diversified equity investments with targets of approximately 14.5% to U.S. stocks and 14.5% to developed and emerging market non-U.S. stocks. Approximately 11% is targeted to broadly diversified multi-asset class strategies that have the flexibility to adjust exposures to different asset classes. Approximately 10.5% is allocated to private markets investments including funds primarily invested in private equity, private debt and hedge funds. Real estate investments are targeted at 8% of plan assets. At the beginning of 2015, our expected annual long-term rate of return on pension assets is assumed to be 7.5%.
Post-Retirement Benefit Plans: Our investment objective for the post-retirement benefit plan assets is to achieve an attractive risk-adjusted return and minimize the risk of large losses over the expected life of the assets. Investment risk is managed by broadly diversifying assets across numerous strategies with differing expected returns, volatilities and correlations. Our investment strategy is designed to be consistent with the investment objective, with particular focus on providing liquidity for the reimbursement of our union-represented employees' post-retirement health care costs. The post-retirement benefit plan assets have target allocations of 30% to equities and 70% to non-equity investments. Specific target allocations within these broad categories are allowed to vary to provide liquidity in order to meet reimbursement requirements. Equity investments are broadly diversified with exposure to publicly traded U.S., non-U.S. and emerging market stocks and private market investments. While no new private market investments have been made in recent years, the percent allocation to existing private market investments is expected to increase as liquid, publicly traded stocks are drawn down for the reimbursement of health care costs. The 70% non-equity allocation includes investment grade bonds, real estate, hedge funds and diversified strategies. At the beginning of 2015, our expected annual long-term rate of return on post-retirement benefit plan assets is assumed to be 7.5%.
Permitted investments: Plan assets are managed consistent with the restrictions set forth by the Employee Retirement Income Security Act of 1974, as amended, which requires diversification of assets and also generally prohibits defined benefit and welfare plans from investing more than 10% of their assets in securities issued by the sponsor company. At December 31, 2014 and 2013, the pension and post-retirement benefit plans did not directly own any shares of our common stock or any of our debt.
Derivative instruments: Derivative instruments are used to reduce risk as well as provide return. The pension and post-retirement benefit plans use exchange traded futures to gain exposure to equity and Treasury markets consistent with target asset allocations. Interest rate swaps are used in the pension plans to reduce risk relative to measurement of the benefit obligation, which is sensitive to interest rate changes. Foreign exchange forward contracts are used to manage currency exposures. Credit default swaps are used to manage credit risk exposures in a cost effective and targeted manner relative to transacting with physical corporate fixed income securities. Options are currently used to manage interest rate exposure taking into account the implied volatility and current pricing of the specific underlying market instrument. Some derivative instruments subject the plans to counterparty risk. The external investment managers, along with Plan Management, monitor counterparty exposure and mitigate this risk by diversifying the exposure among multiple high credit quality counterparties, requiring collateral and limiting exposure by periodically settling contracts.
The gross notional exposure of the derivative instruments directly held by the plans is shown below. The notional amount of the derivatives corresponds to market exposure but does not represent an actual cash investment.
 
Gross Notional Exposure
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Years Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in millions)
Derivative instruments:
 
 
 
 
 
 
 
Exchange-traded U.S. equity futures
$
134

 
95

 
7

 
16

Exchange-traded non-U.S. equity futures
—

 
—

 
—

 
—

Exchange-traded Treasury futures
2,451

 
3,011

 
—

 
—

Interest rate swaps
579

 
556

 
—

 
—

Credit default swaps
382

 
253

 
—

 
—

Foreign exchange forwards
1,195

 
938

 
13

 
29

Options
529

 
261

 
—

 
—


Fair Value Measurements: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB. For additional information on the fair value hierarchy, see Note 10—Fair Value Disclosure.
At December 31, 2014, we used the following valuation techniques to measure fair value for assets. There were no changes to these methodologies during 2014:
•
Level 1—Assets were valued using the closing price reported in the active market in which the individual security was traded.
•
Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, net asset value of shares held by the plans and other methods by which all significant input were observable at the measurement date.
•
Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by the respective institutions at the measurement date.
The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2014. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivables, pending trades and accrued expenses.
 
Fair Value of Pension Plan Assets at December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
1,013

 
1,480

 
—

 
$
2,493

High yield bonds (b)
—

 
1,480

 
33

 
1,513

Emerging market bonds (c)
208

 
434

 
—

 
642

Convertible bonds (d)
—

 
14

 
—

 
14

Diversified strategies (e)
—

 
718

 
—

 
718

U.S. stocks (f)
1,389

 
87

 
—

 
1,476

Non-U.S. stocks (g)
1,169

 
384

 
—

 
1,553

Emerging market stocks (h)
—

 
102

 
—

 
102

Private equity (i)
—

 
—

 
673

 
673

Private debt (j)
—

 
—

 
395

 
395

Market neutral hedge funds (k)
—

 
928

 
100

 
1,028

Directional hedge funds (k)
—

 
530

 
28

 
558

Real estate (l)
—

 
483

 
216

 
699

Derivatives (m)
—

 
17

 
—

 
17

Cash equivalents and short-term investments (n)
—

 
690

 
—

 
690

Total investments
$
3,779

 
7,347

 
1,445

 
12,571

Total pension plan assets
 
 
 
 
 
 
$
12,571


 
Fair Value of Post-Retirement Plan Assets
at December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
5

 
72

 
—

 
$
77

High yield bonds (b)
—

 
15

 
—

 
15

Emerging market bonds (c)
—

 
1

 
—

 
1

Diversified strategies (e)
—

 
89

 
—

 
89

U.S. stocks (f)
35

 
—

 
—

 
35

Non-U.S. stocks (g)
33

 
—

 
—

 
33

Emerging market stocks (h)
6

 
—

 
—

 
6

Private equity (i)
—

 
—

 
28

 
28

Private debt (j)
—

 
—

 
3

 
3

Market neutral hedge funds (k)
—

 
25

 
—

 
25

Directional hedge funds (k)
—

 
1

 
—

 
1

Real estate (l)
—

 
24

 
4

 
28

Cash equivalents and short-term investments (n)
—

 
12

 
—

 
12

Total investments
$
79

 
239

 
35

 
353

Total post-retirement plan assets
 
 
 
 
 
 
$
353


The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2013. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivable, pending trades and accrued expenses.
 
Fair Value of Pension Plan Assets at December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
813

 
1,504

 
—

 
$
2,317

High yield bonds (b)
—

 
1,265

 
26

 
1,291

Emerging market bonds (c)
196

 
367

 
—

 
563

Convertible bonds (d)
—

 
389

 
—

 
389

Diversified strategies (e)
—

 
723

 
—

 
723

U.S. stocks (f)
1,408

 
92

 
—

 
1,500

Non-U.S. stocks (g)
1,159

 
299

 
—

 
1,458

Emerging market stocks (h)
—

 
110

 
—

 
110

Private equity (i)
—

 
—

 
721

 
721

Private debt (j)
—

 
—

 
436

 
436

Market neutral hedge funds (k)
—

 
867

 
99

 
966

Directional hedge funds (k)
—

 
582

 
32

 
614

Real estate (l)
—

 
306

 
265

 
571

Derivatives (m)
—

 
(34
)
 
—

 
(34
)
Cash equivalents and short-term investments (n)
—

 
721

 
—

 
721

Total investments
$
3,576

 
7,191

 
1,579

 
12,346

Total pension plan assets
 

 
 

 
 

 
$
12,346


 
Fair Value of Post-Retirement Plan Assets
at December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
21

 
56

 
—

 
$
77

High yield bonds (b)
—

 
56

 
—

 
56

Emerging market bonds (c)
—

 
37

 
—

 
37

Diversified strategies (e)
—

 
86

 
—

 
86

U.S. stocks (f)
56

 
—

 
—

 
56

Non-U.S. stocks (g)
58

 
—

 
—

 
58

Emerging market stocks (h)
—

 
12

 
—

 
12

Private equity (i)
—

 
—

 
40

 
40

Private debt (j)
—

 
—

 
5

 
5

Market neutral hedge funds (k)
—

 
35

 
—

 
35

Directional hedge funds (k)
—

 
14

 
—

 
14

Real estate (l)
—

 
22

 
12

 
34

Cash equivalents and short-term investments (n)
—

 
24

 
—

 
24

Total investments
$
135

 
342

 
57

 
534

Contribution receivable
 
 
 
 
 
 
1

Total post-retirement plan assets
 
 
 
 
 
 
$
535


The plans' assets are invested in various asset categories utilizing multiple strategies and investment managers. For several of the investments in the tables above and discussed below, the plans own units in commingled funds and limited partnerships that invest in various types of assets. Interests in commingled funds are valued using the net asset value ("NAV") per unit of each fund. The NAV reported by the fund manager is based on the market value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding. Commingled funds held by the plans that can be redeemed at NAV within a year of the financial statement date are generally classified as Level 2. Investments in limited partnerships represent long-term commitments with a fixed maturity date, typically ten years. Valuation inputs for these limited partnership interests are generally based on assumptions and other information not observable in the market and are classified as Level 3 investments. The assumptions and valuation methodologies of the pricing vendors, account managers, fund managers and partnerships are monitored and evaluated for reasonableness. Below is an overview of the asset categories, the underlying strategies and valuation inputs used to value the assets in the preceding tables:
(a) Investment grade bonds represent investments in fixed income securities as well as commingled bond funds comprised of U.S. Treasury securities, agencies, corporate bonds, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Treasury securities are valued at the bid price reported in the active market in which the security is traded and are classified as Level 1. The valuation inputs of other investment grade bonds primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings. The primary observable inputs include references to the new issue market for similar securities, the secondary trading markets and dealer quotes. Option adjusted spread models are utilized to evaluate securities such as asset backed securities that have early redemption features. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying fixed income securities using the same valuation inputs described above. The commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
(b) High yield bonds represent investments in below investment grade fixed income securities as well as commingled high yield bond funds. The valuation inputs for the securities primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying high yield instruments using the same valuation inputs described above. Commingled funds that can be redeemed at NAV within a year of the financial statement date are classified as Level 2. Commingled funds that cannot be redeemed at NAV or that cannot be redeemed at NAV within a year of the financial statement date are classified as Level 3.
(c) Emerging market bonds represent investments in securities issued by governments and other entities located in developing countries as well as registered mutual funds and commingled emerging market bond funds. The valuation inputs for the securities utilize observable market information and are primarily based on dealer quotes or a spread relative to the local government bonds. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying emerging market bonds using the same valuation inputs described above. The commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2. The registered mutual funds trade at the daily NAV, as determined by the market value of the underlying investments, and are classified as Level 1.
(d) Convertible bonds primarily represent investments in corporate debt securities that have features that allow the debt to be converted into equity securities under certain circumstances. The valuation inputs for the individual convertible bonds primarily utilize observable market information including a spread to U.S. Treasuries and the value and volatility of the underlying equity security. Convertible bonds are classified as Level 2.
(e) Diversified strategies represent an investment in a commingled fund that primarily has exposures to global government, corporate and inflation linked bonds, global stocks and commodities. The commingled fund is valued at NAV based on the market value of the underlying investments. The valuation inputs utilize observable market information including published prices for exchange traded securities, bid prices for government bonds, and spreads and yields available for comparable fixed income securities with similar credit ratings. This fund can be redeemed at NAV within a year of the financial statement date and is classified as Level 2.
(f) U.S. stocks represent investments in stocks of U.S. based companies as well as commingled U.S. stock funds. The valuation inputs for U.S. stocks are based on the last published price reported on the major stock market on which the securities are traded and are classified as Level 1. The commingled funds are valued at NAV based on the market value of the underlying investments using the same valuation inputs described above. These commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
(g) Non-U.S. stocks represent investments in stocks of companies based in developed countries outside the U.S. as well as commingled funds. The valuation inputs for non-U.S. stocks are based on the last published price reported on the major stock market on which the securities are traded and are classified as Level 1. The commingled funds are valued at NAV based on the market value of the underlying investments using the same valuation inputs described above. These commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
(h) Emerging market stocks represent investments in a registered mutual fund and commingled funds comprised of stocks of companies located in developing markets. Registered mutual funds trade at the daily NAV, as determined by the market value of the underlying investments, and are classified as Level 1. The commingled funds are valued at NAV based on the market value of the underlying investments using the same valuation inputs described previously for individual stocks. These commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
(i) Private equity represents non-public investments in domestic and foreign buy out and venture capital funds. Private equity funds are structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing accounting and other regulatory guidelines. The partnerships use valuation methodologies that give consideration to a range of factors, including but not limited to the price at which investments were acquired, the nature of the investments, market conditions, trading values on comparable public securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investments. These valuation methodologies involve a significant degree of judgment. Private equity investments are classified as Level 3.
(j) Private debt represents non-public investments in distressed or mezzanine debt funds. Mezzanine debt instruments are debt instruments that are subordinated to other debt issues and may include embedded equity instruments such as warrants. Private debt funds are structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing accounting and other regulatory guidelines. The valuation of underlying fund investments are based on factors including the issuer's current and projected credit worthiness, the security's terms, reference to the securities of comparable companies, and other market factors. These valuation methodologies involve a significant degree of judgment. Private debt investments are classified as Level 3.
(k) Market neutral hedge funds hold investments in a diversified mix of instruments that are intended in combination to exhibit low correlations to market fluctuations. These investments are typically combined with futures to achieve uncorrelated excess returns over various markets. Directional hedge funds—This asset category represents investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral hedge funds. Investments in hedge funds include both direct investments and investments in diversified funds of funds. Hedge Funds are valued at NAV based on the market value of the underlying investments which include publicly traded equity and fixed income securities and privately negotiated debt securities. The hedge funds are valued by third party administrators using the same valuation inputs previously described. Hedge funds that can be redeemed at NAV within a year of the financial statement date are classified as Level 2. Hedge fund investments that cannot be redeemed at NAV or that cannot be redeemed at NAV within a year of the financial statement date are classified as Level 3.
(l) Real estate represents investments in commingled funds and limited partnerships that invest in a diversified portfolio of real estate properties. These investments are valued at NAV according to the valuation policy of each fund or partnership, subject to prevailing accounting and other regulatory guidelines. The valuation inputs of the underlying properties are generally based on third-party appraisals that use comparable sales or a projection of future cash flows to determine fair value. Real estate investments that can be redeemed at NAV within a year of the financial statement date are classified as Level 2. Real estate investments that cannot be redeemed at NAV or that cannot be redeemed at NAV within a year of the financial statement date are classified as Level 3.
(m) Derivatives include exchange traded futures contracts, as well as privately negotiated over-the-counter swaps and options that are valued based on the change in interest rates or a specific market index and are classified as Level 2. The market values represent gains or losses that occur due to fluctuations in interest rates, foreign currency exchange rates, security prices, or other factors.
(n) Cash equivalents and short-term investments represent investments that are used in conjunction with derivatives positions or are used to provide liquidity for the payment of benefits or other purposes. The valuation inputs of securities are based on a spread to U.S. Treasury Bills, the Federal Funds Rate, or London Interbank Offered Rate and consider yields available on comparable securities of issuers with similar credit ratings and are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying investments using the same valuation inputs described above. These commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
Concentrations of Risk: Investments, in general, are exposed to various risks, such as significant world events, interest rate, credit, foreign currency and overall market volatility risk. These risks are managed by broadly diversifying assets across numerous asset classes and strategies with differing expected returns, volatilities and correlations. Risk is also broadly diversified across numerous market sectors and individual companies. Financial instruments that potentially subject the plans to concentrations of counterparty risk consist principally of investment contracts with high quality financial institutions. These investment contracts are typically collateralized obligations and/or are actively managed, limiting the amount of counterparty exposure to any one financial institution. Although the investments are well diversified, the value of plan assets could change materially depending upon the overall market volatility, which could affect the funded status of the plans.
The table below presents a rollforward of the pension plan assets valued using Level 3 inputs:
 
Pension Plan Assets Valued Using Level 3 Inputs
 
High
Yield
Bonds
 
Private
Equity
 
Private
Debt
 
Market
Neutral
Hedge
Fund
 
Directional
Hedge
Funds
 
Real
Estate
 
Total
 
(Dollars in millions)
Balance at December 31, 2012
$
59

 
711

 
465

 
—

 
194

 
337

 
1,766

Net transfers
—

 
—

 
—

 
—

 
(165
)
 
—

 
(165
)
Acquisitions
5

 
82

 
71

 
100

 
—

 
9

 
267

Dispositions
(43
)
 
(179
)
 
(144
)
 
—

 
(1
)
 
(97
)
 
(464
)
Actual return on plan assets:
 

 
 

 
 

 
 

 
 

 
 

 
 
Gains relating to assets sold during the year
12

 
68

 
18

 
—

 
—

 
11

 
109

(Losses) gains relating to assets still held at year-end
(7
)
 
39

 
26

 
(1
)
 
4

 
5

 
66

Balance at December 31, 2013
26

 
721

 
436

 
99

 
32

 
265

 
1,579

Net transfers
6

 
4

 
—

 
—

 
—

 
(4
)
 
6

Acquisitions
14

 
125

 
109

 
—

 
—

 
5

 
253

Dispositions
(16
)
 
(246
)
 
(111
)
 
—

 
—

 
(61
)
 
(434
)
Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains relating to assets sold during the year
8

 
115

 
25

 
—

 
—

 
3

 
151

(Losses) gains relating to assets still held at year-end
(5
)
 
(46
)
 
(64
)
 
1

 
(4
)
 
8

 
(110
)
Balance at December 31, 2014
$
33

 
673

 
395

 
100

 
28

 
216

 
1,445


The table below presents a rollforward of the post-retirement plan assets valued using Level 3 inputs:
 
Post-Retirement Plan Assets Valued Using Level 3 Inputs
 
Private
Equity
 
Private
Debt
 
Real
Estate
 
Total
 
(Dollars in millions)
Balance at December 31, 2012
$
45

 
6

 
28

 
79

Acquisitions
1

 
—

 
—

 
1

Dispositions
(11
)
 
(1
)
 
(18
)
 
(30
)
Actual return on plan assets:
 
 
 
 
 
 
 
Gains (losses) relating to assets sold during the year
4

 
—

 
(1
)
 
3

Gains relating to assets still held at year-end
1

 
—

 
3

 
4

Balance at December 31, 2013
40

 
5

 
12

 
57

Acquisitions
1

 
—

 
—

 
1

Dispositions
(15
)
 
(2
)
 
(8
)
 
(25
)
Actual return on plan assets:
 
 
 
 
 
 
 
Gains relating to assets sold during the year
7

 
1

 
—

 
8

Losses relating to assets still held at year-end
(5
)
 
(1
)
 
—

 
(6
)
Balance at December 31, 2014
$
28

 
3

 
4

 
35


Certain gains and losses are allocated between assets sold during the year and assets still held at year-end based on transactions and changes in valuations that occurred during the year. These allocations also impact our calculation of net acquisitions and dispositions.
For the year ended December 31, 2014, the investment program produced actual gains on qualified pension and post-retirement plan assets of $1.410 billion as compared to the expected returns of $924 million for a difference of $486 million. For the year ended December 31, 2013, the investment program produced actual gains on pension and post-retirement plan assets of $855 million as compared to the expected returns of $935 million for a difference of $80 million. The short-term annual returns on plan assets will almost always be different from the expected long-term returns and the plans could experience net gains or losses, due primarily to the volatility occurring in the financial markets during any given year.
Unfunded Status
The following table presents the unfunded status of the pensions and post-retirement benefit plans:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Years Ended December 31,
 
Years Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in millions)
Benefit obligation
$
(15,042
)
 
(13,401
)
 
(3,830
)
 
(3,688
)
Fair value of plan assets
12,571

 
12,346

 
353

 
535

Unfunded status
(2,471
)
 
(1,055
)
 
(3,477
)
 
(3,153
)
Current portion of unfunded status
$
(6
)
 
(5
)
 
(134
)
 
(154
)
Non-current portion of unfunded status
$
(2,465
)
 
(1,050
)
 
(3,343
)
 
(2,999
)

The current portion of our post-retirement benefit obligations is recorded on our consolidated balance sheets in accrued expenses and other current liabilities-salaries and benefits.
Accumulated Other Comprehensive Loss-Recognition and Deferrals
The following tables present cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2013, items recognized as a component of net periodic benefits expense in 2014, additional items deferred during 2014 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2014. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
 
As of and for the Years Ended December 31,
 
2013
 
Recognition
of Net
Periodic
Benefits
Expense
 
Deferrals
 
Net
Change in
AOCL
 
2014
 
(Dollars in millions)
Accumulated other comprehensive loss:
 
 
 
 
 
 
 
 
 
Pension plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
$
(1,058
)
 
85

 
(1,787
)
 
(1,702
)
 
(2,760
)
Prior service (cost) benefit
(33
)
 
5

 
(4
)
 
1

 
(32
)
Deferred income tax benefit (expense)
422

 
(34
)
 
684

 
650

 
1,072

Total pension plans
(669
)
 
56

 
(1,107
)
 
(1,051
)
 
(1,720
)
Post-retirement benefit plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
(37
)
 
—

 
(240
)
 
(240
)
 
(277
)
Prior service (cost) benefit
(163
)
 
20

 
(23
)
 
(3
)
 
(166
)
Deferred income tax benefit (expense)
78

 
(8
)
 
101

 
93

 
171

Total post-retirement benefit plans
(122
)
 
12

 
(162
)
 
(150
)
 
(272
)
Total accumulated other comprehensive loss
$
(791
)
 
68

 
(1,269
)
 
(1,201
)
 
(1,992
)

The following table presents estimated items to be recognized in 2015 as a component of net periodic benefit expense of the pension, non-qualified pension and post-retirement benefit plans:
 
Pension
Plans
 
Post-Retirement
Plans
 
(Dollars in millions)
Estimated recognition of net periodic benefit expense in 2015:
 
 
 
Net actuarial loss
$
(148
)
 
—

Prior service cost
(5
)
 
(19
)
Deferred income tax benefit
58

 
7

Estimated net periodic benefit expense to be recorded in 2015 as a component of other comprehensive income (loss)
$
(95
)
 
(12
)

Medicare Prescription Drug, Improvement and Modernization Act of 2003
We sponsor post-retirement health care plans with several benefit options that provide prescription drug benefits that we deem actuarially equivalent to or exceeding Medicare Part D. We recognize the impact of the federal subsidy received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in the calculation of our post-retirement benefit obligation and net periodic post-retirement benefit expense.
Other Benefit Plans
Health Care and Life Insurance
We provide health care and life insurance benefits to essentially all of our active employees. We are largely self-funded for the cost of the health care plan. Our health care benefit expenses for current employees was $381 million, $362 million and $360 million for the years ended December 31, 2014, 2013 and 2012, respectively. Union-represented employee benefits are based on negotiated collective bargaining agreements. Employees contributed $136 million, $117 million and $113 million for the years ended December 31, 2014, 2013 and 2012, respectively. Our group basic life insurance plans are fully insured and the premiums are paid by us.
401(k) Plan
We sponsor qualified defined contribution benefit plans covering substantially all of our employees. Under these plans, employees may contribute a percentage of their annual compensation up to certain maximums, as defined by the plans and by the Internal Revenue Service ("IRS"). Currently, we match a percentage of employee contributions in cash. At December 31, 2014 and December 31, 2013, the assets of the plans included approximately 8 million and 9 million shares of our common stock, respectively, as a result of the combination of previous employer match and participant directed contributions. We recognized expenses related to these plans of $81 million, $89 million and $76 million and for the years ended December 31, 2014, 2013 and 2012, respectively.
Deferred Compensation Plans
We sponsored non-qualified unfunded deferred compensation plans for various groups that included certain of our current and former highly compensated employees. The value of assets and liabilities related to these plans was not significant.
Share-based Compensation
Share-based Compensation
Share-based Compensation
We maintain equity programs that allow our Board of Directors (through its Compensation Committee or our Chief Executive Officer as its delegate) to grant incentives to certain employees and our outside directors in any one or a combination of several forms, including incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and market and performance shares. Stock options generally expire ten years from the date of grant. Until June 30, 2014, we offered an employee stock purchase plan, which allowed eligible employees to purchase our common stock at a 15% discount based on the lower of the beginning or ending stock price during recurring six month offering periods.
Stock Options
The following table summarizes activity involving stock option awards for the year ended December 31, 2014:
 
Number of
Options
 
Weighted-
Average
Exercise
Price
 
(in thousands)
 
 
Outstanding and Exercisable at December 31, 2013
5,325

 
$
35.95

Exercised
(1,065
)
 
28.57

Forfeited/Expired
(154
)
 
32.68

Outstanding and Exercisable at December 31, 2014
4,106

 
37.99


The aggregate intrinsic value of our options outstanding and exercisable at December 31, 2014 was $23 million. The weighted average remaining contractual term for such options was 2.7 years.
During 2014, we received net cash proceeds of $30 million in connection with our option exercises. The tax benefit realized from these exercises was $4 million. The total intrinsic value of options exercised for the years ended December 31, 2014, 2013 and 2012 was $9 million, $11 million and $49 million, respectively.
Restricted Stock Awards
For equity based awards that contain only service conditions for vesting, we calculate the award fair value based on the closing stock price on the accounting grant date. For equity based restricted stock awards that contain market conditions, the award fair value is calculated through Monte-Carlo simulations.
During the first quarter of 2014, we granted approximately 440 thousand shares of restricted stock to certain executive-level employees as part of our long-term incentive program, of which approximately 250 thousand contained only service conditions and will vest on a straight-line basis on February 20, 2015, 2016 and 2017. The remaining awards contain market and service conditions and are scheduled to vest on February 20, 2017. These shares, with market and service conditions, represent only the target for the award, as each recipient has the opportunity to ultimately receive a number of shares between 0% and 200% of the target restricted stock award depending on our total shareholder return versus that of selected peer companies for 2014, 2015 and 2016.
During the second quarter of 2014, we granted approximately 1.5 million shares to certain key employees as part of our annual equity compensation program. These awards contained only service conditions and will vest on a straight-line basis on March 26, 2015, 2016 and 2017. During the third quarter of 2014 we granted shares to certain key employees as part of our long-term equity retention program. These awards will vest over a three to seven year period with approximately 105 thousand, 325 thousand and 220 thousand vesting on August 4, 2017, 2019 and 2021, respectively.
The remaining awards granted throughout the year to certain other key employees and our outside directors were made as part of our equity compensation and retention programs. These awards require only service conditions for vesting and typically vest equally over a three year period.
During the second quarter of 2013, we granted approximately 335 thousand shares of restricted stock to certain executive-level employees as part of our long-term incentive program, of which approximately 223 thousand contained only service conditions and are scheduled to vest on a straight-line basis on May 23, 2014, 2015 and 2016. The remaining awards contain market and service conditions and will vest on May 23, 2016. These shares, with market and service conditions, represent only the target for the award as each recipient has the opportunity to ultimately receive a number of shares between 0% and 200% of the target restricted stock award depending on, our total shareholder return versus that of selected peer companies for 2013, 2014 and 2015.
In addition, during the first and second quarter of 2013, we granted approximately 1.2 million shares to certain key employees as part of our annual equity compensation program. These awards contained only service conditions. The remaining awards granted throughout the year to certain other key employees and our outside directors were made as part of our equity compensation and retention programs. These awards require only service conditions for vesting and typically vest equally over a three year period.
During the first quarter of 2012, we granted approximately 402 thousand shares of restricted stock to certain executive-level employees as part of our long-term incentive program, of which approximately 201 thousand contained only service conditions and will vest on a straight-line basis on February 20, 2013, 2014 and 2015. The remaining awards contain market and service conditions and will vest on February 20, 2015. These shares, with market and service conditions, represent only the target for the award as each recipient has the opportunity to ultimately receive between 0% and 200% of the target restricted stock award depending on our total shareholder return for 2012, 2013 and 2014 in relation to that of the S&P 500 Index. As of December 31, 2014, none of the 2012 awards with market and service conditions are expected to vest.
In addition, during the first quarter of 2012, we granted restricted stock to certain key employees as part of our annual equity compensation program. These awards contained only service conditions. Approximately 519 thousand shares of awards will vest on a straight-line basis on January 9, 2013, 2014 and 2015. Approximately 873 thousand shares of awards will vest on a straight-line basis on March 15, 2013, 2014 and 2015. The remaining awards granted throughout the year to certain other key employees and our outside directors were made as part of our equity compensation and retention programs. These awards require only service conditions for vesting and typically vest an equal portion annually over a three year period.
The following table summarizes activity involving restricted stock and restricted stock unit awards for the year ended December 31, 2014:
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
(in thousands)
 
