UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-7784

LUMEN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)



Louisiana		72-0651161
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 CenturyLink Drive,
Monroe,	Louisiana	71203
(Address of principal executive offices)		(Zip Code)

(318) 388-9000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $1.00 per share

LUMN

New York Stock Exchange

Preferred Stock Purchase Rights

N/A

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On ~~October 27, 2023,~~April 26, 2024, there were ~~1,008,898,542~~1,015,035,771 shares of common stock outstanding.

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TABLE OF CONTENTS



	Special Note Regarding Forward-Looking Statements	3
Part I.	Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited)	6
	Consolidated Statements of Comprehensive ~~(Loss)~~ Income (Unaudited)	7
	Consolidated Balance Sheets (Unaudited)	8
	Consolidated Statements of Cash Flows (Unaudited)	9
	Consolidated Statements of Stockholders' Equity (Unaudited)	10
	Notes to Consolidated Financial Statements (Unaudited)*	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4344
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6462
Item 4.	Controls and Procedures	6462
Part II.	Other Information
Item 1.	Legal Proceedings	6563
Item 1A.	R ~~isk Factors~~	65Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6664

Item 6.	Exhibits	6765
Signature		68

* All references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements.

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Special Note Regarding Forward-Looking Statements

This report and other documents filed by us under the federal securities law include, and future oral or written statements or press releases by us and our management may include, forward-looking statements about our business, financial condition, operating results or prospects. These "forward-looking" statements are defined by, and are subject to the "safe harbor" protections under the federal securities laws. These statements include, among others:

•forecasts of our anticipated future results of operations, cash flows or financial position;

•statements concerning the anticipated impact of our completed, pending or proposed transactions, investments, product development, transformation plans, participation in government programs, Quantum Fiber buildout plans, deleveraging plans, and other initiatives, including synergies or costs associated with these initiatives;

•statements about our liquidity, profitability, profit margins, tax position, tax assets, tax rates, asset values, contingent liabilities, growth opportunities, growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, market share, product capabilities, investment and expenditure plans, business strategies, securities repurchase plans, leverage, capital allocation plans, financing or refinancing alternatives and sources, and pricing plans;

•~~statements regarding how the COVID-19 pandemic and its aftermath may impact our business, financial position, operating results or prospects;~~ and

•other similar statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts, many of which are highlighted by words such as “may,” “will,” “would,” “could,” “should,” “plans,” “believes,” “expects,” “anticipates,” “estimates,” "forecasts," “projects,” "proposes," "targets," “intends,” “likely,” “seeks,” “hopes,” or variations or similar expressions with respect to the future.

These forward-looking statements are based upon our judgment and assumptions as of the date such statements are made concerning future developments and events, many of which are beyond our control. These forward-looking statements, and the assumptions upon which they are based, (i) are not guarantees of future results, (ii) are inherently speculative and (iii) are subject to a number of risks and uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in those statements if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. All of our forward-looking statements are qualified in their entirety by reference below to factors that could cause our actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward-looking statements. These factors include but are not limited to:

•the effects of intense competition from a wide variety of competitive providers, including decreased demand for our more mature service offerings and increased pricing pressures;

•the effects of new, emerging or competing technologies, including those that could make our products less desirable or obsolete;

•our ability to successfully and timely attain our key operating imperatives, including simplifying and consolidating our network, simplifying and automating our service support systems, attaining our Quantum Fiber buildout ~~goals,~~schedule, replacing aging or obsolete plant and equipment, strengthening our relationships with customers and attaining projected cost savings;

•our ability to safeguard our network, and to avoid the adverse impact of cyber-attacks, security breaches, service outages, system failures, or similar events impacting our network or the availability and quality of our services;

•the effects of ongoing changes in the regulation of the communications industry, including the outcome of legislative, regulatory or judicial proceedings relating to content liability standards, intercarrier compensation, universal service, service standards, broadband deployment, data protection, privacy and net neutrality;

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•our ability to generate cash flows sufficient to fund our financial commitments and objectives, including our capital expenditures, operating costs, debt ~~repayments,~~obligations, taxes, pension contributions and other benefits payments;

•our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages;

•our ability to successfully adjust to changes in customer demand for our products and services, including increased demand for high-speed data transmission services and artificial intelligence services;

•our ability to successfully maintain the quality and profitability of our existing product and service offerings, to introduce profitable new offerings on a timely and cost-effective basis and to transition customers from our legacy products to our newer offerings;

•our ability to successfully and timely implement our corporate strategies, including our ~~deleveraging~~transformation, buildout and ~~buildout~~deleveraging strategies;

•our ability to successfully and timely ~~consummate the pending divestiture of our European, Middle Eastern and African business, to successfully and timely~~ realize the anticipated benefits from ~~that divestiture~~our 2022 and ~~our~~2023 divestitures, ~~completed in 2022,~~ and to successfully operate and transform our remaining business;

•changes in our operating plans, corporate strategies, or capital allocation plans, whether based upon changes in our cash flows, cash requirements, financial performance, financial position, market or regulatory conditions or otherwise;

•the impact of any future material acquisitions or divestitures that we may transact;

•the negative impact of increases in the costs of our pension, healthcare, post-employment or other benefits, including those caused by changes in markets, interest rates, mortality rates, demographics or regulations;

•the potential negative impact of customer and shareholder complaints, government investigations, security breaches or service outages impacting us or our industry;

•adverse changes in our access to credit markets on ~~favorable~~acceptable terms, whether caused by changes in our financial position, lower credit ratings, unstable markets, debt covenant restrictions or otherwise;

•our ability to meet the terms and conditions of our debt obligations and covenants, including our ability to make transfers of cash in compliance therewith;

•~~the impact of any purported notice of default or notice of acceleration arising from alleged breach of covenants under our credit documents;~~

•our ability to ~~consummate~~attain the ~~transactions contemplated by the transaction support agreement on the timeline currently expected or at all, including the ability~~anticipated benefits of the parties to negotiate definitive agreements with respect to the matters covered by the term sheet included in the transaction support agreement. The occurrence of events may give rise to failure to satisfy any of the conditions to the closing of the transactions contemplated by, or a right of any of the parties to terminate, the transaction support agreement;our March 22, 2024 debt transactions;

•our ability to maintain favorable relations with our security holders, key business partners, suppliers, vendors, landlords and lenders;

•our ability to timely obtain necessary hardware, software, equipment, services, governmental permits and other items on favorable terms;

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•our ability to meet evolving environmental, social and governance ("ESG") expectations and benchmarks, and effectively communicate and implement our ESG strategies;

•the potential adverse effects arising out of allegations regarding the release of hazardous materials into the environment from network assets owned or operated by us or our predecessors, including any resulting governmental actions, removal costs, litigation, compliance costs, or penalties;

•our ability to collect our receivables from, or continue to do business with, financially-troubled customers;

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•our ability to continue to use or renew intellectual property used to conduct our operations;

•any adverse developments in legal or regulatory proceedings involving us;

•changes in tax, pension, healthcare or other laws or regulations, in governmental support programs, or in general government funding levels, including those arising from governmental programs promoting broadband development;

•our ability to use our net operating loss carryforwards ~~and receive our expected U.S. Federal income tax refund~~ in the amounts projected;

•the effects of changes in accounting policies, practices or assumptions, including changes that could potentially require additional future impairment charges;

•~~continuing uncertainties regarding the impact that COVID-19 and its aftermath could have on our business, operations, cash flows and corporate initiatives;~~

•the effects of adverse weather, terrorism, epidemics, pandemics, rioting, vandalism, societal unrest, or other natural or man-made disasters or disturbances;

•the potential adverse effects if our internal controls over financial reporting have weaknesses or deficiencies, or otherwise fail to operate as intended;

•the effects of changes in interest rates or inflation;

•the effects of more general factors such as changes in exchange rates, in operating costs, in public policy, in the views of financial analysts, or in general market, labor, economic, public health or geopolitical conditions; and

•other risks referenced in the "Risk Factors" section or other portions of this report or other of our filings with the U.S. Securities and Exchange Commission (the "SEC").

Additional factors or risks that we currently deem immaterial, that are not presently known to us or that arise in the future could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, existing regulatory, technological, industry, competitive, economic and market conditions, and our assumptions as of such date. We may change our intentions, strategies or plans (including our capital allocation plans) at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


		Three Months Ended September 30,			Nine Months Ended September 30,		Three Months Ended March 31,
		2023		2022	2023	2022
		(Dollars in millions, except per share amounts, and shares in thousands)
	2024							2024		2023
	(Dollars in millions, except per share amounts, and shares in thousands)								(Dollars in millions, except per share amounts, and shares in thousands)
OPERATING REVENUE	OPERATING REVENUE	$	3,641	4,390	11,040	13,678
OPERATING EXPENSES	OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)	Cost of services and products (exclusive of depreciation and amortization)	1,850		1,999	5,407	6,042
Cost of services and products (exclusive of depreciation and amortization)
Cost of services and products (exclusive of depreciation and amortization)
Selling, general and administrative	Selling, general and administrative	791		792	2,302	2,407
Gain on sale of business		—		(593)	—	(593)
Loss on disposal group held for sale		22		—	112	—
Loss on sale of business
Depreciation and amortization	Depreciation and amortization	755		808	2,234	2,443
Goodwill impairment		—		—	8,793	—
Total operating expenses	Total operating expenses	3,418		3,006	18,848	10,299
OPERATING INCOME (LOSS)		223		1,384	(7,808)	3,379
OTHER EXPENSE
OPERATING INCOME
OTHER INCOME (EXPENSE)
Interest expense	Interest expense	(295)		(363)	(868)	(1,052)
Net gain on early retirement of debt (Note 6)		—		9	618	9
Other expense, net		(13)		(93)	(37)	(145)
Total other expense, net		(308)		(447)	(287)	(1,188)
(LOSS) INCOME BEFORE INCOME TAXES		(85)		937	(8,095)	2,191
Income tax (benefit) expense		(7)		359	208	670
NET (LOSS) INCOME		$	(78)	578	(8,303)	1,521
BASIC AND DILUTED (LOSS) EARNINGS PER COMMON SHARE
Interest expense
Interest expense
Net gain on early retirement of debt (Note 5)
Other income (expense), net
Total other income, net
INCOME BEFORE INCOME TAXES
Income tax expense
NET INCOME
BASIC AND DILUTED EARNINGS PER COMMON SHARE
BASIC
BASIC
BASIC	BASIC	$	(0.08)	0.57	(8.45)	1.50
DILUTED	DILUTED	$	(0.08)	0.57	(8.45)	1.50
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING	WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC	BASIC	983,550		1,013,124	982,853	1,011,498
BASIC
BASIC
DILUTED	DILUTED	983,550		1,017,013	982,853	1,016,281

See accompanying notes to consolidated financial statements.

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS)~~ INCOME

(UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
(Dollars in millions)
NET (LOSS) INCOME $ (78) 578 (8,303) 1,521
OTHER COMPREHENSIVE (LOSS) INCOME:
Items related to employee benefit plans:
Change in net actuarial loss, net of $(6), $(8), $(16) and $(25) tax 16 24 47 74
Change in net prior service cost, net of $1, $1, $3 and $1 tax (3) (1) (8) (2)
Reclassification of realized loss on interest rate swaps to net income, net of $—, $—, $— and $(5) tax — — — 17
Reclassification of realized loss on foreign currency translation to gain on sale of business, net of $—, $ —, $— and $— tax — 112 — 112
Foreign currency translation adjustment, net of $5, $28, $(3) and $70 tax (17) (120) 3 (245)
Other comprehensive (loss) income (4) 15 42 (44)
COMPREHENSIVE (LOSS) INCOME $ (82) 593 (8,261) 1,477


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions)
NET INCOME	$	57	511
OTHER COMPREHENSIVE INCOME:
Items related to employee benefit plans:
Change in net actuarial loss, net of $(6) and $(5) tax	18		15
Change in net prior service cost, net of $1 and $1 tax	(3)		(3)



Foreign currency translation adjustment, net of $— and $(6) tax	(4)		18
Other comprehensive income	11		30
COMPREHENSIVE INCOME	$	68	541

See accompanying notes to consolidated financial statements.

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


		September 30, 2023		December 31, 2022
		(Dollars in millions and shares in thousands)
	March 31, 2024					March 31, 2024		December 31, 2023
	(Dollars in millions and shares in thousands)						(Dollars in millions and shares in thousands)
ASSETS	ASSETS				ASSETS
CURRENT ASSETS	CURRENT ASSETS				CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	311	1,251
Accounts receivable, less allowance of $82 and $85		1,411		1,477
Assets held for sale		1,942		1,889
Accounts receivable, less allowance of $67 and $67
Other	Other	982		803
Total current assets	Total current assets	4,646		5,420
Property, plant and equipment, net of accumulated depreciation of $20,976 and $19,886		19,606		19,166
Property, plant and equipment, net of accumulated depreciation of $21,725 and $21,318
GOODWILL AND OTHER ASSETS	GOODWILL AND OTHER ASSETS				GOODWILL AND OTHER ASSETS
Goodwill	Goodwill	3,864		12,657
Other intangible assets, net	Other intangible assets, net	5,744		6,166
Other, net	Other, net	2,061		2,172
Total goodwill and other assets	Total goodwill and other assets	11,669		20,995
TOTAL ASSETS	TOTAL ASSETS	$	35,921	45,581
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY				LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES				CURRENT LIABILITIES
Current maturities of long-term debt	Current maturities of long-term debt	$	155	154
Accounts payable	Accounts payable	1,015		950
Accrued expenses and other liabilities	Accrued expenses and other liabilities				Accrued expenses and other liabilities
Salaries and benefits	Salaries and benefits	733		692
Income and other taxes	Income and other taxes	287		1,158
Current operating lease liabilities	Current operating lease liabilities	296		344
Interest	Interest	139		181
Other	Other	174		277
Liabilities held for sale		478		451
Current portion of deferred revenue	Current portion of deferred revenue	643		596
Total current liabilities	Total current liabilities	3,920		4,803
LONG-TERM DEBT	LONG-TERM DEBT	19,740		20,418
DEFERRED CREDITS AND OTHER LIABILITIES	DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes, net	Deferred income taxes, net	3,192		3,163
Deferred income taxes, net
Deferred income taxes, net
Benefit plan obligations, net	Benefit plan obligations, net	2,322		2,391
Deferred revenue	Deferred revenue	1,902		1,758
Other	Other	2,626		2,611
Total deferred credits and other liabilities	Total deferred credits and other liabilities	10,042		9,923
COMMITMENTS AND CONTINGENCIES (Note 12)
COMMITMENTS AND CONTINGENCIES (Note 11)					COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY				STOCKHOLDERS' EQUITY
Preferred stock—non-redeemable, $25.00 par value, authorized 2,000 and 2,000 shares, issued and outstanding 7 and 7 shares	Preferred stock—non-redeemable, $25.00 par value, authorized 2,000 and 2,000 shares, issued and outstanding 7 and 7 shares	—		—
Common stock, $1.00 par value, authorized 2,200,000 and 2,200,000 shares, issued and outstanding 1,008,933 and 1,001,688 shares		1,008		1,002
Common stock, $1.00 par value, authorized 2,200,000 and 2,200,000 shares, issued and outstanding 1,015,967 and 1,008,486 shares
Additional paid-in capital	Additional paid-in capital	18,117		18,080
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,057)		(1,099)
Accumulated deficit	Accumulated deficit	(15,849)		(7,546)
Total stockholders' equity	Total stockholders' equity	2,219		10,437
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	35,921	45,581

See accompanying notes to consolidated financial statements.

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2023		2022		2024	2023
		(Dollars in millions)
	(Dollars in millions)							(Dollars in millions)
OPERATING ACTIVITIES	OPERATING ACTIVITIES				OPERATING ACTIVITIES
Net (loss) income		$	(8,303)	1,521
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	2,234		2,443
Gain on sale of business		—		(593)
Loss on disposal group held for sale		112		—
Goodwill impairment		8,793		—
Depreciation and amortization
Depreciation and amortization
Loss on sale of business
Deferred income taxes	Deferred income taxes	38		618
Provision for uncollectible accounts	Provision for uncollectible accounts	77		99
Net gain on early retirement of debt	Net gain on early retirement of debt	(618)		(9)
Unrealized loss on investments		96		197
Debt modification costs and related fees
Unrealized (gain) loss on investments
Stock-based compensation	Stock-based compensation	39		71
Changes in current assets and liabilities:	Changes in current assets and liabilities:
Accounts receivable
Accounts receivable
Accounts receivable	Accounts receivable	3		(27)
Accounts payable	Accounts payable	(147)		45
Accrued income and other taxes	Accrued income and other taxes	(996)		25
Other current assets and liabilities, net	Other current assets and liabilities, net	(196)		(323)
Retirement benefits	Retirement benefits	(9)		(440)
Changes in other noncurrent assets and liabilities, net	Changes in other noncurrent assets and liabilities, net	194		141
Other, net	Other, net	59		126
Net cash provided by operating activities	Net cash provided by operating activities	1,376		3,894
INVESTING ACTIVITIES	INVESTING ACTIVITIES				INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(2,279)		(2,183)
Proceeds from sale of business		3		2,707

Proceeds from sale of property, plant and equipment, and other assets
Proceeds from sale of property, plant and equipment, and other assets
Proceeds from sale of property, plant and equipment, and other assets	Proceeds from sale of property, plant and equipment, and other assets	35		67
Other, net	Other, net	9		3
Net cash (used in) provided by investing activities		(2,232)		594
Net cash used in investing activities
FINANCING ACTIVITIES	FINANCING ACTIVITIES				FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt
Payments of long-term debt
Net payments on revolving line of credit
Dividends paid
Debt issuance and extinguishment costs and related fees

Payments of long-term debt		(145)		(3,899)
Net proceeds from revolving line of credit		75		80
Dividends paid		(10)		(780)

Other, net
Other, net
Other, net	Other, net	(21)		(33)
Net cash used in financing activities	Net cash used in financing activities	(101)		(4,632)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(957)		(144)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	1,307		409
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	350	265
Supplemental cash flow information:	Supplemental cash flow information:				Supplemental cash flow information:
Income taxes paid, net		$	(1,289)	(58)
Interest paid (net of capitalized interest of $75 and $48)		$	(886)	(1,092)
Income taxes refunded (paid), net
Interest paid (net of capitalized interest of $39 and $21)
Supplemental noncash information regarding financing activities:	Supplemental noncash information regarding financing activities:
Cancellation of senior unsecured notes as part of exchange offers (Note 6)		$	(1,554)	—
Issuance of senior secured notes as part of exchange offers (Note 6)		$	924	—
Cancellation of senior unsecured notes as part of exchange offers (Note 5)
Cancellation of senior unsecured notes as part of exchange offers (Note 5)
Cancellation of senior unsecured notes as part of exchange offers (Note 5)
Issuance of senior secured notes as part of exchange offers (Note 5)
Cash, cash equivalents and restricted cash:	Cash, cash equivalents and restricted cash:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	311	252
Cash and cash equivalents and restricted cash included in Assets held for sale	Cash and cash equivalents and restricted cash included in Assets held for sale	28		—
Restricted cash included in Other current assets	Restricted cash included in Other current assets	—		1
Restricted cash included in Other, net noncurrent assets	Restricted cash included in Other, net noncurrent assets	11		12
Total	Total	$	350	265

See accompanying notes to consolidated financial statements.

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LUMEN TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)


		Three Months Ended September 30,			Nine Months Ended September 30,		Three Months Ended March 31,
		2023		2022	2023	2022	2024	2023
		(Dollars in millions except per share amounts)					(Dollars in millions except per share amounts)
COMMON STOCK	COMMON STOCK
Balance at beginning of period	Balance at beginning of period	$	1,008	1,032	1,002	1,024
Balance at beginning of period
Balance at beginning of period
Issuance of common stock through incentive and benefit plans	Issuance of common stock through incentive and benefit plans	1		3	7	11
Other		(1)		—	(1)	—

Balance at end of period
Balance at end of period
Balance at end of period	Balance at end of period	1,008		1,035	1,008	1,035
ADDITIONAL PAID-IN CAPITAL	ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period	Balance at beginning of period	18,100		18,459	18,080	18,972
Balance at beginning of period
Balance at beginning of period

Shares withheld to satisfy tax withholdings	Shares withheld to satisfy tax withholdings	(1)		(1)	(5)	(30)
Shares withheld to satisfy tax withholdings
Shares withheld to satisfy tax withholdings
Stock-based compensation	Stock-based compensation	16		23	39	71
Dividends declared		—		(260)	—	(792)

Other
Other
Other	Other	2		—	3	—
Balance at end of period	Balance at end of period	18,117		18,221	18,117	18,221
ACCUMULATED OTHER COMPREHENSIVE LOSS	ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period	Balance at beginning of period	(1,053)		(2,217)	(1,099)	(2,158)
Other comprehensive (loss) income		(4)		15	42	(44)
Balance at beginning of period
Balance at beginning of period
Other comprehensive income
Balance at end of period	Balance at end of period	(1,057)		(2,202)	(1,057)	(2,202)
ACCUMULATED DEFICIT	ACCUMULATED DEFICIT
Balance at beginning of period	Balance at beginning of period	(15,771)		(5,055)	(7,546)	(5,998)
Net (loss) income		(78)		578	(8,303)	1,521
Balance at beginning of period
Balance at beginning of period
Net income
Balance at end of period	Balance at end of period	(15,849)		(4,477)	(15,849)	(4,477)
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	$	2,219	12,577	2,219	12,577
DIVIDENDS DECLARED PER COMMON SHARE		$	—	0.25	—	0.75

See accompanying notes to consolidated financial statements.

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LUMEN TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

References in the Notes to (i) "Lumen Technologies" or "Lumen," "we," "us," the "Company," and "our" refer to Lumen Technologies, Inc. and its consolidated subsidiaries ~~unless the context otherwise requires. References in the Notes to~~and (ii) "Level 3" refer to Level 3 Parent, LLC and its predecessor, Level 3 Communications, Inc., which we acquired on November 1, 2017.

(1) Background

General

During 2022 and 2023, we divested components of our business, referenced herein as (i) the Europe, Middle East and Africa ("EMEA") business, divested November 1, 2023, (ii) the incumbent local exchange ("ILEC") business conducted in 20 Midwestern and Southeastern states, divested October 3, 2022 and (iii) the Latin American business, divested August 1, 2022. Please refer to Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses our Annual Report on Form 10-K for the year ended December 31, 2023 for more information on these divestitures. As we determined that none of these divestitures represented a strategic shift for Lumen, they did not meet the criteria to be treated as discontinued operations and we continued to report our operating results for all three of the divested businesses in our consolidated operating results through their respective disposal dates.

Basis of Presentation

Our consolidated balance sheet as of December 31, ~~2022,~~2023, which was derived from our audited consolidated financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading. We believe these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The consolidated results of operations and cash flows for the first ~~nine~~three months of the year are not necessarily indicative of the consolidated results of operations and cash flows that might be expected for the entire year. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries in which we have a controlling interest. Intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.

