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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Louisiana
(State or other jurisdiction of
incorporation or organization)
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72-0651161
(I.R.S. Employer
Identification No.)
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100 CenturyLink Drive, Monroe, Louisiana
(Address of principal executive offices)
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71203
(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $1.00
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New York Stock Exchange
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Years Ended December 31,
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||||||||
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2013
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2012
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2011
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||||
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(Dollars in millions)
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||||||||
Statements of operations summary data:
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||||
Operating revenues
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$
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18,095
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18,376
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15,351
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Operating expenses
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16,642
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15,663
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13,326
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Operating income
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$
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1,453
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2,713
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2,025
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Net (loss) income
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$
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(239
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)
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777
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573
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December 31,
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|||||
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2013
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2012
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|||
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(Dollars in millions)
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|||||
Balance sheets summary data:
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|||
Total assets
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$
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51,787
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53,940
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Total long-term debt
(1)
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20,966
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20,605
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Total stockholders' equity
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17,191
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19,289
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(1)
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Total long-term debt is the sum of current maturities of long-term debt and long-term debt on our consolidated balance sheets. For total obligations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Future Contractual Obligations" in Item 7 of this annual report.
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As of December 31,
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2013
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2012
(2)
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2011
(2)
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|||
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(in thousands except for data centers, which are actuals)
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|||||||
Operational metrics:
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Total broadband subscribers
(1)
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5,991
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5,851
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5,655
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Total access lines
(1)
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13,002
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13,751
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14,587
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Total data centers
(3)
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55
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54
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51
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(1)
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Broadband subscribers are customers that purchase high-speed Internet connection service through their existing telephone lines and fiber-optic cables, and access lines are lines reaching from the customers' premises to a connection with the public network.
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(2)
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The prior year numbers have been adjusted to include the operational metrics of our wholly owned subsidiary, El Paso County Telephone Company, which had been previously excluded. The increase (in thousands) related to including El Paso County Telephone Company's broadband subscribers and access lines, in the table above, is approximately 3 and 3, respectively.
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(3)
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Data centers are located throughout North America, Europe and Asia.
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•
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Consumer.
Consists generally of providing strategic and legacy products and services to residential consumers. Our strategic products and services offered to these customers include our broadband, wireless and video services, including our Prism TV services. Our legacy services offered to these customers include local and long-distance service;
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•
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Business.
Consists generally of providing strategic and legacy products and services to commercial, enterprise, global and governmental customers. Our strategic products and services offered to these customers include our private line, broadband, Ethernet, MPLS, Voice over Internet Protocol ("VoIP"), and network management services. Our legacy services offered to these customers include local and long-distance service;
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•
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Wholesale.
Consists generally of providing strategic and legacy products and services to other communications providers. Our strategic products and services offered to these customers are mainly private line (including special access), dedicated internet access, digital subscriber line ("DSL") and MPLS. Our legacy services offered to these customers include the resale of our services, the sale of unbundled network elements ("UNEs") which allow our wholesale customers to use our network or a combination of our network and their own networks to provide voice and data services to their customers, long-distance and switched access services and other services, including billing and collection, pole rental, floor space and database services; and
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•
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Data hosting.
Consists primarily of providing colocation, managed hosting and cloud hosting services to commercial, enterprise, global and governmental customers.
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Years Ended December 31,
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Percent Change
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|||||||||||
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2013
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2012
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2011
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2013 vs 2012
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2012 vs 2011
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|||||
Percentage of revenue:
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|||||
Consumer
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33
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%
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34
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%
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35
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%
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(1
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)%
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|
(1
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)%
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Business
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34
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%
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33
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%
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34
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%
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1
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%
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(1
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)%
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Wholesale
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20
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%
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20
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%
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22
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%
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—
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%
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(2
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)%
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Data hosting
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7
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%
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7
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%
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4
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%
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—
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%
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3
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%
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Other operating revenues
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6
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%
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6
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%
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5
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%
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—
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%
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1
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%
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Total
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100
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%
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100
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%
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100
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%
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•
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Broadband.
Our broadband services allow customers to connect to the Internet through their existing telephone lines and fiber-optic cables at high speeds. Substantially all of our broadband subscribers are located within the local service area of our wireline telephone operations;
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•
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Private line.
Private line (including special access, which we market to wholesale and business customers) is a direct circuit or channel specifically dedicated for the purpose of directly connecting two or more sites. Private line offers a high-speed, secure solution for frequent transmission of large amounts of data between sites. We also provide private line transmission services to wireless service providers that use our fiber-optic cables connected to their towers, commonly referred to as fiber to the tower or wireless backhaul services, to support their next generation wireless networks;
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•
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MPLS.
Multi-Protocol Label Switching is standards-approved data networking technology that we provide to support real-time voice and video. This technology allows network operators flexibility to divert and route traffic around link failures, congestion and bottlenecks;
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•
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Managed Hosting.
Managed hosting includes provision of centralized information technology ("IT") infrastructure and a variety of managed services including cloud and traditional computing, application management, back-up, storage, and advanced services including planning, design, implementation and support services;
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•
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Colocation.
Colocation services enable our customers to install their own IT equipment in our state-of-the art facilities through our centralized IT infrastructure;
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•
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Ethernet.
Ethernet services include point-to-point and multi-point configurations that facilitate data transmissions across metropolitan areas and wide area networks. Ethernet services are also used to provide transmission services to wireless service providers that use our fiber-optic cables connected to their towers;
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•
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Video.
Our video services include our facilities-based video, marketed as CenturyLink
TM
Prism
TM
, which is a premium entertainment service that allows our customers to watch hundreds of television or cable channels and record up to four shows on one home digital video recorder. We also offer satellite digital television under an arrangement with DIRECTV that allows us to market, sell and bill for its services under its brand name;
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•
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VoIP.
Voice over Internet Protocol, or VoIP, is a real-time, two-way voice communication service (similar to our traditional voice services) that originates over a broadband connection and often terminates on the PSTN;
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•
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Managed Services.
Managed services represents a blend of network, hosting, cloud, and IT solutions, typically combined with customer premise equipment. These services include development of solutions to customers' communications requirements, end to end deployment and the ongoing operation and proactive management of the solution for the customer. Managed services may also include extensive consulting and complex software development; and
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•
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Wireless Services.
Our wireless services are offered under an agency arrangement with Verizon Wireless that allows us to market, sell and bill for its services under its brand name, primarily to our residential customers who buy these services as part of a bundle with one or more of our other products and services. This arrangement allows us to sell the full complement of Verizon Wireless services. Our current five-year arrangement with Verizon Wireless runs through 2015 and is terminable by either party thereafter.
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•
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Local.
We offer local calling services for our residential and business customers within the local service area of our wireline markets, generally for a fixed monthly charge. These services include a number of enhanced calling features and other services, such as call forwarding, caller identification, conference calling, voice mail, selective call ringing and call waiting, for which we generally charge an additional monthly fee. We also generate revenues from non-recurring services, such as inside wire installation, maintenance services, service activation and reactivation. For our wholesale customers, our local calling service offerings include primarily the resale of our voice services and the sale of UNEs, which allow our wholesale customers to use our network or a combination of our network and their own networks to provide voice and data services to their customers. Local calling services provided to our wholesale customers allow other telecommunications companies the ability to originate or terminate telecommunications services on our network;
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•
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Long-distance.
We offer our residential, business and wholesale customers domestic and international long-distance services and toll-free services. Our international long-distance services include voice calls that either terminate or originate with our customers in the United States;
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•
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ISDN.
We offer integrated services digital network ("ISDN") services, which uses regular telephone lines to support voice, video and data applications;
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•
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WAN.
We offer wide area network ("WAN") services, which allow a local communications network to link to networks in remote locations; and
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•
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Switched access services.
As a part of our wholesale segment operations, we provide various forms of switched access services to wireline and wireless service providers for the use of our facilities to originate and terminate their interstate and intrastate voice transmissions.
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•
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statements concerning the benefits that we expect will result from our operations, investments, transactions and other activities, such as increased revenue or decreased expenditures;
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•
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statements about our anticipated future operating and financial performance, financial position and liquidity, tax position, contingent liabilities, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment and expenditure plans, dividend and stock repurchase plans, capital allocation plans, investment results, financing alternatives and sources, and pricing plans; and
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•
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other similar statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts, many of which are highlighted by words such as “may,” “would,” “could,” “should,” “plan,” “believes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “likely,” “seeks,” “hopes,” or variations or similar expressions.
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•
|
the timing, success and overall effects of competition from a wide variety of competitive providers;
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•
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the risks inherent in rapid technological change, including product displacement;
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•
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the effects of ongoing changes in the regulation of the communications industry, including the outcome of regulatory or judicial proceedings relating to intercarrier compensation, access charges, universal service, broadband deployment, data protection and net neutrality;
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•
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our ability to effectively adjust to changes in the communications industry, and changes in our markets, product mix and network caused by our recent acquisitions;
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•
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our ability to successfully integrate recently-acquired operations into our incumbent operations, including the possibility that the anticipated benefits from our recent acquisitions cannot be fully realized in a timely manner or at all;
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•
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our ability to effectively manage our expansion opportunities, including retaining and hiring key personnel;
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•
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possible changes in the demand for, or pricing of, our products and services, including our ability to effectively respond to increased demand for high-speed broadband service;
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•
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our ability to successfully introduce new product or service offerings on a timely and cost-effective basis;
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•
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the adverse impact on our business and network from possible equipment failures, security breaches or similar attacks on our network;
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•
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our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages;
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•
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our ability to use our net operating loss carryforwards in projected amounts;
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•
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our continued access to credit markets on favorable terms;
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•
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our ability to collect our receivables from financially troubled communications companies;
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•
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our ability to maintain favorable relations with our key business partners, suppliers, vendors, landlords and financial institutions;
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•
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any adverse developments in legal or regulatory proceedings involving us;
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•
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changes in our operating plans, corporate strategies, dividend payment plans or other capital allocation plans, including those caused by changes in our cash requirements, capital expenditure needs, debt obligations, pension funding requirements, cash flows, or financial position, or other similar changes;
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•
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the effects of adverse weather;
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•
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other risks referenced in this annual report or other of our filings with the SEC; and
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•
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the effects of more general factors such as changes in interest rates, in tax laws, in accounting policies or practices, in operating, medical, pension or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.
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•
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an increased focus on selling a broader range of higher-growth strategic services, which are described in detail elsewhere in this annual report;
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•
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an increased focus on serving a broader range of business, governmental and wholesale customers;
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•
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greater use of service bundles; and
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•
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acquisitions to increase our scale and strengthen our product offerings, including new products and services provided by our data hosting segment.
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•
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power losses or physical damage, whether caused by fire, adverse weather conditions, terrorism or otherwise;
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•
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capacity or system configurance limitations;
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•
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software and hardware obsolescence, defects or malfunctions;
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•
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programming, processing and other human error; and
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•
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other disruptions that are beyond our control.
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•
|
disrupt the proper functioning of these networks and systems and therefore our operations or those of certain of our customers;
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•
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result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our customers’ end users, including trade secrets, which others could use for competitive, disruptive, destructive or otherwise harmful purposes and outcomes;
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•
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require significant management attention or financial resources to remedy the damages that result or to change our systems, including expenses to repair systems, add new personnel or develop additional protective systems;
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•
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require us to offer expensive incentives to retain existing customers or subject us to claims for contract breach, damages, credits, fines, penalties, termination or other remedies, particularly with respect to service standards set by state regulatory commissions; or
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•
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result in a loss of business, damage our reputation among our customers and the public generally, subject us to additional regulatory scrutiny or expose us to litigation.
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•
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go bankrupt or experience substantial financial difficulties;
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•
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suffer work stoppages or other labor strife;
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•
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challenge our right to receive payments or services under applicable regulations or the terms of our existing contract arrangements; or
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•
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are otherwise unable or unwilling to make payments or provide services to us.
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•
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we may not have enough cash to pay such dividends due to changes in our cash requirements, capital spending plans, stock repurchase plans, cash flows or financial position;
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•
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the effects of regulatory reform, including any changes to intercarrier compensation, Universal Service Fund or special access rules;
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•
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our desire to maintain or improve the credit ratings on our debt;
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•
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the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and is limited by restricted payment and leverage covenants in our credit facilities and, potentially, the terms of any future indebtedness that we may incur; and
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•
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the amount of dividends that our subsidiaries may distribute to us is subject to restrictions imposed by state law, restrictions that have been or may be imposed by state regulators in connection with obtaining necessary approvals for our acquisitions, and restrictions imposed by the terms of credit facilities applicable to certain subsidiaries and, potentially, the terms of any future indebtedness that these subsidiaries may incur.
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•
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the inability to successfully combine our businesses in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the acquisitions, either due to technological challenges, personnel shortages, strikes or otherwise, any of which would result in the anticipated benefits of the acquisitions not being realized partly or wholly in the time frame anticipated or at all;
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•
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delays or limitations in connection with offering new products or providing current ones arising out of the multiplicity of different legacy systems, network and processes used by each of the companies;
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•
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the complexities associated with managing the combined businesses out of several different locations and integrating personnel from multiple companies, while at the same time attempting to provide consistent, high-quality products and services under a unified culture;
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•
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the difficulties of producing combined financial information using dispersed personnel with different past practices, including the attendant risk of errors;
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•
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the complexities of combining companies with different histories, regulatory restrictions, cost structures, products, sales forces, markets, marketing strategies, and customer bases;
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•
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the failure to retain key employees, some of whom could be critical to integrating, operating or expanding the companies;
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•
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potential unknown liabilities and unforeseen increased expenses or regulatory conditions associated with the acquisitions; and
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•
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performance shortfalls at one or all of the companies as a result of the diversion of management’s attention caused by integrating the companies’ operations.
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•
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tax, licensing, currency, political or other business restrictions or requirements;
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•
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import and export restrictions;
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•
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longer payment cycles and problems collecting accounts receivable;
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•
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additional U.S. and other regulation of non-domestic operations, including regulation under the Foreign Corrupt Practices Act, or FCPA, as well as other anti-corruption laws;
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•
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economic, social and political instability, with the attendant risks of terrorism, kidnapping, extortion, civic unrest and potential seizure or nationalization of assets;
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•
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fluctuations in currency exchange rates;
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•
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the ability to secure and maintain the necessary physical and telecommunications infrastructure;
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•
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the inability to enforce contract rights either due to underdeveloped legal systems or government actions that result in a deprivation of contract rights;
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•
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laws, policies or practices that limit the scope of operations that can legally or practicably be conducted within any particular country; and
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•
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challenges in staffing and managing foreign operations.
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•
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limiting the ability of CenturyLink and its subsidiaries to access the capital markets;
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•
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exposing CenturyLink and its subsidiaries to the risk of credit rating downgrades, as described further below;
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•
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hindering our flexibility to plan for or react to changing market, industry or economic conditions;
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•
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limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses;
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•
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making us more vulnerable to economic or industry downturns, including interest rate increases;
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•
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placing us at a competitive disadvantage compared to less leveraged competitors;
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•
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increasing the risk that we will need to sell securities or assets, possibly on unfavorable terms, or reduce or terminate our dividend payments, to meet payment obligations; or
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•
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increasing the risk that we may not meet the financial covenants contained in our debt agreements or timely make all required debt payments.
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•
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revenues and cash provided by operations decline;
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•
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economic conditions weaken, competitive pressures increase or regulatory requirements change;
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•
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we engage in any acquisitions or undertake substantial capital projects or other initiatives that increase our cash requirements;
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•
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we are required to contribute a material amount of cash to our pension plans;
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•
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we are required to begin to pay other post-retirement benefits earlier than anticipated;
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•
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our payments of federal taxes increase faster or in greater amounts than currently anticipated; or
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•
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we become subject to significant judgments or settlements in one or more of the matters discussed in Note 15—Commitments and Contingencies to our consolidated financial statements included elsewhere in this annual report.
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•
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adversely affect the market price of some or all of our outstanding debt or equity securities;
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•
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limit our access to the capital markets or otherwise adversely affect the availability of other new financing on favorable terms, if at all;
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•
|
trigger the application of restrictive covenants in certain of our debt agreements or result in new or more restrictive covenants in agreements governing the terms of any future indebtedness that we may incur;
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•
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increase our cost of borrowing; and
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•
|
impair our business, financial condition and results of operations.
|
•
|
decreases in investment returns on funds held by our pension and other benefit plan trusts;
|
•
|
changes in prevailing interest rates and the discount rate used to calculate pension and other post-retirement expenses;
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•
|
increases in healthcare costs generally or claims submitted under our healthcare plans specifically;
|
•
|
the continuing implementation of the Patient Protection and Affordable Care Act, and the related reconciliation act and regulations promulgated thereunder;
|
•
|
increases in the number of retirees who elect to receive lump sum benefit payments;
|
•
|
changes in plan benefits; and
|
•
|
changes in funding laws or regulations.
|
|
December 31,
|
||||
|
2013
|
|
2012
|
||
Land
|
2
|
%
|
|
2
|
%
|
Fiber, conduit and other outside plant
(1)
|
41
|
%
|
|
40
|
%
|
Central office and other network electronics
(2)
|
35
|
%
|
|
35
|
%
|
Support assets
(3)
|
19
|
%
|
|
20
|
%
|
Construction in progress
(4)
|
3
|
%
|
|
3
|
%
|
Gross property, plant and equipment
|
100
|
%
|
|
100
|
%
|
(1)
|
Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
|
(2)
|
Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
|
(3)
|
Support assets consist of buildings, computers and other administrative and support equipment.
|
(4)
|
Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
|
|
Sales Price
|
|
Dividend per
Common Share
|
||||||
|
High
|
|
Low
|
|
|||||
2013
|
|
|
|
|
|
||||
First quarter
|
$
|
42.01
|
|
|
32.05
|
|
|
0.540
|
|
Second quarter
|
38.40
|
|
|
33.83
|
|
|
0.540
|
|
|
Third quarter
|
36.49
|
|
|
31.21
|
|
|
0.540
|
|
|
Fourth quarter
|
34.18
|
|
|
29.93
|
|
|
0.540
|
|
|
2012
|
|
|
|
|
|
||||
First quarter
|
$
|
40.54
|
|
|
36.25
|
|
|
0.725
|
|
Second quarter
|
39.89
|
|
|
36.91
|
|
|
0.725
|
|
|
Third quarter
|
43.43
|
|
|
38.96
|
|
|
0.725
|
|
|
Fourth quarter
|
40.49
|
|
|
36.52
|
|
|
0.725
|
|
|
Total Number of
Shares Purchased
|
|
Average Price
Paid Per
Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Approximate Dollar
Value of Shares That
May Yet Be Purchased
Under the Plans or
Programs
|
||||||
Period
|
|
|
|
|
|
|
|
||||||
October 2013
|
2,408,671
|
|
|
$
|
32.34
|
|
|
2,408,671
|
|
|
$
|
686,036,210
|
|
November 2013
|
1,532,500
|
|
|
32.21
|
|
|
1,532,500
|
|
|
636,682,039
|
|
||
December 2013
|
6,567,188
|
|
|
31.01
|
|
|
6,567,188
|
|
|
433,043,700
|
|
||
Total
|
10,508,359
|
|
|
31.49
|
|
|
10,508,359
|
|
|
|
|
|
Total Number of
Shares Withheld
for Taxes
|
|
Average Price Paid
Per Share
|
|||
Period
|
|
|
|
|||
October 2013
|
31,695
|
|
|
$
|
31.40
|
|
November 2013
|
19,190
|
|
|
32.10
|
|
|
December 2013
|
7,245
|
|
|
32.00
|
|
|
Total
|
58,130
|
|
|
|
|
|
Years Ended December 31,
(1)
|
||||||||||||||
|
2013
(2)
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||
|
(Dollars in millions, except per share amounts
and shares in thousands)
|
||||||||||||||
Operating revenues
|
$
|
18,095
|
|
|
18,376
|
|
|
15,351
|
|
|
7,042
|
|
|
4,974
|
|
Operating expenses
|
16,642
|
|
|
15,663
|
|
|
13,326
|
|
|
4,982
|
|
|
3,741
|
|
|
Operating income
|
$
|
1,453
|
|
|
2,713
|
|
|
2,025
|
|
|
2,060
|
|
|
1,233
|
|
Income before income tax expense
|
224
|
|
|
1,250
|
|
|
948
|
|
|
1,531
|
|
|
813
|
|
|
Net (loss) income
|
(239
|
)
|
|
777
|
|
|
573
|
|
|
948
|
|
|
647
|
|
|
Basic (loss) earnings per common share
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
|
3.13
|
|
|
3.23
|
|
|
Diluted (loss) earnings per common share
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
|
3.13
|
|
|
3.23
|
|
|
Dividends declared per common share
|
2.16
|
|
|
2.90
|
|
|
2.90
|
|
|
2.90
|
|
|
2.80
|
|
|
Weighted average basic common shares outstanding
|
600,892
|
|
|
620,205
|
|
|
532,780
|
|
|
300,619
|
|
|
198,813
|
|
|
Weighted average diluted common shares outstanding
|
600,892
|
|
|
622,285
|
|
|
534,121
|
|
|
301,297
|
|
|
199,057
|
|
(1)
|
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations" in Item 7 of this annual report for a discussion of unusual items affecting the results for the years ended December 31,
2013
,
2012
and
2011
.
