Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2012

Employee Benefits

Schedule of estimated future benefit payments

	Pension Plans		Post-Retirement Benefit Plans		Medicare Part D Subsidy Receipts
	(Dollars in millions)
Estimated future benefit payments:
2013	$	1,051		377		(25	)
2014		1,006		370		(26	)
2015		996		358		(28	)
2016		985		348		(29	)
2017		972		338		(31	)
2018 - 2022		4,626		1,511		(173	)

Schedule of actuarial assumptions used to compute net periodic benefit expense

	Pension Plans						Post-Retirement Benefit Plans
	2012		2011(1)		2010		2012		2011(2)		2010
Actuarial assumptions at beginning of year:
Discount rate		4.25% - 5.10%		5.00% - 5.50%		5.50% - 6.00%		4.60% - 4.80%		5.30%		5.70% - 5.80%
Rate of compensation increase		3.25%		3.25%		3.50% - 4.00%		N/A		N/A		N/A
Expected long-term rate of return on plan assets		7.50%		7.50% - 8.00%		8.25% - 8.50%		6.00% - 7.50%		7.25%		7.25%
Initial health care cost trend rate		N/A		N/A		N/A		8.00%		8.50%		8.00%
Ultimate health care cost trend rate		N/A		N/A		N/A		5.00%		5.00%		5.00%
Year ultimate trend rate is reached		N/A		N/A		N/A		2018		2018		2014

N/A—Not applicable

(1)

This column does not consider Qwest's actuarial assumptions for its pension plan as of the beginning of the year due to the acquisition date of April 1, 2011. Qwest had the following actuarial assumptions as of April 1, 2011: discount rate of 5.40%; expected long-term rate of return on plan assets 7.50%; and a rate of compensation increase of 3.50%.

(2)

This column does not consider Qwest's actuarial assumptions for its post-retirement benefit plan as of the beginning of the year due to the acquisition date of April 1, 2011. Qwest had the following actuarial assumptions as of April 1, 2011: discount rate of 5.30%; expected long-term rate of return on plan assets of 7.50%; initial health care cost trend rate of 7.50% and ultimate health care trend rate of 5.00% to be reached in 2016.

Schedule of actuarial assumptions used to compute the funded status for the plans

	Pension Plans				Post-Retirement Benefit Plans
	December 31,				December 31,
	2012		2011		2012		2011
Actuarial assumptions at end of year:
Discount rate		3.25% - 4.20%		4.25% - 5.10%		3.60%		4.60% - 4.80%
Rate of compensation increase		3.25%		3.25%		N/A		N/A
Initial health care cost trend rate		N/A		N/A		6.75% / 7.50%		7.25% / 8.00%
Ultimate health care cost trend rate		N/A		N/A		4.50%		5.00%
Year ultimate trend rate is reached		N/A		N/A		2022 / 2024		2018

N/A—Not applicable

Schedule of gross notional exposure of the derivative instruments directly held by the plans

	Gross Notional Exposure
	Pension Plans				Post-Retirement Benefit Plans
	Years Ended December 31,
	2012		2011		2012		2011
	(Dollars in millions)
Derivative instruments:
Exchange-traded U.S. equity futures	$	302		535		30		12
Exchange-traded non-U.S. equity futures		1		4		—		—
Exchange-traded Treasury futures		1,763		1,512		—		19
Interest rate swaps		1,471		635		—		—
Total return swaps		—		110		—		51
Credit default swaps		495		201		—		—
Foreign exchange forwards		726		635		21		23
Options		768		917		—		—

Schedule of the unfunded status of the benefit plans

	Pension Plans						Post-Retirement Benefit Plans
	Years Ended December 31,						Years Ended December 31,
	2012			2011			2012			2011
	(Dollars in millions)
Benefit obligation	$	(14,881	)		(13,596	)		(4,075	)		(3,930	)
Fair value of plan assets		12,321			11,814			626			693
Unfunded status		(2,560	)		(1,782	)		(3,449	)		(3,237	)
Current portion of unfunded status	$	(6	)		—			(160	)		(164	)
Non-current portion of unfunded status	$	(2,554	)		(1,782	)		(3,289	)		(3,073	)