 
Non-vested at December 31, 2013
3,625

 
$
37.33

Granted
2,851

 
35.87

Vested
(1,561
)
 
36.48

Forfeited
(515
)
 
38.10

Non-vested at December 31, 2014
4,400

 
36.59


During 2013, we granted 1.9 million shares of restricted stock and restricted stock unit awards at a weighted-average price of $35.63. During 2012, we granted 2.1 million shares of restricted stock at a weighted-average price of $39.13. The total fair value of restricted stock that vested during 2014, 2013 and 2012 was $53 million, $52 million and $102 million, respectively.
Compensation Expense and Tax Benefit
We recognize compensation expense related to our market and performance share-based awards with graded vesting that only have a service condition on a straight-line basis over the requisite service period for the entire award. Total compensation expense for all share-based payment arrangements for the years ended December 31, 2014, 2013 and 2012 was $75 million, $63 million and $78 million, respectively. Our tax benefit recognized in the consolidated statements of operations for our share-based payment arrangements for the years ended December 31, 2014, 2013 and 2012 was $29 million, $25 million and $31 million, respectively. At December 31, 2014, there was $112 million of total unrecognized compensation expense related to our share-based payment arrangements, which we expect to recognize over a weighted-average period of 2.2 years.
Earnings (Loss) Per Common Share
(Loss) Earnings Per Common Share
Earnings (Loss) Per Common Share
Basic and diluted earnings (loss) per common share for the years ended December 31, 2014, 2013 and 2012 were calculated as follows:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions, except per share amounts, shares in thousands)
Income (Loss) (Numerator):
 
 
 
 
 
Net income (loss)
$
772

 
(239
)
 
777

Earnings applicable to non-vested restricted stock
—

 
—

 
(1
)
Net income (loss) applicable to common stock for computing basic earnings (loss) per common share
772

 
(239
)
 
776

Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share
$
772

 
(239
)
 
776

Shares (Denominator):
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
Outstanding during period
572,748

 
604,404

 
622,139

Non-vested restricted stock
(4,313
)
 
(3,512
)
 
(2,796
)
Non-vested restricted stock units
—

 
—

 
862

Weighted average shares outstanding for computing basic earnings (loss) per common share
568,435

 
600,892

 
620,205

Incremental common shares attributable to dilutive securities:
 
 
 
 
 
Shares issuable under convertible securities
10

 
—

 
12

Shares issuable under incentive compensation plans
1,294

 
—

 
2,068

Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share
569,739

 
600,892

 
622,285

Basic earnings (loss) per common share
$
1.36

 
(0.40
)
 
1.25

Diluted earnings (loss) per common share
$
1.36

 
(0.40
)
 
1.25


Our calculation of diluted earnings (loss) per common share excludes shares of common stock that are issuable upon exercise of stock options when the exercise price is greater than the average market price of our common stock during the periods reflected in the table above. Such potentially issuable shares averaged 2.5 million, 2.7 million and 2.2 million for 2014, 2013 and 2012, respectively. For the year ended December 31, 2013, due to the net loss position, we excluded from the calculation of diluted loss per share 1.3 million shares which were potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive.
Fair Value Disclosure
Fair Value Disclosure
Fair Value Disclosure
Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt, excluding capital lease obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, accounts receivable and accounts payable approximate their fair values.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB.
We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on discounted future cash flows using current market interest rates.
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
Input Level
 
Description of Input
Level 1
 
Observable inputs such as quoted market prices in active markets.
Level 2
 
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
 
Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input levels used to determine the fair values indicated below:
 
 
 
 
As of December 31, 2014
 
As of December 31, 2013
 
 
Input
Level
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
 
 
 
(Dollars in millions)
Liabilities-Long-term debt excluding capital lease and other obligations
 
2
 
$
20,162

 
21,255

 
20,347

 
20,413

Income Taxes
Income Taxes
Income Taxes
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Income tax expense was as follows:
 
 
 
 
 
Federal
 
 
 
 
 
Current
$
18

 
1

 
57

Deferred
305

 
403

 
361

State
 
 
 
 
 
Current
26

 
62

 
15

Deferred
(14
)
 
(8
)
 
33

Foreign
 
 
 
 
 
Current
3

 
9

 
7

Deferred
—

 
(4
)
 
—

Total income tax expense
$
338

 
463

 
473


 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Income tax expense was allocated as follows:
 
 
 
 
 
Income tax expense in the consolidated statements of operations:
 
 
 
 
 
Attributable to income
$
338

 
463

 
473

Stockholders' equity:
 
 
 
 
 
Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
(5
)
 
(14
)
 
(18
)
Tax effect of the change in accumulated other comprehensive loss
(744
)
 
554

 
(434
)

The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Percentage of pre-tax income)
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
%
State income taxes, net of federal income tax benefit
2.7
 %
 
2.8
 %
 
2.5
%
Impairment of goodwill
—
 %
 
188.5
 %
 
—
%
Reversal of liability for unrecognized tax position
0.4
 %
 
(24.5
)%
 
—
%
Foreign income taxes
0.4
 %
 
2.7
 %
 
0.3
%
Nondeductible accounting adjustment for life insurance
—
 %
 
3.1
 %
 
—
%
Release state valuation allowance
—
 %
 
(2.3
)%
 
—
%
Loss on worthless investment in foreign subsidiary
(5.4
)%
 
—
 %
 
—
%
Other, net
(2.6
)%
 
1.4
 %
 
—
%
Effective income tax rate
30.5
 %
 
206.7
 %
 
37.8
%

The 2014 effective tax rate is 30.5% compared to 206.7% for 2013. The 2014 rate reflects a $60 million benefit for a worthless stock deduction for tax basis in a wholly-owned foreign subsidiary as a result of developments in bankruptcy proceedings involving its sole asset and a $13 million tax decrease due to changes in the state taxes caused by apportionment changes, state tax rate changes and the changes in the expected utilization of NOLs. The 2013 rate reflects the tax effect of a $1.092 billion non-deductible goodwill impairment charge, a favorable settlement with the Internal Revenue Service of $33 million, a $22 million reduction due to the reversal of an uncertain tax position and the tax effect of a $17 million unfavorable accounting adjustment for non-deductible life insurance costs. Also in 2013, the tax rate was decreased by a $5 million reduction to the valuation allowance due to the estimated ability to utilize more state NOLs than previously expected. The 2012 rate reflects the $16 million reversal of a valuation allowance related to the auction rate securities we sold in 2012.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Deferred tax assets
 
 
 
Post-retirement and pension benefit costs
$
2,276

 
1,618

Net operating loss carryforwards
1,091

 
1,532

Other employee benefits
214

 
182

Other
602

 
782

Gross deferred tax assets
4,183

 
4,114

Less valuation allowance
(409
)
 
(435
)
Net deferred tax assets
3,774

 
3,679

Deferred tax liabilities
 
 
 
Property, plant and equipment, primarily due to depreciation differences
(3,869
)
 
(3,904
)
Goodwill and other intangible assets
(2,908
)
 
(3,226
)
Other
(147
)
 
(137
)
Gross deferred tax liabilities
(6,924
)
 
(7,267
)
Net deferred tax liability
$
(3,150
)
 
(3,588
)

Of the $3.150 billion and $3.588 billion net deferred tax liability at December 31, 2014 and 2013, respectively, $4.030 billion and $4.753 billion is reflected as a long-term liability and $880 million and $1.165 billion is reflected as a net current deferred tax asset at December 31, 2014 and 2013, respectively.
At December 31, 2014, we had federal NOLs of $1.6 billion and state NOLs of $12 billion. If unused, the NOLs will expire between 2015 and 2032; however, no significant amounts expire until 2020. At December 31, 2014, we had $51 million ($33 million net of federal income tax) of state investment tax credit carryforwards that will expire between 2015 and 2024 if not utilized. In addition, at December 31, 2014 we had $110 million of federal alternative minimum tax, or AMT, credits. Our acquisitions of Qwest and Savvis caused "ownership changes" within the meaning of Section 382 of the Internal Revenue Code ("Section 382"). As a result, our ability to use these NOLs and AMT credits are subject to annual limits imposed by Section 382. Despite this, we expect to use substantially all of these tax attributes to reduce our future federal tax liabilities, although the timing of that use will depend upon our future earnings and future tax circumstances.
We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize. As of December 31, 2014, a valuation allowance of $409 million was established as it is more likely than not that this amount of net operating loss and tax credit carryforwards will not be utilized prior to expiration. Our valuation allowance at December 31, 2014 and 2013 is primarily related to state NOL carryforwards. This valuation allowance decreased by $26 million during 2014.
A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from January 1 to December 31 for 2014 and 2013 is as follows:
 
2014
 
2013
 
(Dollars in millions)
Unrecognized tax benefits at beginning of year
$
14

 
78

Increase in tax positions taken in the prior year
9

 
—

Decrease due to the reversal of tax positions taken in a prior year
(2
)
 
—

Decrease from the lapse of statute of limitations
(1
)
 
(36
)
Settlements
(3
)
 
(28
)
Unrecognized tax benefits at end of year
$
17

 
14


During 2012, we entered into negotiations with the IRS to resolve a claim that was filed by Qwest for 1999. Based on the status of the negotiations at year end 2012, we partially reversed an unrecognized tax benefit that was assumed as part of the Qwest acquisition. When the negotiations were settled in 2013, we fully reversed the amount of the unrecognized tax position and recorded a receivable for the anticipated refund, which was received in the second quarter of 2014.
The total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $32 million and $29 million at December 31, 2014 and 2013, respectively.
Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense. We had accrued interest (presented before related tax benefits) of approximately $30 million at both December 31, 2014 and 2013.
We file income tax returns, including returns for our subsidiaries, with federal, state and local jurisdictions. Our uncertain income tax positions are related to tax years that are currently under or remain subject to examination by the relevant taxing authorities.
In 2012, Qwest filed an amended 2008 federal income tax return primarily to report the carryforward impact of prior year settlements. A refund was received for the amended 2008 federal income tax return in 2013. In 2013, Qwest filed an amended 2009 federal income tax return primarily to report the carryforward impact of prior year settlements. The refund for the 2009 amended return filed in 2013 was received in 2014. In 2014, Qwest filed an amended federal income tax return for 2010. The refund claim filed for 2010 was accepted by the IRS and the refund is expected to be received in 2015. The 2010 amended return released certain general business credits that were required to be carried back to 2009. As a result, a subsequent 2009 federal amended return was filed by Qwest in 2014 to reflect the carrybacks from 2010. The 2009 refund claim filed in 2014 was accepted by the IRS and the refund is expected to be received in 2015.
Beginning with the 2010 tax year, our federal consolidated returns are subject to annual examination by the IRS. Qwest's federal consolidated returns for the 2010 and pre-merger 2011 tax years are open to examination by the IRS. Federal consolidated returns for Savvis for tax years 2010 and pre-merger 2011 are under examination by the IRS.
In years prior to 2011, Qwest filed amended federal income tax returns for 2002-2007 to make protective claims with respect to items reserved in their audit settlements and to correct items not addressed in prior audits. The examination of those amended federal income tax returns by the IRS was completed in 2012.
Our open income tax years by major jurisdiction are as follows at December 31, 2014:
Jurisdiction
 
Open Tax Years
Federal
 
2010—current
State
 
 
Florida
 
2010—current
Minnesota
 
2011—current
Other states
 
2010—current

Since the period for assessing additional liability typically begins upon the filing of a return, it is possible that certain jurisdictions could assess tax for years prior to the open tax years disclosed above. Additionally, it is possible that certain jurisdictions in which we do not believe we have an income tax filing responsibility, and accordingly did not file a return, may attempt to assess a liability, or that other jurisdictions to which we pay taxes may attempt to assert that we owe additional taxes.
Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $8 million within the next 12 months. The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control.
Segment Information
Segment Information
Segment Information
Effective November 1, 2014, we implemented a new organizational structure designed to strengthen our ability to attain our operational, strategic and financial goals. Prior to this reorganization, we operated and reported as four segments: consumer, business, wholesale and hosting. As a result of this reorganization, we now operate and report the following two segments in our consolidated financial statements:
•
Business. Consists generally of providing strategic, legacy and data integration products and services to enterprise, wholesale and governmental customers, including other communication providers. Our strategic products and services offered to these customers include our private line (including special access), broadband, Ethernet, MPLS, Voice over Internet Protocol ("VoIP"), network management services, colocation, managed hosting and cloud hosting services. Our legacy services offered to these customers primarily include switched access, long-distance, and local services, including the sale of unbundled network elements ("UNEs") which allow our wholesale customers to use our network or a combination of our network and their own networks to provide voice and data services to their customers; and
•
Consumer. Consists generally of providing strategic and legacy products and services to residential customers. Our strategic products and services offered to these customers include our broadband, wireless and video services, including our Prism TV services. Our legacy services offered to these customers include local and long-distance services.
We have restated previously reported segment results for the years ended December 31, 2013 and 2012 due to the above-described organizational restructure on November 1, 2014. The following table summarizes our segment results for 2014, 2013 and 2012 based on the segment categorization we were operating under at December 31, 2014.
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Total segment revenues
$
17,028

 
17,095

 
17,320

Total segment expenses
8,509

 
8,167

 
8,147

Total segment income
$
8,519

 
8,928

 
9,173

Total margin percentage
50
%
 
52
%
 
53
%
Business:
 
 
 
 
 
Revenues
$
11,034

 
11,091

 
11,156

Expenses
6,089

 
5,808

 
5,729

Income
$
4,945

 
5,283

 
5,427

Margin percentage
45
%
 
48
%
 
49
%
Consumer:
 
 
 
 
 
Revenues
$
5,994

 
6,004

 
6,164

Expenses
2,420

 
2,359

 
2,418

Income
$
3,574

 
3,645

 
3,746

Margin percentage
60
%
 
61
%
 
61
%

Recent Changes in Segment Reporting
We have recast our previously reported segment results due to the reorganization of our business. The segment recast resulted in increases in consumer segment expenses and decreases in business segment expenses for the years ended December 31, 2013 and 2012. The nature of the most significant changes to segment expenses are as follows:
•
Certain business segment expenses were reassigned to consumer segment expense; and
•
Certain business segment expenses were reassigned to corporate overhead.
For the years ended December 31, 2013 and 2012, the segment recast resulted in an increase in consumer expenses of $28 million and $32 million, respectively, and a decrease in business expenses of $45 million and $59 million, respectively.
During 2014, we adopted several changes with respect to the assignment of certain expenses to our then segments. We have restated our previously reported segment results for the years ended December 31, 2013 and 2012 to conform to the current presentation. The nature of the most significant changes to segment expenses are as follows:
•
The method for allocating certain shared costs of consumer sales and care, including bad debt expense and credit card fees, was revised, which resulted in an increase in consumer segment expenses with a corresponding decrease in business segment expenses; and
•
The progress of our integration efforts and centralization of certain administrative functions enabled us to discontinue the inclusion of finance, information technology, legal and human resources expenses in our then hosting segment, which resulted in a decrease in business segment expenses.
For the years ended December 31, 2013 and 2012, the reassignments of expenses resulted in an increase in consumer expenses of $100 million and $95 million, respectively, and a decrease in business expenses of $165 million for both years.
Product and Service Categories
We categorize our products, services and revenues among the following four categories:
•
Strategic services, which include primarily broadband, private line (including special access), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), VoIP and Verizon Wireless services;
•
Legacy services, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allow a local communications network to link to networks in remote locations);
•
Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and
•
Other revenues, which consist primarily of Universal Service Fund ("USF") revenue and surcharges. Unlike the first three revenue categories, other revenues are not included in our segment revenues.
Our operating revenues for our products and services consisted of the following categories for the years ended December 31, 2014, 2013 and 2012:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Strategic services
$
9,200

 
8,823

 
8,427

Legacy services
7,138

 
7,616

 
8,221

Data integration
690

 
656

 
672

Other
1,003

 
1,000

 
1,056

Total operating revenues
$
18,031

 
18,095

 
18,376


Other operating revenues include revenues from universal service funds, which allow us to recover a portion of our costs under federal and state cost recovery mechanisms, and certain surcharges to our customers, including billings for our required contributions to several USF programs. We also generate other operating revenues from leasing and subleasing of space in our office buildings, warehouses and other properties. Because we centrally manage the activities that generate these other operating revenues, we do not allocate these revenues to any of our two segments presented above.
We recognize revenues in our consolidated statements of operations for certain USF surcharges and transaction taxes that we bill to our customers. Our consolidated statements of operations also reflects the related expense for the amounts we remit to the government agencies. The total amount of such surcharges that we included in revenues aggregated approximately $526 million, $489 million and $531 million for the years ended December 31, 2014, 2013 and 2012, respectively. Those USF surcharges, where we record revenue, are included in the "other" operating revenues and transaction tax surcharges are included in "legacy services" revenues. We also act as a collection agent for certain other USF and transaction taxes that we are required by government agencies to include in our bills to customers, for which we do not record any revenue or expense because we only act as a pass-through agent.
Allocations of Revenues and Expenses
Our segment revenues include all revenues from our strategic, legacy and data integration operations as described in more detail above. Segment revenues are based upon each customer's classification to an individual segment. We report our segment revenues based upon all services provided to that segment's customers. Our segment expenses for our two segments include specific expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities; and allocated expenses which include network expenses, facilities expenses and other expenses such as fleet and real estate expenses. We do not assign depreciation and amortization expense or impairments to our segments, as the related assets and capital expenditures are centrally managed and are not monitored by or reported to the chief operating decision maker ("CODM") by segment. Similarly, severance expenses, restructuring expenses and certain centrally managed administrative functions (such as finance, information technology, legal and human resources) are not assigned to our segments. Interest expense is also excluded from segment results because we manage our financing on a total company basis and have not allocated assets or debt to specific segments. Other income (expense) is not monitored as a part of our segment operations and is therefore excluded from our segment results.
The following table reconciles segment income to net income for the years ended December 31, 2014, 2013 and 2012:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Total segment income
$
8,519

 
8,928

 
9,173

Other operating revenues
1,003

 
1,000

 
1,056

Depreciation and amortization
(4,428
)
 
(4,541
)
 
(4,780
)
Impairment of goodwill
—

 
(1,092
)
 
—

Other unassigned operating expenses
(2,684
)
 
(2,842
)
 
(2,736
)
Other expenses, net
(1,300
)
 
(1,229
)
 
(1,463
)
Income tax expense
(338
)
 
(463
)
 
(473
)
Net income (loss)
$
772

 
(239
)
 
777


We do not have any single customer that provides more than 10% of our total consolidated operating revenues. Substantially all of our consolidated revenues come from customers located in the United States.
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Total
 
(Dollars in millions, except per share amounts)
2014
 
 
 
 
 
 
 
 
 
Operating revenues
$
4,538

 
4,541

 
4,514

 
4,438

 
18,031

Operating income
653

 
655

 
619

 
483

 
2,410

Net income
203

 
193

 
188

 
188

 
772

Basic earnings per common share
0.35

 
0.34

 
0.33

 
0.33

 
1.36

Diluted earnings per common share
0.35

 
0.34

 
0.33

 
0.33

 
1.36

2013
 
 
 
 
 
 
 
 
 
Operating revenues
$
4,513

 
4,525

 
4,515

 
4,542

 
18,095

Operating income (loss)
782

 
715

 
(685
)
 
641

 
1,453

Net income (loss)
298

 
269

 
(1,045
)
 
239

 
(239
)
Basic earnings (loss) per common share
0.48

 
0.45

 
(1.76
)
 
0.41

 
(0.40
)
Diluted earnings (loss) per common share
0.48

 
0.44

 
(1.76
)
 
0.41

 
(0.40
)

During the fourth quarter of 2014, we recognized a $60 million tax benefit associated with a worthless stock deduction for the tax basis in a wholly-owned foreign subsidiary as a result of developments in bankruptcy proceedings involving its sole asset that occurred in the first quarter of 2014. During the fourth quarter of 2014, we also recognized a pension settlement charge of $63 million. The net loss of $1.045 billion in the third quarter of 2013 is primarily due to a goodwill impairment charge of $1.1 billion and a charge of $233 million in connection with a then tentative settlement in a litigation matter.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
We are vigorously defending against all of the matters described below. As a matter of course, we are prepared both to litigate the matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities. In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. We have established accrued liabilities for the matters described below where losses are deemed probable and reasonably estimable.
Pending Matters
In William Douglas Fulghum, et al. v. Embarq Corporation, et al., filed on December 28, 2007 in the United States District Court for the District of Kansas, a group of retirees filed a class action lawsuit challenging the decision to make certain modifications in retiree benefits programs relating to life insurance, medical insurance and prescription drug benefits, generally effective January 1, 2006 and January 1, 2008 (which, at the time of the modifications, was expected to reduce estimated future expenses for the subject benefits by more than $300 million). Defendants include Embarq, certain of its benefit plans, its Employee Benefits Committee and the individual plan administrator of certain of its benefits plans. Additional defendants include Sprint Nextel and certain of its benefit plans. The Court certified a class on certain of plaintiffs' claims, but rejected class certification as to other claims. On October 14, 2011, the Fulghum lawyers filed a new, related lawsuit, Abbott et al. v. Sprint Nextel et al. In Abbott, approximately 1,500 plaintiffs allege breach of fiduciary duty in connection with the changes in retiree benefits that also are at issue in the Fulghum case. The Abbott plaintiffs are all members of the class that was certified in Fulghum on claims for allegedly vested benefits (Counts I and III), and the Abbott claims are similar to the Fulghum breach of fiduciary duty claim (Count II), on which the Fulghum court denied class certification. The Court has stayed proceedings in Abbott indefinitely, except for limited discovery and motion practice as to approximately 80 of the plaintiffs. On February 14, 2013, the Fulghum court dismissed the majority of the plaintiffs' claims in that case. On July 16, 2013, the Fulghum court granted plaintiffs' request to seek interlocutory review by the United States Court of Appeals for the Tenth Circuit. Embarq and the other defendants are defending the appeal, continue to vigorously contest any remaining claims in Fulghum and seek to have the claims in the Abbott case dismissed on similar grounds. We have not accrued a liability for these matters because we believe it is premature (i) to determine whether an accrual is warranted and (ii) if so, to determine a reasonable estimate of probable liability.
In December 2009, subsidiaries of CenturyLink filed two lawsuits against subsidiaries of Sprint Nextel to recover terminating access charges for VoIP traffic owed under various interconnection agreements and tariffs which originally approximated $34 million in the aggregate. In connection with the first lawsuit, a federal court in Virginia issued a ruling in our favor, which resulted in Sprint paying us approximately $24 million. The other lawsuit is pending in federal court in Louisiana. In that case, in early 2011 the Court dismissed certain of CenturyLink's claims, referred other claims to the Federal Communications Commission ("FCC"), and stayed the litigation. In April 2012, Sprint Nextel filed a petition with the FCC, seeking a declaratory ruling that CenturyLink's access charges do not apply to VoIP originated calls, and earlier this year, CenturyLink filed a complaint with the Missouri Public Service Commission to collect the portion of the remaining unpaid charges arising in that state. We have not deferred any revenue recognition related to these matters.
On July 16, 2013, Comcast MO Group, Inc. ("Comcast") filed a lawsuit in Colorado state court against Qwest Communications International Inc. ("Qwest"). Comcast alleges Qwest breached the parties' 1998 tax sharing agreement ("TSA") when it refused to partially indemnify Comcast for a tax liability settlement Comcast reached with the Commonwealth of Massachusetts in a dispute to which we were not a party. Comcast seeks approximately $80 million in damages, excluding interest. Qwest and Comcast are parties to the TSA in their capacities as successors to the TSA's original parties, U S WEST, Inc., a telecommunications company, and MediaOne Group, Inc., a cable television company, respectively. In October 2014, the state court granted summary judgment in Qwest's favor. In November 2014, Comcast filed a Notice of Appeal. We have not accrued a liability for this matter because we do not believe that liability is probable.
On September 13, 2006, Cargill Financial Markets, Plc ("Cargill") and Citibank, N.A. ("Citibank") filed a lawsuit in the District Court of Amsterdam, the Netherlands, against Qwest, Koninklijke KPN N.V., KPN Telecom B.V., and other former officers, employees or supervisory board members of KPNQwest N.V. ("KPNQwest"), some of whom were formerly affiliated with Qwest. The lawsuit alleges that defendants misrepresented KPNQwest's financial and business condition in connection with the origination of a credit facility and wrongfully allowed KPNQwest to borrow funds under that facility. Plaintiffs allege damages of approximately €219 million (or approximately $266 million based on the exchange rate on December 31, 2014). The value of this claim will be reduced to the degree plaintiffs receive recovery from a distribution of assets from the bankruptcy estate of KPNQwest. The extent of such expected recovery is not yet known. On April 25, 2012, the court issued its judgment denying the claims asserted by Cargill and Citibank in their lawsuit. Cargill and Citibank have appealed that decision. We do not believe that liability is probable in this matter.
The terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law may obligate Qwest to indemnify its former directors, officers or employees with respect to the Cargill matter described above, and Qwest has been advancing legal fees and costs to certain former directors, officers or employees in connection with that matter.
Several putative class actions relating to the installation of fiber optic cable in certain rights-of-way were filed against Qwest on behalf of landowners on various dates and in courts located in 34 states in which Qwest has such cable (Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Wisconsin.) For the most part, the complaints challenge our right to install our fiber optic cable in railroad rights-of-way. The complaints allege that the railroads own the right-of-way as an easement that did not include the right to permit us to install our cable in the right-of-way without the plaintiffs' consent. In general, the complaints seek damages on theories of trespass and unjust enrichment, as well as punitive damages. After previous attempts to enter into a single nationwide settlement in a single court proved unsuccessful, the parties proceeded to seek court approval of settlements on a state-by-state basis. To date, the parties have received final approval of such settlements in 31 states. The settlement administration process, including claim submission and evaluation, is continuing in relation to a number of these settlements. The parties have not yet received final approval in two states (Texas and New Mexico). There is one state where an action was at one time, but is not currently, pending (Arizona). We have accrued an amount that we believe is probable for resolving these matters; however, the amount is not material to our consolidated financial statements.
CenturyLink and certain of its affiliates are defendants in one consolidated securities and four shareholder derivative actions. The actions are pending in federal court in the Western District of Louisiana. Plaintiffs in these actions have variously alleged, among other things, that CenturyLink and certain of its current and former officers and directors violated federal securities laws and/or breached fiduciary duties owed to the Company and its shareholders. Plaintiffs' complaints focus on alleged material misstatements or omissions concerning CenturyLink's financial condition and changes in CenturyLink's capital allocation strategy in early 2013. These matters are in preliminary phases and the Company intends to defend against the filed actions vigorously. We have not accrued a liability for these matters as it is premature (i) to determine whether an accrual is warranted and (ii) if so, to determine a reasonable estimate of probable liability.
The local exchange carrier subsidiaries of CenturyLink are among hundreds of defendants nationwide in dozens of lawsuits filed over the past year by Sprint Communications Company and affiliates of Verizon Communications Inc. The plaintiffs in these suits have challenged the right of local exchange carriers to bill interexchange carriers for switched access charges for certain calls between mobile and wireline devices that are routed through an interexchange carrier. In the lawsuits, the plaintiffs are seeking refunds of access charges previously paid and relief from future access charges. In addition, these and some other interexchange carriers have ceased paying switched access charges on these calls. Recently the lawsuits involving our local exchange carriers and many other carriers have been consolidated for pretrial purposes in the United States District Court for the District of Northern Texas. Some of the defendants, including our affiliated carriers, have petitioned the Federal Communications Commission to address these issues on an industry-wide basis.
As both an interexchange carrier and a local exchange carrier, we both pay and assess significant amounts of the access charges in question. The outcome of these disputes and suits, as well as any related regulatory proceedings that could ensue, are currently not predictable. If we are required to stop assessing these charges or to pay refunds of any such charges, our financial results could be negatively affected.
Other Proceedings and Disputes
From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies, and miscellaneous third party tort actions. The outcome of these other proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on our financial position, results of operations or cash flows.
We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities. These cases have progressed to various stages and one or more may go to trial in the coming 24 months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared both to litigate the matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.
Capital Leases
We lease certain facilities and equipment under various capital lease arrangements. Depreciation of assets under capital leases is included in depreciation and amortization expense in our consolidated statements of operations. Payments on capital leases are included in repayments of long-term debt, including current maturities in our consolidated statements of cash flows.
The tables below summarize our capital lease activity:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Assets acquired through capital leases
$
37