|
(2)
|
We recorded a non-cash, non-tax-deductible goodwill impairment charge of
$1.092 billion
for goodwill attributed to our data hosting segment and a litigation settlement charge of
$235 million
recorded in 2013.
|
|
Years Ended December 31,
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||
|
(Dollars in millions)
|
||||||||||||||
Net property, plant and equipment
(1)
|
$
|
18,646
|
|
|
18,909
|
|
|
19,361
|
|
|
8,754
|
|
|
9,097
|
|
Goodwill
(2) (3)
|
20,674
|
|
|
21,627
|
|
|
21,627
|
|
|
10,261
|
|
|
10,252
|
|
|
Total assets
|
51,787
|
|
|
53,940
|
|
|
55,964
|
|
|
22,038
|
|
|
22,563
|
|
|
Total long-term debt
(4)
|
20,966
|
|
|
20,605
|
|
|
21,836
|
|
|
7,328
|
|
|
7,754
|
|
|
Total stockholders' equity
(2)
|
17,191
|
|
|
19,289
|
|
|
20,827
|
|
|
9,647
|
|
|
9,467
|
|
(1)
|
We have reclassified certain prior year balance sheet amounts presented in our Annual Report on Form 10-K for the year ended December 31, 2012 and 2011 to conform to the current period presentation. Specifically, we have reclassified
$123 million
and
$83 million
in software development costs, net of
$30 million
and
$8 million
in accumulated amortization, from property, plant and equipment to other intangible assets on our consolidated balance sheet as of December 31, 2012,and 2011, respectively. We have also reclassified $28 million and $8 million from depreciation expense to amortization expense in our statements of operations for the years ended December 31, 2012 and 2011, respectively. The correction of the error did not have an effect on our consolidated statements of operations or our consolidated statements of cash flows for the years ended December 31, 2012 and 2011.
|
(2)
|
We recorded a non-cash, non-tax-deductible goodwill impairment charge of
$1.092 billion
during 2013 for goodwill attributed to our data hosting segment.
|
(3)
|
During the year ended December 31, 2013, we recorded a correction of an error related to an overstatement of our net deferred tax liability recorded in connection with the purchase accounting of Savvis and Qwest in 2011. Therefore, we recognized a
$105 million
decrease in our net deferred tax liability and a
$105 million
reduction to goodwill on our consolidated balance sheets as of December 31, 2012 and 2011. The correction of the error did not have an effect on our consolidated statements of operations or our consolidated statements of cash flows for the years ended December 31, 2012 and 2011.
|
(4)
|
Total long-term debt is the sum of current maturities of long-term debt and long-term debt on our consolidated balance sheets. For total obligations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Future Contractual Obligations" in Item 7 of this annual report.
|
|
Years Ended December 31,
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||
|
(Dollars in millions)
|
||||||||||||||
Net cash provided by operating activities
|
$
|
5,559
|
|
|
6,065
|
|
|
4,201
|
|
|
2,045
|
|
|
1,574
|
|
Net cash used in investing activities
|
(3,148
|
)
|
|
(2,690
|
)
|
|
(3,647
|
)
|
|
(859
|
)
|
|
(679
|
)
|
|
Net cash used in financing activities
|
(2,454
|
)
|
|
(3,295
|
)
|
|
(577
|
)
|
|
(1,175
|
)
|
|
(976
|
)
|
|
Payments for property, plant and equipment and capitalized software
|
(3,048
|
)
|
|
(2,919
|
)
|
|
(2,411
|
)
|
|
(864
|
)
|
|
(755
|
)
|
|
Years Ended December 31,
|
|||||||||||||
|
2013
|
|
2012
(2)
|
|
2011
(2)
|
|
2010
|
|
2009
|
|||||
|
(in thousands except for data centers, which are actuals)
|
|||||||||||||
Total broadband subscribers
(1)
|
5,991
|
|
|
5,851
|
|
|
5,655
|
|
|
2,349
|
|
|
2,186
|
|
Total access lines
(1)
|
13,002
|
|
|
13,751
|
|
|
14,587
|
|
|
6,489
|
|
|
7,025
|
|
Total data centers
(3)
|
55
|
|
|
54
|
|
|
51
|
|
|
—
|
|
|
—
|
|
(1)
|
Broadband subscribers are customers that purchase high-speed Internet connection service through their existing telephone lines and fiber-optic cables, and access lines are lines reaching from the customers' premises to a connection with the public network.
|
(2)
|
The prior year numbers have been adjusted to include the operational metrics of our wholly owned subsidiary, El Paso County Telephone Company, which had been previously excluded. The increase (in thousands) related to including El Paso County Telephone Company's broadband subscribers and access lines, in the table above, is approximately 3 and 3, respectively.
|
(3)
|
Data centers are located throughout North America, Europe and Asia.
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Cost of services and products:
|
|
|
|
|
|
||||
Integration and other expenses associated with acquisitions
|
$
|
15
|
|
|
22
|
|
|
43
|
|
Severance expenses, accelerated recognition of share-based awards and retention compensation associated with acquisitions
|
—
|
|
|
—
|
|
|
24
|
|
|
Total
|
$
|
15
|
|
|
22
|
|
|
67
|
|
Selling, general and administrative:
|
|
|
|
|
|
||||
Expenses incurred to effect acquisitions
|
$
|
—
|
|
|
—
|
|
|
79
|
|
Integration and other expenses associated with acquisitions
|
28
|
|
|
25
|
|
|
172
|
|
|
Severance expenses, accelerated recognition of share-based awards and retention compensation associated with acquisitions
|
10
|
|
|
36
|
|
|
149
|
|
|
Total
|
$
|
38
|
|
|
61
|
|
|
400
|
|
•
|
Consumer.
Consists generally of providing strategic and legacy products and services to residential consumers. Our strategic products and services offered to these customers include our broadband, wireless and video services, including our Prism TV services. Our legacy services offered to these customers include local and long-distance service.
|
•
|
Business.
Consists generally of providing strategic and legacy products and services to commercial, enterprise, global and governmental customers. Our strategic products and services offered to these customers include our private line, broadband, Ethernet, Multiprotocol Label Switching ("MPLS"), Voice over Internet Protocol ("VoIP"), and network management services. Our legacy services offered to these customers include local and long-distance service.
|
•
|
Wholesale.
Consists generally of providing strategic and legacy products and services to other communications providers. Our strategic products and services offered to these customers are mainly private line (including special access), dedicated internet access, digital subscriber line ("DSL") and MPLS. Our legacy services offered to these customers include the resale of our services, the sale of unbundled network elements ("UNEs") which allow our wholesale customers to use our network or a combination of our network and their own networks to provide voice and data services to their customers, long-distance and switched access services and other services, including billing and collection, pole rental, floor space and database services.
|
•
|
Data hosting.
Consists primarily of providing colocation, managed hosting and cloud hosting services to commercial, enterprise, global and governmental customers.
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions except
per share amounts)
|
||||||||
Operating revenues
|
$
|
18,095
|
|
|
18,376
|
|
|
15,351
|
|
Operating expenses
|
16,642
|
|
|
15,663
|
|
|
13,326
|
|
|
Operating income
|
1,453
|
|
|
2,713
|
|
|
2,025
|
|
|
Other income (expense)
|
(1,229
|
)
|
|
(1,463
|
)
|
|
(1,077
|
)
|
|
Income tax expense
|
463
|
|
|
473
|
|
|
375
|
|
|
Net (loss) income
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
Basic (loss) earnings per common share
|
$
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
Diluted (loss) earnings per common share
|
$
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
|
As of December 31,
|
|||||||
|
2013
|
|
2012
(2)
|
|
2011
(2)
|
|||
|
(in thousands except for data centers, which are actuals)
|
|||||||
Operational metrics:
|
|
|
|
|
|
|||
Total broadband subscribers
(1)
|
5,991
|
|
|
5,851
|
|
|
5,655
|
|
Total access lines
(1)
|
13,002
|
|
|
13,751
|
|
|
14,587
|
|
Total data centers
(3)
|
55
|
|
|
54
|
|
|
51
|
|
Total employees
|
46.6
|
|
|
47.0
|
|
|
49.2
|
|
(1)
|
Broadband subscribers are customers that purchase high-speed Internet connection service through their existing telephone lines and fiber-optic cables, and access lines are lines reaching from the customers' premises to a connection with the public network.
|
(2)
|
The prior year numbers have been adjusted to include the operational metrics of our wholly owned subsidiary, El Paso County Telephone Company, which had been previously excluded. The increase (in thousands) related to including El Paso County Telephone Company's broadband subscribers and access lines, in the table above, is approximately 3 and 3, respectively.
|
(3)
|
Data centers are located throughout North America, Europe and Asia.
|
•
|
promote long-term relationships with our customers through bundling of integrated services;
|
•
|
provide new services, such as video, cloud hosting, managed hosting, colocation and other additional services that may become available in the future due to, among other things, advances in technology or improvements in our infrastructure;
|
•
|
provide our broadband and premium services to a higher percentage of our customers;
|
•
|
pursue acquisitions of additional assets if available at attractive prices;
|
•
|
increase usage of our networks; and
|
•
|
market our products and services to new customers.
|
•
|
Strategic services
, which include primarily broadband, private line (including special access, which we market to wholesale and business customers), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including our facilities-based video services, which we now offer in twelve markets, and our resold satellite service), VoIP and Verizon Wireless services;
|
•
|
Legacy services
, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);
|
•
|
Data integration
, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and
|
•
|
Other revenues,
which consists primarily of USF revenue and surcharges. Unlike the first three revenue categories, other revenues are not included in our segment revenues.
|
|
Years Ended December 31,
|
|
|
|||||||||
|
2013
|
|
2012
|
|
Increase / (Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Strategic services
|
$
|
8,822
|
|
|
8,427
|
|
|
395
|
|
|
5
|
%
|
Legacy services
|
7,617
|
|
|
8,221
|
|
|
(604
|
)
|
|
(7
|
)%
|
|
Data integration
|
656
|
|
|
672
|
|
|
(16
|
)
|
|
(2
|
)%
|
|
Other
|
1,000
|
|
|
1,056
|
|
|
(56
|
)
|
|
(5
|
)%
|
|
Total operating revenues
|
$
|
18,095
|
|
|
18,376
|
|
|
(281
|
)
|
|
(2
|
)%
|
|
Years Ended
December 31,
|
|
Increase / (Decrease)
|
|||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||||
Strategic services
|
$
|
8,427
|
|
|
6,313
|
|
|
322
|
|
|
1,207
|
|
|
585
|
|
|
2,114
|
|
Legacy services
|
8,221
|
|
|
7,621
|
|
|
(648
|
)
|
|
1,248
|
|
|
—
|
|
|
600
|
|
|
Data integration
|
672
|
|
|
537
|
|
|
19
|
|
|
116
|
|
|
—
|
|
|
135
|
|
|
Other
|
1,056
|
|
|
880
|
|
|
44
|
|
|
132
|
|
|
—
|
|
|
176
|
|
|
Total operating revenues
|
$
|
18,376
|
|
|
15,351
|
|
|
(263
|
)
|
|
2,703
|
|
|
585
|
|
|
3,025
|
|
•
|
Cost of services and products (exclusive of depreciation and amortization)
are expenses incurred in providing products and services to our customers. These expenses include: employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which include third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales expenses (such as data integration and modem expenses); costs for universal service funds ("USF") (which are federal and state funds that are established to promote the availability of telecommunications services to all consumers at reasonable and affordable rates, among other things, and to which we are often required to contribute); litigation expenses associated with our operations; and other expenses directly related to our network and hosting operations.
|
•
|
Selling, general and administrative expenses
are corporate overhead and other operating expenses. These expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions; marketing and advertising; property and other operating taxes and fees; external commissions; litigation expenses associated with general matters; bad debt expense; and other selling, general and administrative expenses.
|
|
Years Ended
December 31,
|
|
|
|
|
|||||||
|
2013
|
|
2012
|
|
Increase / (Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Cost of services and products (exclusive of depreciation and amortization)
|
$
|
7,507
|
|
|
7,639
|
|
|
(132
|
)
|
|
(2
|
)%
|
Selling, general and administrative
|
3,502
|
|
|
3,244
|
|
|
258
|
|
|
8
|
%
|
|
Depreciation and amortization
|
4,541
|
|
|
4,780
|
|
|
(239
|
)
|
|
(5
|
)%
|
|
Impairment of goodwill
|
1,092
|
|
|
—
|
|
|
1,092
|
|
|
100
|
%
|
|
Total operating expenses
|
$
|
16,642
|
|
|
15,663
|
|
|
979
|
|
|
6
|
%
|
|
Years Ended
December 31,
|
|
Increase / (Decrease)
|
|||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||||
Cost of services and products (exclusive of depreciation and amortization)
|
$
|
7,639
|
|
|
6,325
|
|
|
(73
|
)
|
|
1,082
|
|
|
305
|
|
|
1,314
|
|
Selling, general and administrative
|
3,244
|
|
|
2,975
|
|
|
(367
|
)
|
|
483
|
|
|
153
|
|
|
269
|
|
|
Depreciation and amortization
|
4,780
|
|
|
4,026
|
|
|
(149
|
)
|
|
741
|
|
|
162
|
|
|
754
|
|
|
Total operating expenses
|
$
|
15,663
|
|
|
13,326
|
|
|
(589
|
)
|
|
2,306
|
|
|
620
|
|
|
2,337
|
|
|
Years Ended
December 31,
|
|
|
|||||||||
|
2013
|
|
2012
|
|
Increase / (Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Interest expense
|
$
|
(1,298
|
)
|
|
(1,319
|
)
|
|
(21
|
)
|
|
(2
|
)%
|
Net gain (loss) on early retirement of debt
|
10
|
|
|
(179
|
)
|
|
189
|
|
|
106
|
%
|
|
Other income (expense)
|
59
|
|
|
35
|
|
|
24
|
|
|
69
|
%
|
|
Total other income (expense)
|
$
|
(1,229
|
)
|
|
(1,463
|
)
|
|
(234
|
)
|
|
(16
|
)%
|
Income tax expense
|
$
|
463
|
|
|
473
|
|
|
(10
|
)
|
|
(2
|
)%
|
|
Years Ended
December 31,
|
|
Increase / (Decrease)
|
|||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||||
Interest expense
|
$
|
(1,319
|
)
|
|
(1,072
|
)
|
|
62
|
|
|
169
|
|
|
16
|
|
|
247
|
|
Net loss on early retirement of debt
|
(179
|
)
|
|
(8
|
)
|
|
179
|
|
|
(8
|
)
|
|
—
|
|
|
171
|
|
|
Other income (expense)
|
35
|
|
|
3
|
|
|
32
|
|
|
(1
|
)
|
|
1
|
|
|
32
|
|
|
Total other income (expense)
|
$
|
(1,463
|
)
|
|
(1,077
|
)
|
|
273
|
|
|
160
|
|
|
17
|
|
|
386
|
|
Income tax expense
|
$
|
473
|
|
|
375
|
|
|
nm
|
|
|
nm
|
|
|
nm
|
|
|
98
|
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
|
|
(Dollars in millions)
|
||||||
Total segment revenues
|
$
|
17,095
|
|
|
17,320
|
|
|
14,471
|
|
Total segment expenses
|
8,249
|
|
|
8,244
|
|
|
6,623
|
|
|
Total segment income
|
$
|
8,846
|
|
|
9,076
|
|
|
7,848
|
|
Total margin percentage
|
52
|
%
|
|
52
|
%
|
|
54
|
%
|
|
Consumer:
|
|
|
|
|
|
||||
Revenues
|
$
|
6,004
|
|
|
6,162
|
|
|
5,384
|
|
Expenses
|
2,231
|
|
|
2,291
|
|
|
1,972
|
|
|
Income
|
$
|
3,773
|
|
|
3,871
|
|
|
3,412
|
|
Margin percentage
|
63
|
%
|
|
63
|
%
|
|
63
|
%
|
|
Business:
|
|
|
|
|
|
||||
Revenues
|
$
|
6,136
|
|
|
6,133
|
|
|
5,150
|
|
Expenses
|
3,769
|
|
|
3,743
|
|
|
3,068
|
|
|
Income
|
$
|
2,367
|
|
|
2,390
|
|
|
2,082
|
|
Margin percentage
|
39
|
%
|
|
39
|
%
|
|
40
|
%
|
|
Wholesale:
|
|
|
|
|
|
||||
Revenues
|
$
|
3,579
|
|
|
3,725
|
|
|
3,314
|
|
Expenses
|
1,158
|
|
|
1,230
|
|
|
1,137
|
|
|
Income
|
$
|
2,421
|
|
|
2,495
|
|
|
2,177
|
|
Margin percentage
|
68
|
%
|
|
67
|
%
|
|
66
|
%
|
|
Data hosting:
|
|
|
|
|
|
||||
Revenues
|
$
|
1,376
|
|
|
1,300
|
|
|
623
|
|
Expenses
|
1,091
|
|
|
980
|
|
|
446
|
|
|
Income
|
$
|
285
|
|
|
320
|
|
|
177
|
|
Margin percentage
|
21
|
%
|
|
25
|
%
|
|
28
|
%
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Total segment revenues
|
$
|
17,095
|
|
|
17,320
|
|
|
14,471
|
|
Other operating revenues
|
1,000
|
|
|
1,056
|
|
|
880
|
|
|
Operating revenues reported in our consolidated statements of operations
|
$
|
18,095
|
|
|
18,376
|
|
|
15,351
|
|
Total segment income
|
$
|
8,846
|
|
|
9,076
|
|
|
7,848
|
|
Other operating revenues
|
1,000
|
|
|
1,056
|
|
|
880
|
|
|
Depreciation and amortization
|
(4,541
|
)
|
|
(4,780
|
)
|
|
(4,026
|
)
|
|
Impairment of goodwill (Note 3)
|
(1,092
|
)
|
|
—
|
|
|
—
|
|
|
Other unassigned operating expenses
|
(2,760
|
)
|
|
(2,639
|
)
|
|
(2,677
|
)
|
|
Operating income reported in our consolidated statement of operations
|
$
|
1,453
|
|
|
2,713
|
|
|
2,025
|
|
•
|
Direct expenses,
which primarily are specific expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities; and
|
•
|
Allocated expenses,
which include network expenses, facilities expenses and other expenses such as fleet and real estate expenses.
|
•
|
Strategic services.
In order to remain competitive and attract additional residential broadband subscribers, we believe it is important to continually increase our broadband network's scope and connection speeds. As a result, we continue to invest in our broadband network, which allows for the delivery of higher speed broadband services to a greater number of customers. We compete in a maturing broadband market in which most consumers already have broadband services and growth rates in new subscribers have slowed. Moreover, as described further in Items 1 and 1A of this annual report, demand for our broadband services could be adversely affected by competitors providing services at higher broadband speed than ours or using advanced wireless data technologies. We also continue to expand our strategic product offerings, including facilities-based video services. The expansion of our facilities-based video service infrastructure requires us to incur start-up expenses in advance of the revenue that this service is expected to generate. Although, over time, we expect that our revenue for facilities-based video services will offset the expenses incurred, the timing of this revenue growth is uncertain. We believe these efforts will improve our ability to compete and increase our strategic revenues;
|
•
|
Legacy services.
Our voice revenues have been, and we expect they will continue to be, adversely affected by access line losses. Intense competition and product substitution continue to drive our access line losses. For example, many consumers are substituting cable and wireless voice services and electronic mail, texting and social networking non-voice services for traditional voice telecommunications services. We expect that these factors will continue to negatively impact our business. As a result of the expected loss of revenues associated with access lines, we continue to offer our customers service bundling and other product promotions to help mitigate this trend, as described below;
|
•
|
Service bundling and product promotions.
