What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-20 compared with 2024-02-22 · 755 added, 706 removed, 1699 unchanged (46% of the section changed)

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We have audited the accompanying consolidated balance sheets of Lumen Technologies, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Testing of revenue

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We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the relevance and reliability of evidence obtained.

Goodwill impairments for the North America Business and Mass Markets reporting units

As discussed in Note 3 to the consolidated financial statements, the goodwill balance at December 31, 2023 was $2.0 billion.

The Company assesses goodwill for impairment at least annually, or more frequently, if events or circumstances indicate the carrying value of a reporting unit likely exceeds its fair value.

During the second quarter of 2023, the Company determined circumstances related to the sustained decline in the Company's share price indicated it was more likely than not that the carrying value of their reporting units exceeded their fair value.

Also, as of October 31, 2023, the Company performed their annual goodwill impairment test.

For both the second quarter and annual impairment tests, the Company estimated the fair value of its reporting units using a market approach.

The second quarter and annual impairment tests each determined the carrying value of the North America Business and Mass Markets reporting units exceeded their estimated fair value.

As a result, the Company recorded non-cash impairment charges of $7.9 billion and $2.8 billion, respectively, reducing the carrying value of goodwill for the North America Business and Mass Markets reporting units.

We identified the assessment of the Company’s impairment testing of the goodwill of the North America Business and Mass Markets reporting units as a critical audit matter.

Subjective auditor judgment was required in evaluating the earnings before interest, taxes, depreciation, and amortization (“EBITDA”) market multiple assumptions used to estimate the fair value of the reporting units.

The evaluation of these assumptions was challenging as differences in judgment used to determine these assumptions could have had a significant effect on each reporting unit’s estimated fair value.

Specialized skills and knowledge were required in the assessment of the EBITDA market multiple assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the goodwill impairment tests.

This included controls related to the Company’s determination of the EBITDA market multiple assumptions.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the EBITDA market multiple assumptions by:

• comparing to EBITDA market multiple ranges developed using publicly available market data for comparable entities

• performing sensitivity analyses that considered a range of EBITDA market multiples.

We have served as the Company’s auditor since 1977.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 22, 2024 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ equity, for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Total operating expenses 12,648 24,141 17,383

OPERATING (LOSS) INCOME ( 9,584 ) 95 4,285

OPERATING INCOME (LOSS) 460 ( 9,584 ) 95

OTHER EXPENSE

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Net gain on early retirement of debt (Note 7)

Other (expense) income, net ( 113 ) 32 ( 70 )

Other income (expense), net 334 ( 113 ) 32

Total other expense, net ( 690 ) ( 653 ) ( 1,086 )

(LOSS) INCOME BEFORE INCOME TAXES ( 10,237 ) ( 991 ) 2,701

Income tax expense 61 557 668

NET (LOSS) INCOME $ ( 10,298 ) ( 1,548 ) 2,033

BASIC AND DILUTED (LOSS) EARNINGS PER COMMON SHARE

LOSS BEFORE INCOME TAXES ( 230 ) ( 10,237 ) ( 991 )

Income tax (benefit) expense ( 175 ) 61 557

NET LOSS $ ( 55 ) ( 10,298 ) ( 1,548 )

BASIC AND DILUTED LOSS PER COMMON SHARE

BASIC $ ( 0.06 ) ( 10.48 ) ( 1.54 )

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended December 31,

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(Dollars in millions)

NET (LOSS) INCOME $ ( 10,298 ) ( 1,548 ) 2,033

NET LOSS $ ( 55 ) ( 10,298 ) ( 1,548 )

OTHER COMPREHENSIVE INCOME:

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Reclassification of net actuarial loss to (loss) gain on the sale of businesses, net of $ — , $ — and $( 142 ) tax

Settlement charges recognized in net (loss) income, net of $ — , $ — and $( 93 ) tax

Change in net prior service cost, net of $ 4 , $ 4 and $( 9 ) tax

( 11 ) ( 11 ) 30

Reclassification of prior service credit to (loss) gain on the sale of businesses, net of $ — , $ — and $ 6 tax

Reclassification of realized loss on interest rate swaps to net (loss) income, net of $ — , $ — and $( 5 ) tax

Unrealized holding loss on interest rate swaps, net of $ — , $ — and $ — tax

Reclassification of realized loss on foreign currency translation to (loss) gain on the sale of businesses, net of $ — , $ — and $ — tax

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Other comprehensive income 87 289 1,059

COMPREHENSIVE (LOSS) INCOME $ ( 10,009 ) ( 489 ) 2,688

COMPREHENSIVE INCOME (LOSS) $ 32 ( 10,009 ) ( 489 )

See accompanying notes to consolidated financial statements.

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Accounts receivable, less allowance of $ 59 and $ 67

Assets held for sale 104 1,889

Other 1,274 1,223

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Other 179 213

Liabilities held for sale 4 451

Current portion of deferred revenue 861 647

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Preferred stock — non-redeemable, $ 25.00 par value, authorized 2,000 and 2,000 shares, issued and outstanding 7 and 7 shares

Common stock, $ 1.00 par value, authorized 2,200,000 and 2,200,000 shares, issued and outstanding 1,008,486 and 1,001,688 shares

Common stock, $ 0.00 and $ 1.00 par value, authorized 2,200,000 and 2,200,000 shares, issued and outstanding 1,014,768 and 1,008,486 shares

Additional paid-in capital — 18,126

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OPERATING ACTIVITIES

Net (loss) income $ ( 10,298 ) ( 1,548 ) 2,033

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 55 ) ( 10,298 ) ( 1,548 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 2,956 2,985 3,239

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Goodwill impairment — 10,693 3,271

Impairment of long-lived assets 83 27 5

Deferred income taxes ( 209 ) 8 ( 1,230 )

Provision for uncollectible accounts 72 100 133

Net gain on early retirement and modification of debt ( 618 ) ( 214 ) ( 8 )

Unrealized loss (gain) on investments 97 191 ( 138 )

Net gain on early retirement of debt ( 348 ) ( 618 ) ( 214 )

Debt modification costs and related fees ( 79 ) — —

Gain on sale of investment ( 205 ) — —

Unrealized loss on investments 10 97 191

Stock-based compensation 29 52 98

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Retirement benefits ( 181 ) ( 1 ) 46

Change in deferred revenue 1,763 230 6

Changes in other noncurrent assets and liabilities, net 655 500 252

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Payments of long-term debt ( 2,678 ) ( 185 ) ( 8,093 )

Net proceeds from (payments on) revolving line of credit 200 ( 200 ) 50

Net (payments of) proceeds from revolving line of credit ( 200 ) 200 ( 200 )

Dividends paid ( 3 ) ( 11 ) ( 780 )

Debt issuance and extinguishment costs and related fees ( 283 ) ( 14 ) —

Repurchases of common stock — — ( 200 )

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Net cash used in financing activities ( 1,851 ) ( 18 ) ( 9,313 )

Net increase (decrease) in cash, cash equivalents and restricted cash 941 898 ( 18 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 348 ) 941 898

Cash, cash equivalents and restricted cash at beginning of period 2,248 1,307 409

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Supplemental cash flow information:

Income taxes paid, net $ ( 1,303 ) ( 76 ) ( 112 )

Income taxes refunded (paid), net $ 242 ( 1,303 ) ( 76 )

Interest paid (net of capitalized interest of $ 176 , $ 111 and $ 66 )

( 1,245 ) ( 1,138 ) ( 1,365 )

Supplemental non-cash information regarding investing activities:

Sale of property, plant and equipment in exchange for note receivable $ — — 56

Supplemental non-cash information regarding financing activities:

Purchase of software subscription in exchange for installment debt $ — — 77

Cancellation of senior unsecured notes as part of exchange offers (Note 7)

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Repurchases of common stock — — ( 33 )

Conversion to no-par stock value (Note 1)

Balance at end of period 19,149 1,008 1,002

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Dividends declared — 1 ( 791 )

Conversion to no-par stock value (Note 1)

( 18,133 ) — —

Balance at end of period — 18,126 18,080

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Balance at beginning of period ( 17,907 ) ( 7,609 ) ( 6,061 )

Net (loss) income ( 10,298 ) ( 1,548 ) 2,033

Net loss ( 55 ) ( 10,298 ) ( 1,548 )

Balance at end of period ( 17,962 ) ( 17,907 ) ( 7,609 )

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and its consolidated subsidiaries, unless the context otherwise requires.

References in the Notes to "Level 3" refer to Level 3 Parent, LLC and its predecessor, Level 3 Communications, Inc., which we acquired on November 1, 2017.

(1) Background and Summary of Significant Accounting Policies

We are a facilities-based technology and communications company that provides a broad array of integrated products and services to our domestic and global business customers and our domestic mass markets customers.

Note 1—Background and Summary of Significant Accounting Policies

We are a networking company with the goal of connecting people, data, and applications quickly, securely and effortlessly.

We are unleashing the world's digital potential by providing a broad array of integrated products and services to our domestic and global Business customers and our domestic Mass Markets customers.

We operate one of the world’s most interconnected networks.

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To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows:

(i) income attributable to noncontrolling interests in other (expense) income, net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities.

(i) income attributable to noncontrolling interests in other income (expense), net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities.

We reclassified certain prior period amounts to conform to the current period presentation, including the recategorization of our Business revenue by product category and sales channel in our segment reporting for 2023 and 2022.

See Note 17—Segment Information for additional information.

These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period.

These changes had no impact on total operating revenue, total operating expenses or net loss for any period.

Operating Expenses

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external commissions;

litigation expenses associated with general matters;

legal expenses associated with general matters;

bad debt expense;

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Revenue from contracts with customers is accounted for under Accounting Standards Codification ("ASC") 606.

We also earn revenue from leasing arrangements (primarily fiber capacity and colocation agreements) and governmental subsidy payments, which are not accounted for under ASC 606.

We also earn revenue from leasing arrangements (primarily from fiber capacity and conduit leases and colocation agreements) and governmental subsidy payments, which are not accounted for under ASC 606.

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services.

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Recognition of certain payments received in advance of services being provided is deferred.

These advance payments may include certain activation and certain installation charges.

If the activation and installation charges are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which typically ranges from one to five years depending on the service.

These advance payments may include design, planning and engineering fees, as well as certain activation and installation charges.

If these advance payments are not separate performance obligations, we recognize them as revenue over the actual or expected contract term using historical experience, which typically ranges from one to five years depending on the service.

In most cases, termination fees or other fees on existing contracts that are negotiated in conjunction with new contracts are deferred and recognized over the new contract term.

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This activity is included in the operating activities section in our consolidated statements of cash flows.

There were no book overdrafts included in accounts payable at December 31, 2023 or 2022.

There were $ 1 million and no book overdrafts included in accounts payable at December 31, 2024 and 2023, respectively.

Restricted Cash

Restricted cash consists primarily of cash and investments that collateralize our outstanding letters of credit and certain performance and operating obligations.

Restricted cash and securities are recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists.

Restricted securities are stated at cost which approximated their fair value as of December 31, 2023 and 2022.

Restricted cash is recorded as current or non-current assets in the consolidated balance sheets depending on the duration of the restriction and the purpose for which the restriction exists.

Accounts Receivable and Allowance for Credit Losses

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We generally consider our accounts past due if they are outstanding over 30 days.

Our past due accounts are written off against our allowance for credit losses when collection is considered to be not probable.

Any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received.

Our past due accounts are written off against our allowance for credit losses and any recoveries of accounts previously written off are generally recognized as a reduction in bad debt expense in the period received.

The carrying value of accounts receivable net of the allowance for credit losses approximates fair value.

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Property, Plant and Equipment

We record property, plant and equipment acquired in connection with our acquisitions based on its estimated fair value as of its acquisition date plus the estimated value of any associated legally or contractually required retirement obligations.

We record property, plant and equipment acquired in connection with our business acquisitions based on its estimated fair value as of its acquisition date plus the estimated value of any associated legally or contractually required retirement obligations.

We record purchased and constructed property, plant and equipment at cost, plus the estimated value of any associated legally or contractually required retirement obligations.

We depreciate the majority of our property, plant and equipment using the straight-line group method over the estimated useful lives of groups of assets, but depreciate certain of our assets using the straight-line method over the estimated useful lives of the specific asset.

Prior to January 1, 2024, we depreciated the majority of our property, plant and equipment using the straight-line group method over the estimated useful lives of groups of assets.

Under the straight-line group method, assets dedicated to providing telecommunications services (which comprise the majority of our property, plant and equipment) that have similar physical characteristics, use and expected useful lives are pooled for purposes of depreciation and tracking.

We use the equal life group procedure to establish each pool's average remaining useful life.

We used the equal life group procedure to establish each pool's average remaining useful life.

Generally, under the straight-line group method, when an asset is sold or retired in the course of normal business activities, the cost is deducted from property, plant and equipment and charged to accumulated depreciation without recognition of a gain or loss.

Effective January 1, 2024, we re-established all of our assets individually, including accumulated depreciation, and began to depreciate all of our assets using the straight-line method over the estimated useful lives of the specific asset.

A gain or loss is recognized in our consolidated statements of operations only if a disposal is unusual.

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We initially record intangible assets arising from business combinations, such as goodwill, customer relationships, capitalized software, trademarks and trade names, at estimated fair value.

We amortize customer relationships primarily over an estimated life of 7 to 14 years, using the straight-line method, depending on the type of customer.

Certain customer relationship intangible assets became fully amortized at the end of the first quarter 2021 using the sum-of-years-digits method, which we no longer use for any of our remaining intangible assets.

We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to 7 years.

We amortize our other intangible assets using the straight-line method over an estimated life of 9 to 20 years.

We amortize customer relationships primarily over an estimated life of seven to 14 years, using the straight-line method, depending on the type of customer.

We amortize capitalized software using the straight-line method primarily over estimated lives ranging up to seven years .

We amortize our other intangible assets using the straight-line method over an estimated life of nine to 20 years.

Other intangible assets not arising from business combinations are initially recorded at cost.

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This process entails various estimates, judgments and assumptions.

We are required to reassign goodwill to reporting units whenever reorganizations of our internal reporting structure changes the composition of our reporting units.

We are required to reassign goodwill to reporting units whenever reorganizations of our internal reporting structure change the composition of our reporting units.

Goodwill is reassigned to the reporting units using a relative fair value approach.

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Prior to the November 1, 2023 sale of our EMEA business and the August 1, 2022 sale of our Latin American business, a significant portion of our non-United States subsidiaries used the British pound, the Euro, or the Brazilian Real, as their functional currency, each of which experienced significant fluctuations against the U.S.

dollar during the years ended December 31, 2023, 2022 and 2021.

dollar during the periods covered by this report when we operated the divested businesses.

We recognize foreign currency translation gains and losses as a component of accumulated other comprehensive loss in stockholders' equity in our consolidated balance sheet and in our consolidated statements of comprehensive (loss) income in accordance with accounting guidance for foreign currency translation.

Prior to the announcement of our divestitures as discussed in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries to be long-term in nature.

Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other (expense) income, net on our consolidated statements of operations.

Prior to the completion of our divestitures as discussed in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses, we considered the majority of our investments in our foreign subsidiaries to be long-term in nature.

Our foreign currency transaction gains (losses), including where transactions with our non-United States subsidiaries are not considered to be long-term in nature, are included within other income (expense), net on our consolidated statements of operations.

On December 18, 2024, we amended our articles of incorporation to eliminate the par value of our common stock (which was, prior to such amendment, $ 1.00 per share) as approved by our shareholders at our 2024 annual shareholders meeting.

We recognized the change by reclassifying the balance in Additional paid-in capital to Common stock on our consolidated balance sheet as of December 18, 2024.

All changes in capitalization previously recognized as Additional paid-in capital will hereinafter be recognized in Common stock.

This change had no other impact on our consolidated financial statements.

As of December 31, 2024, we had 41 million shares authorized for future issuance under our equity incentive plans.

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We maintain a Section 382 Rights Plan to protect our U.S.

federal net operating loss carryforwards from certain Internal Revenue Code Section 382 limitations.

federal net operating loss carryforwards ("NOLs") from certain Internal Revenue Code Section 382 limitations.

Under the plan, one preferred stock purchase right was distributed for each share of our outstanding common stock as of the close of business on February 25, 2019, and those rights currently trade in tandem with the common stock until they expire or detach under the plan.

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On November 2, 2022, we announced that our Board had terminated our quarterly cash dividend program.

Correction of Immaterial Errors

During 2023, we identified errors in our previously reported consolidated financial statements related to accounts receivable and accounts payable.

The errors are the result of understated revenues from one of our legacy mainframe billing systems and understated network expenses for periods prior to 2021.

We have completed a quantitative and qualitative evaluation of the errors individually and in aggregate, and concluded the errors are immaterial to our previously issued consolidated financial statements.

Notwithstanding this evaluation, we have revised certain line items on our December 31, 2022 consolidated balance sheet for these errors.

The net effect of these adjustments was an increase in accounts receivable and total assets of $ 31 million and an increase of accounts payable and total liabilities of $ 94 million on our December 31, 2022 consolidated balance sheet.

In addition, we recorded an adjustment to increase our January 1, 2021 accumulated deficit by $ 63 million, which represents the cumulative correction of the immaterial errors prior to January 1, 2021.

The errors did not have an impact on our previously issued consolidated statements of operations, comprehensive (loss) income, or cash flows for the years ended December 31, 2022 or 2021, and did not, and are not expected to, have an impact on the economics of the Company's existing or future commercial arrangements.

Change in Accounting Estimates

Effective January 1, 2024, we changed our method of depreciation and amortization for incumbent local exchange carriers ("ILEC") and certain competitive local exchange carriers ("CLEC") fixed assets from the group method of depreciation to straight-line by individual asset method.

Historically, we have used the group method of depreciation for the property, plant and equipment and amortization of certain intangible capitalized software assets of our ILECs and certain CLECs.

Under the group method, all like kind assets for each subsidiary were combined into common pools and depreciated under composite depreciation rates.

Recent business divestitures and asset sales have significantly reduced our composite asset base.

We believe the straight-line depreciation method for individual assets is preferable to the group method as it will result in a more precise estimate of depreciation expense and will result in a consistent depreciation method for all our subsidiaries.

This change in the method of depreciation is considered a change in accounting estimate inseparable from a change in accounting principle and has resulted solely in prospective changes to our depreciation and amortization expense.

This change in accounting estimate had an immaterial impact to our net loss and diluted loss per share for the year ended December 31, 2024.

Additionally, during the first quarter of 2024, we updated our analysis of economic lives of owned fiber network assets.

As of January 1, 2024, we extended the estimated economic life and depreciation period of such assets from 25 years to 30 years to better reflect the physical life of the assets that we have experienced and absence of technological changes that would replace fiber.

The change in accounting estimate decreased depreciation expense by approximately $ 63 million, $ 48 million net of tax for the year ended December 31, 2024, and resulted in an increase of $ 0.05 , per diluted share for the year ended December 31, 2024.

Recently Adopted Accounting Pronouncements

Supplier Finance Programs

On January 1, 2023, we adopted Accounting Standards Update ("ASU") 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations” (“ASU 2022-04”).These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions.

The adoption of ASU 2022-04 did not have a material impact to our consolidated financial statements.

Credit Losses

On January 1, 2023, we adopted ASU 2022-02, “Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings (“TDR”) and Vintage Disclosures” (“ASU 2022-02”).

The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The adoption of ASU 2022-02 did not have a material impact to our consolidated financial statements.

On January 1, 2024, we adopted Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The ASU does not change how a public entity identifies its operating segments, aggregates them or applies quantitative thresholds to determine reportable segments.