To simplify the overall presentation of our consolidated financial statements, we report immaterial amounts attributable to noncontrolling interests in certain of our subsidiaries as follows: (i) income attributable to noncontrolling interests in other ~~expense,~~income (expense), net, (ii) equity attributable to noncontrolling interests in additional paid-in capital and (iii) cash flows attributable to noncontrolling interests in other, net financing activities.

We reclassified certain prior period amounts to conform to the current period presentation, including the recategorization of our Business revenue by product category and sales channel in our segment reporting. See Note ~~11—~~3—Revenue Recognition and Note 10—Segment Information for additional information. These changes had no impact on total operating revenue, total operating expenses or net ~~(loss)~~ income for any period.

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During 2023, we identified errors in our previously reported consolidated financial statements related to accounts receivable and accounts payable which resulted in revisions to certain line items on our December 31, 2022 consolidated balance sheet in prior periods. We have recorded an increase to our accumulated deficit by $63 million, reflected in our January 1, 2023 and March 31, 2023 accumulated deficit in our consolidated statements of stockholders' equity herein. Please refer to Note 1— Background and Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023 for more information.

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.

There were no book overdrafts included in accounts payable at ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

Change in Accounting Estimates

~~Table~~

Effective January 1, 2024, we changed our method of ~~Contents~~depreciation and amortization for 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, for each subsidiary, all like kind assets 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 will result in changes to our depreciation and amortization expense prospectively. The change in accounting estimate had an immaterial impact to our continuing operations for the quarter ended March 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 approximately $16 million, $12 million net of tax, or an increase of $0.01 per diluted share from continuing operations for the quarter ended March 31, 2024.

Summary of Significant Accounting Policies

Refer to the significant accounting policies described in Note 1— Background and Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Recently Adopted Accounting Pronouncements

Supplier Finance Programs

On January 1, 2023, we adopted Accounting Standards Update ("ASU") 2022-04, “Liabilities-Supplier Finance Program (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (“ASU 2022-04”). These amendments require that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, program activity during the period, changes from period to period and the potential magnitude of program transactions. The adoption of ASU 2022-04 did not have a material impact to our consolidated financial statements.

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Credit Losses

On January 1, 2023, we adopted ASU 2022-02, “Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings (“TDR”) and Vintage Disclosures” (“ASU 2022-02”). The ASU eliminates the TDR recognition and measurement guidance, enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The adoption of ASU 2022-02 did not have ~~any impact to our consolidated financial statements.~~

~~Derivatives and Hedging~~

~~On January 1, 2023, we adopted ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method~~” ("ASU 2022-01"). The ASU expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method. The adoption of ASU 2022-01 did not have any impact to our consolidated financial statements.

~~Business Combinations~~

~~On January 1, 2023, we adopted ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The adoption of ASU 2021-08 did not have any impact to our consolidated financial statements.

~~Government Assistance~~

~~On January 1, 2022, we adopted ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance~~” (“ASU 2021-10”). This ASU requires business entities to disclose information about certain types of government assistance they receive. The ASU only impacts annual financial statement note disclosures. The adoption of ASU 2021-10 did not have a material impact to our consolidated financial statements.

~~Leases~~Adoption of Other ASU With No Impact

~~On January 1, 2022,~~As of March 31, 2024, we adopted ~~ASU 2021-05, “Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments~~” (“ASU 2021-05”). This ASU (i) amends the lease classification requirements for lessors to align them with practice under ASC Topic 840, (ii) provides criteria for lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease; and (iii) provides guidance with respect to net investments by lessors under operating leases and other related topics. The adoption of ASU 2021-05 did not have a material impact to our consolidated financial statements.

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~~Recently Issued Accounting Pronouncements~~

~~In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative~~” (“ASU 2023-06”). This ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification”). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. As of September 30, 2023, we do not expect ASU 2023-06 will have any impact to our consolidated financial statements.

~~In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and initial Measurement~~” (“ASU 2023-05”). This ASU applies to the formation of entities that meet the definition of a joint venture (or a corporate joint venture). The amendments in the ASU require that a joint venture apply a new basis of accounting upon formation. ASU 2023-05 will become effective for us in the first quarter of fiscal 2025 and early adoption is permitted. As of September 30, 2023, we do not expect ASU 2023-05 will have any impact to our consolidated financial statements.

~~In August 2023, the FASB issued ASU 2023-04, “Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121~~” (“ASU 2023-04”). This ASU amends and adds various SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users. This ASU does not provide any new guidance. ASU 2023-04 will become effective for us once the addition to the FASB Codification is made available. As of September 30, 2023, we do not expect ASU 2023-04 will have any impact to our consolidated financial statements.

~~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” (“ASU 2023-03”). This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. ASU 2023-03 will become effective for us once the addition to the FASB Codification is made available. As of September 30, 2023, we do not expect ASU 2023-03 will have any impact to our consolidated financial statements.

~~In March 2023, the FASB issued ASU 2023-02, “Investments-Equity method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method~~” (“ASU 2023-02”). These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU 2023-02 will become effective for us in the first quarter of fiscal 2024 and early adoption is permitted. As of September 30, 2023, we do not expect ASU 2023-02 will have any impact to our consolidated financial statements.

~~In March 2023, the FASB issued~~ ASU 2023-01, “Leases (Topic 842): Common Control Arrangements” (“ASU 2023-01”). These amendments require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. ASU 2023-01 will become effective for us in the first quarter of fiscal 2024, and ~~early adoption is permitted. As of September 30, 2023, we do not expect ASU 2023-01 will have any impact to our consolidated financial statements.~~

~~In June 2022, the FASB issued~~ ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The adoption of these ASU did not have any impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU ~~2022-03”~~2023-09”). ~~These amendments clarify~~This ASU requires that public business entities must annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a ~~contractual restriction on~~quantitative threshold (if the ~~sales~~effect of ~~an investment in an equity security~~those reconciling items is ~~not considered part~~equal to or greater than 5 percent of the ~~unit of account of~~amount computed by multiplying pretax income or loss by the ~~equity security and, therefore, is not considered in measuring its fair value.~~applicable statutory income tax rate).” ASU ~~2022-03~~2023-09 will become effective for us in fiscal year 2025 and early adoption is permitted. As of March 31, 2024, we had not early adopted this ASU and are currently evaluating its impact on our consolidated financial statements, including our annual disclosure within our Income Taxes note.

In November 2023, the ~~first quarter of~~FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). This ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU will become effective for us in annual period fiscal 2024 and early adoption is permitted. As of ~~September 30, 2023,~~March 31, 2024, we dohad not ~~expect~~early adopted this ASU ~~2022-03 will have any~~and are currently evaluating its impact toon our consolidated financial ~~statements.~~statements, including on the accompanying annual disclosure within our Segment Information note.

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(2) ~~Planned Divestiture of the EMEA Business~~

On November 2, 2022, affiliates of Level 3 Parent, LLC, an indirect wholly-owned subsidiary of Lumen Technologies, Inc., granted an option to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, to purchase certain of their operations in Europe, the Middle East and Africa (the "EMEA business"), in exchange for $1.8 billion in cash, subject to certain working capital and other purchase price adjustments. Following the completion of a French consultative process, Colt exercised its option and on February 8, 2023, the parties entered into a definitive purchase agreement, which contains various customary covenants for transactions of this type, including various indemnities. Subject to the satisfaction of customary closing conditions, Level 3 Parent LLC expects to close the transaction November 1, 2023, although it can provide no assurances to this effect.

The actual amount of our net after-tax proceeds from this divestiture could vary substantially from the amounts we currently estimate, particularly if we experience delays in completing the transaction or if any of our other assumptions prove to be incorrect.

We do not believe this divestiture represents a strategic shift for Lumen. Therefore, the planned divestiture of the EMEA business does not meet the criteria to be classified as discontinued operations. As a result, we will continue to report our operating results for the EMEA business (the "disposal group") in our consolidated operating results until the transaction is closed.

As of September 30, 2023 in the accompanying consolidated balance sheet, the assets and liabilities of our EMEA business 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 and (ii) the fair value of the disposal group as of such date, less costs to sell. Effective with the designation of the disposal group as held for sale on November 2, 2022, we suspended recording depreciation of property, plant and equipment and amortization of finite-lived intangible assets and right-of-use assets while these assets are classified as held for sale. We estimate that we would have recorded an additional $88 million and $232 million of depreciation, intangible amortization, and amortization of right-of-use assets for the three and nine months ended September 30, 2023, respectively, if the EMEA business did not meet the held for sale criteria.

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 in our Annual Report on Form 10-K for the year ended December 31, 2022. 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. We evaluated the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, and recorded an estimated loss on disposal of $660 million during the year ended December 31, 2022 in the consolidated statement of operations and a valuation allowance included in assets held for sale on the consolidated balance sheet. As a result of our evaluation of the recoverability of the carrying value of the EMEA assets and liabilities held for sale relative to the agreed upon sales price, adjusted for costs to sell, as of September 30, 2023, we recorded a $22 million and $112 million estimated loss on disposal during the three and nine months ended September 30, 2023, respectively, and adjusted the valuation allowance by the same amounts. For each reporting period through the closing date, we will conduct similar evaluations and adjust the valuation allowance for the EMEA assets held for sale, as necessary.

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~~The principal components of the held for sale assets and liabilities of the EMEA business as of the dates below are as follows:~~

September 30, 2023 December 31, 2022
(Dollars in millions)
Assets held for sale
Cash and cash equivalents $ 27 43
Accounts receivable, less allowance of $4 and $5 70 76
Other current assets 55 59
Property, plant and equipment, net of accumulated depreciation of $1,020 and $1,033 1,955 1,873
Customer relationships and other intangible assets, net 103 100
Operating lease assets 215 156
Valuation allowance on assets held for sale(1)
(772) (660)
Deferred tax assets 154 138
Other non-current assets 38 38
Total assets held for sale $ 1,845 1,823
Liabilities held for sale
Accounts payable $ 57 78
Salaries and benefits 20 23
Current portion of deferred revenue 28 28
Current operating lease liabilities 41 33
Other current liabilities 34 28
Deferred income taxes 60 38
Asset retirement obligations 31 30
Deferred revenue, non-current 99 85
Operating lease liabilities, non-current 103 103
Total liabilities held for sale $ 473 446

~~______________________________________________________________________~~

~~(1)~~Includes the impact of $373 million and $365 million as of September 30, 2023 and December 31, 2022, respectively, primarily related to loss on foreign currency translation, expected to be reclassified out of accumulated other comprehensive loss upon close of the sale.

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~~(3)~~ Goodwill, Customer Relationships and Other Intangible Assets

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

September 30, 2023(1)
December 31, 2022(1)
(Dollars in millions)
Goodwill(2)
$ 3,864 12,657
Indefinite-lived intangible assets $ 9 9
Other intangible assets subject to amortization:
Customer relationships, less accumulated amortization of $4,087 and $3,606 4,088 4,574
Capitalized software, less accumulated amortization of $3,961 and $3,895(3)
1,557 1,482
Trade names, patents and other, less accumulated amortization of $68 and $188(3)
90 101
Total other intangible assets, net $ 5,744 6,166


	March 31, 2024		December 31, 2023
	(Dollars in millions)
Goodwill	$	1,964	1,964
Indefinite-lived intangible assets	$	9	9
Other intangible assets subject to amortization:
Customer relationships, less accumulated amortization of $4,047 and $4,248	3,656		3,811
Capitalized software, less accumulated amortization of $3,981 and $4,045(1)	1,542		1,564
Trade names, patents and other, less accumulated amortization of $75 and $72(1)	83		86
Total other intangible assets, net	$	5,290	5,470

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

~~(2)~~ ~~We recorded~~Certain customer relationships with a ~~non-cash, non-tax-deductible goodwill impairment charge~~gross carrying value of ~~$8.8 billion during the second quarter of 2023.~~

~~(3)~~ ~~Certain~~$352 million and capitalized software with a gross carrying value of ~~$183 million and trade names with a gross carrying value of $130~~$153 million became fully amortized during ~~2022~~2023 and were retired during the ~~first quarter of 2023.~~three months ended March 31, 2024.

As of ~~September 30, 2023,~~March 31, 2024, the gross carrying amount of goodwill, customer relationships, indefinite-lived and other intangible assets was ~~$17.7~~$15.4 billion.

Our goodwill was derived from numerous acquisitions where the purchase price exceeded the fair value of the net assets acquired. We report our results within two segments: Business and Mass Markets. See Note ~~11—~~10—Segment Information for more information on these segments. We assigned no goodwill to our Business segment as of March 31, 2024 and December 31, 2023. We assigned approximately $2.0 billion of goodwill to our Mass Markets segment as of both March 31, 2024 and December 31, 2023. Total goodwill as of both March 31, 2024 and December 31, 2023 was net of accumulated impairment losses of $21.7 billion.

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. 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 indefinite-lived intangible assets other than goodwill is December 31.

As of ~~September 30, 2023,~~March 31, 2024, we ~~have~~had three reporting units for goodwill impairment testing, which are (i) Mass Markets, (ii) North ~~America~~American Business ("NA Business") and (iii) Asia Pacific ("APAC") region. Our reporting units are not discrete legal entities with discrete full financial statements. Our assets and liabilities are employed in and relate to the operations of multiple reporting units. For each reporting unit, we compare its estimated fair value of equity to its carrying value of equity that we assign to ~~it.~~the reporting unit. If the estimated fair value of the reporting unit is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than ~~its~~the carrying value, we record a non-cash impairment charge equal to the excess amount. Depending on the facts and circumstances, we typically estimate the fair value of our reporting units by considering either or both of (i) a discounted cash flow method, which is based on the present value of projected cash flows over a discrete projection period and a terminal value, which is based on the expected normalized cash flows of the reporting units following the discrete projection period, and (ii) a market approach, which includes the use of market multiples of publicly-traded companies whose services ~~and markets~~ are comparable to ~~ours.~~

ours
.

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~~Second Quarter 2023 Goodwill Impairment Analysis~~

~~When we performed our October 31, 2022 annual impairment test, we estimated the fair value of our reporting units by considering both a market approach and a discounted cash flow method.~~

The sustained decline in our share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment. 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 1.5x and 4.3x and 4.6x and 10.5x, respectively. The revenue and EBITDA multiples used in the quantitative impairment analysis for each of our reporting units were 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. We did not record any impairments to goodwill in the third quarter of 2023.

The market approach that we used in the quarter ended June 30, 2023 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.

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~~The following table shows the rollforward of goodwill assigned to our reportable segments from December 31, 2022 through September 30, 2023.~~

Business Mass Markets Total
(Dollars in Millions)
As of December 31, 2022(1)
$ 7,906 4,751 12,657
Impairment (6,580) (2,213) (8,793)
As of September 30, 2023(1)
$ 1,326 2,538 3,864

~~(1)Goodwill at September 30, 2023 and December 31, 2022 is net of accumulated impairment losses of $19.8 billion and $11.0 billion, respectively.~~

Total amortization expense for finite-lived intangible assets for the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ totaled ~~$271~~$272 million and ~~$279 million, respectively, and for the nine months ended September 30, 2023 and 2022 totaled $794 million and $830~~$260 million, respectively.

We estimate that total amortization expense for finite-lived intangible assets for the years ending December 31, ~~2023~~2024 through ~~2027~~2028 will be as provided in the table below. As a result of classifying our EMEA business as held for sale on our September 30, 2023 consolidated balance sheet, the amounts presented below do not include future amortization expense for intangible assets of the business to be divested. See Note 2—Planned Divestiture of the EMEA Business for more information.


		(Dollars in millions)		(Dollars in millions)
2023 (remaining three months)		$	244
2024		925
2024 (remaining nine months)
2025	2025	853
2026	2026	809
2027	2027	730
2028

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~~(4)~~(3) Revenue Recognition

Product and Service Categories

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

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

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

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

•Other, which includes equipment sales, ITmanaged 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; and

•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

The following ~~tables provide~~table provides total revenue by segment, sales channel and product category. ~~They~~It also ~~provide~~provides 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~~table below include revenue for the ~~Latin American and ILEC businesses~~EMEA business prior to ~~their~~its sales on ~~August~~November 1, ~~2022 and October 3, 2022, respectively.~~2023. See Note 2—Divestitures of the Latin American, ILEC and ~~ILEC~~EMEA Businesses ~~and Planned Divestiture of the EMEA Business~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 for additional information on these divestitures.

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		Three Months Ended September 30, 2023				Three Months Ended September 30, 2022
		Total Revenue		Adjustments for Non-ASC 606 revenue (1)	Total revenue from Contracts with Customers	Total Revenue	Adjustments for Non-ASC 606 revenue (1)	Total revenue from Contracts with Customers
		(Dollars in millions)
	Three Months Ended March 31, 2024										Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
	Total Revenue								Total Revenue	Adjustments for Non-ASC 606 revenue (1)	Total revenue from Contracts with Customers	Total Revenue	Adjustments for Non-ASC 606 revenue (1)	Total revenue from Contracts with Customers
	(Dollars in millions)												(Dollars in millions)
Business Segment by Sales Channel and Product Category	Business Segment by Sales Channel and Product Category
Large Enterprise	Large Enterprise
Large Enterprise
Large Enterprise
Grow
Grow
Grow	Grow	$	557	(77)	480	571	(79)	492
Nurture	Nurture	369		—	369	404	—	404
Harvest	Harvest	186		—	186	245	—	245
Other	Other	70		(3)	67	66	(1)	65
Total Large Enterprise Revenue	Total Large Enterprise Revenue	1,182		(80)	1,102	1,286	(80)	1,206
Mid-Market Enterprise	Mid-Market Enterprise
Grow	Grow	201		(6)	195	192	(7)	185
Grow
Grow
Nurture	Nurture	195		—	195	226	—	226
Harvest	Harvest	94		(1)	93	129	(2)	127
Other	Other	8		(1)	7	8	(1)	7
Total Mid-Market Enterprise Revenue	Total Mid-Market Enterprise Revenue	498		(8)	490	555	(10)	545
Public Sector	Public Sector
Grow
Grow
Grow	Grow	117		(22)	95	106	(25)	81
Nurture	Nurture	98		—	98	121	—	121
Harvest	Harvest	96		—	96	119	(1)	118
Other	Other	133		—	133	111	—	111
Total Public Sector Revenue	Total Public Sector Revenue	444		(22)	422	457	(26)	431
Wholesale	Wholesale
Grow	Grow	250		(61)	189	247	(67)	180
Grow
Grow
Nurture	Nurture	203		(5)	198	255	(6)	249
Harvest	Harvest	314		(42)	272	404	(56)	348
Other	Other	3		—	3	14	—	14
Total Wholesale Revenue	Total Wholesale Revenue	770		(108)	662	920	(129)	791
International and Other
Grow
Grow
Grow
Nurture
Harvest
Other
Total International and Other
Business Segment by Product Category	Business Segment by Product Category
Grow
Grow
Grow	Grow	1,125		(166)	959	1,116	(178)	938
Nurture	Nurture	865		(5)	860	1,006	(6)	1,000
Harvest	Harvest	690		(43)	647	897	(59)	838
Other	Other	214		(4)	210	199	(2)	197
Total Business Segment Revenue	Total Business Segment Revenue	2,894		(218)	2,676	3,218	(245)	2,973
Mass Markets Segment by Product Category	Mass Markets Segment by Product Category
Fiber Broadband	Fiber Broadband	162		(4)	158	160	(4)	156
Fiber Broadband
Fiber Broadband
Other Broadband	Other Broadband	340		(31)	309	580	(55)	525
Voice and Other	Voice and Other	245		(9)	236	432	(27)	405
Total Mass Markets Revenue	Total Mass Markets Revenue	747		(44)	703	1,172	(86)	1,086
Total Revenue	Total Revenue	$	3,641	(262)	3,379	4,390	(331)	4,059

2017

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Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
Total revenue
Adjustments for non-ASC 606 revenue (1)
Total revenue from contracts with customers Total revenue
Adjustments for non-ASC 606 revenue (1)
Total revenue from contracts with customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow $ 1,665 (234) 1,431 1,882 (284) 1,598
Nurture 1,113 — 1,113 1,302 — 1,302
Harvest 590 — 590 793 — 793
Other 187 (5) 182 183 (4) 179
Total Large Enterprise Revenue 3,555 (239) 3,316 4,160 (288) 3,872
Mid-Market Enterprise
Grow 599 (21) 578 565 (23) 542
Nurture 608 — 608 698 — 698
Harvest 288 (3) 285 404 (6) 398
Other 25 (4) 21 23 (1) 22
Total Mid-Market Enterprise Revenue 1,520 (28) 1,492 1,690 (30) 1,660
Public Sector
Grow 351 (60) 291 337 (79) 258
Nurture 297 — 297 380 — 380
Harvest 290 — 290 367 (3) 364
Other 350 — 350 346 (1) 345
Total Public Sector Revenue 1,288 (60) 1,228 1,430 (83) 1,347
Wholesale
Grow 776 (194) 582 720 (202) 518
Nurture 621 (19) 602 780 (20) 760
Harvest 978 (129) 849 1,216 (170) 1,046
Other 9 — 9 40 — 40
Total Wholesale Revenue 2,384 (342) 2,042 2,756 (392) 2,364
Business Segment by Product Category
Grow 3,391 (509) 2,882 3,504 (588) 2,916
Nurture 2,639 (19) 2,620 3,160 (20) 3,140
Harvest 2,146 (132) 2,014 2,780 (179) 2,601
Other 571 (9) 562 592 (6) 586
Total Business Segment Revenue 8,747 (669) 8,078 10,036 (793) 9,243
Mass Markets Segment by Product Category
Fiber Broadband 471 (12) 459 456 (14) 442
Other Broadband 1,064 (96) 968 1,787 (166) 1,621
Voice and Other 758 (27) 731 1,399 (126) 1,273
Total Mass Markets Revenue 2,293 (135) 2,158 3,642 (306) 3,336
Total Revenue $ 11,040 (804) 10,236 13,678 (1,099) 12,579
~~_____________________________________________________________________~~

(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

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Operating Lease Income

Lumen Technologies leases various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease income are included in operating revenue in our consolidated statements of operations.

For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ our gross rental income was ~~$254~~$221 million and ~~$307~~$269 million, respectively, which ~~represented~~represents approximately 7% of our operating revenue for both the three months ended ~~September 30, 2023~~March 31, 2024 and 2022. For the nine months ended September 30, 2023 and 2022, our gross rental income was $780 million and $978 million, respectively, which represented approximately 7% of our operating revenue for both the nine months ended September 30, 2023 and 2022.2023.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale, as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

September 30, 2023 December 31, 2022
(Dollars in millions)
Customer receivables(1)
$ 1,372 1,424
Contract assets(2)
29 34
Contract liabilities(3)
725 656


	March 31, 2024		December 31, 2023
	(Dollars in millions)
Customer receivables(1)	$	1,289	1,256
Contract assets	26		29
Contract liabilities	710		698

(1)Reflects gross customer receivables of ~~$1.4~~$1.3 billion, ~~and $1.5 billion at September 30, 2023 and December 31, 2022, respectively,~~ net of allowance for credit losses of ~~$63 million and $73~~$60 million, at ~~September 30, 2023~~March 31, 2024 and December 31, 2022, respectively. These amounts exclude customer receivables, net, classified as held for sale of $70 million at September 30, 2023 and $76 million at December 31, 2022 related to the EMEA business.