We offer our customers the ability to bundle multiple products and services. These customers can bundle local services with other services such as broadband, video, long-distance and wireless. While we believe our bundled service offerings can help retain customers, they also tend to lower our profit margins in the consumer segment; and
|
•
|
Operating efficiencies.
We continue to evaluate our operating structure and focus. This involves balancing our segment workforce in response to our workload requirements, productivity improvements and changes in industry, competitive, technological and regulatory conditions.
|
|
Consumer Segment
|
|||||||||||
|
Years Ended December 31,
|
|
Increase /
|
|
|
|||||||
|
2013
|
|
2012
|
|
(Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|||||
Strategic services
|
$
|
2,650
|
|
|
2,474
|
|
|
176
|
|
|
7
|
%
|
Legacy services
|
3,349
|
|
|
3,681
|
|
|
(332
|
)
|
|
(9
|
)%
|
|
Data integration
|
5
|
|
|
7
|
|
|
(2
|
)
|
|
(29
|
)%
|
|
Total revenues
|
6,004
|
|
|
6,162
|
|
|
(158
|
)
|
|
(3
|
)%
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|||||
Direct
|
1,758
|
|
|
1,796
|
|
|
(38
|
)
|
|
(2
|
)%
|
|
Allocated
|
473
|
|
|
495
|
|
|
(22
|
)
|
|
(4
|
)%
|
|
Total expenses
|
2,231
|
|
|
2,291
|
|
|
(60
|
)
|
|
(3
|
)%
|
|
Segment income
|
$
|
3,773
|
|
|
3,871
|
|
|
(98
|
)
|
|
(3
|
)%
|
Segment margin percentage
|
63
|
%
|
|
63
|
%
|
|
|
|
|
|
Consumer Segment
|
||||||||||||||
|
Years Ended December 31,
|
|
Increase / (Decrease)
|
||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Total
|
||||||
|
(Dollars in millions)
|
||||||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|
|
||||||
Strategic services
|
$
|
2,474
|
|
|
1,928
|
|
|
190
|
|
|
356
|
|
|
546
|
|
Legacy services
|
3,681
|
|
|
3,449
|
|
|
(253
|
)
|
|
485
|
|
|
232
|
|
|
Data integration
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total revenues
|
6,162
|
|
|
5,384
|
|
|
(63
|
)
|
|
841
|
|
|
778
|
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Direct
|
1,796
|
|
|
1,542
|
|
|
25
|
|
|
229
|
|
|
254
|
|
|
Allocated
|
495
|
|
|
430
|
|
|
(12
|
)
|
|
77
|
|
|
65
|
|
|
Total expenses
|
2,291
|
|
|
1,972
|
|
|
13
|
|
|
306
|
|
|
319
|
|
|
Segment income
|
$
|
3,871
|
|
|
3,412
|
|
|
(76
|
)
|
|
535
|
|
|
459
|
|
Segment margin percentage
|
63
|
%
|
|
63
|
%
|
|
|
|
|
|
|
•
|
Strategic services.
Our mix of total segment revenues continues to migrate from legacy services to strategic services as our commercial, enterprise, global and governmental customers increasingly demand customized and integrated data, Internet and voice services. We offer diverse combinations of emerging technology products and services such as private line, MPLS, and VoIP services. We believe these services afford our customers more flexibility in managing their communications needs and improve the effectiveness and efficiency of their operations. Although we are experiencing price compression on our strategic services due to competition, we expect strategic revenues from these services to continue to grow during 2013;
|
•
|
Legacy services.
We face intense competition with respect to our legacy services and continue to see customers migrating away from these services and into strategic services. In addition, our legacy services revenues have been, and we expect they will continue to be, adversely affected by access line losses and price compression;
|
•
|
Data integration.
We expect both data integration revenue and the related costs will fluctuate from quarter to quarter as this offering tends to be more sensitive than others to changes in the economy and in spending trends of our federal, state and local governmental customers, many of whom have recently experienced substantial budget cuts with the possibility of additional future budget cuts; and
|
•
|
Operating efficiencies.
We continue to evaluate our operating structure and focus. This involves balancing our segment workforce in response to our workload requirements, productivity improvements and changes in industry, competitive, technological and regulatory conditions, while achieving operational efficiencies and improving our processes through automation. We also expect our business segment to benefit indirectly from efficiencies in our company-wide network operations.
|
|
Business Segment
|
|||||||||||
|
Years Ended December 31,
|
|
Increase /
|
|
|
|||||||
|
2013
|
|
2012
|
|
(Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|||||
Strategic services
|
$
|
2,509
|
|
|
2,356
|
|
|
153
|
|
|
6
|
%
|
Legacy services
|
2,976
|
|
|
3,112
|
|
|
(136
|
)
|
|
(4
|
)%
|
|
Data integration
|
651
|
|
|
665
|
|
|
(14
|
)
|
|
(2
|
)%
|
|
Total revenues
|
6,136
|
|
|
6,133
|
|
|
3
|
|
|
—
|
%
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|||||
Direct
|
3,329
|
|
|
3,285
|
|
|
44
|
|
|
1
|
%
|
|
Allocated
|
440
|
|
|
458
|
|
|
(18
|
)
|
|
(4
|
)%
|
|
Total expenses
|
3,769
|
|
|
3,743
|
|
|
26
|
|
|
1
|
%
|
|
Segment income
|
$
|
2,367
|
|
|
2,390
|
|
|
(23
|
)
|
|
(1
|
)%
|
Segment margin percentage
|
39
|
%
|
|
39
|
%
|
|
|
|
|
|
Business Segment
|
|||||||||||||||||
|
Years Ended December 31,
|
|
Increase / (Decrease)
|
|||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Strategic services
|
$
|
2,356
|
|
|
1,842
|
|
|
44
|
|
|
459
|
|
|
11
|
|
|
514
|
|
Legacy services
|
3,112
|
|
|
2,779
|
|
|
(181
|
)
|
|
514
|
|
|
—
|
|
|
333
|
|
|
Data integration
|
665
|
|
|
529
|
|
|
20
|
|
|
116
|
|
|
—
|
|
|
136
|
|
|
Total revenues
|
6,133
|
|
|
5,150
|
|
|
(117
|
)
|
|
1,089
|
|
|
11
|
|
|
983
|
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Direct
|
3,285
|
|
|
2,751
|
|
|
(77
|
)
|
|
611
|
|
|
—
|
|
|
534
|
|
|
Allocated
|
458
|
|
|
317
|
|
|
62
|
|
|
75
|
|
|
4
|
|
|
141
|
|
|
Total expenses
|
3,743
|
|
|
3,068
|
|
|
(15
|
)
|
|
686
|
|
|
4
|
|
|
675
|
|
|
Segment income
|
$
|
2,390
|
|
|
2,082
|
|
|
(102
|
)
|
|
403
|
|
|
7
|
|
|
308
|
|
Segment margin percentage
|
39
|
%
|
|
40
|
%
|
|
|
|
|
|
|
|
|
•
|
Strategic services.
Demand for our private line services (including special access) has begun to decline due to our customers' optimization of their networks, industry consolidation and technological migration. While we expect that these factors will continue to negatively impact our wholesale segment, we believe the demand for our fiber-based special access services provided to wireless carriers for backhaul will partially offset the decline in copper-based special access services provided to wireless carriers as they migrate to Ethernet services, although the timing and magnitude of this technological migration is uncertain;
|
•
|
Legacy services.
Our access, local services and long-distance revenues have been and we expect will continue to be adversely affected by customer migration to more technologically advanced services, declining demand for traditional voice services, industry consolidation and price compression caused by regulation and rate reductions. For example, wholesale consumers are substituting cable, wireless and VoIP services for traditional voice telecommunications services, resulting in continued access revenue loss. Our switched access revenues have been and will continue to be impacted by changes related to the Connect America and Intercarrier Compensation Reform order ("CAF order") adopted by the Federal Communications Commission ("FCC") on October 27, 2011 that we believe will substantially increase the pace of reductions in the amount of switched access revenues we receive in our wholesale segment. Conversely, the FCC instituted an access recovery charge that we believe will allow us to recover the majority of these lost revenues directly from end users in our consumer and business segments. We expect these factors will continue to adversely impact our wholesale segment; and
|
•
|
Operating efficiencies.
We continue to evaluate our operating structure and focus. This involves balancing our segment workforce in response to our workload requirements, productivity improvements and changes in industry, competitive, technological and regulatory conditions. We also expect our wholesale segment to benefit indirectly from enhanced efficiencies in our company-wide network operations.
|
|
Wholesale Segment
|
|||||||||||
|
Years Ended December 31,
|
|
Increase /
|
|
|
|||||||
|
2013
|
|
2012
|
|
(Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|||||
Strategic services
|
$
|
2,287
|
|
|
2,297
|
|
|
(10
|
)
|
|
—
|
%
|
Legacy services
|
1,292
|
|
|
1,428
|
|
|
(136
|
)
|
|
(10
|
)%
|
|
Total revenues
|
3,579
|
|
|
3,725
|
|
|
(146
|
)
|
|
(4
|
)%
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|||||
Direct
|
169
|
|
|
169
|
|
|
—
|
|
|
—
|
%
|
|
Allocated
|
989
|
|
|
1,061
|
|
|
(72
|
)
|
|
(7
|
)%
|
|
Total expenses
|
1,158
|
|
|
1,230
|
|
|
(72
|
)
|
|
(6
|
)%
|
|
Segment income
|
$
|
2,421
|
|
|
2,495
|
|
|
(74
|
)
|
|
(3
|
)%
|
Segment margin percentage
|
68
|
%
|
|
67
|
%
|
|
|
|
|
|
Wholesale Segment
|
|||||||||||||||||
|
Years Ended December 31,
|
|
Increase / (Decrease)
|
|||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||||
Segment revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Strategic services
|
$
|
2,297
|
|
|
1,920
|
|
|
32
|
|
|
341
|
|
|
4
|
|
|
377
|
|
Legacy services
|
1,428
|
|
|
1,393
|
|
|
(214
|
)
|
|
249
|
|
|
—
|
|
|
35
|
|
|
Data integration
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Total revenues
|
3,725
|
|
|
3,314
|
|
|
(183
|
)
|
|
590
|
|
|
4
|
|
|
411
|
|
|
Segment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Direct
|
169
|
|
|
174
|
|
|
(18
|
)
|
|
13
|
|
|
—
|
|
|
(5
|
)
|
|
Allocated
|
1,061
|
|
|
963
|
|
|
(77
|
)
|
|
175
|
|
|
—
|
|
|
98
|
|
|
Total expenses
|
1,230
|
|
|
1,137
|
|
|
(95
|
)
|
|
188
|
|
|
—
|
|
|
93
|
|
|
Segment income
|
$
|
2,495
|
|
|
2,177
|
|
|
(88
|
)
|
|
402
|
|
|
4
|
|
|
318
|
|
Segment margin percentage
|
67
|
%
|
|
66
|
%
|
|
|
|
|
|
|
|
|
•
|
Colocation.
Colocation is designed for clients seeking data center space and power for their server and networking equipment needs. Our data centers provide our clients around the world with a secure, high-powered, purpose-built location for their IT equipment. We anticipate continued pricing pressure for these services as wholesale vendors continue to expand their enterprise colocation operations; however, we believe that our data center expansion strategy may help mitigate these pricing challenges;
|
•
|
Managed hosting.
Managed hosting services provide a fully managed solution for a customer's IT infrastructure and network needs, and include dedicated and cloud hosting services, utility and computing storage, consulting and managed security services. We believe that competitive cloud computing offerings have led to increased pricing pressure and increased service disconnections by our customers, and expect those trends to continue. However, we remain focused on expanding our managed hosting business, specifically in our cloud service offerings, which we believe is a key to growth. We believe that we have continued to strengthen our cloud offering by adding differentiating features to our cloud products;
|
•
|
Network services.
Network services are comprised of our hosting area network products supporting colocation and managed hosting service offerings. Network services also include managed VPN and bandwidth services. Segment income for these services has been relatively flat due to pricing pressures on VPN and bandwidth services, offset by increases in hosting area network services; and
|
•
|
Operating efficiencies.
We continue to evaluate our operating structure and focus. This involves balancing our segment workforce in response to our workload requirements, productivity improvements and changes in industry, competitive, technological and regulatory conditions.
|
|
Data Hosting Segment
|
|||||||||||
|
Years Ended December 31,
|
|
Increase /
|
|
|
|||||||
|
2013
|
|
2012
|
|
(Decrease)
|
|
% Change
|
|||||
|
(Dollars in millions)
|
|||||||||||
Segment revenues:
|
$
|
1,376
|
|
|
1,300
|
|
|
76
|
|
|
6
|
%
|
Segment expenses:
|
1,091
|
|
|
980
|
|
|
111
|
|
|
11
|
%
|
|
Segment income
|
$
|
285
|
|
|
320
|
|
|
(35
|
)
|
|
(11
|
)%
|
Segment margin percentage
|
21
|
%
|
|
25
|
%
|
|
|
|
|
|
Data Hosting Segment
|
||||||||||||||||||
|
Years Ended December 31,
|
|
Increase / (Decrease)
|
||||||||||||||||
|
2012
|
|
2011
|
|
CenturyLink
|
|
Qwest
|
|
Savvis
|
|
Total
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||||
Segment revenues:
|
$
|
1,300
|
|
|
623
|
|
|
56
|
|
|
51
|
|
|
570
|
|
|
677
|
|
|
Segment expenses:
|
980
|
|
|
446
|
|
|
57
|
|
|
23
|
|
|
454
|
|
|
534
|
|
||
Segment income
|
$
|
320
|
|
|
$
|
177
|
|
|
(1
|
)
|
|
28
|
|
|
116
|
|
|
143
|
|
Segment margin percentage
|
25
|
%
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
||
|
(Dollars in millions)
|
||
Consumer
|
$
|
10,348
|
|
Business
|
6,363
|
|
|
Wholesale
|
3,274
|
|
|
Data hosting
|
689
|
|
|
Total goodwill
|
$
|
20,674
|
|
|
|
|
|
|
Agency
|
|
CenturyLink, Inc.
|
|
Qwest Corporation
|
Standard & Poor's
|
|
BB
|
|
BBB-
|
Moody's Investors Service, Inc.
|
|
Ba2
|
|
Baa3
|
Fitch Ratings
|
|
BB+
|
|
BBB-
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019 and thereafter
|
|
Total
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Long-term debt, including current
maturities and capital lease obligations (excluding unamortized premiums, discounts and other, net.)
|
$
|
785
|
|
|
565
|
|
|
1,493
|
|
|
2,219
|
|
|
246
|
|
|
15,736
|
|
|
21,044
|
|
Interest on long-term debt and
capital leases
(1)
|
1,373
|
|
|
1,316
|
|
|
1,244
|
|
|
1,131
|
|
|
1,088
|
|
|
15,404
|
|
|
21,556
|
|
|
Operating leases
|
297
|
|
|
274
|
|
|
252
|
|
|
232
|
|
|
209
|
|
|
1,391
|
|
|
2,655
|
|
|
Purchase commitments
(2)
|
221
|
|
|
162
|
|
|
86
|
|
|
58
|
|
|
22
|
|
|
79
|
|
|
628
|
|
|
Post-retirement benefit obligation
(3)
|
73
|
|
|
72
|
|
|
70
|
|
|
68
|
|
|
111
|
|
|
992
|
|
|
1,386
|
|
|
Non-qualified pension obligations
(3)
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
21
|
|
|
46
|
|
|
Unrecognized tax benefits
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
|
Other
|
7
|
|
|
7
|
|
|
7
|
|
|
11
|
|
|
7
|
|
|
125
|
|
|
164
|
|
|
Total future contractual obligations
(5)
|
$
|
2,761
|
|
|
2,401
|
|
|
3,157
|
|
|
3,724
|
|
|
1,688
|
|
|
33,792
|
|
|
47,523
|
|
(1)
|
Actual principal and interest paid in all years may differ due to future refinancing of attributing debt or issuance of new debt. Interest on our floating rate debt was calculated for all years using the rates effective at
December 31, 2013
.
|
(2)
|
We have various long-term, non-cancelable purchase commitments for advertising and promotion services, including advertising and marketing at sports arenas and other venues and events. We also have service related commitments with various vendors for data processing, technical and software support services. Future payments under certain service contracts will vary depending on our actual usage. In the table above we estimated payments for these service contracts based on the level of services we expect to receive.
|
(3)
|
Reflects only the portion of total obligation that is contractual in nature; see Note 5 below
|
(4)
|
Represents the amount of tax and interest we would pay for our unrecognized tax benefits. The
$44 million
is composed of unrecognized tax benefits of
$14 million
and related estimated interest and penalties of
$30 million
, which would result in future cash payments if our tax positions were not upheld. See Note 12—Income Taxes to our consolidated financial statements in Item 8 of this annual report for additional information. The timing of any payments for our unrecognized tax benefits cannot be predicted with certainty; therefore, such amount is reflected in the "
2019 and thereafter
" column in the above table.
|
(5)
|
The table is limited to contractual obligations only and does not include:
|
•
|
contingent liabilities;
|
•
|
our open purchase orders as of
December 31, 2013
. These purchase orders are generally issued at fair value, and are generally cancelable without penalty;
|
•
|
other long-term liabilities, such as accruals for legal matters and other taxes that are not contractual obligations by nature. We cannot determine with any degree of reliability the years in which these liabilities might ultimately settle;
|
•
|
cash funding requirements for qualified pension benefits payable to certain eligible current and future retirees. Benefits paid by our qualified pension plans are paid through trusts. Cash funding requirements for these trusts are not included in this table as we are not able to reliably estimate required contributions to the trusts. Our funding projections are discussed further below;
|
•
|
certain post-retirement benefits payable to certain eligible current and future retirees. Not all of our post-retirement benefit obligation amount is a contractual obligation and only the portion that we believe is a contractual obligation is reported in the table. See additional information on our benefits plans in Note 8—Employee Benefits to our consolidated financial statements in Item 8 of this annual report;
|
•
|
contract termination fees. These fees are non-recurring payments, the timing and payment of which, if any, is uncertain. In the ordinary course of business and to optimize our cost structure, we enter into contracts with terms greater than one year to use the network facilities of other carriers and to purchase other goods and services. Our contracts to use other carriers' network facilities generally have no minimum volume requirements and are based on an interrelationship of volumes and discounted rates. Assuming we terminate these contracts in
2014
, the contract termination fees would be approximately
$170 million
. Under the same assumption, termination fees for these contracts to purchase goods and services would be
$166 million
. In the normal course of business, we do not believe payment of these fees is likely; and
|
•
|
potential indemnification obligations to counterparties in certain agreements entered into in the normal course of business. The nature and terms of these arrangements vary. Historically, we have not incurred significant costs related to performance under these types of arrangements.
|
|
Years Ended December 31,
|
|
Increase /
(Decrease)
|
|||||||
|
2013
|
|
2012
|
|
||||||
|
(Dollars in millions)
|
|||||||||
Net cash provided by operating activities
|
$
|
5,559
|
|
|
$
|
6,065
|
|
|
(506
|
)
|
Net cash used in investing activities
|
(3,148
|
)
|
|
(2,690
|
)
|
|
458
|
|
||
Net cash used in financing activities
|
(2,454
|
)
|
|
(3,295
|
)
|
|
(841
|
)
|
|
Years Ended December 31,
|
|
Increase /
(Decrease)
|
|||||||
|
2012
|
|
2011
|
|
||||||
|
(Dollars in millions)
|
|||||||||
Net cash provided by operating activities
|
$
|
6,065
|
|
|
$
|
4,201
|
|
|
1,864
|
|
Net cash used in investing activities
|
(2,690
|
)
|
|
(3,647
|
)
|
|
(957
|
)
|
||
Net cash used in financing activities
|
(3,295
|
)
|
|
(577
|
)
|
|
2,718
|
|
|
Years Ended
December 31,
|
|
Total Since
Acquisition
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
|
||||||
|
(Dollars in millions)
|
|
||||||||||
Amortized
|
$
|
62
|
|
|
86
|
|
|
154
|
|
|
302
|
|
Extinguished
(1)
|
41
|
|
|
177
|
|
|
58
|
|
|
276
|
|
|
Total premiums recognized
|
$
|
103
|
|
|
263
|
|
|
212
|
|
|
578
|
|
(1)
|
See "Debt and Other Financing Arrangements" for more information
|
/s/ R. Stewart Ewing, Jr.