Schedule of items not recognized as a component of net periodic benefits expense

	As of and for the Years Ended December 31,
	2011			Recognition of Net Periodic Benefits Expense			Deferrals			Net Change in AOCI			2012
	(Dollars in millions)
Accumulated other comprehensive (loss) income:
Pension plans:
Net actuarial (loss) gain	$	(1,335	)		35			(936	)		(901	)		(2,236	)
Prior service (cost) benefit		(29	)		4			(13	)		(9	)		(38	)
Deferred income tax benefit (expense)		526			(15	)		364			349			875
Total pension plans		(838	)		24			(585	)		(561	)		(1,399	)
Post-retirement benefit plans:
Net actuarial loss		(221	)		—			(225	)		(225	)		(446	)
Prior service (cost) benefit		(21	)		—			(1	)		(1	)		(22	)
Deferred income tax benefit		92			—			87			87			179
Total post-retirement benefit plans		(150	)		—			(139	)		(139	)		(289	)
Total accumulated other comprehensive (loss) income	$	(988	)		24			(724	)		(700	)		(1,688	)

Schedule of estimated items to be recognized in 2013 as a component of net periodic benefit expense

	Pension Plans			Post-Retirement Plans
	(Dollars in millions)
Estimated recognition of net periodic benefit expense in 2013:
Net actuarial loss	$	(81	)		(4	)
Prior service cost		(5	)		—
Deferred income tax benefit		33			2
Estimated net periodic benefit expense to be recorded in 2013 as a component of other comprehensive income (loss)	$	(53	)		(2	)

Pension Plans

Employee Benefits

Schedule of components of net periodic pension income and post-retirement benefit expense

	Pension Plans Years Ended December 31,
	2012			2011(1)			2010
	(Dollars in millions)
Service cost	$	87			70			61
Interest cost		625			560			246
Expected return on plan assets		(847	)		(709	)		(283	)
Curtailment gain		—			—			(21	)
Settlements		—			1			—
Amortization of unrecognized prior service cost		4			2			2
Amortization of unrecognized actuarial loss		35			13			17
Net periodic pension (income) expense	$	(96	)		(63	)		22

(1)

Includes $58 million of income related to the Qwest plans subsequent to the April 1, 2011 acquisition date.

Schedule of change in benefit obligation

	Pension Plans Years Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	13,596			4,534			4,182
Service cost		87			70			61
Interest cost		625			560			246
Plan amendments		14			12			4
Acquisitions		—			8,267			—
Actuarial loss		1,565			930			427
Curtailment gain		—			—			(110	)
Benefits paid by company		(5	)		(16	)		(5	)
Benefits paid from plan assets		(1,001	)		(761	)		(271	)
Benefit obligation at end of year	$	14,881			13,596			4,534

Schedule of change in plan assets

	Pension Plans Years Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Change in plan assets
Fair value of plan assets at beginning of year	$	11,814			3,732			3,220
Return on plan assets		1,476			479			483
Acquisitions		—			7,777			—
Employer contributions		32			587			300
Settlements		—			—			—
Benefits paid from plan assets		(1,001	)		(761	)		(271	)
Fair value of plan assets at end of year	$	12,321			11,814			3,732