~~(2)These amounts exclude contract assets classified as held for sale of $11 million at September 30, 2023 and $16 million at December 31, 2022 related to the EMEA business.~~

~~(3)These amounts exclude contract liabilities classified as held for sale of $47 million at September 30, 2023 and $59 million at December 31, 2022 related to the EMEA business.~~2023.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue on our consolidated balance sheets. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, we recognized $300 million of revenue that was included in contract liabilities of $698 million as of January 1, 2024. During the three months ended March 31, 2023, we recognized ~~$44 million and $391~~$305 million of revenue that was included in contract liabilities of $715 million as of January 1, 2023, including contract liabilities that were classified as held for sale. During the three and nine months ended September 30, 2022, we recognized $47 million and $494 million, respectively, of revenue that was included in contract liabilities of $841 million as of January 1, 2022, including contract liabilities that were classified as held for sale.

Performance Obligations

As of ~~September 30, 2023,~~March 31, 2024, we expect to recognize approximately ~~$7.2~~$6.9 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of ~~September 30, 2023,~~March 31, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of ~~2023,~~ 2024, 2025 and thereafter was ~~$913 million, $2.4~~$2.3 billion, $2.0 billion and ~~$3.9~~$2.6 billion, respectively.

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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, and (iii) the value of unsatisfied performance obligations for contracts which relate to our EMEA business classified as held for sale.~~606.

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Contract Costs

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

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022
Acquisition Costs Fulfillment Costs Acquisition Costs Fulfillment Costs
(Dollars in millions)
Beginning of period balance(1)(2)
$ 183 186 208 188
Costs incurred 31 41 45 38
Amortization (37) (35) (49) (35)
Change in contract costs held for sale — — 3 (2)
End of period balance(5)(6)
$ 177 192 207 189


		Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
		Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
		(Dollars in millions)
Beginning of period balance(3)(4)		$	202	192	222	186
	Three Months Ended March 31, 2024							Three Months Ended March 31, 2024				Three Months Ended March 31, 2023
	Acquisition Costs						Acquisition Costs		Fulfillment Costs		Acquisition Costs		Fulfillment Costs
	(Dollars in millions)									(Dollars in millions)
Beginning of period balance(1)
Costs incurred	Costs incurred	96		120	129	119
Amortization	Amortization	(117)		(106)	(150)	(113)
Change in contract costs held for sale	Change in contract costs held for sale	(4)		(14)	6	(3)
End of period balance(5)(6)		$	177	192	207	189
End of period balance(2)

(1)Beginning of period balance for the three months ended ~~September 30, 2023 excludes $10 million of acquisition costs and $14 million of fulfillment costs classified as held for sale related to the EMEA business.~~

~~(2)~~Beginning of period balance for the three months ended September 30, 2022 excludes $31 million of acquisition costs and $33 million of fulfillment costs classified as held for sale (related to both the Latin American business and the ILEC business, sold in the third and fourth quarters of 2022, respectively).

~~(3)Beginning of period balance for the nine months ended September 30,~~March 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business.

~~(4)~~Beginning of period balance for the nine months ended September 30, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $34 million and $32 million, respectively (related to both the Latin American business and the ILEC business, sold in the third and fourth quarters of 2022, respectively).

~~(5)~~(2)End of period balance for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 excludes ~~$10~~$11 million of acquisition costs and ~~$14~~$15 million of fulfillment costs classified as held for sale related to the EMEA business.

~~(6)~~End of period balance for the three and nine months ended September 30, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $28 million and $35 million, respectively (related to both the Latin American business and the ILEC business, sold in the third and fourth quarters of 2022, respectively).

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities.

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We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 3650 months for mass markets customers and 3335 months for business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12twelve months in other current assets on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next twelve months in other ~~noncurrent~~non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.

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~~(5)~~(4) Credit Losses on Financial Instruments

To assess our expected credit losses on financial instruments, we aggregate financial assets with similar risk characteristics to monitor their credit quality or deterioration over the life of such assets. We periodically monitor certain risk characteristics within our aggregated financial assets and revise their composition accordingly, to the extent internal and external risk factors change. We separately evaluate financial assets that do not share risk characteristics with other financial assets. Our financial assets measured at amortized cost primarily consist of accounts receivable.

We use a loss rate method to estimate our allowance for credit losses. Our determination of the current expected credit loss rate begins with our review of historical loss experience as a percentage of accounts receivable. We measure our historical loss period based on the average days to recognize accounts receivable as credit losses. When asset specific characteristics and current conditions change from those in the historical period, due to changes in our credit and collections strategy, certain classes of aged balances, or credit loss and recovery policies, we perform a qualitative and quantitative assessment to adjust our historical loss rate. We use regression analysis to develop an expected loss rate using historical experience and economic data over a forecast period. We measure our forecast period based on the average days to collect payment on billed accounts receivable. To determine our current allowance for credit losses, we combine the historical and expected credit loss rates and apply them to our period end accounts receivable.

If there is an unexpected deterioration of a customer's financial condition or an unexpected change in economic conditions, including macroeconomic events, we assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.

The assessment of the correlation between historical observed default rates, current conditions and forecasted economic conditions requires judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding our allowance for credit losses. The amount of credit loss is sensitive to changes in circumstances and forecasted economic conditions. Our historical credit loss experience, current conditions and forecast of economic conditions may also not be representative of the customers' actual default experience in the future, and we may use methodologies that differ from those used by other companies.

The following table presents the activity of our allowance for credit losses by accounts receivable portfolio for the ~~nine~~three months ended ~~September 30, 2023:~~March 31, 2024:

Business Mass Markets Total
(Dollars in millions)
As of December 31, 2022(1)
$ 57 28 85
Provision for expected losses 27 50 77
Write-offs charged against the allowance (37) (51) (88)
Recoveries collected 5 2 7
Change in allowance in assets held for sale 1 — 1
Ending balance at September 30, 2023(1)
$ 53 29 82

~~(1)~~As of September 30, 2023 and December 31, 2022, these amounts excluded $4 million and $5 million of allowance for credit losses classified as held for sale related to the EMEA business included in the Business portfolio. See Note 2—Planned Divestiture of the EMEA Business.


	Business		Mass Markets	Total
	(Dollars in millions)
As of December 31, 2023	$	36	31	67
Provision for expected losses	8		15	23
Write-offs charged against the allowance	(10)		(17)	(27)
Recoveries collected	3		1	4


Ending balance at March 31, 2024	$	37	30	67

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~~(6)~~(5) Long-Term Debt and Credit Facilities

On March 22, 2024 (the "Effective Date"), Lumen Technologies, Inc ("Lumen"), Level 3 Financing, Inc. ("Level 3"), Qwest Corporation ("Qwest") and a group of creditors holding a majority of our consolidated debt (the "Consenting Debtholders" and, collectively with Lumen, Level 3 and Qwest, the "TSA Parties") completed transactions contemplated under the amended and restated transaction support agreement ("TSA") that the TSA Parties entered into on January 22, 2024 (the "TSA Transactions"), including, among others, the following transactions:

•Lumen and certain of the Consenting Debtholders entered into two new superpriority credit agreements that established new revolving credit and term loan facilities (the “New Parent Facilities”), in return for the termination, repayment or exchange of substantially all of the commitments and debt due under Lumen’s amended and restated credit agreement dated January 31, 2020 (the “Former Parent Facilities”);

•Lumen and certain of the Consenting Debtholders agreed to exchange a substantial portion of Lumen’s senior secured notes (the "Former Parent Secured Notes") for newly-issued Lumen superpriority secured notes and cash;

•Level 3 and certain of the Consenting Debtholders entered into a new credit agreement that established new term loan facilities (the “New Level 3 Facilities”) in exchange for substantially all of the term loan debt due under Level 3’s amended and restated credit agreement, dated as of November 29, 2019 (the “Former Level 3 Facility”);

•Level 3 and certain of the Consenting Debtholders agreed to exchange a substantial portion of (i) certain Level 3 senior secured notes (the "Former Level 3 Secured Notes") for newly-issued Level 3 first lien notes and (ii) each series of Level 3 senior unsecured notes for newly-issued Level 3 second lien notes; and

•Level 3 privately placed $1.575 billion in aggregate principal amount of newly-issued first lien notes maturing 2029, $1.325 billion of which was cash proceeds, $200 million of which was issued in exchange for Lumen 4.00% senior secured notes and $50 million of which was comprised of non-cash lender fees.

The following table reflects the consolidated long-term debt of Lumen Technologies, Inc. and its subsidiaries as of the dates indicated below, including unamortized discounts and premiums and unamortized debt issuance costs:

Interest Rates(1)
Maturities(1)
September 30, 2023 December 31, 2022
(Dollars in millions)
Senior Secured Debt: (2)
Lumen Technologies, Inc.
Revolving Credit Facility(3)
SOFR + 2.00% 2025 $ 75 —
Term Loan A(4)
SOFR + 2.00% 2025 948 991
Term Loan A-1(4)
SOFR + 2.00% 2025 271 283
Term Loan B(5)
SOFR + 2.25% 2027 3,903 3,941
Senior notes 4.000% 2027 1,250 1,250
Subsidiaries:
Level 3 Financing, Inc.
Tranche B 2027 Term Loan(6)
SOFR + 1.75% 2027 2,411 2,411
Senior notes 3.400% - 10.500% 2027 - 2030 2,425 1,500
Senior Notes and Other Debt:
Lumen Technologies, Inc.
Senior notes 4.500% - 7.650% 2025 - 2042 2,143 3,722
Subsidiaries:
Level 3 Financing, Inc.
Senior notes 3.625% - 4.625% 2027 - 2029 3,940 3,940
Qwest Corporation
Senior notes 6.500% - 7.750% 2025 - 2057 1,986 1,986
Term loan(7)
SOFR + 2.50% 2027 215 215
Qwest Capital Funding, Inc.
Senior notes 6.875% - 7.750% 2028 - 2031 192 192
Finance lease and other obligations(8)
Various Various 291 317
Unamortized discounts, net (3) (7)
Unamortized debt issuance costs (152) (169)
Total long-term debt 19,895 20,572
Less current maturities (155) (154)
Long-term debt, excluding current maturities $ 19,740 20,418

~~______________________________________________________________________~~

~~(1)As ofSeptember 30, 2023.~~

~~(2)~~See Note 7—Long-Term Debt and Credit Facilities in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of certain parent or subsidiary guarantees and liens securing this debt.

~~(3)Revolving Credit Facility had an interest rate of 7.450% as of September 30, 2023.~~

~~(4)Term Loans A and A-1 had interest rates of 7.431% and 6.384% as of September 30, 2023 and December 31, 2022, respectively.~~

~~(5)Term Loan B had interest rates of 7.681% and 6.634% as of September 30, 2023 and December 31, 2022, respectively.~~

~~(6)The Level 3 Tranche B 2027 Term Loan had interest rates of 7.181% and 6.134% as of September 30, 2023 and December 31, 2022, respectively.~~

~~(7)The Qwest Corporation Term Loan had interest rates of 7.931% and 6.640% as of September 30, 2023 and December 31, 2022, respectively.~~

~~(8)Excludes finance lease obligations of our EMEA business classified as held for sale.~~

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	Interest Rates(1)	Maturities(1)	March 31, 2024		December 31, 2023
			(Dollars in millions)
Secured Senior Debt: (2)
Lumen Technologies, Inc.
New Parent Facilities:
Series A Revolving Credit Facility(3)	SOFR + 4.00%	2028	$	—	—
Series B Revolving Credit Facility(4)	SOFR + 6.00%	2028	—		—
Term Loan A(5)	SOFR + 6.00%	2028	372		—
Term Loan B-1(6)	SOFR + 2.35%	2029	1,625		—
Term Loan B-2(6)	SOFR + 2.35%	2030	1,625		—
Former Parent Facilities:
Term Loan B(7)	SOFR + 2.25%	2027	57		3,891
Other Facilities(8)	SOFR + 2.00%	2025	—		1,399
Superpriority Notes	4.125%	2029 - 2030	812		—
Former Parent Secured Notes	4.000%	2027	—		1,250
Subsidiaries
Level 3 Financing, Inc.
New Level 3 Facilities:
Term Loan B-1(9)	SOFR + 6.56%	2029	1,199		—
Term Loan B-2(9)	SOFR + 6.56%	2030	1,199		—
Former Level 3 Facility(10)	SOFR + 1.75%	2027	12		2,411
First Lien Notes(11)	10.500% to 11.000%	2029 - 2030	3,846		925
Second Lien Notes	3.875% to 4.875%	2029 - 2031	2,229		—
Former Level 3 Senior Notes	3.400% to 3.875%	2027 - 2029	—		1,500
Unsecured Senior Notes and Other Debt:
Lumen Technologies, Inc.
Senior notes(12)	4.000% - 7.650%	2025 - 2042	2,113		2,143
Subsidiaries:
Level 3 Financing, Inc.
Senior notes(13)	3.400% - 4.625%	2027 - 2029	1,865		3,940
Qwest Corporation
Senior notes	6.500% - 7.750%	2025 - 2057	1,986		1,986
Term loan(14)	SOFR + 2.50%	2027	—		215
Qwest Capital Funding, Inc.
Senior notes	6.875% - 7.750%	2028 - 2031	192		192
Finance lease and other obligations	Various	Various	279		285
Unamortized discounts, net			(492)		(4)
Unamortized debt issuance costs			(242)		(145)
Total long-term debt			18,677		19,988
Less current maturities			(86)		(157)
Long-term debt, excluding current maturities			$	18,591	19,831

______________________________________________________________________

(1)As ofMarch 31, 2024. All references to "SOFR" refer to the Secured Overnight Financing Rate.

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(2)As discussed further below in this Note, the debt listed under the caption “Senior Secured Debt” is either guaranteed by affiliates of the issuer, secured, or both. As discussed further in footnotes 12 and 13, we reclassified in the table above certain notes that were guaranteed, secured, or both prior to the Effective Date from “secured” to “unsecured” in light of amendments that released such prior guarantees and security interests.

(3)Series A Revolving Credit Facility had an interest rate of 8.050%, as of March 31, 2024.

(4)Series B Revolving Credit Facility had an interest rate of 10.050% as of March 31, 2024.

(5)Term Loan A had an interest rate of 11.329% as of March 31, 2024.

(6)Term Loan B-1 and B-2 each had an interest rate of 7.739% as of March 31, 2024.

(7)Term Loan B had an interest rate of 7.695% and 7.720% as of March 31, 2024 and December 31, 2023, respectively.

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

(9)The Level 3 Term Loan B-1 and B-2 each had an interest rate of 11.889% as of March 31, 2024.

(10)Reflects Level 3 Tranche B 2027 Term Loan issued under the Former Level 3 Facility, which had an interest rate of 7.195% and 7.220% as of March 31, 2024 and December 31, 2023, respectively.

(11)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.

(12)The total of these notes at March 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 and certain security interests relating thereto.

(13)The total for these notes at March 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 guarantees of such debt and certain security interests relating thereto.

(14)The Qwest Corporation Term Loan had an interest rate of 7.970% as of December 31, 2023.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of ~~September 30, 2023~~March 31, 2024 (excluding unamortized discounts, net, and unamortized debt issuance costs), maturing during the following years. As a result of classifying our EMEA business as held for sale on our September 30, 2023 consolidated balance sheet, the amounts presented below do not include maturities of the finance lease obligations of that business. See Note 2—Planned Divestiture of the EMEA Business.


		(Dollars in millions)		(Dollars in millions)
2023 (remaining three months)		$	40
2024		157
2024 (remaining nine months)
2025	2025	1,739
2026	2026	498
2027	2027	9,386
2028 and thereafter		8,230
2028
2029 and thereafter
Total long-term debt	Total long-term debt	$	20,050

~~Exchange Offers and Repurchases~~Impact of Debt Transactions

~~Pursuant to exchange offers that commenced on March 16, 2023 (the “Exchange Offers”), on March 31, 2023, Level 3 Financing, Inc. issued $915 million~~Consummation of ~~its 10.500% Senior Secured Notes due 2030 (the “10.500% Notes”) in exchange for $1.535 billion~~the above-described TSA Transactions substantially changed the structure and terms of Lumen’s outstanding senior unsecured notes. On April 17, 2023, in connection with the Exchange Offers, Level 3 Financing, Inc. issued an additional $9 million of its 10.500% Notes in exchange for $19 million of Lumen's outstanding senior unsecured notes. All exchanged notes were concurrently cancelled. These transactions resulted in a $630 million net reduction inour consolidated long-term debt. The principal changes included:

•reducing the aggregate principal amount of ~~Lumen’s~~our total debt maturities due on or before December 31, 2027 by approximately $10.2 billion (excluding finance leases and other obligations);

•increasing the average weighted interest rate payable under our consolidated ~~indebtedness. In addition~~long-term debt from 6.23% to 7.73%;

•increasing the ~~above described exchange offers, we repurchased $24~~portion of our consolidated long-term debt that is guaranteed, secured or both;

•modifying the covenants applicable to our consolidated long-term debt;

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•raising $1.325 billion of new capital through the issuance of Level 3 first lien notes maturing 2029;

•obtaining approximately $1.0 billion of new Lumen revolving credit facilities maturing 2028 to replace Lumen's former $2.2 billion revolving credit facility. Under these new revolving credit facilities, Lumen had no borrowings as of March 31, 2024 and had approximately $241 million ~~aggregate principal amount~~ of ~~Lumen's outstanding senior unsecured notes during the first quarter~~letters of ~~2023. These above-described transactions resulted in an aggregate gain~~credit issued and undrawn, leaving approximately $715 million capacity as of ~~$618 million during the nine months ended September 30, 2023.~~such date; and

•repaying certain indebtedness of Lumen and Qwest.

Repayments and Issuances

The following table sets forth the aggregate principal amount of each ~~series~~ of ~~Lumen’s senior unsecured notes retired~~Lumen's consolidated debt arrangements that were partially or fully paid in exchange for cash or newly-issued debt during the ~~nine months ended September 30, 2023,~~first quarter of 2024 in connection with the ~~above-described exchange transactions:~~TSA Transaction:


	Aggregate Principal Amount (in millions)
Debt	Repayment		Exchange
Lumen Technologies, Inc.
Term Loan A	$	933	—
Term Loan A-1	266		—
Term Loan B	575		3,259
5.125% Senior Notes due 2026	116		147
4.000% Senior Notes due 2027	153		865
Level 3 Financing, Inc.
Term Loan B	—		2,398
3.400% Senior Notes due 2027	—		668
3.875% Senior Notes due 2029	—		678
4.625% Senior Notes due 2027	—		606
4.250% Senior Notes due 2028	—		712
3.625% Senior Notes due 2029	—		458
3.750% Senior Notes due 2029	—		453
Qwest Corporation
Senior Term B Loan	215		—
Total	$	2,258	10,244

The following table sets forth the aggregate principal amount of debt issued by Lumen or Level 3 during the first quarter of 2024 in connection with the TSA Transactions:

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New Debt Issuances(1)

~~Period of Reduction~~

Aggregate ~~principal (amounts in~~Principal Amount as of March 31, 2024 (in millions)

~~5.625% Senior Notes, Series X, due 2025~~Lumen Technologies, Inc.

~~Q1 2023~~Term Loan A(2)

48372

~~7.200% Senior Notes, Series D, due 2025~~

Term Loan B-1(2)

Exchange

~~Q1 2023~~1,625

21Term Loan B-2(2)

Exchange

1,625

~~5.125% Senior~~4.125% Superpriority Notes due ~~2026~~2029-2030

Exchange

~~Q1 2023~~812

Level 3 Financing, Inc.

Term Loan B-1

Exchange

~~291~~1,199

~~6.875% Debentures, Series G,~~Term Loan B-2

Exchange

1,199

10.500% First Lien Notes due ~~2028~~2029

Exchange

~~Q1 2023~~668

10.750% First Lien Notes due 2029

Exchange

52678

~~5.375% Senior~~11.000% First Lien Notes due 2029

1,375

11.000% First Lien Notes due 2029

~~Q1 2023~~Exchange

~~275~~200

~~4.500% Senior~~4.875% Second Lien Notes due 2029

Exchange

~~Q1 2023~~606

~~556~~

~~7.600% Senior Notes, Series P, due 2039~~

~~Q1 2023~~

~~161~~

~~7.650% Senior Notes, Series U, due 2042~~

~~Q1 2023~~

~~131~~

~~5.625% Senior Notes, Series X, due 2025~~

~~Q2 2023~~

4.500% ~~Senior~~Second Lien Notes due ~~2029~~2030

Exchange

~~Q2 2023~~712

3.875% Second Lien Notes due 2030

Exchange

2458

~~7.600% Senior~~4.000% Second Lien Notes ~~Series P,~~ due ~~2039~~2031

Exchange

~~Q2 2023~~453

~~7.650% Senior Notes, Series U, due 2042~~

~~Q2 2023~~

Total

~~1,554~~11,982

______________________________________________________________________

(1)Except for the Term Loan A and as otherwise noted herein with respect to Level 3's 11.000% first Lien Notes due 2029, all of the new debt listed in this table was issued in exchange for previously-issued debt of Lumen or Level 3.

(2)Reflected approximately $13 million of term loan installment payments made between March 22, 2024 and March 31, 2024.

In evaluating the terms of the TSA transaction, we determined for certain of our creditors that the new debt instruments were substantially different than pre-existing debt and therefore constituted an extinguishment of old debt and establishment of new debt for which we recorded a 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 extinguishment of $275 million, recognized in other income (expense), net in our consolidated statement of operations for the three months ended March 31, 2024. The remaining creditors’ debt was not substantially different under the terms of the TSA transaction and was treated under modification accounting rules. In conjunction with the TSA transaction, we paid $209 million in lender fees and $174 million in additional third-party costs. Of these amounts, $157 million lender fees were an offset to the gain on extinguishment and $112 million in third-party costs were recorded to selling, general and administrative expense in our consolidated statement of operations for the three months ended March 31, 2024. In accordance with US GAAP provisions for modification and extinguishment accounting, $52 million in lender fees and $62 million in third-party costs, respectively, were capitalized and will be amortized over the new terms of the arrangements.

For information on various issuances, exchanges or payments of long-term indebtedness by Lumen or its subsidiaries during 2023, see Note 7—Long-Term Debt and Credit Facilities in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.

Debt of Lumen Technologies, Inc. and its Subsidiaries

At March 31, 2024, most of our outstanding consolidated debt had been incurred by Lumen or one of the following three other 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"), including its parent guarantor Level 3 Parent, LLC ("Level 3 Parent") and certain subsidiary guarantors;

•Qwest Corporation; and

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

Each of these borrowers or borrowing groups has entered into one or more credit agreements with certain financial institutions or other institutional lenders, or issued senior notes. Certain of these debt instruments are described further below or in Note 7 to the financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.