|
|
R. Stewart Ewing, Jr.
Executive Vice President, Chief Financial Officer and Assistant Secretary
|
|
February 27, 2014
|
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions, except per share
amounts and shares in thousands)
|
||||||||
OPERATING REVENUES
|
$
|
18,095
|
|
|
18,376
|
|
|
15,351
|
|
OPERATING EXPENSES
|
|
|
|
|
|
||||
Cost of services and products (exclusive of depreciation and amortization)
|
7,507
|
|
|
7,639
|
|
|
6,325
|
|
|
Selling, general and administrative
|
3,502
|
|
|
3,244
|
|
|
2,975
|
|
|
Depreciation and amortization
|
4,541
|
|
|
4,780
|
|
|
4,026
|
|
|
Impairment of goodwill (Note 3)
|
1,092
|
|
|
—
|
|
|
—
|
|
|
Total operating expenses
|
16,642
|
|
|
15,663
|
|
|
13,326
|
|
|
OPERATING INCOME
|
1,453
|
|
|
2,713
|
|
|
2,025
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||
Interest expense
|
(1,298
|
)
|
|
(1,319
|
)
|
|
(1,072
|
)
|
|
Net gain (loss) on early retirement of debt
|
10
|
|
|
(179
|
)
|
|
(8
|
)
|
|
Other income
|
59
|
|
|
35
|
|
|
3
|
|
|
Total other income (expense)
|
(1,229
|
)
|
|
(1,463
|
)
|
|
(1,077
|
)
|
|
INCOME BEFORE INCOME TAX EXPENSE
|
224
|
|
|
1,250
|
|
|
948
|
|
|
Income tax expense
|
463
|
|
|
473
|
|
|
375
|
|
|
NET (LOSS) INCOME
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
BASIC AND DILUTED (LOSS) EARNINGS PER COMMON SHARE
|
|
|
|
|
|
||||
BASIC
|
$
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
DILUTED
|
$
|
(0.40
|
)
|
|
1.25
|
|
|
1.07
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
||||
BASIC
|
600,892
|
|
|
620,205
|
|
|
532,780
|
|
|
DILUTED
|
600,892
|
|
|
622,285
|
|
|
534,121
|
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
NET (LOSS) INCOME
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
||||
Items related to employee benefit plans:
|
|
|
|
|
|
||||
Change in net actuarial gain (loss), net of $(606), $432 and $508 tax
|
981
|
|
|
(694
|
)
|
|
(812
|
)
|
|
Change in net prior service credit, net of $52, $4 and $23 tax
|
(84
|
)
|
|
(6
|
)
|
|
(37
|
)
|
|
Auction rate securities marked to market, net of $—, $(1) and $2 tax
|
—
|
|
|
2
|
|
|
(4
|
)
|
|
Auction rate securities settlements reclassified to net income, net of $—, $(1) and $— tax
|
—
|
|
|
3
|
|
|
—
|
|
|
Foreign currency translation adjustment and other, net of $—, $— and $2 tax
|
2
|
|
|
6
|
|
|
(18
|
)
|
|
Other comprehensive income (loss)
|
899
|
|
|
(689
|
)
|
|
(871
|
)
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
660
|
|
|
88
|
|
|
(298
|
)
|
|
December 31,
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions
and shares in thousands)
|
|||||
ASSETS
|
|
|
|
|||
CURRENT ASSETS
|
|
|
|
|||
Cash and cash equivalents
|
$
|
168
|
|
|
211
|
|
Accounts receivable, less allowance of $155 and $158
|
1,977
|
|
|
1,917
|
|
|
Income tax receivable
|
—
|
|
|
42
|
|
|
Deferred income taxes, net
|
1,165
|
|
|
916
|
|
|
Other
|
597
|
|
|
552
|
|
|
Total current assets
|
3,907
|
|
|
3,638
|
|
|
NET PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|||
Property, plant and equipment
|
34,307
|
|
|
31,933
|
|
|
Accumulated depreciation
|
(15,661
|
)
|
|
(13,024
|
)
|
|
Net property, plant and equipment
|
18,646
|
|
|
18,909
|
|
|
GOODWILL AND OTHER ASSETS
|
|
|
|
|||
Goodwill
|
20,674
|
|
|
21,627
|
|
|
Customer relationships, net
|
5,935
|
|
|
7,052
|
|
|
Other intangible assets, net
|
1,802
|
|
|
1,918
|
|
|
Other, net
|
823
|
|
|
796
|
|
|
Total goodwill and other assets
|
29,234
|
|
|
31,393
|
|
|
TOTAL ASSETS
|
$
|
51,787
|
|
|
53,940
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|||
CURRENT LIABILITIES
|
|
|
|
|||
Current maturities of long-term debt
|
$
|
785
|
|
|
1,205
|
|
Accounts payable
|
1,111
|
|
|
1,207
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|||
Salaries and benefits
|
650
|
|
|
683
|
|
|
Income and other taxes
|
339
|
|
|
356
|
|
|
Interest
|
273
|
|
|
268
|
|
|
Other
|
514
|
|
|
234
|
|
|
Advance billings and customer deposits
|
737
|
|
|
642
|
|
|
Total current liabilities
|
4,409
|
|
|
4,595
|
|
|
LONG-TERM DEBT
|
20,181
|
|
|
19,400
|
|
|
DEFERRED CREDITS AND OTHER LIABILITIES
|
|
|
|
|||
Deferred income taxes, net
|
4,753
|
|
|
3,564
|
|
|
Benefit plan obligations, net
|
4,049
|
|
|
5,844
|
|
|
Other
|
1,204
|
|
|
1,248
|
|
|
Total deferred credits and other liabilities
|
10,006
|
|
|
10,656
|
|
|
COMMITMENTS AND CONTINGENCIES (Note 15)
|
|
|
|
|||
STOCKHOLDERS' EQUITY
|
|
|
|
|||
Preferred stock — non-redeemable, $25.00 par value, authorized 2,000 shares, issued and outstanding 7 and 7 shares
|
—
|
|
|
—
|
|
|
Common stock, $1.00 par value, authorized 1,600,000 and 1,600,000 shares, issued and outstanding 583,637 and 625,658 shares
|
584
|
|
|
626
|
|
|
Additional paid-in capital
|
17,343
|
|
|
19,079
|
|
|
Accumulated other comprehensive loss
|
(802
|
)
|
|
(1,701
|
)
|
|
Retained earnings
|
66
|
|
|
1,285
|
|
|
Total stockholders' equity
|
17,191
|
|
|
19,289
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
51,787
|
|
|
53,940
|
|
|
Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
(Dollars in millions)
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
4,541
|
|
|
4,780
|
|
|
4,026
|
|
|||
Impairment of goodwill (Note 3)
|
1,092
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
391
|
|
|
394
|
|
|
395
|
|
|||
Provision for uncollectible accounts
|
152
|
|
|
187
|
|
|
153
|
|
|||
Gain on sale of intangible assets
|
(32
|
)
|
|
—
|
|
|
—
|
|
|||
Long-term debt (premium) discount amortization
|
(57
|
)
|
|
(88
|
)
|
|
(148
|
)
|
|||
Net (gain) loss on early retirement of debt
|
(10
|
)
|
|
179
|
|
|
8
|
|
|||
Changes in current assets and current liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(212
|
)
|
|
(154
|
)
|
|
(102
|
)
|
|||
Accounts payable
|
(76
|
)
|
|
(72
|
)
|
|
(58
|
)
|
|||
Accrued income and other taxes
|
28
|
|
|
(14
|
)
|
|
31
|
|
|||
Other current assets and other current liabilities, net
|
263
|
|
|
16
|
|
|
(76
|
)
|
|||
Retirement benefits
|
(342
|
)
|
|
(169
|
)
|
|
(688
|
)
|
|||
Changes in other noncurrent assets and liabilities
|
19
|
|
|
161
|
|
|
(6
|
)
|
|||
Other, net
|
41
|
|
|
68
|
|
|
93
|
|
|||
Net cash provided by operating activities
|
5,559
|
|
|
6,065
|
|
|
4,201
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Payments for property, plant and equipment and capitalized software
|
(3,048
|
)
|
|
(2,919
|
)
|
|
(2,411
|
)
|
|||
Cash paid for Savvis acquisition, net of $61 cash acquired
|
—
|
|
|
—
|
|
|
(1,671
|
)
|
|||
Cash acquired in Qwest acquisition, net of $5 cash paid
|
—
|
|
|
—
|
|
|
419
|
|
|||
Cash paid for other acquisitions
|
(160
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of property and intangible assets
|
80
|
|
|
191
|
|
|
—
|
|
|||
Other, net
|
(20
|
)
|
|
38
|
|
|
16
|
|
|||
Net cash used in investing activities
|
(3,148
|
)
|
|
(2,690
|
)
|
|
(3,647
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Net proceeds from issuance of long-term debt
|
2,481
|
|
|
3,362
|
|
|
4,102
|
|
|||
Payments of long-term debt
|
(2,010
|
)
|
|
(5,118
|
)
|
|
(2,984
|
)
|
|||
Net (payments) borrowings on credit facility
|
(95
|
)
|
|
543
|
|
|
(88
|
)
|
|||
Early retirement of debt costs
|
(31
|
)
|
|
(346
|
)
|
|
(114
|
)
|
|||
Dividends paid
|
(1,301
|
)
|
|
(1,811
|
)
|
|
(1,556
|
)
|
|||
Net proceeds from issuance of common stock
|
73
|
|
|
110
|
|
|
103
|
|
|||
Repurchase of common stock
|
(1,586
|
)
|
|
(37
|
)
|
|
(31
|
)
|
|||
Other, net
|
15
|
|
|
2
|
|
|
(9
|
)
|
|||
Net cash used in financing activities
|
(2,454
|
)
|
|
(3,295
|
)
|
|
(577
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
3
|
|
|
(22
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(43
|
)
|
|
83
|
|
|
(45
|
)
|
|||
Cash and cash equivalents at beginning of period
|
211
|
|
|
128
|
|
|
173
|
|
|||
Cash and cash equivalents at end of period
|
$
|
168
|
|
|
$
|
211
|
|
|
$
|
128
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Income taxes (paid) refunded, net
|
$
|
(48
|
)
|
|
$
|
(82
|
)
|
|
118
|
|
|
Interest (paid) (net of capitalized interest of $41, $43 and $25)
|
$
|
(1,333
|
)
|
|
$
|
(1,405
|
)
|
|
(1,225
|
)
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
COMMON STOCK (represents dollars and shares)
|
|
|
|
|
|
||||
Balance at beginning of period
|
$
|
626
|
|
|
619
|
|
|
305
|
|
Issuance of common stock to acquire Qwest, including shares issued in connection with share-based compensation awards
|
—
|
|
|
—
|
|
|
294
|
|
|
Issuance of common stock to acquire Savvis, including shares issued in connection with share-based compensation awards
|
—
|
|
|
—
|
|
|
14
|
|
|
Issuance of common stock through dividend reinvestment, incentive and benefit plans
|
4
|
|
|
8
|
|
|
6
|
|
|
Repurchase of common stock
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
Shares withheld to satisfy tax withholdings
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
Balance at end of period
|
584
|
|
|
626
|
|
|
619
|
|
|
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
|
|
||||
Balance at beginning of period
|
19,079
|
|
|
18,901
|
|
|
6,181
|
|
|
Issuance of common stock to acquire Qwest, including assumption of share-based compensation awards
|
—
|
|
|
—
|
|
|
11,974
|
|
|
Issuance of common stock to acquire Savvis, including assumption of share-based compensation awards
|
—
|
|
|
—
|
|
|
601
|
|
|
Issuance of common stock through dividend reinvestment, incentive and benefit plans
|
69
|
|
|
102
|
|
|
97
|
|
|
Repurchase of common stock
|
(1,551
|
)
|
|
—
|
|
|
—
|
|
|
Shares withheld to satisfy tax withholdings
|
(18
|
)
|
|
(34
|
)
|
|
(30
|
)
|
|
Share-based compensation and other, net
|
85
|
|
|
110
|
|
|
78
|
|
|
Dividends Declared
|
(321
|
)
|
|
—
|
|
|
—
|
|
|
Balance at end of period
|
17,343
|
|
|
19,079
|
|
|
18,901
|
|
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
||||
Balance at beginning of period
|
(1,701
|
)
|
|
(1,012
|
)
|
|
(141
|
)
|
|
Other comprehensive income (loss)
|
899
|
|
|
(689
|
)
|
|
(871
|
)
|
|
Balance at end of period
|
(802
|
)
|
|
(1,701
|
)
|
|
(1,012
|
)
|
|
RETAINED EARNINGS
|
|
|
|
|
|
||||
Balance at beginning of period
|
1,285
|
|
|
2,319
|
|
|
3,302
|
|
|
Net (loss) income
|
(239
|
)
|
|
777
|
|
|
573
|
|
|
Dividends declared
|
(980
|
)
|
|
(1,811
|
)
|
|
(1,556
|
)
|
|
Balance at end of period
|
66
|
|
|
1,285
|
|
|
2,319
|
|
|
TOTAL STOCKHOLDERS' EQUITY
|
$
|
17,191
|
|
|
19,289
|
|
|
20,827
|
|
•
|
cash payments of
$1.732 billion
;
|
•
|
the
14.313 million
shares of CenturyLink common stock issued to consummate the acquisition,
|
•
|
the closing stock price of CenturyLink common stock at July 14, 2011 of
$38.54
; and
|
•
|
the estimated net value of the pre-combination portion of certain share-based compensation awards assumed by CenturyLink of
$98 million
, of which
$33 million
was paid in cash.
|
|
July 15, 2011
|
||
|
(Dollars in millions)
|
||
Cash, accounts receivable and other current assets*
|
$
|
214
|
|
Property, plant and equipment
|
1,367
|
|
|
Identifiable intangible assets
|
|
||
Customer relationships
|
739
|
|
|
Other
|
51
|
|
|
Other noncurrent assets
|
27
|
|
|
Current liabilities, excluding current maturities of long-term debt
|
(129
|
)
|
|
Current maturities of long-term debt
|
(38
|
)
|
|
Long-term debt
|
(840
|
)
|
|
Deferred credits and other liabilities
|
(344
|
)
|
|
Goodwill
|
1,335
|
|
|
Aggregate consideration
|
$
|
2,382
|
|
*
|
Includes estimated fair value of
$90 million
for accounts receivable which had gross contractual value of
$101 million
on July 15, 2011. The
$11 million
difference between the gross contractual value and the estimated fair value assigned represents our best estimate as of July 15, 2011 of contractual cash flows that would not be collected.
|
•
|
the
294 million
shares of CenturyLink common stock issued to consummate the acquisition;
|
•
|
the closing stock price of CenturyLink common stock at March 31, 2011 of
$41.55
;
|
•
|
the estimated net value of the pre-combination portion of share-based compensation awards assumed by CenturyLink of
$52 million
(excluding the value of restricted stock included in the number of issued shares specified above); and
|
•
|
cash paid in lieu of the issuance of fractional shares of
$5 million
.
|
|
April 1, 2011
|
||
|
(Dollars in millions)
|
||
Cash, accounts receivable and other current assets*
|
$
|
2,121
|
|
Property, plant and equipment
|
9,529
|
|
|
Identifiable intangible assets
|
|
||
Customer relationships
|
7,558
|
|
|
Capitalized software
|
1,702
|
|
|
Other
|
189
|
|
|
Other noncurrent assets
|
390
|
|
|
Current liabilities, excluding current maturities of long-term debt
|
(2,426
|
)
|
|
Current maturities of long-term debt
|
(2,422
|
)
|
|
Long-term debt
|
(10,253
|
)
|
|
Deferred credits and other liabilities
|
(4,147
|
)
|
|
Goodwill
|
10,032
|
|
|
Aggregate consideration
|
$
|
12,273
|
|
*
|
Includes estimated fair value of
$1.194 billion
for accounts receivable which had gross contractual value of
$1.274 billion
on April 1, 2011. The
$80 million
difference between the gross contractual value and the estimated fair value assigned represents our best estimate as of April 1, 2011 of contractual cash flows that would not be collected.
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Acquisition-related expenses
|
$
|
53
|
|
|
83
|
|
|
467
|
|
|
Year Ended
December 31, 2011
|
||
|
(Dollars in
millions)
|
||
Operating revenues
|
$
|
18,692
|
|
Net income
|
601
|
|
|
Basic earnings per common share
|
0.97
|
|
|
Diluted earnings per common share
|
0.97
|
|
•
|
decreased operating revenues and expenses due to the elimination of deferred revenues and deferred expenses associated with installation activities and capacity leases that were assigned no value at the acquisition date and the elimination of transactions among CenturyLink, Qwest and Savvis that are now subject to intercompany elimination;
|
•
|
increased amortization expense related to identifiable intangible assets, net of decreased depreciation expense to reflect the fair value of property, plant and equipment;
|
•
|
decreased recognition of retiree benefit expenses for Qwest due to the elimination of unrecognized actuarial losses;
|
•
|
decreased interest expense primarily due to the amortization of an adjustment to reflect the increased fair value of long-term debt of Qwest recognized on the acquisition date; and
|
•
|
the related income tax effects.
|
|
December 31, 2013
|
|
December 31, 2012
|
|||
|
(Dollars in millions)
|
|||||
Goodwill
|
$
|
20,674
|
|
|
21,627
|
|
Customer relationships, less accumulated amortization of $3,641 and $2,524
|
5,935
|
|
|
7,052
|
|
|
Indefinite-life intangible assets
|
321
|
|
|
268
|
|
|
Other intangible assets subject to amortization
|
|
|
|
|||
Capitalized software, less accumulated amortization of $1,193 and $844
|
1,415
|
|
|
1,522
|
|
|
Trade names and patents, less accumulated amortization of $208 and $142
|
66
|
|
|
128
|
|
|
Total other intangible assets, net
|
$
|
1,802
|
|
|
1,918
|
|
|
(Dollars in millions)
|
||
2014
|
$
|
1,390
|
|
2015
|
1,249
|
|
|
2016
|
1,139
|
|
|
2017
|
1,027
|
|
|
2018
|
904
|
|
|
|
As of
January 3, 2013 |
||
|
|
(Dollars in millions)
|
||
Consumer
|
|
$
|
10,348
|
|
Business
|
|
6,363
|
|
|
Wholesale
|
|
3,274
|
|
|
Data hosting
|
|
1,642
|
|
|
Total goodwill
|
|
$
|
21,627
|
|
|
As of
January 3, 2013 |
|
Acquisitions
|
|
Impairment
|
|
As of
December 31, 2013 |
||||||
|
(Dollars in millions)
|
||||||||||||
Consumer
|
$
|
10,348
|
|
|
—
|
|
|
—
|
|
|
10,348
|
|
|
Business
|
6,363
|
|
|
—
|
|
|
—
|
|
|
6,363
|
|
||
Wholesale
|
3,274
|
|
|
—
|
|
|
—
|
|
|
3,274
|
|
||
Data hosting
|
1,642
|
|
|
139
|
|
|
(1,092
|
)
|
|
689
|
|
||
Total goodwill
|
$
|
21,627
|
|
|
$
|
139
|
|
|
(1,092
|
)
|
|
20,674
|
|
|
|
|
|
|
December 31,
|
|||||
|
Interest Rates
|
|
Maturities
|
|
2013
|
|
2012
|
|||
|
|
|
|
|
(Dollars in millions)
|
|||||
CenturyLink, Inc.