 
12

 
209

Depreciation expense
126

 
136

 
150

Cash payments towards capital leases
118

 
119

 
113

 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Assets included in property, plant and equipment
$
850

 
877

Accumulated depreciation
393

 
338


The future annual minimum payments under capital lease arrangements as of December 31, 2014 were as follows:
 
Future Minimum
Payments
 
(Dollars in millions)
Capital lease obligations:
 
2015
$
104

2016
76

2017
74

2018
72

2019
61

2020 and thereafter
284

Total minimum payments
671

Less: amount representing interest and executory costs
(182
)
Present value of minimum payments
489

Less: current portion
(73
)
Long-term portion
$
416


Operating Leases
CenturyLink leases various equipment, office facilities, retail outlets, switching facilities, and other network sites. These leases, with few exceptions, provide for renewal options and escalations that are either fixed or based on the consumer price index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. For the years ended December 31, 2014, 2013 and 2012, our gross rental expense was $446 million, $455 million and $445 million, respectively. We also received sublease rental income for the years ended December 31, 2014, 2013 and 2012 of $14 million, $16 million and $18 million, respectively.
At December 31, 2014, our future rental commitments for operating leases were as follows:
 
Future Minimum
Payments
 
(Dollars in millions)
2015
$
311

2016
280

2017
257

2018
233

2019
202

2020 and thereafter
974

Total future minimum payments (1)
$
2,257

_______________________________________________________________________________
(1) 
Minimum payments have not been reduced by minimum sublease rentals of $91 million due in the future under non-cancelable subleases.
Purchase Obligations
We have several commitments primarily for marketing activities and support services from a variety of vendors to be used in the ordinary course of business totaling $407 million at December 31, 2014. Of this amount, we expect to purchase $141 million in 2015, $154 million in 2016 through 2017, $50 million in 2018 through 2019 and $62 million in 2020 and thereafter. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we were contractually committed as of December 31, 2014.
Other Financial Information
Other financial information
Other Financial Information
Other Current Assets
The following table presents details of other current assets in our consolidated balance sheets:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Prepaid expenses
$
260

 
266

Materials, supplies and inventory
132

 
167

Assets held for sale
14

 
26

Deferred activation and installation charges
103

 
94

Other
71

 
44

Total other current assets
$
580

 
597


Assets held for sale includes several assets that we expect to sell within the next twelve months. During 2014, we sold our remaining 700 MHz A-Block wireless spectrum licenses, which we purchased in 2008 but never placed into service. As a result of changes in market conditions and prevailing spectrum prices, we recorded an impairment charge of $14 million, which is included in other income, net in our consolidated statements of operations for the for the year ended December 31, 2014. The sale closed on November 3, 2014, and we received $39 million in cash in the aggregate.
Selected Current Liabilities
Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows:
 
As of December 31
 
2014
 
2013
 
(Dollars in millions)
Accounts payable
$
1,226

 
1,111

Other current liabilities:
 
 
 
Accrued rent
$
34

 
52

Legal reserves
27

 
273

Other
149

 
189

Total other current liabilities
$
210

 
514


Included in accounts payable at December 31, 2014 and 2013 were $80 million and $88 million, respectively, representing book overdrafts and $185 million and $140 million, respectively, associated with capital expenditures. Included in legal reserves at December 31, 2013, was $235 million related to the then tentative settlement agreement with the trustees in the KPNQwest Dutch bankruptcy proceeding. In February 2014, we paid approximately €171 million (or approximately $235 million) to settle this proceeding.
Labor Union Contracts
Labor Union Contracts
Labor Union Contracts
Approximately 36% of our employees are members of various bargaining units represented by the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). As of December 31, 2014, approximately two thousand or 4% of our employees are subject to additional collective bargaining agreements that expired in 2014. We believe that relations with our employees continue to be generally good. We are currently negotiating the terms of new agreements covering these employees. Additionally, approximately two thousand, or 4%, of our employees are subject to collective bargaining agreements that expire in 2015.
Repurchase of CenturyLink Common Stock
Repurchase of CenturyLink Common Stock
Repurchase of CenturyLink Common Stock
In February 2013, our Board of Directors authorized us to repurchase up to $2 billion of our outstanding common stock. On May 29, 2014, we completed the 2013 stock repurchase program, repurchasing over the course of the program a total of 59.5 million shares in the open market at an average purchase price of $33.63 per share. Of those aggregate amounts, we repurchased 13.7 million shares in the open market during the first half of 2014 for an aggregate market price of $433 million, or an average purchase price of $31.54 per share. All shares of common stock repurchased under our 2013 stock repurchase program have been retired.
In February 2014, our Board of Directors authorized a 24-month program to repurchase up to an aggregate of $1 billion of our outstanding common stock. This 2014 stock repurchase program took effect on May 29, 2014, immediately upon the completion of our predecessor 2013 stock repurchase program. During the year ended December 31, 2014, we repurchased 5.2 million shares of our outstanding common stock in the open market. These shares were repurchased for an aggregate market price of $200 million, or an average purchase price of $38.40 per share. The repurchased common stock has been retired. These repurchased shares exclude shares that, as of December 31, 2014, we had agreed to purchase under this program for an aggregate of $6 million, or an average purchase price of $40.22 per share, in transactions that settled early in the first quarter of 2015. The $6 million in shares excluded from the repurchase is included in other current liabilities on our consolidated balance sheet as of December 31, 2014. As of December 31, 2014, we had approximately $800 million in stock remaining available for repurchase under the Stock Repurchase Program. As of February 20, 2015, we had repurchased 7.7 million shares for $298 million, or an average purchase price of $38.57 per share.
Accumulated Other Comprehensive Loss
Other Comprehensive Earnings
Other Comprehensive Loss
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the year ended December 31, 2014:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2013
$
(669
)
 
(122
)
 
(11
)
 
(802
)
Other comprehensive income (loss) before reclassifications
(1,107
)
 
(162
)
 
(15
)
 
(1,284
)
Amounts reclassified from accumulated other comprehensive income
56

 
12

 
1

 
69

Net current-period other comprehensive income (loss)
(1,051
)
 
(150
)
 
(14
)
 
(1,215
)
Balance at December 31, 2014
$
(1,720
)
 
(272
)
 
(25
)
 
(2,017
)

The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the year ended December 31, 2014:
Year Ended December 31, 2014
 
Decrease (Increase)
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
85

 
See Note 7—Employee Benefits
Prior service cost
 
25

 
See Note 7—Employee Benefits
Total before tax
 
110

 
 
Income tax expense (benefit)
 
(42
)
 
Income tax expense
Insignificant items
 
1

 
 
Net of tax
 
$
69

 
 

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the year ended December 31, 2013:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2012
$
(1,399
)
 
(289
)
 
(13
)
 
(1,701
)
Other comprehensive income (loss) before reclassifications
675

 
164

 
1

 
840

Amounts reclassified from accumulated other comprehensive income
55

 
3

 
1

 
59

Net current-period other comprehensive income (loss)
730

 
167

 
2

 
899

Balance at December 31, 2013
$
(669
)
 
(122
)
 
(11
)
 
(802
)
The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the year ended December 31, 2013:
Year Ended December 31, 2013
 
Decrease (Increase)
in Net Loss
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
(88
)
 
See Note 7—Employee Benefits
Prior service cost
 
(5
)
 
See Note 7—Employee Benefits
Total before tax
 
(93
)
 
 
Income tax expense (benefit)
 
35

 
Income tax expense
Insignificant items
 
(1
)
 
 
Net of tax
 
$
(59
)
 
 
Dividends
Dividends
Dividends
Our Board of Directors declared the following dividends payable in 2014 and 2013:
Date Declared
 
Record Date
 
Dividend
Per Share
 
Total Amount
 
Payment Date
 
 
 
 
 
 
(in millions)
 
 
November 11, 2014
 
11/24/2014
 
$
0.540

 
$
307

 
12/5/2014
August 19, 2014
 
8/29/2014
 
$
0.540

 
$
308

 
9/12/2014
May 28, 2014
 
6/9/2014
 
$
0.540

 
$
307

 
6/20/2014
February 24, 2014
 
3/10/2014
 
$
0.540

 
$
309

 
3/21/2014
November 12, 2013
 
11/25/2013
 
$
0.540

 
$
321

 
12/6/2013
August 27, 2013
 
9/6/2013
 
$
0.540

 
$
321

 
9/19/2013
May 22, 2013
 
6/3/2013
 
$
0.540

 
$
320

 
6/14/2013
February 27, 2013
 
3/11/2013
 
$
0.540

 
$
339

 
3/22/2013
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
New Accounting Pronouncements, Policy [Policy Text Block] 
Recent Accounting Pronouncements
On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09” or “new standard”). The new standard is effective for annual and interim periods beginning January 1, 2017, and early adoption is prohibited. ASU 2014-09 may be adopted by applying the provisions of the new standard on a retrospective basis to the periods included in the financial statements or on a modified retrospective basis which would result in the recognition of a cumulative effect of adopting ASU 2014-09 in the first quarter of 2017. We have not yet decided which implementation method we will adopt.
The new standard replaces virtually all existing generally accepted accounting principles (“GAAP”) on revenue recognition and replaces them with a principles-based approach for determining revenue recognition using a new five step model. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also includes new accounting principles related to the deferral and amortization of contract acquisition and fulfillment costs. We currently do not defer any contract acquisition costs and defer contract fulfillment costs only up to the extent of any revenue deferred.
We are studying the new standard and are in the early stages of assessing the impact the new standard will have on us and our consolidated financial statements. We cannot, however, provide any estimate of the impact of adopting the new standard at this time.
Consolidation, Policy [Policy Text Block] 
The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.
To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other income (expense), (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities.
Use of Estimates 
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions we make when accounting for items and matters such as, but not limited to, investments, long-term contracts, customer retention patterns, allowance for doubtful accounts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets (including deferred tax assets), impairment assessments, pension, post-retirement and other post-employment benefits, taxes, certain liabilities and other provisions and contingencies are reasonable, based on information available at the time they were made. These estimates, judgments and assumptions can affect the reported amounts of assets, liabilities and components of stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenues, expenses and components of cash flows during the periods presented in our consolidated statements of operations, our consolidated statements of comprehensive (loss) income and our consolidated statements of cash flows. We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters. See Note 11—Income Taxes and Note 14—Commitments and Contingencies for additional information.
For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.
For matters related to income taxes, if we determine that the impact of an uncertain tax position is more likely than not to be sustained upon audit by the relevant taxing authority, then we recognize a benefit for the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest is recognized on the amount of unrecognized benefit from uncertain tax positions.
For all of these and other matters, actual results could differ from our estimates.
Revenue recognition 
Revenue Recognition
We recognize revenue for services when the related services are provided. Recognition of certain payments received in advance of services being provided is deferred until the service is provided. These advance payments include activation and installation charges, which we recognize as revenue over the expected customer relationship period, which ranges from eighteen months to over ten years depending on the service. We also defer costs for customer activations and installations. The deferral of customer activation and installation costs is limited to the amount of revenue deferred on advance payments. Costs in excess of advance payments are recorded as expense in the period such costs are incurred. Expected customer relationship periods are estimated using historical experience. Termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term.
We offer bundle discounts to our customers who receive certain groupings of services. These bundle discounts are recognized concurrently with the associated revenue and are allocated to the various services in the bundled offering based on the estimated selling price of services included in each bundled combination.
Customer arrangements that include both equipment and services are evaluated to determine whether the elements are separable. If the elements are deemed separable and separate earnings processes exist, the revenue associated with the customer arrangement is allocated to each element based on the relative estimated selling price of the separate elements. We have estimated the selling prices of each element by reference to vendor-specific objective evidence of selling prices when the elements are sold separately. The revenue associated with each element is then recognized as earned. For example, if we receive an advance payment when we sell equipment and continuing service together, we immediately recognize as revenue the amount allocated to the equipment as long as all the conditions for revenue recognition have been satisfied. The portion of the advance payment allocated to the service based upon its relative selling price is recognized ratably over the longer of the contractual period or the expected customer relationship period.
We periodically transfer optical capacity assets on our network to other telecommunications service carriers. These transactions are structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years. We account for the cash consideration received on transfers of optical capacity assets and on all of the other elements deliverable under an IRU, as revenue ratably over the term of the agreement. We have not recognized revenue on any contemporaneous exchanges of our optical capacity assets for other optical capacity assets.
In connection with offering products and services provided by third-party vendors, we review the relationship between us, the vendor and the end customer to assess whether revenue should be reported on a gross or net basis. In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction, take title to the products, have risk and rewards of ownership or act as an agent or broker. Based on our agreements with DIRECTV and Verizon Wireless, we offer these services through sales agency relationships which are reported on a net basis.
For our hosting operations, we have service level commitments pursuant to contracts with certain of our clients. To the extent that such service levels are not achieved or are otherwise disputed due to performance or service issues or other service interruptions or conditions, we will estimate the amount of credits to be issued and record a reduction to revenues, with a corresponding increase in the credit reserve.
USF, Gross Receipts Taxes and Other Surcharges 
USF, Gross Receipts Taxes and Other Surcharges
In determining whether to include in our revenues and expenses the taxes and surcharges collected from customers and remitted to government authorities, including USF charges, sales, use, value added and some excise taxes, we assess, among other things, whether we are the primary obligor or principal taxpayer for the taxes assessed in each jurisdiction where we do business. In jurisdictions where we determine that we are the principal taxpayer, we record the surcharges on a gross basis and include them in our revenues and costs of services and products. In jurisdictions where we determine that we are merely a collection agent for the government authority, we record the taxes on a net basis and do not include them in our revenues and costs of services and products.
Advertising Costs 
Advertising Costs
Costs related to advertising are expensed as incurred and included in selling, general and administrative expenses in our consolidated statements of operations.
Legal Costs 
Legal Costs
In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on regulatory, litigation and other matters. We expense these costs as the related services are received.
Income Taxes 
Income Taxes
We file a consolidated federal income tax return with our eligible subsidiaries. The provision for income taxes consists of an amount for taxes currently payable, an amount for tax consequences deferred to future periods, adjustments to our liabilities for uncertain tax positions and amortization of investment tax credits. We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax net operating losses ("NOLs"), tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax bases of those assets and liabilities. Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income. The effect on deferred income tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.
We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts that we believe are more likely than not to be recovered. A significant portion of our net deferred tax assets relate to tax benefits attributable to NOLs. Each quarter we evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. See Note 11—Income Taxes for additional information.
Cash and Cash Equivalents 
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments that are readily convertible into cash and are not subject to significant risk from fluctuations in interest rates. As a result, the value at which cash and cash equivalents are reported in our consolidated financial statements approximates their fair value. In evaluating investments for classification as cash equivalents, we require that individual securities have original maturities of ninety days or less and that individual investment funds have dollar-weighted average maturities of ninety days or less. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.
Book overdrafts occur when checks have been issued but have not been presented to our controlled disbursement bank accounts for payment. Disbursement bank accounts allow us to delay funding of issued checks until the checks are presented for payment. Until the issued checks are presented for payment, the book overdrafts are included in accounts payable on our consolidated balance sheet. This activity is included in the operating activities section in our consolidated statements of cash flows.
Accounts Receivable and Allowance for Doubtful Accounts 
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recognized based upon the amount due from customers for the services provided or at cost for purchased and other receivables less an allowance for doubtful accounts. The allowance for doubtful accounts receivable reflects our best estimate of probable losses inherent in our receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available evidence. We generally consider our accounts past due if they are outstanding over 30 days. Our collection process varies by the customer segment, amount of the receivable, and our evaluation of the customer's credit risk. Our past due accounts are written off against our allowance for doubtful accounts when collection is considered to be not probable. Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received. The carrying value of accounts receivable net of the allowance for doubtful accounts approximates fair value.
Property, Plant and Equipment 
Property, Plant and Equipment
Property, plant and equipment acquired in connection with our acquisitions was recorded based on its estimated fair value as of its acquisition date plus the estimated value of any associated legally or contractually required retirement obligations. Purchased and constructed property, plant and equipment is recorded at cost, plus the estimated value of any associated legally or contractually required retirement obligations. Property, plant and equipment is depreciated primarily using the straight-line group method. Under the straight-line group method, assets dedicated to providing telecommunications services (which comprise the majority of our property, plant and equipment) that have similar physical characteristics, use and expected useful lives are pooled for purposes of depreciation and tracking. The equal life group procedure is used to establish each pool's average remaining useful life. Generally, under the straight-line group method, when an asset is sold or retired in the course of normal business activities, the cost is deducted from property, plant and equipment and charged to accumulated depreciation without recognition of a gain or loss. A gain or loss is recognized in our consolidated statements of operations only if a disposal is abnormal or unusual. Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term. Expenditures for maintenance and repairs are expensed as incurred. Interest is capitalized during the construction phase of network and other internal-use capital projects. Employee-related costs for construction of network and other internal use assets are also capitalized during the construction phase. Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items for which cost is based on specific identification.
We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment. Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, assumptions about technology evolution and, in certain instances, actuarially determined probabilities to estimate the remaining useful life of our asset base. Our remaining useful life assessments anticipate the loss in service value of assets that may precede the physical retirement. Assets shared among many customers may lose service value as those customers leave the network. However, the asset is not retired until all customers no longer utilize the asset.
We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties. When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability. The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset. Where the removal obligation is not legally binding, the net cost to remove assets is expensed in the period in which the costs are actually incurred.
We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, absent a material change in operations. An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its fair value. Recoverability of the asset group to be held and used is assessed by comparing the carrying amount of the asset group to the estimated undiscounted future net cash flows expected to be generated by the asset group. If the asset group's carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. We determine fair values by using a combination of comparable market values and discounted cash flows, as appropriate.
Goodwill, Customer Relationships and Other Intangible Assets 
Goodwill, Customer Relationships and Other Intangible Assets
Intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, are initially recorded at estimated fair value. We amortize customer relationships primarily over an estimated life of 10 to 15 years, using either the sum-of-the-years-digits or the straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to 7 years, except for approximately $237 million of our capitalized software costs, which represents costs to develop an integrated billing and customer care system which is amortized using the straight-line method over a 20 year period. We amortize our other intangible assets predominantly using the sum-of-the-years-digits method over an estimated life of 4 years. Other intangible assets not arising from business combinations are initially recorded at cost. Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify the intangible asset as indefinite-lived and such intangible assets are not amortized.
Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life. We have capitalized certain costs associated with software such as costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance, data conversion and training costs are expensed in the period in which they are incurred. We review the remaining economic lives of our capitalized software annually. Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.
Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost. However, if their estimated fair value is less than the carrying amount, other indefinite-lived intangible assets are reduced to their estimated fair value through an impairment charge to our consolidated statements of operations.
We annually review the estimated lives and methods used to amortize our other intangible assets. The actual amounts of amortization expense may differ materially from our estimates, depending on the results of our annual review.
We are required to assess goodwill for impairment at least annually, or more frequently if events or a change in circumstances indicate that an impairment may have occurred. We are required to write-down the value of goodwill in periods in which the recorded amount of goodwill exceeds the implied fair value of goodwill. Our reporting units are not discrete legal entities with discrete financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. Therefore, the equity carrying value and future cash flows must be estimated each time a goodwill impairment assessment is performed on a reporting unit. As a result, our assets, liabilities and cash flows are assigned to reporting units using reasonable and consistent allocation methodologies. Certain estimates, judgments and assumptions are required to perform these assignments. We believe these estimates, judgments and assumptions to be reasonable, but changes in many of these can significantly affect each reporting unit's equity carrying value and future cash flows utilized for our goodwill impairment assessment.
During the fourth quarter of 2013, we elected to change the date of our annual assessment of goodwill impairment from September 30 to October 31. This is a change in method of applying an accounting principle which management believes is a preferable alternative as the new date of the assessment is more closely aligned with our strategic planning process. The change in the assessment date did not delay, accelerate or avoid a potential impairment charge in 2013. We performed our annual goodwill impairment assessment at September 30, 2013, prior to the change in our annual assessment date. We then performed a qualitative assessment of our goodwill as of October 31, 2013 and concluded that our goodwill for consumer, wholesale and business reporting units was not impaired and our goodwill for hosting reporting unit was not further impaired as of that date.
We are required to reassign goodwill to reporting units each time we reorganize our internal reporting structure which causes a change in the composition of our reporting units. Goodwill is reassigned to the reporting units using a relative fair value approach. We utilize the earnings before interest, taxes, depreciation and amortization as our allocation methodology as it represents a reasonable proxy for the fair value of the operations being reorganized.
Pension and Post-Retirement Benefits 
Pension and Post-Retirement Benefits
We recognize the funded status of our defined benefit and post-retirement plans as an asset or a liability on our consolidated balance sheet. Each year's actuarial gains or losses are a component of our other comprehensive (loss) income, which is then included in our accumulated other comprehensive loss. Pension and post-retirement benefit expenses are recognized over the period in which the employee renders service and becomes eligible to receive benefits. We make significant assumptions (including the discount rate, expected rate of return on plan assets, mortality and health care trend rates) in computing the pension and post-retirement benefits expense and obligations. See Note 7—Employee Benefits for additional information.
Foreign Currency 
Foreign Currency
Our results of operations include foreign subsidiaries, which are translated from the applicable functional currency to the United States Dollar using the average exchange rates during the reporting period, while assets and liabilities are translated at the reporting date. We include gains or losses from foreign currency remeasurement in other income, net in our consolidated statements of operations. Certain non-U.S. subsidiaries designate the local currency as their functional currency, and we record the translation of their assets and liabilities into U.S. dollars at the balance sheet date as translation adjustments and include them as a component of accumulated other comprehensive loss in our consolidated balance sheets.
Common Stock and Preferred Stock 
Preferred stock
Holders of outstanding CenturyLink preferred stock are entitled to receive cumulative dividends, receive preferential distributions equal to $25 per share plus unpaid dividends upon CenturyLink's liquidation and vote as a single class with the holders of common stock.
Dividends
We pay dividends out of retained earnings to the extent we have retained earnings on the date the dividend is declared. If the dividend is in excess of our retained earnings on the declaration date, then the excess is drawn from our additional paid-in capital.
Reclassification, Policy [Policy Text Block] 
We reclassified certain prior period amounts to conform to the current period presentation, including the categorization of our revenues and our segment reporting. See Note 12—Segment Information for additional information. These changes had no impact on total revenues, total operating expenses or net income (loss) for any period.
Goodwill, Customer Relationships and Other Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Schedule of goodwill and other intangible assets
Text Block 
 
Schedule of estimated amortization expense for intangible assets
Text Block 
 
Schedule of goodwill attributable to segments
Text Block 
Text Block 
Schedule of goodwill and other intangible assets 
Goodwill, customer relationships and other intangible assets consisted of the following:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Goodwill
$
20,755

 
20,674

Customer relationships, less accumulated amortization of $4,682 and $3,641
4,893

 
5,935

Indefinite-life intangible assets
268

 
321

Other intangible assets subject to amortization
 
 
 
Capitalized software, less accumulated amortization of $1,533 and $1,193
1,338

 
1,415

Trade names and patents, less accumulated amortization of $196 and $208
41

 
66

Total other intangible assets, net
$
1,647

 
1,802

Schedule of estimated amortization expense for intangible assets 
We estimate that total amortization expense for intangible assets for the years ending December 31, 2015 through 2019 will be as follows:
 
(Dollars in millions)
2015
$
1,244

2016
1,145

2017
1,036

2018
922

2019
805

Schedule of goodwill attributable to segments 
The following table shows the rollforward of goodwill assigned to our reportable segments from the January 3, 2013 reorganization through December 31, 2014.
 
Business
 
Consumer
 
Wholesale
 
Hosting
 
Total
 
(Dollars in millions)
As of January 3, 2013
$
6,363

 
10,348

 
3,274

 
1,642

 
21,627

Acquisitions
—

 
—

 
—

 
139

 
139

Impairment
—

 
—

 
—

 
(1,092
)
 
(1,092
)
As of December 31, 2013
$
6,363

 
10,348

 
3,274

 
689

 
20,674

Purchase accounting adjustments
—

 
—

 
—

 
(11
)
 
(11
)
November 1, 2014 reorganization
4,022

 
(70
)
 
(3,274
)
 
(678
)
 
—

Acquisitions
92

 
—

 
—

 
—

 
92

As of December 31, 2014
$
10,477

 
10,278

 
—

 
—

 
20,755

Schedule of goodwill attributable to segments 
As of January 3, 2013, we assigned our aggregate goodwill balance to our then four reportable segments as follows.
 
As of
January 3, 2013
 
(Dollars in millions)
Business
6,363

Consumer
10,348

Wholesale
3,274

Hosting
1,642

Total goodwill
$
21,627

Long-Term Debt and Credit Facilities (Tables)
Schedule of long-term debt including unamortized discounts and premiums 
Long-term debt, including unamortized discounts and premiums, consisted of borrowings by CenturyLink, Inc. and certain of its subsidiaries, including Qwest Corporation ("QC"), Qwest Capital Funding, Inc. and Embarq Corporation and subsidiaries ("Embarq"), were as follows:
 
 
 
 
 
As of December 31,
 
Interest Rates
 
Maturities
 
2014
 
2013
 
 
 
 
 
(Dollars in millions)
CenturyLink, Inc.
 
 
 
 
 
 
 
Senior notes
5.000% - 7.650%
 
2015 - 2042
 
$
7,825

 
7,825

Credit facility (1)
1.910% - 4.000%
 
2019
 
725

 
725

Term loan
2.420%
 
2019
 
380

 
402

Subsidiaries
 
 
 
 
 
 
 
Qwest Corporation
 
 
 
 
 
 
 
Senior notes
6.125% - 8.375%
 
2015 - 2054
 
7,311

 
7,411

Qwest Capital Funding, Inc.
 