Lumen Credit Agreements

Superpriority Revolving/Term A Credit Agreement

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

•a superpriority “first out” series A revolving credit facility with commitments of approximately $489 million (the “SP RCF-A”);

•a superpriority “second out” series B revolving credit facility with commitments of approximately $467 million (the “SP RCF-B”, and together with the SP RCF-A, the “SP RCF”); and

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

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

•for the SP RCF-A, term SOFR (subject to a 2.00% floor) plus 4.00% for term SOFR loans or a base rate plus 3.00% for base rate loans;

•for the SP RCF-B, term SOFR (subject to a 2.00% floor) plus 6.00% for term SOFR loans or a base rate plus 5.00% for base rate loans; and

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

Lumen may prepay amounts outstanding under the SP RCF-B or SP TLA at anytime without premium or penalty. If no amounts are outstanding under the SP RCF-B, Lumen may prepay amounts outstanding under the SP RCF-A without premium or penalty.

The SP RCF-A and SP RCF-B mature on June 1, 2028 (in each case subject to a springing maturity in certain circumstances). The SP 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.

The RCF/TLA Credit Agreement contains certain customary events of default (subject, in certain cases, to customary grace and cure periods). If an event of default occurs, the lenders may, among other actions, accelerate the outstanding loans.

In connection with entry into the RCF/TLA Credit Agreement, the (i) revolving commitments outstanding under the Former Parent Facilities were permanently reduced to zero and terminated, (ii) all term A/A-1 loans outstanding under the Former Parent Facilities were prepaid in full and (iii) the outstanding balance of the term B loans under the Former Parent Facilities was reduced to approximately $57 million.

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Superpriority Term B Credit Agreement

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

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

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

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

The SP TLB requires Lumen to make quarterly amortization payments of 0.25% of the initial principal amount and certain specified mandatory prepayments upon the occurrence of certain transactions. Amounts outstanding under the SP TLB may be prepaid at any time without premium or penalty.

The TLB Credit Agreement contains certain customary events of default (subject in certain cases to customary grace and cure periods). If an event of default occurs, the lenders may, among other actions, accelerate the outstanding loans.

Level 3 Credit Agreement

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

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

•a secured term B-2 loan facility in the principal amount of approximately $1.2 billion maturing April 15, 2030 (the “TLB-2” and, together with the TLB-1, the “New Level 3 Facilities”).

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’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 Effective Date and (ii) 1.00% of the aggregate principal amount if prepaid after the 12-month anniversary of the Effective Date and on or prior to the 24-month anniversary of the Effective Date. The New Level 3 Facilities require Level 3 to make certain specified mandatory prepayments upon the occurrence of certain transactions.

The New Level 3 Credit Agreement contains certain customary events of default (subject, in certain cases, to customary grace and cure periods). If an event of default occurs, the lenders may, among other actions, accelerate the outstanding loans.

In connection with entry into the New Level 3 Credit Agreement, the outstanding balance of the term B loans under the Former Level 3 Facility was reduced to approximately $12 million.

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Senior Notes

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

•superpriority senior secured notes issued by Lumen;

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

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

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

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

Certain Guarantees and Security Interests

Lumen’s obligations under the ~~10.500% Notes~~RCF/TLA Credit Agreement are ~~guaranteed~~unsecured, but certain of Lumen’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide 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 ~~a secured basis by its direct parent,~~substantially all of the assets of the applicable Lumen Guarantors. Level 3 Parent, ~~LLC,~~Level 3 and certain of Level 3’s subsidiaries have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Lumen’s obligations under the SP RCF- A of up to $150 million and under the SP RCF-B 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 and certain of its ~~material domestic~~ subsidiaries ~~that~~have provided an unsecured guarantee of collection of Lumen’s obligations under the ~~term loan~~SP RCF and SP TLA (the “Qwest Guarantors”).

Lumen’s obligations under the TLB Credit Agreement are unsecured. The SP TLB is guaranteed by the Lumen Guarantors and the Qwest Guarantors on the same basis as those entities guarantee Lumen’s obligations under the RCF/TLA Credit Agreement.

Level 3’s obligations under the New Level 3 ~~Financing, Inc.’s existing senior secured credit facility and existing senior secured notes (the “Issuer’s Secured Debt”). Such guarantees~~Credit Agreement are secured by ~~liens~~a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals). In addition, the ~~same collateral that is pledged to secure~~other Level 3 Collateral Guarantors have or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of Level 3’s obligations under the ~~Issuer’s Secured Debt.~~New Level 3 Credit Agreement secured by a lien on substantially all of their assets.

~~Revolving~~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 the RCF/TLA Credit ~~Facility Borrowings~~Agreement. Level 3’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 ~~Repayments~~are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, 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 Facilities. Level 3’s obligations under its second lien notes are secured by a second 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, 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 Facilities, except the lien securing such guarantees is a second lien. The senior notes issued by Qwest Capital Funding, Inc. are guaranteed by its parent, Qwest Communications International Inc.

During the three months ended September 30, 2023 , Lumen borrowed $150 million from, and made repayments of $275 million to, its revolving credit facility, and during the nine months ended September 30, 2023, Lumen borrowed $675 million from, and made repayments of $600 million to, its revolving credit facility.

~~During the third quarter~~Table of 2023, we issued approximately $110 million of letters of credit under our revolving credit facility, which reduced our borrowing capacity available thereunder by the same amount. As of September 30, 2023, these issued letters of credit were undrawn.Contents

Covenants

~~Certain~~Lumen

Under the RCF/TLA Credit Agreement and commencing with the fiscal quarter ended June 30, 2024, Lumen may not permit:

(i) its maximum total net leverage ratio to exceed 5.75 to 1.00 as of ~~our debt instruments~~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 stepping down to 5.25 to 1.00 with respect to each fiscal quarter ending after December 31, 2025; or

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

Lumen’s SP Credit Agreements and superpriority senior secured notes contain various representations and warranties and extensive affirmative and negative covenants. ~~Debt at Lumen Technologies, Inc. and Level 3 Financing, Inc. contains more extensive~~Such covenants ~~including,~~include, among other things and subject to certain significant exceptions, restrictions on our ability to declare or pay dividends, repurchase stock, repay certain other indebtedness, create liens, incur additional indebtedness, make investments, engage in transactions with our affiliates, dispose of assets and merge or consolidate with any other person.

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

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

Level 3

The New Level 3 Credit Agreement and Level 3’s first and second lien secured 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, ~~engage in transactions with affiliates,~~ dispose of assets and merge or consolidate with any other person. Also, ~~Lumen Technologies, Inc. and~~under certain circumstances in connection with a “change of ~~its affiliates~~control” of Level 3 Parent or Level 3, Level 3 will be required to make an offer to ~~purchase certain~~repurchase each series of ~~their respective~~its outstanding ~~debt under defined circumstances in connection with specified "change~~senior notes at a price of ~~control" transactions.~~101% of the principal amount redeemed, plus accrued and unpaid interest.

~~Certain~~Qwest Companies

The senior notes of ~~our debt instruments~~Qwest Corporation were issued under indentures dated April 15, 1990 and October 15, 1999. These indentures contain ~~cross-payment default or cross-acceleration provisions.~~restrictions on the incurrence of liens and the consummation of certain transactions substantially similar to the above-described covenants in the indentures governing Lumen’s senior unsecured notes (but contain no mandatory repurchase provisions). The senior notes of Qwest Capital Funding, Inc. were issued under an indenture dated June 29, 1998 containing terms substantially similar to those set forth in Qwest Corporation's indentures.

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Compliance

As of ~~September 30, 2023,~~March 31, 2024, 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.

Guarantees

~~(7)~~

Lumen does not guarantee the debt of any unaffiliated parties, but, as noted above, as of March 31, 2024, certain of its key subsidiaries guaranteed (i) its debt outstanding under its SP Credit Agreements, its superpriority senior secured notes and its $225 million letter of credit facility and (ii) the outstanding term loans or senior secured notes issued by certain other subsidiaries. As further noted above, several of the subsidiaries guaranteeing these obligations have pledged substantially all of their assets to secure certain of their respective guarantees.

(6) Severance

Periodically, we reduce our workforce and accrue liabilities for the related severance costs. These workforce reductions result primarily ~~from:~~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.

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


	Severance
	(Dollars in millions)
Balance at December 31, ~~2022~~2023	$	1118
Accrued to expense	212
Payments, net	~~(19)~~(18)
Balance at ~~September 30, 2023~~March 31, 2024	$	132

~~On October 31, 2023, the Company~~During April 2024 we announced ~~a plan~~plans to reduce ~~its global~~our workforce by ~~approximately 4%~~less than 7% as a part of ~~its ongoing~~our efforts to ~~reorganize Lumen for growth by right-sizing its operations~~change our workforce composition to ~~improve its profitability. The workforce~~reflect our ongoing transformation and cost reduction opportunities that align with our shapeshifting and focus on our strategic priorities. As a result of this plan, we expect to incur severance and related costs in the range of approximately $90 million to $100 million. This plan is expected to be substantially completed by the end of the ~~fourth~~second quarter of ~~2023. As a result of this plan, the Company expects to incur severance and related costs in the range of approximately $55 to $65 million. The Company does~~2024. We do not expect to incur any material impairment or exit costs related to this plan. ~~The~~These workforce ~~reduction is~~reductions are considered a subsequent event for the purposes of ~~these~~the March 31, 2024 financial statements, and therefore, ~~no accrual for~~we have not accrued any severance ~~and~~or related costs ~~has been recorded~~ as of ~~September 30, 2023.~~March 31, 2024.

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~~(8)~~(7) Employee Benefits

For detailed descriptions of the various defined benefit pension plans (qualified and non-qualified), post-retirement benefits plans and defined contribution plan we sponsor, see Note 11—Employee Benefits to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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Net periodic benefit expense ~~(income)~~ for the Lumen Combined Pension Plan (the "Combined Pension Plan" or the "Plan") includes the following components:

Combined Pension Plan
Three Months Ended September 30, Nine Months Ended September 30,
2023
2022(1)
2023
2022(1)
(Dollars in millions)
Service cost $ 7 11 19 34
Interest cost 67 53 202 155
Expected return on plan assets (72) (100) (215) (302)
Recognition of prior service credit (2) (3) (5) (8)
Recognition of actuarial loss 27 32 78 99
Net periodic pension expense (income) $ 27 (7) 79 (22)

~~______________________________________________________________________~~


	Combined Pension Plan
	Three Months Ended March 31,
	2024		2023
	(Dollars in millions)
Service cost	$	6	6
Interest cost	63		68
Expected return on plan assets	(67)		(71)


Recognition of prior service credit	(2)		(2)
Recognition of actuarial loss	28		25
Net periodic pension expense	$	28	26

~~(1)~~These amounts include pension costs related to the Lumen Pension Plan prior to the sale of the ILEC business on October 3, 2022. For additional information on the Lumen Pension Plan, see Note 11—Employee Benefits to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Net periodic benefit expense for our post-retirement benefit plans includes the following components:


		Post-Retirement Benefit Plans					Post-Retirement Benefit Plans
		Three Months Ended September 30,			Nine Months Ended September 30,		Three Months Ended March 31,
		2023		2022	2023	2022	2024	2023
		(Dollars in millions)					(Dollars in millions)
Service cost	Service cost	$	1	3	4	8
Interest cost	Interest cost	26		15	77	45
Recognition of prior service (credit) cost		(2)		1	(6)	5
Recognition of prior service credit
Recognition of actuarial gain	Recognition of actuarial gain	(5)		—	(15)	—

Net periodic post-retirement benefit expense	Net periodic post-retirement benefit expense	$	20	19	60	58
Net periodic post-retirement benefit expense
Net periodic post-retirement benefit expense

Service costs for our pension plans 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 ~~expense,~~income (expense), net on our consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

Our Combined Pension Plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits. We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump sum payments, only if in the aggregate they exceed or are probable to exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. The amount of any future non-cash settlement charges will be dependent on several factors, including the total amount of our future lump sum benefit payments.

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Benefits paid by the Combined Pension Plan are paid through a trust that holds the Plan's assets. The amount of required contributions to the Combined Pension Plan in ~~2023~~2024 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 additional contributions ~~in 2023~~ and we do not expect to make voluntary contributions to the trust for the Combined Pension Plan in ~~2023.~~2024.

~~(9) (Loss)~~

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(8) Earnings Per Common Share

Basic and diluted ~~(loss)~~ earnings per common share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ were calculated as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
(Dollars in millions, except per share amounts, shares in thousands)
(Loss) Income (numerator)
Net (loss) income $ (78) 578 (8,303) 1,521
Net (loss) income applicable to common stock for computing basic (loss) earnings per common share (78) 578 (8,303) 1,521
Net (loss) income as adjusted for purposes of computing diluted (loss) earnings per common share $ (78) 578 (8,303) 1,521
Shares (denominator):
Weighted-average number of shares:
Outstanding during period 1,008,523 1,034,786 1,006,140 1,031,687
Non-vested restricted stock (24,973) (21,662) (23,287) (20,189)
Weighted average shares outstanding for computing basic (loss) earnings per common share 983,550 1,013,124 982,853 1,011,498
Incremental common shares attributable to dilutive securities:
Shares issuable under convertible securities — 10 — 10
Shares issuable under incentive compensation plans — 3,879 — 4,773
Number of shares as adjusted for purposes of computing diluted (loss) earnings per common share 983,550 1,017,013 982,853 1,016,281
Basic (loss) earnings per common share $ (0.08) 0.57 (8.45) 1.50
Diluted (loss) earnings per common share(1)
$ (0.08) 0.57 (8.45) 1.50

~~______________________________________________________________________~~

~~(1)~~For the three and nine months ended September 30, 2023, we excluded from the calculation of diluted loss per share, less than 1 million shares, potentially issuable under incentive compensations plans or convertible securities, as their effect, if included, would have been anti-dilutive.


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions, except per share amounts, shares in thousands)
Income (numerator)
Net income	$	57	511
Net income applicable to common stock for computing basic earnings per common share	57		511
Net income as adjusted for purposes of computing diluted earnings per common share	$	57	511
Shares (denominator):
Weighted-average number of shares:
Outstanding during period	1,011,350		1,003,666
Non-vested restricted stock	(26,495)		(22,111)
Weighted average shares outstanding for computing basic earnings per common share	984,855		981,555
Incremental common shares attributable to dilutive securities:
Shares issuable under convertible securities	10		10
Shares issuable under incentive compensation plans	1,397		718
Number of shares as adjusted for purposes of computing diluted earnings per common share	986,262		982,283
Basic earnings per common share	$	0.06	0.52
Diluted earnings per common share	$	0.06	0.52

Our calculation of diluted ~~(loss)~~ earnings per common share excludes unvested restricted stock awards that are antidilutive as a result of unrecognized compensation cost. Such shares were ~~24.5~~20.2 million and ~~12.9~~21.2 million for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and 22.2 million and 10.4 million for the nine months ended September 30, 2023 and 2022,~~ respectively.

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~~(10)~~(9) 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. 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.

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 using the below-described fair value hierarchy.

We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on inputs other than quoted market prices in active markets that are either directly or indirectly observable such as discounted future cash flows using current market interest rates.

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The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:


Input Level						Description of Input
Level 1						Observable inputs such as quoted market prices in active markets.
Level 2						Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3						Unobservable inputs in which little or no market data exists.

The following table presents the carrying amounts and estimated fair values of our ~~following~~ financial assets and liabilities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

September 30, 2023 December 31, 2022
Input
Level Carrying
Amount Fair
Value Carrying
Amount Fair
Value
(Dollars in millions)
Equity securities(1)
1 $ — — 22 22
Long-term debt, excluding finance lease and other obligations 2 19,604 14,163 20,255 17,309
Indemnifications related to the sale of the Latin American business(2)
3 86 86 86 86
~~______________________________________________________________________~~


		March 31, 2024			December 31, 2023
	Input Level	Carrying Amount		Fair Value	Carrying Amount	Fair Value
		(Dollars in millions)

Long-term debt, excluding finance lease and other obligations	2	$	18,398	13,950	19,703	13,304
Indemnifications related to the sale of the Latin American business(1)	3	86		86	86	86

(1)For the nine months ended September 30, 2023, we recognized $22 million of loss on equity securities in other expense, net in our consolidated statements of operations, with no change in value recognized for the three months ended September 30, 2023. For both the three and nine months ended September 30, 2022 we recognized $83 million of loss on equity securities in other expense, net in our consolidated statements of operations.

~~(2)~~Nonrecurring fair value is measured as of August 1, 2022.

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Investment Held at Net Asset Value

We hold an investment in a limited partnership created as a holding company for various investments. The limited partnership has sole discretion as to the amount and timing of distributions of the underlying assets. As of ~~September 30, 2023,~~March 31, 2024, the underlying investments held by the limited partnership were traded in active markets and, as such, we account for our investment in the limited partnership using net asset value ("NAV"). Subject to restrictions imposed by law and other provisions of the limited partnership agreement, the general partner has the sole discretion as to the amounts and timing of distributions of partnership assets to partners. The following table summarizes the net asset value of our investment in this limited partnership.

As of September 30, 2023 As of December 31, 2022
Net Asset Value
(Dollars in millions)
Investment in limited partnership(1)
$ 11 85


	As of March 31, 2024		As of December 31, 2023
	Net Asset Value
	(Dollars in millions)
Investment in limited partnership(1)	$	30	10

(1)For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we recognized ~~a $15~~$20 million ~~and $74 million loss~~of gain on investment, ~~respectively,~~ reflected in other ~~expense,~~income (expense), net in our consolidated statements of operations. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we recognized ~~$43~~$61 million ~~and $114 million, respectively,~~ of loss on investment, reflected in other ~~expense,~~income (expense), net in our consolidated statements of operations.

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~~(11)~~(10) Segment Information

We report our results within two segments: Business and Mass Markets.

Under our Business segment we provide products and services to meet the needs of our enterprise and wholesale customers under ~~four~~five distinct sales channels: Large Enterprise, Mid-Market Enterprise, Public Sector, Wholesale and ~~Wholesale.~~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 and ILEC businesses~~EMEA business prior to ~~their sales~~its sale on ~~August~~November 1, ~~2022 and October 3, 2022, respectively.~~2023.

Under our Mass Markets Segment, we provide products and services to residential and small business customers. We report the following product categories: 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—3—Revenue Recognition.

As described in more detail below, our segments are managed based on the direct costs of providing services to their customers and directly associated selling, general and administrative costs (primarily salaries and commissions). Shared costs are managed separately and included in "other unallocated expense" in the table included below ~~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 for additional detail on these changes.

The following tables summarize our segment results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ based on the segment categorization we were operating under at ~~September 30, 2023.~~March 31, 2024.

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Business

Mass Markets

Business

Mass Markets

(Dollars in millions)

Three Months Ended March 31, 2024

Business

(Dollars in millions)

Segment revenue

2,894

747

8,747

2,293

Segment expenses:

Cost of services and products

796

2,343

Selling, general and administrative

324

356

916

1,010

Selling, general and administrative

Total segment expense

1,120

378

3,259

1,081

Total segment adjusted EBITDA

1,774

369

5,488

1,212

Total segment adjusted EBITDA

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Business

Mass Markets

Business

Mass Markets

(Dollars in millions)

Three Months Ended March 31, 2023

Business

(Dollars in millions)

Segment revenue

3,218

1,172

10,036

3,642

Segment expenses:

Cost of services and products

792

2,449

Selling, general and administrative

293

470

928

1,283

Selling, general and administrative

Total segment expense

1,085

495

3,377

1,373

Total segment adjusted EBITDA

2,133

677

6,659

2,269

Total segment adjusted EBITDA

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Revenue and Expenses

Our segment revenue includes all revenue from our two segments as described in more detail above. Our segment revenue is based upon each customer's classification. We report our segment revenue based upon all services provided to that segment's customers. Our segment expenses include specific cost of service expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities. We have not allocated assets or debt to specific segments.

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The following items are excluded from our segment results, because they are centrally managed and not monitored by or reported to our chief operating decision maker by segment:

•network expenses not incurred as a direct result of providing services and products to segment customers and centrally managed expenses such as Finance, Human Resources, Legal, Marketing, Product Management and IT, all of which are reported as "other unallocated expense" in the table below;

•depreciation and amortization expense;

•goodwill or other impairments;

•~~stock-based compensation;~~interest expense;

•~~interest expense,~~stock-based compensation; and

•other income and expense items.

The following table reconciles total ~~segment~~ adjusted EBITDA to net ~~(loss)~~ income for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
(Dollars in millions)
Total segment adjusted EBITDA $ 2,143 2,810 6,700 8,928
Depreciation and amortization (755) (808) (2,234) (2,443)
Goodwill impairment — — (8,793) —
Other unallocated expense (1,149) (595) (3,442) (3,035)
Stock-based compensation (16) (23) (39) (71)
Operating income (loss) 223 1,384 (7,808) 3,379
Total other expense, net (308) (447) (287) (1,188)
(Loss) income before income taxes (85) 937 (8,095) 2,191
Income tax (benefit) expense (7) 359 208 670
Net (loss) income $ (78) 578 (8,303) 1,521


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions)
Total segment adjusted EBITDA	$	1,731	2,009
Depreciation and amortization	(748)		(733)
Other unallocated expense	(924)		(872)
Stock-based compensation	(14)		(14)
Operating income	45		390
Total other income, net	57		290
Income before income taxes	102		680
Income tax expense	45		169
Net Income	$	57	$	511

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~~(12)~~(11) Commitments, Contingencies and Other Items

We are subject to various claims, legal proceedings and other contingent liabilities, including the matters described below, which individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. As a matter of course, we are prepared to both litigate these matters to judgment as needed, as well as to evaluate and consider reasonable settlement opportunities.

We review our litigation accrual liabilities on a quarterly basis, but in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable and reasonably estimable and only revise previously established accrual liabilities when warranted by changes in circumstances, in each case based on then-available information. As such, as of any given date we could have exposure to losses under proceedings as to which no liability has been accrued or as to which the accrued liability is inadequate. Subject to these limitations, at ~~September 30, 2023,~~March 31, 2024, we had accrued ~~$85~~$81 million in the aggregate for our litigation and non-income tax contingencies, which is included in other current liabilities or other liabilities ~~or liabilities held for sale on~~in our consolidated balance sheet as of such date. We cannot at this time estimate the reasonably possible loss or range of loss in excess of this ~~$85~~$81 million accrual due to the inherent uncertainties and speculative nature of contested proceedings. The establishment of an accrual does not mean that actual funds have been set aside to satisfy a given contingency. Thus, the resolution of a particular contingency for the amount accrued could have no effect on our results of operations but nonetheless could have an adverse effect on our cash flows.

In this Note, when we refer to a class action as "putative" it is because a class has been alleged, but not certified, in that matter.