We did not early adopt this standard.

Refer to Note 17—Segment Information for more information on the impact of this ASU on our consolidated financial statements.

Government Assistance

On January 1, 2022, we adopted ASU 2021-10 "Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance” (“ASU 2021-10”) ASU 2021-10.

This ASU requires business entities to disclose information about certain types of government assistance they receive.

Please refer to Note 4—Revenue Recognition for more information.

Disclosures by Business Entities about Government Assistance.” This ASU requires business entities to disclose information about certain types of government assistance they receive.

Refer to Note 4—Revenue Recognition for more information on the impact of this ASU on our consolidated financial statements.

On January 1, 2024, we adopted ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

The adoption of this ASU did not have any impact on our consolidated financial statements.

On January 1, 2024, we adopted ASU 2022-03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." This ASU clarifies that a contractual restriction on the sales of an investment in an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring its fair value.

The adoption of this ASU did not have any impact on our consolidated financial statements.

On January 1, 2024, we adopted ASU 2023-01, “Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments” (“ASU 2021-05”).

This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease;

Common Control Arrangements.” This ASU requires all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group.

The adoption of this ASU did not have any impact on our consolidated financial statements.

On January 1, 2022, we adopted ASU 2021-05, “Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments.” This ASU (i) amends the lease classification requirements for lessors, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease;

and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics.

The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements.

On January 1, 2021, we adopted ASU 2020-09, "Debt (Topic 470) Amendments to SEC Paragraphs Pursuant to SEC Release No.

33-10762" ("ASU 2020-09") .

This ASU amends and supersedes various SEC guidance to reflect SEC Release No.

33-10762, which includes amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees.

The adoption of ASU 2020-09 did not have a material impact to our consolidated financial statements.

On January 1, 2021, we adopted ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815)" ("ASU 2020-01") .

This ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments - Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

As of December 31, 2023, we determined there was no application or discontinuation of the equity method during the reporting periods covered in this report.

The adoption of ASU 2020-01 did not have an impact to our consolidated financial statements.

On January 1, 2021, we adopted ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)" ("ASU 2019-12") .

This ASU removes certain exceptions for investments, intra-period allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes.

The adoption of ASU 2019-12 did not have a material impact to our consolidated financial statements.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Reference Rate Reform

In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848." This ASU, which was effective upon issuance, extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, by deferring the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

Based on our review of our key material contracts through December 31, 2024, this ASU does not have a material impact on our consolidated financial statements.

Supplier Finance Programs

On January 1, 2023, we adopted ASU 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” This ASU requires a company that uses a supplier finance program in connection with the purchase of goods or services to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Credit Losses

On January 1, 2023, we adopted ASU 2022-02, “Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings (“TDR”) and Vintage Disclosures.” The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Adoption of Other ASUs

In July 2023, the FASB issued ASU 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock.” This ASU became effective for us once the addition to the FASB Codification was made available in July 2023.

This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements.

This ASU does not provide any new guidance.

The adoption of this ASU did not have any impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”).

This ASU requires that public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” ASU 2023-09 will become effective for us in the annual period of fiscal 2025 and early adoption is permitted.

We have chosen not to early adopt this ASU.

In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments." This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments.

This standard is effective for the annual period of fiscal 2026, and early adoption is permitted.

As of December 31, 2024, we do not hold convertible debt instruments and do not expect this ASU will have any impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses." This ASU requires additional footnote disclosure of the details of certain income statement expense line items as well as additional disclosure about selling expenses.

This standard is effective for the annual period of fiscal 2027, and early adoption is permitted.

The guidance is to be applied prospectively, with the option for retrospective application.

We are currently evaluating the impact the adoption of this standard will have on our disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This ASU requires that public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

This ASU will become effective for us in the annual period of fiscal 2025 and early adoption is permitted.

We have chosen not to early adopt this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes footnote.

In December 2023, the FASB issued ASU 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets” (“ASU 2023-08”).

This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income.

Accounting for and Disclosure of Crypto Assets.” This ASU is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income.

The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period.

This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted.

As of December 31, 2023, we do not hold crypto assets and do not expect ASU 2023-08 will have any impact to our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

This ASU will become effective for us in annual period fiscal 2024 and early adoption is permitted.

As of December 31, 2023, we are evaluating its impact on our consolidated financial statements.

As of December 31, 2024, we do not hold crypto assets and do not expect this ASU to have any impact on our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU 2023-06”).

This ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification”).

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes.

As of December 31, 2023, we do not expect ASU 2023-06 will have any impact to our consolidated financial statements.

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU incorporates certain SEC disclosure requirements into the FASB Codification.

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of FASB Codification topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB Codification with the SEC’s regulations.

This ASU will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes.

As of December 31, 2024, we do not expect this ASU to have any impact on our consolidated financial statements.

In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60):

Recognition and initial Measurement” (“ASU 2023-05”).

This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture).

Recognition and Initial Measurement.” This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture).

The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation.

ASU 2023-05 will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted.

As of December 31, 2023, we do not expect ASU 2023-05 will have any impact to our consolidated financial statements.

In August 2023, the FASB issued ASU 2023-04, “Liabilities (Topic 405):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

121” (“ASU 2023-04”).

This ASU amends and adds various SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users.

This ASU does not provide any new guidance.

ASU 2023-04 became effective for us once the addition to the FASB Codification was made available.

As of December 31, 2023, we do not expect ASU 2023-04 will have any impact to our consolidated financial statements.

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock” (“ASU 2023-03”).

This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements.

This ASU does not provide any new guidance.

ASU 2023-03 became effective for us once the addition to the FASB Codification was made available.

As of December 31, 2023, we do not expect ASU 2023-03 will have any impact to our consolidated financial statements.

In March 2023, the FASB issued ASU 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” (“ASU 2023-02”).

These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

ASU 2023-02 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted.

As of December 31, 2023, we do not expect ASU 2023-02 will have any impact to our consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842):

Common Control Arrangements” (“ASU 2023-01”).

These amendments require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group.

ASU 2023-01 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted.

As of December 31, 2023, we do not expect ASU 2023-01 will have any impact to our consolidated financial statements.

In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-06, “Reference Rate Reform (Topic 848) – Deferral of the Sunset Date of Topic 848" ("ASU 2022-06").

These amendments extend the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, which defers the sunset date from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

ASU 2022-06 is effective upon issuance.

Based on our review of our key material contracts through December 31, 2023, ASU 2022-06 does not have a material impact to our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”).

These amendments clarify that a contractual restriction on the sales of an investment in an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring its fair value.

ASU 2022-03 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted.

As of December 31, 2023, we do not expect ASU 2022-03 will have any impact to our consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848):

Scope" ("ASU 2021-01"), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

ASU 2021-01 also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

These amendments may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

ASU 2021-01 provides optional expedients for a limited time to ease the potential burden in accounting for reference rate reform.

Based on our review of our key material contracts through December 31, 2023, ASU 2021-01 will not have a material impact to our consolidated financial statements.

(2) Divestitures of the Latin American, ILEC and EMEA Businesses

This ASU will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted.

As of December 31, 2024, we do not expect this ASU to have any impact on our consolidated financial statements.

Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses

Latin American Business

On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., sold Lumen’s Latin American business pursuant to a definitive agreement dated July 25, 2021, for pre-tax cash proceeds of approximately $ 2.7 billion.

On August 1, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., sold Lumen’s Latin American business pursuant to a definitive agreement dated July 25, 2021, to a fund advised by Stonepeak Partners LP for pre-tax cash proceeds of approximately $ 2.7 billion.

For the year ended December 31, 2022, we recorded a $ 597 million net pre-tax gain on disposal associated with the sale of our Latin American business.

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In addition, we agreed to indemnify the purchaser for certain matters for which future cash payments by Lumen could be required.

Lumen has estimated the fair value of these indemnifications to be $ 86 million, which is included in other long-term liabilities in our consolidated balance sheet and has reduced our gain on the sale accordingly.

At the time of sale, Lumen estimated the fair value of these indemnifications to be $ 86 million, which was included in other long-term liabilities in our consolidated balance sheet and reduced our gain on the sale accordingly.

See Note 14—Fair Value of Financial Instruments for detail related to the carrying value and fair value of these indemnifications as of December 31, 2024 and 2023.

The Latin American business was included in our continuing operations and classified as assets and liabilities held for sale on our consolidated balance sheets through the closing of the transaction on August 1, 2022.

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In addition, we reclassified $ 112 million of realized loss on foreign currency translation, net of tax, to partially offset the gain on sale of our Latin American business.

ILEC Business

On October 3, 2022, we and certain of our affiliates sold the portion of our incumbent local exchange ("ILEC") business primarily conducted within 20 Midwestern and Southeastern states to affiliates of funds advised by Apollo Global Management, Inc.

Portion of ILEC Business

On October 3, 2022, we and certain of our affiliates sold the portion of our ILEC business primarily conducted within 20 Midwestern and Southeastern states to affiliates of funds advised by Apollo Global Management, Inc.

In exchange, we received $ 7.5 billion of consideration, which was reduced by approximately $ 0.4 billion of closing adjustments and partially paid through purchaser's assumption of approximately $ 1.5 billion of our long-term consolidated indebtedness, resulting in pre-tax cash proceeds of approximately $ 5.6 billion.

We retained the remainder of our ILEC business, which is conducted in 17 states, primarily in the Western United States.

For the year ended December 31, 2022, we recorded a $ 176 million net pre-tax gain on disposal associated with the sale of our ILEC business.

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In addition, Lumen and the purchaser entered into commercial agreements whereby they provide each other various network and other commercial services.

Under these agreements, we committed to ordering services of approximately $ 373 million from the purchaser over a period of three years and the purchaser has committed to ordering services of approximately $ 67 million from us over a period of three years .

Under these agreements, we committed to ordering services from the purchaser for which we expect to pay approximately $ 373 million over a period of three years and the purchaser has committed to ordering services from us for which we expect to receive approximately $ 67 million over a period of three years .

We indemnified the purchaser for certain matters for which, at the time of closing, future cash payments by Lumen were expected.

Lumen had estimated the fair value of these indemnifications to be $ 89 million, which was included in other current liabilities in our consolidated balance sheet as of December 31, 2022, and increased our income tax expense accordingly as of December 31, 2022.

As of the first quarter of 2023, the full $ 89 million payments had been made.

As of the first quarter of 2023, the full $ 89 million payment had been made.

The ILEC business was included in our continuing operations and classified as assets and liabilities held for sale on our consolidated balance sheets through the closing of the transaction on October 3, 2022.

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EMEA Business

On November 1, 2023, affiliates of Level 3 Parent, LLC, sold Lumen's operations in Europe, the Middle East and Africa (the "EMEA business") to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for pre-tax cash proceeds of $ 1.7 billion after certain closing adjustments and transaction costs.

On November 1, 2023, affiliates of Level 3 Parent, LLC, sold Lumen's operations in Europe, the Middle East and Africa ("EMEA") to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, for pre-tax cash proceeds of $ 1.7 billion after certain closing adjustments and transaction costs.

This consideration is further subject to other post-closing adjustments and indemnities set forth in the purchase agreement, as amended and supplemented to date.

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In addition, we reclassified $ 382 million of realized loss on foreign currency translation, net of tax, with an offset to the valuation allowance and loss on sale of the EMEA business.

Other Information

We do not believe these divestiture transactions represented a strategic shift for Lumen.

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As a result, we continued to report our operating results for the Latin American, ILEC and EMEA businesses in our consolidated operating results through their respective disposal dates of August 1, 2022, October 3, 2022, and November 1, 2023, respectively.

(3) Goodwill, Customer Relationships and Other Intangible Assets

Note 3—Goodwill, Customer Relationships and Other Intangible Assets

Goodwill, customer relationships and other intangible assets consisted of the following:

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Capitalized software, less accumulated amortization of $ 4,067 and $ 4,045 (3)

Trade names, patents and other, less accumulated amortization of $ 72 (4) and $ 188

Patents and other, less accumulated amortization of $ 86 and $ 72 (3)

Total other intangible assets, net $ 4,806 5,470

______________________________________________________________________

(1) These values exclude assets classified as held for sale.

(1) We recorded cumulative non-cash, non-tax-deductible goodwill impairment charges of $ 10.7 billion during the year ended December 31, 2023.

(2) For the year ended December 31, 2023, customer relationships decreased $ 121 million in conjunction with the sale of select CDN customer contracts, in the fourth quarter of 2023 that resulted in a net loss of $ 73 million included in selling, general and administrative expenses in our consolidated statements of operations.

(4) Certain capitalized software with a gross carrying value of $ 183 million and trade names with a gross carrying value of $ 130 million became fully amortized during 2022 and were retired during the first quarter of 2023.

As of December 31, 2023, the gross carrying amount of goodwill, customer relationships, indefinite-lived and other intangible assets was $ 15.8 billion.

(3) Certain capitalized software with a gross carrying value of $ 352 million and $ 183 million and trade names with a gross carrying value of $ 153 million and $ 130 million became fully amortized during 2023 and 2022, respectively, and were retired during the first quarter of 2024 and 2023, respectively.

As of December 31, 2024 and December 31, 2023, the gross carrying amount of goodwill, customer relationships, indefinite-lived and other intangible assets was $ 15.4 billion and $ 15.8 billion, respectively.

Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired.

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As of December 31, 2024, we had three reporting units for goodwill impairment testing, which are (i) Mass Markets, (ii) North America Business ("NA Business") and (iii) Asia Pacific ("APAC") region.

Prior to the divestiture of the EMEA business, the EMEA region was also a reporting unit and was tested for impairment in the pre-classification test as of October 31, 2022 discussed below.

Prior to its August 1, 2022 divestiture, the Latin American ("LATAM") region was also a reporting unit.

Prior to the divestiture of the EMEA business in November 2023, the EMEA region was also a reporting unit and was tested for impairment in the pre-classification test as of October 31, 2022, discussed below.

Similarly, prior to its August 2022 divestiture, the LATAM region was also a reporting unit.

Our reporting units are not discrete legal entities with discrete full financial statements.

Our assets and liabilities are employed in and relate to the operations of multiple reporting units.

For each reporting unit, we compare its estimated fair value of equity to its carrying value of equity that we assign to it.

Our assets and liabilities are deployed in and relate to the operations of multiple reporting units.

When we assess goodwill for impairment, we compare the estimated fair value of each reporting unit's equity to the carrying value of equity that we assign to the reporting unit.

If the estimated fair value of the reporting unit is greater than the carrying value, we conclude that no impairment exists.

If the estimated fair value of the reporting unit is less than its carrying value, we record a non-cash impairment charge equal to the excess amount.

Depending on the facts and circumstances, we typically estimate the fair value of our reporting units by considering either or both of (i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete projection period and a terminal value, which is based on the expected normalized cash flows of the reporting units following the discrete projection period, and (ii) a market approach, which includes the use of market multiples of publicly-traded companies whose services and markets are comparable to ours.

If the estimated fair value of the reporting unit is less than the carrying value, we record a non-cash impairment charge equal to the excess amount.

2024 Goodwill Impairment Analysis

At October 31, 2024, we performed our annual impairment analysis of the goodwill in our Mass Markets reporting unit by using a qualitative assessment to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying value.

Factors considered in the qualitative assessment included, among other things, macroeconomic conditions, industry and market conditions, financial performance of the reporting unit and other relevant entity and reporting unit considerations.

We concluded the estimated fair value of our reporting unit was greater than our carrying value of equity as of our testing date.

Therefore, we concluded no impairment existed as of our annual assessment date in the fourth quarter of 2024.

2023 Goodwill Impairment Analyses

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As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $ 8.8 billion for the three months ended June 30, 2023.

The market approach that we used in the quarter ended June 30, 2023 and October 31, 2023 tests incorporated estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives.

The market approach that we used in the June 30, 2023 and October 31, 2023 tests incorporated estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives.

In developing the market multiples applicable to each reporting unit, we considered observed trends of our industry participants.

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As of October 31, 2022, the estimated fair value of equity exceeded the carrying value of equity for our Mass Markets, EMEA and APAC reporting units by 97 %, 171 % and 101 %, respectively.

Based on our assessments performed, we concluded that the goodwill assigned to our Mass Markets, EMEA and APAC reporting units was no t impaired at October 31, 2022.

Based on our assessments performed, we concluded that the goodwill assigned to our Mass Markets, EMEA and APAC reporting units was not impaired at October 31, 2022.

As of October 31, 2022

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See the goodwill rollforward by segment table below for the impairment charges by segment.

2021 Goodwill Impairment Analyses

At October 31, 2021, we estimated the fair value of our five above-mentioned reporting units by considering both a market approach and a discounted cash flow method.

As of October 31, 2021, we determined that the estimated fair value of equity exceeded the carrying value of equity for our Mass Markets, NA Business, EMEA, LATAM and APAC reporting units by 277 %, 8 %, 57 %, 100 % and 125 %, respectively.

Based on our assessments performed, we concluded it was more likely than not that the fair value of each of our reporting units exceeded the carrying value of equity of those reporting units at October 31, 2021.

Therefore, we concluded no impairment existed as of our assessment date.

Our third quarter 2021 classification of held for sale assets related to the divestitures of the Latin American and ILEC businesses as described in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses, was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of July 31, 2021.

We performed a pre-classification goodwill impairment test to determine whether there was an impairment prior to the classification of these assets and to determine the July 31, 2021 fair values to be utilized for goodwill allocation regarding the Latin American and ILEC businesses classified as assets held for sale.

We concluded it was more likely than not that the fair value of each of our reporting units exceeded the carrying value of equity of those reporting units at July 31, 2021.

We also performed a post-classification goodwill impairment test using our estimated post-divestiture cash flows and carrying value of equity to evaluate whether the fair value of our reporting units that would remain following the divestitures exceeded the carrying value of the equity of such reporting units after classification of assets held for sale.

At July 31, 2021, we estimated the fair value of our five above-mentioned reporting units as of such date by considering both a market approach and a discounted cash flow method.

As of July 31, 2021, we determined that the estimated fair value of equity exceeded the carrying value of equity for our Mass Markets, NA Business, EMEA, LATAM and APAC reporting units by 150 %, 24 %, 58 %, 100 % and 134 %, respectively.

Based on our assessments performed, we concluded it was more likely than not that the fair value of each of our reporting units exceeded the carrying value of equity of our reporting units at July 31, 2021.

Therefore, we concluded no impairment existed as of our assessment date.

The January 2021 internal reorganization of our reporting structure was considered an event or change in circumstance which required an assessment of our goodwill for impairment.

We performed a qualitative impairment assessment in the first quarter of 2021 and concluded it was more likely than not that the fair value of each of our reporting units exceeded the carrying value of equity of those reporting units at January 31, 2021.

Therefore, we concluded no impairment existed as of our assessment date.

The following table shows the rollforward of goodwill assigned to our reportable segments from December 31, 2022 through December 31, 2024.

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As of December 31, 2022 (1)

Effect of foreign currency exchange rate change and other $ ( 58 ) — ( 58 )

$ 7,906 4,751 12,657

Impairment ( 7,906 ) ( 2,787 ) ( 10,693 )

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— 1,964 1,964

Impairment ( 7,906 ) ( 2,787 ) ( 10,693 )

As of December 31, 2024 (1)

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For additional information on our segments, see Note 17—Segment Information.

As of December 31, 2023, the weighted average remaining useful lives of our finite-lived intangible assets were approximately 6 years in total, approximately 7 years for customer relationships and 4 years for capitalized software.

Total amortization expense for finite-lived intangible assets for the years ended December 31, 2023, 2022 and 2021 was $ 1.1 billion, $ 1.1 billion and $ 1.3 billion, respectively.