|
|
|
|
|
|
|
|
|||
Senior notes
|
5.000% - 7.650%
|
|
2015 - 2042
|
|
$
|
7,825
|
|
|
6,250
|
|
Credit facility
(1)
|
2.179% - 4.250%
|
|
2017
|
|
725
|
|
|
820
|
|
|
Term loan
|
2.420%
|
|
2019
|
|
402
|
|
|
424
|
|
|
Subsidiaries
|
|
|
|
|
|
|
|
|||
Qwest
|
|
|
|
|
|
|
|
|||
Senior notes
|
6.125% - 8.375%
|
|
2014 - 2053
|
|
8,392
|
|
|
9,168
|
|
|
Embarq
|
|
|
|
|
|
|
|
|||
Senior notes
|
7.082% - 7.995%
|
|
2016 - 2036
|
|
2,669
|
|
|
2,669
|
|
|
First mortgage bonds
|
7.125% - 8.770%
|
|
2014 - 2025
|
|
262
|
|
|
322
|
|
|
Other
|
9.000%
|
|
2019
|
|
150
|
|
|
200
|
|
|
Capital lease and other obligations
|
Various
|
|
Various
|
|
619
|
|
|
734
|
|
|
Unamortized (discounts) premiums and other, net
|
|
|
|
|
(78
|
)
|
|
18
|
|
|
Total long-term debt
|
|
|
|
|
20,966
|
|
|
20,605
|
|
|
Less current maturities
|
|
|
|
|
(785
|
)
|
|
(1,205
|
)
|
|
Long-term debt, excluding current maturities
|
|
|
|
|
$
|
20,181
|
|
|
19,400
|
|
(1)
|
The outstanding amounts of our Credit Facility borrowings at December 31,
2013
and
2012
were
$725 million
and
$820 million
, respectively, with weighted average interest rates of
2.176%
and
2.450%
, respectively. These amounts change on a regular basis.
|
|
(Dollars in millions)
(1)
|
||
2014
|
$
|
785
|
|
2015
|
565
|
|
|
2016
|
1,493
|
|
|
2017
|
2,219
|
|
|
2018
|
246
|
|
|
2019 and thereafter
|
15,736
|
|
|
Total long-term debt
|
$
|
21,044
|
|
(1)
|
Actual principal paid in all years may differ due to the possible future refinancing of outstanding debt or the issuance of new debt.
|
|
Years Ended
December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Interest expense:
|
|
|
|
|
|
||||
Gross interest expense
|
$
|
1,339
|
|
|
1,362
|
|
|
1,097
|
|
Capitalized interest
|
(41
|
)
|
|
(43
|
)
|
|
(25
|
)
|
|
Total interest expense
|
$
|
1,298
|
|
|
1,319
|
|
|
1,072
|
|
|
December 31,
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Trade and purchased receivables
|
$
|
1,862
|
|
|
1,782
|
|
Earned and unbilled receivables
|
252
|
|
|
274
|
|
|
Other
|
18
|
|
|
19
|
|
|
Total accounts receivable
|
2,132
|
|
|
2,075
|
|
|
Less: allowance for doubtful accounts
|
(155
|
)
|
|
(158
|
)
|
|
Accounts receivable, less allowance
|
$
|
1,977
|
|
|
1,917
|
|
|
Beginning
Balance
|
|
Additions
|
|
Deductions
|
|
Ending
Balance
|
|||||
|
(Dollars in millions)
|
|||||||||||
2013
|
$
|
158
|
|
|
152
|
|
|
(155
|
)
|
|
155
|
|
2012
|
$
|
145
|
|
|
187
|
|
|
(174
|
)
|
|
158
|
|
2011
|
$
|
60
|
|
|
153
|
|
|
(68
|
)
|
|
145
|
|
|
|
December 31,
|
|||||
|
Depreciable
Lives
|
||||||
|
2013
|
|
2012
|
||||
|
|
(Dollars in millions)
|
|||||
Land
|
N/A
|
$
|
585
|
|
|
579
|
|
Fiber, conduit and other outside plant
(1)
|
15-45
|
14,187
|
|
|
13,030
|
|
|
Central office and other network electronics
(2)
|
3-10
|
12,178
|
|
|
11,242
|
|
|
Support assets
(3)
|
3-30
|
6,420
|
|
|
6,235
|
|
|
Construction in progress
(4)
|
N/A
|
937
|
|
|
847
|
|
|
Gross property, plant and equipment
|
|
34,307
|
|
|
31,933
|
|
|
Accumulated depreciation
|
|
(15,661
|
)
|
|
(13,024
|
)
|
|
Net property, plant and equipment
|
|
$
|
18,646
|
|
|
18,909
|
|
(1)
|
Fiber, conduit and other outside plant consists of fiber and metallic cable, conduit, poles and other supporting structures.
|
(2)
|
Central office and other network electronics consists of circuit and packet switches, routers, transmission electronics and electronics providing service to customers.
|
(3)
|
Support assets consist of buildings, computers and other administrative and support equipment.
|
(4)
|
Construction in progress includes inventory held for construction and property of the aforementioned categories that has not been placed in service as it is still under construction.
|
|
Years Ended
December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Balance at beginning of year
|
$
|
106
|
|
|
109
|
|
|
41
|
|
Accretion expense
|
7
|
|
|
7
|
|
|
9
|
|
|
Liabilities incurred
|
—
|
|
|
1
|
|
|
—
|
|
|
Liabilities assumed in Qwest and Savvis acquisitions
|
—
|
|
|
—
|
|
|
124
|
|
|
Liabilities settled and other
|
(4
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
Change in estimate
|
(3
|
)
|
|
(10
|
)
|
|
(62
|
)
|
|
Balance at end of year
|
$
|
106
|
|
|
106
|
|
|
109
|
|
|
Severance
|
|
Real Estate
|
|||
|
(Dollars in millions)
|
|||||
Balance at December 31, 2011
|
$
|
37
|
|
|
153
|
|
Accrued to expense
|
96
|
|
|
2
|
|
|
Payments, net
|
(113
|
)
|
|
(24
|
)
|
|
Reversals and adjustments
|
(3
|
)
|
|
—
|
|
|
Balance at December 31, 2012
|
17
|
|
|
131
|
|
|
Accrued to expense
|
31
|
|
|
—
|
|
|
Payments, net
|
(31
|
)
|
|
(16
|
)
|
|
Reversals and adjustments
|
—
|
|
|
(2
|
)
|
|
Balance at December 31, 2013
|
$
|
17
|
|
|
113
|
|
|
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 (consolidated statement of operations)
|
$
|
3
|
|
|
(3
|
)
|
Effect on benefit obligation (consolidated balance sheet)
|
87
|
|
|
(80
|
)
|
|
Pension Plans
|
|
Post-Retirement
Benefit Plans
|
|
Medicare Part D
Subsidy Receipts
|
||||
|
(Dollars in millions)
|
||||||||
Estimated future benefit payments:
|
|
|
|
|
|
||||
2014
|
$
|
1,036
|
|
|
352
|
|
|
(13
|
)
|
2015
|
1,002
|
|
|
341
|
|
|
(10
|
)
|
|
2016
|
990
|
|
|
329
|
|
|
(10
|
)
|
|
2017
|
977
|
|
|
319
|
|
|
(10
|
)
|
|
2018
|
962
|
|
|
308
|
|
|
(10
|
)
|
|
2019 - 2023
|
4,559
|
|
|
1,369
|
|
|
(40
|
)
|
|
Pension Plans
|
|
Post-Retirement Benefit Plans
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
(1)
|
|
2013
|
|
2012
|
|
2011
(2)
|
||||||
Actuarial assumptions at beginning of year:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
3.50% - 4.20%
|
|
|
4.25% - 5.10%
|
|
|
5.00% - 5.50%
|
|
|
3.60
|
%
|
|
4.60% - 4.80%
|
|
|
5.30
|
%
|
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
3.25
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Expected long-term rate of return on plan assets
|
7.50
|
%
|
|
7.50
|
%
|
|
7.50% - 8.00%
|
|
|
7.30
|
%
|
|
6.00% - 7.50%
|
|
|
7.25
|
%
|
Initial health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
6.50% - 7.00%
|
|
|
8.00
|
%
|
|
8.50
|
%
|
Ultimate health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
4.50
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Year ultimate trend rate is reached
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
2022
|
|
|
2018
|
|
|
2018
|
|
(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.
|
|
Pension Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
(1)
|
||||
|
(Dollars in millions)
|
||||||||
Service cost
|
$
|
91
|
|
|
87
|
|
|
70
|
|
Interest cost
|
544
|
|
|
625
|
|
|
560
|
|
|
Expected return on plan assets
|
(896
|
)
|
|
(847
|
)
|
|
(709
|
)
|
|
Settlements
|
—
|
|
|
—
|
|
|
1
|
|
|
Amortization of unrecognized prior service cost
|
5
|
|
|
4
|
|
|
2
|
|
|
Amortization of unrecognized actuarial loss
|
84
|
|
|
35
|
|
|
13
|
|
|
Net periodic pension benefit (income) expense
|
$
|
(172
|
)
|
|
(96
|
)
|
|
(63
|
)
|
(1)
|
Includes
$58 million
of income related to the Qwest plans subsequent to the April 1, 2011 acquisition date.
|
|
Post-Retirement Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
(1)
|
||||
|
(Dollars in millions)
|
||||||||
Service cost
|
$
|
24
|
|
|
22
|
|
|
18
|
|
Interest cost
|
140
|
|
|
173
|
|
|
152
|
|
|
Expected return on plan assets
|
(39
|
)
|
|
(45
|
)
|
|
(41
|
)
|
|
Amortization of unrecognized prior service cost
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
Amortization of unrecognized actuarial loss
|
4
|
|
|
—
|
|
|
—
|
|
|
Net periodic post-retirement benefit expense (income)
|
$
|
129
|
|
|
150
|
|
|
127
|
|
(1)
|
Includes
$92 million
related to the Qwest plans subsequent to the April 1, 2011 acquisition date.
|
|
Pension Plans
|
|
Post-Retirement Benefit Plans
|
||||||||
|
December 31,
|
|
December 31,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Actuarial assumptions at end of year:
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.20% - 5.10%
|
|
|
3.25% - 4.20%
|
|
|
4.50
|
%
|
|
3.60
|
%
|
Rate of compensation increase
|
3.25
|
%
|
|
3.25
|
%
|
|
N/A
|
|
|
N/A
|
|
Initial health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
6.50% / 7.00%
|
|
|
6.75% / 7.50%
|
|
Ultimate health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
4.50
|
%
|
|
4.50
|
%
|
Year ultimate trend rate is reached
|
N/A
|
|
|
N/A
|
|
|
2022 / 2024
|
|
|
2022 / 2024
|
|
|
Pension Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
14,881
|
|
|
13,596
|
|
|
4,534
|
|
Service cost
|
91
|
|
|
87
|
|
|
70
|
|
|
Interest cost
|
544
|
|
|
625
|
|
|
560
|
|
|
Plan amendments
|
—
|
|
|
14
|
|
|
12
|
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
8,267
|
|
|
Actuarial (gain) loss
|
(1,179
|
)
|
|
1,565
|
|
|
930
|
|
|
Benefits paid by company
|
(5
|
)
|
|
(5
|
)
|
|
(16
|
)
|
|
Benefits paid from plan assets
|
(931
|
)
|
|
(1,001
|
)
|
|
(761
|
)
|
|
Benefit obligation at end of year
|
$
|
13,401
|
|
|
14,881
|
|
|
13,596
|
|
|
Post-Retirement Benefit Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
$
|
4,075
|
|
|
3,930
|
|
|
558
|
|
Service cost
|
24
|
|
|
22
|
|
|
18
|
|
|
Interest cost
|
140
|
|
|
173
|
|
|
152
|
|
|
Participant contributions
|
96
|
|
|
86
|
|
|
64
|
|
|
Plan amendments
|
141
|
|
|
—
|
|
|
31
|
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
3,284
|
|
|
Direct subsidy receipts
|
13
|
|
|
19
|
|
|
22
|
|
|
Actuarial (gain) loss
|
(399
|
)
|
|
260
|
|
|
153
|
|
|
Benefits paid by company
|
(266
|
)
|
|
(268
|
)
|
|
(219
|
)
|
|
Benefits paid from plan assets
|
(136
|
)
|
|
(147
|
)
|
|
(133
|
)
|
|
Benefit obligation at end of year
|
$
|
3,688
|
|
|
4,075
|
|
|
3,930
|
|
|
Pension Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Change in plan assets
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
12,321
|
|
|
11,814
|
|
|
3,732
|
|
Return on plan assets
|
810
|
|
|
1,476
|
|
|
479
|
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
7,777
|
|
|
Employer contributions
|
146
|
|
|
32
|
|
|
587
|
|
|
Benefits paid from plan assets
|
(931
|
)
|
|
(1,001
|
)
|
|
(761
|
)
|
|
Fair value of plan assets at end of year
|
$
|
12,346
|
|
|
12,321
|
|
|
11,814
|
|
|
Post-Retirement Benefit Plans
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Change in plan assets
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
$
|
626
|
|
|
693
|
|
|
54
|
|
Actual gain on plan assets
|
45
|
|
|
80
|
|
|
4
|
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
768
|
|
|
Benefits paid from plan assets
|
(136
|
)
|
|
(147
|
)
|
|
(133
|
)
|
|
Fair value of plan assets at end of year
|
$
|
535
|
|
|
626
|
|
|
693
|
|
|
Gross Notional Exposure
|
|||||||||||
|
Pension Plans
|
|
Post-Retirement
Benefit Plans
|
|||||||||
|
Years Ended December 31,
|
|||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||
|
(Dollars in millions)
|
|||||||||||
Derivative instruments:
|
|
|
|
|
|
|
|
|||||
Exchange-traded U.S. equity futures
|
$
|
95
|
|
|
302
|
|
|
16
|
|
|
30
|
|
Exchange-traded non-U.S. equity futures
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Exchange-traded Treasury futures
|
3,011
|
|
|
1,763
|
|
|
—
|
|
|
—
|
|
|
Interest rate swaps
|
556
|
|
|
1,471
|
|
|
—
|
|
|
—
|
|
|
Credit default swaps
|
253
|
|
|
495
|
|
|
—
|
|
|
—
|
|
|
Foreign exchange forwards
|
938
|
|
|
726
|
|
|
29
|
|
|
21
|
|
|
Options
|
261
|
|
|
768
|
|
|
—
|
|
|
—
|
|
•
|
Level 1—Assets were valued using the closing price reported in the active market in which the individual security was traded.
|
•
|
Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, net asset value of shares held by the plans and other methods by which all significant input were observable at the measurement date.
|
•
|
Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by the respective institutions at the measurement date.
|
|
Fair Value of Pension Plan Assets at December 31, 2013
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||
|
(Dollars in millions)
|
||||||||||||
Investment grade bonds (a)
|
$
|
813
|
|
|
1,504
|
|
|
—
|
|
|
$
|
2,317
|
|
High yield bonds (b)
|
—
|
|
|
1,265
|
|
|
26
|
|
|
1,291
|
|
||
Emerging market bonds (c)
|
196
|
|
|
367
|
|
|
—
|
|
|
563
|
|
||
Convertible bonds (d)
|
—
|
|
|
389
|
|
|
—
|
|
|
389
|
|
||
Diversified strategies (e)
|
—
|
|
|
723
|
|
|
—
|
|
|
723
|
|
||
U.S. stocks (f)
|
1,408
|
|
|
92
|
|
|
—
|
|
|
1,500
|
|
||
Non-U.S. stocks (g)
|
1,159
|
|
|
299
|
|
|
—
|
|
|
1,458
|
|
||
Emerging market stocks (h)
|
—
|
|
|
110
|
|
|
—
|
|
|
110
|
|
||
Private equity (i)
|
—
|
|
|
—
|
|
|
721
|
|
|
721
|
|
||
Private debt (j)
|
—
|
|
|
—
|
|
|
436
|
|
|
436
|
|
||
Market neutral hedge funds (k)
|
—
|
|
|
867
|
|
|
99
|
|
|
966
|
|
||
Directional hedge funds (k)
|
—
|
|
|
582
|
|
|
32
|
|
|
614
|
|
||
Real estate (l)
|
—
|
|
|
306
|
|
|
265
|
|
|
571
|
|
||
Derivatives (m)
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||
Cash equivalents and short-term investments (n)
|
—
|
|
|
721
|
|
|
—
|
|
|
721
|
|
||
Total investments
|
$
|
3,576
|
|
|
7,191
|
|
|
1,579
|
|
|
12,346
|
|
|
Accrued expenses
|
|
|
|
|
|
|
—
|
|
|||||
Total pension plan assets
|
|
|
|
|
|
|
$
|
12,346
|
|
|
Fair Value of Post-Retirement Plan Assets
at December 31, 2013 |
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||
|
(Dollars in millions)
|
||||||||||||
Investment grade bonds (a)
|
$
|
21
|
|
|
56
|
|
|
—
|
|
|
$
|
77
|
|
High yield bonds (b)
|
—
|
|
|
56
|
|
|
—
|
|
|
56
|
|
||
Emerging market bonds (c)
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
||
Diversified strategies (e)
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||
U.S. stocks (f)
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
||
Non-U.S. stocks (g)
|
58
|
|
|
—
|
|
|
—
|
|
|
58
|
|
||
Emerging market stocks (h)
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||
Private equity (i)
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
||
Private debt (j)
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||
Market neutral hedge funds (k)
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||
Directional hedge funds (k)
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||
Real estate (l)
|
—
|
|
|
22
|
|
|
12
|
|
|
34
|
|
||
Cash equivalents and short-term investments (n)
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||
Total investments
|
$
|
135
|
|
|
342
|
|
|
57
|
|
|
534
|
|
|
Contribution Receivable
|
|
|
|
|
|
|
1
|
|
|||||
Total post-retirement plan assets
|
|
|
|
|
|
|
$
|
535
|
|
|
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 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
|
|
|
Pension Plan Assets Valued Using Level 3 Inputs
|
||||||||||||||||||||
|
High
Yield
Bonds
|
|
Private
Equity
|
|
Private
Debt
|
|
Market
Neutral
Hedge
Fund
|
|
Directional
Hedge
Funds
|
|
Real
Estate
|
|
Total
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
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
|
|
|
Net transfers
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
|
Acquisitions
|
5
|
|
|
82
|
|
|
71
|
|
|
100
|
|
|
—
|
|
|
9
|
|
|
267
|
|
|
Dispositions
|
(43
|
)
|
|
(179
|
)
|
|
(144
|
)
|
|
—
|
|
|
(1
|
)
|
|
(97
|
)
|
|
(464
|
)
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gains relating to assets sold during the year
|
12
|
|
|
68
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
109
|
|
|
(Losses) gains relating to assets still held at year-end
|
(7
|
)
|
|
39
|
|
|
26
|
|
|
(1
|
)
|
|
4
|
|
|
5
|
|
|
66
|
|
|
Balance at December 31, 2013
|
$
|
26
|
|
|
721
|
|
|
436
|
|
|
99
|
|
|
32
|
|
|
265
|
|
|
1,579
|
|
|
Post-Retirement Plan Assets Valued Using Level 3 Inputs
|
|||||||||||
|
Private
Equity
|
|
Private
Debt
|
|
Real
Estate
|
|
Total
|
|||||
|
(Dollars in millions)
|
|||||||||||
Balance at December 31, 2011
|
$
|
60
|
|
|
8
|
|
|
26
|
|
|
94
|
|
Acquisitions
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Dispositions
|
(15
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(19
|
)
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
|||||
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
|
|
|
Acquisitions
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Dispositions
|
(11
|
)
|
|
(1
|
)
|
|
(18
|
)
|
|
(30
|
)
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
|||||
Gains (losses) relating to assets sold during the year
|
4
|
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
Gains relating to assets still held at year-end
|
1
|
|
|
—
|
|
|
3
|
|
|
4
|
|
|
Balance at December 31, 2013
|
$
|
40
|
|
|
5
|
|
|
12
|
|
|
57
|
|
|
Pension Plans
|
|
Post-Retirement
Benefit Plans
|
|||||||||
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||
|
(Dollars in millions)
|
|||||||||||
Benefit obligation
|
$
|
(13,401
|
)
|
|
(14,881
|
)
|
|
(3,688
|
)
|
|
(4,075
|
)
|
Fair value of plan assets
|
12,346
|
|
|
12,321
|
|
|
535
|
|
|
626
|
|
|
Unfunded status
|
(1,055
|
)
|
|
(2,560
|
)
|
|
(3,153
|
)
|
|
(3,449
|
)
|
|
Current portion of unfunded status
|
$
|
(5
|
)
|
|
(6
|
)
|
|
(154
|
)
|
|
(160
|
)
|
Non-current portion of unfunded status
|
$
|
(1,050
|
)
|
|
(2,554
|
)
|
|
(2,999
|
)
|
|
(3,289
|
)
|
|
As of and for the Years Ended December 31,
|
||||||||||||||
|
2012
|
|
Recognition
of Net
Periodic
Benefits
Expense
|
|
Deferrals
|
|
Net
Change in
AOCI
|
|
2013
|
||||||
|
(Dollars in millions)
|
||||||||||||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||
Pension plans:
|
|
|
|
|
|
|
|
|
|
||||||
Net actuarial (loss) gain
|
$
|
(2,236
|
)
|
|
84
|
|
|
1,094
|
|
|
1,178
|
|
|
(1,058
|
)
|
Prior service (cost) benefit
|
(38
|
)
|
|
5
|
|
|
—
|
|
|
5
|
|
|
(33
|
)
|
|
Deferred income tax benefit (expense)
|
875
|
|
|
(34
|
)
|
|
(419
|
)
|
|
(453
|
)
|
|
422
|
|
|
Total pension plans
|
(1,399
|
)
|
|
55
|
|
|
675
|
|
|
730
|
|
|
(669
|
)
|
|
Post-retirement benefit plans:
|
|
|
|
|
|
|
|
|
|
||||||
Net actuarial (loss) gain
|
(446
|
)
|
|
4
|
|
|
405
|
|
|
409
|
|
|
(37
|
)
|
|
Prior service (cost) benefit
|
(22
|
)
|
|
—
|
|
|
(141
|
)
|
|
(141
|
)
|
|
(163
|
)
|
|
Deferred income tax benefit (expense)
|
179
|
|
|
(1
|
)
|
|
(100
|
)
|
|
(101
|
)
|
|
78
|
|
|
Total post-retirement benefit plans
|
(289
|
)
|
|
3
|
|
|
164
|
|
|
167
|
|
|
(122
|
)
|
|
Total accumulated other comprehensive loss
|
$
|
(1,688
|
)
|
|
58
|
|
|
839
|
|
|
897
|
|
|
(791
|
)
|
|
Pension
Plans
|
|
Post-Retirement
Plans
|
|||
|
(Dollars in millions)
|
|||||
Estimated recognition of net periodic benefit expense in 2014:
|
|
|
|
|||
Net actuarial loss
|
$
|
(17
|
)
|
|
—
|
|
Prior service cost
|
(5
|
)
|
|
(17
|
)
|
|
Deferred income tax benefit
|
8
|
|
|
6
|
|
|
Estimated net periodic benefit expense to be recorded in 2014 as a component of other comprehensive income (loss)
|
$
|
(14
|
)
|
|
(11
|
)
|
|
Number of
Options
|
|
Weighted-
Average
Exercise
Price
|
|||
|
(in thousands)
|
|
|
|||
Outstanding at December 31, 2012
|
6,733
|
|
|
$
|
34.23
|
|
Exercised
|
(1,142
|
)
|
|
$
|
27.07
|
|
Forfeited/Expired
|
(266
|
)
|
|
$
|
30.51
|
|
Outstanding at December 31, 2013
|
5,325
|
|
|
$
|
35.95
|
|
Exercisable at December 31, 2013
|
5,325
|
|
|
$
|
35.95
|
|
|
Number of
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Non-vested at December 31, 2012
|
3,528
|
|
|
$
|
38.43
|
|
Granted
|
1,886
|
|
|
$
|
35.63
|
|
Vested
|
(1,493
|
)
|
|
$
|
37.08
|
|
Forfeited
|
(296
|
)
|
|
$
|
36.26
|
|
Non-vested at December 31, 2013
|
3,625
|
|
|
$
|
37.33
|
|
|
Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
(Dollars in millions, except per share amounts, shares in thousands)
|
||||||||||
(Loss) Income (Numerator):
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
||
Earnings applicable to non-vested restricted stock
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
Net (loss) income applicable to common stock for computing basic earnings per common share
|
(239
|
)
|
|
776
|
|
|
571
|
|
|||
Net (loss) income as adjusted for purposes of computing diluted earnings per common share
|
$
|
(239
|
)
|
|
776
|
|
|
571
|
|
||
Shares (Denominator):
|
|
|
|
|
|
||||||
Weighted average number of shares:
|
|
|
|
|
|
||||||
Outstanding during period
|
604,404
|
|
|
622,139
|
|
|
534,320
|
|
|||
Non-vested restricted stock
|
(3,512
|
)
|
|
(2,796
|
)
|
|
(2,209
|
)
|
|||
Non-vested restricted stock units
|
—
|
|
|
862
|
|
|
669
|
|
|||
Weighted average shares outstanding for computing basic (loss) earnings per common share
|
600,892
|
|
|
620,205
|
|
|
532,780
|
|
|||
Incremental common shares attributable to dilutive securities:
|
|
|
|
|
|
||||||
Shares issuable under convertible securities
|
—
|
|
|
12
|
|
|
13
|
|
|||
Shares issuable under incentive compensation plans
|
—
|
|
|
2,068
|
|
|
1,328
|
|
|||
Number of shares as adjusted for purposes of computing diluted earnings per common share
|
600,892
|
|
|
622,285
|
|
|
534,121
|
|
|||
Basic (loss) earnings per common share
|
$
|
(0.40
|
)
|
|
$
|
1.25
|
|
|
$
|
1.07
|
|
Diluted (loss) earnings per common share
(1)
|
$
|
(0.40
|
)
|
|
$
|
1.25
|
|
|
$
|
1.07
|
|
(1)
|
For the year ended December 31, 2013, we excluded from the calculation of diluted loss per share
1.3 million
shares potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive.