Principal Proceedings

Shareholder Class Action Suits

Houser.Lumen and certain Lumen Board of Directors members and officers were named as defendants in a putative shareholder class action lawsuit filed on June 12, 2018 in the Boulder County District Court of the state of Colorado, captioned Houser et al. v. CenturyLink, et al. The complaint asserted claims on behalf of a putative class of former Level 3 shareholders who became CenturyLink, Inc. shareholders as a result of our acquisition of Level 3. It alleged that the proxy statement provided to the Level 3 shareholders failed to disclose various material information of several kinds, including information about strategic revenue, customer loss rates, and customer account issues, among other items. The complaint seeks damages, costs and fees, rescission, rescissory damages, and other equitable relief. In May 2020, the court dismissed the complaint. Plaintiffs appealed that decision, and in March 2022, the appellate court affirmed the district court's order in part and reversed it in part. It then remanded the case to the district court for further proceedings. Plaintiff filed an amended complaint, and we filed a motion to dismiss. The court granted our motion to dismiss and the plaintiffs have appealed that dismissal.

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. v. Lumen Technologies, ~~Inc.,~~ et al., now 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~~alleged that Lumen and certain of its current or former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s expansion of its Quantum Fiber business. The court appointed a lead plaintiff who filed an amended complaint, ~~seeks~~seeking money damages, attorneys’ fees and costs, and other relief.

In re Lumen Technologies, Inc. Securities Litigation II.On September 15, 2023, a purported shareholder of Lumen filed a putative class action complaint captioned ~~McLemore~~Glauber, et al. v. Lumen Technologies, now In re Lumen Technologies, Inc.~~, et al.,~~ Securities Litigation II, Case 3:23-cv-01290, in the U.S. District Court for the Western District of Louisiana. The complaint ~~alleges~~alleged that Lumen and certain of its current or former officers violated the federal securities laws by omitting or misstating material information related to Lumen’s responsibility for environmental degradation allegedly caused by the lead sheathing of certain telecommunications cables. The court appointed lead plaintiffs who filed an amended complaint, ~~seeks~~seeking money damages, attorneys’ fees and costs, and other relief.

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State Tax Suits

Since 2012, a number of Missouri municipalities have asserted claims in the Circuit Court of St. Louis County, Missouri, alleging that we and several of our subsidiaries have underpaid taxes. These municipalities are seeking, among other things, declaratory relief regarding the application of business license and gross receipts taxes and back taxes from 2007 to the present, plus penalties and interest. In a February 2017 ruling in connection with one of these pending cases, the court entered an order awarding the plaintiffs $4 million and broadening the tax base on a going-forward basis. We appealed that decision to the Missouri Supreme Court. In December 2019, it affirmed the circuit court's order in some respects and reversed it in others, remanding the case to the circuit court for further proceedings. The Missouri Supreme Court's decision reduced our exposure in the case. In a June 2021 ruling in one of the pending cases, another trial court awarded the cities of Columbia and Joplin approximately $55 million, plus statutory interest. On appeal, the Missouri Court of Appeals affirmed in part and reversed in part, vacated the judgment and remanded the case to the trial court with instructions for further proceedings consistent with the Missouri Supreme Court's decision. We continue to vigorously defend against these claims.

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.

The consumer class actions, the securities investor class actions, and the federal derivative actions were transferred to the U.S. District Court for the District of Minnesota for coordinated and consolidated pretrial proceedings as In Re: CenturyLink Sales Practices and Securities Litigation. We have settled the consumer and securities investor class ~~actions. Those settlements are final. The~~actions and the derivative ~~actions remain pending.~~actions.

We have engaged in discussions regarding related claims with a number of state attorneys general, and have entered into agreements settling certain of the consumer practices claims asserted by state attorneys general. While we do not agree with allegations raised in these matters, we have been willing to consider reasonable settlements where appropriate.

December 2018 Outage Proceedings

We experienced an outage on one of our transport networks that impacted voice, IP, 911, and transport services for some of our customers between the 27th and 29th of December 2018. We believe that the outage was caused by a faulty network management card from a third-party equipment vendor.

The FCC and four states (both Washington Utilities and Transportation Commission ("WUTC") and the Washington Attorney General; the Montana Public Service Commission; the Nebraska Public Service Commission; and the Wyoming Public Service Commission)(including Washington) initiated formal investigations. In November 2020, following the FCC's release of a public report on the outage, we negotiated a settlement which was released by the FCC in December 2020. The amount of the settlement was not material to our financial statements.

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In December 2020, the Staff of the ~~WUTC~~Washington Utilities and Transportation Commission ("WUTC") filed a complaint against us based on the December 2018 outage, seeking penalties of approximately $7 million for alleged violations of Washington regulations and laws. The Washington Attorney General's office sought penalties of $27 million. Following trial before the WUTC, it issued an order in June 2023 penalizing us for approximately $1 million. We and the Washington Attorney General's office have both filed for reconsideration. Those motions are pending.

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Latin American Tax Litigation and Claims

In connection with the 2022 divestiture of our Latin American business, the purchaser assumed responsibility for the ~~Peruvian tax litigation and~~ Brazilian tax claims described in our prior periodic reports filed with the SEC. We agreed to indemnify the purchaser for amounts paid in respect of the Brazilian tax claims. The value of this indemnification isand others associated with the Latin American business divestiture are included in the indemnification amount as disclosed in Note ~~10—~~9—Fair Value of Financial Instruments.

Huawei Network Deployment Investigations

Lumen has received requests from the following federal agencies for information relating to the use of equipment manufactured by Huawei Technologies Company ("Huawei") in Lumen’s networks.

•DOJ. Lumen has received a civil investigative demand from the U.S. Department of Justice in the course of a False Claims Act investigation alleging that Lumen Technologies, Inc. and Lumen Technologies Government Solutions, Inc. failed to comply with certain specified requirements in federal contracts concerning their use of Huawei equipment. 

•FCC. The FCC’s Enforcement Bureau issued a Letter of Inquiry to Lumen Technologies, Inc. regarding its written certifications to the FCC that Lumen has complied with FCC rules governing the use of resources derived from the High Cost Program, Lifeline Program, Rural Health Care Program, E-Rate Program, Emergency Broadband Benefit Program, and the Affordable Connectivity Program. Under these programs, federal funds may not be used to facilitate the deployment or maintenance of equipment or services provided by Huawei, a company that the FCC has determined poses a national security threat to the integrity of U.S. communications networks or the communications supply chain.

•Team Telecom. The Committee for the Assessment of Foreign Participation in the United States Telecommunications Service Sector (comprised of the U.S. Attorney General, and the Secretaries of the Department of Homeland Security, and the Department of Defense), commonly referred to as Team Telecom, issued questions and requests for information relating to Lumen’s FCC licenses and its use of Huawei equipment.

We are cooperating with the investigations.

Marshall Fire Litigation

On December 30, 2021, a wildfire referred to as the Marshall Fire ignited near Boulder, Colorado. 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 No. 2023-cv-3048, and Wallace, et al. v. Qwest Corp., et al., Case No. 2023-cv-30488, both of which have been consolidated with Kupfner, et al., v. Public Service Company of Colorado, et al., Case No. 2022-cv-30195. The consolidated proceeding is pending in Colorado District Court, Boulder, Colorado, Preliminary estimates of potential damage claims exceed $2 billion. Qwest is vigorously defending the claims.

911 Surcharge

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 has narrowed the issues to be resolved by jury, ruling that Lumen bears the burden of proving that its actions were reasonable or known and approved by the State. Qwest is defending the New Mexico claims vigorously, as it has done successfully with other 911 claims involving PRS in other states.

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Other Proceedings, Disputes and Contingencies

From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, regulatory hearings relating primarily to our rates or services, actions relating to employee claims, ~~various~~ tax issues, or environmental law issues, grievance hearings before labor regulatory agencies, ~~and~~ miscellaneous third-party tort actions, or commercial disputes.

We are currently defending several patent infringement lawsuits asserted against us by non-practicing entities, many of which are seeking substantial recoveries. These cases have progressed to various stages and one or more may go to trial within the next twelve months if they are not otherwise resolved. Where applicable, we are seeking full or partial indemnification from our vendors and suppliers. As with all litigation, we are vigorously defending these actions and, as a matter of course, are prepared to litigate these matters to judgment, as well as to evaluate and consider all reasonable settlement opportunities.

We are subject to various foreign, federal, state and local environmental protection and health and safety laws. From time to time, we are subject to judicial and administrative proceedings brought by various governmental authorities under these laws. Several such proceedings are currently pending, but none is reasonably expected to exceed $300,000 in fines and penalties. In addition, in the past we acquired companies that had installed lead-sheathed cables several decades earlier, or had operated certain manufacturing companies in the first part of the 1900s. Under applicable environmental laws, we could be named as a potentially responsible party for a share of the remediation of environmental conditions arising from the historical operations of our predecessors.

The outcome of these other proceedings described under this heading is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on us.

The matters listed in this Note do not reflect all of our contingencies. For additional information on our contingencies, see Note 18—Commitments, Contingencies and Other Items to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. The ultimate outcome of the above-described matters may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing above in this Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us.

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~~(13)~~(12) Other Financial Information

Other Current Assets

The following table presents details of other current assets reflected on our consolidated balance sheets:

September 30, 2023 December 31, 2022
(Dollars in millions)
Prepaid expenses $ 392 319
Income tax receivable 122 —
Materials, supplies and inventory 227 236
Contract assets 20 20
Contract acquisition costs 107 123
Contract fulfillment costs 99 100
Other 15 5
Total other current assets(1)
$ 982 803

~~(1)Excludes $55 million and $59 million of other current assets related to the EMEA business that were classified as held for sale as of September 30, 2023 and December 31, 2022, respectively.~~


	March 31, 2024		December 31, 2023
	(Dollars in millions)
Prepaid expenses	$	481	395
Income tax receivable	11		273
Materials, supplies and inventory	193		209
Contract assets	18		19
Contract acquisition costs	106		107
Contract fulfillment costs	102		102
Assets held for sale	104		104
Other	18		14
Total other current assets	$	1,033	1,223

~~(14)~~

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(13) Repurchases of Lumen Common Stock

During the fourth quarter of 2022, our Board of Directors authorized a two-year program to repurchase up to an aggregate of $1.5 billion of our outstanding common stock. During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, we did not repurchase any shares of our outstanding common stock under this program. As of ~~September 30, 2023,~~March 31, 2024, we are authorized to purchase up to an aggregate of $1.3 billion of our outstanding common stock under this program.

Any repurchases made in ~~2023~~2024 or thereafter will be subject to a non-deductible 1% excise tax on the fair market value of the stock under the Inflation Reduction Act of 2022.

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~~(15)~~(14) Accumulated Other Comprehensive Loss

Information Relating to ~~2023~~2024

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheet by component for the ~~nine~~three months ended ~~September 30, 2023:~~March 31, 2024:

Pension Plans Post-Retirement Benefit Plans Foreign Currency Translation Adjustment and Other Total
(Dollars in millions)
Balance at December 31, 2022 $ (985) 308 (422) (1,099)
Other comprehensive income before reclassifications — — 3 3
Amounts reclassified from accumulated other comprehensive loss 55 (16) — 39
Net current-period other comprehensive income (loss) 55 (16) 3 42
Balance at September 30, 2023 $ (930) 292 (419) (1,057)


	Pension Plans		Post-Retirement Benefit Plans	Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2023	$	(1,045)	276	(41)	(810)
Other comprehensive income (loss) before reclassifications	—		—	(4)	(4)
Amounts reclassified from accumulated other comprehensive loss	20		(5)	—	15
Net current-period other comprehensive income (loss)	20		(5)	(4)	11
Balance at March 31, 2024	$	(1,025)	271	(45)	(799)

The ~~tables~~table below ~~present~~presents further information about our reclassifications out of accumulated other comprehensive loss by component for the three ~~and nine~~ months ended ~~September 30, 2023:~~March 31, 2024:

Three Months Ended ~~September 30, 2023~~March 31, 2024

Decrease (Increase)
in Net Income

Affected Line Item in Consolidated Statement of Operations

(Dollars in millions)

Amortization of pension & post-retirement plans(1)

Net actuarial loss

2224

Other ~~expense,~~income (expense), net

Prior service credit

(4)

Other ~~expense,~~income (expense), net

Total before tax

1820

~~Income tax benefit~~

~~(5)~~

~~Income tax (benefit) expense~~

~~Net of tax~~

~~Nine Months Ended September 30, 2023~~

Decrease (Increase)
in Net Income

~~Affected Line Item in Consolidated Statement of Operations~~

~~(Dollars in millions)~~

~~Amortization of pension & post-retirement plans(1)~~

~~Net actuarial loss~~

~~Other expense, net~~

~~Prior service credit~~

~~(11)~~

~~Other expense, net~~

~~Total before tax~~

Income tax benefit

~~(13)~~(5)

Income tax ~~(benefit)~~ expense

Net of tax

3915

(1)See Note 8—7—Employee Benefits for additional information on our net periodic benefit expense (income) related to our pension and post-retirement plans.

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Information Relating to ~~2022~~2023

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023:

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Pension Plans Post-Retirement Benefit Plans Foreign Currency Translation Adjustment and Other Interest Rate Swap Total
(Dollars in millions)
Balance at December 31, 2021 $ (1,577) (164) (400) (17) (2,158)
Other comprehensive loss before reclassifications — — (245) — (245)
Amounts reclassified from accumulated other comprehensive loss 68 4 112 17 201
Net current-period other comprehensive income (loss) 68 4 (133) 17 (44)
Balance at September 30, 2022 $ (1,509) (160) (533) — (2,202)


	Pension Plans		Post-Retirement Benefit Plans	Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2022	$	(985)	308	(422)	(1,099)
Other comprehensive income (loss) before reclassifications	—		—	18	18
Amounts reclassified from accumulated other comprehensive loss	17		(5)	—	12
Net current-period other comprehensive income (loss)	17		(5)	18	30
Balance at March 31, 2023	$	(968)	303	(404)	(1,069)

Three Months Ended ~~September 30, 2022~~March 31, 2023

Decrease (Increase)
in Net Income

Affected Line Item in Consolidated Statement of Operations

(Dollars in millions)

~~Interest rate swaps~~

—

~~Interest expense~~

~~Income tax benefit~~

—

~~Income tax (benefit) expense~~

~~Net of tax~~

—

Amortization of pension & post-retirement plans(1)

~~Net actuarial loss~~

~~Other expense, net~~

~~Prior service cost~~

~~(2)~~

~~Other expense, net~~

~~Total before tax~~

~~Income tax benefit~~

~~(7)~~

~~Income tax (benefit) expense~~

~~Net of tax~~

~~Reclassification of realized loss on foreign currency translation to gain on sale of business~~

~~112~~

~~Gain on sale of business~~

~~Income tax benefit~~

—

~~Income tax (benefit) expense~~

~~Net of tax~~

~~112~~

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~~Nine Months Ended September 30, 2022~~

Decrease (Increase)
in Net Income

~~Affected Line Item in Consolidated Statement of Operations~~

~~(Dollars in millions)~~

~~Interest rate swaps~~

~~Interest expense~~

~~Income tax benefit~~

~~(5)~~

~~Income tax (benefit) expense~~

~~Net of tax~~

~~Amortization of pension & post-retirement plans(1)~~

Net actuarial loss

9920

Other ~~expense,~~income (expense), net

Prior service cost

~~(3)~~(4)

Other ~~expense,~~income (expense), net

Total before tax

9616

Income tax benefit

~~(24)~~(4)

Income tax ~~(benefit)~~ expense

Net of tax

7212

~~Reclassification of realized loss on foreign currency translation to gain on sale of business~~

~~112~~

~~Gain on sale of business~~

~~Income tax benefit~~

—

~~Income tax (benefit) expense~~

~~Net of tax~~

~~112~~

(1)See Note 8—7—Employee Benefits for additional information on our net periodic benefit income related to our pension and post-retirement plans.

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~~(16)~~(15) Labor Union Contracts

As of ~~September 30, 2023,~~March 31, 2024, approximately ~~19%~~21% of our employees were represented by the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW"). Approximately 2%5% of our represented employees are subject to collective bargaining agreements that are scheduled to expire over the 12 month period ending ~~September 30, 2024.~~March 31, 2025.

~~(17) Subsequent Events~~

~~Sale of Select Content Delivery Network ("CDN") Customer Contracts~~

On October 10, 2023, we announced the sale of substantially all of our CDN service contracts. We will provide certain transition services to the purchaser for 90 days, following which we plan to wind down the remaining portion of our remaining CDN contracts in 2024.

~~Debt Transaction Support Agreement~~

On October 31, 2023, Lumen announced that it has entered into a transaction support agreement with a group of creditors representing over $7 billion of the outstanding indebtedness of the Company and its subsidiaries to, among other things, extend maturities of the debt instruments of the Company and Level 3 Financing, Inc. In addition, the creditors have committed to provide $1.2 billion of financing to the Company through new long-term debt. The consummation of the transactions contemplated by the transaction support agreement is subject to the satisfaction of various closing conditions.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context requires otherwise, (i) references in this report to "Lumen Technologies" or "Lumen," "we," "us" and "our" refer to Lumen Technologies, Inc. and its consolidated subsidiaries and (ii) references in this report to "Level 3" refer to Level 3 Parent, LLC and its predecessor, Level 3 Communications, Inc., which we acquired on November 1, 2017.

All references to "Notes" in this Item 2 of Part I refer to the Notes to Consolidated Financial Statements included in Item 1 of Part I of this report.

Certain statements in this report constitute forward-looking statements. See "Special Note Regarding Forward-Looking Statements" appearing at the beginning of this report for factors relating to these statements and "Risk Factors" referenced in Item 1A of Part II of this report or other of our filings with the SEC for a discussion of certain risk factors applicable to our business, financial condition, results of operations, liquidity or prospects.

Overview

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") included herein should be read in conjunction with MD&A and the other information included in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 and with the consolidated financial statements and related notes in Item 1 of Part I of this report. The results of operations and cash flows for the first ~~nine~~three months of the year are not necessarily indicative of the results of operations and cash flows that might be expected for the entire year.

We are ~~an international~~a facilities-based technology and communications company ~~focused on providing our business and mass markets customers with~~that provides a broad array of integrated products and services ~~necessary~~ to ~~fully participate in~~ our ~~ever-evolving digital world.~~domestic and global business customers and our domestic mass markets customers. We operate one of the world's most interconnected networks. Our platform empowers our customers to swiftly adjust digital programs ~~securely~~ to meet immediate demands, create efficiencies, accelerate market access, and reduce costs, ~~- allowing~~which allows our customers to rapidly evolve their IT programs to address dynamic changes. We are among the largest providers of communications services to domestic and global enterprise customers. Our ~~terrestrial and subsea fiber optic~~ long-haul network throughout North America ~~Europe,~~ and Asia Pacific connects to metropolitan fiber networks that we operate. ~~We provide services in over 60 countries, with most of our revenue being derived in the United States.~~ As of ~~September 30, 2023,~~March 31, 2024, we had approximately ~~30,000~~27,000 employees.

On August 1, 2022, affiliates of Level 3 sold our Latin American business and on October 3, 2022, we and certain of our affiliates sold the portion of our facilities-based ILEC business primarily conducted within 20 Midwestern and Southeastern states. For additional information regarding these divestitures, including the amount of net proceeds we derived therefrom, see Note 2—Divestitures of the Latin American and ILEC Businesses and Planned Divestiture of the EMEA Business~~to the audited financial statements included within our Annual Report on Form 10-K for the year ended December 31, 2022.~~

~~Pending Divestiture of our European, Middle Eastern and African Business~~

Under agreements entered into on November 2, 2022 and February 8, 2023, affiliates of Level 3 Parent, LLC, have agreed to divest certain operations in EMEA to Colt Technology Services Group Limited, a portfolio company of Fidelity Investments, in exchange for $1.8 billion in cash, subject to certain post-closing adjustments. Subject to the satisfaction of customary closing conditions, Level 3 Parent LLC expects to close the transaction November 1, 2023, although it can provide no assurances to this effect. The actual amount of our net after-tax proceeds from this divestiture could vary substantially from the amounts we currently estimate, particularly if we experience delays in completing the transaction or any of our other assumptions prove to be incorrect.

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Changes in the Macroeconomic, Industry and Work Environments

~~Societal,~~Over the past few years, societal, governmental and macroeconomic changes have impacted us, our customers and our business in several ~~ways since the onset of the COVID-19 pandemic in the U.S. in March 2020. Beginning in the second half of 2020~~ways. On a regular basis, we review and ~~continuing into 2023, we rationalized~~rationalize our ~~leased~~lease footprint and ~~ceased using 42 leased property locations that were underutilized. These lease cancellations resulted in~~may incur accelerated lease costs ~~including $8 million of such~~when we determine to cease using underutilized leased property locations. We did not incur material accelerated lease costs ~~recognized~~ during the ~~nine~~three months ended September 30, 2023, but will lower our future operating costs. During the second quarter of 2023, we also donated our Monroe, Louisiana campus and leased back a portion thereof. This donation resulted in a loss recognized during the second quarter, as discussed further below. In conjunction with our plans to continue to reduce costs, we expect to continue our real estate rationalization efforts and expect to incur additional accelerated real estate costs in future periods.March 31, 2024.

Additionally, as discussed further elsewhere herein, ~~the pandemic and~~ macroeconomic changes ~~arising therefrom~~over the past few years have resulted in (i) increases in certain revenue streams and decreases in others, (ii) operational challenges resulting from inflation and, to a lesser extent, shortages of certain components and other supplies that we use in our business, (iii) delays in our cost transformation initiatives and (iv) delayed decision-making by certain of our customers. None of these effects, individually or in the aggregate, have to date materially impacted our financial performance or financial position.

Industry developments over the past couple years have increased fiber construction demand. The resulting increase in construction labor rates ~~has widened~~increased the ~~range~~cost of ~~enablement costs~~enabling units to be capable of receiving our fiber ~~buildout projects. Over the past couple~~broadband services. In recent years, we believe these factors ~~among others,~~ contributed to a delay in attaining our Quantum Fiber buildout targets.

~~If any of the above-listed factors intensify,~~Continued inflationary pressures, supply constraints or business uncertainty could materially impact our financial results ~~could be materially impacted~~ in a variety of ways, including by increasing our expenses, decreasing our revenues, further delaying our network expansion plans or otherwise interfering with our ability to deliver products and services. ~~For additional information on~~

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These above-mentioned macroeconomic factors, coupled with dis-synergies resulting from our 2022 and 2023 divestitures, changes in customer preferences and negotiations with our creditors through the ~~impacts~~end of the ~~pandemic~~first quarter of 2024, placed additional pressures on our financial performance and our market capitalization. These developments contributed to us recognizing a total of nearly $14.0 billion in goodwill impairment charges in 2022 and 2023. Some, but not all, of these pressures continue to impact us. To the ~~macroeconomic~~extent these pressures continue, we could experience additional deterioration in our projected cash flows or market capitalization, or make significant changes ~~arising therefrom, see (i)~~to the ~~remainder~~assumed discount rates or market multiples that we use to determine the fair value of ~~this item, including "—Liquidity and Capital Resources—Overview~~our reporting units. Any of ~~Sources and Uses~~these could result in additional impairments on our approximately $2.0 billion of ~~Cash" and (ii) Item 1A of Part II of this report.~~remaining goodwill in the future periods.

