Severance and Leased Real Estate

9 Months Ended

Sep. 30, 2014

Restructuring and Related Activities [Abstract]

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 7—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 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 September 30, 2014, the current and noncurrent portions of our leased real estate accrual were $15 million and $85 million, respectively. The remaining lease terms range from 0.3 to 11.2 years, with a weighted average of 8.5 years.

Changes in our accrued liabilities for severance expenses and leased real estate during the first nine months of 2014 were as follows:



	Severance			Real Estate
	(Dollars in millions)
Balance at December 31, 2013	$	17		113
Accrued to expense	65			1
Payments, net	(63		)	(12	)
Reversals and adjustments	—			(2	)
Balance at September 30, 2014	$	19		100

- 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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