Schedule of fair value of the plans' assets by asset category

	Fair Value of Pension Plan Assets at December 31, 2012
	Level 1			Level 2		Level 3		Total
	(Dollars in millions)
Investment grade bonds (a)	$	830			1,555		—	$	2,385
High yield bonds (b)		—			1,303		59		1,362
Emerging market bonds (c)		199			396		—		595
Convertible bonds (d)		—			374		—		374
Diversified strategies (e)		—			655		—		655
U.S. stocks (f)		1,225			119		—		1,344
Non-U.S. stocks (g)		1,212			178		—		1,390
Emerging market stocks (h)		111			193		—		304
Private equity (i)		—			—		711		711
Private debt (j)		—			—		465		465
Market neutral hedge funds (k)		—			906		—		906
Directional hedge funds (k)		—			340		194		534
Real estate (l)		—			223		337		560
Derivatives (m)		(5	)		3		—		(2	)
Cash equivalents and short-term investments (n)		—			750		—		750
Total investments	$	3,572			6,995		1,766		12,333
Accrued expenses									(12	)
Total pension plan assets								$	12,321

	Fair Value of Pension Plan Assets at December 31, 2011
	Level 1		Level 2			Level 3		Total
	(Dollars in millions)
Investment grade bonds (a)	$	694		2,206			—	$	2,900
High yield bonds (b)		—		541			79		620
Emerging market bonds (c)		—		295			—		295
Convertible bonds (d)		—		337			—		337
Diversified strategies (e)		—		489			—		489
U.S. stocks (f)		401		944			—		1,345
Non-U.S. stocks (g)		994		459			—		1,453
Emerging market stocks (h)		102		136			—		238
Private equity (i)		—		—			791		791
Private debt (j)		—		—			461		461
Market neutral hedge funds (k)		—		620			188		808
Directional hedge funds (k)		—		268			183		451
Real estate (l)		—		48			535		583
Derivatives (m)		12		(5	)		—		7
Cash equivalents and short-term investments (n)		13		1,183			—		1,196
Total investments	$	2,216		7,521			2,237		11,974
Dividends and interest receivable									32
Pending trades receivable									436
Accrued expenses									(8	)
Pending trades payable									(620	)
Total pension plan assets								$	11,814

Summary of changes in fair value of defined benefit plans' Level 3 assets

	Pension Plan Assets Valued Using Level 3 Inputs
	High Yield Bonds			Private Equity			Private Debt			Market Neutral Hedge Fund			Directional Hedge Funds			Real Estate			Other			Total
	(Dollars in millions)
Balance at December 31, 2010	$	—			1			3			—			161			182			3			350
Net acquisitions (dispositions)		96			795			453			185			30			318			(3	)		1,874
Actual return on plan assets:
(Losses) gains relating to assets sold during the year		(12	)		197			13			3			(1	)		9			—			209
(Losses) gains relating to assets still held at year-end		(5	)		(202	)		(8	)		—			(7	)		26			—			(196	)
Balance at December 31, 2011		79			791			461			188			183			535			—			2,237
Net transfers		(12	)		—			—			(188	)		—			(105	)		—			(305	)
Acquisitions		1			70			120			—			—			18			—			209
Dispositions		(11	)		(109	)		(102	)		—			—			(121	)		—			(343	)
Actual return on plan assets:
Gains relating to assets sold during the year		—			3			1			—			—			—			—			4
Gains (losses) relating to assets still held at year-end		2			(44	)		(15	)		—			11			10			—			(36	)
Balance at December 31, 2012	$	59			711			465			—			194			337			—			1,766

Post-Retirement Plans

Employee Benefits

Schedule of effects of a 100 basis point change in assumed health care cost rates

	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 (statement of operations)	$	3		(3	)
Effect on benefit obligation (balance sheet)		77		(70	)

Schedule of components of net periodic pension income and post-retirement benefit expense

	Post-Retirement Plans Years Ended December 31,
	2012			2011(1)			2010
	(Dollars in millions)
Service cost	$	22			18			15
Interest cost		173			152			32
Expected return on plan assets		(45	)		(41	)		(4	)
Amortization of unrecognized prior service cost		—			(2	)		(3	)
Amortization of unrecognized actuarial loss		—			—			1
Net periodic post-retirement benefit expense	$	150			127			41

(1)

Includes $92 million related to the Qwest plans subsequent to the April 1, 2011 acquisition date.