Reporting Segments

Our reporting segments are currently organized ~~as follows,~~ by customer ~~focus:~~focus, as follows:

•Business Segment: Under our Business segment, we provide our products and services under four sales channels:

◦Large Enterprise: Under our large enterprise sales channel, we provide our products and services to large ~~enterprises, including multinational and global~~ enterprise customers and ~~carriers.~~carriers in North America.

◦Mid-Market Enterprise: Under our mid-market enterprise sales channel, we provide our products and services to medium-sized enterprises in North America directly and through our indirect channel partners.

◦Public Sector: Under our public sector sales channel, we provide our products and services to the public sector, including the U.S. Federal government, state and local governments and research and education institutions.

◦Wholesale: Under our wholesale sales channel, we provide our products and services to a wide range of other communication companies providing wireline, wireless, cable, voice and data center services.

◦International and Other: Under our international and other sales channel, we provide products and services (i) to multinational and global enterprise customers and carriers and (ii) under those content delivery network ("CDN") contracts that we did not sell in late 2023.

•Mass Markets Segment: Under our Mass Markets segment, we provide products and services to domestic residential and small business customers. At ~~September 30, 2023,~~March 31, 2024, we served ~~2.8~~2.7 million broadband subscribers under our Mass Markets segment.

See Note ~~11—~~10—Segment Information to our consolidated financial statements in Item 1 of Part I of this report for additional information.

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

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

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

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

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

•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; and

Trends Impacting Our Operations

In addition to the above-described impact of ~~the pandemic and its aftermath,~~macroeconomic pressures, our consolidated operations have been, and will continue to be, impacted by the following company-wide trends:

•Customers’ demand for automated products and services and competitive pressures will require that we continue to invest in new technologies and automated processes to improve the customer experience and reduce our operating expenses.

•The increased use of digital applications, online video, gaming and artificial intelligence has substantially increased demand for robust, scalable network services. We are continuing to enhance our product capabilities and simplify our product portfolio based on demand and profitability to enable customers to have access to greater bandwidth.

•Businesses continue to adopt distributed, global operating models. We are expanding and enhancing our fiber network, connecting more buildings to our network to generate revenue opportunities and reducing our reliance upon other carriers.

•Changes in customer preferences and in the regulatory, technological and competitive environment are (i) significantly reducing demand for our more mature service offerings, commoditizing certain of our other offerings, or resulting in volume or rate reductions for other of our offerings and (ii) also creating certain opportunities for us arising out of increased demand for lower latency provided by Edge computing and for faster and more secure data transmissions.

•The operating margins of several of our newer, more technologically advanced services, some of which may connect to customers through other carriers, are lower than the operating margins on our traditional, on-net wireline services.

•Uncertainties regarding our financial performance, leverage and debt covenant compliance have caused, and may continue to cause, certain of our customers and other third parties to reduce or cease transacting business with us.

•Our expenses will be impacted by higher vendor costs, reduced economies of scale and other dis-synergies due to our completed 2022 and 2023 divestitures and any future divestitures.

•Declines in our traditional wireline services and other more mature offerings have necessitated right-sizing our cost structures to remain competitive.

•We have historically generated revenue by entering into transactions that utilize excess conduit, fiber or other assets, on our network to create custom networks for our customers. We expect the demand for and size of these transactions to grow. We routinely assess revenue-generating opportunities with respect to these assets through right-of-use agreements, leases or other agreements. We may or may not consummate such transactions from time to time, and the revenue from and obligations associated with any such opportunities may be significant, either individually or in the aggregate. The completion of any future transactions may be subject to customary conditions, and may not be executed in a timely manner, or at all.

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Inflation has placed downward pressure on our margins and macroeconomic uncertainties have likely contributed to delayed decision-making by certain of our customers, which are trends that will likely continue to impact us as long as elevated inflation ~~rates remain elevated.~~and macroeconomic uncertainties persist. These and other developments and trends impacting our operations are discussed elsewhere in this Item 2.

Results of Operations

In this section, we discuss our overall results of operations and highlight special items that are not included in our segment results. In "Segment Results" we review the performance of our two reporting segments in more detail. Results in this section include the results of our ~~Latin American and ILEC businesses~~EMEA business prior to ~~their~~its sale on ~~August~~November 1, ~~2022 and October 3, 2022, respectively.~~2023.

The following table summarizes the results of our consolidated operations for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~March 31, 2023:

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
(Dollars in millions, except per share amounts)
Operating revenue $ 3,641 4,390 11,040 13,678
Operating expenses 3,418 3,006 18,848 10,299
Operating income (loss) 223 1,384 (7,808) 3,379
Total other expense, net (308) (447) (287) (1,188)
(Loss) income before income taxes (85) 937 (8,095) 2,191
Income tax (benefit) expense (7) 359 208 670
Net (loss) income $ (78) 578 (8,303) 1,521
Basic (loss) earnings per common share $ (0.08) 0.57 (8.45) 1.50
Diluted (loss) earnings per common share $ (0.08) 0.57 (8.45) 1.50


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions, except per share amounts)
Operating revenue	$	3,290	3,738
Operating expenses	3,245		3,348
Operating income	45		390
Total other income (expense), net	57		290
Income before income taxes	102		680
Income tax expense	45		169
Net income	$	57	511
Basic earnings per common share	$	0.06	0.52
Diluted earnings per common share	$	0.06	0.52

We have experienced ~~a prolonged period of~~ revenue declines, excluding the impact of acquisitions, primarily due to declines in voice and private line customers, switched access rates and minutes of use. More recently, we have experienced declines in revenue derived from the sale of certain of our other products and services. To partially mitigate these revenue declines, we ~~are increasing our focus~~remain focused on efforts to, among other things:

•promote long-term relationships with our customers through bundling of integrated services;

•increase the size, capacity, speed and usage of our networks;

•allocate capital to our most promising products and services;

•increase revenue from providing our Grow products and services to Business customers and our Quantum Fiber services to Mass Markets customers;

•pursue acquisitions of additional assets or divestitures of non-strategic assets, in each case if available at attractive prices;

•increase prices on our products and services and rationalize products across our portfolio if and when practicable; and

•market our products and services to new customers, and transition existing customers from our legacy products to our newer offerings.

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Revenue

The following ~~tables summarize~~table summarizes our consolidated operating revenue recorded under each of our two segments and in our ~~four~~five above-described revenue sales channels within the Business ~~segment described above:~~segment:

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Business Segment:
Large Enterprise $ 1,182 1,286 (8) %
Mid-Market Enterprise 498 555 (10) %
Public Sector 444 457 (3) %
Wholesale 770 920 (16) %
Business segment revenue 2,894 3,218 (10) %
Mass Markets segment revenue 747 1,172 (36) %
Total consolidated operating revenue $ 3,641 4,390 (17) %


		Nine Months Ended September 30,			% Change
		2023		2022
		(Dollars in millions)
	Three Months Ended March 31,															Three Months Ended March 31,						% Change
	2024
		(Dollars in millions)
		(Dollars in millions)
		(Dollars in millions)
Business Segment:	Business Segment:
Business Segment:
Business Segment:
Large Enterprise
Large Enterprise
Large Enterprise	Large Enterprise	$	3,555	4,160	(15)	%	$	858			911		911				(6)		(6)	%
Mid-Market Enterprise	Mid-Market Enterprise	1,520		1,690	(10)	%	Mid-Market Enterprise		486			523			523			(7)		(7)	%
Public Sector	Public Sector	1,288		1,430	(10)	%	Public Sector		420			432			432			(3)		(3)	%
Wholesale	Wholesale	2,384		2,756	(13)	%	Wholesale		730			823			823			(11)		(11)	%
Business segment revenue		8,747		10,036	(13)	%
Mass Markets segment revenue		2,293		3,642	(37)	%
International and Other							International and Other		97					279					(65)	%
Business Segment Revenue							Business Segment Revenue		2,591					2,968					(13)	%
Mass Markets Segment Revenue							Mass Markets Segment Revenue		699					770					(9)	%
Total consolidated operating revenue	Total consolidated operating revenue	$	11,040	13,678	(19)	%	Total consolidated operating revenue		$	3,290		3,738			3,738			(12)		(12)	%

Our consolidated operating revenue decreased by ~~$749~~$448 million ~~and $2.6 billion~~ for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 as compared to the three ~~and nine~~ months ended ~~September 30, 2022, $571~~March 31, 2023, $168 million ~~and $2.0 billion~~ of which ~~is attributable~~was due to the sale of ~~our Latin American~~the EMEA business and ~~ILEC businesses~~select CDN contracts in the ~~second half of 2022. An additional $59 million is attributable to the release during the first~~fourth quarter of ~~2022 of previously deferred revenue related to the CAF II program, which lapsed on December 31, 2021.~~2023. See our segment results below for additional information on the drivers of the ~~remaining~~ decrease in revenue.

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Operating Expenses

The following ~~tables summarize~~table summarizes our operating expenses for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization) $ 1,850 1,999 (7) %
Selling, general and administrative 791 792 — %
Gain on sale of business — (593) nm
Loss on disposal group held for sale 22 — nm
Depreciation and amortization 755 808 (7) %
Total operating expenses $ 3,418 3,006 14 %

Nine Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization) $ 5,407 6,042 (11) %
Selling, general and administrative 2,302 2,407 (4) %
Gain on sale of business — (593) nm
Loss on disposal group held for sale 112 — nm
Depreciation and amortization 2,234 2,443 (9) %
Goodwill impairment 8,793 — nm
Total operating expenses $ 18,848 10,299 83 %

nm~~Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.~~


	Three Months Ended March 31,			% Change
	2024		2023
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	1,652	1,817	(9)	%
Selling, general and administrative	823		721	14	%
Loss on sale of business	22		77	(71)	%
Depreciation and amortization	748		733	2	%

Total operating expenses	$	3,245	3,348	(3)	%

Cost of Services and Products (exclusive of depreciation and amortization)

Cost of services and products (exclusive of depreciation and amortization) decreased by ~~$149 million and $635~~$165 million for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 as compared to the three ~~and nine~~ months ended ~~September 30, 2022. These decreases were~~March 31, 2023. This decrease was primarily due to a decrease of approximately ~~$189~~$126 million ~~and $637 million for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022, respectively,~~ due to the sale of the ~~Latin American and ILEC businesses~~EMEA business in the ~~second half~~fourth quarter of ~~2022,~~2023, as well as reductions of approximately ~~$12~~$16 million in facilities costs and ~~$78~~$14 million ~~for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022, respectively,~~ in employee-related expense from lower headcount in our ~~remaining~~retained business. These decreases were partially offset by increased network expenses of $27 million and $45 million for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022, respectively.

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Selling, General and Administrative

Selling, general and administrative expenses ~~decreased~~increased by ~~$1 million and $105~~$102 million for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 as compared to the three ~~and nine~~ months ended ~~September 30, 2022. These decreases were~~March 31, 2023. The increase was primarily due to an increase of $143 million in legal and other professional fees, mainly driven by our debt transaction, offset by a decrease of approximately ~~$46~~$25 million ~~and $169 million for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022, respectively,~~ due to the sale of our ~~Latin American and ILEC businesses~~EMEA business in the ~~second half~~fourth quarter of ~~2022. For the three months ended September 30,~~ 2023, as ~~compared to September 30, 2022, these declines were partially offset by~~well as recognition of a ~~$40~~deferred gain of $22 million ~~increase~~on the sale of select CDN contracts in ~~employee related expenses. For~~ the ~~nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, these declines were partially offset by a $67 million loss incurred as a result~~fourth quarter of ~~our above-described donation of our Monroe, Louisiana campus.~~2023.

Loss on ~~Disposal Group Held for~~ Sale of Business

For a discussion of the loss on ~~disposal group held for~~ sale of business that we recognized for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023, see Note 2—~~Planned Divestiture~~Divestitures of the Latin American, ILEC and EMEA ~~Business.~~Businesses to our consolidated financial statements in Item 8 of Part II of our Annual Report Form 10-K for the year ended December 31, 2023.

Depreciation and Amortization

The following ~~tables provide~~table provides detail of our depreciation and amortization expense:

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Depreciation $ 484 529 (9) %
Amortization 271 279 (3) %
Total depreciation and amortization $ 755 808 (7) %


		Nine Months Ended September 30,			% Change
		2023		2022
		(Dollars in millions)
	Three Months Ended March 31,														Three Months Ended March 31,						% Change
	2024
		(Dollars in millions)
		(Dollars in millions)
		(Dollars in millions)
Depreciation
Depreciation
Depreciation	Depreciation	$	1,440	1,613	(11)	%	$	476			473		473			1		1	%
Amortization	Amortization	794		830	(4)	%	Amortization		272			260		260			5		5	%
Total depreciation and amortization	Total depreciation and amortization	$	2,234	2,443	(9)	%	Total depreciation and amortization		$	748		733		733			2		2	%

Depreciation expense ~~decreased~~increased by ~~$45 million and $173~~$3 million for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, as compared to the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 primarily due ~~to the discontinuation during the fourth quarter of 2022 of the~~a $12 million increase from accelerated depreciation of ~~the tangible EMEA~~CDN assets ~~we plan~~and an $8 million increase due to ~~divest, resulting in~~decommissioned assets, which were partially offset by a decrease of ~~$48~~$16 million and $139 million, respectively, of depreciation expense during the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022. In addition, for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022, depreciation expense decreased $34 million and $103 million, respectively, due to changes in the ~~impact~~depreciation lives of ~~annual rate depreciable life changes, which was partially offset by higher depreciation expense of $31 million and $70 million, respectively, associated with net growth in depreciable~~fiber network assets.

Amortization expense ~~decreased~~increased by ~~$8 million and $36~~$12 million for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, as compared to the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. The ~~decrease~~increase was primarily due to an increase of $13 million associated with net increases in amortizable assets as well as $10 million associated with the accelerated amortization of CDN software assets. These increases were partially offset by (i) a ~~decrease of $11~~$4 million ~~and $27 million, respectively,~~decrease due to ~~the discontinuation during the fourth quarter~~a changed method of ~~2022 of the~~ amortization ~~of the intangible EMEA assets we plan to divest, In addition, for the three and nine months ended September 30, 2023,~~ as ~~compared to the three and nine months ended September 30, 2022, amortization expense decreased~~discussed in Note 1— Background "— Change in Accounting Estimates", (ii) a $7 million ~~and $11 million, respectively, resulting~~decrease from certain customer relationship intangible assets becoming fully amortized in the second quarter of ~~2023.~~2023 and (iii) a $4 million decrease related to CDN customer relationships.

Further analysis of our segment operating expenses by segment is provided below in ~~Segment~~"Segment Results.

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~~Goodwill Impairment~~

We are required to perform impairment tests related to our goodwill annually, which we perform as of October 31, or sooner if an indicator of impairment occurs. The sustained decline in our share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment.

We report under two segments: Business and Mass Markets. As of September 30, 2023, we had three reporting units for goodwill impairment testing, which were (i) Mass Markets, (ii) North America Business ("NA Business") and (iii) Asia Pacific ("APAC") region. Prior to the planned divestiture of the EMEA business, the EMEA region was also a reporting unit and was tested for impairment in the pre-classification test as of October 31, 2022 discussed elsewhere herein. Prior to its August 1, 2022 divestiture, the Latin American ("LATAM") region was also a reporting unit.

When we performed an impairment test during the second quarter of 2023, we concluded that the estimated fair value of certain of our reporting units was less than their carrying value of equity as of our testing date. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge aggregating to $8.8 billion in the second quarter of 2023. We did not record any impairments to goodwill in the third quarter of 2023.

~~See Note 3—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements in this report for further details on these tests and impairment charges.~~"

Other Consolidated Results

The following ~~tables summarize~~table summarizes our total other ~~expense,~~income (expense), net and income tax expense:

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Interest expense $ (295) (363) (19) %
Net gain on early retirement of debt — 9 nm
Other expense, net (13) (93) (86) %
Total other expense, net $ (308) (447) (31) %
Income tax (benefit) expense $ (7) 359 nm


		Nine Months Ended September 30,			% Change
		2023		2022
		(Dollars in millions)
	Three Months Ended March 31,															Three Months Ended March 31,						% Change
	2024
		(Dollars in millions)
		(Dollars in millions)
		(Dollars in millions)
Interest expense
Interest expense
Interest expense	Interest expense	$	(868)	(1,052)	(17)	%	$	(291)			(279)		(279)				4		4	%
Net gain on early retirement of debt	Net gain on early retirement of debt	618		9	nm		Net gain on early retirement of debt		275			609			609			(55)		(55)	%
Other expense, net		(37)		(145)	(74)	%
Total other expense, net		$	(287)	(1,188)	(76)	%
Other income (expense), net							Other income (expense), net		73					(40)					nm
Total other income, net							Total other income, net		$	57				290					(80)	%
Income tax expense	Income tax expense	$	208	670	(69)	%	Income tax expense		$	45		169			169			(73)		(73)	%

nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.

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Interest Expense

Interest expense ~~decreased~~increased by ~~$68 million and $184~~$12 million for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 as compared to the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. The ~~decrease~~increase was due to ~~the decrease in average outstanding long-term debt (inclusive of debt classified as held for sale) of $8.0 billion and $8.2 billion, respectively, which was partially offset by~~ the increase in the average interest rate from ~~5.14% to 6.17% and from 5.08% to 5.89%, respectively,~~5.73% for the three ~~and nine~~ months ended ~~September 30, 2022 compared~~March 31, 2023 to 6.59% for the three ~~and nine~~ months ended ~~September 30, 2023.~~March 31, 2024, which was partially offset by a decrease in average outstanding long-term debt of approximately $900 million.

Net Gain on Early Retirement of Debt

For a discussion of the TSA Transactions that resulted in the net gain on debt we recognized for the three months ended March 31, 2024, see Note 5—Long-Term Debt and Credit Facilities. See Note 7—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 8 of Part II of our Annual Report Form 10-K for the year ended December 31, 2023 for discussion of the 2023 exchange offers that resulted in the net gain on debt ~~that we~~ recognized for the three ~~and nine~~ months ended ~~September 30, 2023, see Note 6—Long-Term Debt and Credit Facilities.~~March 31, 2023.

Other ~~Expense,~~Income (Expense), Net

Other ~~expense,~~income (expense), net reflects certain items not directly related to our core operations, including (i) components of net periodic pension and post-retirement benefit costs, (ii) foreign currency gains and losses, (iii) our share of income from partnerships we do not control, (iv) interest income, (v) gains and losses from non-operating asset dispositions, (vi) income from transition and separation services provided by us to the purchasers of our divested businesses and (vii) other non-core items.

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
(Dollars in millions)
Pension and post-retirement net periodic (expense) income $ (39) 2 (117) 6
Foreign currency loss (44) (20) (32) (49)
Loss on investment in limited partnership (15) (43) (74) (114)
Loss on investment in equity securities — (83) (22) (83)
Transition and separation services 64 37 150 70
Other 21 14 58 25
Total other expense, net $ (13) (93) (37) (145)


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions)
Pension and post-retirement net periodic expense	$	(39)	(39)
Foreign currency (loss) gain	(12)		2
Gain (loss) on investment in limited partnership	20		(61)
Loss on investment in equity securities	—		(19)
Transition and separation services	35		49
Interest income	58		13
Other	11		15
Total other income (expense), net	$	73	(40)

See Note ~~10—~~9—Fair Value of Financial Instruments for more information regarding the losses recognized on our investments in equity securities and a limited partnership.

Income Tax ~~(Benefit)~~ Expense

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024, our effective income tax rate was 44.1%, including an unfavorable impact of interest on our uncertain tax position reserves, and for the three months ended March 31, 2023, our effective income tax rate was 8.2% and (2.6)%, respectively, and for the three and nine months ended September 30, 2022, our effective income tax rate was 38.3% and 30.6%, respectively. The effective tax rate for both the three and nine months ended September 30, 2023 is attributable to a pre-tax loss in the same periods. The effective tax rate for the nine months ended September 30, 2023 includes a $1.8 billion unfavorable impact of a non-deductible goodwill impairment and a $11 million unfavorable impact as a result of our donating our Monroe, Louisiana campus.24.9%.

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Segment Results

General

Reconciliation of segment revenue to total operating revenue is below. The results presented in this section include results of our ~~Latin American and ILEC businesses~~EMEA business prior to ~~their~~its sale on ~~August~~November 1, ~~2022 and October 3, 2022, respectively:~~2023:


		Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022	2023	2022
		(Dollars in millions)
	Three Months Ended March 31,							Three Months Ended March 31,
	2024						2024		2023
	(Dollars in millions)							(Dollars in millions)
Operating revenue	Operating revenue
Business segment		$	2,894	3,218	8,747	10,036
Mass Markets segment		747		1,172	2,293	3,642
Business
Business
Business
Mass Markets
Total operating revenue	Total operating revenue	$	3,641	4,390	11,040	13,678

~~Additional information regarding our~~Reconciliation of segment EBITDA to total adjusted EBITDA is below:


		Three Months Ended September 30,			Nine Months Ended September 30,
		2023		2022	2023	2022
		(Dollars in millions)
Net (loss) income		$	(78)	578	(8,303)	1,521
Income tax (benefit) expense		(7)		359	208	670
Total other expense, net		308		447	287	1,188
	Three Months Ended March 31,							Three Months Ended March 31,
	2024						2024		2023
	(Dollars in millions)							(Dollars in millions)
Net income
Income tax expense
Total other income, net
Depreciation and amortization expense	Depreciation and amortization expense	755		808	2,234	2,443
Goodwill impairment		—		—	8,793	—
Stock-based compensation expense	Stock-based compensation expense	16		23	39	71
Total adjusted EBITDA	Total adjusted EBITDA	$	994	2,215	3,258	5,893
Business segment adjusted EBITDA	Business segment adjusted EBITDA	$	1,774	2,133	5,488	6,659
Mass Markets segment adjusted EBITDA	Mass Markets segment adjusted EBITDA	369		677	1,212	2,269
Other unallocated expense		(1,149)		(595)	(3,442)	(3,035)
Other unallocated amounts

For additional information on our reportable segments and product and services categories, see Note 4—3—Revenue Recognition and Note ~~11—~~10—Segment Information to our consolidated financial statements in Item 1 of Part I of this report.