 
 
 
 
 
 
Senior notes
6.500% - 7.750%
 
2018 - 2031
 
981

 
981

Embarq Corporation and subsidiaries
 
 
 
 
 
 
 
Senior notes
7.082% - 7.995%
 
2016 - 2036
 
2,669

 
2,669

First mortgage bonds
7.125% - 8.770%
 
2017 - 2025
 
232

 
262

Other
9.000%
 
  2019
 
150

 
150

Capital lease and other obligations
Various
 
Various
 
509

 
619

Unamortized discounts, net
 
 
 
 
(111
)
 
(78
)
Total long-term debt
 
 
 
 
20,671

 
20,966

Less current maturities
 
 
 
 
(550
)
 
(785
)
Long-term debt, excluding current maturities
 
 
 
 
$
20,121

 
20,181

_______________________________________________________________________________
(1) 
The outstanding amount of our Credit Facility borrowings at both December 31, 2014 and 2013 was $725 million, with weighted average interest rates of 2.270% and 2.176%, respectively. These amounts change on a regular basis.
Schedule of maturities of long-term debt 
Aggregate maturities of our long-term debt (excluding unamortized premiums, discounts and other, net):
 
(Dollars in millions)(1)
2015
$
550

2016
1,494

2017
1,497

2018
248

2019
1,474

2020 and thereafter
15,519

Total long-term debt
$
20,782

_______________________________________________________________________________
(1) 
Actual principal paid in all years may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.
Schedule of amount of gross interest expense, net of capitalized interest 
Interest expense includes interest on long-term debt. The following table presents the amount of gross interest expense, net of capitalized interest:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Interest expense:
 
 
 
 
 
Gross interest expense
$
1,358

 
1,339

 
1,362

Capitalized interest
(47
)
 
(41
)
 
(43
)
Total interest expense
$
1,311

 
1,298

 
1,319

Accounts Receivable (Tables)
Schedule of components of accounts receivable 
The following table presents details of our accounts receivable balances:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Trade and purchased receivables
$
1,821

 
1,862

Earned and unbilled receivables
307

 
252

Other
22

 
18

Total accounts receivable
2,150

 
2,132

Less: allowance for doubtful accounts
(162
)
 
(155
)
Accounts receivable, less allowance
$
1,988

 
1,977


Schedule of details of allowance for doubtful accounts 
The following table presents details of our allowance for doubtful accounts:
 
Beginning
Balance
 
Additions
 
Deductions
 
Ending
Balance
 
(Dollars in millions)
2014
$
155

 
159

 
(152
)
 
162

2013
$
158

 
152

 
(155
)
 
155

2012
$
145

 
187

 
(174
)
 
158

Property, Plant and Equipment (Tables)
Schedule of net property, plant and equipment 
Net property, plant and equipment is composed of the following:
 
Depreciable
Lives
 
As of December 31,
 
 
2014
 
2013
 
 
 
(Dollars in millions)
Land
n/a
 
$
575

 
585

Fiber, conduit and other outside plant (1)
15-45
 
15,151

 
14,187

Central office and other network electronics (2)
3-10
 
13,248

 
12,178

Support assets (3)
3-30
 
6,578

 
6,420

Construction in progress (4)
n/a
 
1,166

 
937

Gross property, plant and equipment
 
 
36,718

 
34,307

Accumulated depreciation
 
 
(18,285
)
 
(15,661
)
Net property, plant and equipment
 
 
$
18,433

 
18,646

_______________________________________________________________________________
(1) 
Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
(2) 
Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
(3) 
Support assets consist of buildings, data centers, computers and other administrative and support equipment.
(4) 
Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
Schedule of changes to asset retirement obligations 
The following table provides asset retirement obligation activity:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Balance at beginning of year
$
106

 
106

 
109

Accretion expense
7

 
7

 
7

Liabilities incurred
6

 
—

 
1

Liabilities settled and other
(2
)
 
(4
)
 
(1
)
Change in estimate
(10
)
 
(3
)
 
(10
)
Balance at end of year
$
107

 
106

 
106

Severance and Leased Real Estate (Tables)
Schedule of changes in accrued liabilities for severance expenses and leased real estate
Changes in our accrued liabilities for severance expenses and leased real estate were as follows:
 
Severance
 
Real Estate
 
(Dollars in millions)
Balance at December 31, 2012
$
17

 
131

Accrued to expense
31

 
—

Payments, net
(31
)
 
(16
)
Reversals and adjustments
—

 
(2
)
Balance at December 31, 2013
17

 
113

Accrued to expense
87

 
1

Payments, net
(78
)
 
(16
)
Reversals and adjustments
—

 
(2
)
Balance at December 31, 2014
$
26

 
96

Employee Benefits (Tables)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Employee Benefits
 
 
Schedule of estimated future benefit payments
Text Block 
 
Schedule of actuarial assumptions used to compute net periodic benefit expense
Text Block 
 
Schedule of actuarial assumptions used to compute the funded status for the plans
Text Block 
 
Schedule of change in plan assets
Text Block 
 
Schedule of gross notional exposure of the derivative instruments directly held by the plans
Text Block 
 
Schedule of the unfunded status of the benefit plans
Text Block 
 
Schedule of items not recognized as a component of net periodic benefits expense
Text Block 
 
Schedule of estimated items to be recognized in 2013 as a component of net periodic benefit expense
Text Block 
 
Pension Plans
 
 
Employee Benefits
 
 
Schedule of components of net periodic pension income and post-retirement benefit expense
Text Block 
 
Schedule of change in benefit obligation
Text Block 
 
Schedule of change in plan assets
Text Block 
 
Schedule of fair value of the plans' assets by asset category
Text Block 
Text Block 
Summary of changes in fair value of defined benefit plans' Level 3 assets
Text Block 
 
Post-Retirement Benefit Plans
 
 
Employee Benefits
 
 
Schedule of effects of a 100 basis point change in assumed health care cost rates
Text Block 
 
Schedule of components of net periodic pension income and post-retirement benefit expense
Text Block 
 
Schedule of change in benefit obligation
Text Block 
 
Schedule of fair value of the plans' assets by asset category
Text Block 
Text Block 
Summary of changes in fair value of defined benefit plans' Level 3 assets
Text Block 
 
Schedule of estimated future benefit payments 
The estimated benefit payments provided below are based on actuarial assumptions using the demographics of the employee and retiree populations and have been reduced by estimated participant contributions.
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Medicare Part D
Subsidy Receipts
 
(Dollars in millions)
Estimated future benefit payments:
 
 
 
 
 
2015
$
1,061

 
309

 
(7
)
2016
1,011

 
300

 
(7
)
2017
996

 
292

 
(7
)
2018
980

 
285

 
(7
)
2019
965

 
279

 
(7
)
2020 - 2024
4,568

 
1,276

 
(31
)
Schedule of actuarial assumptions used to compute net periodic benefit expense 
The actuarial assumptions used to compute the net periodic benefit expense for our qualified pension, non-qualified pension and post-retirement benefit plans are based upon information available as of the beginning of the year, as presented in the following table.
 
Pension Plans
 
Post-Retirement Benefit Plans
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Actuarial assumptions at beginning of year:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.20% - 5.10%

 
3.50% - 4.20%

 
4.25% - 5.10%

 
4.50
%
 
3.60
%
 
4.60% - 4.80%

Rate of compensation increase
3.25
%
 
3.25
%
 
3.25
%
 
N/A

 
N/A

 
N/A

Expected long-term rate of return on plan assets
7.50
%
 
7.50
%
 
7.50
%
 
6.00% - 7.50%

 
6.00% - 7.30%

 
6.00% - 7.50%

Initial health care cost trend rate
N/A

 
N/A

 
N/A

 
6.00% - 6.50%

 
6.50% - 7.00%

 
8.00
%
Ultimate health care cost trend rate
N/A

 
N/A

 
N/A

 
4.50
%
 
4.50
%
 
5.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2024

 
2022

 
2018

_______________________________________________________________________________
N/A-Not applicable
Schedule of actuarial assumptions used to compute the funded status for the plans 
The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2014 and 2013 and are as follows:
 
Pension Plans
 
Post-Retirement Benefit Plans
 
December 31,
 
December 31,
 
2014
 
2013
 
2014
 
2013
Actuarial assumptions at end of year:
 
 
 
 
 
 
 
Discount rate
3.50% - 4.10%

 
4.20% - 5.10%

 
3.80
%
 
4.50
%
Rate of compensation increase
3.25
%
 
3.25
%
 
N/A

 
N/A

Initial health care cost trend rate
N/A

 
N/A

 
6.00% / 6.50%

 
6.50% / 7.00%

Ultimate health care cost trend rate
N/A

 
N/A

 
4.50
%
 
4.50
%
Year ultimate trend rate is reached
N/A

 
N/A

 
2024

 
2022 / 2024

_______________________________________________________________________________
N/A-Not applicable
Schedule of change in plan assets 
The following tables summarize the change in the fair value of plan assets for the pension and post-retirement benefit plans:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
12,346

 
12,321

 
11,814

Return on plan assets
1,373

 
810

 
1,476

Employer contributions
157

 
146

 
32

Settlements
(460
)
 
—

 
—

Benefits paid from plan assets
(845
)
 
(931
)
 
(1,001
)
Fair value of plan assets at end of year
$
12,571

 
12,346

 
12,321

Schedule of gross notional exposure of the derivative instruments directly held by the plans 
The gross notional exposure of the derivative instruments directly held by the plans is shown below. The notional amount of the derivatives corresponds to market exposure but does not represent an actual cash investment.
 
Gross Notional Exposure
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Years Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in millions)
Derivative instruments:
 
 
 
 
 
 
 
Exchange-traded U.S. equity futures
$
134

 
95

 
7

 
16

Exchange-traded non-U.S. equity futures
—

 
—

 
—

 
—

Exchange-traded Treasury futures
2,451

 
3,011

 
—

 
—

Interest rate swaps
579

 
556

 
—

 
—

Credit default swaps
382

 
253

 
—

 
—

Foreign exchange forwards
1,195

 
938

 
13

 
29

Options
529

 
261

 
—

 
—

Schedule of the unfunded status of the benefit plans 
The following table presents the unfunded status of the pensions and post-retirement benefit plans:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Years Ended December 31,
 
Years Ended December 31,
 
2014
 
2013
 
2014
 
2013
 
(Dollars in millions)
Benefit obligation
$
(15,042
)
 
(13,401
)
 
(3,830
)
 
(3,688
)
Fair value of plan assets
12,571

 
12,346

 
353

 
535

Unfunded status
(2,471
)
 
(1,055
)
 
(3,477
)
 
(3,153
)
Current portion of unfunded status
$
(6
)
 
(5
)
 
(134
)
 
(154
)
Non-current portion of unfunded status
$
(2,465
)
 
(1,050
)
 
(3,343
)
 
(2,999
)
Schedule of items not recognized as a component of net periodic benefits expense 
The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
 
As of and for the Years Ended December 31,
 
2013
 
Recognition
of Net
Periodic
Benefits
Expense
 
Deferrals
 
Net
Change in
AOCL
 
2014
 
(Dollars in millions)
Accumulated other comprehensive loss:
 
 
 
 
 
 
 
 
 
Pension plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
$
(1,058
)
 
85

 
(1,787
)
 
(1,702
)
 
(2,760
)
Prior service (cost) benefit
(33
)
 
5

 
(4
)
 
1

 
(32
)
Deferred income tax benefit (expense)
422

 
(34
)
 
684

 
650

 
1,072

Total pension plans
(669
)
 
56

 
(1,107
)
 
(1,051
)
 
(1,720
)
Post-retirement benefit plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
(37
)
 
—

 
(240
)
 
(240
)
 
(277
)
Prior service (cost) benefit
(163
)
 
20

 
(23
)
 
(3
)
 
(166
)
Deferred income tax benefit (expense)
78

 
(8
)
 
101

 
93

 
171

Total post-retirement benefit plans
(122
)
 
12

 
(162
)
 
(150
)
 
(272
)
Total accumulated other comprehensive loss
$
(791
)
 
68

 
(1,269
)
 
(1,201
)
 
(1,992
)
Schedule of estimated items to be recognized in 2013 as a component of net periodic benefit expense 
The following table presents estimated items to be recognized in 2015 as a component of net periodic benefit expense of the pension, non-qualified pension and post-retirement benefit plans:
 
Pension
Plans
 
Post-Retirement
Plans
 
(Dollars in millions)
Estimated recognition of net periodic benefit expense in 2015:
 
 
 
Net actuarial loss
$
(148
)
 
—

Prior service cost
(5
)
 
(19
)
Deferred income tax benefit
58

 
7

Estimated net periodic benefit expense to be recorded in 2015 as a component of other comprehensive income (loss)
$
(95
)
 
(12
)
Schedule of components of net periodic pension income and post-retirement benefit expense 
Net periodic (income) expense for our qualified and non-qualified pension plans include the following components:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Service cost
$
77

 
91

 
87

Interest cost
602

 
544

 
625

Expected return on plan assets
(891
)
 
(896
)
 
(847
)
Settlements
63

 
—

 
—

Recognition of prior service cost
5

 
5

 
4

Recognition of actuarial loss
22

 
84

 
35

Net periodic pension benefit income
$
(122
)
 
(172
)
 
(96
)

Schedule of change in benefit obligation 
The following tables summarize the change in the benefit obligations for the pension and post-retirement benefit plans:
 
Pension Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
13,401

 
14,881

 
13,596

Service cost
77

 
91

 
87

Interest cost
602

 
544

 
625

Plan amendments
4

 
—

 
14

Actuarial loss (gain)
2,269

 
(1,179
)
 
1,565

Settlements
(460
)
 
—

 
—

Benefits paid by company
(6
)
 
(5
)
 
(5
)
Benefits paid from plan assets
(845
)
 
(931
)
 
(1,001
)
Benefit obligation at end of year
$
15,042

 
13,401

 
14,881

Schedule of change in plan assets 
 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
535

 
626

 
693

Return on plan assets
37

 
45

 
80

Benefits paid from plan assets
(219
)
 
(136
)
 
(147
)
Fair value of plan assets at end of year
$
353

 
535

 
626

Schedule of fair value of the plans' assets by asset category 
The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2014. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivables, pending trades and accrued expenses.
 
Fair Value of Pension Plan Assets at December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
1,013

 
1,480

 
—

 
$
2,493

High yield bonds (b)
—

 
1,480

 
33

 
1,513

Emerging market bonds (c)
208

 
434

 
—

 
642

Convertible bonds (d)
—

 
14

 
—

 
14

Diversified strategies (e)
—

 
718

 
—

 
718

U.S. stocks (f)
1,389

 
87

 
—

 
1,476

Non-U.S. stocks (g)
1,169

 
384

 
—

 
1,553

Emerging market stocks (h)
—

 
102

 
—

 
102

Private equity (i)
—

 
—

 
673

 
673

Private debt (j)
—

 
—

 
395

 
395

Market neutral hedge funds (k)
—

 
928

 
100

 
1,028

Directional hedge funds (k)
—

 
530

 
28

 
558

Real estate (l)
—

 
483

 
216

 
699

Derivatives (m)
—

 
17

 
—

 
17

Cash equivalents and short-term investments (n)
—

 
690

 
—

 
690

Total investments
$
3,779

 
7,347

 
1,445

 
12,571

Total pension plan assets
 
 
 
 
 
 
$
12,571

Schedule of fair value of the plans' assets by asset category 
The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2013. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivable, pending trades and accrued expenses.
 
Fair Value of Pension Plan Assets at December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
813

 
1,504

 
—

 
$
2,317

High yield bonds (b)
—

 
1,265

 
26

 
1,291

Emerging market bonds (c)
196

 
367

 
—

 
563

Convertible bonds (d)
—

 
389

 
—

 
389

Diversified strategies (e)
—

 
723

 
—

 
723

U.S. stocks (f)
1,408

 
92

 
—

 
1,500

Non-U.S. stocks (g)
1,159

 
299

 
—

 
1,458

Emerging market stocks (h)
—

 
110

 
—

 
110

Private equity (i)
—

 
—

 
721

 
721

Private debt (j)
—

 
—

 
436

 
436

Market neutral hedge funds (k)
—

 
867

 
99

 
966

Directional hedge funds (k)
—

 
582

 
32

 
614

Real estate (l)
—

 
306

 
265

 
571

Derivatives (m)
—

 
(34
)
 
—

 
(34
)
Cash equivalents and short-term investments (n)
—

 
721

 
—

 
721

Total investments
$
3,576

 
7,191

 
1,579

 
12,346

Total pension plan assets
 

 
 

 
 

 
$
12,346

Summary of changes in fair value of defined benefit plans' Level 3 assets 
The table below presents a rollforward of the pension plan assets valued using Level 3 inputs:
 
Pension Plan Assets Valued Using Level 3 Inputs
 
High
Yield
Bonds
 
Private
Equity
 
Private
Debt
 
Market
Neutral
Hedge
Fund
 
Directional
Hedge
Funds
 
Real
Estate
 
Total
 
(Dollars in millions)
Balance at December 31, 2012
$
59

 
711

 
465

 
—

 
194

 
337

 
1,766

Net transfers
—

 
—

 
—

 
—

 
(165
)
 
—

 
(165
)
Acquisitions
5

 
82

 
71

 
100

 
—

 
9

 
267

Dispositions
(43
)
 
(179
)
 
(144
)
 
—

 
(1
)
 
(97
)
 
(464
)
Actual return on plan assets:
 

 
 

 
 

 
 

 
 

 
 

 
 
Gains relating to assets sold during the year
12

 
68

 
18

 
—

 
—

 
11

 
109

(Losses) gains relating to assets still held at year-end
(7
)
 
39

 
26

 
(1
)
 
4

 
5

 
66

Balance at December 31, 2013
26

 
721

 
436

 
99

 
32

 
265

 
1,579

Net transfers
6

 
4

 
—

 
—

 
—

 
(4
)
 
6

Acquisitions
14

 
125

 
109

 
—

 
—

 
5

 
253

Dispositions
(16
)
 
(246
)
 
(111
)
 
—

 
—

 
(61
)
 
(434
)
Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains relating to assets sold during the year
8

 
115

 
25

 
—

 
—

 
3

 
151

(Losses) gains relating to assets still held at year-end
(5
)
 
(46
)
 
(64
)
 
1

 
(4
)
 
8

 
(110
)
Balance at December 31, 2014
$
33

 
673

 
395

 
100

 
28

 
216

 
1,445

Schedule of effects of a 100 basis point change in assumed health care cost rates 
A change of 100 basis points in the assumed initial health care cost trend rate would have had the following effects in 2014:
 
100 Basis
Points Change
 
Increase
 
(Decrease)
 
(Dollars in millions)
Effect on the aggregate of the service and interest cost components of net periodic post-retirement benefit expense (consolidated statement of operations)
$
4

 
(3
)
Effect on benefit obligation (consolidated balance sheet)
92

 
(82
)
Schedule of components of net periodic pension income and post-retirement benefit expense 
Net periodic expense (income) for our post-retirement benefit plans include the following components:
 
Post-Retirement Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Service cost
$
22

 
24

 
22

Interest cost
159

 
140

 
173

Expected return on plan assets
(33
)
 
(39
)
 
(45
)
Recognition of prior service cost
20

 
—

 
—

Recognition of actuarial loss
—

 
4

 
—

Net periodic post-retirement benefit expense
$
168

 
129

 
150

Schedule of change in benefit obligation 
 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
3,688

 
4,075

 
3,930

Service cost
22

 
24

 
22

Interest cost
159

 
140

 
173

Participant contributions
69

 
96

 
86

Plan amendments
23

 
141

 
—

Direct subsidy receipts
9

 
13

 
19

Actuarial loss (gain)
245

 
(399
)
 
260

Benefits paid by company
(166
)
 
(266
)
 
(268
)
Benefits paid from plan assets
(219
)
 
(136
)
 
(147
)
Benefit obligation at end of year
$
3,830

 
3,688

 
4,075

Schedule of fair value of the plans' assets by asset category 
 
Fair Value of Post-Retirement Plan Assets
at December 31, 2014
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
5

 
72

 
—

 
$
77

High yield bonds (b)
—

 
15

 
—

 
15

Emerging market bonds (c)
—

 
1

 
—

 
1

Diversified strategies (e)
—

 
89

 
—

 
89

U.S. stocks (f)
35

 
—

 
—

 
35

Non-U.S. stocks (g)
33

 
—

 
—

 
33

Emerging market stocks (h)
6

 
—

 
—

 
6

Private equity (i)
—

 
—

 
28

 
28

Private debt (j)
—

 
—

 
3

 
3

Market neutral hedge funds (k)
—

 
25

 
—

 
25

Directional hedge funds (k)
—

 
1

 
—

 
1

Real estate (l)
—

 
24

 
4

 
28

Cash equivalents and short-term investments (n)
—

 
12

 
—

 
12

Total investments
$
79

 
239

 
35

 
353

Total post-retirement plan assets
 
 
 
 
 
 
$
353

Schedule of fair value of the plans' assets by asset category 
 
Fair Value of Post-Retirement Plan Assets
at December 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
21

 
56

 
—

 
$
77

High yield bonds (b)
—

 
56

 
—

 
56

Emerging market bonds (c)
—

 
37

 
—

 
37

Diversified strategies (e)
—

 
86

 
—

 
86

U.S. stocks (f)
56

 
—

 
—

 
56

Non-U.S. stocks (g)
58

 
—

 
—

 
58

Emerging market stocks (h)
—

 
12

 
—

 
12

Private equity (i)
—

 
—

 
40

 
40

Private debt (j)
—

 
—

 
5

 
5

Market neutral hedge funds (k)
—

 
35

 
—

 
35

Directional hedge funds (k)
—

 
14

 
—

 
14

Real estate (l)
—

 
22

 
12

 
34

Cash equivalents and short-term investments (n)
—

 
24

 
—

 
24

Total investments
$
135

 
342

 
57

 
534

Contribution receivable
 
 
 
 
 
 
1

Total post-retirement plan assets
 
 
 
 
 
 
$
535

Summary of changes in fair value of defined benefit plans' Level 3 assets 
The table below presents a rollforward of the post-retirement plan assets valued using Level 3 inputs:
 
Post-Retirement Plan Assets Valued Using Level 3 Inputs
 
Private
Equity
 
Private
Debt
 
Real
Estate
 
Total
 
(Dollars in millions)
Balance at December 31, 2012
$
45

 
6

 
28

 
79

Acquisitions
1

 
—

 
—

 
1

Dispositions
(11
)
 
(1
)
 
(18
)
 
(30
)
Actual return on plan assets:
 
 
 
 
 
 
 
Gains (losses) relating to assets sold during the year
4

 
—

 
(1
)
 
3

Gains relating to assets still held at year-end
1

 
—

 
3

 
4

Balance at December 31, 2013
40

 
5

 
12

 
57

Acquisitions
1

 
—

 
—

 
1

Dispositions
(15
)
 
(2
)
 
(8
)
 
(25
)
Actual return on plan assets:
 
 
 
 
 
 
 
Gains relating to assets sold during the year
7

 
1

 
—

 
8

Losses relating to assets still held at year-end
(5
)
 
(1
)
 
—

 
(6
)
Balance at December 31, 2014
$
28

 
3

 
4

 
35

Share-based Compensation (Tables)
Stock option awards activity 
The following table summarizes activity involving stock option awards for the year ended December 31, 2014:
 
Number of
Options
 
Weighted-
Average
Exercise
Price
 
(in thousands)
 
 
Outstanding and Exercisable at December 31, 2013
5,325

 
$
35.95

Exercised
(1,065
)
 
28.57

Forfeited/Expired
(154
)
 
32.68

Outstanding and Exercisable at December 31, 2014
4,106

 
37.99

Restricted stock and restricted stock unit awards activity 
The following table summarizes activity involving restricted stock and restricted stock unit awards for the year ended December 31, 2014:
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
(in thousands)
 
 
Non-vested at December 31, 2013
3,625

 
$
37.33

Granted
2,851

 
35.87

Vested
(1,561
)
 
36.48

Forfeited
(515
)
 
38.10

Non-vested at December 31, 2014
4,400

 
36.59

Earnings (Loss) Per Common Share (Tables)
Schedule of basic and diluted earnings per common share
Basic and diluted earnings (loss) per common share for the years ended December 31, 2014, 2013 and 2012 were calculated as follows:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions, except per share amounts, shares in thousands)
Income (Loss) (Numerator):
 
 
 
 
 
Net income (loss)
$
772

 
(239
)
 
777

Earnings applicable to non-vested restricted stock
—

 
—

 
(1
)
Net income (loss) applicable to common stock for computing basic earnings (loss) per common share
772

 
(239
)
 
776

Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share
$
772

 
(239
)
 
776

Shares (Denominator):
 
 
 
 
 
Weighted average number of shares:
 
 
 
 
 
Outstanding during period
572,748

 
604,404

 
622,139

Non-vested restricted stock
(4,313
)
 
(3,512
)
 
(2,796
)
Non-vested restricted stock units
—

 
—

 
862

Weighted average shares outstanding for computing basic earnings (loss) per common share
568,435

 
600,892

 
620,205

Incremental common shares attributable to dilutive securities:
 
 
 
 
 
Shares issuable under convertible securities
10

 
—

 
12

Shares issuable under incentive compensation plans
1,294

 
—

 
2,068

Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share
569,739

 
600,892

 
622,285

Basic earnings (loss) per common share
$
1.36

 
(0.40
)
 
1.25

Diluted earnings (loss) per common share
$
1.36

 
(0.40
)
 
1.25


Our calculation of diluted
Fair Value Disclosure (Tables)
Schedule of the three input levels in the hierarchy of fair value measurements 
The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:
Input Level
 
Description of Input
Level 1
 
Observable inputs such as quoted market prices in active markets.
Level 2
 
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3
 
Unobservable inputs in which little or no market data exists.
Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input levels to determine fair values 
The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease and other obligations, as well as the input levels used to determine the fair values indicated below:
 
 
 
 
As of December 31, 2014
 
As of December 31, 2013
 
 
Input
Level
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
 
 
 
(Dollars in millions)
Liabilities-Long-term debt excluding capital lease and other obligations
 
2
 
$
20,162

 
21,255

 
20,347

 
20,413

Income Taxes (Tables)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
 
Schedule of components of provision for income tax
Text Block 
 
Schedule of income tax expense allocation
Text Block 
 
Schedule of reconciliation of the statutory federal income tax rate to effective income tax rate
Text Block 
 
Schedule of components of deferred tax assets and deferred tax liabilities
Text Block 
 
Summary of the reconciliation of the change in gross unrecognized tax benefits
 
Text Block 
Schedule of open income tax years by major jurisdiction
Text Block 
 
Schedule of components of provision for income tax 
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Income tax expense was as follows:
 
 
 
 
 
Federal
 
 
 
 
 
Current
$
18

 
1

 
57

Deferred
305

 
403

 
361

State
 
 
 
 
 
Current
26

 
62

 
15

Deferred
(14
)
 
(8
)
 
33

Foreign
 
 
 
 
 
Current
3

 
9

 
7

Deferred
—

 
(4
)
 
—

Total income tax expense
$
338

 
463

 
473

Schedule of income tax expense allocation 
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Income tax expense was allocated as follows:
 
 
 
 
 
Income tax expense in the consolidated statements of operations:
 
 
 
 
 
Attributable to income
$
338

 
463

 
473

Stockholders' equity:
 
 
 
 
 
Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
(5
)
 
(14
)
 
(18
)
Tax effect of the change in accumulated other comprehensive loss
(744
)
 
554

 
(434
)
Schedule of reconciliation of the statutory federal income tax rate to effective income tax rate 
The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Percentage of pre-tax income)
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
%
State income taxes, net of federal income tax benefit
2.7
 %
 
2.8
 %
 
2.5
%
Impairment of goodwill
—
 %
 
188.5
 %
 
—
%
Reversal of liability for unrecognized tax position
0.4
 %
 
(24.5
)%
 
—
%
Foreign income taxes
0.4
 %
 
2.7
 %
 
0.3
%
Nondeductible accounting adjustment for life insurance
—
 %
 
3.1
 %
 
—
%
Release state valuation allowance
—
 %
 
(2.3
)%
 
—
%
Loss on worthless investment in foreign subsidiary
(5.4
)%
 
—
 %
 
—
%
Other, net
(2.6
)%
 
1.4
 %
 
—
%
Effective income tax rate
30.5
 %
 
206.7
 %
 
37.8
%
Schedule of components of deferred tax assets and deferred tax liabilities 
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Deferred tax assets
 
 
 
Post-retirement and pension benefit costs
$
2,276

 
1,618

Net operating loss carryforwards
1,091

 
1,532

Other employee benefits
214

 
182

Other
602

 
782

Gross deferred tax assets
4,183

 
4,114

Less valuation allowance
(409
)
 
(435
)
Net deferred tax assets
3,774

 
3,679

Deferred tax liabilities
 
 
 
Property, plant and equipment, primarily due to depreciation differences
(3,869
)
 
(3,904
)
Goodwill and other intangible assets
(2,908
)
 
(3,226
)
Other
(147
)
 
(137
)
Gross deferred tax liabilities
(6,924
)
 
(7,267
)
Net deferred tax liability
$
(3,150
)
 