We estimate that total amortization expense for finite-lived intangible assets for the years ending December 31, 2024 through 2028 will be as provided in the table below.

As of December 31, 2024, the weighted average remaining useful lives of our finite-lived intangible assets were approximately five years in total, approximately six years for customer relationships and four years for capitalized software.

Total amortization expense for finite-lived intangible assets for each of the years ended December 31, 2024, 2023 and 2022 was $ 1.1 billion.

We estimate that future total amortization expense for finite-lived intangible assets will be as follows:

(Dollars in millions)

(4) Revenue Recognition

2030 and thereafter 1,003

Total finite-lived intangible assets future amortization expense $ 4,797

Note 4—Revenue Recognition

Product and Service Categories

We categorize our products and services revenue among the following categories for the Business segment:

• Grow , which includes products and services that we anticipate will grow, including our dark fiber, Edge Cloud services, IP, managed security, software-defined wide area networks ("SD WAN"), secure access service edge ("SASE"), Unified Communications and Collaboration ("UC&C") and wavelengths services;

• Grow , which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks ("SD WAN"), Unified Communications and Collaboration ("UC&C") and wavelengths services;

• Nurture , which includes our more mature offerings, including ethernet and VPN data networks services;

• Harvest , which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services;

• Other , which includes equipment sales, IT solutions and other services.

• Harvest , which includes our legacy services managed for cash flow, including Time Division Multiplexing voice, and private line services;

• Other , which includes equipment sales, managed and professional service solutions and other services.

We categorize our products and services revenue among the following categories for the Mass Markets segment:

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Harvest 1,079 ( 140 ) 939

Other 11 — 11

Total Wholesale Revenue 2,875 ( 446 ) 2,429

International and Other

Grow 155 ( 4 ) 151

Nurture 161 — 161

Harvest 42 — 42

Other 15 — 15

Total International and Other 373 ( 4 ) 369

Business Segment by Product Category

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Total Wholesale Revenue 3,152 ( 441 ) 2,711

International and Other

Grow 453 ( 115 ) 338

Nurture 266 — 266

Harvest 126 — 126

Other 135 — 135

Total International and Other 980 ( 115 ) 865

Business Segment by Product Category

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Harvest 1,551 ( 215 ) 1,336

Other 51 — 51

Total Wholesale Revenue 3,605 ( 509 ) 3,096

International and Other

Grow 761 ( 176 ) 585

Nurture 401 — 401

Harvest 210 — 210

Other 190 — 190

Total International and Other 1,562 ( 176 ) 1,386

Business Segment by Product Category

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Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale, as of December 31, 2023 and 2022:

December 31, 2023 December 31, 2022

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale:

As of December 31,

(Dollars in millions)

Customer receivables (1)

Customer receivables, less allowance of $ 50 and $ 60

$ 1,193 1,256

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Contract liabilities

______________________________________________________________________

(1) Reflects gross customer receivables of $ 1.3 billion and $ 1.5 billion, net of allowance for credit losses of $ 60 million and $ 73 million, at December 31, 2023 and December 31, 2022, respectively.

At December 31, 2022 amounts exclude customer receivables, net, classified as held for sale of $ 76 million, related to the EMEA business which was sold November 1, 2023.

(2) At December 31, 2022 these amounts exclude contract assets classified as held for sale of $ 16 million, related to the EMEA business which was sold November 1, 2023.

(3) At December 31, 2022 these amounts exclude contract liabilities classified as held for sale of $ 59 million, related to the EMEA business which was sold November 1, 2023.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future.

We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer.

Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from 1 to 5 years depending on the service.

Contract liabilities are included within deferred revenue in our consolidated balance sheets.

Contract liabilities are included within Deferred revenue on our consolidated balance sheets.

During the years ended December 31, 2024 and December 31, 2023, we recognized $ 443 million and $ 434 million, respectively, of revenue that was included in contract liabilities of $ 698 million and $ 715 million as of January 1, 2024 and 2023, respectively, including contract liabilities that were classified as held for sale.

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Amortization ( 130 ) ( 138 )

Change in contract costs held for sale

End of period balance $ 203 222

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End of period balance $ 182 184

_____________________________________________________________________

(1) Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1, 2022 and October 3, 2022, respectively, as well as changes of $ 6 million acquisition costs and no fulfillment costs classified as held for sale as of December 31, 2022 related to the divestiture of the EMEA business, held for sale as of December 31, 2022 and completed November 1, 2023.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

Acquisition costs include commission fees paid to employees as a result of obtaining contracts.

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We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 50 months for Mass Markets customers and 35 months for Business customers.

We include amortized fulfillment costs in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations.

We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in other current assets on our consolidated balance sheets.

We include the amount of deferred costs expected to be amortized beyond the next twelve months in other non-current assets on our consolidated balance sheets.

We include amortized fulfillment costs in Cost of services and products and amortized acquisition costs in Selling, general and administrative in our consolidated statements of operations.

We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other under Current Assets on our consolidated balance sheets.

We include the amount of deferred costs expected to be amortized beyond the next 12 months in Other under Deferred Credits and Other Liabilities on our consolidated balance sheets.

We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.

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In certain instances, support payments are conditioned on specified infrastructure buildouts by milestone deadlines or provision of services at specified locations and speed requirements.

Commitments may be made annually, on a multi-year basis ranging from one to ten years or be on-going subject to periodic change or termination.

Commitments may be made annually, on a multi-year basis ranging from one to 10 years or be on-going subject to periodic change or termination.

Consistent with customary practice and as referenced in ASC 832 Government Assistance , Lumen applies a grant model of accounting by which it accounts for these transactions as non-ASC 606 revenue over the periods in which the costs for which the funding is intended to compensate are incurred.

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In the first quarter of 2022, we recognized $ 59 million of previously deferred revenue related to the conclusion of the CAF II program based upon our final buildout and filing submissions.

The government has the right to audit our compliance with the CAF II program and the ultimate outcome of any remaining examinations is unknown, but could result in a liability to us in excess of our reserve accruals established for these matters.

In early 2020, the FCC created the Rural Digital Opportunity Fund (the “RDOF”) program, a federal support program designed to fund broadband deployment in rural America.

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We were awarded RDOF funding in several of the states in which we operate and began receiving monthly support payments during the second quarter of 2022.

We received approximately $ 17 million in annual RDOF Phase I support payments for the years ended December 31, 2023 and 2022 and expect to receive this same amount each year thereafter during the program period.

We received approximately $ 17 million in annual RDOF Phase I support payments for the years ended December 31, 2023 and 2022.

In the third quarter of 2024, we relinquished rights to develop certain RDOF census blocks in four states, which resulted in (i) a reduction of the anticipated RDOF Phase I support payments to approximately $ 16 million for the year ending December 31, 2024 and $ 15 million each year thereafter through the program period and (ii) an expectation of payment to the federal government, which we anticipate will be approximately $ 10 million.

Lumen participates in multiple state sponsored programs for broadband deployment in unserved and underserved areas for which the states have state universal service funds sourced from fees levied on telecommunications providers and passed on to consumers.

During the years ending December 31, 2023 and 2022, Lumen participated in these types of programs primarily in the states of Nebraska, North Carolina, New Mexico, Minnesota, Virginia and Wisconsin.

We primarily lease to or from third parties various office facilities, colocation facilities, equipment and transmission capacity.

During the years ending December 31, 2024 and 2023, Lumen participated in these types of programs primarily in the states of Nebraska, New Mexico and Minnesota.

Note 5—Leases

We primarily lease various office facilities, colocation facilities, equipment and transmission capacity to or from third parties.

Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheets;

we recognize lease expense for these leases on a straight-line basis over the lease term.

We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease.

We determine if an arrangement is a lease at inception and whether that lease meets the classification criteria of a finance or operating lease at the commencement date.

Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities.

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Total lease cost $ 482 503 503

We primarily lease from third parties various equipment, office facilities, retail outlets, switching facilities and other network sites or components.

We lease various equipment, office facilities, retail outlets, switching facilities and other network sites or components from third parties.

These leases, with few exceptions, provide for renewal options and rent escalations that are either fixed or based on the consumer price index.

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The lease term for most leases includes the initial non-cancelable term plus any term under renewal options that we believe are reasonably assured.

Beginning in the second half of 2020 and continuing into 2023, we rationalized our lease footprint and ceased using 42 underutilized leased property locations.

We determined that we no longer needed the leased space and, due to the limited remaining term on the contracts, concluded that we had neither the intent nor ability to sublease the properties.

For the years ended December 31, 2023 and 2021, we incurred accelerated lease costs of approximately $ 8 million and $ 35 million, respectively.

We did not incur material accelerated lease costs during 2022.

Additionally, during the second quarter of 2023, we also donated our Monroe, Louisiana campus and leased back a portion thereof.

This donation resulted in a $ 101 million loss recognized for the year ended December 31, 2023.

In conjunction with our plans to continue to reduce costs, we expect to continue our real estate rationalization efforts and expect to incur additional accelerated real estate costs in future periods.

On a regular basis, we rationalize our lease footprint.

When we determine that we no longer need leased space, we may incur accelerated lease costs.

Our accelerated lease costs in December 31, 2024, 2023 and 2022 were not material.

For the years ended December 31, 2024, 2023 and 2022, our gross rental expense, including the accelerated lease costs discussed above, was $ 482 million, $ 503 million and $ 503 million, respectively.

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Finance leases 4.40 % 4.98 %

At December 31, 2022, we classified certain operating and finance lease assets and liabilities related to the EMEA business, which was sold as of November 1, 2023, as held for sale and discontinued recording amortization on the related right-of-use assets upon this classification.

These operating and finance lease assets and liabilities held for sale are not reflected in the above or throughout the disclosures within this note.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for more information.

Supplemental consolidated cash flow statement information related to leases is included below:

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As of December 31, 2024, we had no material operating or finance leases that had not yet commenced.

Operating Lease Income

Lumen Technologies leases various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases.

Operating Lease Revenue

We lease various dark fiber and conduit, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases.

Lease and sublease income are included in operating revenue in the consolidated statements of operations.

See "Revenue Recognition" in Note 1—Background and Summary of Significant Accounting Policies.

For the years ended December 31, 2023, 2022 and 2021, our gross rental income was $ 1.0 billion, $ 1.2 billion and $ 1.2 billion, respectively, which represents 7 %, 7 % and 6 % respectively, of our operating revenue for the years ended December 31, 2023, 2022 and 2021.

(6) Credit Losses on Financial Instruments

For the years ended December 31, 2024, 2023 and 2022, our gross rental income was approximately $ 1.0 billion, $ 1.0 billion and $ 1.2 billion, respectively, which represents 7 % of our operating revenue for each of the years ended December 31, 2024, 2023 and 2022.

Note 6—Credit Losses on Financial Instruments

To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets.

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Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future, and we may use methodologies that differ from those used by other companies.

The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the years ended December 31, 2023 and December 31, 2022:

The following table presents the activity of our allowance for credit losses by accounts receivable portfolio:

Business Mass Markets Total

(Dollars in millions)

Beginning balance at January 1, 2021 $ 109 82 191

Balance at December 31, 2021 $ 88 26 114

Provision for expected losses 25 108 133

1 unchanged sentence

Recoveries collected 10 6 16

Classified as assets held for sale (1)

Change in allowance in assets held for sale (1)

( 5 ) 2 ( 3 )

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Recoveries collected 6 3 9

Change in allowance in assets held for sale (2)

( 5 ) 2 ( 3 )

Balance at December 31, 2023 36 31 67

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______________________________________________________________________

(1) Represents the amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1, 2022 and October 3, 2022, respectively.

See Note 2—Divestitures of the Latin American and ILEC Businesses and Planned Divestiture of the EMEA Business.

(2) Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1, 2022 and October 3, 2022, respectively, and the inclusion of a $ 5 million allowance for credit losses classified as held for sale as of December 31, 2022 related to the divestiture of the EMEA business.

(1) Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1, 2022 and October 3, 2022, respectively, and the inclusion of a $ 5 million allowance for credit losses classified as held for sale as of December 31, 2022 related to the divestiture of the EMEA business in 2023.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

(7) Long-Term Debt and Credit Facilities

Note 7—Long-Term Debt and Credit Facilities

At December 31, 2024, most of our outstanding consolidated debt had been incurred by us or one of the following three subsidiaries, each of which has borrowed funds either on a standalone basis or as part of a separate restricted group with certain of its subsidiaries:

• Level 3 Financing, Inc.

("Level 3 Financing"), including its parent guarantor Level 3 Parent, LLC, and certain subsidiary guarantors;

• Qwest Corporation ("Qwest");

• Qwest Capital Funding, Inc., including its parent guarantor, Qwest Communications International Inc.

Each of these borrowers or borrowing groups has entered into a credit agreement with certain financial institutions or other institutional lenders or issued senior notes.

Certain of these debt instruments are described further below.

The following table reflects the consolidated long-term debt of Lumen Technologies, Inc.

and its subsidiaries as of the dates indicated below, including unamortized discounts and premiums and unamortized debt issuance costs:

and its subsidiaries as of the dates indicated below, including unamortized premiums (discounts) and unamortized debt issuance costs:

As of December 31,

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Lumen Technologies, Inc.

Revolving Credit Facility (3)

Series A Revolving Credit Facility

SOFR + 4.00 %

Term Loan A (4)

Series B Revolving Credit Facility

SOFR + 6.00 %

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SOFR + 2.35 %

Term Loan B-2 (4)

SOFR + 2.35 %

Term Loan B (5)

SOFR + 2.25 %

2027 56 3,891

Senior notes 4.000 %

Other Facilities (6)

Superpriority Notes

4.125 % - 10.000 %

Former Parent Secured Notes (7)

Subsidiaries:

Level 3 Financing, Inc.

Tranche B 2027 Term Loan (6)

Term Loan B-1 (8)

SOFR + 6.56 %

Term Loan B-2 (8)

SOFR + 6.56 %

Former Level 3 Facility (9)

SOFR + 1.75 %

2027 12 2,411

Senior notes 3.400 % - 10.500 %

Senior Notes and Other Debt:

First Lien Notes (10)

10.500 % - 11.000 %

Second Lien Notes

3.875 % - 10.000 %

Former Level 3 Senior Notes (11)

Unsecured Senior Notes and Other Debt:

Lumen Technologies, Inc.

Senior notes (12)

4.000 % - 7.650 %

Subsidiaries:

1 unchanged sentence

Senior notes (13)

3.400 % - 4.625 %

Qwest Corporation

Senior notes 6.500 % - 7.750 %

Term loan (7)

SOFR + 2.50 %

Former Term Loan (14)

Qwest Capital Funding, Inc.

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_______________________________________________________________________________

N/A - Not applicable

(1) As of December 31, 2024.

(2) See the remainder of this Note for a description of certain parent or subsidiary guarantees and liens securing this debt.

(3) Revolving Credit Facility had an interest rate of 7.464 % as of December 31, 2023.

(4) Term Loans A and A-1 had interest rates of 7.470 % and 6.384 % as of December 31, 2023 and December 31, 2022, respectively.

(5) Term Loan B had interest rates of 7.720 % and 6.634 % as of December 31, 2023 and December 31, 2022, respectively.

(6) The Level 3 Tranche B 2027 Term Loan had interest rates of 7.220 % and 6.134 % as of December 31, 2023 and December 31, 2022, respectively.

(7) The Qwest Corporation Term Loan had interest rates of 7.970 % and 6.640 % as of December 31, 2023 and December 31, 2022, respectively.

(8) December 31, 2022 excludes finance lease obligations of our EMEA business that were classified as held for sale as of December 31, 2022 and sold on November 1, 2023.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

All references to "SOFR" refer to the Secured Overnight Financing Rate.

(2) As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is either secured by assets of the issuer, guaranteed on a secured or unsecured basis by certain affiliates of the issuer, or both.

As discussed further in footnotes 12 and 13 below, we reclassified in the table above certain notes that were guaranteed, secured, or both prior to the TSA Effective Date (as defined below) from “secured” to “unsecured” in light of amendments that released such security interests.

(3) Term Loan A had an interest rate of 10.573 % as of December 31, 2024.

(4) Term Loan B-1 and B-2 each had an interest rate of 7.037 % as of December 31, 2024.

(5) Term Loan B had an interest rate of 6.937 % and 7.720 % as of December 31, 2024 and December 31, 2023, respectively.

(6) Reflects revolving credit facility and term loan A and A-1 debt issued under the Former Parent Facilities (as defined below), which were due in 2025 and had interest rates of 7.464 % and 7.470 %, respectively, as of December 31, 2023.

(7) Former Parent Secured Notes were due in 2027 and had an interest rate of 4.000 % as of December 31, 2023, prior to being cancelled on the TSA Effective Date (as defined below).

(8) The Level 3 Term Loan B-1 and B-2 each had an interest rate of 11.133 % as of December 31, 2024.

(9) Reflects Level 3 Tranche B 2027 Term Loan issued under the Former Level 3 Facility (as defined below), which had an interest rate of 6.437 % and 7.220 % as of December 31, 2024 and December 31, 2023, respectively.

(10) Includes Level 3's 10.500 % Senior Secured Notes due 2030 issued in early 2023, the terms of which have been amended to be consistent with Level 3's first lien notes issued on March 22, 2024.

(11) Former Level 3 Senior Notes were due in 2027 - 2029 and had an interest rates of 3.400 % - 3.875 % as of December 31, 2023, prior to being cancelled on the TSA Effective Date (as defined below) .

(12) The total amount of these notes at December 31, 2024 includes the remaining aggregate principal amount due under the Former Parent Secured Notes, the terms of which were amended on March 22, 2024 to release the guarantees of such debt that could be released in accordance with their indentures and the security interests relating thereto.

(13) The total amount for these notes at December 31, 2024 includes the remaining aggregate principal amount due under the Former Level 3 Secured Notes, the terms of which were amended on March 22, 2024 to release the security interests relating thereto.

(14) The Qwest Corporation Term Loan was due in 2027 and had an interest rate of 7.970 % as of December 31, 2023, prior to being cancelled on the TSA Effective Date (as defined below).

Long-Term Debt Maturities

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Total long-term debt $ 18,518

Debt of Lumen Technologies, Inc.

and its Subsidiaries

At December 31, 2023, most of our outstanding consolidated debt had been incurred by Lumen Technologies, Inc.

or one of the following three other primary borrowers or “borrowing groups,” each of which has borrowed funds either on a standalone basis or as part of a separate restricted group with certain of its subsidiaries:

• Level 3 Financing, Inc., including its parent guarantor Level 3 Parent, LLC, and one or more subsidiary guarantors;

• Qwest Corporation;

• Qwest Capital Funding, Inc., including its parent guarantor, Qwest Communications International Inc.

Each of these borrowers or borrowing groups has entered into one or more credit agreements with certain financial institutions or other institutional lenders, or issued senior notes.

Certain of these debt instruments are described further below.

Amended and Restated Credit Agreement

On January 31, 2020, we amended and restated our credit agreement dated June 19, 2017 (as so amended and restated, the "Amended Credit Agreement").

At December 31, 2023, the Amended Credit Agreement consisted of the following facilities:

• a $ 2.2 billion senior secured revolving credit facility (“the Revolving Credit Facility”), against which $ 200 million of borrowings and $ 218 million of undrawn letters of credit were issued under this facility as of December 31, 2023, discussed further below;

• a $ 933 million senior secured Term Loan A credit facility;

• a $ 266 million senior secured Term Loan A-1 credit facility with CoBank, ACB;

• a $ 3.9 billion senior secured Term Loan B credit facility (the term loan facilities and the Revolving Credit Facility being referred to collectively as the "Amended Secured Credit Facilities").

