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Severance and Leased Real Estate

9 Months Ended

Sep. 30, 2012

(5) Severance and Leased Real Estate

Periodically, we have implemented reductions in our workforce and have accrued liabilities for related severance costs. These workforce reductions resulted primarily from the progression or completion of our integration plans related to CenturyLink's acquisition of us, increased competitive pressures and reduced workload demands due to the loss of access lines.

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.

Due to workforce reductions and efforts to consolidate work locations subsequent to business acquisitions, we have ceased using certain real estate for which we have continuing lease obligations. When we cease using a discrete real estate location, we record a liability associated with that location's lease after estimating the potential for subleasing the real estate. 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—other" in our consolidated balance sheets. We report the related expenses in "selling, general and administrative expenses" in our consolidated statements of operations.

As of the successor dates of September 30, 2012 and December 31, 2011, the current portion of our leased real estate accrual was $23 million and $27 million, respectively, and the noncurrent portion was $107 million and $126 million, respectively. The remaining lease terms range from 0.1 years to 13.3 years, with a weighted average of 9.1 years.

Changes in our accrued liabilities for severance expenses and leased real estate were as follows:

	Severance

	(Dollars in millions)
Balance at December 31, 2011 (Successor)	$	29		153
Accrued to expense		60		2
Payments, net		(74	)	(25	)
Reversals and adjustments		(3	)	—

Balance at September 30, 2012 (Successor)	$	12		130

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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