(3,588
)
Summary of the reconciliation of the change in gross unrecognized tax benefits 
A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from January 1 to December 31 for 2014 and 2013 is as follows:
 
2014
 
2013
 
(Dollars in millions)
Unrecognized tax benefits at beginning of year
$
14

 
78

Increase in tax positions taken in the prior year
9

 
—

Decrease due to the reversal of tax positions taken in a prior year
(2
)
 
—

Decrease from the lapse of statute of limitations
(1
)
 
(36
)
Settlements
(3
)
 
(28
)
Unrecognized tax benefits at end of year
$
17

 
14

Schedule of open income tax years by major jurisdiction 
Our open income tax years by major jurisdiction are as follows at December 31, 2014:
Jurisdiction
 
Open Tax Years
Federal
 
2010—current
State
 
 
Florida
 
2010—current
Minnesota
 
2011—current
Other states
 
2010—current
Segment Information (Tables)
Schedule of segment information 
The following table summarizes our segment results for 2014, 2013 and 2012 based on the segment categorization we were operating under at December 31, 2014.
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Total segment revenues
$
17,028

 
17,095

 
17,320

Total segment expenses
8,509

 
8,167

 
8,147

Total segment income
$
8,519

 
8,928

 
9,173

Total margin percentage
50
%
 
52
%
 
53
%
Business:
 
 
 
 
 
Revenues
$
11,034

 
11,091

 
11,156

Expenses
6,089

 
5,808

 
5,729

Income
$
4,945

 
5,283

 
5,427

Margin percentage
45
%
 
48
%
 
49
%
Consumer:
 
 
 
 
 
Revenues
$
5,994

 
6,004

 
6,164

Expenses
2,420

 
2,359

 
2,418

Income
$
3,574

 
3,645

 
3,746

Margin percentage
60
%
 
61
%
 
61
%
Schedule of operating revenues by products and services 
Our operating revenues for our products and services consisted of the following categories for the years ended December 31, 2014, 2013 and 2012:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Strategic services
$
9,200

 
8,823

 
8,427

Legacy services
7,138

 
7,616

 
8,221

Data integration
690

 
656

 
672

Other
1,003

 
1,000

 
1,056

Total operating revenues
$
18,031

 
18,095

 
18,376

Schedule of reconciliation from segment income to consolidated net income 
The following table reconciles segment income to net income for the years ended December 31, 2014, 2013 and 2012:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Total segment income
$
8,519

 
8,928

 
9,173

Other operating revenues
1,003

 
1,000

 
1,056

Depreciation and amortization
(4,428
)
 
(4,541
)
 
(4,780
)
Impairment of goodwill
—

 
(1,092
)
 
—

Other unassigned operating expenses
(2,684
)
 
(2,842
)
 
(2,736
)
Other expenses, net
(1,300
)
 
(1,229
)
 
(1,463
)
Income tax expense
(338
)
 
(463
)
 
(473
)
Net income (loss)
$
772

 
(239
)
 
777

Quarterly Financial Data (Unaudited) (Tables)
Schedule of quarterly financial information
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Total
 
(Dollars in millions, except per share amounts)
2014
 
 
 
 
 
 
 
 
 
Operating revenues
$
4,538

 
4,541

 
4,514

 
4,438

 
18,031

Operating income
653

 
655

 
619

 
483

 
2,410

Net income
203

 
193

 
188

 
188

 
772

Basic earnings per common share
0.35

 
0.34

 
0.33

 
0.33

 
1.36

Diluted earnings per common share
0.35

 
0.34

 
0.33

 
0.33

 
1.36

2013
 
 
 
 
 
 
 
 
 
Operating revenues
$
4,513

 
4,525

 
4,515

 
4,542

 
18,095

Operating income (loss)
782

 
715

 
(685
)
 
641

 
1,453

Net income (loss)
298

 
269

 
(1,045
)
 
239

 
(239
)
Basic earnings (loss) per common share
0.48

 
0.45

 
(1.76
)
 
0.41

 
(0.40
)
Diluted earnings (loss) per common share
0.48

 
0.44

 
(1.76
)
 
0.41

 
(0.40
)
Commitments and Contingencies (Tables)
Schedule of capital lease activity 
The tables below summarize our capital lease activity:
 
Years Ended December 31,
 
2014
 
2013
 
2012
 
(Dollars in millions)
Assets acquired through capital leases
$
37

 
12

 
209

Depreciation expense
126

 
136

 
150

Cash payments towards capital leases
118

 
119

 
113

 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Assets included in property, plant and equipment
$
850

 
877

Accumulated depreciation
393

 
338

Schedule of future annual minimum payments under capital lease arrangements 
The future annual minimum payments under capital lease arrangements as of December 31, 2014 were as follows:
 
Future Minimum
Payments
 
(Dollars in millions)
Capital lease obligations:
 
2015
$
104

2016
76

2017
74

2018
72

2019
61

2020 and thereafter
284

Total minimum payments
671

Less: amount representing interest and executory costs
(182
)
Present value of minimum payments
489

Less: current portion
(73
)
Long-term portion
$
416

Schedule of future rental commitments for operating leases 
At December 31, 2014, our future rental commitments for operating leases were as follows:
 
Future Minimum
Payments
 
(Dollars in millions)
2015
$
311

2016
280

2017
257

2018
233

2019
202

2020 and thereafter
974

Total future minimum payments (1)
$
2,257

_______________________________________________________________________________
(1) 
Minimum payments have not been reduced by minimum sublease rentals of $91 million due in the future under non-cancelable subleases.
Other Financial Information (Tables)
Schedule of components of other current assets 
The following table presents details of other current assets in our consolidated balance sheets:
 
As of December 31,
 
2014
 
2013
 
(Dollars in millions)
Prepaid expenses
$
260

 
266

Materials, supplies and inventory
132

 
167

Assets held for sale
14

 
26

Deferred activation and installation charges
103

 
94

Other
71

 
44

Total other current assets
$
580

 
597

Schedule of current liabilities including accounts payable and other current liabiities 
Current liabilities reflected in our consolidated balance sheets include accounts payable and other current liabilities as follows:
 
As of December 31
 
2014
 
2013
 
(Dollars in millions)
Accounts payable
$
1,226

 
1,111

Other current liabilities:
 
 
 
Accrued rent
$
34

 
52

Legal reserves
27

 
273

Other
149

 
189

Total other current liabilities
$
210

 
514

Accumulated Other Comprehensive Loss (Tables)
Summary of the entity's accumulated other comprehensive income (loss) by component 
The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the year ended December 31, 2014:
 
Pension Plans
 
Post-Retirement
Benefit Plans
 
Foreign Currency
Translation
Adjustment
and Other
 
Total
 
(Dollars in millions)
Balance at December 31, 2013
$
(669
)
 
(122
)
 
(11
)
 
(802
)
Other comprehensive income (loss) before reclassifications
(1,107
)
 
(162
)
 
(15
)
 
(1,284
)
Amounts reclassified from accumulated other comprehensive income
56

 
12

 
1

 
69

Net current-period other comprehensive income (loss)
(1,051
)
 
(150
)
 
(14
)
 
(1,215
)
Balance at December 31, 2014
$
(1,720
)
 
(272
)
 
(25
)
 
(2,017
)
Schedule of reclassifications out of accumulated other comprehensive income (loss) by component 
The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the year ended December 31, 2014:
Year Ended December 31, 2014
 
Decrease (Increase)
in Net Income
 
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
 
 
(Dollars in millions)
 
 
Amortization of pension & post-retirement plans
 
 
 
 
Net actuarial loss
 
$
85

 
See Note 7—Employee Benefits
Prior service cost
 
25

 
See Note 7—Employee Benefits
Total before tax
 
110

 
 
Income tax expense (benefit)
 
(42
)
 
Income tax expense
Insignificant items
 
1

 
 
Net of tax
 
$
69

 
 
Dividends (Tables)
Schedule of cash dividends declared
Date Declared
 
Record Date
 
Dividend
Per Share
 
Total Amount
 
Payment Date
 
 
 
 
 
 
(in millions)
 
 
November 11, 2014
 
11/24/2014
 
$
0.540

 
$
307

 
12/5/2014
August 19, 2014
 
8/29/2014
 
$
0.540

 
$
308

 
9/12/2014
May 28, 2014
 
6/9/2014
 
$
0.540

 
$
307

 
6/20/2014
February 24, 2014
 
3/10/2014
 
$
0.540

 
$
309

 
3/21/2014
November 12, 2013
 
11/25/2013
 
$
0.540

 
$
321

 
12/6/2013
August 27, 2013
 
9/6/2013
 
$
0.540

 
$
321

 
9/19/2013
May 22, 2013
 
6/3/2013
 
$
0.540

 
$
320

 
6/14/2013
February 27, 2013
 
3/11/2013
 
$
0.540

 
$
339

 
3/22/2013
Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 1 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Jan. 31, 2013
Wireless spectrum licenses
Long Lived Assets Held-for-sale [Line Items]
 
 
 
 
Disposal group, including discontinued operation, intangible assets, current
 
 
 
$ 43 
Gain on sale of intangible assets
$ 0 
$ 32 
$ 0 
$ 32 
Basis of Presentation and Summary of Significant Accounting Policies (Details 2) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Service life
Switch, circuit and cable network equipment
Dec. 31, 2014
Service life
Network assets, future abandonment
Dec. 31, 2015
Service life
Network assets, future abandonment
Forecast
Dec. 31, 2014
Intangible assets, amortization period
Change in accounting estimates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
 
 
$ 2,958 
$ 2,952 
$ 3,070 
$ 78 
$ 12 
$ 48 
 
Amortization of intangible assets
 
 
 
 
 
 
 
 
1,470 
1,589 
1,710 
 
 
 
23 
Net income (loss)
$ 188 
$ 188 
$ 193 
$ 203 
$ 239 
$ (1,045)
$ 269 
$ 298 
$ 772 
$ (239)
$ 777 
$ 48 
$ 7 
 
$ 14 
Basic earnings per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.45 
$ 0.48 
$ 1.36 
$ (0.40)
$ 1.25 
$ 0.08 
$ 0.01 
 
$ 0.02 
Diluted earnings per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.44 
$ 0.48 
$ 1.36 1
$ (0.40)1
$ 1.25 1
$ 0.08 
$ 0.01 
 
$ 0.02 
[1] Years Ended December 31, 2014 2013 2012 (Dollars in millions, except per share amounts, shares in thousands)Income (Loss) (Numerator): Net income (loss)$772 (239) 777Earnings applicable to non-vested restricted stock— — (1)Net income (loss) applicable to common stock for computing basic earnings (loss) per common share772 (239) 776Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share$772 (239) 776Shares (Denominator): Weighted average number of shares: Outstanding during period572,748 604,404 622,139Non-vested restricted stock(4,313) (3,512) (2,796)Non-vested restricted stock units— — 862Weighted average shares outstanding for computing basic earnings (loss) per common share568,435 600,892 620,205Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities10 — 12Shares issuable under incentive compensation plans1,294 — 2,068Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share569,739 600,892 622,285Basic earnings (loss) per common share$1.36 (0.40) 1.25Diluted earnings (loss) per common share$1.36 (0.40) 1.25
Basis of Presentation and Summary of Significant Accounting Policies (Details 3) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Revenue Recognition
 
 
 
Term of indefeasible rights of use (in years)
20 years 
 
 
Advertising Costs
 
 
 
Advertising expense
$ 214 
$ 210 
$ 189 
Preferred stock
 
 
 
Preferential preferred stock distribution (in dollars per share)
$ 25 
 
 
Minimum
 
 
 
Revenue Recognition
 
 
 
Customer relationship period for revenue recognition (from eighteen months to over ten years)
18 months 
 
 
Accounts Receivable and Allowance for Doubtful Accounts
 
 
 
Period of accounts past due
30 days 
 
 
Maximum
 
 
 
Revenue Recognition
 
 
 
Customer relationship period for revenue recognition (from eighteen months to over ten years)
10 years 
 
 
Customer relationship |
Minimum
 
 
 
Goodwill and other intangible assets
 
 
 
Estimated useful life
10 years 
 
 
Customer relationship |
Maximum
 
 
 
Goodwill and other intangible assets
 
 
 
Estimated useful life
15 years 
 
 
Capitalized software |
Maximum
 
 
 
Goodwill and other intangible assets
 
 
 
Estimated useful life
7 years 
 
 
Integrated billing and customer care system
 
 
 
Goodwill and other intangible assets
 
 
 
Estimated useful life
20 years 
 
 
Finite-lived intangible assets, gross
$ 237 
 
 
Other
 
 
 
Goodwill and other intangible assets
 
 
 
Estimated useful life
4 years 
 
 
Basis of Presentation and Summary of Significant Accounting Policies (Details 4)
In Millions, unless otherwise specified
Dec. 31, 2014
Incentive compensation programs
 
Common Stock, Capital Shares Reserved for Future Issuance [Line Items]
 
Unissued shares of CenturyLink common stock
27 
Business acquisitions
 
Common Stock, Capital Shares Reserved for Future Issuance [Line Items]
 
Unissued shares of CenturyLink common stock
4 
Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies (Details 5) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Immaterial Error Correction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
 
 
$ 2,958 
$ 2,952 
$ 3,070 
Net income (loss)
188 
188 
193 
203 
239 
(1,045)
269 
298 
772 
(239)
777 
Basic earnings per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.45 
$ 0.48 
$ 1.36 
$ (0.40)
$ 1.25 
Diluted earnings per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.44 
$ 0.48 
$ 1.36 1
$ (0.40)1
$ 1.25 1
Correction of immaterial error of overstatement of depreciation
 
 
 
 
 
 
 
 
 
 
 
Immaterial Error Correction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
 
 
 
 
30 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
$ 19 
Basic earnings per common share (in dollars per share)
 
 
 
 
 
 
 
 
 
 
$ 0.03 
Diluted earnings per common share (in dollars per share)
 
 
 
 
 
 
 
 
 
 
$ 0.03 
[1] Years Ended December 31, 2014 2013 2012 (Dollars in millions, except per share amounts, shares in thousands)Income (Loss) (Numerator): Net income (loss)$772 (239) 777Earnings applicable to non-vested restricted stock— — (1)Net income (loss) applicable to common stock for computing basic earnings (loss) per common share772 (239) 776Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share$772 (239) 776Shares (Denominator): Weighted average number of shares: Outstanding during period572,748 604,404 622,139Non-vested restricted stock(4,313) (3,512) (2,796)Non-vested restricted stock units— — 862Weighted average shares outstanding for computing basic earnings (loss) per common share568,435 600,892 620,205Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities10 — 12Shares issuable under incentive compensation plans1,294 — 2,068Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share569,739 600,892 622,285Basic earnings (loss) per common share$1.36 (0.40) 1.25Diluted earnings (loss) per common share$1.36 (0.40) 1.25
Goodwill, Customer Relationships and Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Jan. 31, 2013
Jan. 3, 2013
Intangible assets
 
 
 
 
 
 
Impairment of goodwill
$ 1,100 
$ 0 
$ 1,092 
$ 0 
 
 
Goodwill
 
20,755 
20,674 
 
21,627 
21,627 
Indefinite-life intangible assets
 
268 
321 
 
 
 
Other intangible assets, net
 
1,647 
1,802 
 
 
 
Amortization of intangible assets
 
1,470 
1,589 
1,710 
 
 
Customer relationships
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
Finite lived intangible assets, net
 
4,893 
5,935 
 
 
 
Accumulated amortization
 
4,683 
3,641 
 
 
 
Capitalized software
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
Finite lived intangible assets, net
 
1,338 
1,415 
 
 
 
Accumulated amortization
 
1,533 
1,193 
 
 
 
Tradenames and patents
 
 
 
 
 
 
Intangible assets
 
 
 
 
 
 
Finite lived intangible assets, net
 
41 
66 
 
 
 
Accumulated amortization
 
$ 196 
$ 208 
 
 
 
Goodwill, Customer Relationships and Other Intangible Assets (Details 2) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Expected amortization expense
 
2015
$ 1,244 
2016
1,145 
2017
1,036 
2018
922 
2019
$ 805 
Goodwill, Customer Relationships and Other Intangible Assets (Details 3) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Jan. 31, 2013
Jan. 3, 2013
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Goodwill
 
$ 20,755 
$ 20,674 
 
$ 21,627 
$ 21,627 
Discount rate (percent)
 
6.00% 
 
 
 
 
Fair value inputs after tax cost of debt rate (percent)
 
2.90% 
 
 
 
 
Fair value inputs cost of equity rate (percent)
 
8.20% 
 
 
 
 
Percentage of reasonable implied control premium (percent)
 
4.30% 
 
 
 
 
Impairment of goodwill
1,100 
0 
1,092 
0 
 
 
Business
 
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Goodwill
 
10,477 
6,363 
 
 
6,363 
Impairment of goodwill
 
 
0 
 
 
 
Consumer
 
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Goodwill
 
10,278 
10,348 
 
 
10,348 
Impairment of goodwill
 
 
0 
 
 
 
Wholesale
 
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Goodwill
 
0 
3,274 
 
 
3,274 
Impairment of goodwill
 
 
0 
 
 
 
Hosting
 
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Goodwill
 
0 
689 
 
 
1,642 
Discount rate (percent)
 
11.00% 
 
 
 
 
Fair value inputs after tax cost of debt rate (percent)
 
2.90% 
 
 
 
 
Fair value inputs cost of equity rate (percent)
 
12.40% 
 
 
 
 
Impairment of goodwill
 
 
$ 1,092 
 
 
 
Goodwill, Customer Relationships and Other Intangible Assets (Details 4) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Nov. 1, 2014
Jan. 31, 2013
Jan. 3, 2013
Goodwill [rollforward]
 
 
 
 
 
 
 
Goodwill at the beginning of the period
 
$ 20,674 
 
 
 
$ 21,627 
$ 21,627 
Acquisitions
 
92 
139 
 
 
 
 
Impairment
(1,100)
0 
(1,092)
0 
 
 
 
Purchase accounting adjustments
 
(11)
 
 
 
 
 
November 1, 2014 reorganization
 
 
 
 
0 
 
 
Goodwill at the end of the period
 
20,755 
20,674 
 
 
21,627 
21,627 
Business
 
 
 
 
 
 
 
Goodwill [rollforward]
 
 
 
 
 
 
 
Goodwill at the beginning of the period
 
6,363 
 
 
 
 
6,363 
Acquisitions
 
92 
0 
 
 
 
 
Impairment
 
 
0 
 
 
 
 
Purchase accounting adjustments
 
0 
 
 
 
 
 
November 1, 2014 reorganization
 
 
 
 
4,022 
 
 
Goodwill at the end of the period
 
10,477 
6,363 
 
 
 
6,363 
Consumer
 
 
 
 
 
 
 
Goodwill [rollforward]
 
 
 
 
 
 
 
Goodwill at the beginning of the period
 
10,348 
 
 
 
 
10,348 
Acquisitions
 
0 
0 
 
 
 
 
Impairment
 
 
0 
 
 
 
 
Purchase accounting adjustments
 
0 
 
 
 
 
 
November 1, 2014 reorganization
 
 
 
 
(70)
 
 
Goodwill at the end of the period
 
10,278 
10,348 
 
 
 
10,348 
Wholesale
 
 
 
 
 
 
 
Goodwill [rollforward]
 
 
 
 
 
 
 
Goodwill at the beginning of the period
 
3,274 
 
 
 
 
3,274 
Acquisitions
 
0 
0 
 
 
 
 
Impairment
 
 
0 
 
 
 
 
Purchase accounting adjustments
 
0 
 
 
 
 
 
November 1, 2014 reorganization
 
 
 
 
(3,274)
 
 
Goodwill at the end of the period
 
0 
3,274 
 
 
 
3,274 
Hosting
 
 
 
 
 
 
 
Goodwill [rollforward]
 
 
 
 
 
 
 
Goodwill at the beginning of the period
 
689 
 
 
 
 
1,642 
Acquisitions
 
0 
139 
 
 
 
 
Impairment
 
 
(1,092)
 
 
 
 
Purchase accounting adjustments
 
(11)
 
 
 
 
 
November 1, 2014 reorganization
 
 
 
 
(678)
 
 
Goodwill at the end of the period
 
$ 0 
$ 689 
 
 
 
$ 1,642 
Goodwill, Customer Relationships and Other Intangible Assets Goodwill, Customer Relationships and Other Intangible Assets (Details 5) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Business Acquisition [Line Items]
 
 
 
Payments to acquire businesses, gross
$ 93 
$ 160 
$ 0 
Goodwill acquired during period
92 
139 
 
Goodwill purchase accounting adjustment
(11)
 
 
Cognilytics and Data Gardens
 
 
 
Business Acquisition [Line Items]
 
 
 
Payments to acquire businesses, net of cash acquired
95 
 
 
Cash acquired from business acquisition
2 
 
 
Goodwill acquired during period
92 
 
 
AppFog and Tier 3
 
 
 
Business Acquisition [Line Items]
 
 
 
Payments to acquire businesses, gross
 
160 
 
Goodwill acquired during period
 
139 
 
Tier 3
 
 
 
Business Acquisition [Line Items]
 
 
 
Finite-Lived intangible assets purchase accounting adjustment
19 
 
 
Goodwill purchase accounting adjustment
(11)
 
 
Deferred tax assets purchase accounting adjustment
$ (8)
 
 
Long-Term Debt and Credit Facilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2014
CenturyLink, Inc.
Senior notes
Dec. 31, 2013
CenturyLink, Inc.
Senior notes
Dec. 31, 2014
CenturyLink, Inc.
Credit facility
Dec. 31, 2013
CenturyLink, Inc.
Credit facility
Dec. 31, 2014
CenturyLink, Inc.
Term loan
Dec. 31, 2013
CenturyLink, Inc.
Term loan
Dec. 31, 2014
Qwest Corporation
Senior notes
Dec. 31, 2013
Qwest Corporation
Senior notes
Dec. 31, 2014
Qwest Capital Funding, Inc
Senior notes
Dec. 31, 2013
Qwest Capital Funding, Inc
Senior notes
Dec. 31, 2014
Embarq Corporation
Senior notes
Dec. 31, 2013
Embarq Corporation
Senior notes
Dec. 31, 2014
Embarq Corporation
First mortgage bonds
Dec. 31, 2013
Embarq Corporation
First mortgage bonds
Dec. 31, 2014
Embarq Corporation
Other
Dec. 31, 2013
Embarq Corporation
Other
Dec. 31, 2014
Minimum
CenturyLink, Inc.
Senior notes
Dec. 31, 2014
Minimum
CenturyLink, Inc.
Credit facility
Dec. 31, 2014
Minimum
Qwest Corporation
Senior notes
Dec. 31, 2014
Minimum
Qwest Capital Funding, Inc
Senior notes
Dec. 31, 2014
Minimum
Embarq Corporation
Senior notes
Dec. 31, 2014
Minimum
Embarq Corporation
First mortgage bonds
Dec. 31, 2014
Maximum
CenturyLink, Inc.
Senior notes
Dec. 31, 2014
Maximum
CenturyLink, Inc.
Credit facility
Dec. 31, 2014
Maximum
Qwest Corporation
Senior notes
Dec. 31, 2014
Maximum
Qwest Capital Funding, Inc
Senior notes
Dec. 31, 2014
Maximum
Embarq Corporation
Senior notes
Dec. 31, 2014
Maximum
Embarq Corporation
First mortgage bonds
Feb. 20, 2015
Subsequent Event
Qwest Corporation
Term loan
Long-term Debt and Credit Facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital lease and other obligations
$ 509 
$ 619 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
20,782 1
 
7,825 
7,825 
725 
725 
380 
402 
7,311 
7,411 
981 
981 
2,669 
2,669 
232 
262 
150 
150 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premiums, discounts and other, net
111 
78 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
20,671 
20,966 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
(550)
(785)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, excluding current maturities
20,121 
20,181 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Term loan interest rate at period end (as a percent)
 
 
 
 
 
 
2.42% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit facility interest rate at period end (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.91% 
 
 
 
 
 
4.00% 
 
 
 
 
 
Interest rate, stated percentage (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.00% 
 
5.00% 
 
6.125% 
6.50% 
7.082% 
7.125% 
7.65% 
 
8.375% 
7.75% 
7.995% 
8.77% 
 
Weighted average interest rate (as a percent)
 
 
 
 
2.27% 
2.176% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount of debt issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100 
Long-Term Debt and Credit Facilities (Details 2) (USD $)
12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Qwest Corporation
Revolving credit facility
Dec. 31, 2014
CenturyLink, Inc.
Revolving credit facility
Dec. 31, 2014
CenturyLink, Inc.
Letter of credit
Dec. 31, 2013
CenturyLink, Inc.
Letter of credit
Apr. 30, 2011
CenturyLink, Inc.
Letter of credit
Dec. 3, 2014
CenturyLink, Inc.
Credit Facility
Letter of credit
Dec. 31, 2014
Senior notes
Qwest Corporation
Minimum
Dec. 31, 2014
Senior notes
Qwest Corporation
Maximum
Sep. 29, 2014
Senior notes
Qwest Corporation
6.875% Notes due 2054
May 23, 2013
Senior notes
Qwest Corporation
6.125% Notes due 2053
Oct. 2, 2014
Senior notes
Qwest Corporation
Notes, 7.500 percent due 2014
Oct. 1, 2014
Senior notes
Qwest Corporation
Notes, 7.500 percent due 2014
Dec. 31, 2014
Senior notes
CenturyLink, Inc.
Minimum
Dec. 31, 2014
Senior notes
CenturyLink, Inc.
Maximum
Nov. 27, 2013
Senior notes
CenturyLink, Inc.
6.750% Notes due 2023
Apr. 2, 2013
Senior notes
CenturyLink, Inc.
5.50% Notes
Mar. 21, 2013
Senior notes
CenturyLink, Inc.
5.625% Notes due 2020
Dec. 27, 2013
Senior notes
QCII
7.125% Notes due 2018
Nov. 27, 2013
Senior notes
QCII
7.125% Notes due 2018
Dec. 31, 2014
Senior notes
Embarq Corporation
Minimum
Dec. 31, 2014
Senior notes
Embarq Corporation
Maximum
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Revolving credit facility
lender
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Minimum
Revolving credit facility
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Minimum
Revolving credit facility
Base Rate
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Minimum
Revolving credit facility
London Interbank Offered Rate (LIBOR)
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Maximum
Revolving credit facility
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Maximum
Revolving credit facility
Base Rate
Dec. 3, 2014
Line of credit
CenturyLink, Inc.
Credit Facility
Maximum
Revolving credit facility
London Interbank Offered Rate (LIBOR)
Dec. 31, 2014
First mortgage bonds
Embarq Corporation
Dec. 31, 2014
First mortgage bonds
Embarq Corporation
Minimum
Dec. 31, 2014
First mortgage bonds
Embarq Corporation
Maximum
Apr. 2, 2014
First mortgage bonds
Embarq Corporation
Notes, 7.460 Percent Due 2014
Apr. 1, 2014
First mortgage bonds
Embarq Corporation
Notes, 7.460 Percent Due 2014
Jun. 17, 2013
Other
Qwest Corporation
Floating interest rate notes
Apr. 2, 2013
Other
CenturyLink, Inc.
5.50% Notes
Dec. 31, 2014
Other
Embarq Corporation
Jul. 15, 2013
Other
Embarq Corporation
6.875% Notes
Aug. 15, 2013
Other
Embarq Corporation
Notes 6.75 Percent
Jan. 31, 2015
Subsequent Event
CenturyLink, Inc.
Line of credit
Feb. 15, 2015
Subsequent Event
Senior notes
CenturyLink, Inc.
Series M 5.00% Notes
Feb. 20, 2015
Subsequent Event
Term loan
Qwest Corporation
Long-term Debt and Credit Facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount of debt issuance
 
 
 
 
 
 
 
 
 
 
 
$ 500,000,000 
$ 775,000,000 
 
 
 
 
$ 750,000,000 
 
$ 1,000,000,000 
 
$ 800,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100,000,000 
Interest rate, stated percentage (as a percent)
 