Loans under the Term Loan A and A-1 facilities and the Revolving Credit Facility bear interest at a rate equal to, at our option, the Secured Overnight Financing Rate ("SOFR") or the alternative base rate (each as defined in the Amended Credit Agreement) plus an applicable margin between 1.50 % to 2.25 % per annum for SOFR loans and 0.50 % to 1.25 % per annum for alternative base rate loans, depending on our then current total leverage ratio.

Loans under the Term Loan B facility bear interest at SOFR plus 2.25 % per annum or the alternative base rate plus 1.25 % per annum.

Loans under each of the term loan facilities require certain specified quarterly amortization payments and certain specified mandatory prepayments in connection with certain asset sales and debt issuances and out of excess cash flow, among other things, subject in each case to certain significant exceptions.

Borrowings under the Revolving Credit Facility and the Term Loan A and A-1 facilities mature on January 31, 2025.

Borrowings under the Term Loan B facility mature on March 15, 2027.

All of Lumen's obligations under the Amended Secured Credit Facilities are guaranteed by certain of its subsidiaries.

The guarantees by certain of those guarantors are secured by a first priority security interest in substantially all assets (including certain subsidiaries stock) directly owned by them, subject to certain exceptions and limitations.

A portion of the revolving credit facility in an amount not to exceed $ 250 million is available for swingline loans, and a portion in an amount not to exceed $ 800 million is available for the issuance of letters of credit.

During the year ended December 31, 2023, we issued approximately $ 218 million of letters of credit under our revolving credit facility, which reduced our borrowing capacity available thereunder by the same amount.

As of December 31, 2023, these issued letters of credit were undrawn.

Lumen Technologies is permitted under the Amended Credit Agreement to request certain incremental borrowings subject to the satisfaction of various conditions and to certain other limitations.

Any incremental borrowings would be subject to the same terms and conditions under the Amended Credit Agreement.

Term Loans and Certain Other Debt of Subsidiaries

Qwest Corporation

On October 23, 2020, Qwest Corporation borrowed $ 215 million under a variable-rate term loan with CoBank ACB.

The outstanding unpaid principal amount of this term loan plus any accrued and unpaid interest is due on October 23, 2027.

Interest is paid at least quarterly based upon either SOFR or the base rate (as defined in the credit agreement) plus an applicable margin between 1.50 % to 2.50 % per annum for SOFR loans and 0.50 % to 1.50 % per annum for base rate loans depending on Qwest Corporation's then current senior unsecured long-term debt rating.

Level 3 Financing, Inc .

At December 31, 2023, Level 3 Financing, Inc.

owed $ 2.4 billion under a senior secured Tranche B 2027 Term Loan, which matures on March 1, 2027.

The Tranche B 2027 Term Loan carries an interest rate, in the case of base rate borrowings, equal to (i) the greater of the Prime Rate, the Federal Funds Effective Rate plus 50 basis points, or SOFR plus 100 basis points (with all such terms and calculations as defined or further specified in the credit agreement) plus (ii) 0.75 % per annum.

Any Eurodollar borrowings under the Tranche B 2027 Term Loan bear interest at SOFR plus 1.75 % per annum.

The Tranche B 2027 Term Loan requires certain specified mandatory prepayments in connection with certain asset sales and other transactions, subject to certain significant exceptions.

The obligations of Level 3 Financing, Inc.

under the Tranche B 2027 Term Loan are, subject to certain exceptions, secured by certain assets of Level 3 Parent, LLC and certain of its material domestic telecommunication subsidiaries.

Also, Level 3 Parent, LLC and certain of its subsidiaries have guaranteed the obligations of Level 3 Financing, Inc.

under the Tranche B 2027 Term Loan.

Revolving Letters of Credit

We use various financial instruments in the normal course of business.

These instruments include letters of credit, which are conditional commitments issued on our behalf in accordance with specified terms and conditions.

Lumen Technologies maintains an uncommitted $ 225 million revolving letter of credit facility separate from the letter of credit facility included in the revolving credit facility noted above.

Letters of credit issued under this uncommitted facility are backed by credit enhancements in the form of secured guarantees issued by certain of our subsidiaries.

As of December 31, 2023 and 2022, we had (i) $ 40 million and $ 94 million, respectively, of letters of credit outstanding under our committed facility and various other facilities and (ii) $ 218 million and no letters of credit outstanding, respectively, under our revolving credit facility.

As of December 31, 2023, these issued letters of credit were undrawn.

Lumen's consolidated indebtedness at December 31, 2023 included (i) senior secured notes issued by Lumen Technologies, Inc.

and Level 3 Financing, Inc.

and (ii) senior unsecured notes issued by Lumen Technologies, Inc., Level 3 Financing, Inc., Qwest Corporation, and Qwest Capital Funding, Inc.

All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which rates and maturity dates are summarized in the table above.

The Lumen Technologies, Inc.

secured senior notes are guaranteed by the same domestic subsidiaries that guarantee the Amended Credit Agreement on substantially the same terms and conditions that govern the guarantees of the Amended Credit Agreement.

The Level 3 Financing, Inc.

secured senior notes are secured by a pledge of substantially all of its assets and guaranteed on a secured basis by the same domestic subsidiaries that guarantee its Term B 2027 Term Loan.

The remaining senior notes issued by Level 3 Financing, Inc.

are guaranteed on an unsecured basis by its parent, Level 3 Parent, LLC, and one of its subsidiaries.

The senior notes issued by Qwest Capital Funding, Inc.

are guaranteed by its parent, Qwest Communications International Inc.

Except for a limited number of senior notes issued by Qwest Corporation, the issuer generally can redeem the notes, at its option, in whole or in part, (i) pursuant to a fixed schedule of pre-established redemption prices, (ii) pursuant to a “make whole” redemption price or (iii) under certain other specified limited conditions.

Under certain circumstances in connection with a “change of control” of Lumen Technologies, it will be required to make an offer to repurchase each series of these senior notes (other than two of its older series of notes) at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.

Also, under certain circumstances in connection with a "change of control" of Level 3 Parent, LLC or Level 3 Financing, Inc., Level 3 Financing will be required to make an offer to repurchase each series of its outstanding senior notes at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.

2023 Borrowings and Repayments

During 2023, Lumen borrowed $ 925 million from, and made repayments of $ 725 million to, its revolving credit facility.

2023 Exchange Offers and Repurchases

Pursuant to exchange offers that commenced on March 16, 2023 (the “Exchange Offers”), on March 31, 2023, Level 3 Financing, Inc.

issued $ 915 million of its 10.500 % Senior Secured Notes due 2030 (the “ 10.500 % Notes”) in exchange for $ 1.535 billion of Lumen’s outstanding senior unsecured notes.

On April 17, 2023, in connection with the Exchange Offers, Level 3 Financing, Inc.

issued an additional $ 9 million of its 10.500 % Notes in exchange for $ 19 million of Lumen's outstanding senior unsecured notes.

All exchanged notes were concurrently cancelled.

These transactions resulted in a $ 630 million net reduction in the aggregate principal amount of Lumen’s consolidated indebtedness.

In addition to the above described exchange offers, we repurchased $ 24 million aggregate principal amount of Lumen's outstanding senior unsecured notes during the first quarter of 2023.

These above-described transactions resulted in an aggregate net gain of $ 618 million for the year ended December 31, 2023.

The following table sets forth the aggregate principal amount of each series of Lumen’s senior unsecured notes retired during the year ended December 31, 2023, in connection with the above-described exchange transactions:

Debt Period of Reduction Aggregate principal (amounts in millions)

2024 Debt Transactions

Cash Tender Offers

Pursuant to cash tender offers that commenced on November 12, 2024 (the "Cash Tender Offers"), in November 2024 we reduced the aggregate principal amount of our consolidated indebtedness by approximately $ 393 million.

In conjunction with the Cash Tender Offers, we recorded a gain of $ 33 million including an offset of immaterial third-party fees in our aggregate Net gain on early retirement of debt in Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2024.

The following table sets forth the aggregate principal amount of each series of senior notes of Lumen and Level 3 Financing retired in exchange for cash in November 2024 in connection with the Cash Tender Offers:

Aggregate Principal Amount (in millions)

Lumen Technologies, Inc.

5.625 % Senior Notes, Series X, due 2025

1 unchanged sentence

5.125 % Senior Notes due 2026

4.000 % Senior Secured Notes due 2027 (unsecured)

6.875 % Debentures, Series G, due 2028

Level 3 Financing, Inc.

3.400 % Senior Secured Notes due 2027 (unsecured)

4.625 % Senior Notes due 2027

4.250 % Senior Notes due 2028

7.600 % Senior Notes, Series P, due 2039

7.650 % Senior Notes, Series U, due 2042

5.625 % Senior Notes, Series X, due 2025

Exchange Offers

Pursuant to exchange offers that commenced on September 3, 2024 (the "Exchange Offers"), on September 24, 2024:

• Lumen Technologies issued approximately $ 438 million aggregate principal amount of its newly-issued 10.000 % Secured Notes due 2032 (the "New Lumen Notes") and paid approximately $ 14 million cash (excluding accrued and unpaid interest payable with respect to the exchange) in exchange for approximately $ 491 million aggregate principal amount of four series of its outstanding senior unsecured notes, maturing between 2026 and 2029 (which were concurrently cancelled), and

• Level 3 Financing issued approximately $ 350 million aggregate principal amount of its newly-issued 10.000 % Second Lien Notes due 2032 in exchange for $ 357 million aggregate principal amount of two series of its outstanding senior unsecured notes maturing in 2027 (which were concurrently cancelled).

These transactions reduced the aggregate principal amount of Lumen's consolidated indebtedness by approximately $ 60 million.

The Company determined that the Exchange Offers constituted a debt modification consistent with ASC 470 and recorded no gain or loss.

In conjunction with the Exchange Offers, we recorded $ 17 million of fees to Selling, general and administrative expense in our consolidated statements of operations for the year ended December 31, 2024.

The following table sets forth the aggregate principal amount of each series of senior unsecured notes of Lumen and Level 3 Financing exchanged and retired on September 24, 2024 in connection with the Exchange Offers:

Aggregate Principal Amount (in millions)

Lumen Technologies, Inc.

5.125 % Senior Notes due 2026

7.600 % Senior Notes, Series P, due 2039

7.650 % Senior Notes, Series U, due 2042

4.000 % Senior Secured Notes due 2027 (unsecured)

6.875 % Debentures, Series G, due 2028

4.500 % Senior Notes due 2029

Level 3 Financing, Inc.

3.400 % Senior Secured Notes due 2027 (unsecured)

4.625 % Senior Notes due 2027

Transaction Support Agreement Transactions

On March 22, 2024 (the "TSA Effective Date"), Lumen Technologies, Level 3 Financing, Qwest and a group of creditors holding a majority of our consolidated debt completed transactions contemplated under the amended and restated transaction support agreement ("TSA") that such parties entered into on January 22, 2024 (the "TSA Transactions"), including the termination, repayment or exchange of previous commitments and debt and the issuance of new term loan facilities, notes, and revolving credit facilities.

The following table sets forth the aggregate principal amount of each of Lumen's consolidated debt arrangements that were partially or fully paid in exchange for cash or newly-issued debt during the first quarter of 2024 in connection with the TSA Transactions:

Aggregate Principal Amount

(in millions)

Lumen Technologies, Inc.

Term Loan A-1

5.125 % Senior Notes due 2026

4.000 % Senior Notes due 2027

Level 3 Financing, Inc.

3.400 % Senior Notes due 2027

3.875 % Senior Notes due 2029

4.625 % Senior Notes due 2027

4.250 % Senior Notes due 2028

3.625 % Senior Notes due 2029

3.750 % Senior Notes due 2029

Qwest Corporation

Total $ 2,258 10,244

2022 Borrowings and Repayments

During 2022, Lumen borrowed $ 2.4 billion from, and made repayments of $ 2.6 billion to, its revolving credit facility.

We used our net revolving credit draws and available cash to repay the following aggregate principal amounts of indebtedness through a combination of tender offers, redemptions, prepayments, amortization payments and payments at maturity.

These transactions resulted in a net gain on the extinguishment of debt of $ 214 million.

Debt Period of Repayment (Dollars in millions)

The following table sets forth the aggregate principal balance as of December 31, 2024 of the debt issued by Lumen or Level 3 Financing in connection with the TSA Transactions:

New Debt Issuances (1)

Aggregate Principal Amount as of December 31, 2024 (in millions)

Lumen Technologies, Inc.

5.800 % Senior Notes due 2022 (at maturity)

Q1 2022 $ 1,400

6.750 % Senior Notes, Series W, due 2023

7.500 % Senior Notes, Series Y, due 2024

Term Loan A (2)

Term Loan B-1 (2)

Term Loan B-2 (2)

4.125 % Superpriority Notes due 2029-2030

Level 3 Financing, Inc.

Term Loan B-1

Term Loan B-2

10.500 % First Lien Notes due 2029

11.000 % First Lien Notes due 2029

4.875 % Second Lien Notes due 2029

10.750 % First Lien Notes due 2030

4.500 % Second Lien Notes due 2030

3.875 % Second Lien Notes due 2030

4.000 % Second Lien Notes due 2031

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(1) Except for Lumen's Term Loan A and $ 1.375 billion of Level 3 Financing's 11.000 % First Lien Notes due 2029, all of the new debt listed in this table was issued in the first quarter of 2024 in exchange for previously-issued debt of Lumen or Level 3 Financing in connection with the TSA Transactions.

(2) Reflects approximately $ 66 million of term loan installment payments and paydowns made between the TSA Effective Date and December 31, 2024.

In evaluating the terms of the TSA Transactions, we determined that for certain of our creditors the new debt instruments were substantially different than pre-existing debt and therefore constituted a non-cash extinguishment of old debt for Lumen Technologies and Level 3 Financing of $ 744 million and $ 2.6 billion and the establishment of new debt for which we recorded a $ 275 million gain on extinguishment in the first quarter of 2024.

This new debt was recorded at fair value generating a reduction to debt of $ 492 million which was included in our aggregate Net gain on early retirement of debt of $ 348 million, recognized in Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2024.

The remaining creditors’ newly-issued debt was not substantially different under the terms of the TSA Transactions and was treated under modification accounting rules.

In conjunction with the TSA Transactions, we paid $ 209 million in lender fees and $ 174 million in additional third-party costs.

Of these amounts, we offset $ 157 million of lender fees against the gain on extinguishment and recorded $ 112 million in third-party costs to Selling, general and administrative expense in our consolidated statement of operations for the year ended December 31, 2024.

In accordance with GAAP provisions for modification and extinguishment accounting, $ 52 million in lender fees and $ 62 million in third-party costs, respectively, were capitalized and will be amortized over the terms of the newly-issued indebtedness.

Repurchases of Debt Instruments

During 2024, we repurchased various debt instruments on the open market.

These repurchases resulted in an aggregate net gain of $ 40 million which is included in our aggregate Net gain on early retirement of debt in Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2024.

The following table sets forth the aggregate principal amount of each series of notes and term loans repurchased during the year ended December 31, 2024:

Principal Amount Repurchased

(in millions)

Lumen Technologies, Inc.

Term Loan B-1

Term Loan B-2

5.625 % Senior Notes, Series X, due 2025

7.200 % Senior Notes, Series D, due 2025

6.875 % Senior Notes, Series G, due 2028

4.500 % Senior Notes due 2029

4.125 % Superpriority Notes due 2029-2030

7.600 % Senior Notes due 2039

6.875 % Debentures, Series G, due 2028

7.650 % Senior Notes due 2042

Term Loan B prepayment Q4 2022 909

Scheduled term loan payments Multiple 125

Level 3 Financing, Inc.

Tranche B 2027 Term Loan Q3 2022 700

4.250 % Senior Notes due 2028

3.625 % Senior Notes due 2029

Embarq Corporation Subsidiaries

First Mortgage Bonds Q4 2022 137

Qwest Capital Funding, Inc.

Senior Notes Q4 2022 63

Other Q4 2022 68

Total debt repayments

3.750 % Sustainability-Linked Senior Notes due 2029

3.875 % Senior Secured Notes due 2029 (unsecured)

Qwest Corporation

7.250 % Senior Notes due 2025

2023 Debt Modification Transactions

Exchange Offers

Pursuant to exchange offers that commenced on March 16, 2023 (the “2023 Exchange Offers”), on March 31, 2023, Level 3 Financing issued $ 915 million of its 10.500 % Senior Secured Notes due 2030 (the “ 10.500 % Notes”) in exchange for $ 1.535 billion of Lumen’s outstanding senior unsecured notes.

On April 17, 2023, in connection with the Exchange Offers, Level 3 Financing issued an additional $ 9 million of its 10.500 % Notes in exchange for $ 19 million of Lumen's outstanding senior unsecured notes.

All exchanged notes were concurrently cancelled.

These transactions resulted in a $ 630 million net reduction in the aggregate principal amount of Lumen’s consolidated indebtedness.

In addition to the above-described exchange offers, we repurchased $ 24 million aggregate principal amount of Lumen's outstanding senior unsecured notes during the first quarter of 2023.

These above-described transactions resulted in an aggregate net gain of $ 618 million for the year ended December 31, 2023.

Debt Aggregate principal (amounts in millions)

5.625 % Senior Notes, Series X, due 2025

7.200 % Senior Notes, Series D, due 2025

5.125 % Senior Notes due 2026

6.875 % Debentures, Series G, due 2028

5.375 % Senior Notes due 2029

4.500 % Senior Notes due 2029

7.600 % Senior Notes, Series P, due 2039

7.650 % Senior Notes, Series U, due 2042

Total $ 1,554

Credit Facility Borrowings and Repayments

During 2023, Lumen borrowed $ 925 million from, and made repayments of $ 725 million to, the Former Lumen Facilities.

2022 Borrowings and Repayments

During 2022, Lumen borrowed $ 2.4 billion from, and made repayments of $ 2.6 billion to, the Former Lumen Facilities.

Interest Expense

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Total interest expense $ 1,372 1,158 1,332

Lumen Technologies, Inc.

With respect to the Term Loan A and A-1 facilities and the Revolving Credit Facility, the Amended Credit Agreement requires us to maintain (i) a maximum total leverage ratio of not more than 4.75 to 1.00 and (ii) a minimum consolidated interest coverage ratio of at least 2.00 to 1.00, with such ratios being determined and calculated in the manner described in the Amended Credit Agreement.

The Amended Secured Credit Facilities contain various representations and warranties and extensive affirmative and negative covenants.

Such covenants include, among other things and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with our affiliates, dispose of assets and merge or consolidate with any other person.

The senior unsecured notes of Lumen Technologies, Inc.

were issued under four separate indentures.

These indentures restrict our ability to (i) incur, issue or create liens upon the property of Lumen Technologies, Inc.

and (ii) consolidate with or merge into, or transfer or lease all or substantially all of our assets to any other party.

These indentures do not contain any provisions that restrict the incurrence of additional indebtedness.

The senior secured notes of Lumen Technologies, Inc.

were issued under a separate indenture that contains a more restrictive set of covenants.

As indicated above under "Senior Notes", Lumen Technologies, Inc.

will be required to offer to purchase certain of its long-term debt securities issued under its indentures under certain circumstances in connection with a "change of control" of Lumen Technologies, Inc.

Level 3 Companies

The term loan, senior secured notes and senior unsecured notes of Level 3 Financing, Inc.

contain various representations and extensive affirmative and negative covenants.

Such covenants include, among other things and subject to certain significant exceptions, restrictions on their ability to declare or pay dividends, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person.

