Employee Benefits

6 Months Ended

Jun. 30, 2011

Employee Benefits

Employee Benefits

(6)   Employee Benefits

        We sponsor several defined benefit pension plans, which in the aggregate cover substantially all of our employees. In connection with the acquisition of Qwest on April 1, 2011, we assumed defined benefit pension plans sponsored by Qwest for its employees. Based on a preliminary valuation analysis, we recognized a $479 million liability as of April 1, 2011 for the unfunded status of the Qwest pension plans, reflecting estimated projected benefit obligations of $8.267 billion in excess of the $7.788 billion estimated fair value of plan assets.

        Net periodic pension (benefit) expense for the three and six months ended June 30, 2011 and 2010 consisted of the following components:

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
	(Dollars in millions)
Service cost	$	20			17			28			33
Interest cost		169			58			229			122
Expected return on plan assets		(212	)		(71	)		(285	)		(142	)
Net amortization and deferral		3			3			7			10
Net periodic pension (benefit) expense	$	(20	)		7			(21	)		23

        Net periodic pension benefit for the three and six months ended June 30, 2011 includes an $18 million benefit related to Qwest plans subsequent to the April 1, 2011 acquisition date.

        We contributed $100 million to certain of our defined benefit pension plans during the six months ended June 30, 2011.

        We also sponsor plans that provide postretirement health care and other benefits to qualifying employees. In connection with the acquisition of Qwest on April 1, 2011, we assumed postretirement benefit plans sponsored by Qwest for certain of its employees. Based on a preliminary valuation analysis, we recognized a $2.516 billion liability as of April 1, 2011 for the unfunded status of Qwest's postretirement benefit plans, reflecting estimated accumulated postretirement benefit obligations of $3.284 billion in excess of the $768 million estimated fair value of the plans assets.

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

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
	(Dollars in millions)
Service cost	$	4			3			7			7
Interest cost		48			8			55			16
Expected return on plan assets		(13	)		(1	)		(14	)		(2	)
Amortization of unrecognized prior service cost		(1	)		—			(1	)		(1	)
Net periodic postretirement benefit expense	$	38			10			47			20

        Net periodic postretirement benefit expense for the three and six months ended June 30, 2011 includes $30 million related to the Qwest plans subsequent to the April 1, 2011 acquisition date. We report net periodic pension (benefit) expense and postretirement benefit expense in cost of services and products and selling, general and administrative expenses.