 
 
 
 
 
 
 
 
6.125% 
8.375% 
6.875% 
6.125% 
 
7.50% 
5.00% 
7.65% 
6.75% 
 
5.625% 
7.125% 
7.125% 
7.082% 
7.995% 
 
 
 
 
 
 
 
 
7.125% 
8.77% 
 
7.46% 
 
5.50% 
9.00% 
6.875% 
6.75% 
 
5.00% 
 
Net proceeds from issuance of debt
 
 
 
 
 
 
 
 
 
 
 
483,000,000 
752,000,000 
 
 
 
 
742,000,000 
 
988,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount of debt that was sold pursuant to an over allotment option granted to the underwriters
 
 
 
 
 
 
 
 
 
 
 
 
25,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of long-term debt, including extinguishment fees and accrued interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
196,000,000 
646,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Repurchased Face Amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
186,000,000 
614,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate margin (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
1.00% 
 
1.25% 
2.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility, Subsidiary Guarantors, Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repayments of notes
800,000,000 
2,010,000,000 
5,118,000,000 
 
 
 
 
 
 
 
 
 
 
600,000,000 
 
 
 
 
176,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30,000,000 
 
750,000,000 
 
 
59,000,000 
50,000,000 
 
350,000,000 
 
Maximum borrowing capacity
 
 
 
 
 
 
 
160,000,000 
400,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
Net loss (gain) on early retirement of debt
0 
(10,000,000)
179,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,000,000)
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of principal amount of notes for which tender offer was received and accepted (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
77.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of lenders of Credit Facility
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lender commitment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,500,000 
 
 
198,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letters of credit outstanding
 
 
 
 
 
124,000,000 
132,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of lenders of revolving line of credit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Costs Incurred
1,358,000,000 
1,339,000,000 
1,362,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalized interest
(47,000,000)
(41,000,000)
(43,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest expense
1,311,000,000 
1,298,000,000 
1,319,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of net tangible assets allowed to secure senior notes (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of subsidiary property, plant and equipment securing debt, (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Debt to EBITDA ratio to be maintained under the Credit Facility
 
 
 
2.85 
4.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from Issuance of Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 100,000,000 
Long-Term Debt and Credit Facilities Long-Term Debt and Credit Facilities (Details 3) (Senior notes)
0 Months Ended
Nov. 27, 2013
6.750% Notes due 2023
Debt Instrument, Redemption, Period One [Member]
CenturyLink, Inc.
May 23, 2013
6.125% Notes due 2053
Debt Instrument, Redemption, Period One [Member]
Qwest Corporation
Nov. 27, 2013
5.625% Notes due 2020
Debt Instrument, Redemption, Period One [Member]
CenturyLink, Inc.
Mar. 21, 2013
5.625% Notes due 2020
Debt Instrument, Redemption, Period One [Member]
CenturyLink, Inc.
Nov. 27, 2013
5.625% Notes due 2020
Debt Instrument, Redemption, Period Two [Member]
CenturyLink, Inc.
Debt Instrument, Redemption [Line Items]
 
 
 
 
 
Debt Instrument, Redemption Price, Percentage of Principal Amount
 
 
35.00% 
 
 
Debt Instrument, Redemption Price, Percentage
106.75% 
100.00% 
 
105.625% 
101.00% 
Long-Term Debt and Credit Facilities (Details 4) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Long-term Debt, Fiscal Year Maturity [Abstract]
 
2015
$ 550 1
2016
1,494 1
2017
1,497 1
2018
248 1
2019
1,474 1
2020 and thereafter
15,519 1
Total long-term debt
$ 20,782 1
Accounts Receivable (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Accounts receivable
 
 
 
Trade and purchased receivables
$ 1,821 
$ 1,862 
 
Earned and unbilled receivables
307 
252 
 
Other
22 
18 
 
Total accounts receivable
2,150 
2,132 
 
Less: allowance for doubtful accounts
(162)
(155)
 
Accounts receivable, less allowance
1,988 
1,977 
 
Changes in allowance for doubtful accounts
 
 
 
Ending Balance
 
155 
 
Allowance for doubtful accounts
 
 
 
Changes in allowance for doubtful accounts
 
 
 
Beginning Balance
155 
158 
145 
Additions
159 
152 
187 
Deductions
(152)
(155)
(174)
Ending Balance
$ 162 
$ 155 
$ 158 
Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Property, plant and equipment
 
 
 
Gross property, plant and equipment
$ 36,718 
$ 34,307 
 
Accumulated depreciation
(18,285)
(15,661)
 
Net property, plant and equipment
18,433 
18,646 
 
Depreciation expense
2,958 
2,952 
3,070 
Land
 
 
 
Property, plant and equipment
 
 
 
Gross property, plant and equipment
575 
585 
 
Fiber, conduit and other outside plant
 
 
 
Property, plant and equipment
 
 
 
Gross property, plant and equipment
15,151 1
14,187 1
 
Fiber, conduit and other outside plant |
Minimum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
15 years 
 
 
Fiber, conduit and other outside plant |
Maximum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
45 years 
 
 
Central office and other network electronics
 
 
 
Property, plant and equipment
 
 
 
Gross property, plant and equipment
13,248 2
12,178 2
 
Central office and other network electronics |
Minimum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
3 years 
 
 
Central office and other network electronics |
Maximum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
10 years 
 
 
Support assets
 
 
 
Property, plant and equipment
 
 
 
Gross property, plant and equipment
6,578 3
6,420 3
 
Support assets |
Minimum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
3 years 
 
 
Support assets |
Maximum
 
 
 
Property, plant and equipment
 
 
 
Depreciable Lives
30 years 
 
 
Construction in progress
 
 
 
Property, plant and equipment
 
 
 
Gross property, plant and equipment
1,166 4
937 4
 
Qwest Corporation |
Office building
 
 
 
Property, plant and equipment
 
 
 
Impairment of office building
17 
 
 
CenturyLink, Inc. |
Office building
 
 
 
Property, plant and equipment
 
 
 
Sale price specified in sales agreement
$ 12 
 
 
Property, Plant and Equipment-Asset Retirement Obligation (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Asset Retirement Obligation
 
 
 
Balance at beginning of year
$ 106 
$ 106 
$ 109 
Accretion expense
7 
7 
7 
Liabilities incurred
6 
0 
1 
Liabilities settled and other
(2)
(4)
(1)
Change in estimate
(10)
(3)
(10)
Balance at end of year
$ 107 
$ 106 
$ 106 
Severance and Leased Real Estate (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Severance
 
 
Restructuring reserve
 
 
Balance at the beginning of the period
$ 17 
$ 17 
Accrued to expense
87 
31 
Reversals and adjustments
(78)
(31)
Reversals and adjustments
0 
0 
Balance at the end of the period
26 
17 
Qwest Communications International Inc |
Leased real estate
 
 
Severance and Leased Real Estate
 
 
Current portion of leased real estate accrual
(14)
 
Noncurrent portion of leased real estate accrual
(82)
 
Weighted average lease terms (in years)
8 years 5 months 14 days 
 
Restructuring reserve
 
 
Balance at the beginning of the period
113 
131 
Accrued to expense
1 
0 
Reversals and adjustments
(16)
(16)
Reversals and adjustments
2 
(2)
Balance at the end of the period
$ 96 
$ 113 
Qwest Communications International Inc |
Leased real estate |
Minimum
 
 
Severance and Leased Real Estate
 
 
Remaining lease terms
4 months 
 
Qwest Communications International Inc |
Leased real estate |
Maximum
 
 
Severance and Leased Real Estate
 
 
Remaining lease terms
11 years 
 
Employee Benefits (Details) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended
Dec. 8, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Pension Plans
Dec. 31, 2013
Pension Plans
Dec. 31, 2012
Pension Plans
Dec. 31, 2014
Pension Plans
Interest rate sensitive investments
Dec. 31, 2014
Pension Plans
Investment grade bonds
Dec. 31, 2014
Pension Plans
High yield and emerging market bonds
Dec. 31, 2014
Pension Plans
Convertible bonds
Dec. 31, 2014
Pension Plans
Diversified strategies
Dec. 31, 2014
Pension Plans
Interest rate investments with higher returns
Dec. 31, 2014
Pension Plans
U.S. stocks
Dec. 31, 2014
Pension Plans
Developed market Non-U.S. stocks
Dec. 31, 2014
Pension Plans
Diversified multi-asset classes
Dec. 31, 2014
Pension Plans
Other
Dec. 31, 2014
Pension Plans
Real estate
Dec. 31, 2014
Pension Plans
Minimum
Dec. 31, 2013
Pension Plans
Minimum
Dec. 31, 2012
Pension Plans
Minimum
Dec. 31, 2014
Pension Plans
Maximum
Dec. 31, 2013
Pension Plans
Maximum
Dec. 31, 2012
Pension Plans
Maximum
Dec. 31, 2014
Qualified Pension Plans
Dec. 31, 2014
Non-Qualified Pension Plans
Dec. 8, 2014
Qwest Qualified Pension Plan
Mar. 31, 2013
Qwest Qualified Pension Plan
Dec. 31, 2014
Qwest Qualified Pension Plan
Dec. 31, 2012
Qwest Qualified Pension Plan
Dec. 31, 2014
Post-Retirement Benefit Plans
Dec. 31, 2013
Post-Retirement Benefit Plans
Dec. 31, 2012
Post-Retirement Benefit Plans
Dec. 31, 2014
Post-Retirement Benefit Plans
Investment grade bonds
Dec. 31, 2013
Post-Retirement Benefit Plans
Investment grade bonds
Dec. 31, 2014
Post-Retirement Benefit Plans
Diversified strategies
Dec. 31, 2013
Post-Retirement Benefit Plans
Diversified strategies
Dec. 31, 2014
Post-Retirement Benefit Plans
U.S. stocks
Dec. 31, 2013
Post-Retirement Benefit Plans
U.S. stocks
Dec. 31, 2014
Post-Retirement Benefit Plans
Developed market Non-U.S. stocks
Dec. 31, 2013
Post-Retirement Benefit Plans
Developed market Non-U.S. stocks
Dec. 31, 2014
Post-Retirement Benefit Plans
Real estate
Dec. 31, 2013
Post-Retirement Benefit Plans
Real estate
Dec. 31, 2014
Post-Retirement Benefit Plans
Equity Securities
Dec. 31, 2014
Post-Retirement Benefit Plans
Non-equity investments
Dec. 31, 2014
Post-Retirement Benefit Plans
Minimum
Dec. 31, 2013
Post-Retirement Benefit Plans
Minimum
Dec. 31, 2012
Post-Retirement Benefit Plans
Minimum
Dec. 31, 2014
Post-Retirement Benefit Plans
Maximum
Dec. 31, 2013
Post-Retirement Benefit Plans
Maximum
Dec. 31, 2012
Post-Retirement Benefit Plans
Maximum
Employee Benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization period of the plan shortfall
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unfunded status
 
 
 
 
$ (2,471,000,000)
$ (1,055,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ (2,400,000,000)
 
 
 
 
 
$ (3,477,000,000)
$ (3,153,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employer contributions
 
 
 
 
157,000,000 
146,000,000 
32,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
157,000,000 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Termination settlement threshold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
418,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits paid directly to participants by company
 
 
 
 
6,000,000 
5,000,000 
5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
 
166,000,000 
266,000,000 
268,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
 
 
 
 
12,571,000,000 
12,346,000,000 
12,321,000,000 
 
2,493,000,000 1
 
14,000,000 2
718,000,000 3
 
1,476,000,000 4
1,553,000,000 5
 
 
699,000,000 6
 
 
 
 
 
 
 
 
 
 
 
 
353,000,000 
535,000,000 
626,000,000 
77,000,000 1
77,000,000 
89,000,000 3
86,000,000 
35,000,000 4
56,000,000 
33,000,000 5
58,000,000 
28,000,000 6
34,000,000 
 
 
 
 
 
 
 
 
Benefits paid, net of participant contributions and direct subsidy receipts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected future benefit payments not payable by the trust, net of participant contributions and direct subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
139,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation
 
18,872,000,000 
17,089,000,000 
18,956,000,000 
15,042,000,000 
13,401,000,000 
14,881,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,830,000,000 
3,688,000,000 
4,075,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation increase due to adoption of new mortality table
 
1,300,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Remaining estimated life of plan participants
 
8 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of change of 100 basis points in the assumed initial health care cost trend rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect on the aggregate of the service and interest cost components of net periodic post-retirement benefit expense (statements of operations) - Increase
 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect on the aggregate of the service and interest cost components of net periodic post-retirement benefit expense (statements of operations) - Decrease
 
(3,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of one-percentage point increase on postretirement benefit obligation
 
92,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of one-percentage point decrease on postretirement benefit obligation
 
(82,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare cost increase trend rates (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual decrease in health care cost trend rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(0.25%)
 
 
(0.15%)
 
 
Health care cost trend rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ultimate health care cost trend rate (as a percent)
 
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
4.50% 
5.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
 
 
 
 
Estimated future benefit payments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
1,061,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,000,000 
 
 
 
 
309,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
1,011,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
300,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
996,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
292,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
980,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
285,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
965,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
279,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 - 2024
 
 
 
 
4,568,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,276,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defined Benefit Plan, Settlements, Benefit Obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(460,000,000)
0 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicare Part D Subsidy Receipts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 - 2024
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(31,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actuarial assumptions at beginning of year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.20% 
3.50% 
4.25% 
5.10% 
4.20% 
5.10% 
 
 
 
 
 
 
4.50% 
3.60% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.60% 
 
 
4.80% 
Rate of compensation increase (as a percent)
 
 
 
 
3.25% 
3.25% 
3.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected long-term rate of return on plan assets (as a percent)
 
 
 
 
7.50% 
7.50% 
7.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
6.00% 
6.00% 
7.50% 
7.30% 
7.50% 
Ultimate health care cost trend rate (as a percent)
 
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
4.50% 
5.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
 
 
 
 
Components of net periodic benefit (income) expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
 
 
 
77,000,000 
91,000,000 
87,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000,000 
24,000,000 
22,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest cost
 
 
 
 
602,000,000 
544,000,000 
625,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
159,000,000 
140,000,000 
173,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected return on plan assets
 
(924,000,000)
(935,000,000)
 
(891,000,000)
(896,000,000)
(847,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(33,000,000)
(39,000,000)
(45,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlements
 
 
 
 
63,000,000 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognition of prior service cost
 
 
 
 
5,000,000 
5,000,000 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognition of actuarial loss
 
 
 
 
22,000,000 
84,000,000 
35,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0 
4,000,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net periodic pension benefit income
 
 
 
 
(122,000,000)
(172,000,000)
(96,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
168,000,000 
129,000,000 
150,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actuarial assumptions at end of year:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.50% 
4.20% 
 
4.10% 
5.10% 
 
 
 
 
 
 
 
3.80% 
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate of compensation increase (as a percent)
 
 
 
 
3.25% 
3.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial health care cost trend rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.00% 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
6.50% 
 
6.50% 
7.00% 
 
Ultimate health care cost trend rate (as a percent)
 
4.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
4.50% 
5.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.50% 
 
 
 
 
Change in benefit obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
17,089,000,000 
18,956,000,000 
 
13,401,000,000 
14,881,000,000 
13,596,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,688,000,000 
4,075,000,000 
3,930,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
 
 
 
77,000,000 
91,000,000 
87,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000,000 
24,000,000 
22,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest cost
 
 
 
 
602,000,000 
544,000,000 
625,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
159,000,000 
140,000,000 
173,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Participant contributions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
69,000,000 
96,000,000 
86,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plan amendments
 
 
 
 
4,000,000 
0 
14,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23,000,000 
141,000,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct subsidy receipts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,000,000 
13,000,000 
19,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actuarial loss (gain)
 
 
 
 
2,269,000,000 
(1,179,000,000)
1,565,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
245,000,000 
(399,000,000)
260,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits paid by company
 
 
 
 
(6,000,000)
(5,000,000)
(5,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,000,000)
 
 
 
 
(166,000,000)
(266,000,000)
(268,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits paid from plan assets
 
 
 
 
(845,000,000)5
(931,000,000)5
(1,001,000,000)5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(219,000,000)
(136,000,000)
(147,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at end of year
 
18,872,000,000 
17,089,000,000 
18,956,000,000 
15,042,000,000 
13,401,000,000 
14,881,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,830,000,000 
3,688,000,000 
4,075,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in plan assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
 
12,346,000,000 
12,321,000,000 
11,814,000,000 
 
2,317,000,000 1
 
389,000,000 2
723,000,000 3
 
1,500,000,000 4
1,458,000,000 5
 
 
571,000,000 6
 
 
 
 
 
 
 
 
 
 
 
 
535,000,000 
626,000,000 
693,000,000 
77,000,000 1
77,000,000 
89,000,000 3
86,000,000 
35,000,000 4
56,000,000 
33,000,000 5
58,000,000 
28,000,000 6
34,000,000 
 
 
 
 
 
 
 
 
Return on plan assets
 
1,410,000,000 
855,000,000 
 
1,373,000,000 
810,000,000 
1,476,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,000,000 
45,000,000 
80,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employer contributions
 
 
 
 
157,000,000 
146,000,000 
32,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
157,000,000 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlements
460,000,000 
 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits paid from plan assets
 
 
 
 
(845,000,000)5
(931,000,000)5
(1,001,000,000)5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(219,000,000)
(136,000,000)
(147,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at end of year
 
 
 
 
$ 12,571,000,000 
$ 12,346,000,000 
$ 12,321,000,000 
 
$ 2,493,000,000 1
 
$ 14,000,000 2
$ 718,000,000 3
 
$ 1,476,000,000 4
$ 1,553,000,000 5
 
 
$ 699,000,000 6
 
 
 
 
 
 
 
 
 
 
 
 
$ 353,000,000 
$ 535,000,000 
$ 626,000,000 
$ 77,000,000 1
$ 77,000,000 
$ 89,000,000 3
$ 86,000,000 
$ 35,000,000 4
$ 56,000,000 
$ 33,000,000 5
$ 58,000,000 
$ 28,000,000 6
$ 34,000,000 
 
 
 
 
 
 
 
 
Target allocation of plan assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Target asset allocation percentage (as a percent)
 
 
 
 
 
 
 
41.50% 
26.00% 
10.50% 
13.50% 
5.00% 
58.50% 
14.50% 
14.50% 
11.00% 
10.50% 
8.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30.00% 
70.00% 
 
 
 
 
 
 
Expected long-term rate of return on plan assets (as a percent)
 
 
 
 
7.50% 
7.50% 
7.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
6.00% 
6.00% 
7.50% 
7.30% 
7.50% 
Permitted investment in securities issued by the sponsor company (as a percent)
 
10.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[1] Investment grade bonds represent investments in fixed income securities as well as commingled bond funds comprised of U.S. Treasury securities, agencies, corporate bonds, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Treasury securities are valued at the bid price reported in the active market in which the security is traded and are classified as Level 1. The valuation inputs of other investment grade bonds primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings. The primary observable inputs include references to the new issue market for similar securities, the secondary trading markets and dealer quotes. Option adjusted spread models are utilized to evaluate securities such as asset backed securities that have early redemption features. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying fixed income securities using the same valuation inputs described above. The commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
Employee Benefits (Details 2) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Dec. 31, 2011
Actual return on plan assets:
 
 
 
 
 
Actual gains on pension and post retirement plan assets
$ 1,410 
$ 855 
 
 
 
Expected return
924 
935 
 
 
 
Difference between the actual and expected returns on pension and post-retirement plan assets
486 
80 
 
 
 
Unfunded Status
 
 
 
 
 
Benefit obligation
(18,872)
(17,089)
(18,956)
 
 
Non-current portion of unfunded status
(5,808)
(4,049)
 
 
 
Accumulated other comprehensive (loss) income at the beginning of the period
 
 
 
 
 
Total
1,992 
791 
 
 
 
Recognition of Net Periodic Benefits Expense
 
 
 
 
 
Net periodic (income) expense
68 
 
 
 
 
Deferrals
 
 
 
 
 
Total
(1,269)
 
 
 
 
Net Change in AOCI
 
 
 
 
 
Total
(1,201)
 
 
 
 
Accumulated other comprehensive (loss) income at the end of the period
 
 
 
 
 
Total
1,992 
791 
 
 
 
Health Care and Life Insurance
 
 
 
 
 
Active health care benefit expenses
381 
362 
360 
 
 
Participating employees' contribution to health care plan
136 
117 
113 
 
 
Pension Plans
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Defined Benefit Plan, Amortization of Gain (Loss), Including Settlements
85 
 
 
 
 
Total investments
12,571 
12,346 
 
 
 
Total plan assets
12,571 
12,346 
12,321 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
12,346 
12,321 
11,814 
 
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
12,571 
12,346 
12,321 
 
 
Actual gains on pension and post retirement plan assets
1,373 
810 
1,476 
 
 
Expected return
891 
896 
847 
 
 
Unfunded Status
 
 
 
 
 
Benefit obligation
(15,042)
(13,401)
(14,881)
 
(13,596)
Fair value of plan assets
12,571 
12,346 
12,321 
 
 
Unfunded status
(2,471)
(1,055)
 
 
 
Current portion of unfunded status
(6)
(5)
 
 
 
Non-current portion of unfunded status
(2,465)
(1,050)
 
 
 
Accumulated other comprehensive (loss) income at the beginning of the period
 
 
 
 
 
Net actuarial (loss) gain
(2,760)
(1,058)
 
 
 
Prior service (cost) benefit
33 
 
 
32 
 
Deferred income tax benefit (expense)
(1,072)
(422)
 
 
 
Total
1,720 
669 
 
 
 
Recognition of Net Periodic Benefits Expense
 
 
 
 
 
Net actuarial (loss) gain
22 
84 
35 
 
 
Prior service (cost) benefit
(5)
(5)
(4)
 
 
Deferred income tax benefit (expense)
(34)
 
 
 
 
Net periodic (income) expense
56 
 
 
 
 
Deferrals
 
 
 
 
 
Net actuarial (loss) gain
(1,787)
 
 
 
 
Prior service (cost) benefit
(4)
 
 
 
 
Deferred income tax benefit (expense)
684 
 
 
 
 
Total
(1,107)
 
 
 
 
Net Change in AOCI
 
 
 
 
 
Net actuarial (loss) gain
(1,702)
 
 
 
 
Prior service (cost) benefit
1 
 
 
 
 
Deferred income tax benefit (expense)
650 
 
 
 
 
Total
(1,051)
 
 
 
 
Accumulated other comprehensive (loss) income at the end of the period
 
 
 
 
 
Net actuarial (loss) gain
(2,760)
(1,058)
 
 
 
Prior service (cost) benefit
33 
 
 
32 
 
Deferred income tax benefit (expense)
(1,072)
(422)
 
 
 
Total
1,720 
669 
 
 
 
Estimated recognition of net periodic benefit expense in 2013:
 
 
 
 
 
Net actuarial loss
(148)
 
 
 
 
Prior service cost
(5)
 
 
 
 
Deferred income tax benefit
58 
 
 
 
 
Total
(95)
 
 
 
 
Pension Plans |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
3,779 
3,576 
 
3,779 
 
Pension Plans |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
7,347 
7,191 
 
7,347 
 
Pension Plans |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
1,445 
1,579 
 
 
 
Total plan assets
1,445 
1,579 
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
1,579 
1,766 
 
 
 
Net transfers
6 
(165)
 
 
 
Acquisitions
253 
267 
 
 
 
Dispositions
434 
464 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
151 
109 
 
 
 
(Losses) gains relating to assets still held at year-end
(110)
66 
 
 
 
Fair value of plan assets at end of year
1,445 
1,579 
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,445 
1,579 
 
 
 
Pension Plans |
Exchange-traded U.S. equity futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
134 
95 
 
134 
 
Pension Plans |
Exchange-traded non-U.S. equity futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Pension Plans |
Exchange-traded Treasury futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
2,451 
3,011 
 
2,451 
 
Pension Plans |
Interest rate swaps
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
579 
556 
 
579 
 
Pension Plans |
Credit default swaps
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
382 
253 
 
382 
 
Pension Plans |
Foreign exchange forwards
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
1,195 
938 
 
1,195 
 
Pension Plans |
Options
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
529 
261 
 
529 
 
Pension Plans |
Investment grade bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
2,493 1
2,317 1
 
2,493 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
2,493 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
2,493 1
2,317 1
 
2,493 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
2,493 1
2,317 1
 
2,493 1
 
Pension Plans |
Investment grade bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,013 1
813 1
 
1,013 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,013 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,013 1
813 1
 
1,013 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,013 1
813 1
 
1,013 1
 
Pension Plans |
Investment grade bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,480 1
1,504 1
 
1,480 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,480 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,480 1
1,504 1
 
1,480 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,480 1
1,504 1
 
1,480 1
 
Pension Plans |
Investment grade bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 1
0 1
 
0 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 1
0 1
 
0 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 1
0 1
 
0 1
 
Pension Plans |
High Yield Bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,513 2
1,291 2
 
1,513 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,513 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,513 2
1,291 2
 
1,513 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,513 2
1,291 2
 
1,513 2
 
Pension Plans |
High Yield Bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 2
0 2
 
0 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 2
0 2
 
0 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 2
0 2
 
0 2
 
Pension Plans |
High Yield Bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,480 2
1,265 2
 
1,480 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,480 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,480 2
1,265 2
 
1,480 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,480 2
1,265 2
 
1,480 2
 
Pension Plans |
High Yield Bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
33 2
26 2
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
26 2
59 
 
 
 
Net transfers
6 
0 
 
 
 
Acquisitions
14 
5 
 
 
 
Dispositions
16 
43 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
8 
12 
 
 
 
(Losses) gains relating to assets still held at year-end
(5)
(7)
 
 
 
Fair value of plan assets at end of year
33 2
26 2
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
33 2
26 2
 
 
 
Pension Plans |
Emerging market bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
642 3
563 3
 
642 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
642 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
642 3
563 3
 
642 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
642 3
563 3
 
642 3
 
Pension Plans |
Emerging market bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
208 3
196 3
 
208 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
208 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
208 3
196 3
 
208 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
208 3
196 3
 
208 3
 
Pension Plans |
Emerging market bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
434 3
367 3
 
434 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
434 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
434 3
367 3
 
434 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
434 3
367 3
 
434 3
 
Pension Plans |
Emerging market bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 3
0 3
 
0 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 3
0 3
 
0 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 3
0 3
 
0 3
 
Pension Plans |
Convertible bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
14 4
389 4
 
14 4
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
14 4
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
14 4
389 4
 
14 4
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
14 4
389 4
 
14 4
 
Pension Plans |
Convertible bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 4
0 4
 
0 4
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 4
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 4
0 4
 
0 4
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 4
0 4
 
0 4
 
Pension Plans |
Convertible bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
14 4
389 4
 
14 4
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
14 4
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
14 4
389 4
 
14 4
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
14 4
389 4
 
14 4
 
Pension Plans |
Convertible bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 4
0 4
 
0 4
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 4
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 4
0 4
 
0 4
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 4
0 4
 
0 4
 
Pension Plans |
Diversified strategies
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
718 5
723 5
 
718 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
718 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
718 5
723 5
 
718 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
718 5
723 5
 
718 5
 
Pension Plans |
Diversified strategies |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 5
0 5
 
0 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 5
0 5
 
0 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 5
0 5
 
0 5
 
Pension Plans |
Diversified strategies |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
718 5
723 5
 
718 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
718 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
718 5
723 5
 
718 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
718 5
723 5
 
718 5
 
Pension Plans |
Diversified strategies |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 5
0 5
 
0 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 5
0 5
 
0 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 5
0 5
 
0 5
 
Pension Plans |
U.S. stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,476 6
1,500 6
 
1,476 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,476 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,476 6
1,500 6
 
1,476 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,476 6
1,500 6
 
1,476 6
 
Pension Plans |
U.S. stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,389 6
1,408 6
 
1,389 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,389 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,389 6
1,408 6
 