Also, as indicated above under "Senior Notes", Level 3 Financing, Inc.

will be required to offer to repurchase or repay certain of its long-term debt under certain circumstances in connection with a "change of control" of Level 3 Financing or Level 3 Parent, LLC.

Lumen Credit Agreements

Superpriority Revolving/Term A Credit Agreement

On the TSA Effective Date, Lumen, as borrower, the lenders party thereto and Bank of America, as administrative agent and collateral agent, entered into the Superpriority Revolving/Term A Credit Agreement (the “RCF/TLA Credit Agreement”), providing for:

• a superpriority “first out” series A revolving credit facility with original commitments of approximately $ 489 million (the “Series A Revolving Credit Facility”);

• a superpriority “second out” series B revolving credit facility with original commitments of approximately $ 467 million (the “Series B Revolving Credit Facility”, and together with the Series A Revolving Credit Facility, the “Lumen Revolving Credit Facilities”);

• a superpriority secured term loan facility in the amount of approximately $ 377 million (the “Lumen TLA”).

Interest on borrowings under the RCF/TLA Credit Agreement is payable at the end of each interest period at a rate equal to, at Lumen’s option:

• for the Series A Revolving Credit Facility, term SOFR (subject to a 2.00 % floor) plus 4.00 % for term SOFR loans or a base rate plus 3.00 % for base rate loans;

• for the Series B Revolving Credit Facility, term SOFR (subject to a 2.00 % floor) plus 6.00 % for term SOFR loans or a base rate plus 5.00 % for base rate loans;

• for the Lumen TLA, term SOFR (subject to a 2.00 % floor) plus a 6.00 % for term SOFR loans or a base rate plus 5.00 % for base rate loans.

Lumen may prepay amounts outstanding under the Series B Revolving Credit Facility or Lumen TLA at anytime without premium or penalty.

If no amounts are outstanding under the Series B Revolving Credit Facility, Lumen may prepay amounts outstanding under the Series A Revolving Credit Facility without premium or penalty.

Both of the Lumen Revolving Credit Facilities mature on June 1, 2028 (in each case subject to a springing maturity in certain circumstances).

The Lumen TLA matures on June 1, 2028 and requires Lumen to make quarterly amortization payments of 1.25 % of the initial principal amount and certain specified mandatory prepayments upon the occurrence of certain transactions.

At December 31, 2024, no borrowings were outstanding under Lumen’s (i) Series A Revolving Credit Facility, with commitments of approximately $ 489 million, or (ii) Series B Revolving Credit Facility, with commitments of approximately $ 465 million.

Superpriority Term B Credit Agreement

On the TSA Effective Date, Lumen, as borrower, the lenders party thereto, Wilmington Trust, National Association (“WTNA”), as administrative agent, and Bank of America, as collateral agent, entered into a Superpriority Term B Credit Agreement (the “TLB Credit Agreement”), providing for:

• a superpriority secured term loan facility in a principal amount of approximately $ 1.6 billion maturing April 15, 2029 (the “Lumen TLB-1”);

• a superpriority secured term loan facility in a principal amount of approximately $ 1.6 billion maturing April 15, 2030 (the “Lumen TLB-2”, and together with the Lumen TLB-1, the “Lumen TLB”).

Interest on borrowings under the TLB Credit Agreement is payable at the end of each interest period at a rate equal to, at Lumen’s option, adjusted term SOFR (subject to a 0 % floor) plus 2.35 % for term SOFR loans or a base rate plus 1.35 % for base rate loans.

The Lumen TLB requires Lumen to make quarterly amortization payments of 0.25 % of the initial principal amount and certain specified mandatory prepayments upon the occurrence of certain transactions.

Amounts outstanding under the Lumen TLB may be prepaid at any time without premium or penalty.

Former Facilities

In connection with entering into the RCF/TLA Credit Agreement, all revolving commitments under Lumen’s amended and restated credit agreement dated January 31, 2020 (the “Former Parent Facilities”) were terminated and substantially all of the debt issued thereunder was repaid.

Level 3 Credit Agreements

Credit Agreement dated March 22, 2024

On the TSA Effective Date, Level 3 Financing, as borrower, Level 3 Parent, LLC.

the lenders party thereto and WTNA, as administrative agent and collateral agent, entered into a credit agreement (the “New Level 3 Credit Agreement”), providing for:

• a secured term B-1 loan facility in the principal amount of approximately $ 1.2 billion maturing April 15, 2029;

• a secured term B-2 loan facility in the principal amount of approximately $ 1.2 billion maturing April 15, 2030.

Interest on borrowings under the New Level 3 Credit Agreement is payable at the end of each interest period at a rate equal to, at Level 3 Financing’s option, term SOFR (subject to a 2.00 % floor) plus 6.56 % for term SOFR loans or a base rate plus 5.56 % for base rate loans.

Amounts outstanding under the New Level 3 Credit Agreement may be prepaid at any time, subject to a premium of (i) 2.00 % of the aggregate principal amount if prepaid on or prior to the 12-month anniversary of the TSA Effective Date and (ii) 1.00 % of the aggregate principal amount if prepaid after the 12-month anniversary of the TSA Effective Date and on or prior to the 24-month anniversary of the TSA Effective Date.

The New Level 3 Facilities require Level 3 Financing to make certain specified mandatory prepayments upon the occurrence of certain transactions.

Former Facility

In connection with entering into the New Level 3 Credit Agreement, substantially all of the indebtedness issued under Level 3 Financing’s amended and restated credit agreement dated as of November 29, 2019 (the “Former Level 3 Facility”) was repaid.

Senior Notes of Lumen and its Subsidiaries

The Company’s consolidated indebtedness at December 31, 2024 included:

• superpriority senior secured notes issued by Lumen;

• first and second lien secured notes issued by Level 3 Financing;

• senior unsecured notes issued by Lumen, Level 3 Financing, Qwest, and Qwest Capital Funding, Inc.

All of these notes carry fixed interest rates and all principal is due on the notes’ respective maturity dates, which rates and maturity dates are summarized in the table above.

Revolving Letters of Credit

We use various financial instruments in the normal course of business.

These instruments include letters of credit, which are conditional commitments issued on our behalf in accordance with specified terms and conditions.

Lumen may draw letters of credit under (i) an uncommitted $ 225 million revolving letter of credit facility and (ii) the Lumen Revolving Credit Facilities.

At December 31, 2024, we had $ 220 million of undrawn letters of credit outstanding, $ 217 million of which were issued under the Lumen Revolving Credit Facilities, $ 1 million of which were issued under our $ 225 million uncommitted letter of credit facility and $ 2 million of which were issued under a separate facility maintained by one of our subsidiaries (the full amount of which is collateralized by cash).

Certain Guarantees and Security Interests

Lumen’s obligations under its RCF/TLA Credit Agreement are unsecured, but certain of Lumen’s subsidiaries have provided an unconditional guarantee of payment of Lumen’s obligations (such entities, the “Lumen Guarantors”) and certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Lumen Guarantors.

Level 3 Parent, LLC, Level 3 Financing and certain of Level 3 Financing’s subsidiaries have provided an unconditional guarantee of payment of Lumen’s obligations under its Series A Revolving Credit Facility of up to $ 150 million and under its Series B Revolving Credit Facility of up to $ 150 million, in each case secured by a lien on substantially all of their assets (such entities, the “Level 3 Collateral Guarantors”).

The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances.

Qwest Corporation and certain of its subsidiaries have provided an unsecured guarantee of collection of Lumen’s obligations under the Lumen Revolving Credit Facilities and Lumen TLA (the “Qwest Guarantors”).

Lumen’s obligations under the TLB are unsecured.

The term loans issued under this agreement are guaranteed by the Lumen Guarantors and the Qwest Guarantors on the same basis as those entities guarantee Lumen’s obligations under its RCF/TLA Credit Agreement.

Level 3 Financing’s obligations under the New Level 3 Credit Agreement are secured by a first lien on substantially all of its assets.

In addition, the other Level 3 Collateral Guarantors have provided an unconditional guarantee of payment of Level 3 Financing’s obligations under the New Level 3 Credit Agreement secured by a lien on substantially all of their assets.

Lumen’s superpriority secured senior notes are guaranteed by the Lumen Guarantors and the Qwest Guarantors on the same basis as those entities guarantee Lumen’s obligations under its RCF/TLA Credit Agreement (subject, in certain cases, to receipt of necessary regulatory approvals).

Level 3 Financing’s obligations under its first lien notes are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, for certain notes, will be guaranteed upon the receipt of required regulatory approvals) on the same basis as the guarantees provided by such entities under the New Level 3 Credit Agreement.

Level 3 Financing’s obligations under its second lien notes are secured by a second lien on substantially all of its assets, and are guaranteed by the other Level 3 Collateral Guarantors on the same basis as the guarantees provided by such entities under the New Level 3 Credit Agreement, except the lien securing such guarantees is a second lien.

Lumen's reimbursement obligations under its outstanding letters of credit are secured by guarantees issued by certain of its subsidiaries.

Level 3 Financing's obligations under its unsecured notes are guaranteed on an unsecured basis by the same affiliated entities that guarantee the New Level 3 Credit Agreement and Level 3 Financing's secured notes.

The senior unsecured notes issued by Qwest Capital Funding, Inc.

are guaranteed by its parent, Qwest Communications International Inc.

Under its Superpriority Revolving/Term Loan A Credit Agreement, Lumen may not permit:

(i) its maximum total net leverage ratio to exceed 5.75 to 1.00 as of the last day of each fiscal quarter, stepping down to 5.50 to 1.00 with respect to each fiscal quarter ending after December 31, 2024 and further stepping down to 5.25 to 1.00 with respect to each fiscal quarter ending after December 31, 2025;

(ii) its interest coverage ratio as of the last day of any test period to be less than 2.00 to 1.00.

Lumen’s superpriority credit agreements and superpriority senior secured notes contain various representations and warranties and extensive affirmative and negative covenants.

Lumen’s senior unsecured notes were issued under four separate indentures.

These indentures restrict Lumen’s ability to (i) incur, issue or create liens upon its property and (ii) consolidate with or merge into, or transfer or lease all or substantially all of its assets to, any other party.

Under certain circumstances in connection with a “change of control” of Lumen, Lumen will be required to make an offer to repurchase each series of these senior notes (other than two of its older series of notes) at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.

Level 3 Financing

The New Level 3 Credit Agreement and Level 3 Financing's first and second lien secured notes contain various representations and extensive affirmative and negative covenants.

Also, under certain circumstances in connection with a “change of control” of Level 3 Parent, LLC or Level 3 Financing, Level 3 Financing will be required to make an offer to repurchase each series of its outstanding senior notes at a price of 101 % of the principal amount redeemed, plus accrued and unpaid interest.

Qwest Companies

Under its term loan, Qwest Corporation must maintain a debt to EBITDA ratio of not more than 2.85 to 1.00, as determined and calculated in the manner described in the applicable term loan documentation.

The term loan also contains a negative pledge covenant, which generally requires Qwest Corporation to secure equally and ratably any advances under the term loan if it pledges assets or permits liens on its property for the benefit of other debtholders.

The senior notes of Qwest Corporation were issued under indentures dated April 15, 1990 and October 15, 1999.

These indentures contain restrictions on the incurrence of liens and the consummation of certain transactions substantially similar to the above-described covenants in Lumen's indentures (but contain no mandatory repurchase provisions).

These indentures contain restrictions on the incurrence of liens and the consummation of certain transactions substantially similar to the above-described covenants in the indentures governing Lumen’s senior unsecured notes (but contain no mandatory repurchase provisions).

The senior notes of Qwest Capital Funding, Inc.

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and its subsidiaries to comply with the financial covenants in their respective debt instruments could be adversely impacted by a wide variety of events, including unforeseen contingencies, many of which are beyond their control.

As of December 31, 2023, Lumen Technologies, Inc.

believes it and its subsidiaries were in compliance with the provisions and financial covenants in their respective material debt agreements in all material respects.

Lumen Technologies does not guarantee the debt of any unaffiliated parties, but, as noted above, as of December 31, 2023 certain of its largest subsidiaries guaranteed (i) its debt outstanding under its Amended Secured Credit Facilities, its senior secured notes and its $ 225 million letter of credit facility and (ii) the outstanding term loans or senior notes issued by certain other subsidiaries.

As of December 31, 2024, Lumen Technologies believes it and its subsidiaries were in compliance with the provisions and financial covenants in their respective material debt agreements in all material respects.

Lumen does not guarantee the debt of any unaffiliated parties, but, as noted above, as of December 31, 2024 certain of its key subsidiaries guaranteed (i) its debt outstanding under its superpriority credit agreements, its superpriority senior secured notes and its $ 225 million letter of credit facility and (ii) the outstanding term loans or senior secured notes issued by certain other subsidiaries.

As further noted above, several of the subsidiaries guaranteeing these obligations have pledged substantially all of their assets to secure certain of their respective guarantees.

Subsequent Event

See Note 24—Subsequent Events, for information regarding certain debt restructuring transactions contemplated under our amended and restated transaction support agreement dated as of January 22, 2024.

(8) Accounts Receivable

Subsequent Events

As of February 15, 2025, (i) Lumen Technologies redeemed approximately $ 132 million aggregate principal amount of its unsecured senior notes and (ii) Level 3 Financing redeemed approximately $ 70 million aggregate principal amount of its unsecured senior notes, both in exchange for cash.

Note 8—Accounts Receivable

The following table presents details of our accounts receivable balances:

As of December 31,

2023 2022 (1)

(Dollars in millions)

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Accounts receivable, less allowance $ 1,231 1,318

______________________________________________________________________

(1) Amounts have been adjusted to reflect the immaterial correction of accounts receivable.

See Note 1—Background and Summary of Significant Accounting Policies under the header Correction of Immaterial Errors .

We are exposed to concentrations of credit risk from our customers.

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We have not experienced any significant loss associated with these purchased receivables.

(9) Property, Plant and Equipment

Note 9—Property, Plant and Equipment

Net property, plant and equipment is composed of the following:

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(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.

(5) At December 31, 2022, we had $ 1.9 billion of certain property, plant and equipment, net related to our EMEA business which was classified as held for sale at this date and which was sold on November 1, 2023.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for more information.

During 2024, we initiated marketing of our Broomfield, Colorado office buildings to locate a buyer and have classified those buildings as held for sale, resulting in an impairment loss of $ 80 million.

During the second quarter of 2023, we donated our Monroe, Louisiana campus and leased back a portion thereof.

This donation resulted in a $ 101 million loss recognized for the year ended December 31, 2023.

We recorded depreciation expense of $ 1.9 billion, $ 1.9 billion and $ 2.1 billion for the years ended December 31, 2024, 2023 and 2022, respectively.

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(Dollars in millions)

Balance at beginning of year $ 156 182

Balance at beginning of period $ 157 156

Accretion expense 12 6

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Change in estimate — 4

Classified as held for sale (1)

Balance at end of year $ 157 156

_______________________________________________________________________________

(1) Represents the amounts classified as held for sale related to our EMEA business.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

Balance at end of period

The changes in estimate referred to in the table above were offset against gross property, plant and equipment.

(10) Severance

Note 10—Severance

Periodically, we reduce our workforce and accrue liabilities for the related severance costs.

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As a result of this plan, we incurred severance and related costs of approximately $ 53 million.

We do not expect to incur any material impairment or exit costs related to this plan.

During April 2024, we further reduced our workforce by approximately 6 % as a part of our efforts to change our workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with our shapeshifting and focus on our strategic priorities.

As a result of this plan, we incurred severance and related costs of approximately $ 103 million during the second quarter of 2024.

We have not incurred, and do not expect to incur, any material impairment or exit costs related to either of these plans.

We report severance liabilities within accrued expenses and other liabilities - salaries and benefits in our consolidated balance sheets and report severance expenses in selling, general and administrative expenses in our consolidated statements of operations.

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Changes in our accrued liabilities for severance expenses were as follows:

Years Ended December 31,

(Dollars in millions)

Balance at December 31, 2021 $ 36

Accrued to expense 12

Payments, net ( 37 )

Balance at December 31, 2022 11

Balance at beginning of period $ 18 11

Accrued to expense 130 74

Payments, net ( 136 ) ( 67 )

Balance at December 31, 2023 $ 18

(11) Employee Benefits

Balance at end of period $ 12 18

Note 11—Employee Benefits

Pension, Post-Retirement and Other Post-Employment Benefits

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We use a December 31 measurement date for all our plans.

On October 19, 2021, we, as sponsor of the Combined Pension Plan, along with the Plan’s independent fiduciary, entered into an agreement committing the Plan to use a portion of its plan assets to purchase an annuity from an insurance company (the "Insurer") to transfer approximately $ 1.4 billion of the Plan’s pension liabilities.

This agreement irrevocably transferred to the Insurer future Plan benefit obligations for approximately 22,600 U.S.

Lumen participants (“Transferred Participants”) effective on December 31, 2021.

This annuity transaction was funded entirely by existing Plan assets.

The Insurer assumed responsibility for administrative and customer service support, including distribution of payments to the Transferred Participants.

Transferred Participants’ benefits were not reduced as a result of this transaction.

As of January 1, 2022, we spun off the Lumen Pension Plan from the Lumen Combined Pension Plan in anticipation of the sale of the ILEC business, as described further in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

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The accounting unfunded status of the Combined Pension Plan was $ 615 million and $ 736 million as of December 31, 2024 and 2023, respectively.

We made no voluntary cash contributions to the Combined Pension Plan in 2023 or 2022.

We made a voluntary contribution of $ 170 million to the trust for the Combined Pension Plan in 2024.

We made no voluntary cash contributions to the Combined Pension Plan in 2023.

As discussed above, we contributed approximately $ 319 million of cash to the Lumen Pension Plan trust to fully fund the pension plan in September 2022 in preparation for the closing of the sale of the ILEC business.

We paid $ 5 million of benefits directly to participants of our non-qualified pension plans in both 2023 and 2022.

We paid $ 4 million and $ 5 million of benefits directly to participants of our non-qualified pension plans in 2024 and 2023, respectively.

Benefits paid by the Combined Pension Plan are paid through a trust that holds all of the Plan's assets.

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Based on current laws and circumstances, we do not believe we are required to make any contributions to the Combined Pension Plan in 2025 and we do not expect to make voluntary contributions to the trust for the Combined Pension Plan in 2025.

We estimate that in 2024 we will pay $ 4 million of benefits directly to participants of our non-qualified pension plans.

We recognize in our consolidated balance sheets the funded status of the legacy Level 3 defined benefit post-retirement plans.

These plans were fully funded as of December 31, 2023 and 2022.

We estimate that in 2025 we will pay approximately $ 4 million of benefits directly to participants of our non-qualified pension plans.

We recognize in our consolidated balance sheets the funded status of the legacy Level 3 Parent, LLC qualified defined benefit post-retirement plan.

This plan was fully funded as of December 31, 2024 and 2023.

Additionally, as previously mentioned, we sponsor unfunded non-qualified pension plans for certain current and former highly-compensated employees.

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Post-Retirement Benefits

Our post-retirement benefit plans provide post-retirement benefits to qualified retirees and allow (i) eligible employees retiring before certain dates to receive benefits at no or reduced cost and (ii) eligible employees retiring after certain dates to receive benefits on a shared cost basis.

Our post-retirement benefit plans provide post-retirement benefits to qualified retirees and allow certain participants to receive benefits at no or reduced cost and other participants to receive benefits on a shared cost basis.

The post-retirement benefits not paid by the trusts are funded by us and we expect to continue funding these post-retirement obligations as benefits are paid.