|
Input Level
|
|
Description of Input
|
Level 1
|
|
Observable inputs such as quoted market prices in active markets.
|
Level 2
|
|
Inputs other than quoted prices in active markets that are either directly or indirectly observable.
|
Level 3
|
|
Unobservable inputs in which little or no market data exists.
|
|
|
|
|
December 31, 2013
|
|
December 31, 2012
|
|||||||||
|
|
Input
Level
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
|||||
|
|
|
|
(Dollars in millions)
|
|||||||||||
Liabilities-Long-term debt excluding capital lease obligations
|
|
2
|
|
$
|
20,347
|
|
|
20,413
|
|
|
19,871
|
|
|
21,457
|
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Income tax expense was as follows:
|
|
|
|
|
|
||||
Federal
|
|
|
|
|
|
||||
Current
|
$
|
1
|
|
|
57
|
|
|
(49
|
)
|
Deferred
|
403
|
|
|
361
|
|
|
401
|
|
|
State
|
|
|
|
|
|
||||
Current
|
62
|
|
|
15
|
|
|
25
|
|
|
Deferred
|
(8
|
)
|
|
33
|
|
|
(6
|
)
|
|
Foreign
|
|
|
|
|
|
||||
Current
|
9
|
|
|
7
|
|
|
4
|
|
|
Deferred
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
Total income tax expense
|
$
|
463
|
|
|
473
|
|
|
375
|
|
|
Years Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
|
(Dollars in millions)
|
||||||||
Income tax expense was allocated as follows:
|
|
|
|
|
|
||||
Income tax expense in the consolidated statements of operations:
|
|
|
|
|
|
||||
Attributable to income
|
$
|
463
|
|
|
473
|
|
|
375
|
|
Stockholders' equity:
|
|
|
|
|
|
||||
Compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
|
(14
|
)
|
|
(18
|
)
|
|
(13
|
)
|
|
Tax effect of the change in accumulated other comprehensive loss
|
554
|
|
|
(434
|
)
|
|
(535
|
)
|
|
Years Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
|
(Percentage of pre-tax income)
|
|||||||
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal income tax benefit
|
2.8
|
%
|
|
2.5
|
%
|
|
1.3
|
%
|
Impairment of goodwill
|
188.5
|
%
|
|
—
|
%
|
|
—
|
%
|
Reversal of liability for unrecognized tax position
|
(24.5
|
)%
|
|
—
|
%
|
|
—
|
%
|
Foreign income taxes
|
2.7
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
Nondeductible accounting adjustment for life insurance
|
3.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Release state valuation allowance
|
(2.3
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other, net
|
1.4
|
%
|
|
—
|
%
|
|
2.9
|
%
|
Effective income tax rate
|
206.7
|
%
|
|
37.8
|
%
|
|
39.6
|
%
|
|
Years Ended December 31,
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Deferred tax assets
|
|
|
|
|||
Post-retirement and pension benefit costs
|
$
|
1,618
|
|
|
2,311
|
|
Net operating loss carryforwards
|
1,532
|
|
|
2,176
|
|
|
Other employee benefits
|
182
|
|
|
184
|
|
|
Other
|
782
|
|
|
789
|
|
|
Gross deferred tax assets
|
4,114
|
|
|
5,460
|
|
|
Less valuation allowance
|
(435
|
)
|
|
(444
|
)
|
|
Net deferred tax assets
|
3,679
|
|
|
5,016
|
|
|
Deferred tax liabilities
|
|
|
|
|||
Property, plant and equipment, primarily due to depreciation differences
|
(3,904
|
)
|
|
(3,784
|
)
|
|
Goodwill and other intangible assets
|
(3,226
|
)
|
|
(3,688
|
)
|
|
Other
|
(137
|
)
|
|
(192
|
)
|
|
Gross deferred tax liabilities
|
(7,267
|
)
|
|
(7,664
|
)
|
|
Net deferred tax liability
|
$
|
(3,588
|
)
|
|
(2,648
|
)
|
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Unrecognized tax benefits at beginning of year
|
$
|
78
|
|
|
111
|
|
Increase in tax positions taken in the current year
|
—
|
|
|
3
|
|
|
Decrease due to the reversal of tax positions taken in a prior year
|
—
|
|
|
(34
|
)
|
|
Decrease from the lapse of statute of limitations
|
(36
|
)
|
|
(2
|
)
|
|
Settlements
|
(28
|
)
|
|
—
|
|
|
Unrecognized tax benefits at end of year
|
$
|
14
|
|
|
78
|
|
|
|
|
Jurisdiction
|
|
Open Tax Years
|
Federal
|
|
2009—current
|
State
|
|
|
Florida
|
|
2006—2008 and 2010—current
|
Minnesota
|
|
1999 and 2010—current
|
Oregon
|
|
2009—current
|
Other states
|
|
2009—current
|
•
|
Consumer.
Consists generally of providing strategic and legacy products and services to residential consumers. Our strategic products and services offered to these customers include our broadband, wireless and video services, including our Prism TV services. Our legacy services offered to these customers include local and long-distance service.
|
•
|
Business.
Consists generally of providing strategic and legacy products and services to commercial, enterprise, global and governmental customers. Our strategic products and services offered to these customers include our private line, broadband, Ethernet, Multiprotocol Label Switching ("MPLS"), Voice over Internet Protocol ("VoIP"), and network management services. Our legacy services offered to these customers include local and long-distance service.
|
•
|
Wholesale.
Consists generally of providing strategic and legacy products and services to other communications providers. Our strategic products and services offered to these customers are mainly private line (including special access), dedicated internet access, digital subscriber line ("DSL") and MPLS. Our legacy services offered to these customers include resale of our services, the sale of unbundled network elements ("UNEs") which allow our wholesale customers the use of our network or a combination of our network and their own networks to provide voice and data services to their customers, long-distance and switched access services and other services, including billing and collection, pole rental, floor space and database services.
|
•
|
Data hosting.
Consists primarily of providing colocation, managed hosting and cloud hosting services to commercial, enterprise, global and governmental customers.
|
|
Years Ended December 31,
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
|||||
|
(Dollars in millions)
|
|||||||||
Total segment revenues
|
$
|
17,095
|
|
|
$
|
17,320
|
|
|
14,471
|
|
Total segment expenses
|
8,249
|
|
|
8,244
|
|
|
6,623
|
|
||
Total segment income
|
$
|
8,846
|
|
|
$
|
9,076
|
|
|
7,848
|
|
Total margin percentage
|
52
|
%
|
|
52
|
%
|
|
54
|
%
|
||
Consumer:
|
|
|
|
|
|
|||||
Revenues
|
$
|
6,004
|
|
|
$
|
6,162
|
|
|
5,384
|
|
Expenses
|
2,231
|
|
|
2,291
|
|
|
1,972
|
|
||
Income
|
$
|
3,773
|
|
|
$
|
3,871
|
|
|
3,412
|
|
Margin percentage
|
63
|
%
|
|
63
|
%
|
|
63
|
%
|
||
Business:
|
|
|
|
|
|
|||||
Revenues
|
$
|
6,136
|
|
|
$
|
6,133
|
|
|
5,150
|
|
Expenses
|
3,769
|
|
|
3,743
|
|
|
3,068
|
|
||
Income
|
$
|
2,367
|
|
|
$
|
2,390
|
|
|
2,082
|
|
Margin percentage
|
39
|
%
|
|
39
|
%
|
|
40
|
%
|
||
Wholesale:
|
|
|
|
|
|
|||||
Revenues
|
$
|
3,579
|
|
|
$
|
3,725
|
|
|
3,314
|
|
Expenses
|
1,158
|
|
|
1,230
|
|
|
1,137
|
|
||
Income
|
$
|
2,421
|
|
|
$
|
2,495
|
|
|
2,177
|
|
Margin percentage
|
68
|
%
|
|
67
|
%
|
|
66
|
%
|
||
Data hosting:
|
|
|
|
|
|
|||||
Revenues
|
$
|
1,376
|
|
|
$
|
1,300
|
|
|
623
|
|
Expenses
|
1,091
|
|
|
980
|
|
|
446
|
|
||
Income
|
$
|
285
|
|
|
$
|
320
|
|
|
177
|
|
Margin percentage
|
21
|
%
|
|
25
|
%
|
|
28
|
%
|
•
|
Strategic services
, which include primarily broadband, private line (including special access which we market to wholesale and business customers), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), VoIP and Verizon Wireless services;
|
•
|
Legacy services
, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);
|
•
|
Data integration
, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and
|
•
|
Other revenues,
which consist primarily of Universal Service Fund ("USF") revenue and surcharges. Unlike the first three revenue categories, other revenues are not included in our segment revenues.
|
|
Years Ended December 31,
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
|||||
|
(Dollars in millions)
|
|||||||||
Strategic services
|
$
|
8,822
|
|
|
$
|
8,427
|
|
|
6,313
|
|
Legacy services
|
7,617
|
|
|
8,221
|
|
|
7,621
|
|
||
Data integration
|
656
|
|
|
672
|
|
|
537
|
|
||
Other
|
1,000
|
|
|
1,056
|
|
|
880
|
|
||
Total operating revenues
|
$
|
18,095
|
|
|
$
|
18,376
|
|
|
15,351
|
|
•
|
Direct expenses
, which primarily are specific expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities; and
|
•
|
Allocated expenses
, which include network expenses, facilities expenses and other expenses such as fleet and real estate expenses.
|
|
Years Ended December 31,
|
|||||||||
|
2013
|
|
2012
|
|
2011
|
|||||
|
(Dollars in millions)
|
|||||||||
Total segment income
|
$
|
8,846
|
|
|
$
|
9,076
|
|
|
7,848
|
|
Other operating revenues
|
1,000
|
|
|
1,056
|
|
|
880
|
|
||
Depreciation and amortization
|
(4,541
|
)
|
|
(4,780
|
)
|
|
(4,026
|
)
|
||
Impairment of goodwill
|
(1,092
|
)
|
|
—
|
|
|
—
|
|
||
Other unassigned operating expenses
|
(2,760
|
)
|
|
(2,639
|
)
|
|
(2,677
|
)
|
||
Other income (expense), net
|
(1,229
|
)
|
|
(1,463
|
)
|
|
(1,077
|
)
|
||
Income tax expense
|
(463
|
)
|
|
(473
|
)
|
|
(375
|
)
|
||
Net (loss) income
|
$
|
(239
|
)
|
|
777
|
|
|
573
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
4,513
|
|
|
4,525
|
|
|
4,515
|
|
|
4,542
|
|
|
18,095
|
|
Operating income (loss)
|
782
|
|
|
715
|
|
|
(685
|
)
|
|
641
|
|
|
1,453
|
|
|
Net income (loss)
|
298
|
|
|
269
|
|
|
(1,045
|
)
|
|
239
|
|
|
(239
|
)
|
|
Basic earnings (loss) per common share
|
0.48
|
|
|
0.45
|
|
|
(1.76
|
)
|
|
0.41
|
|
|
(0.40
|
)
|
|
Diluted earnings (loss) per common share
|
0.48
|
|
|
0.44
|
|
|
(1.76
|
)
|
|
0.41
|
|
|
(0.40
|
)
|
|
2012
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
4,610
|
|
|
4,612
|
|
|
4,571
|
|
|
4,583
|
|
|
18,376
|
|
Operating income
|
654
|
|
|
657
|
|
|
736
|
|
|
666
|
|
|
2,713
|
|
|
Net income
|
200
|
|
|
74
|
|
|
270
|
|
|
233
|
|
|
777
|
|
|
Basic earnings per common share
|
0.32
|
|
|
0.12
|
|
|
0.43
|
|
|
0.37
|
|
|
1.25
|
|
|
Diluted earnings per common share
|
0.32
|
|
|
0.12
|
|
|
0.43
|
|
|
0.37
|
|
|
1.25
|
|
|
Years Ended December 31,
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Assets acquired through capital leases
|
$
|
12
|
|
|
209
|
|
Depreciation expense
|
136
|
|
|
150
|
|
|
Cash payments towards capital leases
|
119
|
|
|
113
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(Dollars in millions)
|
||||||
Assets included in property, plant and equipment
|
$
|
877
|
|
|
$
|
893
|
|
Accumulated depreciation
|
338
|
|
|
229
|
|
|
Future
Minimum
Payments
|
||
|
(Dollars in
millions)
|
||
Capital lease obligations:
|
|
||
2014
|
$
|
144
|
|
2015
|
111
|
|
|
2016
|
75
|
|
|
2017
|
70
|
|
|
2018
|
68
|
|
|
2019 and thereafter
|
308
|
|
|
Total minimum payments
|
776
|
|
|
Less: amount representing interest and executory costs
|
(206
|
)
|
|
Present value of minimum payments
|
570
|
|
|
Less: current portion
|
(109
|
)
|
|
Long-term portion
|
$
|
461
|
|
|
Future
Minimum
Payments
|
||
|
(Dollars in
millions)
|
||
2014
|
$
|
297
|
|
2015
|
274
|
|
|
2016
|
252
|
|
|
2017
|
232
|
|
|
2018
|
209
|
|
|
2019 and thereafter
|
1,391
|
|
|
Total future minimum payments
(1)
|
$
|
2,655
|
|
(1)
|
Minimum payments have not been reduced by minimum sublease rentals of
$104 million
due in the future under non-cancelable subleases.
