Employee Benefits

6 Months Ended

Jun. 30, 2011

Employee Benefits

Employee Benefits

(5) Employee Benefits

In connection CenturyLink's acquisition of us on April 1, 2011, we performed a preliminary valuation analysis and recognized a $479 million liability as of April 1, 2011 for the unfunded status of our pension plans, reflecting estimated accumulated pension benefit obligations of $8.267 billion in excess of the $7.788 billion estimated fair value of plan assets.

Net periodic benefit expense for our pension and non-qualified pension plans for the successor three months ended June 30, 2011, predecessor three months ended March 31, 2011, predecessor three months ended June 30, 2010 and predecessor six months ended June 30, 2010 consisted of the following components:

	Successor			Predecessor
	Three months ended June 30, 2011			Three months ended March 31, 2011			Three months ended June 30, 2010			Six months ended June 30, 2010
	(Dollars in millions)
Service cost	$	13			14			12			27
Interest cost		108			104			111			224
Expected return on plan assets		(139	)		(133	)		(138	)		(278	)
Amortization of unrecognized prior service cost		—			(6	)		(5	)		(11	)
Amortization of unrecognized net actuarial loss		—			31			33			65
Net periodic benefits (income) expense	$	(18	)		10			13			27

In connection CenturyLink's acquisition of us on April 1, 2011, we performed a preliminary valuation analysis and recognized a $2.516 billion liability as of April 1, 2011 for the unfunded status of our postretirement benefit plan, reflecting estimated accumulated postretirement benefit obligations of $3.284 billion in excess of the $768 million estimated fair value of plan assets.

Net periodic postretirement benefit expense for the successor three months ended June 30, 2011, predecessor three months ended March 31, 2011, predecessor three months ended June 30, 2010 and predecessor six months ended June 30, 2010 consisted of the following components:

	Successor			Predecessor
	Three months ended June 30, 2011			Three months ended March 31, 2011			Three months ended June 30, 2010			Six months ended June 30, 2010
	(Dollars in millions)
Service cost	$	1			2			2			4
Interest cost		41			41			45			91
Expected return on plan assets		(12	)		(13	)		(15	)		(30	)
Amortization of unrecognized prior service cost		—			(24	)		(25	)		(50	)
Amortization of unrecognized net actuarial loss		—			10			10			20
Net periodic benefits expense	$	30			16			17			35

We report net periodic pension expense and net periodic postretirement benefits expense in cost of services and products and selling, general and administrative expenses.