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In 2025, we currently expect to pay directly $ 186 million of post-retirement benefits, net of participant contributions and direct subsidies.

We expect our expected health care cost trend to range from 5.4 % to 7.50 % in 2024 and grading to 4.50 % by 2031.

We anticipate our expected health care cost trend to range from 6.20 % to 7.90 % in 2025 and grading to 4.50 % by 2031.

Our post-retirement benefit cost, for certain eligible legacy Qwest retirees and certain eligible legacy CenturyLink retirees, is capped at a set dollar amount.

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Prior to the sale of the ILEC business on October 3, 2022, we realized pension costs related to the Lumen Pension Plan.

Net periodic benefit expense (income) for our Combined Pension Plan and the Lumen Pension Plan (through October 3, 2022, together the "Pension Plans") includes the following components:

Net periodic benefit expense for our Combined Pension Plan and the Lumen Pension Plan (through October 3, 2022, together the "Pension Plans") includes the following components:

Pension Plans

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Expected return on plan assets ( 272 ) ( 287 ) ( 385 )

Settlement charges — — 383

Realized to gain on sale of businesses — — 546

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Recognition of actuarial loss ( 17 ) ( 20 ) ( 4 )

Special termination benefits 2 — —

Net periodic post-retirement benefit expense $ 75 80 54

Service costs for our Combined Pension Plan and post-retirement benefit plans are included in the cost of services and products and selling, general and administrative line items on our consolidated statements of operations and all other costs listed above, except for amounts realized as part of the net gain on sale of businesses, are included in other (expense) income, net on our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021.

Service costs for our Combined Pension Plan and post-retirement benefit plans are included in the cost of services and products and selling, general and administrative line items on our consolidated statements of operations and all other costs listed above, except for amounts realized as part of the net gain on sale of businesses, are included in other income (expense), net on our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022.

Additionally, a portion of the service cost is also allocated to certain assets under construction, which are capitalized and reflected as part of property, plant and equipment in our consolidated balance sheets.

As a result of ongoing efforts to reduce our workforce, we recognized a one-time charge in 2023 and in 2021 of $ 2 million and $ 6 million, respectively, for special termination benefit enhancements paid to certain eligible employees upon voluntary retirement.

As a result of ongoing efforts to reduce our workforce, we recognized a one-time charge in our net periodic post-retirement benefit expense in 2024 of $ 2 million and in our net periodic pension expense in 2023 of $ 2 million, both for special termination benefit enhancements paid to certain eligible employees upon voluntary retirement.

Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits.

We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump sum payments only if, in the aggregate, they exceed or are probable to exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold.

The lump sum pension settlement payments for 2021 exceeded the settlement threshold.

In addition, during the fourth quarter of 2021, we executed an annuity purchase contract with a third party insurer that triggered additional settlement activity (see discussion above for further information).

As a result, we recognized a non-cash settlement charge of $ 383 million as of December 31, 2021 to accelerate the recognition of a portion of the previously unrecognized actuarial losses in the qualified pension plan, which is reflected in other (expense) income, net in our consolidated statement of operations for the year ended December 31, 2021.

This non-cash charge increased our recorded net loss and increased our recorded accumulated deficit, with an offset to accumulated other comprehensive loss in shareholders' equity for the year ended December 31, 2021.

The amount of any future non-cash settlement charges will be dependent on several factors, including the total amount of our future lump sum benefit payments.

As of December 31, 2024, the settlement threshold was not reached.

In the event of workforce reductions in the future, the annual lump sum payments may trigger settlement accounting.

Benefit Obligations

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Combined Pension Plan Post-Retirement Benefit Plans

December 31, December 31,

As of December 31, As of December 31,

2024 2023 2024 2023

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N/A - Not applicable

In 2021, we adopted the revised mortality tables and projection scales released by the Society of Actuaries, which increased the projected benefit obligation of our benefit plans by $ 37 million for 2021.

The Society of Actuaries did not release any revised mortality tables or projection scales in 2024, 2023, or 2022.

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Interest cost 251 270 154

Plan amendments — — ( 13 )

Special termination benefits charge — 2 —

Actuarial loss (gain) 114 ( 1,432 ) ( 337 )

Actuarial (gain) loss ( 119 ) 114 ( 1,432 )

Benefits paid from plan assets ( 552 ) ( 494 ) ( 590 )

Settlement payments and annuity purchase — — ( 1,671 )

Benefit obligation at end of year $ 4,816 5,212 5,295

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Plan amendments — — ( 41 )

Actuarial loss (gain) 14 ( 591 ) ( 125 )

Actuarial (gain) loss ( 84 ) 14 ( 591 )

Benefits paid by company ( 214 ) ( 228 ) ( 249 )

Benefits paid from plan assets — ( 4 ) —

Special termination benefits charge 2 — —

Benefit obligation at end of year $ 1,750 1,919 1,995

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Benefits paid from plan assets ( 552 ) ( 494 ) ( 590 )

Settlement payments and annuity purchase — — ( 1,671 )

Contributions 170 — —

Fair value of plan assets at end of year $ 4,201 4,476 4,715

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It is determined annually based on the strategic asset allocation and the long-term risk and return forecast for each asset class.

Our investment objective for the Combined Pension Plan assets is to achieve an attractive risk-adjusted return over time that will provide for the payment of benefits and minimize the risk of large losses.

Our investment objective for the Combined Pension Plan assets is to achieve an attractive risk-adjusted return over time that will provide for the payment of benefits while minimizing the risk of large losses in funded status.

We employ a liability-aware investment strategy designed to reduce the volatility of pension assets relative to pension liabilities.

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Permitted investments:

Plan assets are managed consistent with the restrictions set forth by the Employee Retirement Income Security Act of 1974, as amended.

Plan assets are managed consistent with the restrictions set forth by ERISA (the Employee Retirement Income Security Act of 1974, as amended).

Fair Value Measurements:

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Investments include dividend and interest receivables, pending trades and accrued expenses.

Fair Value of Combined Pension Plan Assets at December 31, 2023

Fair Value of Combined Pension Plan Assets

As of December 31, 2024

Level 1 Level 2 Level 3 Total

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stocks (e) 14 — 1 15

Multi-asset strategies (l) 28 — — 28

Cash equivalents and short-term investments (o) 6 2 — 8

Total investments, excluding investments valued at NAV $ 722 1,455 6 2,183

Other receivables 27

Investments valued at NAV 2,359

Repurchase agreements & other obligations (n) $ — ( 361 ) — ( 361 )

Derivatives (m) ( 1 ) ( 6 ) — ( 7 )

Investments valued at NAV 2,192

Total pension plan assets $ 4,201

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Investments include dividend and interest receivable, pending trades and accrued expenses.

Fair Value of Combined Pension Plan Assets at December 31, 2022

Fair Value of Combined Pension Plan Assets

As of December 31, 2023

Level 1 Level 2 Level 3 Total

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Multi-asset strategies (l) 28 — — 28

Cash equivalents and short-term investments (o) — 1 — 1

Total investments, excluding investments valued at NAV $ 728 1,927 5 2,660

Investments valued at NAV 2,192

Repurchase agreements (n) $ — ( 375 ) — ( 375 )

Derivatives (m) ( 1 ) — — ( 1 )

Investments valued at NAV 2,259

Total pension plan assets $ 4,476

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Fair Value of Plan Assets Valued at NAV

Combined Pension Plan at

Combined Pension Plan

As of December 31,

(Dollars in millions)

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High yield bonds (b) 340 110

Emerging market bonds (c) 69 —

stocks (d) 6 51

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(f) Emerging market stocks represent investments in stocks of companies located in emerging markets.

(g) Private equity represents non-public investments in domestic and foreign buy out and venture capital funds.

(g) Private equity represents non-public investments in domestic and foreign buyout and venture capital funds.

Private equity funds are primarily structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing accounting and other regulatory guidelines.

(h) Private debt represents non-public investments in distressed or mezzanine debt.

(h) Private debt represents non-public investments in performing and distressed credits.

(i) Market neutral hedge funds hold investments in a diversified mix of instruments that are intended in combination to exhibit low correlations to market fluctuations.

These investments are typically combined with futures to achieve uncorrelated excess returns over various markets.

(j) Directional hedge funds —This asset category represents investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral hedge funds.

(j) Directional hedge funds represent investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral hedge funds.

(k) Real estate represents investments in a diversified portfolio of real estate properties.

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The table below presents a rollforward of the Combined Pension Plan assets valued using Level 3 inputs:

Combined Pension Plan Assets Valued Using Level 3 Inputs

Combined Pension Plan Assets Valued

Using Level 3 Inputs

(Dollars in millions)

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Balance at December 31, 2023 4 1 — 5

(Dispositions) acquisitions ( 2 ) — ( 2 )

Acquisition — — 1 1

Actual return on plan assets — — — —

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For the year ended December 31, 2024, the investment program produced actual gains on Combined Pension Plan assets of $ 107 million as compared to expected returns of $ 272 million, for a difference of $ 165 million.

For the year ended December 31, 2022, the investment program produced actual losses on Combined Pension Plan assets of $ 987 million as compared to the expected returns of $ 329 million, for a difference of $ 1.3 billion.

For the year ended December 31, 2023, the investment program produced actual gains on Combined Pension Plan assets of $ 255 million as compared to the expected returns of $ 287 million, for a difference of $ 32 million.

The short-term annual returns on plan assets will almost always be different from the expected long-term returns and the plans could experience net gains or losses, due primarily to the volatility occurring in the financial markets during any given year.

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Post-retirement benefit plans:

Net actuarial (loss) gain ( 217 ) ( 3 ) 591 588 371

Prior service (cost) benefit ( 5 ) 1 41 42 37

Net actuarial gain (loss) 371 ( 20 ) ( 14 ) ( 34 ) 337

Prior service benefit (cost) 37 ( 8 ) — ( 8 ) 29

Curtailment loss 4 — — — 4

Deferred income tax benefit (expense) 54 1 ( 159 ) ( 158 ) ( 104 )

Deferred income tax (expense) benefit ( 104 ) 7 3 10 ( 94 )

Total post-retirement benefit plans 308 ( 21 ) ( 11 ) ( 32 ) 276

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The value of liabilities related to these plans was not significant.

(12) Stock-based Compensation

We maintain an equity incentive program that allows our Board of Directors (through its Compensation Committee or a senior officer acting under delegated authority) to grant incentives to certain employees and outside directors in one or more forms, including:

incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and market and performance shares.

Note 12—Stock-based Compensation

We maintain an equity incentive program that allows our Board of Directors (through its Human Resources and Compensation Committee or a senior officer acting under delegated authority) to grant incentives to certain employees and outside directors in one or more forms, including:

incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and market and other equity-based awards.

Restricted Stock Awards and Restricted Stock Unit Awards

We grant equity based restricted stock and restricted stock units that contain service only conditions for vesting (“Service Awards”), awards that contain both service and market conditions for vesting (“Market Awards”) and awards that contain both service and performance conditions for vesting (“Performance Awards”).

The fair value of Service Awards is based upon the closing stock price on the accounting grant date and the awards generally vest over periods ranging from one to three years .

The fair value of Service Awards is based upon the closing stock price on the accounting grant date and the awards generally vest over periods ranging from one to four years .

The fair value of Market Awards is determined using Monte-Carlo simulations and the awards vest over periods up to three years .

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The fair value of Performance Awards is based upon the closing stock price on the accounting grant date;

however, the award value may increase, or decrease based upon the outcome of the performance conditions.

however, the award value may increase, or decrease based upon the extent to which the performance conditions are satisfied.

Performance Awards vest over periods of up to three-years and specify a target number of shares for the award.

The recipient ultimately can receive between 0 % and 200 % of the target number of shares depending upon the outcome of the performance conditions.

The recipient ultimately can receive between 0 % and 200 % of the target number of shares depending upon the extent to which the performance conditions are satisfied.

All stock awards granted in 2024 were subject to service vesting conditions only.

The following table summarizes activity involving restricted stock and restricted stock unit awards for the year ended December 31, 2024:

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At December 31, 2024, there was $ 28 million of total unrecognized compensation expense related to our stock-based payment arrangements, which we expect to recognize over a weighted-average period of 1.4 years.

(13) (Loss) Earnings Per Common Share

Basic and diluted (loss) earnings per common share for the years ended December 31, 2023, 2022 and 2021 were calculated as follows:

Note 13—Loss Per Common Share

Basic and diluted loss per common share for the years ended December 31, 2024, 2023 and 2022 were calculated as follows:

Years Ended December 31,

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(Dollars in millions, except per share amounts, shares in thousands)

(Loss) income (numerator)

Net (loss) income $ ( 10,298 ) ( 1,548 ) 2,033

Net (loss) income applicable to common stock for computing basic (loss) earnings per common share ( 10,298 ) ( 1,548 ) 2,033

Net (loss) income as adjusted for purposes of computing diluted (loss) earnings per common share $ ( 10,298 ) ( 1,548 ) 2,033

Loss (numerator)

Net loss $ ( 55 ) ( 10,298 ) ( 1,548 )

Net loss applicable to common stock for computing basic loss per common share ( 55 ) ( 10,298 ) ( 1,548 )

Net loss as adjusted for purposes of computing diluted loss per common share $ ( 55 ) ( 10,298 ) ( 1,548 )

Shares (denominator):

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Non-vested restricted stock ( 26,874 ) ( 23,706 ) ( 20,552 )

Weighted average shares outstanding for computing basic (loss) earnings per common share 983,081 1,007,517 1,059,541

Weighted average shares outstanding for computing basic loss per common share 987,680 983,081 1,007,517

Incremental common shares attributable to dilutive securities:

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Shares issuable under incentive compensation plans — — —

Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share 983,081 1,007,517 1,066,778

Basic (loss) earnings per common share $ ( 10.48 ) ( 1.54 ) 1.92

Diluted (loss) earnings per common share (1)

Number of shares as adjusted for purposes of computing diluted loss per common share 987,680 983,081 1,007,517

Basic loss per common share $ ( 0.06 ) ( 10.48 ) ( 1.54 )

Diluted loss per common share (1)

$ ( 0.06 ) ( 10.48 ) ( 1.54 )

______________________________________________________________________________

(1) For the years ended December 31, 2023 and December 31, 2022, we excluded from the calculation of diluted loss per share 0.3 million and 3.8 million shares, respectively, potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive.

Our calculation of diluted (loss) earnings per common share excludes shares of common stock that are issuable upon exercise of stock options when the exercise price is greater than the average market price of our common stock.

We also exclude unvested restricted stock awards that are antidilutive as a result of unrecognized compensation cost.

(1) For the years ended December 31, 2024, December 31, 2023, and December 31, 2022 , we excluded from the calculation of diluted loss per share 7.3 million shares, 0.3 million shares and 3.8 million shares, respectively, potentially issuable under incentive compensation plans or convertible securities, as their effect, if included, would have been anti-dilutive due to our net loss position.

Our calculation of diluted loss per common share excludes non-vested restricted stock awards that are anti-dilutive based upon the terms of the award and due to the lower stock price resulting in more assumed repurchases and greater antidilution.

Such shares were 16.0 million, 22.5 million and 13.8 million for 2024, 2023 and 2022, respectively.

(14) Fair Value of Financial Instruments

Note 14—Fair Value of Financial Instruments

Our financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, long-term debt (excluding finance lease and other obligations), interest rate swap contracts, certain equity investments and certain indemnification obligations.

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Level 3 Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our following financial assets and liabilities as of December 31, 2023 and 2022:

The following table presents the carrying amounts and estimated fair values of our following financial assets and liabilities as of December 31, 2024 and 2023, as well as the input level used to determine the fair values indicated below:

As of December 31, 2024 As of December 31, 2023

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(Dollars in millions)

Equity securities (1)

1 $ — — 22 22

Long-term debt, excluding finance lease and other obligations

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______________________________________________________________________

(1) For the years ended December 31, 2023 and 2022, we recognized a $ 22 million and a $ 109 million of loss on equity securities in other (expense) income, net in our consolidated statements of operations.

(2) Nonrecurring fair value is measured as of August 1, 2022.

Investment Held at Net Asset Value

We hold an investment in a limited partnership created as a holding company for various investments.

The limited partnership has sole discretion as to the amount and timing of distributions of the underlying assets.

As of December 31, 2023, the underlying investments held by the limited partnership were traded in active markets and as such, we account for our investment in the limited partnership using net asset value ("NAV").

Subject to restrictions imposed by law and other provisions of the limited partnership agreement, the general partner has the sole discretion as to the amounts and timing of distributions of partnership assets to partners.

The following table summarizes the net asset value of our investment in this limited partnership.

As of December 31, 2023 As of December 31, 2022

Net Asset Value

(Dollars in millions)

Investment in limited partnership (1)

______________________________________________________________________

(1) For the years ended December 31, 2023 and December 31, 2022, we recognized $ 75 million and $ 83 million of loss on investment, respectively, reflected in other (expense) income, net in our consolidated statement of operations.

(15) Derivative Financial Instruments

(1) Non-recurring fair value recorded in connection with the sale of our Latin American business was measured as of August 1, 2022.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for further details.

Note 15—Derivative Financial Instruments

From time to time, we use derivative financial instruments, primarily interest rate swaps, to manage our exposure to fluctuations in interest rates.

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In 2019, we entered into variable-to-fixed interest rate swap agreements to hedge the interest on $ 4.0 billion notional amount of floating rate debt.

As of December 31, 2021, we evaluated the effectiveness of our remaining hedges quantitatively and determined that hedges in effect on such dates qualified as effective hedge relationships.

All remaining hedges were expired as of December 31, 2022.

All such hedges were expired as of December 31, 2022.

Amounts accumulated in accumulated other comprehensive loss related to derivatives were indirectly recognized in earnings as periodic settlement payments were made throughout the term of the swaps.

The amount of unrealized losses recognized in accumulated other comprehensive loss consists of the following (in millions):

Derivatives designated as hedging instruments

Cash flow hedging contracts

Year Ended December 31, 2021

The amount of realized losses reclassified from accumulated other comprehensive loss to the statement of operations consists of the following (in millions):

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Cash flow hedging contracts

Years Ended December 31, $ 22 83

Year Ended December 31, 2022 $ 22

For the year ended December 31, 2022, amounts included in accumulated other comprehensive loss at the beginning of the period were reclassified into earnings upon the settlement of the cash flow hedging contracts on March 31, 2022 and June 30, 2022.

During the year ended December 31, 2022, $ 19 million of net losses on the interest rate swaps have been reflected in our consolidated statements of operations upon settlement of the agreements in the first half of 2022.

(16) Income Taxes

The components of the income tax expense are as follows:

Note 16—Income Taxes

The components of the income tax (benefit) expense are as follows:

Years Ended December 31,

1 unchanged sentence

(Dollars in millions)

Income tax expense:

Income tax (benefit) expense:

Current $ 87 7 838

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Deferred 1 7 ( 73 )

Total income tax expense $ 61 557 668

Total income tax (benefit) expense $ ( 175 ) 61 557

Income tax (benefit) expense was allocated as follows:

Years Ended December 31,

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(Dollars in millions)

Income tax expense was allocated as follows:

Income tax expense in the consolidated statements of operations:

Income tax (benefit) expense in the consolidated statements of operations:

Attributable to income $ ( 175 ) 61 557

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2024 2023 2022

(Percentage of pre-tax (loss) income)

(Percentage of pre-tax loss)

Statutory federal income tax rate 21.0 % 21.0 % 21.0 %

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Change in liability for unrecognized tax position ( 16.8 ) % ( 0.1 ) % ( 0.2 ) %

Legislative changes to Global Intangible Low-Taxes Income ("GILTI") ( 1.2 ) % — % — %

Nondeductible executive stock compensation ( 4.9 ) % — % ( 0.1 ) %

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— % ( 0.4 ) % ( 4.0 ) %

Indemnification refunds 11.2 % — % — %

Cancellation of debt income 59.3 % — % — %

Other, net ( 3.1 ) % ( 0.4 ) % ( 0.2 ) %

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_______________________________________________________________________________

(1) Includes GILTI (as defined below) incurred as a result of the sale of our Latin American business.