|
|
December 31,
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Prepaid expenses
|
$
|
266
|
|
|
257
|
|
Materials, supplies and inventory
|
167
|
|
|
125
|
|
|
Assets held for sale
|
26
|
|
|
96
|
|
|
Deferred activation and installation charges
|
94
|
|
|
53
|
|
|
Other
|
44
|
|
|
21
|
|
|
Total other current assets
|
$
|
597
|
|
|
552
|
|
|
December 31
|
|||||
|
2013
|
|
2012
|
|||
|
(Dollars in millions)
|
|||||
Accounts payable
|
$
|
1,111
|
|
|
1,207
|
|
Other current liabilities:
|
|
|
|
|||
Accrued rent
|
$
|
52
|
|
|
48
|
|
Legal reserves
|
273
|
|
|
39
|
|
|
Other
|
189
|
|
|
147
|
|
|
Total other current liabilities
|
$
|
514
|
|
|
234
|
|
|
Pension Plans
|
|
Post-Retirement
Benefit Plans
|
|
Foreign Currency
Translation
Adjustment
and Other
|
|
Total
|
|||||
|
(Dollars in millions)
|
|||||||||||
Balance at December 31, 2012
|
$
|
(1,399
|
)
|
|
(289
|
)
|
|
(13
|
)
|
|
(1,701
|
)
|
Other comprehensive income (loss) before reclassifications
|
675
|
|
|
164
|
|
|
1
|
|
|
840
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
55
|
|
|
3
|
|
|
1
|
|
|
59
|
|
|
Net current-period other comprehensive income (loss)
|
730
|
|
|
167
|
|
|
2
|
|
|
899
|
|
|
Balance at December 31, 2013
|
$
|
(669
|
)
|
|
(122
|
)
|
|
(11
|
)
|
|
(802
|
)
|
Year Ended December 31, 2013
|
|
Decrease (Increase)
in Net Loss
|
|
Affected Line Item in Consolidated Statement of
Operations or Footnote Where Additional
Information is Presented If The Amount is not
Recognized in Net Income in Total
|
||
|
|
(Dollars in millions)
|
|
|
||
Amortization of pension & post-retirement plans
|
|
|
|
|
||
Net actuarial loss
|
|
$
|
(88
|
)
|
|
See Note 8—Employee Benefits
|
Prior service cost
|
|
(5
|
)
|
|
See Note 8—Employee Benefits
|
|
Total before tax
|
|
(93
|
)
|
|
|
|
Income tax expense (benefit)
|
|
35
|
|
|
Income tax expense
|
|
Insignificant items
|
|
(1
|
)
|
|
|
|
Net of tax
|
|
$
|
(59
|
)
|
|
|
Date Declared
|
|
Record Date
|
|
Dividend
Per Share
|
|
Total Amount
|
|
Payment Date
|
|||
|
|
|
|
|
|
(in millions)
|
|
|
|||
November 12, 2013
|
|
11/25/2013
|
|
0.540
|
|
|
$
|
321
|
|
|
12/6/2013
|
August 27, 2013
|
|
9/6/2013
|
|
0.540
|
|
|
$
|
321
|
|
|
9/19/2013
|
May 22, 2013
|
|
6/3/2013
|
|
0.540
|
|
|
$
|
320
|
|
|
6/14/2013
|
February 27, 2013
|
|
3/11/2013
|
|
0.540
|
|
|
$
|
339
|
|
|
3/22/2013
|
November 13, 2012
|
|
12/11/2012
|
|
0.725
|
|
|
$
|
454
|
|
|
12/21/2012
|
August 21, 2012
|
|
9/11/2012
|
|
0.725
|
|
|
$
|
452
|
|
|
9/21/2012
|
May 24, 2012
|
|
6/5/2012
|
|
0.725
|
|
|
$
|
453
|
|
|
6/15/2012
|
February 12, 2012
|
|
3/6/2012
|
|
0.725
|
|
|
$
|
452
|
|
|
3/16/2012
|
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options and
rights
(a)
|
|
Weighted-
average
exercise price of
outstanding
options and
rights
(b)
|
|
Number of securities
remaining available
for future issuance
under plans (excluding
securities reflected in
column (a))
(c)
|
|
||||
Equity compensation plans approved by shareholders
|
|
1,074,746
|
|
(1)
|
$
|
42.87
|
|
|
26,883,539
|
|
(1)
|
Equity compensation plans not approved by shareholders
(2)
|
|
4,250,543
|
|
|
34.20
|
|
|
—
|
|
|
|
Totals
|
|
5,325,289
|
|
|
$
|
35.95
|
|
|
26,883,539
|
|
|
(1)
|
This amount includes
1,472,131
shares remaining to be granted under our shareholder-approved employee stock purchase plan.
|
(2)
|
These amounts represent common shares to be issued upon exercise of options or vesting of restricted stock units that were assumed in connection with certain acquisitions approved under our required company equity incentive plans. See Note 2—Acquisitions to the Consolidated Financial Statements in Item 8 of this annual report.
|
Exhibit
Number
|
|
Description
|
||
2.1
|
|
Agreement and Plan of Merger, dated as of October 26, 2008, by and among CenturyLink, Inc., Embarq Corporation and Cajun Acquisition Company (incorporated by reference to Exhibit 99.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on October 30, 2008).
|
||
2.2
|
|
Agreement and Plan of Merger, dated as of April 21, 2010, by and among CenturyLink, Inc., its subsidiary SB44 Acquisition Company, and Qwest Communications International Inc. (incorporated by reference to Exhibit 2.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 27, 2010).
|
||
2.3
|
|
Agreement and Plan of Merger, dated as of April 26, 2011, by and among CenturyLink, Inc., SAVVIS, Inc. and Mimi Acquisition Company (incorporated by reference to Exhibit 2.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 27, 2011).
|
||
3.1
|
|
Amended and Restated Articles of Incorporation of CenturyLink, Inc., as amended through May 23, 2012 (incorporated by reference to Exhibit 3.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on May 30, 2012).
|
||
3.2
|
|
Bylaws of CenturyLink, Inc., as amended and restated through November 4, 2010 (incorporated by reference to Exhibit 3.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010).
|
||
4.1
|
|
Form of common stock certificate (incorporated by reference to Exhibit 4.10 of CenturyLink, Inc.'s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on March 2, 2012 (Registration No. 333-179888)).
|
||
4.2
|
|
Instruments relating to CenturyLink, Inc.'s Revolving Credit Facility.
|
||
|
|
a.
|
Amended and Restated Credit Agreement, dated as of April 6, 2012, by and among CenturyLink, Inc. and the lenders and agents named therein (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 11, 2012).
|
|
|
|
b.
|
Guarantee Agreement, dated as of April 6, 2012, by and among the original guarantors named therein (incorporated by reference to Exhibit 4.2 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 11, 2012), as assumed by two additional guarantors under an assumption agreement, dated as of May 23, 2013 (incorporated by reference to Exhibit 4.2(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013 (File No. 001-07784) filed with the Securities and Exchange Commission on August 8, 2013).
|
|
4.3
|
|
Instruments relating to CenturyLink, Inc.'s Term Loan.
|
||
|
|
a.
|
Credit Agreement, dated as of April 18, 2012, by and among CenturyLink, Inc., the several banks and other financial institutions or entities from time to time parties thereto, and CoBank, ACB, as administrative agent (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 20, 2012).
|
|
|
|
b.
|
Guarantee Agreement, dated as of April 18, 2012, by and among the original guarantors named therein (incorporated by reference to Exhibit 4.2 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on April 20, 2012), as assumed by two additional guarantors under an assumption agreement, dated as of May 23, 2013 (incorporated by reference to Exhibit 4.3(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013 (File No. 001-07784) filed with the Securities and Exchange Commission on August 8, 2013).
|
|
4.4
|
|
Instruments relating to CenturyLink, Inc.'s public senior debt.
(1)
|
||
|
|
a.
|
Form of Indenture, by and between Century Telephone Enterprises, Inc. (currently named CenturyLink, Inc.) and First American Bank & Trust of Louisiana, as Trustee (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Registration Statement on Form S-3 (File No. No. 33-52915) filed with the Securities and Exchange Commission on March 31, 1994).
|
Exhibit
Number
|
|
Description
|
||
|
|
|
(i).
|
Form of 7.2% Senior Notes, Series D, due 2025 (incorporated by reference to Exhibit 4.27 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 001-07784) filed with the Securities and Exchange Commission on March 18, 1996).
|
|
|
|
(ii).
|
Form of 6.875% Debentures, Series G, due 2028, (incorporated by reference to Exhibit 4.9 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 001-07784) filed with the Securities and Exchange Commission on March 16, 1998).
|
|
|
b.
|
Third Supplemental Indenture, dated as of February 14, 2005, by and between CenturyTel, Inc. (currently named CenturyLink, Inc.) and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 5% Senior Notes, Series M, due 2015 (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 000-50260) filed with the Securities and Exchange Commission on February 15, 2005).
|
|
|
|
|
(i).
|
Form of 5% Senior Notes, Series M, due 2015 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 000-50260) filed with the Securities and Exchange Commission on February 15, 2005).
|
|
|
c.
|
Fourth Supplemental Indenture, dated as of March 26, 2007, by and between CenturyTel, Inc. (currently named CenturyLink, Inc.) and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 6.0% Senior Notes, Series N, due 2017 and 5.5% Senior Notes, Series O, due 2013 (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 29, 2007).
|
|
|
|
|
(i).
|
Form of 6.0% Senior Notes, Series N, due 2017 and 5.5% Senior Notes, Series O, due 2013 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 29, 2007).
|
|
|
d.
|
Fifth Supplemental Indenture, dated as of September 21, 2009, by and between CenturyTel, Inc. (currently named CenturyLink, Inc.) and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 7.60% Senior Notes, Series P, due 2039 and 6.15% Senior Notes, Series Q, due 2019 (incorporated by reference to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on September 22, 2009).
|
|
|
|
|
(i).
|
Form of 7.60% Senior Notes, Series P, due 2039 and 6.15% Senior Notes, Series Q, due 2019 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on September 22, 2009).
|
|
|
e.
|
Sixth Supplemental Indenture, dated as of June 16, 2011, by and between CenturyLink, Inc. and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 5.15% Senior Notes, Series R, due 2017 and 6.45% Senior Notes, Series S, due 2021 (incorporated by reference to Exhibit 4.2 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on June 16, 2011).
|
|
|
|
|
(i).
|
Form of 5.15% Senior Notes, Series R, due 2017 and 6.45% Senior Notes, Series S, due 2021 (incorporated by reference to Exhibit A to Exhibit 4.2 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on June 16, 2011).
|
|
|
f.
|
Seventh Supplemental Indenture, dated as of March 12, 2012, by and between CenturyLink, Inc. and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 5.80% Senior Notes, Series T, due 2022 and 7.65% Senior Notes, Series U, due 2042 (incorporated by reference to Exhibit 4.1 of CenturyLink's Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2012).
|
|
|
|
|
(i).
|
Form of 5.80% Senior Notes, Series T, due 2022 and 7.65% Senior Notes, Series U, due 2042 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2012).
|
|
|
g.
|
Eighth Supplemental Indenture, dated as of March 21, 2013, by and between CenturyLink, Inc. and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 5.625% Senior Notes, Series V, due 2020 (incorporated by reference to Exhibit 4.1 of CenturyLink's Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 21, 2013).
|
Exhibit
Number
|
|
Description
|
||
|
|
|
(i).
|
Form of 5.625% Senior Notes, Series V, due 2020 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 21, 2013).
|
|
|
h.
|
Ninth Supplemental Indenture, dated as of November 27, 2013, by and between CenturyLink, Inc. and Regions Bank, as Trustee, designating and outlining the terms and conditions of CenturyLink's 6.75% Senior Notes, Series W, due 2023 (incorporated by reference to Exhibit 4.1 of CenturyLink's Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on November 27, 2013).
|
|
|
|
|
(i)
|
Form of 6.75% Senior Notes, Series W, due 2023 (incorporated by reference to Exhibit A to Exhibit 4.1 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on November 27, 2013).
|
4.5
|
|
Instruments relating to indebtedness of Qwest Communications International, Inc. and its subsidiaries.
(1)
|
||
|
|
a.
|
Indenture, dated as of April 15, 1990, by and between The Mountain States Telephone and Telegraph Company (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.2 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).
|
|
|
|
|
(i).
|
First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.3 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).
|
|
|
b.
|
Indenture, dated as of April 15, 1990, by and between Northwestern Bell Telephone Company (predecessor to Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.5(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2012 (File No. 001-07784) filed with the Securities and Exchange Commission on May 10, 2012).
|
|
|
|
|
(i).
|
First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.3 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).
|
|
|
c.
|
Indenture, dated as of June 29, 1998, by and among U S WEST Capital Funding, Inc. (currently named Qwest Capital Funding, Inc.), U S WEST, Inc. (predecessor to Qwest Communications International Inc.) and The First National Bank of Chicago, as trustee (incorporated by reference to Exhibit 4(a) of U S WEST, Inc.'s Current Report on Form 8-K (File No. 001-14087) filed with the Securities and Exchange Commission on November 18, 1998).
|
|
|
|
|
(i).
|
First Supplemental Indenture, dated as of June 30, 2000, by and among U S WEST Capital Funding, Inc. (currently named Qwest Capital Funding, Inc.), U S WEST, Inc. (predecessor to Qwest Communications International Inc.) and Bank One Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.10 of Qwest Communications International Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2000 (File No. 001-15577) filed with the Securities and Exchange Commission on August 11, 2000).
|
|
|
d.
|
Indenture, dated as of October 15, 1999, by and between US West Communications, Inc. (currently named Qwest Corporation) and Bank One Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4(b) of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 001-03040) filed with the Securities and Exchange Commission on March 3, 2000).
|
|
|
|
|
(i).
|
First Supplemental Indenture, dated as of August 19, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.22 of Qwest Communications International Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2004 (File No. 001-15577) filed with the Securities and Exchange Commission on November 5, 2004).
|
|
|
|
(ii).
|
Third Supplemental Indenture, dated as of June 17, 2005, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on June 23, 2005).
|
Exhibit
Number
|
|
Description
|
||
|
|
|
(iii).
|
Fourth Supplemental Indenture, dated as of August 8, 2006, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on August 8, 2006).
|
|
|
|
(iv).
|
Fifth Supplemental Indenture, dated as of May 16, 2007, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on May 18, 2007).
|
|
|
|
(v).
|
Sixth Supplemental Indenture, dated as of April 13, 2009, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on April 13, 2009).
|
|
|
|
(vi).
|
Seventh Supplemental Indenture, dated as of June 8, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.8 of Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on June 7, 2011).
|
|
|
|
(vii).
|
Eighth Supplemental Indenture, dated as of September 21, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.9 of Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on September 20, 2011).
|
|
|
|
(viii).
|
Ninth Supplemental Indenture, dated as of October 4, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Corporation's Current Report on Form 8-K (File No. 001-03040) filed with the Securities and Exchange Commission on October 4, 2011).
|
|
|
|
(ix)
|
Tenth Supplemental Indenture, dated as of April 2, 2012, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on March 30, 2012).
|
|
|
|
(x)
|
Eleventh Supplemental Indenture, dated as of June 25, 2012, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.12 of Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on June 22, 2012).
|
|
|
|
(xi)
|
Twelfth Supplemental Indenture, dated as of May 23, 2013, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on May 22, 2013).
|
4.6
|
|
Instruments relating to indebtedness of Embarq Corporation.
(1)
|
||
|
|
a.
|
Indenture, dated as of May 17, 2006, by and between Embarq Corporation and J.P. Morgan Trust Company, National Association, a national banking association, as trustee (incorporated by reference to Exhibit 4.1 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32732) filed with the Securities and Exchange Commission on May 18, 2006).
|
|
|
|
b.
|
7.082% Global Note due 2016 of Embarq Corporation (incorporated by reference to Exhibit 4.3 to Embarq Corporation's Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-32372) filed with the Securities and Exchange Commission on March 9, 2007).
|
|
|
|
c.
|
7.995% Global Note due 2036 of Embarq Corporation (incorporated by reference to Exhibit 4.4 to Embarq Corporation's Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-32372) filed with the Securities and Exchange Commission on March 9, 2007).
|
|
4.7
|
|
Intercompany debt instruments.
|
||
|
|
a.
|
Revolving Promissory Note, dated as of April 2, 2012 pursuant to which Embarq Corporation may borrow from an affiliate of CenturyLink, Inc. up to $2.5 billion on a revolving basis (incorporated by reference to Exhibit 4.7(a) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2012 (File No. 001-07784) filed with the Securities and Exchange Commission on November 8, 2012).
|
|
|
|
b.
|
Revolving Promissory Note, dated as of April 18, 2012, pursuant to which Qwest Corporation may borrow from an affiliate of CenturyLink, Inc. up to $1.0 billion on a revolving basis (incorporated by reference to Exhibit 4.7(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2012 (File No. 001-07784) filed with the Securities and Exchange Commission on November 8, 2012).
|
Exhibit
Number
|
|
Description
|
||
|
|
c.
|
Revolving Promissory Note, dated as of September 27, 2012, pursuant to which Qwest Communications International, Inc. may borrow from an affiliate of CenturyLink, Inc. up to $3.0 billion on a revolving basis (incorporated by reference to Exhibit 4.7(c) of CenturyLink Inc.'s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-07844) filed with the Securities and Exchange Commission on March 1, 2013).
|
|
10.1
|
|
Qualified Employee Benefit Plans of CenturyLink, Inc. (excluding several narrow-based qualified plans that cover union employees or other limited groups of employees).
|
||
|
|
a.
|
CenturyLink Dollars & Sense 401(k) Plan and Trust, as amended and restated through December 31, 2006 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2007), as amended by the First Amendment and the Second Amendment thereto, each dated as of December 31, 2007 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on February 29, 2008), as amended by the Third Amendment thereto dated as of November 20, 2008 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009), as amended by the Fourth Amendment thereto dated as of June 30, 2009 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009), as amended by the Fifth Amendment thereto dated as of September 15, 2009 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by the Sixth Amendment thereto, dated as of December 30, 2009 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by the Seventh Amendment thereto, effective May 20, 2010 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010) and as amended by the Eighth Amendment thereto, effective January 1, 2011 (incorporated by reference to Exhibit 10.1(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
|
|
|
b.
|
CenturyLink Union 401(k) Plan and Trust, as amended and restated through December 31, 2006 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2007), as amended by the First Amendment thereto dated as of May 29, 2007 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on May 7, 2008), as amended by the Second Amendment thereto dated as of December 31, 2007 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on February 29, 2008), as amended by the Third Amendment thereto dated as of November 20, 2008 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009), as amended by the Fourth Amendment thereto dated as of June 30, 2009 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009), as amended by the Fifth Amendment thereto dated as of September 15, 2009 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by the Sixth Amendment thereto, dated as of December 30, 2009 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by the Seventh Amendment thereto, effective May 20, 2010 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010) and as amended by the Eighth Amendment thereto, effective January 1, 2011 (incorporated by reference to Exhibit 10.1(b) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
Exhibit
Number
|
|
Description
|
||
|
|
c.
|
CenturyLink Retirement Plan, as amended and restated through December 31, 2006 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2007), as amended by Amendment No. 1 thereto dated as of April 2, 2007 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on May 7, 2008), as amended by Amendment No. 2 thereto dated as of December 31, 2007 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on February 29, 2008), as amended by Amendment No. 3 thereto dated as of October 24, 2008 (incorporated by reference to Exhibit 10.1(c) CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009), as amended by Amendment No. 4 dated as of June 30, 2009 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009), as amended by Amendment No. 5 thereto dated as of September 15, 2009 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by Amendment No. 6 thereto, dated as of December 30, 2009 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010), as amended by Amendment No. 7 thereto, effective at various dates during 2010 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010) and as amended by Amendment No. 8 thereto, effective January 1, 2011 (incorporated by reference to Exhibit 10.1(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
|
10.2
|
|
Stock-based Incentive Plans and Agreements of CenturyLink
|
||
|
|
a.
|
Amended and Restated 1983 Restricted Stock Plan, as amended and restated through February 23, 2010 (incorporated by reference to Exhibit 10.2(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010).
|
|
|
|
b.
|
Amended and Restated 2000 Incentive Compensation Plan, as amended through May 23, 2000 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2000 (File No. 001-07784) filed with the Securities and Exchange Commission on August 11, 2000) and amendment thereto dated as of May 29, 2003 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2003 (File No. 001-7784) filed with the Securities and Exchange Commission on August 14, 2003).
|
|
|
|
|
(i)
|
Form of Stock Option Agreement, pursuant to the 2000 Incentive Compensation Plan and dated as of May 21, 2001, entered into between CenturyLink, Inc. and its officers (incorporated by reference to Exhibit 10.2(e) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 001-07784) filed with the Securities and Exchange Commission on March 15, 2002).
|
|
|
|
(ii)
|
Form of Stock Option Agreement, pursuant to the 2000 Incentive Compensation Plan and dated as of February 25, 2002, entered into between CenturyLink, Inc. and its officers (incorporated by reference to Exhibit 10.2(d) (ii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-07784) filed with the Securities and Exchange Commission on March 27, 2003).
|
|
|
c.
|
Amended and Restated 2002 Directors Stock Option Plan, dated as of February 25, 2004 (incorporated by reference to Exhibit 10.2(e) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2004) and amendment thereto dated as of October 24, 2008 (incorporated by reference to Exhibit 10.2(d) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009).
|
Exhibit
Number
|
|
Description
|
||
|
|
|
(i)
|
Form of Stock Option Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. in connection with options granted to the outside directors as of May 10, 2002 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2002 (File No. 001-07784) filed with the Securities and Exchange Commission on November 14, 2002).
|
|
|
|
(ii)
|
Form of Stock Option Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. in connection with options granted to the outside directors as of May 9, 2003 (incorporated by reference to Exhibit 10.2(e) (ii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2004).
|
|
|
|
(iii)
|
Form of Stock Option Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. in connection with options granted to the outside directors as of May 7, 2004 (incorporated by reference to Exhibit 10.2(d) (iii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-07784) filed with the Securities and Exchange Commission on March 16, 2006).
|
|
|
d.
|
Amended and Restated 2002 Management Incentive Compensation Plan, dated as of February 25, 2004 (incorporated by reference to Exhibit 10.2(f) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2004) and amendment thereto dated as of October 24, 2008 (incorporated by reference to Exhibit 10.2(e) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009).
|
|
|
|
|
(i)
|
Form of Stock Option Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and certain of its officers and key employees at various dates during 2002 following May 9, 2002 (incorporated by reference to Exhibit 10.4 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2002 (File No. 001-07784) filed with the Securities and Exchange Commission on November 14, 2002).