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Business Segment

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Business Segment Product Categories:
Grow $ 1,125 1,116 1 %
Nurture 865 1,006 (14) %
Harvest 690 897 (23) %
Other 214 199 8 %
Total segment revenue 2,894 3,218 (10) %
Expenses:
Total segment expense 1,120 1,085 3 %
Total segment adjusted EBITDA $ 1,774 2,133 (17) %


		Nine Months Ended September 30,			% Change				Three Months Ended March 31,					% Change
		2023		2022					2024								2023			% Change
		(Dollars in millions)
Business Segment Product Categories:	Business Segment Product Categories:
Business Segment Product Categories:
Business Segment Product Categories:
Grow
Grow
Grow	Grow	$	3,391	3,504	(3)	%	$	1,059			1,134		1,134			(7)	(7)	%
Nurture	Nurture	2,639		3,160	(16)	%	Nurture		777			913			913			(15)	(15)	%
Harvest	Harvest	2,146		2,780	(23)	%	Harvest		582			706			706			(18)	(18)	%
Other	Other	571		592	(4)	%	Other		173			215			215			(20)	(20)	%
Total segment revenue	Total segment revenue	8,747		10,036	(13)	%	Total segment revenue		2,591			2,968			2,968			(13)	(13)	%
Expenses:	Expenses:
Total segment expense	Total segment expense	3,259		3,377	(3)	%
Total segment expense
Total segment expense									1,236					1,373			(10)		%
Total segment adjusted EBITDA	Total segment adjusted EBITDA	$	5,488	6,659	(18)	%	Total segment adjusted EBITDA		$	1,355		1,595			1,595			(15)	(15)	%

Three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 compared to the same ~~periods~~period ended ~~September 30, 2022~~March 31, 2023

Business segment revenue decreased ~~$324 million and $1.3 billion for the three and nine months ended as of September 30, 2023 compared to the same periods ended September 30, 2022. Approximately $217 million and $918~~$377 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 as compared to March 31, 2023. Approximately $168 million of ~~these decreases~~this decrease was due to the sale of the ~~Latin American~~EMEA business and ~~ILEC businesses~~select CDN contracts in the ~~second half~~fourth quarter of ~~2022.~~2023. More specifically, within each product ~~category for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022:~~category:

•Grow ~~increased by $9 million and~~ decreased by ~~$113~~$75 million ~~reflecting~~for the three months ended March 31, 2024 compared to March 31, 2023 due to a decrease of approximately ~~$47 million and $320~~$81 million associated with the sale of the ~~Latin American and ILEC businesses. Excluding the impact~~EMEA business. This decline was partially offset by growth in IP services of ~~these divestitures, Grow increased by approximately $56 million and $207 million primarily in products such as IP, dark fiber, wavelengths and colocation;~~$35 million;

•Nurture decreased by ~~$141~~$136 million ~~and $521 million,~~for the three months ended March 31, 2024 compared to March 31, 2023, approximately ~~$62 million and $241~~$27 million of which was attributable to the sale of the ~~Latin American and ILEC businesses.~~EMEA business. The remainder of the decline is principally attributable to declines in traditional VPN ~~network~~ services of ~~$61 million and $207~~$78 million and declines in Ethernet services of ~~$18 million and $77~~$35 million;

•Harvest decreased ~~by $207~~by$124 million ~~and $634 million,~~for the three months ended March 31, 2024 compared to March 31, 2023, approximately ~~$107 million and $354~~$24 million of which was attributable to the sale of the ~~Latin American and ILEC businesses.~~EMEA business. The remainder of the decline is principally attributable to ~~a $61 million and $203~~an $80 million decline in legacy voice and private line services; and

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•Other ~~increased by $15 million and~~ decreased by ~~$21~~$42 million ~~primarily due to higher equipment revenue of $25 million and $30 million and lower IT solutions services of $10 million and $46 million.~~

~~Business segment revenue~~ for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 compared to ~~the three and nine months ended September 30, 2022 includes $7~~March 31, 2023 approximately $29 million of ~~favorable~~which was attributable to the sale of select CDN contracts and ~~$18~~$14 million of ~~unfavorable foreign currency adjustments, respectively.~~which is due to lower equipment revenue, which was partially offset by a $12 million increase in managed and professional services.

Business segment expense ~~increased by $35 million and~~ decreased by ~~$118~~$137 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024 as compared to the three ~~and nine~~ months ended ~~September 30, 2022. Segment expense for the three months ended September 30,~~March 31, 2023 ~~increased from the three months ended September 30, 2022 due to~~primarily driven by a $16 million increase in employee-related costs. Additionally, segment expense increased for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022 by $36 million and $57 million in higher network access costs and $11 million and $17 million in higher professional fees, respectively. These increases were partially offset for the three months ended September 30, 2023 and fully offset for the nine months ended September 30, 2023 by $34 million and $187decrease of $53 million due to the sale of the ~~Latin American~~EMEA business and ~~ILEC businesses.~~select CDN contracts and an $86 million reduction in overall network expense.

Business segment adjusted EBITDA as a percentage of segment revenue was 52% for the three ~~and nine~~ months ended ~~September 30, 2023 was 61%~~March 31, 2024 and ~~63%, respectively, and~~54% for ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2022 was 66%.~~

~~Mass Markets Segment~~

Three Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Mass Markets Product Categories:
Fiber Broadband $ 162 160 1 %
Other Broadband 340 580 (41) %
Voice and Other 245 432 (43) %
Total segment revenue 747 1,172 (36) %
Expenses:
Total segment expense 378 495 (24) %
Total segment adjusted EBITDA $ 369 677 (45) %

Nine Months Ended September 30, % Change
2023 2022
(Dollars in millions)
Mass Markets Product Categories:
Fiber Broadband $ 471 456 3 %
Other Broadband 1,064 1,787 (40) %
Voice and Other 758 1,399 (46) %
Total segment revenue 2,293 3,642 (37) %
Expenses:
Total segment expense 1,081 1,373 (21) %
Total segment adjusted EBITDA $ 1,212 2,269 (47) %

~~Three and nine months ended September 30, 2023 compared to the same periods ended September 30, 2022~~March 31, 2023.

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Mass Markets Segment


	Three Months Ended March 31,			% Change
	2024		2023
	(Dollars in millions)
Mass Markets Product Categories:
Fiber Broadband	$	170	152	12	%
Other Broadband	315		369	(15)	%
Voice and Other	214		249	(14)	%
Total segment revenue	699		770	(9)	%
Expenses:
Total segment expense	323		356	(9)	%
Total segment adjusted EBITDA	$	376	414	(9)	%

Three months ended March 31, 2024 compared to the same period ended March 31, 2023

Mass Markets segment revenue decreased ~~$425~~$71 million ~~and $1.3 billion~~ for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 as compared to ~~the comparable periods ended September 30, 2022, respectively. Approximately $354 million and $1.1 billion of this decrease is due to the sale of our ILEC business in the fourth quarter of 2022.~~March 31, 2023. More specifically, within each product ~~category for the three and nine months ended September 30, 2023 as compared to the comparable periods ended September 30, 2022:~~category:

•Fiber Broadband revenue increased ~~$2 million and $15~~$18 million, primarily driven by ~~$17 million and $54 million of~~ growth in the number of fiber customers associated with our continued increase in enabled locations from our Quantum Fiber ~~buildout, partially offset by respective decreases of $15 million and $41 million due to the sale of the ILEC business relating to such periods;~~buildout;

•Other Broadband revenue decreased ~~$240~~$54 million, ~~and $723 million. Approximately $185 million and $563 million of this decrease was due to the sale of the ILEC business and $55 million and $160 million was~~primarily due to fewer customers for our lower speed copper-based broadband services;

•Voice and Other declined ~~$187~~$35 million, ~~and $641 million. The decline was~~ principally ~~due to (i) a $154 million and $472 million decrease due to the sale of the ILEC business, (ii) a $34 million and $111 million decrease~~ due to the continued loss of ~~legacy~~copper-based voice ~~customers and (iii) the recognition in the first quarter of 2022 of $59 million of previously deferred revenue related to the CAF II program, which lapsed on December 31, 2021.~~customers.

Mass Markets segment expense ~~for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022~~ decreased ~~by $117~~$33 million ~~and $292 million, respectively, primarily driven by a decrease of $81 million and $295 million due to the sale of the ILEC business. For~~for the three months ended ~~September 30, 2023, segment expense additionally decreased due to $13 million of lower bad debt expense and a decrease of $11 million of professional fees~~March 31, 2024 as compared to the three months ended ~~September 30, 2022. Segment expense for the nine months ended September 30,~~March 31, 2023 ~~additionally decreased~~primarily driven by ~~$34~~a $14 million ~~due~~increase in capitalized expenses related to ~~lower~~our Quantum Fiber buildout, a decrease of $13 million in professional fees and $7 million in employee costs, partially offset by an $11 million increase in ~~employee costs of $39 million for the nine months ended September 30, 2023.~~marketing and advertising expense.

Mass Markets segment adjusted EBITDA as a percentage of segment revenue was 54% for both the three ~~and nine~~ months ended ~~September 30, 2023 was 49%~~March 31, 2024 and ~~53%, respectively, and for~~ the three ~~and nine~~ months ended ~~September 30, 2022 was 58% and 62%, respectively.~~March 31, 2023.

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Liquidity and Capital Resources

Overview of Sources and Uses of Cash

We are a holding company that is dependent on the capital resources of our subsidiaries to satisfy our parent company liquidity requirements. Several of our significant operating subsidiaries have borrowed funds either on a standalone basis or as part of a separate restricted group with certain of its subsidiaries or affiliates. The terms of the instruments governing the indebtedness of these borrowers or borrowing groups may restrict our ability to access their accumulated cash. In addition, our ability to access the liquidity of these and other subsidiaries may be constrained by tax, legal and other limitations.

At ~~September 30, 2023,~~March 31, 2024, we held cash and cash equivalents of $338 million, $27 million of which is classified as held for sale. During the third quarter of 2023, we issued approximately $110 million of letters of credit under our revolving credit facility, which reduced our borrowing capacity available thereunder by the same amount.$1.6 billion. As of ~~September 30, 2023, these issued letters of credit were undrawn and~~March 31, 2024 we had ~~$2.0 billion~~$715 million of borrowing capacity available under our approximately $1.0 billion revolving credit ~~facility.~~facilities, net of undrawn letters of credit issued to us thereunder. We typically use our revolving credit ~~facility~~facilities as a source of liquidity for operating activities and our other cash requirements. We had approximately ~~$65~~$60 million of cash and cash equivalents outside the United States at ~~September 30, 2023.~~March 31, 2024. We currently believe that there are no material restrictions on our ability to repatriate cash and cash equivalents into the United States, and that we may do so without paying or accruing U.S. taxes. ~~Other than transactions related to our EMEA divestiture, we~~We do not currently intend to repatriate to the United States any of our foreign cash and cash equivalents from operating entities.

Our executive officers and our Board of Directors review our sources and potential uses of cash in connection with our annual budgeting process and throughout the year as circumstances warrant. Generally speaking, our principal funding source is cash from operating activities, and our principal cash requirements include operating expenses, capital expenditures, income taxes, debt ~~repayments,~~payments, periodic securities repurchases, periodic pension contributions and other benefits payments. The impact of the ~~recent sales~~divestitures of our Latin American, ILEC and ~~ILEC~~EMEA businesses ~~and our planned divestiture of our EMEA business~~ is further described below.

Based on our current capital allocation objectives, for the full year ~~2023~~2024 we project ~~expending~~ approximately ~~$2.9~~$2.7 billion to ~~$3.1~~$2.9 billion of capital expenditures.

For the ~~12-month~~12 month period ending ~~September 30, 2024,~~March 31, 2025, we project that our fixed commitments will include (i) ~~$125~~$52 million of scheduled term loan amortization payments and (ii) ~~$32~~$34 million of finance lease and other fixed ~~payments (which includes $2 million of finance lease obligations that have been classified as held for sale).~~

We are currently experiencing competitive, macroeconomic and financial pressures, including operational challenges resulting from inflation, dis-synergies resulting from our 2022 divestitures, concerns about our ability to refinance debt in the future, and, to a lesser extent, shortages of certain components and other supplies that we use in our business. These and other factors contributed to us recognizing goodwill impairments in the fourth quarter of 2022 and, coupled with the sustained decline in our share price during the second quarter of 2023, contributed to us recognizing additional goodwill impairments for the three months ended June 30, 2023. If these pressures continue, we may experience additional deterioration in our projected cash flows or market capitalization, or make significant changes to our assumptions of discount rates and market multiples. Any of these could result in additional goodwill impairments in future quarters.payments.

We will continue to monitor our future sources and uses of cash, and anticipate that we will make adjustments to our capital allocation strategies when, as and if determined by our Board of Directors. We may also draw on our revolving credit ~~facility~~facilities as a source of liquidity for operating activities and to give us additional flexibility to finance our capital investments, ~~repayments~~payments of debt, pension contributions and other cash requirements.

For additional information, see "Risk Factors—Financial Risks" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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Impact of the Divestitures of the Latin American, ~~and~~ ILEC ~~Businesses~~ and ~~Planned Divestiture of the~~ EMEA Business

~~During 2022,~~As discussed in Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023, we sold our Latin American, ~~business~~ILEC and ~~a portion of our ILEC business. We additionally agreed to divest our~~ EMEA ~~business subject to satisfaction of certain customary closing conditions. See Note 2—Planned Divestiture of the EMEA Business to our consolidated financial statements in Item~~Businesses on August 1, ~~of Part I of this report for more information.~~2022, October 3, 2022 and November 1, 2023, respectively. As further described ~~in previous reports,~~elsewhere herein, these transactions have provided ~~or are expected to provide~~ us with a substantial amount of cash proceeds but ~~ultimately will reduce~~have also reduced our base of income-generating assets that generate our recurring cash from operating activities. AsFor a ~~result~~discussion of ~~these divestitures, we utilized all~~the impact of our ~~NOLs available for use in 2022. During the first quarter of 2023, we paid $90 million of indemnification payments related to~~divestitures upon our ~~2022 divestitures. In addition, during the second quarter of 2023, we paid approximately $1.2 billion of estimated~~ federal ~~and state~~ income taxes, ~~the majority of which relates to our 2022 divestitures. See " —Net Operating Loss Carryforwards" below for additional information on our 2023 tax year cash tax estimate.~~see "Liquidity and Capital Resources–Federal Income Tax Obligations.”

~~We are expecting a U.S. Federal income tax refund~~Table of approximately $900 million previously not included within the Financial Outlook. Approximately $200 million of the refund will be applied to pay 2023 estimated taxes, and we are expecting a cash refund of approximately $700 million in the first quarter of 2024. While we expect to receive a near-term cash benefit, this is in part due to an accelerated use of our NOLs for which some of the near-term benefits will reverse over the next few years.Contents

Capital Expenditures

We incur capital expenditures on an ongoing basis to expand and improve our service offerings, enhance and modernize our networks and compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment. The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, our network requirements, cash flow generated by operating activities, cash required for debt service and other purposes, ~~and~~ regulatory considerations (such as governmentally-mandated infrastructure buildout requirements) and the availability of requisite supplies, labor and permits.

Our capital expenditures continue to be focused on enhancing network operating efficiencies, ~~supporting~~developing new ~~service developments,~~services, and expanding our fiber network, including our Quantum Fiber buildout plan. A portion of our ~~2023~~2024 capital expenditures will also be focused on ~~restoring~~replacing aged network ~~assets destroyed or damaged by Hurricane Ian in Florida during 2022.~~assets. For more information on our capital spending, see (i) "—Overview of Sources and Uses of ~~Cash"~~Cash " above, (ii) "Cash Flow Activities—Investing Activities" below and (iii) Item 1 of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Debt Instruments and Financing Arrangements

Debt Instruments

~~Pursuant~~On March 22, 2024, Lumen completed the TSA Transactions with a group of Consenting Debtholders representing over $15 billion of Lumen's outstanding consolidated long-term debt to, ~~exchange offers commenced on March 16, 2023 (the "Exchange Offers"), (i) on March 31, 2023,~~among other things, extend maturities of the debt instruments of the Company and Level 3 Financing, Inc. ~~issued $915 million of its 10.500% Senior Secured Notes due 2030 in exchange for $1.535~~and provide access to approximately $1.0 billion of ~~Lumen’s outstanding senior unsecured notes and (ii) on April 17, 2023,~~new Lumen revolving credit facilities maturing in 2028 to replace Lumen's former $2.2 billion revolving credit facility. In addition, Level 3 Financing, Inc. issued an additional $9 million of its 10.500% Notes in exchange for $19 million of Lumen's outstanding senior unsecured notes. All exchanged notes were concurrently cancelled. These transactions resulted in a net reduction in theprivately placed $1.575 billion aggregate principal amount of ~~Lumen’s consolidated indebtedness~~newly-issued first lien notes. For more information, see Note 5 to the financial statements included in Item 1 Part I of ~~approximately $630 million and, along with a repurchase of notes in the first quarter of 2023, a gain of $618 million during the nine months ended September 30, 2023.~~this report.

At ~~September 30, 2023,~~March 31, 2024, we ~~had $11.3~~had:

•$13.0 billion of outstanding consolidated secured ~~indebtedness, $8.5~~indebtedness;

•$6.2 billion of outstanding consolidated unsecured indebtedness (excluding (i) finance lease obligations, (ii) unamortized premiums, net, and (iii) unamortized debt issuance costs); and ~~$2.0 billion~~

•approximately $715 million of unused borrowing capacity under our revolving credit ~~facility,~~facilities, as discussed further below.

~~Table~~Under its credit agreements dated March 22, 2024, Lumen maintained at March 31, 2024 (i) approximately $1.0 billion of ~~Contents~~

~~Under our amended and restated~~superpriority revolving credit ~~agreement dated~~facilities, under which it owed none as of ~~January 31, 2020 (the "Amended Credit Agreement"), we maintained at September 30, 2023 (i) a $2.2 billion senior secured revolving~~such date and had approximately $241 million of letters of credit ~~facility, under which we owed $75 million~~issued and undrawn as of such date, and (ii) ~~$5.1~~approximately $3.6 billion of ~~senior~~drawn superpriority term loan facilities. Under its credit agreement dated March 22, 2024, Level 3 Financing, Inc. maintained at March 31, 2024, $2.4 billion of drawn secured term loan facilities.

At September 30, 2023, we had $212 million of undrawn letters of credit outstanding, $110 million of which were issued under our revolving line of credit, $99 million of which were issued under our $225 million uncommitted letter of credit facility and $3 million of which were issued under a separate facility maintained by one of our subsidiaries (the full $3 million of which is collateralized by cash that is reflected on our consolidated balance sheet as restricted cash within other assets).

In addition to its indebtedness under our Amended Credit Agreement, Lumen Technologies is indebted under its outstanding senior notes, and several of its subsidiaries are indebted under separate credit facilities or senior notes.

For additional information, ~~regarding the foregoing matters and the terms and conditions of the debt instruments of us and our subsidiaries, including financial and operating covenants,~~ see (i) "—Overview of Sources and Uses of Cash," (ii) Note 6—5—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 1 of Part I of this report and (iii) Note 7—Long-Term Debt and Credit Facilities in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023.

At March 31, 2024, we had $270 million undrawn letters of credit outstanding, $241 million of which were issued under our revolving credit facilities, $27 million of letters of credit outstanding under our $225 million uncommitted letter of credit facility and ~~(iv)~~$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 that is reflected on our consolidated balance sheets as restricted cash within other assets).

In addition to indebtedness under their March 22, 2024 credit agreements, Lumen and Level 3 Financing, Inc. are indebted under their respective outstanding senior notes, and several of Lumen's other subsidiaries are indebted under their respective outstanding senior notes.

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For additional information on the terms and conditions of debt instruments of ours and our subsidiaries, including financial and operating covenants, see (i) Note 5—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 1 of Part I of this report, (ii) "—Other Matters" ~~below.~~below, and (iii) our Current Report on Form 8-K dated March 22, 2024.

Future Financings and Debt Reduction Transactions

Subject to market conditions, we plan to continue to issue debt securities from time to time in the future to refinance a substantial portion of our maturing debt, including issuing debt securities of certain of our subsidiaries to refinance their maturing debt to the extent permitted under our debt covenants and consistent with our capital allocation strategies. The availability, interest rate and other terms of any new borrowings will depend on the ratings assigned by credit rating agencies, among other factors.

As of the filing date of this report, the credit ratings for the senior secured and unsecured debt of Lumen Technologies, Inc., Level 3 Financing, Inc. and Qwest Corporation were as follows:

Borrower

Moody's Investors Service, Inc.

Standard & Poor's

Fitch Ratings

Lumen Technologies, Inc.:

Unsecured

~~Caa3~~Ca

CCC-

~~CCC+~~CCC

Secured

~~Caa2~~Caa2/Caa3

~~BB-~~B+

Level 3 Financing, Inc.

Unsecured

B3Caa2

~~CCC+~~CCC-

BCCC-

Secured

B1B3/Caa2

BB/B-

~~BB-~~B+/CCC

Qwest Corporation:

Unsecured

B3Caa3

BB-

~~BB-~~B+

Our credit ratings are reviewed and adjusted from time to time by the rating agencies. Any future changes in the senior unsecured or secured debt ratings of us or our subsidiaries could impact our access to capital or borrowing costs. ~~With the recent downgrades of our credit ratings~~We cannot provide any assurances that we ~~may find it more difficult~~will be able to borrow additional funds on favorable terms, or at all. See "Risk Factors—Financial Risks" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~

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2023.

From time to time over the past couple of years, we have engaged in various refinancings, redemptions, tender offers, exchange offers, open market purchases and other transactions designed to reduce our consolidated indebtedness, improve our financial flexibility or otherwise enhance our debt profile. Subject to market conditions, restrictions under our debt covenants, and other limitations, we ~~may~~expect to opportunistically pursue similar transactions in the future to the extent feasible. ~~We may not disclose these transactions in advance, unless required by applicable law or material in nature or amount.~~ See Note 6—5—Long-Term Debt and Credit Facilities for additional information.

~~Net Operating Loss Carryforwards~~Federal Income Tax Obligations

As of December 31, ~~2022,~~2023, Lumen Technologies had approximately ~~$1.0 billion~~$800 million of federal ~~net operating loss carryforwards ("NOLs"),~~NOLs which, for U.S. federal income tax purposes, ~~can~~may be used to offset future taxable income. These NOLs are primarily related to federal NOLs we acquired through the Level 3 acquisition on November 1, 2017 and are subject to limitations under Section 382 of the Internal Revenue Code ~~and related U.S. Treasury Department regulations.~~of 1986, as amended ("Section 382"). We maintain a Section 382 rights agreement designed to safeguard through late ~~2023~~2026 our ability to use those NOLs. We utilized a substantial portion of our previously available NOLs to offset taxable gains generated by the completion of our 2022 divestitures. As a result, we anticipate that our cash income tax liability will increase ~~substantially~~ in ~~current and~~ future periods. ~~During the nine months ended September 30, 2023,~~

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In January 2024, we ~~paid approximately $1.3 billion~~received a federal income tax cash refund of ~~estimated federal and state income taxes, the majority of which relates to our 2022 divestitures.~~$729 million, including interest. The amounts of our near-term future tax payments will depend upon many factors, including our future earnings and tax circumstances and the impact of any corporate tax reform or taxable transactions. Based on current laws and our current assumptions and projections, we estimate our cash federal income tax liability related to the 2023 tax year will range from $300 million to $400 million, excluding the impact of the above-referenced impact of our 2022 divestitures.