(1) Includes GILTI incurred as a result of the sale of our Latin American business.

The effective tax rate for the year ended December 31, 2024 includes a $ 135 million favorable impact from the exclusion of cancellation of debt income ("CODI") under Section 108 of the Internal Revenue Code.

The effective tax rate for the year ended December 31, 2023 includes a $ 2.2 billion unfavorable impact of a non-deductible goodwill impairment and a $ 137 million favorable impact as a result of utilizing available capital losses generated by the sale of our Latin American business in 2022.

The effective tax rate for the year ended December 31, 2022 includes a $ 682 million unfavorable impact of non-deductible goodwill impairments and $ 128 million unfavorable impact related to incurring tax on Global Intangible Low-Tax Income ("GILTI") as a result of the sale of our Latin American business.

The effective tax rate for the year ended December 31, 2022 includes a $ 682 million unfavorable impact of non-deductible goodwill impairments and $ 128 million unfavorable impact related to incurring tax on GILTI as a result of the sale of our Latin American business.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

As of December 31,

2023 2022 (1)

(Dollars in millions)

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Net deferred tax liability $ ( 2,794 ) ( 3,015 )

_______________________________________________________________________________

(1) Excludes $ 138 million of deferred tax assets and $ 38 million of deferred tax liabilities related to the EMEA business sold November 1, 2023, that were classified as held for sale as of December 31, 2022.

Of the $ 3.0 billion net deferred tax liability at December 31, 2023 and 2022, respectively, $ 3.1 billion and $ 3.2 billion is reflected as a long-term liability and $ 112 million and $ 133 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets at December 31, 2023 and 2022, respectively.

Income taxes receivable as of December 31, 2023 was $ 273 million and income taxes payable as of December 31, 2022 was $ 943 million.

Of the $ 2.8 billion and $ 3.0 billion net deferred tax liability at December 31, 2024 and 2023, respectively, $ 2.9 billion and $ 3.1 billion is reflected as a long-term liability and $ 96 million and $ 112 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets at December 31, 2024 and 2023, respectively.

Income taxes receivable as of December 31, 2024 and 2023, were $ 483 million and $ 273 million, respectively.

tax purposes, the Company is required to recognize CODI on the difference between the adjusted issue price of the debt exchanged and the fair market value of the new debt issued.

As a result of the 2023 Exchange Offers, the Company realized approximately $ 663 million of CODI for U.S.

tax purposes.

See Note 7—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of this report for discussion of the 2023 Exchange Offers.

The Internal Revenue Code provides that a debtor may exclude CODI from taxable income to the extent certain exceptions apply but must reduce certain of its tax attributes by the amount of the excluded CODI.

For the year ended December 31, 2023, the Company excluded approximately $ 663 million of CODI from taxable income under Section 108 of the Code and, accordingly, the Company’s tax attributes have been reduced by a corresponding amount.

At December 31, 2024, we had federal NOLs of approximately $ 570 million, net of expirations from Section 382 limitations and uncertain tax positions, for U.S.

federal income tax purposes.

We expect to use substantially all of these tax attributes to reduce our future federal tax liabilities, although the timing of that use will depend upon our future earnings and future tax circumstances.

We expect to use substantially all of these NOLs to reduce our future federal tax liabilities, although the timing of that use will depend upon our future earnings and future tax circumstances.

Our ability to use these NOLs is subject to annual limits imposed by Section 382.

As a result, we anticipate that our cash income tax liabilities will increase in future periods.

If unused, the NOLs will expire between 2027 and 2031.

At December 31, 2023 we had state net operating loss carryforwards of $ 13 billion (net of uncertain tax positions).

At December 31, 2024, we had state NOLs of $ 12 billion (net of uncertain tax positions).

Our ability to use these NOLs is subject to annual limits imposed by Section 382.

We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize.

As of December 31, 2023, we established a valuation allowance of $ 399 million as it is more likely than not that this amount of net operating loss will not be utilized prior to expiration.

Our valuation allowance at December 31, 2023 and 2022 is primarily related to NOL carryforwards.

This valuation allowance decreased by $ 151 million during 2023, primarily due to the impact of utilization of available capital losses.

A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) from January 1 to December 31 for 2023 and 2022 is as follows:

As of December 31, 2024, we established a valuation allowance of $ 343 million as it is more likely than not that this amount of NOLs will not be utilized prior to expiration.

Our valuation allowance at December 31, 2024 and 2023 is primarily related to NOLs.

This valuation allowance decreased by $ 56 million during 2024, primarily due to changes in our state NOL carryforwards.

A reconciliation of the change in our gross unrecognized tax benefits (excluding both interest and any related federal benefit) for the years ended December 31, 2024 and 2023 is as follows:

(Dollars in millions)

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Decrease in tax positions of prior periods netted against deferred tax assets ( 4 ) ( 411 )

(Decrease) increase in tax positions taken in the current year ( 73 ) 634

Increase (decrease) in tax positions taken in the prior year 752 ( 3 )

Decrease in tax positions taken in the current year ( 64 ) ( 73 )

Increase in tax positions taken in the prior year 65 752

Decrease due to payments/settlements — ( 1 )

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As of December 31, 2024, the total amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate was $ 404 million.

The unrecognized tax benefits also includes tax positions that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes, that would not impact the effective tax rate but could impact cash tax amounts payable to taxing authorities.

Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax expense.

The unrecognized tax benefits also include tax positions that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes, which would not impact the effective tax rate but could impact cash tax amounts payable to taxing authorities.

Our policy is to reflect interest expense associated with unrecognized tax benefits in income tax (benefit) expense.

We had accrued interest (presented before related tax benefits) of approximately $ 217 million and $ 100 million at December 31, 2024 and 2023, respectively.

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income tax examinations by tax authorities for years before 2004.

The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where net operating loss carryforwards are available.

The Internal Revenue Service and state and local taxing authorities reserve the right to audit any period where NOLs are available.

Based on our current assessment of various factors, including (i) the potential outcomes of these ongoing examinations, (ii) the expiration of statute of limitations for specific jurisdictions, (iii) the negotiated settlement of certain disputed issues, and (iv) the administrative practices of applicable taxing jurisdictions, it is reasonably possible that the related unrecognized tax benefits for uncertain tax positions previously taken may decrease by up to $ 395 million within the next 12 months.

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The CAMT had no material impact on our financial results as of December 31, 2024.

In addition, the Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024.

While the US has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation, some of which are effective for tax periods after December 31, 2023.

While the global minimum tax will increase our administrative and compliance burdens, it is expected to have an immaterial impact to our financial statements.

(17) Segment Information

We report our results within two segments:

In addition, in 2021, the Organization for Economic Co-operation and Development (“OECD”) issued Pillar Two model rules introducing a new global minimum corporate tax of 15% and the OECD and the majority of its participating countries continue to work toward the enactment of such tax.

While the U.S.

has not adopted Pillar Two legislation, various other governments around the world have enacted such legislation that is effective for tax periods after December 31, 2023.

These global minimum tax rules have increased our administrative and compliance burdens, but the impact to our financial statements for the year ended December 31, 2024 was immaterial.

We anticipate further legislative activity and administrative guidance throughout 2025 and continue to monitor evolving global tax legislation.

Note 17—Segment Information

Our business is managed based on customer-facing sales channels to align with how we support our customers.

Our chief operating decision maker ("CODM"), who is the CEO of the Company, makes decisions and assesses the performance of the Company reviewing two segments:

Business and Mass Markets.

Under our Business segment we provide products and services to meet the needs of our enterprise and wholesale customers under four distinct sales channels:

Large Enterprise, Mid-Market Enterprise, Public Sector and Wholesale.

Our reportable segments have not been aggregated.

Under our Business segment we provide products and services to meet the needs of our enterprise and wholesale customers under five distinct sales channels:

Large Enterprise, Mid-Market Enterprise, Public Sector, Wholesale and International and Other.

For Business segment revenue, we report the following product categories:

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See detailed descriptions of these product and service categories in Note 4—Revenue Recognition.

As described in more detail below, our segments are managed based on the direct costs of providing services to their customers and directly associated selling, general and administrative costs (primarily salaries and commissions).

Shared costs are managed separately and included in "other unallocated expense" in the table included below "—Revenue and Expenses".

As referenced above, we reclassified certain prior period amounts to conform to the current period presentation.

As described in more detail below, our segments are managed based on the direct costs of providing services to their customers and directly associated headcount and non-headcount operating expenses.

Shared costs are managed separately and included in "other unallocated expense" in the table included below "—Revenue and Expenses." As referenced above, we reclassified certain prior period amounts to conform to the current period presentation.

See Note 1—Background and Summary of Significant Accounting Policies for additional detail on these changes.

The CODM uses adjusted EBITDA as the key indicator in assessing performance and allocating resources for both the Business segment and Mass Markets segment.

The following tables summarize our segment results for 2024, 2023 and 2022 based on the segment categorization we were operating under at December 31, 2024.

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Cost of services and products 3,063 69

Selling, general and administrative 1,232 1,341

Headcount costs 1,237 651

Non-headcount costs 652 572

Total expense 4,952 1,292

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Cost of services and products 3,248 79

Selling, general and administrative 1,215 1,623

Headcount costs 1,473 768

Non-headcount costs 807 610

Total expense 5,528 1,457

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Cost of services and products 3,436 121

Selling, general and administrative 1,273 1,685

Headcount costs 1,584 945

Non-headcount costs 879 703

Total expense 5,899 1,769

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We report our segment revenue based upon all services provided to that segment's customers.

Our segment expenses include specific cost of service 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.

Our segment expenses include (i) specific cost of service expenses incurred as a direct result of providing services and products to segment customers, (ii) headcount costs, which primarily includes salaries, commissions, and group insurance, and (iii) non-headcount costs, which primarily includes legal and other professional fees, marketing and advertising expenses, other network related expenses, and external commissions.

We have not allocated assets or debt to specific segments.

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• other income and expense items.

The following table reconciles total segment adjusted EBITDA to net (loss) income for the years ended December 31, 2023, 2022 and 2021:

The following table reconciles total segment adjusted EBITDA to net loss for the years ended December 31, 2024, 2023 and 2022:

Years Ended December 31,

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Stock-based compensation ( 29 ) ( 52 ) ( 98 )

Operating (loss) income ( 9,584 ) 95 4,285

Operating income (loss) 460 ( 9,584 ) 95

Total other expense, net ( 690 ) ( 653 ) ( 1,086 )

(Loss) income before income taxes ( 10,237 ) ( 991 ) 2,701

Income tax expense 61 557 668

Net (loss) income $ ( 10,298 ) ( 1,548 ) 2,033

Loss before income taxes ( 230 ) ( 10,237 ) ( 991 )

Income tax (benefit) expense ( 175 ) 61 557

Net loss $ ( 55 ) ( 10,298 ) ( 1,548 )

We do not have any single customer that comprises more than 10% of our consolidated total operating revenue.

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comprises less than 10% of our total operating revenue.

(18) Commitments, Contingencies and Other Items

Note 18—Commitments, Contingencies and Other Items

We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows.

As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities.

We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information.

As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate.

Subject to these limitations, at December 31, 2023 and December 31, 2022, we had accrued $ 84 million and $ 88 million, respectively, in the aggregate for our litigation and non-income tax contingencies, which is included in other current liabilities or other liabilities in our consolidated balance sheet as of such date.

We cannot at this time estimate the reasonably possible loss or range of loss in excess of this $ 84 million accrual due to the inherent uncertainties and speculative nature of contested proceedings.

Subject to these limitations, at December 31, 2024 and December 31, 2023, we had accrued $ 78 million and $ 84 million, respectively, in the aggregate for our litigation and non-income tax contingencies, which is included in Other under Current Liabilities or Other under Deferred Credits and Other Liabilities in our consolidated balance sheets as of such dates.

We cannot at this time estimate the reasonably possible loss or range of loss, if any, in excess of our $ 78 million accrual due to the inherent uncertainties and speculative nature of contested proceedings.

The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency.

Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.

In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified, in that matter.

In this Note, a reference to a "putative" class action means a class has been alleged, but not certified, in that matter.

Principal Proceedings

Shareholder Class Action Suits

Lumen and certain Lumen Board of Directors members and officers were named as defendants in a putative shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of Colorado, captioned Houser et al.

Houser Shareholder Suit

Lumen and certain of its current and former officers and directors were named as defendants in a putative shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of Colorado, captioned Houser et al.

CenturyLink, et al.

The complaint asserted claims on behalf of a putative class of former Level 3 shareholders who became CenturyLink, Inc.

The original complaint asserted claims on behalf of a putative class of former Level 3 Communications, Inc.

("Level 3") shareholders who became CenturyLink, Inc.

shareholders as a result of our acquisition of Level 3.

It alleged that the proxy statement provided to the Level 3 shareholders failed to disclose various material information of several kinds, including information about strategic revenue, customer loss rates, and customer account issues, among other items.

The complaint seeks damages, costs and fees, rescission, rescissory damages, and other equitable relief.

In May 2020, the court dismissed the complaint.

Plaintiffs appealed that decision, and in March 2022, the appellate court affirmed the district court's order in part and reversed it in part.

It alleged that the proxy statement provided to the Level 3 shareholders failed to disclose various material information, including information about strategic revenue, customer loss rates, and customer account issues, among other items.

The original complaint sought damages, costs and fees, rescission, rescissory damages, and other equitable relief.

In May 2020, the court dismissed the original complaint.

The plaintiffs appealed that decision, and in March 2022, the appellate court affirmed the district court's order in part and reversed it in part.

It then remanded the case to the district court for further proceedings.

Plaintiff filed an amended complaint, and we filed a motion to dismiss.

The court granted our motion to dismiss and the plaintiffs have appealed that dismissal.

On March 3, 2023, a purported shareholder of Lumen filed a putative class action complaint captioned Voigt v.

Lumen Technologies, Inc., et al., Case 3:23-cv-00286-TAD-KDM, in the U.S.

The plaintiffs filed an amended complaint asserting the same claims and prayer for relief, and we filed a motion to dismiss.

The court granted our motion to dismiss in May 2023 and the plaintiffs appealed that dismissal.

In August 2024, the appellate court set aside the trial court's dismissal.

In October 2024, we filed a petition with the Colorado Supreme Court seeking a review of the appellate court's decision.

Quantum Fiber Disclosure Litigation

In re Lumen Technologies, Inc.

Securities Litigation.

On March 3, 2023, a purported shareholder of Lumen filed a putative class action complaint originally captioned Voigt et al.

Lumen Technologies, et al.

(now captioned In re Lumen Technologies, Inc.

Securities Litigation, Case 3:23-cv-00286-TAD-KDM), in the U.S.

District Court for the Western District of Louisiana.

The complaint alleges that Lumen and certain of its current or former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s expansion of its Quantum Fiber business.

The complaint seeks money damages, attorneys’ fees and costs, and other relief.

On September 15, 2023, a purported shareholder of Lumen filed a putative class action complaint captioned McLemore v.

Lumen Technologies, Inc., et al., Case 3:23-cv-01290, in the U.S.

The complaint alleges that Lumen and certain of its current and former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s expansion of its Quantum Fiber business.

The court appointed a lead plaintiff who filed an amended complaint, seeking money damages, attorneys’ fees and costs, and other relief.

On October 30, 2024, the court granted the motion to dismiss we filed against the amended complaint.

The plaintiff filed and then withdrew an appeal.

Associated Derivative Litigation.

On August 5, 2024, a purported shareholder of Lumen filed a shareholder derivative complaint on behalf of Lumen captioned Slack v.

Allen, et al., Case 3:24-cv-01043-TAD-KMM, in the U.S.

District Court for the Western District of Louisiana.

The complaint alleges claims for breach of fiduciary duty, violations of the federal securities laws, and other causes of action against current and former officers and directors of Lumen allegedly responsible for omitting or misstating material information related to Lumen’s expansion of its Quantum Fiber business.

The complaint seeks money damages, attorneys’ fees and costs, and other relief.

Substantially similar derivative cases have been filed as follows:

(i) on August 20, 2024, Capistrano v.

Storey, et al., Case 3:24-cv-01130-TAD-KMM, in the U.S.

District Court for the Western District of Louisiana;

and on (ii) October 11, 2024, Ostrow v.

Johnson, et al., Case 2024-3706, in the 4th Judicial District Court for the Parish of Ouachita, State of Louisiana, subsequently removed on October 11, 2024, to the U.S.

District Court for the Western District of Louisiana as Case 3:24-cv-01399-TAD-KMM.

The plaintiff in the Ostrow case voluntarily dismissed that proceeding.

Lead-Sheathed Cable Litigation

Disclosure Litigation.

In re Lumen Technologies, Inc.

Securities Litigation II.

On September 15, 2023, a purported shareholder of Lumen filed a putative class action complaint originally captioned Glauber, et al.

Lumen Technologies (now captioned In re Lumen Technologies, Inc.

Securities Litigation II, Case 3:23-cv-01290), in the U.S.

District Court for the Western District of Louisiana.

The complaint alleged that Lumen and certain of its current and former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s responsibility for environmental degradation allegedly caused by the lead sheathing of certain telecommunications cables.

The court appointed lead plaintiffs who filed an amended complaint, seeking money damages, attorneys’ fees and costs, and other relief.

Derivative Litigation .

On June 11, 2024, a purported shareholder of Lumen filed a shareholder derivative complaint on behalf of Lumen captioned Brown v.

Johnson, et al., Case 3:24-cv-00798-TAD-KDM, in the U.S.

District Court for the Western District of Louisiana.

The complaint alleges claims for breach of fiduciary duty, violations of the federal securities laws, and other causes of action against current and former officers and directors of Lumen relating to placement or presence of lead-sheathed telecommunications cables.

The complaint seeks damages, injunctive relief, and attorneys' fees.

Substantially similar derivative cases have been filed as follows:

(i) on August 9, 2024, Pourarian v.

Johnson, et al., Case 3:24-cv-01071-TAD-KMM in the U.S.

District Court for the Western District of Louisiana;

(ii) on September 9, 2024, Capistrano v.

Johnson, et al., Case 3:24-cv-01234-TAD-KMM in the U.S.

District Court for the Western District of Louisiana;

(iii) on September 16, 2024, Vogel v.

Perry, et al., Case 2024-3360 in the 4th Judicial District Court for the Parish of Ouachita, State of Louisiana, subsequently removed on September 17, 2024 to the U.S.

District Court for the Western District of Louisiana as Case 3:24-cv-01274-TAD-KMM;

and (iv) on September 25, 2024, Murray v.

Allen, et al., Case 3:24-cv-01320 in the U.S.

District Court for the Western District of Louisiana.

Environmental Litigation

Parish of St.

On July 9, 2024, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St.

Mary, State of Louisiana, Case 138575, asserting claims on behalf of all parishes, municipalities, and citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T and Lumen or their predecessors.

The complaint seeks damages and injunctive relief under Louisiana state law.

The case was removed to the United States District Court Western District of Louisiana Lafayette Division, Case 6:24-CV-01001-RRS-DJA.

On December 6, 2024, the plaintiffs voluntarily dismissed the class action complaint without prejudice.

On December 13, 2024, St.