1,389 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,389 6
1,408 6
 
1,389 6
 
Pension Plans |
U.S. stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
87 6
92 6
 
87 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
87 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
87 6
92 6
 
87 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
87 6
92 6
 
87 6
 
Pension Plans |
U.S. stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 6
0 6
 
0 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 6
0 6
 
0 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 6
0 6
 
0 6
 
Pension Plans |
Non-U.S. stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,553 7
1,458 7
 
1,553 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,553 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,553 7
1,458 7
 
1,553 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,553 7
1,458 7
 
1,553 7
 
Pension Plans |
Non-U.S. stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,169 7
1,159 7
 
1,169 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,169 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,169 7
1,159 7
 
1,169 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,169 7
1,159 7
 
1,169 7
 
Pension Plans |
Non-U.S. stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
384 7
299 7
 
384 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
384 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
384 7
299 7
 
384 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
384 7
299 7
 
384 7
 
Pension Plans |
Non-U.S. stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 7
0 7
 
0 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 7
0 7
 
0 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 7
0 7
 
0 7
 
Pension Plans |
Emerging market stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
102 8
110 8
 
102 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
102 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
102 8
110 8
 
102 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
102 8
110 8
 
102 8
 
Pension Plans |
Emerging market stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 8
0 8
 
0 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 8
0 8
 
0 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 8
0 8
 
0 8
 
Pension Plans |
Emerging market stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
102 8
110 8
 
102 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
102 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
102 8
110 8
 
102 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
102 8
110 8
 
102 8
 
Pension Plans |
Emerging market stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 8
0 8
 
0 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 8
0 8
 
0 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 8
0 8
 
0 8
 
Pension Plans |
Private Equity
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
673 9
721 9
 
673 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
673 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
673 9
721 9
 
673 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
673 9
721 9
 
673 9
 
Pension Plans |
Private Equity |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 9
0 9
 
0 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 9
0 9
 
0 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 9
0 9
 
0 9
 
Pension Plans |
Private Equity |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 9
0 9
 
0 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 9
0 9
 
0 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 9
0 9
 
0 9
 
Pension Plans |
Private Equity |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
673 9
721 9
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
721 9
711 
 
 
 
Net transfers
4 
0 
 
 
 
Acquisitions
125 
82 
 
 
 
Dispositions
246 
179 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
115 
68 
 
 
 
(Losses) gains relating to assets still held at year-end
(46)
39 
 
 
 
Fair value of plan assets at end of year
673 9
721 9
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
673 9
721 9
 
 
 
Pension Plans |
Private Debt
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
395 10
436 10
 
395 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
395 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
395 10
436 10
 
395 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
395 10
436 10
 
395 10
 
Pension Plans |
Private Debt |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 10
0 10
 
0 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 10
0 10
 
0 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 10
0 10
 
0 10
 
Pension Plans |
Private Debt |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 10
0 10
 
0 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 10
0 10
 
0 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 10
0 10
 
0 10
 
Pension Plans |
Private Debt |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
395 10
436 10
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
436 10
465 
 
 
 
Net transfers
0 
0 
 
 
 
Acquisitions
109 
71 
 
 
 
Dispositions
111 
144 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
25 
18 
 
 
 
(Losses) gains relating to assets still held at year-end
(64)
26 
 
 
 
Fair value of plan assets at end of year
395 10
436 10
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
395 10
436 10
 
 
 
Pension Plans |
Market Neutral Hedge Funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1,028 11
966 11
 
1,028 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1,028 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1,028 11
966 11
 
1,028 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1,028 11
966 11
 
1,028 11
 
Pension Plans |
Market Neutral Hedge Funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 11
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 11
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 11
 
0 11
 
Pension Plans |
Market Neutral Hedge Funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
928 11
867 11
 
928 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
928 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
928 11
867 11
 
928 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
928 11
867 11
 
928 11
 
Pension Plans |
Market Neutral Hedge Funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
100 11
99 11
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
99 11
0 
 
 
 
Net transfers
0 
0 
 
 
 
Acquisitions
0 
100 
 
 
 
Dispositions
0 
0 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
0 
0 
 
 
 
(Losses) gains relating to assets still held at year-end
1 
(1)
 
 
 
Fair value of plan assets at end of year
100 11
99 11
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
100 11
99 11
 
 
 
Pension Plans |
Directional Hedge Funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
558 11
614 11
 
558 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
558 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
558 11
614 11
 
558 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
558 11
614 11
 
558 11
 
Pension Plans |
Directional Hedge Funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 11
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 11
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 11
 
0 11
 
Pension Plans |
Directional Hedge Funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
530 11
582 11
 
530 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
530 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
530 11
582 11
 
530 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
530 11
582 11
 
530 11
 
Pension Plans |
Directional Hedge Funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
28 11
32 11
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
32 11
194 
 
 
 
Net transfers
0 
(165)
 
 
 
Acquisitions
0 
0 
 
 
 
Dispositions
0 
1 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
0 
0 
 
 
 
(Losses) gains relating to assets still held at year-end
(4)
4 
 
 
 
Fair value of plan assets at end of year
28 11
32 11
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
28 11
32 11
 
 
 
Pension Plans |
Real Estate
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
699 12
571 12
 
699 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
699 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
699 12
571 12
 
699 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
699 12
571 12
 
699 12
 
Pension Plans |
Real Estate |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 12
0 12
 
0 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 12
0 12
 
0 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 12
0 12
 
0 12
 
Pension Plans |
Real Estate |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
483 12
306 12
 
483 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
483 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
483 12
306 12
 
483 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
483 12
306 12
 
483 12
 
Pension Plans |
Real Estate |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
216 12
265 12
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
265 12
337 
 
 
 
Net transfers
(4)
0 
 
 
 
Acquisitions
5 
9 
 
 
 
Dispositions
61 
97 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
3 
11 
 
 
 
(Losses) gains relating to assets still held at year-end
8 
5 
 
 
 
Fair value of plan assets at end of year
216 12
265 12
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
216 12
265 12
 
 
 
Pension Plans |
Derivatives
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
17 13
(34)13
 
17 13
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
17 13
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
17 13
(34)13
 
17 13
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
17 13
(34)13
 
17 13
 
Pension Plans |
Derivatives |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 13
0 13
 
0 13
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 13
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 13
0 13
 
0 13
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 13
0 13
 
0 13
 
Pension Plans |
Derivatives |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
17 13
(34)13
 
17 13
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
17 13
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
17 13
(34)13
 
17 13
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
17 13
(34)13
 
17 13
 
Pension Plans |
Derivatives |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 13
0 13
 
0 13
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 13
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 13
0 13
 
0 13
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 13
0 13
 
0 13
 
Pension Plans |
Cash equivalents and short-term investment funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
690 14
721 14
 
690 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
690 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
690 14
721 14
 
690 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
690 14
721 14
 
690 14
 
Pension Plans |
Cash equivalents and short-term investment funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 14
0 14
 
0 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 14
0 14
 
0 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 14
0 14
 
0 14
 
Pension Plans |
Cash equivalents and short-term investment funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
690 14
721 14
 
690 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
690 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
690 14
721 14
 
690 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
690 14
721 14
 
690 14
 
Pension Plans |
Cash equivalents and short-term investment funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 14
0 14
 
0 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 14
0 14
 
0 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 14
0 14
 
0 14
 
Post-Retirement Benefit Plans
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
353 
534 
 
 
 
Other items to reconcile to fair value of plan assets
 
1 
 
 
 
Total plan assets
353 
535 
626 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
535 
626 
693 
 
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
353 
535 
626 
 
 
Actual gains on pension and post retirement plan assets
37 
45 
80 
 
 
Expected return
33 
39 
45 
 
 
Unfunded Status
 
 
 
 
 
Benefit obligation
(3,830)
(3,688)
(4,075)
 
(3,930)
Fair value of plan assets
353 
535 
626 
 
 
Unfunded status
(3,477)
(3,153)
 
 
 
Current portion of unfunded status
(134)
(154)
 
 
 
Non-current portion of unfunded status
(3,343)
(2,999)
 
 
 
Accumulated other comprehensive (loss) income at the beginning of the period
 
 
 
 
 
Net actuarial (loss) gain
(277)
(37)
 
 
 
Prior service (cost) benefit
163 
 
 
166 
 
Deferred income tax benefit (expense)
(171)
(78)
 
 
 
Total
272 
122 
 
 
 
Recognition of Net Periodic Benefits Expense
 
 
 
 
 
Net actuarial (loss) gain
0 
4 
0 
 
 
Prior service (cost) benefit
(20)
0 
0 
 
 
Deferred income tax benefit (expense)
(8)
 
 
 
 
Net periodic (income) expense
12 
 
 
 
 
Deferrals
 
 
 
 
 
Net actuarial (loss) gain
(240)
 
 
 
 
Prior service (cost) benefit
(23)
 
 
 
 
Deferred income tax benefit (expense)
101 
 
 
 
 
Total
(162)
 
 
 
 
Net Change in AOCI
 
 
 
 
 
Net actuarial (loss) gain
(240)
 
 
 
 
Prior service (cost) benefit
(3)
 
 
 
 
Deferred income tax benefit (expense)
93 
 
 
 
 
Total
(150)
 
 
 
 
Accumulated other comprehensive (loss) income at the end of the period
 
 
 
 
 
Net actuarial (loss) gain
(277)
(37)
 
 
 
Prior service (cost) benefit
163 
 
 
166 
 
Deferred income tax benefit (expense)
(171)
(78)
 
 
 
Total
272 
122 
 
 
 
Estimated recognition of net periodic benefit expense in 2013:
 
 
 
 
 
Net actuarial loss
0 
 
 
 
 
Prior service cost
(19)
 
 
 
 
Deferred income tax benefit
7 
 
 
 
 
Total
(12)
 
 
 
 
Post-Retirement Benefit Plans |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
79 
135 
 
79 
 
Post-Retirement Benefit Plans |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
239 
342 
 
239 
 
Post-Retirement Benefit Plans |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total investments
35 
57 
 
 
 
Total plan assets
35 
57 
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
57 
79 
 
 
 
Acquisitions
1 
1 
 
 
 
Dispositions
25 
30 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
8 
3 
 
 
 
(Losses) gains relating to assets still held at year-end
(6)
4 
 
 
 
Fair value of plan assets at end of year
35 
57 
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
35 
57 
 
 
 
Post-Retirement Benefit Plans |
Exchange-traded U.S. equity futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
7 
16 
 
7 
 
Post-Retirement Benefit Plans |
Exchange-traded non-U.S. equity futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Post-Retirement Benefit Plans |
Exchange-traded Treasury futures
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Post-Retirement Benefit Plans |
Interest rate swaps
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Post-Retirement Benefit Plans |
Credit default swaps
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Post-Retirement Benefit Plans |
Foreign exchange forwards
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
13 
29 
 
13 
 
Post-Retirement Benefit Plans |
Options
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Gross notional exposure
0 
0 
 
0 
 
Post-Retirement Benefit Plans |
Investment grade bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
77 1
77 
 
77 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
77 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
77 1
77 
 
77 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
77 1
77 
 
77 1
 
Post-Retirement Benefit Plans |
Investment grade bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
5 1
21 
 
5 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
5 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
5 1
21 
 
5 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
5 1
21 
 
5 1
 
Post-Retirement Benefit Plans |
Investment grade bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
72 1
56 
 
72 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
72 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
72 1
56 
 
72 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
72 1
56 
 
72 1
 
Post-Retirement Benefit Plans |
Investment grade bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 1
0 
 
0 1
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 1
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 1
0 
 
0 1
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 1
0 
 
0 1
 
Post-Retirement Benefit Plans |
High Yield Bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
15 2
56 
 
15 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
15 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
15 2
56 
 
15 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
15 2
56 
 
15 2
 
Post-Retirement Benefit Plans |
High Yield Bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 2
0 
 
0 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 2
0 
 
0 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 2
0 
 
0 2
 
Post-Retirement Benefit Plans |
High Yield Bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
15 2
56 
 
15 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
15 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
15 2
56 
 
15 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
15 2
56 
 
15 2
 
Post-Retirement Benefit Plans |
High Yield Bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 2
0 
 
0 2
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 2
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 2
0 
 
0 2
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 2
0 
 
0 2
 
Post-Retirement Benefit Plans |
Emerging market bonds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1 3
37 
 
1 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1 3
37 
 
1 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1 3
37 
 
1 3
 
Post-Retirement Benefit Plans |
Emerging market bonds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 3
0 
 
0 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 3
0 
 
0 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 3
0 
 
0 3
 
Post-Retirement Benefit Plans |
Emerging market bonds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1 3
37 
 
1 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1 3
37 
 
1 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1 3
37 
 
1 3
 
Post-Retirement Benefit Plans |
Emerging market bonds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 3
0 
 
0 3
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 3
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 3
0 
 
0 3
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 3
0 
 
0 3
 
Post-Retirement Benefit Plans |
Diversified strategies
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
89 5
86 
 
89 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
89 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
89 5
86 
 
89 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
89 5
86 
 
89 5
 
Post-Retirement Benefit Plans |
Diversified strategies |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 5
0 
 
0 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 5
0 
 
0 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 5
0 
 
0 5
 
Post-Retirement Benefit Plans |
Diversified strategies |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
89 5
86 
 
89 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
89 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
89 5
86 
 
89 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
89 5
86 
 
89 5
 
Post-Retirement Benefit Plans |
Diversified strategies |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 5
0 
 
0 5
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 5
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 5
0 
 
0 5
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 5
0 
 
0 5
 
Post-Retirement Benefit Plans |
U.S. stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
35 6
56 
 
35 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
35 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
35 6
56 
 
35 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
35 6
56 
 
35 6
 
Post-Retirement Benefit Plans |
U.S. stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
35 6
56 
 
35 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
35 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
35 6
56 
 
35 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
35 6
56 
 
35 6
 
Post-Retirement Benefit Plans |
U.S. stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 6
0 
 
0 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 6
0 
 
0 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 6
0 
 
0 6
 
Post-Retirement Benefit Plans |
U.S. stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 6
0 
 
0 6
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 6
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 6
0 
 
0 6
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 6
0 
 
0 6
 
Post-Retirement Benefit Plans |
Non-U.S. stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
33 7
58 
 
33 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
33 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
33 7
58 
 
33 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
33 7
58 
 
33 7
 
Post-Retirement Benefit Plans |
Non-U.S. stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
33 7
58 
 
33 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
33 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
33 7
58 
 
33 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
33 7
58 
 
33 7
 
Post-Retirement Benefit Plans |
Non-U.S. stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 7
0 
 
0 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 7
0 
 
0 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 7
0 
 
0 7
 
Post-Retirement Benefit Plans |
Non-U.S. stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 7
0 
 
0 7
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 7
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 7
0 
 
0 7
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 7
0 
 
0 7
 
Post-Retirement Benefit Plans |
Emerging market stocks
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
6 8
12 
 
6 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
6 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
6 8
12 
 
6 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
6 8
12 
 
6 8
 
Post-Retirement Benefit Plans |
Emerging market stocks |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
6 8
0 
 
6 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
6 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
6 8
0 
 
6 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
6 8
0 
 
6 8
 
Post-Retirement Benefit Plans |
Emerging market stocks |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 8
12 
 
0 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 8
12 
 
0 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 8
12 
 
0 8
 
Post-Retirement Benefit Plans |
Emerging market stocks |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 8
0 
 
0 8
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 8
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 8
0 
 
0 8
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 8
0 
 
0 8
 
Post-Retirement Benefit Plans |
Private Equity
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
28 9
40 
 
28 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
28 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
28 9
40 
 
28 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
28 9
40 
 
28 9
 
Post-Retirement Benefit Plans |
Private Equity |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 9
0 
 
0 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 9
0 
 
0 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 9
0 
 
0 9
 
Post-Retirement Benefit Plans |
Private Equity |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 9
0 
 
0 9
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 9
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 9
0 
 
0 9
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 9
0 
 
0 9
 
Post-Retirement Benefit Plans |
Private Equity |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
28 9
40 
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
40 
45 
 
 
 
Acquisitions
1 
1 
 
 
 
Dispositions
15 
11 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
7 
4 
 
 
 
(Losses) gains relating to assets still held at year-end
(5)
1 
 
 
 
Fair value of plan assets at end of year
28 9
40 
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
28 9
40 
 
 
 
Post-Retirement Benefit Plans |
Private Debt
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
3 10
5 
 
3 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
3 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
3 10
5 
 
3 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
3 10
5 
 
3 10
 
Post-Retirement Benefit Plans |
Private Debt |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 10
0 
 
0 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 10
0 
 
0 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 10
0 
 
0 10
 
Post-Retirement Benefit Plans |
Private Debt |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 10
0 
 
0 10
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 10
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 10
0 
 
0 10
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 10
0 
 
0 10
 
Post-Retirement Benefit Plans |
Private Debt |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
3 10
5 
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
5 
6 
 
 
 
Acquisitions
0 
0 
 
 
 
Dispositions
2 
1 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
1 
0 
 
 
 
(Losses) gains relating to assets still held at year-end
(1)
0 
 
 
 
Fair value of plan assets at end of year
3 10
5 
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
3 10
5 
 
 
 
Post-Retirement Benefit Plans |
Market Neutral Hedge Funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
25 11
35 
 
25 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
25 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
25 11
35 
 
25 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
25 11
35 
 
25 11
 
Post-Retirement Benefit Plans |
Market Neutral Hedge Funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 
 
0 11
 
Post-Retirement Benefit Plans |
Market Neutral Hedge Funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
25 11
35 
 
25 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
25 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
25 11
35 
 
25 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
25 11
35 
 
25 11
 
Post-Retirement Benefit Plans |
Market Neutral Hedge Funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 
 
0 11
 
Post-Retirement Benefit Plans |
Directional Hedge Funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1 11
14 
 
1 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1 11
14 
 
1 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1 11
14 
 
1 11
 
Post-Retirement Benefit Plans |
Directional Hedge Funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 
 
0 11
 
Post-Retirement Benefit Plans |
Directional Hedge Funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
1 11
14 
 
1 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
1 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
1 11
14 
 
1 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
1 11
14 
 
1 11
 
Post-Retirement Benefit Plans |
Directional Hedge Funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 11
0 
 
0 11
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 11
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 11
0 
 
0 11
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 11
0 
 
0 11
 
Post-Retirement Benefit Plans |
Real Estate
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
28 12
34 
 
28 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
28 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
28 12
34 
 
28 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
28 12
34 
 
28 12
 
Post-Retirement Benefit Plans |
Real Estate |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 12
0 
 
0 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 12
0 
 
0 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 12
0 
 
0 12
 
Post-Retirement Benefit Plans |
Real Estate |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
24 12
22 
 
24 12
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
24 12
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
24 12
22 
 
24 12
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
24 12
22 
 
24 12
 
Post-Retirement Benefit Plans |
Real Estate |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
4 12
12 
 
 
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
12 
28 
 
 
 
Acquisitions
0 
0 
 
 
 
Dispositions
8 
18 
 
 
 
Actual return on plan assets:
 
 
 
 
 
Gains relating to assets sold during the year
0 
(1)
 
 
 
(Losses) gains relating to assets still held at year-end
0 
3 
 
 
 
Fair value of plan assets at end of year
4 12
12 
 
 
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
4 12
12 
 
 
 
Post-Retirement Benefit Plans |
Cash equivalents and short-term investment funds
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
12 14
24 
 
12 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
12 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
12 14
24 
 
12 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
12 14
24 
 
12 14
 
Post-Retirement Benefit Plans |
Cash equivalents and short-term investment funds |
Level 1
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 14
0 
 
0 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 14
0 
 
0 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
0 14
0 
 
0 14
 
Post-Retirement Benefit Plans |
Cash equivalents and short-term investment funds |
Level 2
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
12 14
24 
 
12 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
12 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
12 14
24 
 
12 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
12 14
24 
 
12 14
 
Post-Retirement Benefit Plans |
Cash equivalents and short-term investment funds |
Level 3
 
 
 
 
 
Employee Benefits
 
 
 
 
 
Total plan assets
0 14
0 
 
0 14
 
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
 
 
 
0 14
 
Actual return on plan assets:
 
 
 
 
 
Fair value of plan assets at end of year
0 14
0 
 
0 14
 
Unfunded Status
 
 
 
 
 
Fair value of plan assets
$ 0 14
$ 0 
 
$ 0 14
 
[1] Investment grade bonds represent investments in fixed income securities as well as commingled bond funds comprised of U.S. Treasury securities, agencies, corporate bonds, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Treasury securities are valued at the bid price reported in the active market in which the security is traded and are classified as Level 1. The valuation inputs of other investment grade bonds primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings. The primary observable inputs include references to the new issue market for similar securities, the secondary trading markets and dealer quotes. Option adjusted spread models are utilized to evaluate securities such as asset backed securities that have early redemption features. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying fixed income securities using the same valuation inputs described above. The commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2.
[2] High yield bonds represent investments in below investment grade fixed income securities as well as commingled high yield bond funds. The valuation inputs for the securities primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying high yield instruments using the same valuation inputs described above. Commingled funds that can be redeemed at NAV within a year of the financial statement date are classified as Level 2. Commingled funds that cannot be redeemed at NAV or that cannot be redeemed at NAV within a year of the financial statement date are classified as Level 3.
[3] Emerging market bonds represent investments in securities issued by governments and other entities located in developing countries as well as registered mutual funds and commingled emerging market bond funds. The valuation inputs for the securities utilize observable market information and are primarily based on dealer quotes or a spread relative to the local government bonds. These securities are classified as Level 2. The commingled funds are valued at NAV based on the market value of the underlying emerging market bonds using the same valuation inputs described above. The commingled funds can be redeemed at NAV within a year of the financial statement date and are classified as Level 2. The registered mutual funds trade at the daily NAV, as determined by the market value of the underlying investments, and are classified as Level 1.
[9] Private equity represents non-public investments in domestic and foreign buy out and venture capital funds. Private equity funds are structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing accounting and other regulatory guidelines. The partnerships use valuation methodologies that give consideration to a range of factors, including but not limited to the price at which investments were acquired, the nature of the investments, market conditions, trading values on comparable public securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investments. These valuation methodologies involve a significant degree of judgment. Private equity investments are classified as Level 3.
[11] Market neutral hedge funds hold investments in a diversified mix of instruments that are intended in combination to exhibit low correlations to market fluctuations. These investments are typically combined with futures to achieve uncorrelated excess returns over various markets. Directional hedge funds—This asset category represents investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral hedge funds. Investments in hedge funds include both direct investments and investments in diversified funds of funds. Hedge Funds are valued at NAV based on the market value of the underlying investments which include publicly traded equity and fixed income securities and privately negotiated debt securities. The hedge funds are valued by third party administrators using the same valuation inputs previously described. Hedge funds that can be redeemed at NAV within a year of the financial statement date are classified as Level 2. Hedge fund investments that cannot be redeemed at NAV or that cannot be redeemed at NAV within a year of the financial statement date are classified as Level 3.
Employee Benefits (Details 3) (Qualified Defined Contribution Benefit Plan [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Qualified Defined Contribution Benefit Plan [Member]
 
 
 
Defined Contribution Plan Disclosure [Line Items]
 
 
 
Company common stock included in the assets of the 401(k) Plan (in shares)
8 
9 
 
Expenses related to the 401(k) Plan
$ 81 
$ 89 
$ 76 
Share-based Compensation (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Stock option awards
Dec. 31, 2013
Stock option awards
Dec. 31, 2012
Stock option awards
Dec. 31, 2014
Restricted stock and restricted stock unit awards
Dec. 31, 2013
Restricted stock and restricted stock unit awards
Dec. 31, 2012
Restricted stock and restricted stock unit awards
Dec. 31, 2014
Restricted Stock
Dec. 31, 2013
Restricted Stock
Dec. 31, 2012
Restricted Stock
Mar. 31, 2014
Restricted Stock
Executive Officers And Other Key Employees
Jun. 30, 2013
Restricted Stock
Executive Officers And Other Key Employees
Mar. 31, 2012
Restricted Stock
Executive Officers And Other Key Employees
Mar. 31, 2014
Service based restricted stock
Executive Officers And Other Key Employees
Jun. 30, 2013
Service based restricted stock
Executive Officers And Other Key Employees
Mar. 31, 2012
Service based restricted stock
Executive Officers And Other Key Employees
Jun. 30, 2013
Service based restricted stock
Key Employees And Outside Directors
Dec. 31, 2014
Service based restricted stock
Key Employees And Outside Directors
Dec. 31, 2012
Service based restricted stock
Key Employees And Outside Directors
Jun. 30, 2014
Service based restricted stock
Key Employees
Jun. 30, 2013
Service based restricted stock
Key Employees
Mar. 31, 2012
Service based restricted stock
Key Employees
Awards vesting on January 9, 2013, 2014 and 2015
Mar. 31, 2012
Service based restricted stock
Key Employees
Awards vesting on March 15, 2013, 2014 and 2015
Sep. 30, 2014
Service based restricted stock
Key Employees
Awards vesting on August 4, 2017
Sep. 30, 2014
Service based restricted stock
Key Employees
Awards Vesting on August 4, 2019
Sep. 30, 2014
Service based restricted stock
Key Employees
Awards Vesting on August 4, 2021
Sep. 30, 2014
Service based restricted stock
Key Employees
Minimum
Sep. 30, 2014
Service based restricted stock
Key Employees
Maximum
Mar. 31, 2014
Performance based restricted stock
Executive Officers And Other Key Employees
Minimum
Jun. 30, 2013
Performance based restricted stock
Executive Officers And Other Key Employees
Minimum
Mar. 31, 2012
Performance based restricted stock
Executive Officers And Other Key Employees
Minimum
Mar. 31, 2014
Performance based restricted stock
Executive Officers And Other Key Employees
Maximum
Jun. 30, 2013
Performance based restricted stock
Executive Officers And Other Key Employees
Maximum
Mar. 31, 2012
Performance based restricted stock
Executive Officers And Other Key Employees
Maximum
Dec. 31, 2014
Employee Stock Purchase Plan
Share-based compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Option expiration term (in years)
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount given to employees on common stock (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
Period during which lower of beginning and ending stock price is considered for purchase of common stock at discount (in months)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 months 
Summary of stock option awards activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2012 (in shares)
 
 
 
5,325 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercised (in shares)
 
 
 
(1,065)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forfeited/Expired (in shares)
 
 
 
(154)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2013 (in shares)
 
 
 
4,106 
5,325 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at December 31, 2013 (in shares)
 
 
 
4,106 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Exercise Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2012 (in dollars per share)
 
 
 
$ 35.95 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercised (in dollars per share)
 
 
 
$ 28.57 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forfeited/Expired (in dollars per share)
 
 
 
$ 32.68 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at December 31, 2013 (in dollars per share)
 
 
 
 
$ 35.95 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at the end of the period (in dollars per share)
 
 
 
$ 37.99 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate Intrinsic value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at the end of the period
 
 
 
$ 23 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash proceeds received in connection with option exercises
 
 
 
30 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit realized from option exercises
 
 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intrinsic value of options exercised
 
 
 
9 
11 
49 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of target award (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
0.00% 
0.00% 
200.00% 
200.00% 
200.00% 
 
Period over which total shareholder return will be considered for determining satisfaction of specific performance conditions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
3 years 
3 years 
 
 
 
 
 
 
 
3 years 
7 years 
 
 
 
 
 
 
 
Weighted-average remaining contractual term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at the end of the period
 
 
 
2 years 8 months 15 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary of restricted stock and restricted stock unit activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonvested at the beginning of the period (in shares)
 
 
 
 
 
 
3,625 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted (in shares)
 
 
 
 
 
 
2,851 
1,900 
2,100 
 
 
 
440 
335 
402 
250 
223 
201 
 
 
 
1,500 
1,200 
519 
873 
105 
325 
220 
 
 
 
 
 
 
 
 
 
Vested (in shares)
 
 
 
 
 
 
(1,561)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forfeited (in shares)
 
 
 
 
 