|
|
|
|
(ii)
|
Form of Stock Option Agreement, pursuant to foregoing plan and dated as of February 24, 2003, entered into between CenturyLink, Inc. and its officers (incorporated by reference to Exhibit 10.2(f) (ii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-07784) filed with the Securities and Exchange Commission on March 27, 2003).
|
|
|
|
(iii)
|
Form of Stock Option Agreement, pursuant to foregoing plan and dated as of February 25, 2004, entered into between CenturyLink, Inc. and its officers (incorporated by reference to Exhibit 10.2(f) (iii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-07784) filed with the Securities and Exchange Commission on March 12, 2004).
|
|
|
|
(iv)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 24, 2003, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.1 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2003 (File No. 001-07784) filed with the Securities and Exchange Commission on May 14, 2003).
|
|
|
|
(v)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 25, 2004, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2(f) (v) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2004 (File No. 000-50260) filed with the Securities and Exchange Commission on May 7, 2004).
|
|
|
|
(vi)
|
Form of Stock Option Agreement, pursuant to foregoing plan and dated as of February 17, 2005, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2(e) (v) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 000-50260) filed with the Securities and Exchange Commission on March 16, 2005).
|
|
|
|
(vii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 17, 2005, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2(e) (vi) of CenturyLink, Inc.'s Annual Report on Form 10-K for the period ended December 31, 2004 (File No. 000-50260) filed with the Securities and Exchange Commission on March 16, 2005).
|
Exhibit
Number
|
|
Description
|
||
|
|
e.
|
Amended and Restated 2005 Directors Stock Plan, as amended and restated through February 23, 2010 (incorporated by reference to Exhibit 10.2(f) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010).
|
|
|
|
|
(i)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and each of its outside directors as of May 13, 2005 (incorporated by reference to Exhibit 10.4 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 000-50260) filed with the Securities and Exchange Commission on May 13, 2005).
|
|
|
|
(ii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and each of its outside directors as of May 12, 2006 (incorporated by reference to Exhibit 10.1 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2006 (File No. 001-07784) filed with the Securities and Exchange Commission on August 3, 2006).
|
|
|
|
(iii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and each of its outside directors as of May 11, 2007 (incorporated by reference to Exhibit 10.2(f) (iii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the period ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009).
|
|
|
|
(iv)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and each of its outside directors as of May 9, 2008 (incorporated by reference to Exhibit 10.2 (f) (iv) of CenturyLink, Inc.'s Annual Report on Form 10-K for the period ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on February 27, 2009).
|
|
|
|
(v)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of May 8, 2009, entered into between CenturyLink, Inc. and each of its outside directors on such date who remained on the Board following July 1, 2009 (incorporated by reference to Exhibit 10.2(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
|
|
|
(vi)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of May 8, 2009, entered into between CenturyLink, Inc. and each of its outside directors who retired on July 1, 2009 (incorporated by reference to Exhibit 10.2(c) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
|
|
|
(vii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of July 2, 2009, entered into between CenturyLink, Inc. and each of its outside directors named to the Board on July 1, 2009 (incorporated by reference to Exhibit 10.1(d) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
|
|
|
(viii)
|
Restricted Stock Agreement, pursuant to the foregoing plan and dated as of July 2, 2009, entered into between CenturyLink, Inc. and William A. Owens in payment of Mr. Owens' 2009 supplemental chairman's fees (incorporated by reference to Exhibit 10.2(e) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
|
|
|
(ix)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of May 21, 2010, entered into between CenturyLink, Inc. and seven of its outside directors on such date (incorporated by reference to Exhibit 10.1 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on August 6, 2010).
|
|
|
f.
|
Amended and Restated 2005 Management Incentive Compensation Plan, as amended and restated through February 23, 2010 (incorporated by reference to Exhibit 10.2(g) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010).
|
|
|
|
|
(i)
|
Form of Stock Option Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and certain officers and key employees at various dates since May 12, 2005 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2005 (File No. 001-07784) filed with the Securities and Exchange Commission on November 9, 2005).
|
Exhibit
Number
|
|
Description
|
||
|
|
|
(ii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan, entered into between CenturyLink, Inc. and certain officers and key employees at various dates since May 12, 2005 (incorporated by reference to Exhibit 10.3 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2005 (File No. 001-07784) filed with the Securities and Exchange Commission on November 9, 2005).
|
|
|
|
(iii)
|
Form of Stock Option Agreement, pursuant to the foregoing plan and dated as of February 21, 2006, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2(g) (iii) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-07784) filed with the Securities and Exchange Commission on March 16, 2006).
|
|
|
|
(iv)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 21, 2006, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2(g) (iv) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-07784) filed with the Securities and Exchange Commission on March 16, 2006).
|
|
|
|
(v)
|
Form of Stock Option Agreement, pursuant to the foregoing plan and dated as of February 26, 2007, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.1 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on May 9, 2007).
|
|
|
|
(vi)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 26, 2007, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on May 9, 2007).
|
|
|
|
(vii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 21, 2008, entered into between CenturyLink, Inc. and its executive officers (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on May 7, 2008).
|
|
|
|
(viii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of February 26, 2009 (incorporated by reference to Exhibit 10.2(g) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on May 1, 2009).
|
|
|
|
(ix)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of March 8, 2010 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on May 7, 2010).
|
|
|
g.
|
Amended and Restated CenturyLink Legacy Embarq 2008 Equity Incentive Plan, as amended and restated through February 23, 2010 (incorporated by reference to Exhibit 10.2(h) of CenturyLink, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2010).
|
|
|
|
|
(i)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of May 21, 2010, entered into between CenturyLink, Inc. and four of its outside directors as of such date (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on August 6, 2010).
|
|
|
|
(ii)
|
Form of Restricted Stock Agreement, pursuant to the foregoing plan and dated as of May 21, 2010, entered into between CenturyLink, Inc. and William A. Owens in payment of Mr. Owens' 2010 supplemental chairman's fees (incorporated by reference to Exhibit 10.3 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on August 6, 2010).
|
|
|
|
(iii)
|
Form of Restricted Stock Agreement, dated as of September 7, 2010, entered into between CenturyLink, Inc. and Dennis G. Huber (incorporated by reference to Exhibit 10.16 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010).
|
Exhibit
Number
|
|
Description
|
||
|
|
h.
|
Form of Retention Award Agreement, pursuant to the equity incentive plans of CenturyLink or Embarq and dated as of August 23, 2010, entered into between CenturyLink, Inc. and certain officers and key employees as of such date (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010).
|
|
|
|
i.
|
CenturyLink 2011 Equity Incentive Plan (incorporated by reference to Appendix B of CenturyLink, Inc.'s Proxy Statement for its 2011 Annual Meeting of Shareholders (File No. 001-07784) filed with the Securities and Exchange Commission on April 6, 2011).
|
|
|
|
|
(i)
|
Form of Restricted Stock Agreement for executive officers used in 2011 and 2012 (incorporated by reference to Exhibit 10.2(a) (i) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2011 (File No. 001-07784) filed with the Securities and Exchange Commission on August 9, 2011).
|
|
|
|
(ii)
|
Form of Restricted Stock Agreement for non-management directors used since 2011 (incorporated by reference to Exhibit 10.2(a) (ii) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2011 (File No. 001-07784) filed with the Securities and Exchange Commission on August 9, 2011).
|
|
|
|
(iii)
|
Form of Restricted Stock Agreement for executive officers used since May 2013.
|
10.3
|
|
Key Employee Incentive Compensation Plan, dated as of January 1, 1984, as amended and restated as of November 16, 1995 (incorporated by reference to Exhibit 10.1(f) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 001-07784) filed with the Securities and Exchange Commission on March 18, 1996) and amendment thereto dated as of November 21, 1996 (incorporated by reference to Exhibit 10.1(f) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 001-07784) filed with the Securities and Exchange Commission on March 17, 1997), amendment thereto dated as of February 25, 1997 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 1997 (File No. 001-07784) filed with the Securities and Exchange Commission on May 8, 1997), amendment thereto dated as of April 25, 2001 (incorporated by reference to Exhibit 10.2 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2001 (File No. 001-07784) filed with the Securities and Exchange Commission on May 15, 2001), amendment thereto dated as of April 17, 2000 (incorporated by reference to Exhibit 10.3(a) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 001-07784) filed with the Securities and Exchange Commission on March 15, 2002) and amendment thereto dated as of February 27, 2007 (incorporated by reference to Exhibit 10.1 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on August 8, 2007).
|
||
10.4
|
|
Supplemental Dollars & Sense Plan, 2008 Restatement, effective January 1, 2008, (incorporated by reference to Exhibit 10.3(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-07784) filed with the Securities and Exchange Commission on February 29, 2009) and amendment thereto dated as of October 24, 2008 (incorporated by reference to Exhibit 10.3(c) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on March 27, 2009) and amendment thereto dated as of December 27, 2010 (incorporated by reference to Exhibit 10.4 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
||
10.5
|
|
Supplemental Defined Benefit Pension Plan, effective as of January 1, 2012 (incorporated by reference to Exhibit 10.5 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-07784) filed with the Securities and Exchange Commission on February 28, 2012).
|
||
10.6
|
|
Amended and Restated Salary Continuation (Disability) Plan for Officers, dated as of November 26, 1991 (incorporated by reference to Exhibit 10.16 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1991).
|
||
10.7
|
|
2010 Executive Officer Short-Term Incentive Program (incorporated by reference to Appendix B of CenturyLink, Inc.'s 2010 Proxy Statement on Form 14A (File No. 001-07784) filed with the Securities and Exchange Commission on April 7, 2010).
|
||
10.8
|
|
Amended and Restated CenturyLink 2001 Employee Stock Purchase Plan, dated as of June 30, 2009 (incorporated by reference to Exhibit 10.3 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
||
10.9
|
|
Form of Indemnification Agreement entered into between CenturyLink, Inc. and each of its directors as of July 1, 2009 (incorporated by reference to Exhibit 99.3 of CenturyLink, Inc.'s Current Report on Form 8-K (File No. 001-07784) with the Securities and Exchange Commission on July 1, 2009).
|
Exhibit
Number
|
|
Description
|
||
10.10
|
|
Form of Indemnification Agreement entered into between CenturyLink, Inc. and each of its officers as of July 1, 2009 (incorporated by reference to Exhibit 10.5 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
||
10.11
|
|
Change of Control Agreement, effective January 1, 2011, by and between Glen F. Post, III and CenturyLink, Inc. (incorporated by reference to Exhibit 10.11 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
||
10.12
|
|
Form of Change of Control Agreement, effective January 1, 2011 between CenturyLink, Inc. and each of its other executive officers (incorporated by reference to Exhibit 10.12 of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011).
|
||
10.13
|
|
Amended and Restated CenturyLink, Inc. Bonus Life Insurance Plan for Executive Officers, dated as of April 3, 2008 (incorporated by reference to Exhibit 10.4 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2008 (File No. 001-07784) filed with the Securities and Exchange Commission on May 7, 2008) and First Amendment thereto (incorporated by reference to Exhibit 10.13 of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on November 5, 2010).
|
||
10.14
|
|
Certain Material Agreements and Plans of Embarq Corporation.
|
||
|
|
a.
|
Embarq Corporation 2006 Equity Incentive Plan, as amended and restated (incorporated by reference to Exhibit 99.1 of the Registration Statement on Form S-8 filed by CenturyLink, Inc. (File No. 001-07784) with the Securities and Exchange Commission on July 1, 2009).
|
|
|
|
b.
|
Form of 2007 Award Agreement for executive officers of Embarq Corporation (incorporated by reference to Exhibit 10.1 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32372) filed with the Securities and Exchange Commission on February 27, 2007).
|
|
|
|
c.
|
Form of 2008 Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32372) filed with the Securities and Exchange Commission on March 4, 2008).
|
|
|
|
d.
|
Form of 2009 Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32732) filed with the Securities and Exchange Commission on March 5, 2009).
|
|
|
|
e.
|
Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.3 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32372) filed with the Securities and Exchange Commission on March 4, 2008).
|
|
|
|
f.
|
Amendment to Outstanding RSUs granted in 2007 and 2008 under the Embarq Corporation 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.16 of Embarq Corporation's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-32372) filed with the Securities and Exchange Commission on February 13, 2009).
|
|
|
|
g.
|
Form of 2006 Award Agreement, entered into between Embarq Corporation and Richard A. Gephardt (incorporated by reference to Exhibit 10.3 of Embarq Corporation's Current Report on Form 8-K (File No. 001-32372) filed with the Securities and Exchange Commission on August 1, 2006), as amended by the amendment thereto dated as of June 26, 2009 (incorporated by reference to Exhibit 10.6 (m) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (File No. 001-07784) filed with the Securities and Exchange Commission on August 7, 2009).
|
|
|
|
h.
|
Amended and Restated Executive Severance Plan, including Form of Participation Agreement entered into between Embarq Corporation and William E. Cheek (incorporated by reference to Exhibit 10.4 of Embarq Corporation's Quarterly Report on Form 10-Q for the period ended September 30, 2008 (File No. 001-32372) filed with the Securities and Exchange Commission on October 30, 2008).
|
|
|
|
i.
|
Embarq Supplemental Executive Retirement Plan, as amended and restated as of January 1, 2009 (incorporated by reference to Exhibit 10.27 of Embarq Corporation's Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-32372) filed with the Securities and Exchange Commission on February 13, 2009), amendment thereto dated as of December 27, 2010 (incorporated by reference to Exhibit 10.14(o) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-07784) filed with the Securities and Exchange Commission on March 1, 2011) and second amendment thereto as of dated as of November 15, 2011 (incorporated by reference to Exhibit 10.14(k) of CenturyLink, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-07784) filed with the Securities and Exchange Commission on February 28, 2012).
|
Exhibit
Number
|
|
Description
|
||
10.15
|
|
Certain Material Agreements and Plans of Qwest Communications International Inc. or Savvis, Inc.
|
||
|
|
a.
|
Equity Incentive Plan, as amended and restated (incorporated by reference to Annex A of Qwest Communications International Inc.'s Proxy Statement for the 2007 Annual Meeting of Stockholders (File No. 001-15577) filed with the Securities and Exchange Commission on March 29, 2007).
|
|
|
|
b.
|
Forms of restricted stock, performance share and option agreements used under Equity Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.2 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on October 24, 2005; Exhibit 10.2 of Qwest Communication International Inc.'s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 001-15577) filed with the Securities and Exchange Commission on February 16, 2006; Exhibit 10.2 of Qwest Communication International Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2006 (File No. 001-15577) filed with the Securities and Exchange Commission on May 3, 2006; Exhibit 10.2 of Qwest Communication International Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-15577) filed with the Securities and Exchange Commission on February 8, 2007; Exhibit 10.3 of Qwest Communication International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on September 15, 2008; Exhibit 10.2 of Qwest Communication International Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2009 (File No. 001-15577) filed with the Securities and Exchange Commission on April 30, 2009; and Exhibit 10.2 of Qwest Communication International Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-15577) filed with the Securities and Exchange Commission on February 15, 2011).
|
|
|
|
c.
|
Deferred Compensation Plan for Nonemployee Directors, as amended and restated, Amendment to Deferred Compensation Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.2 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on December 16, 2005 and Exhibit 10.8 to Qwest Communication International Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2008 (File No. 001-15577) filed with the Securities and Exchange Commission on October 29, 2008) and Amendment No. 2011-1 to Deferred Compensation Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.15(c) of CenturyLink, Inc.'s Annual Report for the year ended December 31, 2011 (File No. 001-07784) filed with the Securities and Exchange Commission on February 28, 2012).
|
|
|
|
d.
|
Qwest Nonqualified Pension Plan (incorporated by reference to Exhibit 10.9 of Qwest Communications International Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-15577) filed with the Securities and Exchange Commission on February 16, 2010).
|
|
|
|
e.
|
SAVVIS, Inc. Amended and Restated 2003 Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 of SAVVIS, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2006 (File No. 000-29375) filed with the Securities and Exchange Commission on May 5, 2006), as amended by Amendment No. 1 (incorporated by reference to Exhibit 10.6 of SAVVIS, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 000-29375) filed with the Securities and Exchange Commission on February 26, 2007); Amendment No. 2 (incorporated by reference to Exhibit 10.1 of SAVVIS, Inc.'s Current Report on Form 8-K (File No. 000-29375) filed with the Securities and Exchange Commission on May 15, 2007); Amendment No. 3 (incorporated by reference to Exhibit 10.3 of SAVVIS, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2007 (File No. 000-29375) filed with the Securities and Exchange Commission on July 31, 2007); Amendment No. 4 (incorporated by reference to Exhibit 10.2 of SAVVIS, Inc.'s Current Report on Form 8-K (File No. 000-29375) filed with the Securities and Exchange Commission on May 22, 2009); and Amendment No. 5 (incorporated by reference to Exhibit 10.2 of SAVVIS, Inc.'s Current Report on Form 8-K (File No. 000-29375) filed with the Securities and Exchange Commission on May 22, 2009).
|
|
12*
|
|
Ratio of Earnings to Fixed Charges
|
||
18*
|
|
Preferability Letter of Independent Registered Public Accounting Firm.
|
||
21*
|
|
Subsidiaries of CenturyLink, Inc.
|
||
23*
|
|
Independent Registered Public Accounting Firm Consent.
|
||
31.1*
|
|
Certification of the Chief Executive Officer of CenturyLink, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2*
|
|
Certification of the Chief Financial Officer of CenturyLink, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32*
|
|
Certification of the Chief Executive Officer and Chief Financial Officer of CenturyLink, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Exhibit
Number
|
|
Description
|
||
101*
|
|
Financial statements from the Annual Report on Form 10-K of CenturyLink, Inc. for the period ended December 31, 2013, formatted in XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive (Loss) Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders' Equity and (vi) the Notes to our Consolidated Financial Statements.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Exhibit filed herewith.
|
Note:
|
|
Our Corporate Governance Guidelines and Charters of our Board of Director Committees are located on our website at www.centurylink.com.
|
|
|
|
|
CenturyLink, Inc.
|
Date: February 27, 2014
|
|
By:
|
|
/s/ David D. Cole
|
|
|
|
|
David D. Cole
|
|
|
|
|
Executive Vice President, Controller and Operations Support
(Chief Accounting Officer)
|
/s/ Glen F. Post, III
|
|
Chief Executive Officer,
President and Director
|
|
February 27, 2014
|
Glen F. Post, III
|
|
|
|
|
/s/ William A. Owens
|
|
Chairman of the Board
|
|
February 27, 2014
|
William A. Owens
|
|
|
|
|
/s/ R. Stewart Ewing, Jr.
|
|
Executive Vice President, Chief Financial
Officer and Assistant Secretary
|
|
February 27, 2014
|
R. Stewart Ewing, Jr.
|
|
|
|
|
/s/ David D. Cole
|
|
Executive Vice President, Controller and
Operations Support
|
|
February 27, 2014
|
David D. Cole
|
|
|
|
|
/s/ Virginia Boulet
|
|
Director
|
|
February 27, 2014
|
Virginia Boulet
|
|
|
|
|
/s/ Peter C. Brown
|
|
Director
|
|
February 27, 2014
|
Peter C. Brown
|
|
|
|
|
/s/ Richard A. Gephardt
|
|
Director
|
|
February 27, 2014
|
Richard A. Gephardt
|
|
|
|
|
/s/ W. Bruce Hanks
|
|
Director
|
|
February 27, 2014
|
W. Bruce Hanks
|
|
|
|
|
/s/ Gregory J. McCray
|
|
Director
|
|
February 27, 2014
|
Gregory J. McCray
|
|
|
|
|
/s/ C. G. Melville, Jr.
|
|
Director
|
|
February 27, 2014
|
C. G. Melville, Jr.
|
|
|
|
|
/s/ Fred R. Nichols
|
|
Director
|
|
February 27, 2014
|
Fred R. Nichols
|
|
|
|
|
/s/ Harvey P. Perry
|
|
Director
|
|
February 27, 2014
|
Harvey P. Perry
|
|
|
|
|
/s/ Michael J. Roberts
|
|
Director
|
|
February 27, 2014
|
Michael J. Roberts
|
|
|
|
|
/s/ Laurie A. Siegel
|
|
Director
|
|
February 27, 2014
|
Laurie A. Siegel
|
|
|
|
|
/s/ Joseph R. Zimmel
|
|
Director
|
|
February 27, 2014
|
Joseph R. Zimmel
|
|
|
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Suppliers
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|