Schedule of change in benefit obligation

	Post-Retirement Benefit Plans Years Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	3,930			558			582
Service cost		22			18			15
Interest cost		173			152			32
Participant contributions		86			64			14
Plan amendments		—			31			—
Acquisitions		—			3,284			—
Direct subsidy receipts		19			22			1
Actuarial loss (gain)		260			153			(32	)
Benefits paid by company		(268	)		(219	)		(45	)
Benefits paid from plan assets		(147	)		(133	)		(9	)
Benefit obligation at end of year	$	4,075			3,930			558

Schedule of change in plan assets

	Post-Retirement Benefit Plans Years Ended December 31,
	2012			2011			2010
	(Dollars in millions)
Change in plan assets
Fair value of plan assets at beginning of year	$	693			54			57
Actual gain on plan assets		80			4			6
Acquisitions		—			768			—
Employer contributions		—			—			—
Participant contributions		—			—			—
Benefits paid from plan assets		(147	)		(133	)		(9	)
Fair value of plan assets at end of year	$	626			693			54

Schedule of fair value of the plans' assets by asset category

	Fair Value of Post-Retirement Plan Assets at December 31, 2012
	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Investment grade bonds (a)	$	22		86		—	$	108
High yield bonds (b)		—		90		—		90
Emerging market bonds (c)		—		40		—		40
Convertible bonds (d)		—		2		—		2
Diversified strategies (e)		—		72		—		72
U.S. stocks (f)		55		—		—		55
Non-U.S. stocks (g)		58		1		—		59
Emerging market stocks (h)		—		20		—		20
Private equity (i)		—		—		45		45
Private debt (j)		—		—		6		6
Market neutral hedge funds (k)		—		41		—		41
Directional hedge funds (k)		—		24		—		24
Real estate (l)		—		21		28		49
Cash equivalents and short-term investments (n)		5		21		—		26
Total investments	$	140		418		79		637
Accrued expenses								(1	)
Reimbursement accrual								(10	)
Total post-retirement plan assets							$	626

	Fair Value of Post-Retirement Plan Assets at December 31, 2011
	Level 1		Level 2		Level 3		Total
	(Dollars in millions)
Investment grade bonds (a)	$	45		100		—	$	145
High yield bonds (b)		—		61		—		61
Emerging market bonds (c)		—		33		—		33
Convertible bonds (d)		—		30		—		30
Diversified strategies (e)		—		62		—		62
U.S. stocks (f)		64		4		—		68
Non-U.S. stocks (g)		62		2		—		64
Emerging market stocks (h)		—		17		—		17
Private equity (i)		—		—		60		60
Private debt (j)		—		—		8		8
Market neutral hedge funds (k)		—		67		—		67
Directional hedge funds (k)		—		20		—		20
Real estate (l)		—		19		26		45
Cash equivalents and short-term investments (n)		5		20		—		25
Total investments	$	176		435		94		705
Dividends and interest receivable								3
Pending trades receivable								23
Accrued expenses								(15	)
Pending trades payable								(23	)
Total post-retirement plan assets							$	693

Summary of changes in fair value of defined benefit plans' Level 3 assets

	Post-Retirement Plan Assets Valued Using Level 3 Inputs
	Private Equity			Private Debt			Real Estate			Total
	(Dollars in millions)
Balance at December 31, 2010	$	—			—			—			—
Net acquisitions		55			8			24			87
Actual return on plan assets:
Gains relating to assets sold during the year		33			1			—			34
(Losses) gains relating to assets still held at year-end		(28	)		(1	)		2			(27	)
Balance at December 31, 2011		60			8			26			94
Acquisitions		1			—			—			1
Dispositions		(15	)		(3	)		(1	)		(19	)
Gains (losses) relating to assets sold during the year		4			2			(1	)		5
(Losses) gains relating to assets still held at year-end		(5	)		(1	)		4			(2	)
Balance at December 31, 2012	$	45			6			28			79