 
(515)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonvested at the end of the period (in shares)
 
 
 
 
 
 
4,400 
3,625 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Grant Date Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonvested at the beginning of the period (in dollars per share)
 
 
 
 
 
 
$ 37.33 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Granted (in dollars per share)
 
 
 
 
 
 
$ 35.87 
$ 35.63 
$ 39.13 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested (in dollars per share)
 
 
 
 
 
 
$ 36.48 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Forfeited (in dollars per share)
 
 
 
 
 
 
$ 38.10 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonvested at the end of the period (in dollars per share)
 
 
 
 
 
 
$ 36.59 
$ 37.33 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fair value of awards vested during the period
 
 
 
 
 
 
 
 
 
53 
52 
102 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation cost
75 
63 
78 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation, aggregate disclosures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit recognized in the income statement for share-based payment arrangements
29 
25 
31 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost
$ 112 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average recognition period
2 years 2 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) Per Common Share (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income (Loss) (Numerator):
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$ 188 
$ 188 
$ 193 
$ 203 
$ 239 
$ (1,045)
$ 269 
$ 298 
$ 772 
$ (239)
$ 777 
Earnings applicable to non-vested restricted stock
 
 
 
 
 
 
 
 
0 
0 
(1)
Net income (loss) applicable to common stock for computing basic earnings (loss) per common share
 
 
 
 
 
 
 
 
772 
(239)
776 
Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share
 
 
 
 
 
 
 
 
$ 772 
$ (239)
$ 776 
Weighted average number of shares:
 
 
 
 
 
 
 
 
 
 
 
Outstanding during period (in shares)
 
 
 
 
 
 
 
 
572,748,000 
604,404,000 
622,139,000 
Non-vested restricted stock (in shares)
 
 
 
 
 
 
 
 
(4,313,000)
(3,512,000)
(2,796,000)
Non-vested restricted stock units (in shares)
 
 
 
 
 
 
 
 
0 
0 
862,000 
Weighted average shares outstanding for computing basic earnings (loss) per common share (in shares)
 
 
 
 
 
 
 
 
568,435,000 
600,892,000 
620,205,000 
Incremental common shares attributable to dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Shares issuable under convertible securities (in shares)
 
 
 
 
 
 
 
 
10,000 
0 
12,000 
Shares issuable under incentive compensation plans (in shares)
 
 
 
 
 
 
 
 
1,294,000 
0 
2,068,000 
Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share (in shares)
 
 
 
 
 
 
 
 
569,739,000 
600,892,000 
622,285,000 
Basic earnings (loss) per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.45 
$ 0.48 
$ 1.36 
$ (0.40)
$ 1.25 
Diluted earnings (loss) per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.44 
$ 0.48 
$ 1.36 1
$ (0.40)1
$ 1.25 1
Stock option awards
 
 
 
 
 
 
 
 
 
 
 
Incremental common shares attributable to dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Number of shares of common stock excluded from the computation of diluted earnings per share
 
 
 
 
 
 
 
 
2,500,000 
2,700,000 
2,200,000 
Share-based payments and convertible debt securities
 
 
 
 
 
 
 
 
 
 
 
Incremental common shares attributable to dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Number of shares of common stock excluded from the computation of diluted earnings per share
 
 
 
 
 
 
 
 
1,300,000 
 
 
[1] Years Ended December 31, 2014 2013 2012 (Dollars in millions, except per share amounts, shares in thousands)Income (Loss) (Numerator): Net income (loss)$772 (239) 777Earnings applicable to non-vested restricted stock— — (1)Net income (loss) applicable to common stock for computing basic earnings (loss) per common share772 (239) 776Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share$772 (239) 776Shares (Denominator): Weighted average number of shares: Outstanding during period572,748 604,404 622,139Non-vested restricted stock(4,313) (3,512) (2,796)Non-vested restricted stock units— — 862Weighted average shares outstanding for computing basic earnings (loss) per common share568,435 600,892 620,205Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities10 — 12Shares issuable under incentive compensation plans1,294 — 2,068Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share569,739 600,892 622,285Basic earnings (loss) per common share$1.36 (0.40) 1.25Diluted earnings (loss) per common share$1.36 (0.40) 1.25
Fair Value Disclosure (Details) (Fair Value Measurements valued on recurring basis, Fair value, Level 2, USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Reported Value Measurement [Member]
 
 
Liabilities
 
 
Liabilities-Long-term debt excluding capital lease and other obligations
$ 20,162 
$ 20,347 
Estimate of Fair Value Measurement [Member]
 
 
Liabilities
 
 
Liabilities-Long-term debt excluding capital lease and other obligations
$ 21,255 
$ 20,413 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
NOLs
 
 
 
 
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions
 
$ 9 
$ 0 
 
Federal
 
 
 
 
Current
 
18 
1 
57 
Deferred
 
305 
403 
361 
State
 
 
 
 
Current
 
26 
62 
15 
Deferred
 
(14)
(8)
33 
Foreign
 
 
 
 
Current
 
3 
9 
7 
Deferred
 
0 
(4)
0 
Total income tax expense
 
338 
463 
473 
Income tax expense in the consolidated statements of operations:
 
 
 
 
Attributable to income
 
338 
463 
473 
Stockholders' equity:
 
 
 
 
Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
 
(5)
(14)
(18)
Tax effect of the change in accumulated other comprehensive loss
 
(744)
554 
(434)
Reconciliation of the statutory federal income tax rate to effective income tax rate
 
 
 
 
Statutory federal income tax rate (as a percent)
 
35.00% 
35.00% 
35.00% 
State income taxes, net of federal income tax benefit (as a percent)
 
2.70% 
2.80% 
2.50% 
Impairments of goodwill (as a percent)
 
0.00% 
188.50% 
0.00% 
Reversal of liability for unrecognized tax position (as a percent)
 
0.40% 
(24.50%)
0.00% 
Foreign income taxes (as a percent)
 
0.40% 
2.70% 
0.30% 
Nondeductible accounting adjustment for life insurance (as a percent)
 
0.00% 
3.10% 
0.00% 
Release state valuation allowance (as a percent)
 
0.00% 
(2.30%)
0.00% 
Effective income Tax Rate Reconciliation, Foreign Subsidiary Investment Write-Off
 
(5.40%)
0.00% 
0.00% 
Effective Income Tax Rate Reconciliation,Other Reconciling Items, Percent
 
(2.60%)
1.40% 
0.00% 
Effective income tax rate (as a percent)
 
30.50% 
206.70% 
37.80% 
Write-off of investment in foreign subsidiary
 
60 
 
 
Impairment of goodwill
1,100 
0 
1,092 
0 
Valuation Allowance Reversal
 
 
(22)
 
Expense on reversal of valuation allowance on auction rate securities
 
 
 
(16)
Deferred tax assets
 
 
 
 
Post-retirement and pension benefit costs
 
2,276 
1,618 
 
Deferred Tax Assets, Operating Loss Carryforwards
 
1,091 
1,532 
 
Other employee benefits
 
214 
182 
 
Other
 
602 
782 
 
Gross deferred tax assets
 
4,183 
4,114 
 
Less valuation allowance
 
(409)
(435)
 
Net deferred tax assets
 
3,774 
3,679 
 
Deferred tax liabilities
 
 
 
 
Property, plant and equipment, primarily due to depreciation differences
 
(3,869)
(3,904)
 
Goodwill and other intangible assets
 
(2,908)
(3,226)
 
Other
 
(147)
(137)
 
Gross deferred tax liabilities
 
(6,924)
(7,267)
 
Net deferred tax liabilities
 
(3,150)
(3,588)
 
Long-term deferred tax liability
 
4,030 
4,753 
 
Deferred income taxes, net
 
880 
1,165 
 
Summary of reconciliation of the change in gross unrecognized tax benefits activity
 
 
 
 
Unrecognized tax benefits, beginning of year
 
14 
78 
 
Increase in tax positions taken in the prior year
 
 
17 
 
Decrease due to the reversal of tax positions taken in a prior year
 
(2)
0 
 
Decrease from the lapse of statute of limitations
 
(1)
(36)
 
Settlements
 
(3)
(28)
 
Unrecognized tax benefits, end of year
 
17 
14 
78 
Valuation Allowance, Deferred Tax Asset, Change in Amount
 
26 
(5)
 
State
 
 
 
 
Reconciliation of the statutory federal income tax rate to effective income tax rate
 
 
 
 
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount
 
13 
 
 
Federal
 
 
 
 
Reconciliation of the statutory federal income tax rate to effective income tax rate
 
 
 
 
Refund from taxing authority
 
 
$ 33 
 
Income Taxes (Details 2) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income taxes
 
 
Significant operating loss carryforwards expiring prior to 2020
$ 0 
 
Valuation allowance
409,000,000 
435,000,000 
Deferred tax asset valuation allowance adjustment
(26,000,000)
5,000,000 
Unrecognized tax benefits that would impact effective tax rate
32,000,000 
29,000,000 
Interest on income taxes accrued
30,000,000 
30,000,000 
Amount of unrecorded benefit
8,000,000 
 
Federal
 
 
Income taxes
 
 
Operating loss carryforward
1,600,000,000 
 
State
 
 
Income taxes
 
 
Operating loss carryforward
12,000,000,000 
 
Investment tax credits
 
 
Income taxes
 
 
Tax credit carryforwards, net of federal income tax
33,000,000 
 
Investment tax credits |
State
 
 
Income taxes
 
 
Tax credit carryforwards
51,000,000 
 
Alternative minimum tax credits
 
 
Income taxes
 
 
Tax credit carryforwards
$ 110,000,000 
 
Segment Information (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 3 Months Ended 10 Months Ended 12 Months Ended
Nov. 1, 2014
segment
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Oct. 30, 2014
segment
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
$ 4,438 
$ 4,514 
$ 4,541 
$ 4,538 
$ 4,542 
$ 4,515 
$ 4,525 
$ 4,513 
 
$ 18,031 
$ 18,095 
$ 18,376 
Expenses
 
 
 
 
 
 
 
 
 
 
15,621 
16,642 
15,663 
OPERATING INCOME
 
483 
619 
655 
653 
641 
(685)
715 
782 
 
2,410 
1,453 
2,713 
Number of reportable segments (segments)
2 
 
 
 
 
 
 
 
 
4 
 
 
 
Operating segments (segments)
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
 
 
17,028 
17,095 
17,320 
Expenses
 
 
 
 
 
 
 
 
 
 
8,509 
8,167 
8,147 
OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
8,519 
8,928 
9,173 
Margin percentage (percent)
 
 
 
 
 
 
 
 
 
 
50.00% 
52.00% 
53.00% 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
 
 
11,034 
11,091 
11,156 
Expenses
 
 
 
 
 
 
 
 
 
 
6,089 
5,808 
5,729 
OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
4,945 
5,283 
5,427 
Margin percentage (percent)
 
 
 
 
 
 
 
 
 
 
45.00% 
48.00% 
49.00% 
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
 
 
5,994 
6,004 
6,164 
Expenses
 
 
 
 
 
 
 
 
 
 
2,420 
2,359 
2,418 
OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
3,574 
3,645 
3,746 
Margin percentage (percent)
 
 
 
 
 
 
 
 
 
 
60.00% 
61.00% 
61.00% 
Structural reorganization |
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior period reclassification adjustment of segment expenses
 
 
 
 
 
 
 
 
 
 
 
(45)
(59)
Structural reorganization |
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior period reclassification adjustment of segment expenses
 
 
 
 
 
 
 
 
 
 
 
28 
32 
Segment expense reassignment |
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior period reclassification adjustment of segment expenses
 
 
 
 
 
 
 
 
 
 
 
(165)
165 
Segment expense reassignment |
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior period reclassification adjustment of segment expenses
 
 
 
 
 
 
 
 
 
 
 
$ 100 
$ 95 
Segment Information (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
category
Dec. 31, 2013
Dec. 31, 2012
Operating revenues by products and services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$ 4,438 
$ 4,514 
$ 4,541 
$ 4,538 
$ 4,542 
$ 4,515 
$ 4,525 
$ 4,513 
$ 18,031 
$ 18,095 
$ 18,376 
Surcharge amount on customers' bills
 
 
 
 
 
 
 
 
526 
489 
531 
Number of categories of products and services (categories)
 
 
 
 
 
 
 
 
4 
 
 
Number of categories of products and services included in segment revenue (categories)
 
 
 
 
 
 
 
 
3 
 
 
Strategic services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues by products and services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
9,200 
8,823 
8,427 
Legacy services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues by products and services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
7,138 
7,616 
8,221 
Data integration
 
 
 
 
 
 
 
 
 
 
 
Operating revenues by products and services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
690 
656 
672 
Other
 
 
 
 
 
 
 
 
 
 
 
Operating revenues by products and services
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
 
 
 
 
 
 
 
$ 1,003 
$ 1,000 
$ 1,056 
Segment Information (Details 3) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total segment income
$ 483 
$ 619 
$ 655 
$ 653 
$ 641 
$ (685)
$ 715 
$ 782 
$ 2,410 
$ 1,453 
$ 2,713 
Other operating revenues
4,438 
4,514 
4,541 
4,538 
4,542 
4,515 
4,525 
4,513 
18,031 
18,095 
18,376 
Depreciation and amortization
 
 
 
 
 
 
 
 
(4,428)
(4,541)
(4,780)
Impairment of goodwill
 
1,100 
 
 
 
 
 
 
0 
1,092 
0 
Other unassigned operating expenses
 
 
 
 
 
 
 
 
(3,347)
(3,502)
(3,244)
Income tax expense
 
 
 
 
 
 
 
 
(338)
(463)
(473)
Other expenses, net
 
 
 
 
 
 
 
 
(1,300)
(1,229)
(1,463)
Net income (loss)
188 
188 
193 
203 
239 
(1,045)
269 
298 
772 
(239)
777 
Operating segments (segments)
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total segment income
 
 
 
 
 
 
 
 
8,519 
8,928 
9,173 
Unallocated amount to segment
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Other operating revenues
 
 
 
 
 
 
 
 
1,003 
1,000 
1,056 
Depreciation and amortization
 
 
 
 
 
 
 
 
(4,428)
(4,541)
(4,780)
Impairment of goodwill
 
 
 
 
 
 
 
 
0 
1,092 
0 
Other unassigned operating expenses
 
 
 
 
 
 
 
 
(2,684)
(2,842)
(2,736)
Income tax expense
 
 
 
 
 
 
 
 
(338)
(463)
(473)
Other expenses, net
 
 
 
 
 
 
 
 
$ (1,300)
$ (1,229)
$ (1,463)
Quarterly Financial Data (Unaudited) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Condensed Income Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
$ 4,438 
$ 4,514 
$ 4,541 
$ 4,538 
$ 4,542 
$ 4,515 
$ 4,525 
$ 4,513 
$ 18,031 
$ 18,095 
$ 18,376 
OPERATING INCOME
483 
619 
655 
653 
641 
(685)
715 
782 
2,410 
1,453 
2,713 
Net income (loss)
188 
188 
193 
203 
239 
(1,045)
269 
298 
772 
(239)
777 
Basic earnings (loss) per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.45 
$ 0.48 
$ 1.36 
$ (0.40)
$ 1.25 
Diluted earnings (loss) per common share (in dollars per share)
$ 0.33 
$ 0.33 
$ 0.34 
$ 0.35 
$ 0.41 
$ (1.76)
$ 0.44 
$ 0.48 
$ 1.36 1
$ (0.40)1
$ 1.25 1
Write-off of investment in foreign subsidiary
 
 
 
 
 
 
 
 
60 
 
 
Impairment of goodwill
 
1,100 
 
 
 
 
 
 
0 
1,092 
0 
KPNQwest
 
 
 
 
 
 
 
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Litigation tentative settlement, expense
 
233 
 
 
 
 
 
 
 
 
 
Pension Plans
 
 
 
 
 
 
 
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Settlements
 
 
 
 
 
 
 
 
$ 63 
$ 0 
$ 0 
[1] Years Ended December 31, 2014 2013 2012 (Dollars in millions, except per share amounts, shares in thousands)Income (Loss) (Numerator): Net income (loss)$772 (239) 777Earnings applicable to non-vested restricted stock— — (1)Net income (loss) applicable to common stock for computing basic earnings (loss) per common share772 (239) 776Net income (loss) as adjusted for purposes of computing diluted earnings (loss) per common share$772 (239) 776Shares (Denominator): Weighted average number of shares: Outstanding during period572,748 604,404 622,139Non-vested restricted stock(4,313) (3,512) (2,796)Non-vested restricted stock units— — 862Weighted average shares outstanding for computing basic earnings (loss) per common share568,435 600,892 620,205Incremental common shares attributable to dilutive securities: Shares issuable under convertible securities10 — 12Shares issuable under incentive compensation plans1,294 — 2,068Number of shares as adjusted for purposes of computing diluted earnings (loss) per common share569,739 600,892 622,285Basic earnings (loss) per common share$1.36 (0.40) 1.25Diluted earnings (loss) per common share$1.36 (0.40) 1.25
Commitments and Contingencies (Details)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 24 Months Ended 0 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2014
USD ($)
Dec. 31, 2013
USD ($)
Dec. 31, 2012
USD ($)
Dec. 31, 2014
CenturyLink, Inc.
security
shareholder_derivative_action
Dec. 31, 2013
Pending litigation related to Federal Communications Act
CenturyLink, Inc.
USD ($)
Dec. 31, 2009
Pending litigation related to Federal Communications Act
CenturyLink, Inc.
USD ($)
Dec. 31, 2007
William Douglas Fulghum, et al. v. Embarq Corporation
USD ($)
Oct. 14, 2011
Abbott et al. v. Sprint Nextel et al.
plaintiff
Jul. 16, 2013
Comcast MO Group, Inc.
Qwest Communications International Inc
USD ($)
Feb. 27, 2014
KPNQwest
Qwest Communications International Inc
USD ($)
Feb. 27, 2014
KPNQwest
Qwest Communications International Inc
EUR (€)
Dec. 31, 2014
KPNQwest
Qwest Communications International Inc
USD ($)
Dec. 31, 2014
Cargill Financial Markets, Plc and Citibank, N.A.
USD ($)
Dec. 31, 2014
Cargill Financial Markets, Plc and Citibank, N.A.
EUR (€)
Dec. 31, 2014
Fiber-optic cable installation
state
Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of lawsuits filed (lawsuits)
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
Charges claimed against Sprint Nextel
 
 
 
 
 
$ 34 
 
 
 
 
 
 
 
 
 
Proceeds from legal settlements
 
 
 
 
24 
 
 
 
 
 
 
 
 
 
 
Effect of modifications made to Embarq's benefits program, greater than
 
 
 
 
 
 
300 
 
 
 
 
 
 
 
 
Number of plaintiffs have alleged breach of fiduciary duty (plaintiffs)
 
 
 
 
 
 
 
1,500 
 
 
 
 
 
 
 
Number of Plaintiffs, Limited Discovery
 
 
 
 
 
 
 
80 
 
 
 
 
 
 
 
Litigation Matters Assumed in Qwest Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Damages sought by plaintiff
 
 
 
 
 
 
 
 
80 
 
 
 
266 
219 
 
Payments for legal settlements
 
 
 
 
 
 
 
 
 
235 
171 
 
 
 
 
Legal reserve, KPNQwest litigation settlement
 
 
 
 
 
 
 
 
 
 
 
235 
 
 
 
Number of states in which service is provided (states)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34 
Number of states in which final approval of settlements received (states)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 
Number of states where an action is pending (states)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
Number of states in which actions are not currently pending
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
Number of securities actions in which the company is the defendant (securities)
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
Number of shareholder derivative actions in which the company is the defendant (shareholder derivative actions)
 
 
 
4 
 
 
 
 
 
 
 
 
 
 
 
Capital lease activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets acquired through capital leases
37 
12 
209 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation expense
126 
136 
150 
 
 
 
 
 
 
 
 
 
 
 
 
Cash payments towards capital leases
118 
119 
113 
 
 
 
 
 
 
 
 
 
 
 
 
Assets included in property, plant and equipment
850 
877 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated depreciation
393 
338 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future annual minimum payments under capital lease arrangements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
104 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
76 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
74 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
72 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
61 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 and thereafter
284 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total minimum payments
671 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: amount representing interest and executory costs
(182)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Present value of minimum payments
489 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: current portion
(73)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term portion
416 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rent expense
446 
455 
445 
 
 
 
 
 
 
 
 
 
 
 
 
Sublease rental income
14 
16 
18 
 
 
 
 
 
 
 
 
 
 
 
 
Future rental commitments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
311 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
280 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017
257 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
233 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
202 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 and thereafter
974 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total future minimum payments
2,257 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum sublease rentals due in the future under non-cancelable subleases
91 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase obligations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total purchase commitments
407 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015
141 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 and 2017
154 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018 and 2019
50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 and thereafter
$ 62 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Financial Information Other Financial Information (Details) (Wireless spectrum licenses, USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Nov. 3, 2014
Wireless spectrum licenses
 
 
Schedule of Impaired Long-Lived Assets Held for Sale [Line Items]
 
 
Impairment of intangible assets, indefinite-lived (excluding goodwill)
$ (14)
 
Disposed long-lived assets, contract sales price
 
$ 39 
Other Financial Information (Details 2) (Qwest Communications International Inc, KPNQwest)
In Millions, unless otherwise specified
1 Months Ended
Feb. 27, 2014
USD ($)
Feb. 27, 2014
EUR (€)
Dec. 31, 2014
USD ($)
Commitments and Contingencies
 
 
 
Payments for legal settlements
$ 235 
€ 171 
 
Legal reserve, KPNQwest litigation settlement
 
 
$ 235 
Other Financial Information Other Financial Information (Details 3) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Other Current Assets [Abstract]
 
 
Prepaid expenses
$ 260 
$ 266 
Materials, supplies and inventory
132 
167 
Assets held for sale
14 
26 
Deferred activation and installation charges
103 
94 
Other
71 
44 
Other Assets, Current
580 
597 
Selected Current Liabilities [Abstract]
 
 
Accounts payable
1,226 
1,111 
Other current liabilities:
 
 
Accrued rent
34 
52 
Legal reserves
27 
273 
Other
149 
189 
Total other current liabilities
210 
514 
Current liabilities
 
 
Book overdraft balance
80 
88 
Capital expenditures included in accounts payable
$ 185 
$ 140 
Labor Union Contracts (Details)
Dec. 31, 2014
Employees covered under collective bargaining agreements
 
Labor Union Contracts
 
Percentage of employees who are members of bargaining units (percent)
36.00% 
Employees covered under expired collective bargaining agreements
 
Labor Union Contracts
 
Percentage of employees who are members of bargaining units (percent)
4.00% 
Number of employees covered under the agreement (employees)
2,000 
Employees subject to collective bargaining arrangements expiring within one year
 
Labor Union Contracts
 
Percentage of employees who are members of bargaining units (percent)
4.00% 
Number of employees covered under the agreement (employees)
2,000 
Repurchase of CenturyLink Common Stock (Details) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
12 Months Ended 16 Months Ended 12 Months Ended 9 Months Ended
Dec. 31, 2014
Share Repurchase Program Authorized February 2013 [Member]
May 31, 2014
Share Repurchase Program Authorized February 2013 [Member]
Feb. 28, 2013
Share Repurchase Program Authorized February 2013 [Member]
Dec. 31, 2014
Share Repurchase Program Authorized February 2014 [Member]
Feb. 28, 2014
Share Repurchase Program Authorized February 2014 [Member]
Feb. 20, 2015
Subsequent Event
Share Repurchase Program Authorized February 2014 [Member]
Schedule of Stock Repurchases [Line Items]
 
 
 
 
 
 
Stock repurchases, aggregate authorized amount
 
 
$ 2,000,000,000 
 
$ 1,000,000,000 
 
Stock repurchased and retired during program period (shares)
 
59.5 
 
 
 
7.7 
Stock repurchased and retired during program period, value
 
 
 
 
 
298,000,000 
Stock repurchased and retired during program period, average cost per share
$ 33.63 
 
 
 
 
$ 38.57 
Stock repurchased and retired during period, shares
13.7 
 
 
5.2 
 
 
Stock repurchased and retired during period, value
433,000,000 
 
 
200,000,000 
 
 
Stock repurchased and retired during period, average cost per share
$ 31.54 
 
 
$ 38.40 
 
 
Stock repurchase program shares unsettled amount
 
 
 
6,000,000 
 
 
Stock repurchase program shares unsettled average cost per share
 
 
 
$ 40.22 
 
 
Stock repurchase program, period in force
 
 
 
24 months 
 
 
Stock repurchases, remaining authorized amount
 
 
 
$ 800,000,000 
 
 
Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Accumulated other comprehensive income (loss) by component
 
 
 
Balance at December 31, 2013
$ (802)
$ (1,701)
 
Other comprehensive income (loss) before reclassifications
(1,284)
840 
 
Amounts reclassified from accumulated other comprehensive income
69 
59 
 
Net current-period other comprehensive income (loss)
(1,215)
899 
(689)
Balance at December 31, 2014
(2,017)
(802)
(1,701)
Foreign Currency Translation Adjustment and Other
 
 
 
Accumulated other comprehensive income (loss) by component
 
 
 
Balance at December 31, 2013
(11)
(13)
 
Other comprehensive income (loss) before reclassifications
(15)
1 
 
Amounts reclassified from accumulated other comprehensive income
1 
1 
 
Net current-period other comprehensive income (loss)
(14)
2 
 
Balance at December 31, 2014
(25)
(11)
 
Defined Benefit Plans |
Pension Plans
 
 
 
Accumulated other comprehensive income (loss) by component
 
 
 
Balance at December 31, 2013
(669)
(1,399)
 
Other comprehensive income (loss) before reclassifications
(1,107)
675 
 
Amounts reclassified from accumulated other comprehensive income
56 
55 
 
Net current-period other comprehensive income (loss)
(1,051)
730 
 
Balance at December 31, 2014
(1,720)
(669)
 
Defined Benefit Plans |
Post-Retirement Benefit Plans
 
 
 
Accumulated other comprehensive income (loss) by component
 
 
 
Balance at December 31, 2013
(122)
(289)
 
Other comprehensive income (loss) before reclassifications
(162)
164 
 
Amounts reclassified from accumulated other comprehensive income
12 
3 
 
Net current-period other comprehensive income (loss)
(150)
167 
 
Balance at December 31, 2014
$ (272)
$ (122)
 
Accumulated Other Comprehensive Loss (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
 
 
 
 
 
 
$ (1,110)
$ (224)
$ (1,250)
Income tax expense
 
 
 
 
 
 
 
 
(338)
(463)
(473)
Other income, net
 
 
 
 
 
 
 
 
11 
59 
35 
NET INCOME (LOSS)
188 
188 
193 
203 
239 
(1,045)
269 
298 
772 
(239)
777 
Reclassification out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net actuarial loss
 
 
 
 
 
 
 
 
85 
88 
 
Prior service cost
 
 
 
 
 
 
 
 
25 
5 
 
INCOME BEFORE INCOME TAX EXPENSE
 
 
 
 
 
 
 
 
(110)
(93)
 
Income tax expense
 
 
 
 
 
 
 
 
(42)
(35)
 
Other income, net
 
 
 
 
 
 
 
 
1 
(1)
 
NET INCOME (LOSS)
 
 
 
 
 
 
 
 
$ 69 
$ (59)
 
Dividends (Details) (USD $)
0 Months Ended
Nov. 11, 2014
Aug. 19, 2014
May 28, 2014
Feb. 24, 2014
Nov. 12, 2013
Aug. 27, 2013
May 23, 2013
Feb. 26, 2013
Dividends
 
 
 
 
 
 
 
 
Dividend per share (usd per share)
$ 0.54 
$ 0.54 
$ 0.54 
$ 0.54 
$ 0.54 
$ 0.54 
$ 0.54 
$ 0.54 
Total amount declared
$ 307,000,000 
$ 308,000,000 
$ 307,000,000 
$ 309,000,000 
$ 320,536,173.38 
$ 321,000,000 
$ 320,000,000 
$ 339,000,000