Although we expect to use substantially all of our remaining NOLs in future periods in accordance with Section 382's annual limitations, we cannot assure this. See "Risk Factors—Financial Risks—We may not be able to fully utilize our NOLs" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023.

In August 2022, the Inflation Reduction Act was signed into law, 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, 2023. In addition, the Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation, some of which are effective for tax periods after December 31, 2023. While the global minimum tax will increase our administrative and compliance burdens, we expect that it will have an immaterial impact on our financial statements for tax period ending December 31, 2024.

Stock Repurchases

~~During the fourth quarter of~~Effective November 2, 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.~~stock (the "November 2022 stock repurchase program"). During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, we did not repurchase any shares of our outstanding common stock under this program. As of ~~September 30, 2023,~~March 31, 2024, we were authorized to purchase up to an aggregate of $1.3 billion of our outstanding common stock under this program. We currently do not plan to purchase any shares of our outstanding common stock under this program in the near term.

Pension and Post-retirement Benefit Obligations

We are subject to material obligations under our existing defined benefit pension plans and post-retirement benefit plans. At December 31, ~~2022,~~2023, the accounting unfunded status of our qualified and non-qualified defined benefit pension plans and our qualified post-retirement benefit plans was ~~$615~~$769 million and ~~$2.0~~$1.9 billion, respectively. For additional information about our pension and post-retirement benefit arrangements, see "Critical Accounting Policies and Estimates—Pension and Post-retirement Benefits" in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 and see Note 11—Employee Benefits to our consolidated financial statements in Item 8 of Part II of the same report.

Benefits paid by our Combined Pension Plan are paid through the trust that holds the Combined Pension Plan's assets. Based on current laws and circumstances, we do not expect any contributions to be required for our Combined Pension Plan during ~~2023.~~2024. The amount of required contributions to our Combined Pension Plan in ~~2024~~2025 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. We occasionally make voluntary contributions to our plans in addition to required contributions and reserve the right to do so in the future. We last made a voluntary contribution to the trust for our Combined Pension Plan during 2018. We currently do not expect to make a voluntary contribution in ~~2023.~~

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2024.

Substantially all of our post-retirement health care and life insurance benefits plans are unfunded and are paid by us with available cash. Based on our most recent estimates, we expect to pay ~~$210~~$193 million of post-retirement benefits, net of participant contributions and direct subsidies, for the full year ~~2023.~~2024. For additional information on our expected future benefits payments for our post-retirement benefit plans, please see Note 11—Employee Benefits to our consolidated financial statements in Item 8 of Part II of our Annual Report Form 10-K for the year ended December 31, ~~2022.~~2023.

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Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits. We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan, associated with these lump sum payments only if, in the aggregate, they exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. Please see Note 11—Employee Benefits to our consolidated financial statements in Item 8 of Part II of our Annual Report Form 10-K for the year ended December 31, ~~2022~~2023 for additional information.

For ~~2023,~~2024, our expected annual long-term rate of return on the pension plan assets is 6.5%. However, actual returns could be substantially different.

See Note 8—7—Employee Benefits to our consolidated financial statements in Item 1 of Part I of this report for more information.

Future Contractual Obligations

For information regarding our estimated future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Federal Broadband Support Programs

In January 2020, the FCC created the Rural Digital Opportunity Fund (“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 in 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 ~~expect to receive~~received approximately $17 million in annual RDOF Phase I support payments during 2023 and expect to receive this same amount each year thereafter during the program period.

For additional information on these programs, see (i) Note ~~4 -~~ 4—Revenue Recognition to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (ii) "Business—Regulation of Our Business" in Item 1 of Part I of the same Annual Report and (iii) "Risk Factors—Legal and Regulatory Risks" in Item 1A of Part I of the same Annual Report.

Federal officials have proposed changes to current programs and laws that could impact us, including proposals designed to increase broadband access, increase competition among broadband providers, lower broadband costs and ~~re-adopt "net neutrality" rules similar to those adopted under the Obama Administration.~~increase broadband regulation. In late 2021, the U.S. Congress enacted legislation that appropriated $65 billion to improve broadband affordability and access, primarily through federally funded state grants. As of the date of this report, various state and federal agencies are continuing to take steps to make this funding available to eligible applicants, including us. ItAlthough, it remains premature to speculate on the ultimate impact of this legislation on ~~us.~~us, we anticipate that the release of this funding would increase competition for broadband customers in newly-served areas. On April 25, 2024, the FCC re-adopted net neutrality rules similar to those in effect between 2015 and 2018. These rules are expected to take effect mid-year, subject to the outcome of any legal challenges.

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Cash Flow Activities

The following table summarizes our consolidated cash flow activities for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.


							Three Months Ended March 31,	$ Change

		Nine Months Ended September 30,			$ Change
		2023		2022
		(Dollars in millions)				(Dollars in millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	1,376	3,894	(2,518)
Net cash (used in) provided by investing activities		(2,232)		594	2,826
Net cash used in investing activities
Net cash used in financing activities	Net cash used in financing activities	(101)		(4,632)	(4,531)

Operating Activities

Net cash provided by operating activities ~~decreased~~increased by ~~$2.5 billion~~$507 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 as compared to the ~~nine~~three months ended ~~September 30, 2022 principally~~March 31, 2023 primarily due to ~~lower~~our federal income tax cash refund of $729 million, including interest, received in first quarter of 2024. This increase was partially offset by a decrease in net income adjusted for non-cash expenses and gains, ~~partially driven by~~partly as a result of the sale of ~~the Latin American and ILEC businesses~~our EMEA business in ~~the second half of 2022. Additionally, a substantial portion of the decrease is largely due to the payment of taxes, the majority of which relate to our 2022 divestitures.~~late 2023. Cash provided by operating activities is subject to variability period over period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable and bonuses.

For additional information about our operating results, see "Results of Operations" above.

Investing Activities

Net cash ~~(used in) provided by~~used in investing activities ~~changed~~increased by ~~$2.8 billion~~$82 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 as compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to ~~the receipt of pre-tax cash proceeds of $2.7 billion from the sale of the Latin American business~~an increase in ~~the prior year period.~~capital expenditures.

Financing Activities

Net cash used in financing activities ~~decreased~~increased by ~~$4.5 billion~~$974 million for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 as compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to ~~higher~~the payments of long-term debt ~~repayments~~ and ~~dividend payments in the prior year period.~~associated fees, partially offset by proceeds from issuance of long-term debt.

See Note 6—5—Long-Term Debt and Credit Facilities to our consolidated financial statements in Item 1 of Part I of this report for additional information on our outstanding debt securities.

Other Matters

We have cash management and loan arrangements with a majority of our income-generating subsidiaries, in which a substantial portion of the aggregate cash of those subsidiaries' is periodically advanced or loaned to us or our service company affiliate. Although we periodically repay these advances to fund the subsidiaries' cash requirements throughout the year, at any given point in time we may owe a substantial sum to our subsidiaries under these arrangements. In accordance with generally accepted accounting principles, these arrangements are reflected in the balance sheets of our subsidiaries but are eliminated in consolidation and therefore not recognized on our consolidated balance sheets.

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Our network includes some residual lead-sheathed copper cables installed years ago. These lead-sheathed cables constitute a small portion of our network. Due to ~~recent~~ media coverage over the past year of potential health and environmental risks associated with these cables, we anticipate incurring certain investigative costs. We also may ~~include~~incur other costs from related proceedings, including litigation, regulatory initiatives, and remediation. As ~~September 30, 2023,~~March 31, 2024, we have not accrued for any such potential costs and will only accrue when such costs are probable and reasonably estimable. For additional information about related litigation and potential risks, see Note ~~12—~~11—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 1 of Part I of this

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report, and the risk factor disclosures incorporated by reference herein under “Risk Factors” in Item 1A of Part II of this report.

We are also involved in various legal proceedings that could substantially impact our financial position. See Note ~~12—~~11—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 1 of Part I of this report for additional information.

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Market Risk

As of ~~September 30, 2023,~~March 31, 2024, we were exposed to market risk from changes in interest rates on our variable rate long-term debt obligations and fluctuations in certain foreign currencies.

Management periodically reviews our exposure to interest rate fluctuations and periodically implements strategies to manage the exposure. From time to time, we have used derivative instruments to swap our exposure to variable interest rates for fixed interest rates. We have established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative instrument activities. As of ~~September 30, 2023,~~March 31, 2024, we did not hold or issue derivative financial instruments for trading or speculative purposes.

As of ~~September 30, 2023,~~March 31, 2024, we had approximately ~~$7.8~~$6.1 billion of unhedged floating rate debt based on the secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR relating to our ~~$7.8~~$6.1 billion of unhedged floating rate debt would, among other things, decrease our annual pre-tax earnings by approximately ~~$78~~$61 million.

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. ~~Our~~Prior to the November 1, 2023 divestiture of our EMEA business, certain of our former European subsidiaries ~~use~~used the local currency as their functional currency, as the majority of their sales and purchases ~~are or~~ were transacted in their local currencies. Although we continue to evaluate strategies to mitigate risks related to the effect of fluctuations in currency exchange rates, we will likely recognize 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.

Certain shortcomings are inherent in the method of analysis presented in the computation of exposures to market risks. Actual values may differ materially from those disclosed by us from time to time if market conditions vary from the assumptions used in the analyses performed. These analyses only incorporate the risk exposures that existed at ~~September 30, 2023.~~March 31, 2024.

Other Information

Our website is www.lumen.com. We routinely post important investor information in the "Investor Relations" section of our website at ir.lumen.com. The information contained on, or that may be accessed through, our website is not part of this quarterly report. You may obtain free electronic copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed by us or our affiliates Level 3 Parent, LLC and Qwest Corporation, and all amendments to those reports, in the "Investor Relations" section of our website (ir.lumen.com) under the headings "FINANCIALS" and "SEC Filings." These reports are available on our website as soon as reasonably practicable after they are electronically filed with the SEC. From time to time, we also use our website to webcast our earnings calls and certain of our meetings with investors or other members of the investment community.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Liquidity and Capital Resources—Market Risk" in Item 2 of Part I above.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be disclosed by us in the reports we file or furnish under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure this information is accumulated and communicated to our senior management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of our President and Chief Executive Officer, Kate Johnson, and our Executive Vice President and Chief Financial Officer, Chris Stansbury, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2023.~~March 31, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective, as of ~~September 30, 2023,~~March 31, 2024, in providing reasonable assurance the information required to be disclosed by us in this report was accumulated and communicated in the manner provided above.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the ~~third~~first quarter of ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management's control objectives.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information contained in Note ~~12—~~11—Commitments, Contingencies and Other Items included in Item 1 of Part I of this quarterly report on Form 10-Q is incorporated herein by reference. The ultimate outcome of the matters described in Note 1211 may differ materially from the outcomes anticipated, estimated, projected or implied by us in certain of our statements appearing in such Note, and proceedings currently viewed as immaterial by us may ultimately materially impact us. For more information, see “Risk Factors—Risks Relating to Legal and Regulatory Matters—Our pending legal proceedings could have a material adverse impact on our financial condition and operating results, on the trading price of our securities and on our ability to access the capital markets” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

ITEM 1A. RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, which could adversely affect our business, financial condition or future results. We recommend that you carefully consider (i) the other information set forth in this report and (ii) the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as supplemented by the disclosures ~~included in Part II, Item 1A~~immediately below:

We may not realize some or all of the anticipated benefits from completing our debt transactions on March 22, 2024.

On March 22, 2024, we completed transactions contemplated under our amended and restated transaction support agreement dated as of January 22, 2024, including extending the maturities of a substantial portion of our ~~Quarterly~~near-term debt obligations, obtaining new credit facilities and raising $1.325 billion in new debt capital. In connection with announcing the closing of these transactions, we indicated that they would provide us with additional time to transform our operations and improve our financial performance.

In completing these transactions, we incurred substantial transaction expenses, agreed to pay higher levels of interest and committed to more restrictive debt covenants, which collectively could have important consequences, including (i) limiting our ability to obtain additional financing to fund future debt maturities, working capital, capital expenditures, acquisitions or other general corporate requirements, and increasing our cost of borrowing; (ii) requiring a substantial portion of our cash flows to be dedicated to payments on our obligations instead of for other purposes; and (iii) various other potentially adverse consequences of carrying significant debt, as disclosed in our Annual Report on Form ~~10-Q~~10-K for the ~~quarterly period~~year ended ~~March~~December 31, ~~2023 and Part II, Item 1A~~2023. Moreover, the extension of our ~~Quarterly Report on Form 10-Q for~~debt maturities may not afford us a sufficient amount of time to implement our transformation plans. For all these reasons and more, we may not realize some or all of the ~~quarterly period ended June 30, 2023.~~benefits we anticipate receiving from completing our March 22, 2024 transactions.

Our pending proposal to implement a reverse stock split may entail certain risks or disadvantages.

In our proxy statement dated April 5, 2024 that we filed the same date with the SEC (the “2024 Proxy Statement”), we submitted to our shareholders a proposal to grant our Board discretionary authority to implement a reverse stock split, which we expect, absent other factors, would proportionately increase the per share market price of our common stock upon implementation.

We cannot assure you that this proposal will be approved by our shareholders, or, if approved, will be implemented or have the effects expected by us. Any such reverse stock split implemented by us could decrease the liquidity of our common stock, result in higher trading costs, or have certain other potentially negative impacts, all of which are described in detail in our 2024 Proxy Statement.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Effective November 2, 2022, our Board of Directors authorized a two-year program to repurchase up to an aggregate of $1.5 billion of our outstanding common stock. During the three months ended ~~September 30, 2023,~~March 31, 2024, we did not repurchase any shares of our outstanding common stock under this program. For additional information, see Note ~~14—~~13—Repurchases of Lumen Common Stock to our consolidated financial statements included in Item 1 of Part I of this report.

The following table contains information about shares of our previously-issued common stock that we withheld from employees upon vesting of their stock-based awards during the ~~third~~first quarter of ~~2023~~2024 to satisfy the related tax withholding obligations:

Total Number of
Shares Withheld
for Taxes Average Price Paid
Per Share
Period
Jul-23 64,582 $ 2.21
Aug-23 53,989 $ 1.72
Sep-23 6,576 $ 1.42
Total 125,147


	Total Number of Shares Withheld for Taxes	Average Price Paid Per Share
Period
Jan-24	61,117	$	1.65
Feb-24	19,176	$	1.52
Mar-24	1,364,059	$	1.62
Total	1,444,352

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ITEM 6. EXHIBITS

Exhibits identified in parentheses below are on file with the SEC and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission.


Exhibit Number			Description
4.1*4.1			~~Supplement, dated as of October~~ 26 ~~, 2023, to the~~Second Supplemental Indenture, dated as of ~~April 15, 2020,~~March 22, 2024, among Lumen Technologies, Inc., as issuer, the guarantors party thereto and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee and collateral agent, relating to Lumen Technologies, Inc.’s 4.000% Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.2			Form of 4.125% Superpriority Secured Notes due 2029, issued by Lumen Technologies, Inc., dated as of March 22, 2024 (included in Exhibit 4.3).
4.3			Indenture, dated as of March 22, 2024, among Lumen Technologies, Inc., the guarantors party thereto, Wilmington Trust, National Association, as trustee, registrar and paying agent, and Bank of America, N.A., as collateral agent, relating to Lumen Technologies, Inc.’s 4.125% Superpriority Secured Notes due 2029 (incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.4			Form of 4.125% Superpriority Secured Notes due 2030, issued by Lumen Technologies, Inc., dated as of March 22, 2024 (included in Exhibit 4.5).
4.5			Indenture, dated as of March 22, 2024, among Lumen Technologies, Inc., the guarantors party thereto, Wilmington Trust, National Association, as trustee, registrar and paying agent, and Bank of America, N.A., as collateral agent, relating to Lumen Technologies, Inc.’s 4.125% Superpriority Secured Notes due 2030 (incorporated by reference to Exhibit 4.5 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.6			Third Supplemental Indenture, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., ~~as Issuer, The~~the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as ~~Trustee~~trustee and ~~Notes Collateral Agent, and~~note collateral agent, relating to Level 3 ~~Parent, LLC and several of its subsidiaries, as guarantors, clarifying which subsidiaries are guarantors of the~~Financing, Inc.’s 3.400% Senior Secured Notes due 2027 ~~of Level 3 Financing, Inc.~~(incorporated by reference to Exhibit 4.6 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.2*4.7			~~Supplement, dated as of October~~ 26 ~~, 2023, to the~~Third Supplemental Indenture, dated as of ~~April 15, 2020,~~March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., ~~as Issuer, The~~the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as ~~Trustee~~trustee and ~~Notes Collateral Agent, and~~note collateral agent, relating to Level 3 ~~Parent, LLC and several of its subsidiaries, as guarantors, clarifying which subsidiaries are guarantors of the~~Financing, Inc.’s 3.875% Senior Secured Notes due 2029 ~~of Level 3 Financing, Inc.~~(incorporated by reference to Exhibit 4.7 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.3*4.8			Third Supplemental Indenture, dated as of ~~October 23, 2023,~~March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., ~~as Issuer, The~~the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as ~~Trustee~~trustee and ~~Notes Collateral Agent, and~~note collateral agent, relating to Level 3 ~~Parent, LLC and several of its subsidiaries, as guarantors, designating and outlining the terms and conditions of certain specified secured guarantees of the~~Financing, Inc.’s 10.500% Senior Secured Notes due 2030 (incorporated by reference to Exhibit 4.8 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.9			Third Supplemental Indenture, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as trustee and note collateral agent, relating to Level 3 Financing, Inc.’s 4.625% Senior Notes due 2027 (incorporated by reference to Exhibit 4.9 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.10			Third Supplemental Indenture, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as trustee and note collateral agent, relating to Level 3 Financing, Inc.’s 4.250% Senior Notes due 2028 (incorporated by reference to Exhibit 4.10 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.11			Third Supplemental Indenture, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as trustee and note collateral agent, relating to Level 3 Financing, Inc.’s 3.750% Sustainability-Linked Senior Notes due 2029 (incorporated by reference to Exhibit 4.11 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).

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Exhibit Number			Description
4.12			Third Supplemental Indenture, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., the guarantors party thereto, and the Bank of New York Mellon Trust Company, N.A., as trustee and note collateral agent, relating to Level 3 Financing, Inc.’s 3.625% Senior Notes due 2029 (incorporated by reference to Exhibit 4.12 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.13			Form of 11.000% First Lien Notes due 2029, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.14).
4.14			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 11.000% First Lien Notes due 2029 (incorporated by reference to Exhibit 4.14 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.15			Form of 10.500% First Lien Notes due 2029, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.16).
4.16			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 10.500% First Lien Notes due 2029 (incorporated by reference to Exhibit 4.16 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.17			Form of 10.750% First Lien Notes due 2030, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.18).
4.18			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 10.750% First Lien Notes due 2030 (incorporated by reference to Exhibit 4.18 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.19			Form of 4.875% Second Lien Notes due 2029, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.20).
4.20			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 4.875% Second Lien Notes due 2029 (incorporated by reference to Exhibit 4.20 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.21			Form of 4.500% Second Lien Notes due 2030, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.22).
4.22			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 4.500% Second Lien Notes due 2030 (incorporated by reference to Exhibit 4.22 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.23			Form of 3.875% Second Lien Notes due 2030, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.24).
4.24			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 3.875% Second Lien Notes due 2030 (incorporated by reference to Exhibit 4.24 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
4.25			Form of 4.000% Second Lien Notes due 2031, issued by Level 3 Financing, Inc., dated as of March 22, 2024 (included in Exhibit 4.26).
4.26			Indenture, dated as of March 22, 2024, among Level 3 Financing, Inc., as issuer, Level 3 Parent, LLC, the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, relating to Level 3 Financing, Inc.’s 4.000% Second Lien Notes due 2031 (incorporated by reference to Exhibit 4.26 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).

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Exhibit Number			Description
10.1			Amendment Agreement, dated as of March 22, 2024, among Lumen Technologies, Inc., as borrower, the guarantors party thereto, the issuing banks party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, to the Amended and Restated Credit Agreement, dated as of January 31, 2020, among Lumen Technologies, Inc., as borrower, the issuing banks party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent, collateral agent and swingline lender (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
10.2			Superpriority Revolving/Term A Credit Agreement, dated as of March 22, 2024, among Lumen Technologies, Inc., as borrower, the lenders and issuing banks party thereto and Bank of America, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
10.3			Superpriority Term B Credit Agreement, dated as of March 22, 2024, among Lumen Technologies, Inc., as borrower, the lenders party thereto, Wilmington Trust, National Association, as administrative agent, and Bank of America, N.A., as collateral agent (incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
10.4			Fourteenth Amendment Agreement, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., as borrower, the guarantors party thereto, the lenders party thereto and Merrill Lynch Capital Corporation, as administrative agent and collateral agent, to the Amended and Restated Credit Agreement, dated as of November 29, 2019, among Level 3 Parent, LLC, Level 3 Financing, Inc., as borrower, the lenders party thereto and Merrill Lynch Capital Corporation, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
10.5			Credit Agreement, dated as of March 22, 2024, among Level 3 Parent, LLC, Level 3 Financing, Inc., as borrower, the lenders party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K (File No. 001-07784) filed with the Securities and Exchange Commission on March 28, 2024).
31.1*			Certification of the Chief Executive Officer of Lumen Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of the Chief Financial Officer of Lumen Technologies, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of the Chief Executive Officer of Lumen Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of the Chief Financial Officer of Lumen Technologies, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*			Financial statements from the Quarterly Report on Form 10-Q of Lumen Technologies, Inc. for the period ended ~~September 30, 2023,~~March 31, 2024, formatted in Inline XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive ~~(Loss)~~ Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders' Equity and (vi) the Notes to Consolidated Financial Statements.
104*			Cover page formatted as Inline XBRL and contained in Exhibit 101.

* Exhibit filed herewith.

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~October 31, 2023.~~April 30, 2024.


			LUMEN TECHNOLOGIES, INC.
			By:			/s/ Andrea Genschaw
						Andrea Genschaw Senior Vice President, Controller (Principal Accounting Officer)


	September 30, 2023(1)		December 31, 2022(1)
	(Dollars in millions)
Goodwill(2)	$	3,864	12,657
Indefinite-lived intangible assets	$	9	9
Other intangible assets subject to amortization:
Customer relationships, less accumulated amortization of $4,087 and $3,606	4,088		4,574
Capitalized software, less accumulated amortization of $3,961 and $3,895(3)	1,557		1,482
Trade names, patents and other, less accumulated amortization of $68 and $188(3)	90		101
Total other intangible assets, net	$	5,744	6,166


	As of September 30, 2023		As of December 31, 2022
	Net Asset Value
	(Dollars in millions)
Investment in limited partnership(1)	$	11	85