Mary’s Parish along with other parishes, municipalities, and two individuals served a notice of intent to file citizen suit under the Louisiana Environmental Quality Act, asserting claims identical to the class action which the plaintiffs voluntarily dismissed.

On November 6, 2023, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St.

Mary, State of Louisiana, Case 137935, asserting claims on behalf of all citizens owning real properties in the State of Louisiana that have been affected by lead-sheathed telecommunications cables installed by AT&T, BellSouth, Verizon, and Lumen or their predecessors.

The complaint seeks damages and injunctive relief under Louisiana state law.

The case has been removed to Federal Court in the United States District Court Western District of Louisiana Lafayette Division, Case 6:23-CV-01748.

State Tax Suits

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On appeal, the Missouri Court of Appeals affirmed in part and reversed in part, vacated the judgment and remanded the case to the trial court with instructions for further proceedings consistent with the Missouri Supreme Court's decision.

We continue to vigorously defend against these claims.

FCRA Litigation

In November 2014, a putative class action complaint captioned Bultemeyer v.

CenturyLink, Inc.

was filed in the United States District Court for the District of Arizona, Case CV-14-02530-PHX-SPL, alleging violations of the Fair Credit Reporting Act (the "FCRA").

In February 2017, the case was dismissed for lack of standing.

The plaintiff appealed and the 9th Circuit reversed and remanded.

Class certification was contested and ultimately granted in 2023.

The 9th Circuit denied Lumen’s request to appeal the class certification ruling.

A jury trial was conducted in September 2024.

The jury found that CenturyLink willfully violated the FCRA and awarded each class member $ 500 for statutory damages and $ 2,000 for punitive damages.

If the verdict is not set aside in connection with post-trial motion practice, Lumen will appeal to the 9th Circuit.

We have not accrued a contingent liability for this matter.

While liability is possible, we have not determined it to be probable, and damages exposure, if any, is uncertain.

Billing Practices Suits

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against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties.

The consumer class actions, the securities investor class actions, and the federal derivative actions were transferred to the U.S.

District Court for the District of Minnesota for coordinated and consolidated pretrial proceedings as In Re:

CenturyLink Sales Practices and Securities Litigation.

We have settled the consumer and securities investor class actions and the derivative actions.

We have engaged in discussions regarding related claims with a number of state attorneys general, and have entered into agreements settling certain of the consumer practices claims asserted by state attorneys general.

While we do not agree with allegations raised in these matters, we have been willing to consider reasonable settlements where appropriate.

December 2018 Outage Proceedings

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We believe that the outage was caused by a faulty network management card from a third-party equipment vendor.

The FCC and four states (both Washington Utilities and Transportation Commission ("WUTC") and the Washington Attorney General;

the Montana Public Service Commission;

the Nebraska Public Service Commission;

and the Wyoming Public Service Commission) initiated formal investigations.

In November 2020, following the FCC's release of a public report on the outage, we negotiated a settlement which was released by the FCC in December 2020.

The FCC and four states initiated formal investigations.

In November 2020, following the FCC's release of a public report on the outage, we negotiated a settlement which was disclosed by the FCC in December 2020.

The amount of the settlement was not material to our financial statements.

In December 2020, the Staff of the WUTC filed a complaint against us based on the December 2018 outage, seeking penalties of approximately $ 7 million for alleged violations of Washington regulations and laws.

In December 2020, the Staff of the Washington Utilities and Transportation Commission ("WUTC") filed a complaint against us based on the December 2018 outage, seeking penalties of approximately $ 7 million for alleged violations of Washington regulations and laws.

The Washington Attorney General's office sought penalties of $ 27 million.

Following trial before the WUTC, it issued an order in June 2023 penalizing us for approximately $ 1 million.

We and the Washington Attorney General's office have both filed for reconsideration.

Those motions are pending.

Following trial, the WUTC issued an order imposing a penalty of approximately $ 1 million.

That decision is now pending appeal to the Washington State of Court of Appeals.

Latin American Tax Litigation and Claims

In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the Peruvian tax litigation and Brazilian tax claims described in our prior periodic reports filed with the SEC.

We agreed to indemnify the purchaser for amounts paid in respect of the Brazilian tax claims.

The value of this indemnification is included in the indemnification amount as disclosed in Note 14—Fair Value of Financial Instruments.

In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the Brazilian tax claims described in our prior periodic reports filed with the SEC.

We agreed to indemnify the purchaser for amounts paid with respect to the Brazilian tax claims.

The value of this indemnification and others associated with the Latin American business divestiture are included in the indemnification amount as disclosed in Note 14—Fair Value of Financial Instruments.

Huawei Network Deployment Investigations

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and Lumen Technologies Government Solutions, Inc.

failed to comply with the requirements in federal contracts concerning their use of Huawei equipment.

failed to comply with certain specified requirements in federal contracts concerning their use of Huawei equipment.

The FCC’s Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc.

regarding its written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program, Emergency Broadband Benefit Program, and the Affordable Connectivity Program.

Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company that the FCC has determined poses a national security threat to the integrity of communications networks or the communications supply chain.

communications networks or the communications supply chain.

• Team Telecom.

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Attorney General, and the Secretaries of the Department of Homeland Security, and the Department of Defense), commonly referred to as Team Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of Huawei equipment.

We are cooperating with the investigations.

Marshall Fire Litigation

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Allstate Fire and Casualty Insurance Company, et al., v.

Qwest Corp., et al., Case No.

2023-cv-3048, and Wallace, et al.

v, Qwest Corp., et al, Case No.

2023-cv-30488, both of which have been consolidated with Kupfner et al v Public Service Company of Colorado, et al.

2022-cv-30195.

Qwest Corp., et al., Case 2023-cv-3048, and Wallace, et al.

Qwest Corp., et al., Case 2023-cv-30488, both of which have been consolidated with Kupfner et al v Public Service Company of Colorado, et al., Case 2022-cv-30195.

The consolidated proceeding is pending in Colorado District Court, Boulder, Colorado, Preliminary estimates of potential damage claims exceed $ 2 billion.

Qwest is vigorously defending the claims.

911 Surcharge

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The complaint claims Qwest Corporation and CenturyTel of the Southwest have violated the New Mexico Fraud Against Taxpayers Act since 2004 by failing to bill, collect and remit certain 911 surcharges from customers.

Through pre-trial proceedings, the Court has narrowed the issues to be resolved by jury, ruling that Lumen bears the burden of proving that its actions were reasonable or known and approved by the State.

Qwest is defending the New Mexico claims vigorously, as it has done successfully with other 911 claims involving PRS in other states.

Through pre-trial proceedings, the Court narrowed the issues to be resolved by jury.

On August 21, 2024, a jury decided the remaining issues, and consequently all claims asserted, in Lumen's favor.

The plaintiff has filed a Notice of Appeal and Lumen submitted a cross-appeal as to the original motion to dismiss and motion for summary judgment.

Other Proceedings, Disputes and Contingencies

From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, various tax issues, environmental law issues, grievance hearings before labor regulatory agencies and miscellaneous third-party tort actions or commercial disputes.

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries.

From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, tax issues, or environmental law issues, grievance hearings before labor regulatory agencies, miscellaneous third-party tort actions, or commercial disputes.

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities which are seeking substantial recoveries.

These cases have progressed to various stages and one or more may go to trial within the next twelve months if they are not otherwise resolved.

Where applicable, we are seeking full or partial indemnification from our vendors and suppliers.

As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.

We are subject to various foreign, federal, state and local environmental protection and health and safety laws.

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Under applicable environmental laws, we could be named as a potentially responsible party for a share of the remediation of environmental conditions arising from the historical operations of our predecessors.

The outcome of these other proceedings described under this heading is not predictable.

The outcomes of these other proceedings described under this heading are not predictable.

However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us.

The matters listed in this Note do not reflect all of our contingencies.

The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us.

The matters listed in this Note do not reflect all our contingencies.

The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings we currently consider immaterial may ultimately affect us materially.

At December 31, 2024, our future rental commitments and Right-of-Way ("ROW") agreements were as follows:

Future Rental Commitments and ROW Agreements

(Dollars in millions)

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Purchase Commitments

We have several commitments primarily for marketing activities and support services from a variety of vendors to be used in the ordinary course of business totaling $ 1.0 billion at December 31, 2023.

Of this amount, we expect to purchase $ 403 million in 2024, $ 378 million in 2025 through 2026, $ 78 million in 2027 through 2028 and $ 127 million in 2029 and thereafter.

We have several commitments to a variety of vendors for services to be used in the ordinary course of business totaling $ 2.4 billion at December 31, 2024.

Of this amount, we and our subsidiaries expect to purchase $ 795 million in 2025, $ 1.2 billion in 2026 through 2027, $ 256 million in 2028 through 2029 and $ 164 million in 2030 and thereafter.

These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we were contractually committed as of December 31, 2024.

(19) Other Financial Information

Note 19—Other Financial Information

Other Current Assets

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As of December 31,

2023 2022 (1)

(Dollars in millions)

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Contract fulfillment costs 109 102

Assets held for sale

Total other current assets

$ 1,274 1,223

(1) Excludes $ 59 million of other current assets related to the EMEA business sold on November 1, 2023 that were classified as held for sale as of December 31, 2022.

Current Liabilities

Included in accounts payable at December 31, 2024 and 2023 were $ 248 million and $ 274 million, respectively, associated with capital expenditures.

(20) Repurchases of Lumen Common Stock

During the fourth quarter of 2022, our Board of Directors authorized a two-year program to repurchase up to an aggregate of $ 1.5 billion of our outstanding common stock.

During the year ended December 31, 2023, we did not repurchase any shares of our outstanding common stock under this program.

Other Income (Expense), Net

Other income (expense), net reflects certain items not directly related to our core operations, including gains and losses from non-operating asset dispositions.

For the year ended December 31, 2024, Other income (expense), net included a gain on sale of investment of $ 205 million.

Note 20—Repurchases of Lumen Common Stock

During the fourth quarter of 2022, our Board of Directors authorized a two-year program to repurchase up to an aggregate of $ 1.5 billion of our outstanding common stock, which expired on November 2, 2024.

During the years ended December 31, 2024 and 2023, we did not repurchase any shares of our outstanding common stock under this program.

During the year ended December 31, 2022, we repurchased under this program 33 million shares of our outstanding common stock in the open market for an aggregate market price of $ 200 million, or an average purchase price of $ 6.07 per share.

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As a result, common stock and additional paid-in capital were reduced as of December 31, 2022 by $ 33 million and $ 167 million, respectively.

On August 3, 2021, our Board of Directors authorized a 24 -month program to repurchase up to an aggregate of $ 1.0 billion of our outstanding common stock.

During the year ended December 31, 2021, we repurchased under this program 80.9 million shares of our outstanding common stock in the open market for an aggregate market price of $ 1.0 billion, or an average purchase price of $ 12.36 per share, thereby fully exhausting the program.

All repurchased common stock has been retired.

As a result, common stock and additional paid-in capital were reduced as of December 31, 2021 by $ 81 million and $ 919 million, respectively.

Any repurchases made in 2024 or thereafter will be subject to a non-deductible 1% excise tax on the fair market value of the stock under the Inflation Reduction Act of 2022.

(21) Accumulated Other Comprehensive Loss

Note 21—Accumulated Other Comprehensive Loss

Information Relating to 2024

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the year ended December 31, 2024:

Pension Plans Post-Retirement

Benefit Plans Foreign Currency

Post-Retirement

Foreign Currency

and Other Total

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Balance at December 31, 2023 $ ( 1,045 ) 276 ( 41 ) ( 810 )

Other comprehensive loss before reclassifications ( 110 ) ( 11 ) ( 1 ) ( 122 )

Amounts reclassified from accumulated other comprehensive loss 50 ( 21 ) 382 411

Net current-period other comprehensive (loss) income ( 60 ) ( 32 ) 381 289

Other comprehensive (loss) income before reclassifications ( 34 ) 63 1 30

Amounts reclassified from accumulated other comprehensive income (loss) 76 ( 19 ) — 57

Net current-period other comprehensive income 42 44 1 87

Balance at December 31, 2024 $ ( 1,003 ) 320 ( 40 ) ( 723 )

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Year Ended December 31, 2024 (Decrease) Increase

in Net Loss Affected Line Item in Consolidated Statement of

in Net Loss Affected Line Item in Consolidated Statement of Operations

(Dollars in millions)

Amortization of pension & post-retirement plans (1)

Net actuarial loss $ 82 Other (expense) income, net

Prior service cost ( 15 ) Other (expense) income, net

Net actuarial loss $ 91 Other income (expense), net

Prior service cost ( 15 ) Other income (expense), net

Total before tax 76

Income tax benefit ( 16 ) Income tax expense

Net of tax $ 51

Year Ended December 31, 2023 Reclassification out of Accumulated Other Comprehensive Loss

Affected line item in Consolidated Balance Sheets and Consolidated Statement of Operations

Reclassification of realized loss on foreign currency translation to valuation allowance within assets held for sale (2)

$ 389 Assets held for sale

Reclassification of realized loss on foreign currency translation to loss on sale of business (3)

( 7 ) Net loss (gain) on sale of businesses

Subtotal reclassification of realized loss on foreign currency

Reclassification of net actuarial loss to valuation allowance within assets held for sale (2)

( 24 ) Assets held for sale

Reclassification of net actuarial gain to loss on sale of business (3)

2 Net loss (gain) on sale of businesses

Subtotal reclassification of net actuarial loss

Income tax benefit — Income tax expense

Income tax benefit ( 19 ) Income tax (benefit) expense

Net of tax $ 57

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(1) See Note 11—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans.

(2) Recognized in net income through net loss (gain) on sale of business for the year ended December 31, 2022 and included in our valuation allowance in assets held for sale as of December 31, 2022.

(3) (Decrease) increase to net loss for the year ended December 31, 2023.

Information Relating to 2023

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the year ended December 31, 2023:

Pension Plans Post-Retirement

Benefit Plans Foreign Currency

and Other Interest Rate Swap Total

Post-Retirement

Foreign Currency

and Other Total

(Dollars in millions)

Balance at December 31, 2022 $ ( 985 ) 308 ( 422 ) ( 1,099 )

Other comprehensive income (loss) before reclassifications 98 473 ( 134 ) — 437

Amounts reclassified from accumulated other comprehensive loss 494 ( 1 ) 112 17 622

Net current-period other comprehensive income (loss) 592 472 ( 22 ) 17 1,059

Other comprehensive loss before reclassifications ( 110 ) ( 11 ) ( 1 ) ( 122 )

Amounts reclassified from accumulated other comprehensive income (loss) 50 ( 21 ) 382 411

Net current-period other comprehensive (loss) income ( 60 ) ( 32 ) 381 289

Balance at December 31, 2023 $ ( 1,045 ) 276 ( 41 ) ( 810 )

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Year Ended December 31, 2023 (Decrease) Increase

in Net Loss Affected Line Item in Consolidated Statement of

in Net Loss Affected Line Item in Consolidated Statement of Operations

(Dollars in millions)

Interest rate swap $ 22 Interest expense

Income tax benefit ( 5 ) Income tax expense

Net of tax $ 17

Amortization of pension & post-retirement plans (1)

Net actuarial loss $ 121 Other (expense) income, net

Settlement charge ( 2 ) Other (expense) income, net

Reclassification of net actuarial loss and prior service credit to gain on the sale of business

539 Net loss (gain) on sale of businesses

Net actuarial loss $ 82 Other income (expense), net

Prior service cost

( 15 ) Other income (expense), net

Total before tax 67

Income tax benefit ( 165 ) Income tax expense

Income tax benefit ( 16 ) Income tax (benefit) expense

Net of tax $ 51

Reclassification of realized loss on foreign currency translation to loss (gain) on sale of businesses

Year Ended December 31, 2023 Reclassification out of Accumulated Other Comprehensive Loss Affected line item in Consolidated Balance Sheets and Consolidated Statement of Operations

Reclassification of realized loss on foreign currency translation to valuation allowance within assets held for sale (2)

$ 389 Assets held for sale

Reclassification of realized loss on foreign currency translation to loss on sale of business (3)

( 7 ) Net loss (gain) on sale of businesses

Subtotal reclassification of realized loss on foreign currency

Reclassification of net actuarial loss to valuation allowance within assets held for sale (2)

( 24 ) Assets held for sale

Reclassification of net actuarial gain to loss on sale of business (3)

2 Net loss (gain) on sale of businesses

Subtotal reclassification of net actuarial loss

Income tax benefit — Income tax expense

2 unchanged sentences

(1) See Note 11—Employee Benefits for additional information on our net periodic benefit (expense) income related to our pension and post-retirement plans.

(22) Labor Union Contracts

(2) Recognized in net income through net loss (gain) on sale of business for the year ended December 31, 2022 and included in our valuation allowance in assets held for sale as of December 31, 2022.

(3) (Decrease) increase to net loss for the year ended December 31, 2023.

Note 22—Labor Union Contracts

As of December 31, 2024, approximately 21 % of our employees were represented by the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW").

None of our collective bargaining agreements were in expired status as of December 31, 2023.

Approximately 10 % of our represented employees are subject to collective bargaining agreements that are scheduled to expire over the 12 month period ending December 31, 2025.

(23) Dividends

Note 23—Dividends

The declaration of dividends is solely at the discretion of our Board of Directors.

On November 2, 2022, we announced that our Board had terminated our quarterly cash dividend program;

as a result no dividends were declared and paid in 2023.

Our Board of Directors declared the following dividends payable in 2022:

as a result no dividends were declared and paid in 2023 or 2024.

Our Board declared the following dividends payable in 2022:

Date Declared Record Date Dividend

4 unchanged sentences

February 24, 2022 3/8/2022 0.25 253 3/18/2022

The declaration of dividends is solely at the discretion of our Board of Directors.

(24) Subsequent Events

Transaction Support Agreement

On January 22, 2024, the Company, Level 3, Qwest and a group of creditors holding a majority of our consolidated debt (the "TSA Parties") amended and restated the transaction support agreement that we originally entered into with a subset of the TSA Parties on October 31, 2023 (as amended and restated, the “Transaction Support Agreement”).

The Transaction Support Agreement defines the parties’ commitments to effect a series of transactions (the “TSA Transactions”) set forth in the term sheet attached thereto (the “Term Sheet”).

Among other things and subject to the terms and conditions set forth therein, the Transaction Support Agreement, including the Term Sheet, contemplates:

• the incurrence by Level 3 of $ 1.325 billion in new money long term senior secured first lien indebtedness, which indebtedness will be backstopped by certain of the consenting lenders;

• a new revolving credit facility at Lumen in an amount expected to be approximately $ 1 billion;

• the extension of maturities, covenant modifications and rate increases of certain secured and unsecured indebtedness at the Company and Level 3 through a series of exchanges and other debt transactions with certain consenting lenders as set forth in the Term Sheet;

• the repayment of certain indebtedness of the Company and Qwest.

The outside date for completion of the TSA Transactions under the Transaction Support Agreement is February 29, 2024, which the Company may unilaterally extend at its discretion to March 31, 2024.

The Company expects to consummate the TSA Transactions in the first quarter of 2024, subject to the satisfaction of remaining closing conditions.

Following consummation of the TSA Transactions, the Company may assess potential follow-on transactions with respect to non-participating creditors.

Additional information about the Transaction Support Agreement and the TSA Transactions is available in our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2024, and Exhibit 10.16 to this annual report.

During the year ended December 31, 2023 we requested a U.S.

Federal income tax refund of approximately $ 900 million.

We applied approximately $ 200 million of that refund to pay our 2023 estimated taxes and, in January 2024, we received a cash refund of approximately $ 729 million, including interest.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk