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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-02-20 compared with 2025-02-20 · 757 added, 738 removed, 1716 unchanged (47% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk" in Item 7 of Part II of this report is incorporated herein by reference.

As of December 31, 2025, we are exposed to market risk primarily from changes in interest rates on our variable-rate long-term debt obligations and from fluctuations in certain foreign currencies.

Interest Rate Risk

Our management periodically reviews our exposure to interest rate fluctuations and implements strategies to manage this risk.

From time to time, we have used derivative instruments to convert variable interest rates to fixed rates.

We maintain policies and procedures governing risk assessment, approval, reporting, and monitoring of derivative activities.

As of December 31, 2025, we did not hold or issue derivative financial instruments for trading or speculative purposes.

As of December 31, 2025, we had approximately $5.9 billion aggregate principal amount of debt bearing unhedged floating interest rates based on the secured overnight financing rate ("SOFR").

A hypothetical increase of 100 basis points in SOFR relating to our unhedged floating rate debt would, among other things, decrease our annual pre-tax earnings by approximately $59 million.

Foreign Currency Risk

We conduct a small portion of our business in currencies other than the U.S.

dollar, the currency in which our consolidated financial statements are reported.

Prior to the November 1, 2023 divestiture of our EMEA business, certain former European subsidiaries used local currencies as their functional currency.

Although we continue to evaluate strategies to mitigate risks related to fluctuations in currency exchange rates, we expect to continue recognizing gains or losses from international transactions.

Accordingly, changes in foreign currency rates relative to the U.S.

dollar could positively or negatively impact our operating results.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ (deficit) equity for each of the years in the three-year period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S.

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

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.

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.

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.

Sufficiency of audit evidence over the implementation of enterprise resource planning system

The Company implemented the first phase of a new enterprise resource planning system (the ERP implementation) during the fourth quarter of 2025.

The ERP implementation impacted a high volume of transactions, substantially all financial statement account balances, and certain disclosures.

We identified the evaluation of the sufficiency of audit evidence over the ERP implementation as a critical audit matter.

Complex auditor judgment and the involvement of information technology (IT) professionals with specialized skills and knowledge were required to evaluate general IT controls and IT application controls of certain IT applications.

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

We applied auditor judgment to determine the nature and extent of procedures to be performed over the ERP implementation.

We involved IT professionals with specialized skills and knowledge, who assisted in:

• obtaining an understanding of the relevant IT applications

• evaluating the design and testing the operating effectiveness of certain general IT controls, including controls related to program development, change management, and logical access

• evaluating the design and testing the operating effectiveness of certain IT application controls, including inspecting and evaluating configurations and interfaces.

We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of the audit effort.

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, 2025, 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, 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.

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, 2025 and 2024, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ (deficit) equity, for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 20, 2026 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Selling, general and administrative 3,199 2,972 3,198

Net loss (gain) on sale of businesses 17 121 ( 113 )

Loss on disposal groups held for sale — — 40

Net loss on sale of businesses — 17 121

Depreciation and amortization 2,749 2,956 2,985

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Total operating expenses 13,214 12,648 24,141

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

OPERATING (LOSS) INCOME ( 812 ) 460 ( 9,584 )

OTHER EXPENSE

Interest expense ( 1,284 ) ( 1,372 ) ( 1,158 )

Net gain on early retirement of debt (Note 7)

Net (loss) gain on early retirement of debt (Note 7)

( 740 ) 348 618

Other income (expense), net 120 334 ( 113 )

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NET LOSS $ ( 1,739 ) ( 55 ) ( 10,298 )

BASIC AND DILUTED LOSS PER COMMON SHARE

BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK

BASIC $ ( 1.75 ) ( 0.06 ) ( 10.48 )

DILUTED $ ( 1.75 ) ( 0.06 ) ( 10.48 )

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING

BASIC 994,548 987,680 983,081

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Years Ended December 31,

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Items related to employee benefit plans:

Change in net actuarial loss, net of $( 30 ), $ 20 and $( 205 ) tax

Change in net actuarial loss (gain), net of $( 38 ), $( 30 ) and $ 20 tax

113 97 ( 59 )

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( 7 ) ( 11 ) ( 11 )

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

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

Foreign currency translation adjustment, net of $ — , $ — and $( 3 ) tax

1 ( 1 ) ( 134 )

Other comprehensive income 122 87 289

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

COMPREHENSIVE (LOSS) INCOME $ ( 1,617 ) 32 ( 10,009 )

See accompanying notes to consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS

As of December 31,

(Dollars in millions

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Accounts receivable, less allowance of $ 67 and $ 59

Other 1,274 1,223

Assets held for sale 4,285 24

Other current assets, net 1,307 1,250

Total current assets 7,909 4,394

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Goodwill — 1,964

Other intangible assets, net 4,806 5,470

Other, net 1,911 2,051

Intangible assets, net 4,463 4,806

Other assets, net 2,395 1,911

Total goodwill and other assets 6,858 8,681

TOTAL ASSETS $ 34,342 33,496

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES

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Interest 149 197

Other 179 213

Other current liabilities 203 179

Liabilities held for sale 38 —

Current portion of deferred revenue 1,005 861

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Deferred revenue 6,406 3,733

Other 3,071 2,650

Other liabilities 2,937 3,071

Total deferred credits and other liabilities 13,716 11,899

COMMITMENTS AND CONTINGENCIES (Note 17)

STOCKHOLDERS' EQUITY

STOCKHOLDERS' (DEFICIT) EQUITY

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

Common stock, no par value, authorized 2,200,000 and 2,200,000 shares, issued and outstanding 1,025,446 and 1,014,768 shares

19,185 19,149

Accumulated other comprehensive loss ( 601 ) ( 723 )

Accumulated deficit ( 19,701 ) ( 17,962 )

Total stockholders' equity 464 417

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,496 34,018

Total stockholders' (deficit) equity ( 1,117 ) 464

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY $ 34,342 33,496

See accompanying notes to consolidated financial statements.

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Depreciation and amortization 2,749 2,956 2,985

Net loss (gain) on sale of businesses 17 121 ( 113 )

Loss on disposal groups held for sale — — 40

Net loss on sale of businesses — 17 121

Goodwill impairment 628 — 10,693

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Provision for uncollectible accounts 70 72 100

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

Net loss (gain) on early retirement and modification of debt 740 ( 348 ) ( 618 )

Debt modification costs and related fees — ( 79 ) —

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Other, net 15 20 ( 12 )

Net cash (used in) provided by investing activities ( 2,830 ) ( 1,201 ) 5,476

Net cash used in investing activities ( 4,305 ) ( 2,830 ) ( 1,201 )

FINANCING ACTIVITIES

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Payments of long-term debt ( 8,818 ) ( 2,678 ) ( 185 )

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

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

Dividends paid ( 1 ) ( 3 ) ( 11 )

Debt issuance and extinguishment costs and related fees ( 645 ) ( 283 ) ( 14 )

Repurchases of common stock — — ( 200 )

Other, net ( 13 ) ( 12 ) ( 8 )

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Supplemental cash flow information:

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

Income taxes (paid) refunded, net $ ( 18 ) 242 ( 1,303 )

Interest paid (net of capitalized interest of $ 154 , $ 176 and $ 111 )

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Supplemental non-cash information regarding financing activities:

Cancellation of term loans as part of refinancings (Note 7)

$ ( 2,267 ) — —

Issuance of term loans as part of refinancings (Note 7)

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

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Cash and cash equivalents $ 1,003 1,889 2,234

Cash and cash equivalents and restricted cash included in Assets held for sale — — 44

Restricted cash included in Other current assets 3 2 4

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

Years Ended December 31,

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Issuance of common stock through dividend reinvestment, incentive and benefit plans — 8 6

Repurchases of common stock — — ( 33 )

Shares withheld to satisfy tax withholdings ( 15 ) — —

Stock-based compensation 48 — —

Conversion to no-par stock value (Note 1)

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

Repurchases of common stock — — ( 167 )

Shares withheld to satisfy tax withholdings — ( 6 ) ( 5 )

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Balance at end of period ( 19,701 ) ( 17,962 ) ( 17,907 )

TOTAL STOCKHOLDERS' EQUITY $ 464 417 10,374

DIVIDENDS DECLARED PER COMMON SHARE $ — — 0.75

TOTAL STOCKHOLDERS' (DEFICIT) EQUITY $ ( 1,117 ) 464 417

See accompanying notes to consolidated financial statements.

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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 a leading digital networking services company, empowering enterprise businesses to fuel growth in a multi-cloud, AI-first marketplace by 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.

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

Our platform empowers our customers to swiftly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access, and reduce costs, which allows our customers to rapidly evolve their IT programs to address dynamic changes.

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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 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.

• income attributable to noncontrolling interests in other income (expense), net;

• equity attributable to noncontrolling interests in common stock;

• cash flows attributable to noncontrolling interests in other, net financing activities.

As of December 31, 2025, we no longer have any noncontrolling interests.

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 2024 and 2023.

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Our current definitions of operating expenses are as follows:

• Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing products and services to our customers.

Cost of services and products (exclusive of depreciation and amortization) :

Expenses incurred in providing products and services to our customers.

These expenses include:

employee-related expenses directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees);

facilities expenses (which include third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers);

• employee-related expenses directly attributable to operating and maintaining our network (e.g., salaries, wages, benefits, and professional fees);

• network and facilities expenses (e.g., third-party telecommunications expenses we incur for using other carriers' networks to provide services to our customers);

• rents and utilities expenses;

equipment sales expenses (such as data integration and modem expenses);

and other expenses directly related to our operations;

• Selling, general and administrative expenses are corporate overhead and other operating expenses.

• equipment sales expenses (e.g., modem expenses);

• other expenses directly related to our operations.

Selling, general and administrative expenses :

Corporate overhead and other operating expenses.

These expenses include:

employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions;

• employee-related expenses directly attributable to selling products or services and employee-related expenses for administrative functions (e.g., salaries, wages, internal commissions, benefits and professional fees);

• marketing and advertising;

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• bad debt expense;

and other selling, general and administrative expenses.

• other selling, general, and administrative expenses.

These expense classifications may not be comparable to those of other companies.

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Our consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles.

These accounting principles require us to make certain estimates, judgments and assumptions.

We believe that the estimates, judgments and assumptions we make when accounting for specific items and matters are reasonable, based on information available at the time they are made.

These estimates, judgments and assumptions can materially affect the reported amounts of assets, liabilities and components of stockholders' equity as of the dates of the consolidated balance sheets, as well as the reported amounts of revenue, expenses and components of cash flows during the periods presented in our other consolidated financial statements.

generally accepted accounting principles ("GAAP") and require management to make estimates and assumptions that affect reported amounts of assets, liabilities, equity, revenue, expenses, and cash flows and related disclosures.

These estimates are based on information available at the time, including historical and forward-looking factors, that we believe are reasonable;

however, these estimates may differ materially from actual results.

We also make estimates in our assessments of potential losses in relation to threatened or pending tax and legal matters.

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We recognize interest on the amount of unrecognized benefit from uncertain tax positions.

For all of these and other matters, actual results could differ materially from our estimates.

Assets Held for Sale

We classify assets and related liabilities as held for sale when:

(i) management has committed to a plan to sell the assets, (ii) the net assets are available for immediate sale, (iii) there is an active program to locate a buyer and (iv) the sale and transfer of the net assets is probable within one year.

Assets and liabilities held for sale are presented separately on our consolidated balance sheets with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell.

Depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets are not recorded while these assets are classified as held for sale.

For each period that assets are classified as being held for sale, they are tested for recoverability.

Unless otherwise specified, the amounts and information presented in the notes do not include assets and liabilities that were classified as held for sale as of December 31, 2023 and December 31, 2022.

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

Assets and related liabilities are classified as held for sale when:

• management commits to a plan to sell the assets;

• the assets are available for immediate sale;

• an active program to locate a buyer is initiated;

• the sale is probable within one year.

Assets and related liabilities held for sale are presented separately at the lower of (i) carrying amount or (ii) fair value less costs to sell.

If the carrying amount exceeds fair value less cost to sell, a loss is recognized.

Depreciation and amortization cease once assets are classified as held for sale.

Assets classified as held for sale are remeasured each reporting period to ensure they are stated at the lower of (i) carrying amount or (ii) fair value less costs to sell.

Unless otherwise specified, the amounts and information presented in the notes do not include assets and liabilities that were classified as held for sale.

See Note 2 — Divestitures for details on our recently completed divestitures.

Revenue Recognition

We earn most of our consolidated revenue from contracts with customers, primarily through the provision of communications and other services.

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

Revenue is recognized based on the following five-step model:

We recognize revenue primarily from contracts with customers for communications and related services in accordance with Accounting Standards Codification Topic 606, "Revenue from Contracts with Customers" (“ASC 606”).

Revenue is measured based on the consideration we expect to receive and is recognized when control of goods or services transfers to the customer.

We also earn revenue from leasing arrangements (e.g., fiber capacity and conduit leases and colocation agreements) and governmental subsidies, which are outside the scope of ASC 606.

Under ASC 606, revenue is recognized using the following five-step model:

• identification of the contract with a customer;

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• recognition of revenue when, or as, we satisfy a performance obligation.

We provide an array of communications services to business and residential customers, including local voice, VPN, Ethernet, data, broadband, private line (including special access), network access, transport, voice, information technology, video and other ancillary services.

We provide these services to a wide range of businesses, including global, enterprise, wholesale, government, and small and medium business customers.

Certain contracts also include the sale of equipment, which is not significant to our business.

Service and Equipment Revenue

We provide a broad range of communications services to business and residential customers — including global, enterprise, wholesale, government, and small and medium business customers.

Certain contracts include equipment sales, which are not significant to our operations.

We recognize revenue for services when we provide the applicable service or when control of a product is transferred.

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

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.

For arrangements using third-party vendors, we assess whether we act as a principal or agent to determine whether revenue is reported on a gross or net basis.

Performance Obligations

Customer contracts are evaluated to determine whether the performance obligations are separable.

If the performance obligations are deemed separable and separate earnings processes exist, the transaction price is allocated to each performance obligation based on its relative standalone selling price.

The revenue associated with each performance obligation is then recognized as when, or as, the performance obligation is satisfied.

Deferred Revenue and Fees

Payments received in advance — such as design, planning, engineering, activation, or installation fees — are deferred unless they represent separate performance obligations.

When these payments are not separate obligations, we recognize them over the contract term or estimated useful life, typically one to five years , based on historical experience.

Termination fees or other charges negotiated with new contracts are also deferred and recognized over the new contract term.

Billing Practices

For access services, we generally bill fixed monthly charges one month in advance to customers and recognize revenue as service is provided over the contract term in alignment with the customer's receipt of service.

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In most cases, the amount invoiced for our service offerings constitutes the price that would be billed on a standalone basis.

In certain cases, customers may be permitted to modify their contracts.

We evaluate the change in scope or price to identify whether the modification should be treated as a separate contract, as a termination of the existing contract and creation of a new contract, or as a change to the existing contract.

Customer contracts are evaluated to determine whether the performance obligations are separable.

If the performance obligations are deemed separable and separate earnings processes exist, the total transaction price that we expect to receive with the customer is allocated to each performance obligation based on its relative standalone selling price.

The revenue associated with each performance obligation is then recognized as earned.

We periodically sell transmission capacity on our network.

These transactions are generally structured as indefeasible rights of use, commonly referred to as IRUs, which are the exclusive right to use a specified amount of capacity or fiber for a specified term, typically 20 years.

In most cases, we account for the cash consideration received on transfers of transmission capacity as ASC 606 revenue which is adjusted for the time value of money and is recognized ratably over the term of the agreement.

Cash consideration received on transfers of dark fiber is accounted for as non-ASC 606 lease revenue, which we also recognize ratably over the term of the agreement.

We do not recognize revenue on any contemporaneous exchanges of our transmission capacity assets for other non-owned transmission capacity assets.

In connection with offering products and services provided to the end user by third-party vendors, we review the relationship between us, the vendor and the end user to assess whether revenue should be reported on a gross or net basis.

In assessing whether revenue should be reported on a gross or net basis, we consider whether we act as a principal in the transaction and control the goods and services used to fulfill the performance obligations associated with the transaction.

We have service level commitments pursuant to contracts with certain of our customers.

To the extent that we determine that such service levels were not achieved or may not have been achieved, we estimate the amount of credits to be issued and record a corresponding reduction to revenue in the period that the service level commitment was not met or may not be met.

Customer payments are made based on billing schedules included in our customer contracts, which is typically on a monthly basis.

Contract Costs

We defer (or capitalize) incremental contract acquisition and fulfillment costs and recognize (or amortize) such costs over the average contract life.

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These deferred costs are periodically monitored to reflect any significant change in assumptions.

Contract Modifications

In certain cases, customers may be permitted to modify their contracts.

Indefeasible Rights of Use and Leases

We periodically sell transmission capacity on our network through indefeasible rights of use (“IRU”s), which grant the exclusive right to use a specified amount of capacity or fiber for a typical term of 20 years.

Cash consideration received on transfers of transmission capacity is recognized as ASC 606 revenue, adjusted for time value of money and recognized ratably over the term.

Cash consideration received on transfers of dark fiber is treated as non-ASC 606 lease revenue, which we also recognized ratably over the lease term.

We treat contemporaneous exchanges of transmission capacity assets as non-revenue generating activities and therefore do not recognize revenue for these exchanges.

Service Level Commitments

We have service level commitments pursuant to contracts with certain of our customers.

See Note 4 — Revenue Recognition for additional information.

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Costs related to advertising are expensed as incurred and recorded as selling, general and administrative expenses in our consolidated statements of operations.

Our advertising expense was $ 94 million, $ 87 million and $ 62 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Our advertising expenses were:

Years Ended December 31,

2025 2024 2023

Advertising costs

In the normal course of our business, we incur costs to hire and retain external legal counsel to advise us on finance, regulatory, litigation, and other matters.

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The provision for income taxes reflects taxes currently payable, tax consequences deferred to future periods and adjustments to our liabilities for uncertain tax positions.

We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax NOLs, tax credit carryforwards and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities.

We record deferred income tax assets and liabilities reflecting future tax consequences attributable to tax attributes carryforwards, including NOL carryforwards and tax credit carryforwards, and differences between the financial statement carrying value of assets and liabilities and the tax basis of those assets and liabilities.

Deferred taxes are computed using enacted tax rates expected to apply in the year in which the differences are expected to affect taxable income.

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

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

Restricted Cash

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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 and 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 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 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.

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 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.

Leasehold improvements are amortized over the shorter of the useful lives of the assets or the expected lease term.

Purchased and constructed property, plant, and equipment are recorded at cost and assets acquired through business combinations are recorded at their estimated fair value as of the acquisition date.

In both instances we include the estimated value of any associated legally or contractually required retirement obligations.

Expenditures for maintenance and repairs are expensed as incurred.

Supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost.

Depreciation Methods

• Prior to January 1, 2024:

Most assets were depreciated using the straight-line group method.

Under this approach, assets with similar characteristics and useful lives were pooled together and depreciated over the group’s average remaining useful life.

When assets were sold or retired in the normal course of business, their cost was removed from both the asset and accumulated depreciation accounts, with no gain or loss recognized.

• Effective January 1, 2024:

We re-established all of our assets individually, including accumulated depreciation, and transitioned to depreciating all assets individually using the straight-line method over each asset’s estimated useful life.

When assets are sold in the normal course of business, a gain or loss is recognized in our consolidated statements of operations.

Leasehold Improvements and Capital Projects

Leasehold improvements are amortized over the shorter of the assets’ useful lives or the expected lease term.

During the construction phase of network and other internal-use capital projects, we capitalize related employee and interest costs.

Property, plant and equipment supplies used internally are carried at average cost, except for significant individual items which are carried at actual cost.

We perform annual internal reviews to evaluate the reasonableness of the depreciable lives for our property, plant and equipment.

Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, assumptions about technology evolution and, in certain instances, actuarially determined probabilities to estimate the remaining useful life of our asset base.

Our reviews utilize models that take into account actual usage, physical wear and tear, replacement history, and assumptions about technology evolution.

Our remaining useful life assessments evaluate the possible loss in service value of assets that may precede the physical retirement.

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However, the asset is not retired until all customers no longer utilize the asset and we determine there is no alternative use for the asset.

We have asset retirement obligations associated with the legally or contractually required removal of a limited group of property, plant and equipment assets from leased properties and the disposal of certain hazardous materials present in our owned properties.

When an asset retirement obligation is identified, usually in association with the acquisition of the asset, we record the fair value of the obligation as a liability.

The fair value of the obligation is also capitalized as property, plant and equipment and then amortized over the estimated remaining useful life of the associated asset.

Where the removal obligation is not legally binding, we expense the net cost to remove assets in the period in which the costs are actually incurred.

Impairment Testing

We review long-lived tangible assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable.

For assessment purposes, long-lived assets are grouped with other assets and liabilities at the lowest identifiable level for which we generate cash flows independently of other groups of assets and liabilities, absent a material change in operations.

An impairment loss is recognized only if the carrying amount of the asset group is not recoverable and exceeds its estimated fair value.

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If the asset group's carrying value is not recoverable, we recognize an impairment charge for the amount by which the carrying amount of the asset group exceeds its estimated fair value.

Goodwill, Customer Relationships and Other Intangible Assets

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 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.

Asset Retirement Obligations

We recognize asset retirement obligations (“ARO”s) for the legally or contractually required removal of certain property, plant, and equipment from leased properties, as well as for the disposal of hazardous materials in owned facilities.

When an ARO is identified — typically at the time an asset is acquired — we record the fair value of the obligation as a liability and capitalize a corresponding amount as part of the asset’s cost.

Our fair value estimates were determined using the discounted cash flow method.

In subsequent periods, we increase the ARO liability for the passage of time (accretion expense) and adjust the liability and related asset for changes in the timing or amount of expected future cash flows.

The capitalized amount is then amortized over the asset’s estimated remaining useful life.

If a removal obligation is not legally binding, we expense the related removal costs as incurred, rather than capitalizing them.

Goodwill and Intangible Assets

Intangible assets acquired in business combinations — including goodwill, customer relationships, capitalized software, trademarks, and trade names — are recorded at estimated fair value at the acquisition date.

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

Where there are no legal, regulatory, contractual or other factors that would reasonably limit the useful life of an intangible asset, we classify them as indefinite-lived intangible assets and such intangible assets are not amortized.

Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life.

We have capitalized certain costs associated with software such as costs of employees devoted to software development and external direct costs for materials and services.

Costs associated with software to be used for internal purposes are expensed until the point at which the project has reached the development stage.

Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform.

Software maintenance, data conversion and training costs are expensed in the period in which they are incurred.

We review the remaining economic lives of our capitalized software annually.

Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.

Our long-lived intangible assets, other than goodwill, with indefinite lives are assessed for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be an impairment.

These assets are carried at the estimated fair value at the time of acquisition and assets not acquired in acquisitions are recorded at historical cost.

However, if their estimated fair value is less than the carrying amount, we recognize an impairment charge for the amount by which the carrying amount of these assets exceeds their estimated fair value.

We are required to assess our goodwill for impairment annually, or more frequently if an event occurs or circumstances change that indicates it is more likely than not the fair values of any of our reporting units were less than their carrying values.

We are required to write-down the value of goodwill of our reporting units in periods in which the recorded carrying value of any such unit exceeds its fair value of equity.

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

Therefore, we assess the equity carrying value and future cash flows each time we perform a goodwill impairment assessment on a reporting unit.

To do so, we assign our assets, liabilities and cash flows to reporting units using allocation methodologies which we believe are reasonable and consistent.

This process entails various estimates, judgments and assumptions.

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.

As our remaining goodwill was fully impaired or reclassified as held for sale as of December 31, 2025, no further reassignment is required as the goodwill balance has been reduced to zero .

When the fair value of a reporting unit is available, we allocate goodwill based on the relative fair value of the reporting units.

When fair value is not available, we utilize an alternative allocation methodology that we believe represents a reasonable approximation of the fair value of the operations being reorganized.

For more information, see Note 3—Goodwill, Customer Relationships and Other Intangible Assets.

Derivatives and Hedging

From time to time we have used derivative instruments to hedge exposure to interest rate risks arising from fluctuation in interest rates.

We account for derivative instruments in accordance with ASC 815, Derivatives and Hedging , which establishes accounting and reporting standards for derivative instruments.

We do not use derivative financial instruments for speculative purposes.

Derivatives are recognized in the consolidated balance sheets at their fair values.

When we become a party to a derivative instrument and intend to apply hedge accounting, we formally document the hedge relationship and the risk management objective for undertaking the hedge, which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge.

As of December 31, 2024, we were not party to any swap agreements.

All of our variable-to-fixed interest rate swap agreements in place at the beginning of 2022 expired during the first half of 2022.

While we held these agreements, we evaluated the effectiveness as described in Note 15—Derivative Financial Instruments (designated as cash-flow hedges) qualitatively on a quarterly basis.

We reflected the change in the fair value of the interest rate swaps in accumulated other comprehensive loss and subsequently reclassified into earnings in the period the hedged transaction affects earnings, by virtue of qualifying as effective cash flow hedges.

For more information see Note 15—Derivative Financial Instruments.

Intangible assets without legal, regulatory, contractual, or other limiting factors are classified as indefinite-lived and are not amortized.

For finite-lived intangible assets, we amortize using the straight-line method over the following estimated lives:

• Customer relationships :

7 - 14 years, depending on customer type

• Capitalized software :

• Other intangible assets :

Internal Use Software

Internally used software, whether purchased or developed by us, is capitalized and amortized using the straight-line method over its estimated useful life.

We capitalized costs of employees devoted to software development and external direct costs for materials and services.

Costs are expensed until the project reaches the development stage.

Subsequent additions, modifications, or upgrades are capitalized only if they add new functionality.

Software maintenance, data conversion, and training costs are expensed as incurred.

We review the remaining economic lives of our capitalized software annually.

Capitalized software is included in other intangible assets, net, in our consolidated balance sheets.

Impairment Testing

Finite-lived intangible assets are evaluated for impairment when triggering events or changes in circumstances occur.

If fair value is less than the carrying amount, we record an impairment charge for the difference.

We test goodwill for impairment annually as of October 31, or more frequently if events suggest a reporting unit’s fair value may fall below its carrying value.

If the carrying value of a reporting unit exceeds its fair value of equity, we write-down goodwill.

Because reporting units are not separate legal entities with full financial statements, we determine equity carrying value and future cash flows during each impairment assessment we perform on a reporting unit.

This involves allocating assets, liabilities, and cash flows to reporting units using reasonable, consistent methodologies.

This process requires significant estimates, judgments, and assumptions.

For more information, see Note 3 — Goodwill and Intangible Assets.

Pension and Post-Retirement Benefits

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Foreign Currency

Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries, primarily in Latin America prior to the August 1, 2022 sale of our Latin American business.

For operations outside the United States that have functional currencies other than the U.S.

dollar, assets and liabilities are translated to U.S.

dollars at period-end exchange rates, and revenue, expenses and cash flows are translated using average monthly exchange rates.

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 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 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.

Local currencies of our foreign subsidiaries are the functional currencies for financial reporting purposes except for certain foreign subsidiaries.

For operations with functional currencies other than the U.S.

dollar, assets and liabilities are translated at period-end exchange rates, while revenue, expenses and cash flows use average monthly rates.

Foreign currency translation gains and losses are recorded in accumulated other comprehensive loss in stockholders' (deficit) equity and in our consolidated statements of comprehensive (loss) income.

Before the November 1, 2023 sale of our EMEA business, many of our non-United States subsidiaries used the British pound or Euro as their functional currency, both of which fluctuated significantly against the U.S.

dollar during the periods covered in this report when we operated the divested business.

Prior to the divestiture, most investments in foreign subsidiaries were considered long-term.

We continue to have immaterial operations transacted in foreign currencies.

Foreign currency transaction gains and losses, including those not deemed long-term, are reported in other income (expense), net on our consolidated statements of operations.

For additional details on the sale of our EMEA business, see Note 2 — Divestitures.

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.

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Holders of outstanding Lumen Technologies preferred stock are entitled to receive cumulative dividends, receive preferential distributions equal to $ 25 per share plus unpaid dividends upon Lumen's liquidation and vote as a single class with the holders of common stock.

Section 382 Rights Plan

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

Section 382 Rights Agreement

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

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.

This plan was designed to deter trading that would result in a change of control (as defined in Code Section 382), and therefore protect our ability to use our historical federal NOLs in the future.

The plan is scheduled to lapse in late 2026.

Under the agreement, 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 agreement.

This agreement was designed to deter trading that would result in a change of control (as defined in Internal Revenue Code Section 382), and therefore protect our ability to use our historical federal NOLs in the future.

The agreement is scheduled to lapse in late 2026.

The declaration and payment of dividends is at the discretion of our Board of Directors.

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

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.

We do not currently pay a dividend on our common stock.

Recently Adopted Accounting Pronouncements

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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.” 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.

Refer to Note 16 — Segment Information for more information.

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

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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 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.

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 became effective for us in the annual period of fiscal 2025.

Refer to Note 15 — Income Taxes for more information.

Business Combinations

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

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.

This ASU became effective for us in the first quarter of fiscal 2025.

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

Supplier Finance Programs

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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 2025, the Financial Accounting Standards Board ("FASB") issued ASU 2025-12 “Codification Improvements.” The ASU represents changes to the Codification that clarify, correct errors, or make minor improvements.

The amendments make the Codification easier to understand and apply.

The amendments in ASU 2025-12 are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted.

Except for the amendments to Topic 260, "Earnings Per Share" this ASU can be applied either prospectively or retrospectively with transition method elected on an issue-by-issue basis.

The Company is currently evaluating ASU 2025-12 to determine the impact it may have on our consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270):

Narrow-Scope Improvements." This ASU clarifies that the interim reporting requirements in Topic 270 apply to all entities that issue interim financial statements prepared in accordance with U.S.

GAAP and consolidates such requirements within Topic 270.

The amendments provide a comprehensive list within Topic 270 of required interim disclosures, establish a principle requiring disclosure of events or changes occurring after the end of the most recent annual reporting period that have a material impact on interim results and clarifies the form and content requirements applicable to interim financial statements.

The amendments in ASU 2025-11 are effective for the interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

This ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating ASU 2025-11 to determine the impact it may have on our consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, "Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities." This ASU establishes authoritative guidance on the accounting for government grants received by business entities.

The amendments in ASU 2025-10 are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted.

This ASU can be applied using a modified prospective approach, a modified retrospective approach, or a retrospective approach.

The Company is currently evaluating ASU 2025-10 to determine the impact it may have on our consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements." This ASU introduces five targeted improvements to better align hedge accounting with entities’ risk management activities.

The amendments in ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted and should be applied on a prospective basis for all hedging relationships.

The Company intends to early adopt ASU 2025-09 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, "Financial Instruments — Credit Losses (Topic 326):

Purchased Loans." This ASU requires that loans acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition (i.e., record the loan at its purchase price and separately record an allowance for expected credit losses).

Seasoned loans include all loans acquired in a business combination, that do not have “more-than-insignificant” deterioration of credit quality since origination, as well as loans purchased at least 90 days after origination, where the purchaser was not involved in the origination of the loans.

The amendments in ASU 2025-08 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted.

This ASU should be applied prospectively to loans that are acquired on or after the initial application date.

The Company intends to early adopt ASU 2025-08 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815)" and "Revenue from Contracts with Customers (Topic 606)." The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting.

This ASU also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract.

The amendments in ASU 2025-07 are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted.

This ASU is permitted to be applied either prospectively to new contracts entered into on or after the date of adoption or on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings.

The Company intends to early adopt ASU 2025-07 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, "Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software" which amends the guidance in ASC 350-40, "Intangibles — Goodwill and Other — Internal-Use Software." This ASU modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach.

The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted.

This ASU is permitted to be applied prospectively, retrospectively or through a modified transition approach.

The Company intends to early adopt ASU 2025-06 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05 "Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets." This ASU provides entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset.

The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted.

The Company is currently evaluating ASU 2025-05 to determine the impact it may have on our consolidated financial statements.

In May 2025, the FASB issued ASU 2025-04 "Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606):

Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”)." This ASU clarifies the guidance on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer.

It also clarifies the guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred”.

ASU 2025-04 will be effective for the annual periods beginning after December 15, 2026 with early adoption permitted.

The Company intends to early adopt ASU 2025-04 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03 "Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity." This ASU revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business.

The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions.

The amendments in ASU 2025-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early prospective adoption permitted.

The Company intends to early adopt ASU 2025-03 prospectively, effective January 1, 2026.

The adoption is not expected to have an impact on our consolidated financial statements.

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.

The amendments in ASU 2024-04 are effective for the annual period of fiscal 2026, and early adoption is permitted.

This ASU is permitted to be applied on either a prospective or retrospective basis.

As of December 31, 2025, 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 amendments in ASU 2024-03 are 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):

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.” 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, 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.” 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.” 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.

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, 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.

This gain is reflected as operating income within the consolidated statements of operations.

In connection with the sale, we entered into a transition services agreement under which we provide the purchaser various support services.

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

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

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.

As a result of closing the transaction, we derecognized net assets of $ 1.9 billion, primarily made up of (i) property, plant and equipment, net of accumulated depreciation, of $ 1.7 billion, (ii) goodwill of $ 245 million, (iii) other intangible assets, net of accumulated amortization, of $ 140 million, and (iv) deferred income tax liabilities, net, of $ 154 million.

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.

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.

This gain is reflected as operating income within the consolidated statements of operations.

In connection with the sale, we entered into a transition services agreement under which we provide the purchaser various support services.

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 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 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.

As a result of closing the transaction, we derecognized net assets of $ 4.8 billion, primarily made up of (i) property, plant and equipment, net of accumulated depreciation, of $ 3.6 billion, (ii) goodwill of $ 2.6 billion and (iii) long-term debt, net of discounts, of $ 1.4 billion.

In addition, we reclassified $ 403 million of net actuarial loss and prior service credit related to the Lumen Pension Plan, net of tax, conveyed to the purchaser to partially offset the gain on the sale of our ILEC business.

The Company is currently evaluating ASU 2024-03 and the impact the adoption of this standard will have on our disclosures.

Note 2 — Divestitures

EMEA Business

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The classification of the EMEA business as held for sale was considered an event or change in circumstance which requires an assessment of the goodwill of the disposal group for impairment each reporting period until disposal.

We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3—Goodwill, Customer Relationships and Other Intangible Assets.

We performed a pre-classification and post-classification goodwill impairment test of the disposal group as described further in Note 3 — Goodwill and Intangible Assets.

As a result of our impairment tests, we determined the EMEA business disposal group was impaired, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $ 43 million in the fourth quarter of 2022.

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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.

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

Therefore, the divested businesses discussed above did not meet the criteria to be classified as discontinued operations.

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.

Note 3—Goodwill, Customer Relationships and Other Intangible Assets

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

As of December 31,

Mass Markets Fiber-to-the-Home Business

On May 21, 2025, we entered into a definitive agreement to sell our Mass Markets Fiber-to-the-Home business in 11 states (the "Territory") to AT&T for $ 5.75 billion in cash, subject to working capital and other negotiated purchase price adjustments.

The actual amount of our net after-tax proceeds from this divestiture could vary substantially from the amounts we currently estimate, including if there are changes in other assumptions that impact our estimates.

As of December 31, 2025 in the accompanying consolidated balance sheet, the assets and liabilities of the disposal group are classified as held for sale and measured at the lower of (i) the carrying value when we classified the disposal group as held for sale or (ii) the fair value of the disposal group, less costs to sell.

Effective with the designation of the disposal group as held for sale on May 21, 2025, we suspended recording depreciation of property, plant and equipment while these assets are classified as held for sale.

We estimate that we would have recorded an additional $ 104 million of depreciation for the year ended December 31, 2025 if the disposal group did not meet the held for sale criteria.

Under the terms of the purchase agreement related to the sale of the Mass Market Fiber-to-the-Home business in the Territory, Lumen agreed to grant the purchaser an indefeasible right to use (“IRU”) certain Lumen retained fiber assets following the closing of the transaction in order to service the transferred customer contracts.

The value of these retained Lumen assets subject to the IRU is excluded from assets held for sale in the table below.

The principal components of the held for sale assets and liabilities of the disposal group as of December 31, 2025 are as follows:

December 31, 2025

(Dollars in millions)

$ 1,964 1,964

Assets held for sale

Accounts receivable, less allowance of $ 1

Other current assets, net 30

Property, plant and equipment, net of accumulated depreciation of $ 773

Goodwill 1,336

Other assets, net 51

Total assets held for sale $ 4,271

Liabilities held for sale

Other current liabilities $ 6

Current portion of deferred revenue 32

Total liabilities held for sale $ 38

Subsequent Event

On February 2, 2026, we and certain of our affiliates completed the sale of our Mass Markets Fiber-to-the-Home business in 11 states to AT&T in exchange for pre-tax cash proceeds of approximately $ 5.75 billion, subject to working capital and other negotiated post-closing adjustments.

In connection with the sale, Lumen has entered into a transition services agreement under which it will provide to the purchaser various support services and certain long-term agreements under which Lumen and the purchaser will provide to each other various network and other commercial services.

Treatment of Consolidated Operating Results of Divested Businesses

We do not believe the divestiture of the EMEA business or the recently completed divestiture of the Mass Markets Fiber-to-the-Home business represent a strategic shift for Lumen, and therefore do not qualify as discontinued operations.

As a result, we continued to report our operating results for the EMEA business and the Mass Markets Fiber-to-the-Home business in our consolidated operating results through their respective disposal dates of November 1, 2023 and February 2, 2026.

Note 3 — Goodwill and Intangible Assets

Goodwill and Intangible assets, net on our consolidated balance sheets consisted of the following:

(Dollars in millions)

Goodwill (1)(2)

Indefinite-lived intangible assets $ — 9

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______________________________________________________________________

(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.

(1) We recorded cumulative non-cash, non-tax-deductible goodwill impairment charges of $ 628 million during the year ended December 31, 2025.

(2) As of December 31, 2025, this amount excluded goodwill classified as held for sale of approximately $ 1.3 billion.

See Note 2 — Divestitures .

(3) Certain capitalized software with a gross carrying value of $ 161 million and $ 352 million and trade names with a gross carrying value of $ 211 million and $ 153 million became fully amortized during 2024 and 2023, respectively, and were retired during the first quarter of 2025 and 2024, 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.

As of December 31, 2025 and December 31, 2024, the gross carrying amount of goodwill and intangible assets was $ 13.4 billion and $ 15.4 billion, respectively, excluding the amounts classified as held for sale.

We are required to assess our goodwill and other indefinite-lived intangible assets for impairment annually, or, under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment.

Our annual impairment assessment date for indefinite-lived intangible assets other than goodwill is December 31.

We completed our qualitative assessment of our indefinite-lived intangible assets other than goodwill as of December 31, 2024, 2023 and 2022 and concluded it is more likely than not that our indefinite-lived intangible assets are not impaired;

As of December 31, 2025, we had no indefinite-lived intangible assets and our remaining goodwill was classified as held for sale.

As such, we did not perform any annual impairment assessment for the year ended December 31, 2025 and the only impairment testing performed on our goodwill for the year-ended December 31, 2025 was performed on April 30, 2025 due to a triggering event as described below.

Our annual impairment assessment date for indefinite-lived intangible assets other than goodwill was historically December 31.

We completed our qualitative assessment of our indefinite-lived intangible assets other than goodwill as of December 31, 2024 and 2023 and concluded it is more likely than not that our indefinite-lived intangible assets were not impaired;

thus, no impairment charge for these assets was recorded in 2024 or 2023.

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

We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of any of our reporting units exceeds its fair value.

Our annual impairment assessment date for goodwill is October 31, at which date we assess our reporting units.

Our annual impairment assessment date for goodwill was October 31, at which date we assessed our reporting units.

We report our results within two segments:

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See Note 16 — Segment Information for more information on these segments and the underlying sales channels.

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 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.

As of April 30, 2025, we had three reporting units for goodwill impairment testing, which were:

• Mass Markets;

• North America Business ("NA Business");

• Asia Pacific ("APAC") region.

Prior to the divestiture of the EMEA business in November 2023, the EMEA region was also a reporting unit and was tested for impairment.

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

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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.

2025 Goodwill Impairment Analysis

During the second quarter of 2025, we determined that the classification of the Mass Markets Fiber-to-the-Home business in the Territory as held for sale as described in Note 2 — Divestitures was considered an event or change in circumstance which required an assessment of our goodwill for impairment as of April 30, 2025.

We performed a pre-classification goodwill impairment assessment, as of April 30, 2025, using the market approach to test for impairment prior to the classification of these assets as held for sale and to determine the fair value of our Mass Markets reporting unit for the assignment of goodwill held for sale.

Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and earnings before interest, tax, depreciation and amortization ("EBITDA") multiples between 1.8 x and 3.1 x and 5.8 x and 8.0 x, respectively.

We reconciled the estimated fair values of the reporting units to our market capitalization as of April 30, 2025 and concluded that the indicated control premium of approximately 42 % was reasonable based on recent market transactions.

We concluded no impairment existed at any of our reporting units as of our April 30, 2025 assessment date.

We also performed a post-classification goodwill impairment test using the market approach to evaluate whether the fair value of our reporting units that will remain following the divestiture exceeds the carrying value of the equity of such reporting units after classification of assets held for sale and concluded the indicated control premium of approximately 4 % was reasonable based on recent market transactions.

As a result of this analysis, we determined that the Mass Markets reporting unit was fully impaired, resulting in us recognizing a non-cash, non-tax-deductible goodwill impairment charge of $ 628 million during the quarter ended June 30, 2025.

The market approach we used in the quarter ended June 30, 2025 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 for each reporting unit, we considered observed trends of our industry participants.

Our assessment included many factors that required significant judgment.

Alternative interpretations of these factors could have resulted in different conclusions regarding the size of our impairment.

Subsequent to this impairment analysis and as of December 31, 2025, our only remaining goodwill was classified as held for sale.

2024 Goodwill Impairment Analysis

As of 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.

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2023 Goodwill Impairment Analyses

At October 31, 2023, we performed our annual impairment analysis of the goodwill of our three above-mentioned reporting units.

Given the continued erosion in our market capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting units using only the market approach.

In determining the fair value of each reporting unit, we used revenue and EBITDA multiples below these comparable market multiples.

We reconciled the estimated fair values of the reporting units to our market capitalization as of October 31, 2023 and concluded that the indicated control premium of approximately 2 % was reasonable based on recent market transactions.

Based on our assessments performed with respect to the reporting units as described above, we concluded the estimated fair value of certain of our reporting units was less than their carrying value of equity.

As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $ 1.9 billion on October 31, 2023.

During the second quarter of 2023, we determined circumstances existed indicating it was more likely than not that the carrying value of our reporting units exceed their fair value.

Given the continued erosion in our market capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting units using only the market approach.

Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.5 x and 4.3 x and 4.6 x and 10.5 x, respectively.

In determining the fair value of each reporting unit, we used revenue and EBITDA multiples below these comparable market multiples.

The estimated fair values of the reporting units determined in connection with our impairment analysis in the second quarter of 2023 resulted in no control premium, which we determined to be reasonable based on our market capitalization relative to recent transactions.

For the three months ended June 30, 2023, based on our assessments performed with respect to the reporting units as described above, we concluded the estimated fair value of certain of our reporting units was less than their carrying value of equity.

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 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.

Our assessment included many factors that required significant judgment.

Alternative interpretations of these factors could have resulted in different conclusions regarding the size of our impairments.

2022 Goodwill Impairment Analyses

As of October 31, 2022, we estimated the fair value of our four above-mentioned reporting units by considering both a market approach and a discounted cash flow method.

We discounted the projected cash flows for our Mass Markets, NA Business, EMEA and APAC reporting units using a rate that represented their weighted average cost of capital as of the assessment date, which comprised an after-tax cost of debt and a cost of equity, as disclosed in the table below.

We utilized company comparisons and analyst reports within the telecommunications industry which at the time of assessment supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.8 x and 4.6 x and 4.7 x and 10.8 x, respectively.

We selected a revenue and EBITDA multiple for each of our reporting units, resulting in an overall company revenue and EBITDA multiple of 2.5 x and 5.5 x, respectively.

We also reconciled the estimated fair values of the reporting units to our market capitalization as of October 31, 2022 and concluded that the indicated control premium of approximately 59 % was reasonable based on recent market transactions, including our divestitures, and our depressed stock price.

Due to the depressed trading price of our stock at October 31, 2022, and our assessment performed with respect to the reporting units described above, we concluded that the estimated fair value of our NA Business reporting unit was less than our carrying value of equity for that reporting unit, resulting in a non-cash, non-tax-deductible goodwill impairment charge of approximately $ 3.2 billion.

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

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 not impaired at October 31, 2022.

As of October 31, 2022

Reporting Units

Mass Markets NA Business EMEA APAC

Weighted average cost of capital 9.4 % 9.4 % 9.8 % 11.3 %

After-tax cost of debt 4.7 % 4.7 % 5.1 % 6.3 %

Cost of equity 14.0 % 14.0 % 14.4 % 16.2 %

Our classification of the EMEA Business as being held for sale 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 October 31, 2022.

We performed a pre-announcement goodwill impairment test described above to determine whether there was an impairment prior to the classification of these assets as held for sale and to determine the November 2, 2022, fair values to be utilized for goodwill allocation regarding the disposal group to be classified as assets held for sale.

We also performed a post-announcement goodwill impairment test using our estimated post-divestiture cash flows and carrying value of equity to evaluate whether the fair value of our NA Business, Mass Markets and APAC reporting units that will remain following the divestiture exceeds the carrying value of the equity of such reporting units after classification of assets held for sale.

We concluded no impairment existed regarding our post-divestiture reporting units.

Separate from the annual, pre-announcement and post-announcement goodwill assessments discussed above, we performed an assessment of our EMEA business disposal group for impairment using the purchase price compared to the carrying value of the EMEA business net assets.

As a result, the EMEA business disposal group was impaired, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $ 43 million.

See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses for additional information regarding the purchase price, carrying value, and impairment for goodwill of the EMEA business.

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

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

During 2023, we recorded non-cash and non-tax-deductible goodwill impairment charges totaling $ 10.7 billion related to certain reporting units.

In the second quarter of 2023, we determined circumstances existed indicating it was more likely than not that the carrying value of our reporting units exceeded their fair value, resulting in an impairment charge of $ 8.8 billion.

An additional $ 1.9 billion was recorded as part of our annual goodwill impairment analysis of our three reporting units performed on October 31, 2023

Given the continued erosion in our market capitalization, both quantitative impairment analyses were performed using the market approach, which relied on company comparisons and analyst reports within the telecommunications industry to develop fair value ranges based on annualized revenue and EBITDA multiples.

For each of our assessments, we used revenue and EBITDA multiples below these comparable market multiples.

Estimated fair values were reconciled to market capitalization, and any implied control premium was determined to be reasonable based on recent market transactions at that time.

Significant judgment was required in developing assumptions, and alternative interpretations could have resulted in different conclusions regarding the size of our impairments.

The following table shows the rollforward of goodwill assigned to our reportable segments.

Business Mass Markets Total

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$ — 1,964 1,964

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

As of December 31, 2024 (1)

— 1,964 1,964

As of December 31, 2024 (1)

Impairment — ( 628 ) ( 628 )

Reclassified as held for sale (2)

— ( 1,336 ) ( 1,336 )

As of December 31, 2025 (1)

______________________________________________________________________

(1) Goodwill at December 31, 2024, December 31, 2023 and December 31, 2022 is net of accumulated impairment losses of $ 21.7 billion, $ 21.7 billion and $ 11.0 billion, respectively.

(1) Goodwill as of December 31, 2025, December 31, 2024 and December 31, 2023 is net of accumulated impairment losses of $ 22.3 billion, $ 21.7 billion, and $ 21.7 billion, respectively.

(2) Reflects the goodwill, net of accumulated impairment loss, reclassified as held for sale related to our recently completed divestiture.

See Note 2 — Divestitures.

For additional information on our segments, see Note 16 — Segment Information.

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.

As of December 31, 2025, the weighted average remaining useful lives of our finite-lived intangible assets were approximately five years in total, approximately five years for customer relationships and four years for capitalized software.

Total amortization expense for finite-lived intangible assets for the years ended December 31, 2025, 2024, and 2023 was $ 1.0 billion, $ 1.1 billion, and $ 1.1 billion, respectively.

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

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Product and Service Categories

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

• 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 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:

• Fiber Broadband , under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

• Other Broadband , under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

• Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.

As of December 31, 2025, we categorize our products and services revenue among the following categories for the Business segment:

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, Unified Communications and Collaboration, and wavelengths services;

Includes our more mature offerings, including ethernet, and VPN data networks services;

Includes our legacy services managed for cash flow, including Time Division Multiplexing voice, and private line services;

Includes equipment sales, managed and professional service solutions and other services.

As of December 31, 2025, we categorize our products and services revenue among the following categories for the Mass Markets segment:

• Fiber Broadband :

Under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

• Other Broadband :

Under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

• Voice and Other :

Under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

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They also provide the amount of revenue that is not subject to ASC 606, " Revenue from Contracts with Customers " ("ASC 606"), but is instead governed by other accounting standards.

The amounts in the tables below include revenue for the Latin American, ILEC and EMEA businesses prior to their sales on August 1, 2022, October 3, 2022 and November 1, 2023, respectively:

The amounts in the tables below include revenue for the EMEA business prior to its sale on November 1, 2023:

Year Ended December 31, 2025

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Harvest 1,093 ( 140 ) 953

Other 12 — 12

Total Wholesale Revenue 2,886 ( 446 ) 2,440

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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)

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Contract liabilities (2)

______________________________________________________________________

(1) As of December 31, 2025, this amount excluded $ 13 million of customer receivables, net associated with the disposal group classified as held for sale.

(2) As of December 31, 2025, this amount excluded $ 32 million of contract liabilities associated with the disposal group classified as held for sale.

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

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As of December 31, 2025, the transaction price related to unsatisfied performance obligation that are expected to be recognized in 2026, 2027, and thereafter was $ 2.8 billion, $ 1.6 billion and $ 1.6 billion, respectively.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed) and (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606.

These amounts exclude:

• the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed);

• contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606;

• the value of unsatisfied performance obligations for contracts which relate to the disposal group classified as held for sale.

Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:

Year Ended December 31, 2024

Acquisition Costs Fulfillment Costs

(Dollars in millions)

Beginning of period balance $ 182 184

Costs incurred 151 176

Amortization ( 130 ) ( 138 )

End of period balance $ 203 222

Year Ended December 31, 2023

Acquisition Costs Fulfillment Costs

(Dollars in millions)

Year Ended December 31, 2025 Year Ended December 31, 2024

Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs

(Dollars in millions) (Dollars in millions)

Beginning of period balance $ 203 222 182 184

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Amortization ( 126 ) ( 162 ) ( 130 ) ( 138 )

Classified as held for sale

Change in contract costs held for sale

( 24 ) ( 21 ) — —

End of period balance (1)

$ 196 264 203 222

______________________________________________________________________

(1) The ending balance for the year ended December 31, 2025 excluded $ 24 million and $ 21 million of acquisition costs and fulfillment costs, respectively, associated with the disposal group classified as held for sale .

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

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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 include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other current assets, net and the deferred costs expected to be amortized beyond the next 12 months in Other assets, net on our consolidated balance sheets.

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

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Lumen evaluates each program and establishes a liability under the principles of ASC 450 if it is probable support payments will be recaptured or a penalty will be imposed.

For the years ended December 31, 2024 and 2023, Lumen recorded non-customer revenue of $ 83 million and $ 85 million, respectively, under government assistance programs, of which 18 % and 17 %, respectively, was associated with state universal service fund support programs.

Between 2015 and 2021, we received approximately $ 500 million annually through the Federal Communications Commission (the "FCC")'s Connect America Fund II ("CAF II"), a federal multi-year recurring subsidy program for more extensive broadband deployment in price-cap ILEC territories.

For this program, which ended on December 31, 2021, we were required to meet certain specified infrastructure buildout requirements in 33 states by the end of 2021, which required substantial capital expenditures.

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 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.

For the first phase of this program, RDOF Phase I, the FCC ultimately awarded $ 6.4 billion support payments to be paid in equal monthly installments over 10 years.

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.

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, 2024 and 2023, Lumen participated in these types of programs primarily in the states of Nebraska, New Mexico and Minnesota.

For both the years ended December 31, 2025 and 2024, Lumen recorded non-customer revenue of $ 67 million and $ 83 million, respectively, under government assistance programs , of which 28 % and 18 %, respectively, was associated with state universal service fund support programs.

The federal government has introduced several programs expand broadband access, including the Rural Digital Opportunity Fund (“RDOF”) program, an FCC initiative that provides federal financial support to fund broadband deployment in rural America.

We were awarded RDOF funding in several of the states in which we operate and received payments for a period starting in 2022.

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

In the third quarter of 2024, we relinquished rights to develop certain RDOF census blocks in four states, which resulted in a reduction of the anticipated RDOF Phase I support payments to approximately $ 16 million for the year ending December 31, 2024.

In the second quarter of 2025, we voluntarily relinquished the remainder of our RDOF awards.

As a result, we will no longer receive funding through the RDOF program and recognized a reduction to revenue of $ 46 million in our consolidated statements of operations in the second quarter of 2025.

We also incurred fees of $ 49 million in connection therewith, which are reflected in our operating expenses within our consolidated statements of operations.

In January 2026, we paid the $ 95 million of revenue and fees summarized above, along with an additional $ 4 million relating to our 2024 relinquishment as repayment of funds previously received and remittance of the fees incurred.

Lumen participates in two 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, 2025 and 2024, Lumen participated in these types of programs in the states of Nebraska and New Mexico.

Note 5 — Leases

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Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Operating lease assets are included in other, net under goodwill and other assets on our consolidated balance sheets.

Noncurrent operating lease liabilities are included in other under deferred credits and other liabilities on our consolidated balance sheets.

Some of our lease arrangements contain lease components, non-lease components (including common-area maintenance costs) and executory costs (including real estate taxes and insurance costs).

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Our lease agreements do not generally contain any material residual value guarantees or material restrictive covenants.

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.

Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term.

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

Lease expense consisted of the following:

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Total lease cost $ 451 482 503

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.

Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term.

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

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.

We also received sublease rental income of $ 25 million for each of the years ended December 31, 2024, 2023 and 2022.

Supplemental consolidated balance sheet information and other information related to leases is included below:

As of December 31,

Leases (Dollars in millions) Classification on the Balance Sheet 2024 2023

Operating lease assets Other, net $ 1,119 1,230

Leases (Dollars in millions) Balance Sheet Classification

Operating lease assets Other assets, net $ 1,291 1,119

Finance lease assets Property, plant and equipment, net of accumulated depreciation 216 236

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Finance Current maturities of long-term debt 19 17

Operating Other 959 1,040

Operating Other liabilities 1,113 959

Finance Long-term debt 183 198

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As of December 31, 2025, we had no material operating or finance leases that had not yet commenced.

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.

Lease and sublease revenue 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, 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.

For the years ended December 31, 2025, 2024, and 2023, our gross operating lease revenue was $ 1.1 billion, $ 1.0 billion and $ 1.0 billion, respectively, which represents 9 %, 7 %, and 7 % of our operating revenue for the years ended December 31, 2025, 2024, and 2023.

Included in our operating lease revenue is sublease revenue of $ 23 million, $ 25 million, and $ 25 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Note 6 — Credit Losses on Financial Instruments

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(Dollars in millions)

Balance at December 31, 2021 $ 88 26 114

Balance as of December 31, 2022 (1)

Provision for expected losses 35 65 100

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Recoveries collected 6 3 9

Change in allowance in assets held for sale (1)

( 5 ) 2 ( 3 )

Balance at December 31, 2022 57 28 85

Balance as of December 31, 2023 36 31 67

Provision for expected losses 26 46 72

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Recoveries collected 6 4 10

Balance at December 31, 2023 36 31 67

Balance as of December 31, 2024 36 23 59

Provision for expected losses 32 38 70

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Recoveries collected 4 3 7

Balance at December 31, 2024

Change in allowance in assets held for sale (2)

— ( 1 ) ( 1 )

(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.

Balance as of December 31, 2025

______________________________________________________________________

(1) Includes $ 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.

(2) Represents changes in amounts classified as held for sale associated with the disposal group related to the recently completed divestiture of the Mass Markets Fiber-to-the-Home business in the Territory.

See Note 2 — Divestitures.

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:

As of December 31, 2025, substantially all 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;

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

• Qwest Corporation ("Qwest");

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

As of December 31,

Interest Rates (1)

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SOFR + 6.00 %

Term Loan B-1 (4)

SOFR + 2.35 %

2028 $ 338 357

Term Loan B-1 (4)

SOFR + 2.35 %

2029 1,590 1,606

Term Loan B-2 (4)

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2030 1,590 1,606

Other Facilities (6)

Term Loan B (5)

Superpriority notes

4.125 % - 10.000 %

Former Parent Secured Notes (7)

Subsidiaries:

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Term Loan B-1 (6)

SOFR + 6.56 %

N/A N/A — 1,199

Term Loan B-2 (6)

SOFR + 6.56 %

Former Level 3 Facility (9)

N/A N/A — 1,199

Term Loan B-4 (7)

SOFR + 3.25 %

2027 12 2,411

Former Facility Tranche B Term Loan (8)

First Lien notes

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Second Lien notes 3.875 % - 4.875 %

3.875 % - 10.000 %

Former Level 3 Senior Notes (11)

Unsecured Senior Notes and Other Debt:

Lumen Technologies, Inc.

Senior notes (12)

4.500 % - 7.650 %

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Senior notes 3.625 % - 8.500 %

3.400 % - 4.625 %

Qwest Corporation

Senior notes 6.500 % - 7.750 %

Former Term Loan (14)

Qwest Capital Funding, Inc.

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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).

(2) The debt listed under the caption “Senior Secured Debt” was either secured by assets of the issuer, guaranteed on a secured or unsecured basis by certain affiliates of the issuer, or both.

(3) Lumen's Term Loan A had an interest rate of 9.916 % and 10.573 % as of December 31, 2025 and December 31, 2024, respectively.

(4) Lumen's Term Loan B-1 and B-2 each had an interest rate of 6.380 % and 7.037 % as of December 31, 2025 and December 31, 2024, respectively.

(5) Lumen's Term Loan B had an interest rate composition of SOFR + 2.25 %, which was 6.937 % as of December 31, 2024.

(6) Level 3 Financing's Term Loan B-1 and B-2 each had an interest rate composition of SOFR + 6.56 %, which was 11.133 % as of December 31, 2024.

As described below, this indebtedness was refinanced during the first quarter of 2025.

(7) Level 3 Financing's Term Loan B-4 has an interest rate composition of SOFR + 3.25 %, which was 7.166 % as of December 31, 2025.

(8) Level 3 Financing's Former Facility Tranche B 2027 Term Loan had an interest rate composition of SOFR + 1.75 %., which was 6.437 % as of December 31, 2024.

Long-Term Debt Maturities

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2025 Debt Transactions

During 2025, we have completed various debt refinancing, term loan repricing, and further debt reduction transactions described below, which resulted in a $ 740 million net loss on early retirement of debt, recognized in our Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2025.

Additionally, certain of these transactions resulted in early call premiums which were funded by proceeds from our debt issuances and are reflected as Debt issuance and extinguishment costs and related fees within our financing activities in our consolidated statements of cash flow.

Second Lien Notes Refinancing — Fourth Quarter 2025

On December 23, 2025, Level 3 Financing issued $ 1.25 billion of 8.500 % Senior Notes due 2036.

On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand for the 2025 Early Settlement Cash Tender Offers (as defined herein) noted below.

Cash Tender Offers — Fourth Quarter 2025

Pursuant to cash tender offers that commenced on December 8, 2025 (the "2025 Early Settlement Cash Tender Offers"), in December 2025 we reduced the aggregate principal amount of our consolidated indebtedness by $ 1.6 billion as described in the table below.

The Company determined that the Second Lien Notes Refinancing constituted a debt extinguishment and recorded a loss of $ 74 million in our aggregate Net (loss) gain on early retirement of debt in Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2025.

The following table sets forth the aggregate principal amount of each series of second lien notes of Level 3 Financing retired in exchange for cash in December 2025 in connection with the 2025 Early Settlement Cash Tender Offers:

Aggregate Principal Amount (in millions)

Level 3 Financing, Inc.

3.875 % Second Lien Notes due 2030

4.500 % Second Lien Notes due 2030

4.000 % Second Lien Notes due 2031

Term Loan Repayments — Fourth Quarter 2025

During the fourth quarter of 2025, we and Level 3 Financing, Inc.

repaid all $ 68 million of the outstanding Term Loan B and Former Facility Tranche B Term Loan due 2027.

Second Credit Facilities Refinancing — Third Quarter 2025

On September 29, 2025, Level 3 Financing (i) refinanced all of the outstanding secured Term Loan B-3 facilities under its Existing Credit Agreement (as defined below) and (ii) entered into an amendment to the Existing Level 3 Credit Agreement (collectively, the "Second Credit Facilities Transactions") and the Existing Level 3 Credit Agreement as amended in connection with the Second Credit Facilities Transactions, the ("Level 3 Credit Agreement").

This amendment revised the Existing Level 3 Credit Agreement to, among other things, reduce the pricing on Level 3 Financing’s term loan facility and make related changes to effect such repricing.

Immediately following the Second Credit Facilities Transactions, Level 3 Financing had $ 2.4 billion of outstanding borrowings under its new secured Term Loan B-4 facility.

The Company determined that the Second Credit Facilities Transactions constituted a debt extinguishment and recorded a loss of $ 56 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Other income (expense), net in our consolidated statement of operations for the year ended December 31, 2025.

First Lien Note Refinancings — Third Quarter 2025

On August 18, 2025, Level 3 Financing issued $ 2.0 billion of 7.000 % First Lien Notes due 2034.

On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem (i) all $ 1.4 billion aggregate principal amount of its then-outstanding First Lien 11.000 % Senior Secured Notes due 2029, and (ii) $ 305 million aggregate principal amount of its outstanding 10.750 % First Lien Notes due 2030, in each case including the payment of redemption premium and accrued interest, as well as related fees and expenses.

Additionally, on September 8, 2025, Level 3 Financing issued an additional $ 425 million aggregate principal amount of 7.000 % First Lien Notes due 2034.

On September 14, 2025, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem the remaining $ 373 million aggregate principal amount of its outstanding 10.750 % First Lien Notes due 2030, including the payment of redemption premium and accrued interest, as well as related fees and expenses.

The Company determined that these refinancings constituted debt extinguishments and recorded a loss of $ 344 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Other income (expense), net in our consolidated statements of operations for the year ended December 31, 2025.

First Lien Note Refinancing — Second Quarter 2025

On June 30, 2025, Level 3 Financing issued $ 2.0 billion of 6.875 % First Lien Notes due 2033.

On such date, Level 3 Financing used the net proceeds from the offering, together with cash on hand, to redeem (i) all $ 925 million aggregate principal amount of Level 3 Financing's then-outstanding First Lien 10.500 % Senior Secured Notes due 2030, (ii) all $ 668 million aggregate principal amount of Level 3 Financing’s then-outstanding 10.500 % First Lien Notes due 2029, and (iii) $ 167 million aggregate principal amount of Level 3 Financing’s outstanding 11.000 % First Lien Notes due 2029, in each case including the payment of redemption premium and accrued interest, as well as related fees and expenses.

The Company determined this refinancing constituted a debt extinguishment and recorded a loss of $ 236 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Other income (expense), net in our consolidated statements of operations for the year ended December 31, 2025.

First Credit Facilities Refinancing — First Quarter 2025

On March 27, 2025, Level 3 Financing (i) refinanced all of the outstanding secured Term Loan B-1 facilities and secured Term Loan B-2 facilities under its Credit Agreement dated March 22, 2024 (the "Original Level 3 Credit Agreement") by and among Level 3 Financing, as borrower, Level 3 Parent, as guarantor, Wilmington Trust, National Association, as administrative agent and collateral agent, and the lenders from time to time party thereto and (ii) entered into an amendment to the Original Level 3 Credit Agreement (collectively, the "First Credit Facilities Transactions";

the Original Credit Agreement as amended in connection with the First Credit Facilities Transactions, the "Existing Level 3 Credit Agreement").

This amendment revised the Original Level 3 Credit Agreement to, among other things, (i) reduce the pricing on Level 3 Financing’s term loan facility and make related changes to effect such repricing and (ii) extend the maturity of Level 3 Financing's term loan facility to 2032.

Immediately following the First Credit Facilities Transactions, Level 3 Financing had $ 2.4 billion of outstanding borrowings under its new secured Term Loan B-3 facility.

The Company determined that the First Credit Facilities Transactions constituted a debt extinguishment and recorded a loss of $ 35 million, which is included in our aggregate Net (loss) gain on early retirement of debt in Other income (expense), net in our consolidated statements of operations for the year ended December 31, 2025.

Cash Redemption — Third Quarter 2025

On September 30, 2025, Level 3 Financing fully redeemed $ 350 million in aggregate principal amount of its 10.000 % Second Lien notes due 2032 in exchange for cash.

Transaction fees related to this redemption were not significant.

Cash Redemptions — First Quarter 2025

The following table sets forth the aggregate principal amount of each series of unsecured senior notes of Lumen and Level 3 Financing fully redeemed in exchange for cash on February 15, 2025.

Transaction fees related to these redemptions were not significant.

Debt Redeemed on February 15, 2025

Aggregate Principal Amount (in millions)

Lumen Technologies, Inc.

5.625 % unsecured Senior Notes due 2025

7.200 % unsecured Senior Notes due 2025

5.125 % unsecured Senior Notes due 2026

4.000 % unsecured Senior Notes due 2027

Level 3 Financing, Inc.

3.400 % unsecured Senior Notes due 2027

4.625 % unsecured Senior Notes due 2027

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.

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 (loss) 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:

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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).

• Lumen Technologies issued $ 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 $ 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.

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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.

(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 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.

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, respectively, 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 (loss) 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.

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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.

These repurchases resulted in an aggregate net gain of $ 40 million which is included in our aggregate Net (loss) 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:

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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.

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 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

2023 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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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.

As of December 31, 2025, 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

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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.

Lumen 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 all of the debt issued thereunder was repaid as of December 31, 2025.

Level 3 Credit Agreements

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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:

the lenders party thereto and WTNA, as administrative agent and collateral agent, entered into the Original 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.

Pursuant to the First Credit Facilities Transactions, Level 3 Financing refinanced all of the outstanding secured Term Loan B-1 facilities and secured Term Loan B-2 facilities under the Original Level 3 Credit Agreement under its new secured Term Loan B-3 facility.

Pursuant to the Second Credit Facilities Transactions, Level 3 Financing refinanced all of the outstanding secured Term Loan B-3 facilities under the Existing Level 3 Credit Agreement under its new secured Term Loan B-4 facility.

As of December 31, 2025, Level 3 Financing had $ 2.4 billion of non-amortizing secured Term Loan B-4 outstanding under the term loan facility established by the Level 3 Credit Agreement.

Borrowings under the Term Loan B-4 facility will be, at Level 3 Financing’s option, either (i) the base rate (which is the highest of (x) the overnight federal funds rate, plus 0.50 %, (y) the prime rate on such day, and (z) the one-month SOFR published on such date, plus 1.00 %), plus an applicable margin, or (ii) one-, three- or six-month SOFR, plus an applicable margin.

The applicable margin for SOFR loans under the Term Loan B-4 will be 3.25 %.

The Term Loan B-4 is subject to a SOFR floor of 0.00 %.

Level 3 Financing may voluntarily prepay loans or reduce commitments under the Level 3 Credit Agreement, in whole or in part, subject to minimum amounts, with prior notice, but without premium or penalty (other than a 1.00 % premium on any prepayment in connection with a repricing transaction prior to March 29, 2026).

Level 3 Financing is required to prepay borrowings under the term loan facility with 100 % of the net cash proceeds of certain asset sales and 100 % of the net cash proceeds of certain debt issuances, in each case subject to certain exceptions.

Level 3 Former Facility

In connection with entering into the Original Level 3 Credit Agreement, 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 as of December 31, 2025.

Senior Notes of Lumen and its Subsidiaries

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

The Company’s consolidated indebtedness related to the senior notes of Lumen and its subsidiaries as of December 31, 2025 included:

• superpriority senior secured notes issued by Lumen;

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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).

As of December 31, 2025, we had $ 234 million of undrawn letters of credit outstanding, (i) $ 232 million of which were issued under the Lumen Revolving Credit Facilities and (ii) $ 2 million of which were issued under a separate facility maintained by Lumen subsidiaries (the full amount of which is collateralized by cash that is reflected on our consolidated balance sheets as restricted cash within Other assets, net).

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”).

Lumen’s obligations under its Superpriority Revolving/Term Loan A 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 are secured by a lien on substantially all of the assets of the applicable Lumen Guarantors.

Level 3 Parent, Level 3 Financing and certain of Level 3 Financing’s subsidiaries have provided an unconditional guarantee of payment of Lumen’s obligations under each of its Series A Revolving Credit Facility of up to $ 150 million and 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.

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

Lumen’s obligations under the Superpriority Term Loan B Credit Agreement are unsecured.

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

In addition, the other Level 3 Collateral Guarantors have provided a guarantee of Level 3 Financing’s obligations under the 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 Superpriority Revolving/Term Loan A Credit Agreement (subject, in certain cases, to receipt of necessary regulatory approvals).

Level 3 Financing’s obligations under its first priority 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 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 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.

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

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

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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.

• its maximum total net leverage ratio to exceed 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;

• 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.

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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.

Under certain circumstances in connection with a “change of control” of Lumen, Lumen will be required to make an offer to repurchase substantially all of these senior 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.

The Level 3 Credit Agreement and Level 3 Financing's first and second lien secured notes and unsecured notes 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 other persons.

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

Also, under certain circumstances in connection with a “change of control” of Level 3 Parent 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 Corporation and Qwest Capital Funding, Inc.

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

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were issued under an indenture dated June 29, 1998 containing terms substantially similar to those set forth in Qwest Corporation's indentures.

Impact of Covenants

The debt covenants applicable to Lumen Technologies, Inc.

and its subsidiaries could have a material adverse impact on their ability to operate or expand their respective businesses, to pursue strategic transactions, or to otherwise pursue their plans and strategies.

The covenants of the Level 3 companies may significantly restrict the ability of Lumen Technologies, Inc.

to receive cash from the Level 3 companies, to distribute cash from the Level 3 companies to other of Lumen’s affiliated entities, or to enter into other transactions among Lumen’s wholly-owned entities.

Certain of the debt instruments of Lumen Technologies, Inc.

and its subsidiaries contain cross payment default or cross acceleration provisions.

When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument.

The ability of Lumen Technologies, Inc.

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, 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 of December 31, 2025, 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 does not guarantee the debt of any unaffiliated parties, but, as noted above, as of December 31, 2025, certain of its key subsidiaries have guaranteed on either a secured or unsecured basis (i) Lumen's debt outstanding under its superpriority credit agreements, its superpriority senior secured notes and unsecured senior notes issued by certain other subsidiaries and its $ 225 million letter of credit facility and (ii) the outstanding term loans, senior secured notes and senior unsecured 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 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.

Senior Secured Notes

On January 9, 2026, Level 3 Financing, Inc.

issued an additional $ 650 million aggregate principal amount of its 8.500 % Senior Notes due 2036.

Level 3 Financing used the net proceeds from this offering, to fund the repurchase of its outstanding Second Lien Notes.

The following table sets forth the aggregate principal amount of each series of Second Lien Notes repurchased as part of this transaction:

Principal Amount Repurchased

(in millions)

Level 3 Financing, Inc.

4.875 % Second Lien Notes due 2029

4.500 % Second Lien Notes due 2030

3.875 % Second Lien Notes due 2030

Repurchases of Debt Instruments

On February 2, 2026 we applied approximately $ 4.8 billion of the proceeds from the Mass Markets Fiber-to-the-Home divestiture and cash on hand to fund the repurchase of the following:

Principal Amount Repurchased

(in millions)

Lumen Technologies, Inc.

4.125 % Senior Secured Notes due 2029

4.125 % Senior Secured Notes due 2030

10.000 % Secured Notes due 2032

Term Loan B-1

Term Loan B-2

Total $ 4,765

Note 8 — Accounts Receivable

The following table presents details of our accounts receivable balances:

As of December 31,

(Dollars in millions)

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Accounts receivable, less allowance $ 1,314 1,231

_______________________________________________________________________________

(1) These values exclude assets classified as held for sale as of December 31, 2025.

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

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

Lives As of December 31,

Lives December 31,

(Dollars in millions)

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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) These values exclude assets classified as held for sale as of December 31, 2025.

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.

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

As of December 31, 2025, we classified certain property, plant and equipment, net as held for sale and discontinued recording depreciation on the disposal group.

See Note 2 — Divestitures.

We recorded depreciation expense of $ 1.7 billion, $ 1.9 billion and $ 1.9 billion for the years ended December 31, 2025, 2024 and 2023, respectively.

Asset Retirement Obligations

As of December 31, 2024 and 2023, our asset retirement obligations balance was primarily related to estimated future costs of removing equipment from leased properties and estimated future costs of properly disposing of asbestos and other hazardous materials upon remodeling or demolishing buildings.

As of December 31, 2025 and 2024, our asset retirement obligations consisted primarily of estimated future costs of removing equipment from leased properties and estimated future costs of properly disposing of asbestos and other hazardous materials upon remodeling or demolishing buildings.

Asset retirement obligations are included in other long-term liabilities on our consolidated balance sheets.

Our fair value estimates were determined using the discounted cash flow method.

The following table provides asset retirement obligation activity:

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These workforce reductions result primarily from the progression or completion of our post-acquisition integration plans, increased competitive pressures, cost reduction initiatives, process improvements through automation and reduced workloads due to reduced demand for certain services.

During the fourth quarter of 2023 we reduced our global workforce by approximately 4 % as part of our ongoing efforts to reorganize Lumen for growth by right-sizing our operations to improve our profitability.

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

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.

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We sponsor various defined benefit pension plans (qualified and non-qualified) which, in the aggregate, cover a substantial portion of our employees.

Pension benefits for participants of the Lumen Combined Pension Plan ("Combined Pension Plan") and, through the October 3, 2022 sale of the ILEC business, the Lumen Pension Plan, who are represented by a collective bargaining agreement are based on negotiated schedules.

Pension benefits for participants of the Lumen Combined Pension Plan ("Combined Pension Plan") who are represented by a collective bargaining agreement are based on negotiated schedules.

All other participants' pension benefits are based on each individual participant's years of service and compensation.

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

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.

At the time of the spin-off, the Lumen Pension Plan covered approximately 2,500 active plan participants along with 19,000 other participants.

At the time of the spin-off, the Lumen Pension Plan had a pension benefit obligation of $ 2.5 billion and assets of $ 2.2 billion.

In addition, the December 31, 2021 actuarial (loss) gain and prior service cost included in accumulated other comprehensive loss was allocated between the Lumen Pension Plan and the Lumen Combined Pension Plan.

Following a revaluation of the pension obligation and pension assets for the Lumen Pension Plan, in preparation for the closing of the sale of the ILEC business, we contributed approximately $ 319 million of Lumen's cash to the Lumen Pension Plan trust to fully fund the pension plan in September 2022.

The amounts allocated to the Lumen Pension Plan were subject to adjustment up to the closing of the sale of the ILEC business on October 3, 2022, at which time the plan was transferred along with the rest of the assets and liabilities of the ILEC business.

We recognized pension costs related to both plans through the sale of the ILEC business, at which time balances related to the Lumen Pension Plan were reflected in the calculation of our gain on the sale of the business.

Pension Benefits

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The accounting unfunded status of the Combined Pension Plan was $ 559 million and $ 615 million as of December 31, 2025 and 2024, respectively.

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 $ 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.

We made no voluntary cash contributions to the trust for the Combined Pension Plan in 2025.

In 2024, we made a voluntary cash contribution of $ 170 million to the trust for the Combined Pension Plan.

We paid $ 4 million of benefits directly to participants of our non-qualified pension plans in both 2025 and 2024.

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

The amount of required contributions to the Combined Pension Plan in 2026 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations.

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.

Based on current laws and circumstances, we do not believe we are required to make any contributions to the Combined Pension Plan in 2026.

We estimate that in 2026 we will pay approximately $ 4 million of benefits directly to participants of our non-qualified pension plans.

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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.

The accounting unfunded status of our qualified post-retirement benefit plan was $ 1.7 billion and $ 1.9 billion as of December 31, 2024 and 2023, respectively.

The accounting unfunded status of our qualified post-retirement benefit plan was $ 1.7 billion as of both December 31, 2025 and 2024.

Assets in the post-retirement trusts were substantially depleted as of December 31, 2016;

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(1) Rates are presented net of projected fees and administrative costs.

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 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 includes the following components:

Pension Plans

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Expected return on plan assets ( 254 ) ( 272 ) ( 287 )

Realized to gain on sale of businesses — — 546

Special termination benefits charge — — 2

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Interest cost 88 94 103

Realized to gain on sale of businesses — — ( 32 )

Recognition of prior service cost ( 8 ) ( 8 ) ( 8 )

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Net periodic post-retirement benefit expense $ 57 75 80

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.

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 are included in other income (expense), net on our consolidated statements of operations for the years ended December 31, 2025, 2024, and 2023.

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.

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Combined Pension Plan Post-Retirement Benefit Plans

As of December 31, As of December 31,

2025 2024 2025 2024

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

Plan spin-off — — ( 2,552 )

Service cost 22 24 25

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Special termination benefits charge — — 2

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

Actuarial loss (gain) 155 ( 119 ) 114

Benefits paid from plan assets ( 485 ) ( 552 ) ( 494 )

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

Benefit obligation transferred to purchaser upon sale of business — — ( 26 )

Service cost 3 4 5

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Direct subsidy receipts 3 2 2

Plan amendments — — ( 41 )

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

Actuarial loss (gain) 30 ( 84 ) 14

Benefits paid by company ( 201 ) ( 214 ) ( 228 )

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As previously noted, assets in the post-retirement benefit plan trusts were substantially depleted as of December 31, 2016.

The fair value of post-retirement benefit plan assets was $ 1 million, $ 1 million and $ 5 million at December 31, 2024, 2023 and 2022, respectively.

The fair value of post-retirement benefit plan assets was $ 1 million as of December 31, 2025, 2024 and 2023.

Due to the insignificance of these assets on our consolidated financial statements, we have predominantly excluded them from the disclosures of plan assets in this Note, unless otherwise indicated.

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Fair value of plan assets at beginning of year $ 4,201 4,476 4,715

Plan spin-off — — ( 2,239 )

Return on plan assets 473 107 255

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At the beginning of 2026, our expected annual long-term rate of return on pension assets before consideration of administrative expenses is assumed to be 7.0 %.

Administrative expenses, including projected PBGC (Pension Benefit Guaranty Corporation) premiums, reduce the annual long-term expected return, net of administrative expenses, to 6.5 %.

Administrative expenses, including projected Pension Benefit Guaranty Corporation premiums, reduce the annual long-term expected return, net of administrative expenses, to 6.5 %.

Permitted investments :

Plan assets are managed consistent with the restrictions set forth by ERISA (the Employee Retirement Income Security Act of 1974, as amended).

Plan assets are managed consistent with the restrictions set forth by the Employee Retirement Income Security Act of 1974, as amended.

Fair value measurements :

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date.

We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB.

We measure plan assets at fair value using a hierarchy that prioritizes observable inputs.

For additional information on the fair value hierarchy, see Note 14 — Fair Value of Financial Instruments.

At December 31, 2024, we used the following valuation techniques to measure fair value for assets.

As of December 31, 2025, we used the following valuation techniques to measure fair value for assets.

There were no changes to these methodologies during 2025:

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Repurchase agreements are valued based on expected settlement per the contract terms.

• Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by the respective institutions at the measurement date.

Valuation methods may consider a range of factors, including estimates based on the assumptions of the investment entity.

• Level 3 — Assets were valued using unobservable inputs where little or no market data exists at the measurement date.

Valuation methods may consider a range of factors, including estimates provided by the investment entity.

The Combined Pension Plan's assets are invested in various asset categories utilizing multiple strategies and investment managers.

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Investments held in separate accounts are individually classified.

The table below presents the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2024.

The table below presents the fair value of plan assets by category and the input levels used to determine those fair values as of December 31, 2025.

It is important to note that the asset allocations do not include market exposures that are gained with derivatives.

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stocks (e) 27 — 1 28

Cash equivalents and short-term investments (o) 6 2 — 8

Cash equivalents and short-term investments (n) — 1 — 1

Derivatives (l) — 5 — 5

Total investments, excluding investments valued at NAV $ 906 1,464 1 2,371

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Investments valued at NAV 2,170

Repurchase agreements & other obligations (n) $ — ( 361 ) — ( 361 )

Derivatives (m) ( 1 ) ( 6 ) — ( 7 )

Repurchase agreements & other obligations (m) $ — ( 368 ) — ( 368 )

Total pension plan assets $ 4,189

The table below presents the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2023.

The table below presents the fair value of plan assets by category and the input levels used to determine those fair values as of December 31, 2024.

It is important to note that the asset allocations do not include market exposures that are gained with derivatives.

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stocks (e) 14 — 1 15

Multi-asset strategies (l) 28 — — 28

Cash equivalents and short-term investments (n) 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 (n) $ — ( 375 ) — ( 375 )

Derivatives (m) ( 1 ) — — ( 1 )

Repurchase agreements (m) $ — ( 361 ) — ( 361 )

Derivatives (l) ( 1 ) ( 6 ) — ( 7 )

Total pension plan assets $ 4,201

The table below presents the fair value of plan assets valued at NAV by category for our Combined Pension Plan at December 31, 2024 and 2023.

The table below presents the fair value of plan assets valued at NAV by category for our Combined Pension Plan as of December 31, 2025 and 2024.

Fair Value of Plan Assets Valued at NAV

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Real estate (k) 215 218

Multi-asset strategies (l) — 27

Cash equivalents and short-term investments (o) 277 318

Cash equivalents and short-term investments (n) 88 277

Total investments valued at NAV $ 2,170 2,359

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(k) Real estate represents investments in a diversified portfolio of real estate properties.

(l) Multi-asset strategies represent broadly diversified strategies that have the flexibility to tactically adjust exposures to different asset classes through time.

(m) Derivatives include exchange traded futures contracts as well as privately negotiated over the counter contracts.

(l) Derivatives include exchange traded futures contracts as well as privately negotiated over the counter contracts.

The market values represent gains or losses that occur due to differences between stated contract terms and fluctuations in underlying market instruments.

(n) Repurchase agreements and other obligations includes contracts where the security owner sells a security with the agreement to buy it back at a future date and price.

(m) Repurchase agreements and other obligations includes contracts where the security owner sells a security with the agreement to buy it back at a future date and price.

Other obligations include obligations to repay cash collateral held by a plan, net liability for investment purchases pending settlement, and accrued plan expenses.

(o) Cash equivalents and short-term investments represent investments that are used in conjunction with derivatives positions or are used to provide liquidity for the payment of benefits or other purposes.

Derivative instruments:

Derivative instruments are used to reduce risk as well as provide return.

The gross notional exposure of the derivative instruments directly held by the Combined Pension Plan is shown below.

The notional amount of the derivatives corresponds to market exposure but does not represent an actual cash investment.

Gross Notional Exposure

Combined Pension Plan

Years Ended December 31,

(Dollars in millions)

(n) Cash equivalents and short-term investments represent investments that are used in conjunction with derivatives positions or are used to provide liquidity for the payment of benefits or other purposes.

Derivative instruments :

Exchange-traded U.S.

equity futures $ 212 60

Exchange-traded Treasury and other interest rate futures 795 1,136

Exchange-traded Foreign currency futures — 1

Interest rate swaps 149 214

Credit default swaps 124 72

Index swaps 701 94

Foreign exchange forwards 47 57

Options 15 32

The plan uses exchange‑traded futures and centrally cleared/OTC swaps primarily to align interest‑rate exposure with liabilities and to efficiently maintain equity exposure.

Fair values of these instruments are included within the fair value hierarchy.

Concentrations of risk :

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Financial instruments that potentially subject the plans to concentrations of counterparty risk consist principally of investment contracts with high quality financial institutions.

These investment contracts are typically collateralized obligations and/or are actively managed, limiting the amount of counterparty exposure to any one financial institution.

These investment contracts are typically collateralized obligations or are actively managed, limiting the amount of counterparty exposure to any one financial institution.

Although the investments are well diversified, the value of plan assets could change materially depending upon the overall market volatility, which could affect the funded status of the plan.

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(Dollars in millions)

Balance at December 31, 2022 $ 4 1 — 5

Dispositions ( 2 ) — — ( 2 )

Actual return on plan assets 2 — — 2

Balance at December 31, 2023 4 1 — 5

Balance as of December 31, 2023 $ 4 1 — 5

Acquisition — — 1 1

Balance as of December 31, 2024 4 1 1 6

Acquisition — — — —

Actual return on plan assets ( 4 ) ( 1 ) — ( 5 )

Balance at December 31, 2024 $ 4 1 1 6

Balance as of December 31, 2025 $ — — 1 1

Certain gains and losses are allocated between assets sold during the year and assets still held at year-end based on transactions and changes in valuations that occurred during the year.

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Total accumulated other comprehensive (loss) income $ ( 769 ) 57 29 86 ( 683 )

Other Benefit Plans

Medicare Prescription Drug, Improvement and Modernization Act of 2003

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We recognize the impact of the federal subsidy received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in the calculation of our post-retirement benefit obligation and net periodic post-retirement benefit expense.

Other Benefit Plans

Health Care and Life Insurance

We provide health care and life insurance benefits to essentially all of our active employees.

We provide health care and life insurance benefits to essentially all our active employees.

We are largely self-funded for the cost of the health care plan.

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Our group basic life insurance plans are fully insured and the premiums are paid by us.

We sponsor a qualified defined contribution plan covering substantially all of our U.S.

We sponsor a qualified defined contribution plan covering substantially all our U.S.

Under this plan, employees may contribute a percentage of their annual compensation up to certain maximums, as defined by the plan and by the Internal Revenue Service.

Currently, we match a percentage of employee contributions in cash.

At December 31, 2024 and 2023, the assets of the plan included approximately 8 million and 9 million shares of our common stock, all of which were the result of the combination of previous employer match and participant directed contributions.

As of December 31, 2025 and 2024, the assets of the plan included approximately 7 million and 8 million shares of our common stock, all of which were the result of the combination of previous employer match and participant directed contributions.

We recognized expenses related to this plan of $ 80 million, $ 82 million and $ 87 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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The value of liabilities related to these plans was not significant.

Subsequent Event

In January 2026, we made a voluntary contribution of $ 101 million to the trust for the Combined Pension Plan.

Note 12 — Stock-Based Compensation

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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, 2025:

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(in thousands)

Non-vested at December 31, 2023

Non-vested as of December 31, 2024

28,160 $ 3.18

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Forfeited ( 5,740 ) 6.15

Non-vested at December 31, 2024

Non-vested as of December 31, 2025

During 2025, we granted 19.0 million shares of restricted stock and restricted stock unit awards at a weighted-average price of $ 5.10 .

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Our tax benefit recognized in the consolidated statements of operations for our stock-based payment arrangements for the years ended December 31, 2025, 2024 and 2023, was $ 12 million, $ 7 million and $ 12 million, respectively.

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.

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:

As of December 31, 2025, there was $ 83 million of total unrecognized compensation expense related to our stock-based payment arrangements, which we expect to recognize over a weighted-average period of 1.5 years.

Note 13 — Loss Per Share Of Common Stock

Basic and diluted loss per share of common stock for the years ended December 31, 2025, 2024 and 2023 were calculated as follows:

Years Ended December 31,

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Net loss $ ( 1,739 ) ( 55 ) ( 10,298 )

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 )

Net loss applicable to common stock for computing basic loss per share of common stock ( 1,739 ) ( 55 ) ( 10,298 )

Net loss as adjusted for purposes of computing diluted loss per share of common stock $ ( 1,739 ) ( 55 ) ( 10,298 )

Shares (denominator):

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Non-vested restricted stock ( 29,645 ) ( 26,874 ) ( 23,706 )

Weighted average shares outstanding for computing basic loss per common share 987,680 983,081 1,007,517

Weighted average shares outstanding for computing basic loss per share of common stock 994,548 987,680 983,081

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 per common share 987,680 983,081 1,007,517

Basic loss per common share $ ( 0.06 ) ( 10.48 ) ( 1.54 )

Number of shares as adjusted for purposes of computing diluted loss per share of common stock 994,548 987,680 983,081

Basic loss per share of common stock $ ( 1.75 ) ( 0.06 ) ( 10.48 )

Diluted loss per common share (1)

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______________________________________________________________________________

(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.

(1) For the years ended December 31, 2025, December 31, 2024, and December 31, 2023 , we excluded from the calculation of diluted loss per share of common stock 11.9 million shares, 7.3 million shares and 0.3 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 share of common stock excludes non-vested restricted stock awards that are anti-dilutive based upon the terms of the award.

Such shares were 11.9 million, 16.0 million and 22.5 million for 2025, 2024 and 2023, respectively.

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.

Our financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, long-term debt (excluding finance lease and other obligations), certain equity investments and certain indemnification obligations.

Due primarily to their short-term nature, the carrying amounts of our cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values.

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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, 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

The following table presents the carrying amounts and estimated fair values of our following liabilities as of December 31, 2025 and 2024, as well as the input level used to determine the fair values indicated below:

December 31, 2025 December 31, 2024

Level Carrying

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______________________________________________________________________

(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.

Our primary objective in managing interest rate risk is to decrease the volatility of our earnings and cash flows affected by changes in the underlying rates.

We have floating rate long-term debt (see Note 7—Long-Term Debt and Credit Facilities).

These obligations expose us to variability in interest payments due to changes in interest rates.

If interest rates increase, our interest expense increases.

Conversely, if interest rates decrease, our interest expense also decreases.

Through their expiration on June 30, 2022, we designated the interest rate swap agreements described below as cash flow hedges.

Under these hedges, we received variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the lives of the agreements without exchange of the underlying notional amount.

The change in the fair value of the interest rate swap agreements was reflected in accumulated other comprehensive loss and was subsequently reclassified into earnings in the period that the hedged transaction affected earnings by virtue of qualifying as effective cash flow hedges.

We do not use derivative financial instruments for speculative purposes.

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.

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 realized losses reclassified from accumulated other comprehensive loss to the statement of operations consists of the following (in millions):

Derivatives designated as hedging instruments

Cash flow hedging contracts

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.

(1) Nonrecurring fair value is measured as of August 1, 2022.

Note 15 — Income Taxes

The components of the income tax (benefit) expense are as follows:

Year Ended December 31,

(Dollars in millions)

Loss before income taxes

Domestic $ ( 2,698 )

Foreign ( 18 )

Total pre-tax book loss $ ( 2,716 )

Income tax (benefit) expense

Current tax (benefit) expense

Federal $ ( 309 )

State and Local 32

Total current tax benefit ( 272 )

Deferred tax (benefit) expenses

Federal ( 546 )

State and Local ( 160 )

Total deferred tax benefit ( 705 )

Income tax (benefit) expense

Federal ( 855 )

State and Local ( 128 )

Total income tax benefit $ ( 977 )

Years Ended December 31,

2024 2023 2022

(Dollars in millions)

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Deferred 15 55

Current 2 — 32

Deferred 1 7 ( 73 )

Total income tax (benefit) expense $ ( 175 ) 61 557

Total income tax benefit $ ( 175 ) 61

Income tax (benefit) expense was allocated as follows:

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Attributable to income $ ( 977 ) ( 175 ) 61

Stockholders' equity:

Stockholders' (deficit) equity:

Tax effect of the change in accumulated other comprehensive loss 36 26 ( 21 )

The following is a reconciliation from the statutory federal income tax rate to our effective income tax rate:

Years Ended December 31,

Year Ended December 31,

(Dollars in millions)

(Percentage of pre-tax loss)

Statutory federal income tax rate $ ( 573 ) 21.0 %

Effect of cross-border tax laws

Other ( 2 ) 0.1 %

Research and development credits ( 4 ) 0.2 %

Other ( 1 ) 0.1 %

Changes in valuation allowance — — %

Nontaxable or nondeductible items

Goodwill impairment 32 ( 1.2 ) %

Other ( 20 ) 0.7 %

State income taxes, net of federal income tax benefit (1)

( 110 ) 4.1 %

Change in liability for unrecognized tax position ( 322 ) 11.8 %

Foreign tax effect

Other Jurisdictions 23 ( 0.8 ) %

Effective income tax rate $ ( 977 ) 36.0 %

_______________________________________________________________________________

(1) During the year ended December 31, 2025, state taxes in California, Minnesota, Arizona, Florida, Colorado, and Illinois comprised greater than 50% of the tax effect in this category.

Years Ended December 31,

(Percentage of pre-tax loss)

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Research and development credits 6.5 % 0.1 %

Divestitures of businesses (1)

— % ( 0.4 ) % ( 4.0 ) %

Divestiture of business — % ( 0.4 ) %

Indemnification refunds 11.2 % — %

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Effective income tax rate 76.1 % ( 0.6 ) %

_______________________________________________________________________________

(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, 2025 includes a $ 333 million favorable impact from statute of limitation releases on uncertain tax positions previously disclosed.

The effective tax rate for 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 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,

(Dollars in millions)

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Other employee benefits 57 22

Deferred revenue 796 271

Interest expense limitation carryforwards 484 261

Other 234 212

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Goodwill and other intangible assets ( 900 ) ( 1,002 )

Other ( 24 ) —

Gross deferred tax liabilities ( 4,647 ) ( 4,449 )

Net deferred tax liability $ ( 2,125 ) ( 2,794 )

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.

As of December 31, 2025, we have determined that a portion of our undistributed earnings in India are no longer permanently reinvested, resulting in the recognition of an immaterial deferred tax liability.

We continue to assert that undistributed earnings of our subsidiaries in all other foreign jurisdictions are indefinitely reinvested.

Of the $ 2.1 billion and $ 2.8 billion net deferred tax liability as of December 31, 2025 and 2024, respectively, $ 2.3 billion and $ 2.9 billion is reflected as a long-term liability and $ 145 million and $ 96 million is reflected as a net noncurrent deferred tax asset, in other, net on our consolidated balance sheets as of December 31, 2025 and 2024, respectively.

Income taxes receivable as of December 31, 2025 and 2024, were $ 468 million and $ 483 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.

Income taxes paid (refunded), net are as follows:

Year Ended December 31,

(Dollars in millions)

Pennsylvania 1

Massachusetts ( 1 )

Total income taxes paid (refunded), net $ 18

As of December 31, 2025, we had federal NOLs of approximately $ 982 million, net of expirations from limitations under Section 382 of the Internal Revenue Code and uncertain tax positions, for U.S.

federal income tax purposes.

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Our ability to use these NOLs is subject to annual limits imposed by Section 382.

If unused, the NOLs will expire between 2027 and 2031.

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.

If unused, approximately $ 570 million of pre-2018 NOLs will expire between 2027 and 2031.

As of December 31, 2025, we had state NOLs of $ 11 billion (net of uncertain tax positions).

Our ability to use these NOLs is subject to annual limits under state law.

We establish valuation allowances when necessary to reduce the deferred tax assets to amounts we expect to realize.

As of December 31, 2025, we established a valuation allowance of $ 328 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.

Our valuation allowance as of December 31, 2025 and 2024 is primarily related to NOLs.

This valuation allowance decreased by $ 15 million during 2025, primarily due to changes in our state NOL carryforwards.

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Unrecognized tax benefits at beginning of year $ 1,263 1,424

Decrease in tax positions of prior periods netted against deferred tax assets ( 4 ) ( 411 )

Increase (decrease) in tax positions of prior periods netted against deferred tax assets 1 ( 4 )

Decrease in tax positions taken in the current year ( 7 ) ( 64 )

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Decrease from the lapse of statute of limitations ( 394 ) ( 158 )

Decrease related to divestitures of businesses — ( 109 )

Unrecognized tax benefits at end of year $ 866 1,263

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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.

We had accrued interest (presented before related tax benefits) of approximately $ 306 million and $ 217 million as of December 31, 2025 and 2024, respectively.

We, or at least one of our subsidiaries, file income tax returns in the U.S.

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The actual amount of such decrease, if any, will depend on several future developments and events, many of which are outside our control.

In August 2022, the Inflation Reduction Act was signed into law and which, among other things, implemented a corporate alternative minimum tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, 2022.

The CAMT had no material impact on our financial results as of December 31, 2024.

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.

In July 2025, the U.S.

enacted the “One, Big Beautiful Bill Act” (the “OBBBA”), which permanently allows 100% bonus depreciation, immediate expensing for domestic R&D, and favorable changes to interest expense limitations.

These provisions did not have a material impact on our 2025 effective tax rate but significantly reduced our federal income tax liability.

The Company filed a refund claim for $ 400 million of federal estimated income taxes in July 2025 that it anticipates receiving in the first half of 2026.

The OECD has issued Pillar Two model rules introducing a new global minimum corporate tax of 15% for tax years effective after December 31, 2023.

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.

has not adopted Pillar Two legislation, certain countries in which we operate have already adopted legislation to implement Pillar Two.

On January 5, 2026, the OECD announced the Side-by-Side ("SbS") package, implemented as administrative guidance modifying the operation of Pillar Two rules, which would fully exempt U.S.-parented groups from the application certain Pillar Two top-up taxes.

The SbS package also extends the current Transitional Country-by-Country Reporting ("CbCR") Safe Harbor by one year, through the end of fiscal year of 2027.

The Pillar Two rules have increased our compliance requirements but did not materially impact our 2025 results.

We continue to monitor evolving global and domestic tax legislation and administrative guidance.

Note 16 — 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:

Our chief operating decision maker ("CODM"), who is our CEO, makes decisions and assesses the performance of the Company reviewing two segments:

Business and Mass Markets.

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.

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:

Grow, Nurture, Harvest and Other, in each case through the sales channels outlined above.

The Business segment included the results of our Latin American, ILEC and EMEA businesses prior to their sales on August 1, 2022, October 3, 2022 and November 1, 2023, respectively.

The Business segment included the results of our EMEA business prior to the sale on November 1, 2023.

Under our Mass Markets segment, we provide products and services to residential and small business customers.

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Fiber Broadband, Other Broadband, and Voice and Other.

The Mass Markets segment included the results of our ILEC business prior to its sale on October 3, 2022.

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 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.

Shared costs are managed separately and included in "other unallocated expense" in the table included below under the heading "— 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.

The following tables summarize our segment results for 2025, 2024 and 2023 based on the segment categorization we were operating under as of December 31, 2025.

Year Ended December 31, 2025

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We report our segment revenue based upon all services provided to that segment's customers.

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.

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 include 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;

• income tax expense.

The following table reconciles total segment adjusted EBITDA to net loss for the years ended December 31, 2025, 2024 and 2023:

7 unchanged sentences

Stock-based compensation ( 48 ) ( 29 ) ( 52 )

Operating income (loss) 460 ( 9,584 ) 95

Operating (loss) income ( 812 ) 460 ( 9,584 )

Total other expense, net ( 1,904 ) ( 690 ) ( 653 )

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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, 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.

Subject to these limitations, as of December 31, 2025 and December 31, 2024, we had accrued $ 71 million and $ 78 million, respectively, in the aggregate for our litigation and non-income tax contingencies, which is included in Other current liabilities or Other liabilities on our consolidated balance sheets as of such dates.

Although we quantify our exposure for certain matters below, we cannot at this time estimate the reasonably possible loss or range of loss, if any, in excess of our $ 71 million accrual as of December 31, 2025 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.

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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 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.

In October 2024, we filed a petition with the Colorado Supreme Court seeking a review of the appellate court's decision, and the petition for review was granted.

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.

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The court appointed lead plaintiffs who filed an amended complaint, seeking money damages, attorneys’ fees and costs, and other relief.

On March 31, 2025, the court granted Lumen's motion to dismiss plaintiffs' claims with prejudice.

On April 30, 2025, the plaintiffs filed an appeal which is captioned McLemore v.

Lumen Technologies, Case 25-30264, in the U.S.

Court of Appeals for the Fifth Circuit.

On January 30, 2026, the Fifth Circuit reversed on prejudice only and modified the dismissal to be without prejudice.

Derivative Litigation

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District Court for the Western District of Louisiana.

In April 2025, the court consolidated the Brown, Pourarian, Capistrano, and Murray actions and stayed the consolidated action pending further developments in In re Lumen Technologies, Inc.

Securities Litigation II .

In July 2025, the court similarly stayed the Vogel action.

Environmental Litigation

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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.

In April 2025, the Village of Parks (one of the municipalities which had served a notice of intent to file a citizen suit) served Lumen with a petition in an action captioned Village of Parks v.

Lumen Technologies, Inc.

, Case 95026, in the 16th Judicial District Court for the Parish of St.

Martin, State of Louisiana.

The Village of Parks petition seeks damages and injunctive relief under Louisiana state law relating to the above-described allegations about lead-sheathed telecommunications cables.

On November 6, 2023, a putative class action complaint was filed in the 16th Judicial District Court for the Parish of St.

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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.

In December 2024, the plaintiffs filed an amended complaint and a motion for remand.

In September 2025, the motion to remand was denied.

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.

In July 2025, a settlement was reached with the cities of Columbia and Joplin.

FCRA Litigation

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In February 2017, the case was dismissed for lack of standing.

The plaintiff appealed and the 9th Circuit reversed and remanded.

The plaintiff appealed and the Ninth 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.

The Ninth 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.

The district court denied Lumen's post-trial motions for relief, and on October 16, 2024, Lumen filed an appeal which is captioned Bultemeyer v.

CenturyLink, Inc., Case 24-6413, in the U.S.

Court of Appeals for the Ninth 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

In June 2017, a former employee filed an employment lawsuit against us claiming that she was wrongfully terminated for alleging that we charged some of our retail customers for products and services they did not authorize.

Thereafter, based in part on the allegations made by the former employee, several legal proceedings were filed, including consumer class actions in federal and state courts, a series of securities investor class actions in federal courts and several shareholder derivative actions in federal and Louisiana state courts.

The derivative cases were brought on behalf of CenturyLink, Inc.

against certain current and former officers and directors of the Company and seek damages for alleged breaches of fiduciary duties.

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 several state attorneys general.

December 2018 Outage Proceedings

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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

On April 15, 2024, we appealed that decision to the Washington State Court of Appeals.

In August 2025, the Court of Appeals denied the appeal.

In September 2025, we filed a petition for review with the Washington State Supreme Court.

In January 2026, the Washington State Supreme Court denied our petition for review.

Latin American Tax Indemnification Claims

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.

However, 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.

In addition, there remain other pending proceedings in Brazil, Peru, and other Latin America countries, that, if upheld, could result in a reasonably possible loss of up to approximately $ 82 million in excess of the amount accrued as of December 31, 2025.

Huawei Network Deployment Investigations

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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 U.S.

Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company the FCC has determined poses a national security threat to the integrity of U.S.

communications networks or the communications supply chain.

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The Marshall Fire killed two people, and it burned thousands of acres, including entire neighborhoods.

Approximately 300 lawsuits naming various defendants and asserting various claims for relief have been filed.

To date, three of those name our affiliate Qwest Corporation as being at fault:

Allstate Fire and Casualty Insurance Company, et al., v.

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.

911 Surcharge

In June 2021, the Company was served with a complaint filed in the Santa Fe County District Court by Phone Recovery Services, LLC (“PRS”), acting on behalf of the State of New Mexico.

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 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.

Approximately 300 lawsuits seeking substantial monetary relief have been filed naming as defendants our affiliate Qwest Corporation, an additional telecommunications company, and certain power companies.

The complaints involving Qwest have been consolidated with Kupfner et al., v.

Public Service Company of Colorado, et al., Case 2022-cv-30195 pending in Colorado District Court, Boulder, Colorado.

In September 2025, the court vacated the trial date because the defendants reached agreements in principle to settle with virtually all of the plaintiffs, subject to final documentation.

The court has held periodic status conferences and set a further status conference for February 26, 2026.

Minnesota State Income Tax Appeal

In May 2025, the Minnesota Department of Revenue issued an order (the "Order") denying the Company's petition for a separate allocation or separate apportionment of the taxable gain resulting from the 2022 divestiture of a portion of our incumbent local exchange carrier ("ILEC") business and making other minor adjustments.

The Order seeks to assess additional income tax, penalties, and interest for the 2021 and 2022 tax years.

On August 4, 2025, Lumen filed an appeal of the Order disputing this assessment, which is captioned Lumen Technologies, Inc.

Commissioner of Revenue, Docket No.

9744-R., in the Minnesota Tax Court.

The Company previously established an uncertain tax position for this item.

Other Proceedings, Disputes and Contingencies

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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:

Contractual Commitments

As of December 31, 2025, our future rental commitments and Right-of-Way ("ROW") agreements were as follows:

(Dollars in millions)

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Purchase Commitments

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.

We have several commitments to a variety of vendors for services to be used in the ordinary course of business.

As of December 31, 2025, we and our subsidiaries expect to purchase the following amounts under these commitments:

(Dollars in millions)

2027 through 2028 563

2029 through 2030 192

2031 and thereafter 95

Total purchase commitments

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, 2025.

Amounts included in the ROW and in the purchase commitments tables above are inclusive of contractual obligations related to our Mass Markets Fiber-to-the-Home business as of December 31, 2025 that were subsequently transferred to the buyer upon the close of the divestiture in February 2026.

Note 18 — Other Financial Information

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The following table presents details of other current assets reflected in our consolidated balance sheets:

As of December 31,

(Dollars in millions)

5 unchanged sentences

Contract fulfillment costs 136 109

Assets held for sale

Total other current assets (1)

$ 1,307 1,250

______________________________________________________________________

(1) As of December 31, 2025, this amount excludes $ 30 million of other current assets associated with the disposal group classified as held for sale.

Current Liabilities

Included in accounts payable at December 31, 2024 and 2023 were $ 248 million and $ 274 million, respectively, associated with capital expenditures.

Included in accounts payable as of December 31, 2025 and 2024 were $ 463 million and $ 248 million, respectively, associated with capital expenditures.

Other Income (Expense), Net

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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.

All repurchased common stock has been retired.

As a result, common stock and additional paid-in capital were reduced as of December 31, 2022 by $ 33 million and $ 167 million, respectively.

Note 19 — Accumulated Other Comprehensive Loss

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(Dollars in millions)

Balance at December 31, 2023 $ ( 1,045 ) 276 ( 41 ) ( 810 )

Balance as of December 31, 2024 $ ( 1,003 ) 320 ( 40 ) ( 723 )

Other comprehensive (loss) income before reclassifications 47 ( 23 ) 16 40

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Net current-period other comprehensive income 155 ( 49 ) 16 122

Balance at December 31, 2024 $ ( 1,003 ) 320 ( 40 ) ( 723 )

Balance as of December 31, 2025 $ ( 848 ) 271 ( 24 ) ( 601 )

The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the year ended December 31, 2025:

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(Dollars in millions)

Balance at December 31, 2022 $ ( 985 ) 308 ( 422 ) ( 1,099 )

Balance as of December 31, 2023 $ ( 1,045 ) 276 ( 41 ) ( 810 )

Other comprehensive loss before reclassifications ( 34 ) 63 1 30

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Net current-period other comprehensive (loss) income 42 44 1 87

Balance at December 31, 2023 $ ( 1,045 ) 276 ( 41 ) ( 810 )

Balance as of December 31, 2024 $ ( 1,003 ) 320 ( 40 ) ( 723 )

The table below presents further information about our reclassifications out of accumulated other comprehensive loss by component for the year ended December 31, 2024:

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Net of tax $ 57

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

Net of tax $ 360

________________________________________________________________________

(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.

Note 20 — Labor Union Contracts

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Approximately 87 % of our represented employees are subject to collective bargaining agreements that are scheduled to expire over the 12 month period ending December 31, 2026.

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 or 2024.

Our Board declared the following dividends payable in 2022:

Date Declared Record Date Dividend

Per Share Total Amount Payment Date

(in millions)

August 18, 2022 8/30/2022 $ 0.25 $ 253 9/9/2022

May 19, 2022 5/31/2022 0.25 253 6/10/2022

February 24, 2022 3/8/2022 0.25 253 3/18/2022

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