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~~March 3031, ~~2023~~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 number 001-35134

LEVEL 3 PARENT, LLC

(Exact name of registrant as specified in its charter)

Delaware		47-0210602
(State of Incorporation)		(I.R.S. EmployerIdentification No.)
1025 Eldorado Blvd.,
931 14th Street,
Broomfield,	CO	80021-8869
Denver	CO	80202-2994
(Address of principal executive offices)		(Zip Code)

(720) 888-1000

(Registrant’s telephone number,

including area code)

Securities registered pursuant to Section 12(b) of the Act: None

THE REGISTRANT, A WHOLLY-OWNED SUBSIDIARY OF LUMEN TECHNOLOGIES, INC., MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE PURSUANT TO GENERAL INSTRUCTION H(2).

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 ☒ Although the registrant is no longer required to file reports under Section 13 or 15(d) of such Act, it has filed all such reports for the preceding 12 months.

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 (§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, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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 ☒

All of the limited liability company interest in the registrant is held by an affiliate of the registrant. None of the interest is publicly traded.

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TABLE OF CONTENTS

	Special Note Regarding Forward-Looking Statements	3
Part I	Financial Information
Item 1.	Financial Statements	6
	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 Member's Equity (Unaudited)	10
	Notes to Consolidated Financial Statements (Unaudited)*	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2829
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3837
Item 4.	Controls and Procedures	3938
Part II	Other Information
Item 1.	Legal Proceedings	4039
Item 1A.	Risk Factors	4039
Item 6.	Exhibits	4140
Signature		42
* All references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements.

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Unless the context requires otherwise, references in this report to "Level 3," “we,” “us,” "its," the "Company" and "our" refer to Level 3 Parent, LLC and its predecessor Level 3 Communications, Inc., and their respective consolidated subsidiaries. References to (i) "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, (ii) “Level 3 Financing” refer to our finance subsidiary, Level 3 Financing, Inc., and (iii) “Qwest” refer to its affiliate Qwest Corporation.

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, 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, distribution and securities repurchase plans, leverage, capital allocation plans, financing or refinancing alternatives and sources, and pricing plans; and

•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, 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;

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•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, broadband deployment, data protection, privacy and net neutrality;

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

•our ability to effectively retain and hire key personnel;

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

•changes in our operating plans, corporate strategies ~~and~~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 Lumen’s pension, healthcare and post-employment benefits, including those caused by changes in markets, interest rates, mortality rates, demographics or regulations;

•the potential negative impact of customer 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;

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

•~~the~~our ~~impact~~ability ofto ~~any~~attain ~~purported~~the ~~notice~~anticipated ofbenefits ~~default or notice~~ of ~~acceleration~~our ~~arising~~March ~~from~~22, ~~alleged~~2024 ~~breach~~debt ~~of covenants under our credit documents~~transactions;

•our ability to ~~consummate~~maintain ~~the~~favorable ~~transactions~~relations ~~contemplated~~with byour ~~the~~security ~~transaction~~holders, ~~support~~key ~~agreement~~business ~~on the timeline currently expected or at all~~partners, including the ability 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 bysuppliers, ~~or a right of any of the parties to terminate~~vendors, ~~the~~landlords ~~transaction~~and ~~support agreement~~lenders;

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

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

4•Lumen's ability to meet evolving environmental, social and governance ("ESG") expectations and benchmarks, and effectively communicate and implement its ESG strategies;

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•Lumen's ability to meet evolving environmental, social and governance ("ESG") expectations and benchmarks, and effectively communicate its ESG strategies;

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

•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 or our affiliates, including Lumen Technologies;

•changes in tax, pension, healthcare or other laws or regulations, or in general government funding levels, including those arising from governmental programs promoting increased broadband development;4

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•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 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 distribution or other 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

LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(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)
OPERATING REVENUE
OPERATING REVENUE
Operating revenue	$	1,531	1,727
Operating revenue	$	1,706	1,762	5,144	5,548
Operating revenue - affiliates	59		57
Operating revenue - affiliates	57		57	167	170
Total operating revenue	1,590		1,784
Total operating revenue	1,763		1,819	5,311	5,718
OPERATING EXPENSES
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)	672		771
Cost of services and products (exclusive of depreciation and amortization)	779		785	2,281	2,472
Selling, general and administrative	337		286
Selling, general and administrative	342		269	946	901
Loss on sale of business	22		77
Gain on sale of business	—		(119)	—	(119)
Operating expenses - affiliates	238		168
Loss on disposal group held for sale	28		—	113	—
Depreciation and amortization	364		347
Operating expenses - affiliates	172		173	571	481
Total operating expenses	1,633		1,649
Depreciation and amortization	354		377	1,056	1,178
OPERATING (LOSS) INCOME	(43)		135
Goodwill impairment	—		—	1,970	—
OTHER (EXPENSE) INCOME
Total operating expenses	1,675		1,485	6,937	4,913
Interest expense	(129)		(93)
OPERATING INCOME (LOSS)	88		334	(1,626)	805
Interest income - affiliate	22		16
OTHER (EXPENSE) INCOME
Net gain on early retirement of debt (Note 5)	54		—
Interest expense	(123)		(99)	(336)	(284)
Other income, net	14		5
Interest income - affiliate	16		19	47	50
Total other expense, net	(39)		(72)
Other expense, net	(39)		(4)	(27)	(25)
(LOSS) INCOME BEFORE INCOME TAXES	(82)		63
Total other expense, net	(146)		(84)	(316)	(259)
Income tax (benefit) expense	(18)		22
(LOSS) INCOME BEFORE INCOME TAXES	(58)		250	(1,942)	546
NET (LOSS) INCOME	$	(64)	41
Income tax (benefit) expense	(13)		312	(14)	397
NET (LOSS) INCOME	$	(45)	(62)	(1,928)	149

See accompanying notes to consolidated financial statements.

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LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(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)
NET (LOSS) INCOME	$	(64)	41
NET (LOSS) INCOME	$	(45)	(62)	(1,928)	149
OTHER COMPREHENSIVE (LOSS) INCOME
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments, net of $— and $(6) tax	(2)		11
Reclassification of realized loss on foreign currency translation to gain on sale of business, net of $—, $—, $— and $— tax	—		112	—	112
Other comprehensive (loss) income, net of tax	(2)		11
Foreign currency translation adjustments, net of $5, $28, $(3) and $70 tax	(14)		(114)	(2)	(229)
COMPREHENSIVE (LOSS) INCOME	$	(66)	52
Other comprehensive loss, net of tax	(14)		(2)	(2)	(117)
COMPREHENSIVE (LOSS) INCOME	$	(59)	(64)	(1,930)	32

See accompanying notes to consolidated financial statements.

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LEVEL 3 PARENT, LLC

CONSOLIDATED BALANCE SHEETS

	September 30, 2023		December 31, 2022
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	146	118
Accounts receivable, less allowance of $13 and $19	567		517
Note receivable - affiliate	1,466		1,468
Assets held for sale	1,885		1,853
Other	220		197
Total current assets	4,284		4,153
Property, plant and equipment, net of accumulated depreciation of $3,521 and $2,875	7,384		7,303
GOODWILL AND OTHER ASSETS
Goodwill	—		1,970
Other intangible assets, net	4,516		4,973
Other, net	1,320		1,360
Total goodwill and other assets	5,836		8,303
TOTAL ASSETS	$	17,504	19,759
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	29	26
Accounts payable	340		365
Accounts payable - affiliates	48		70
Accrued expenses and other liabilities
Salaries and benefits	177		146
Income and other taxes	106		86
Current operating lease liabilities	310		326
Other	145		109
Liabilities held for sale	474		446
Current portion of deferred revenue	292		274
Total current liabilities	1,921		1,848
LONG-TERM DEBT	8,960		8,070
DEFERRED REVENUE AND OTHER LIABILITIES
Deferred revenue	1,554		1,420
Operating lease liabilities	840		922
Other	657		701
Total deferred revenue and other liabilities	3,051		3,043
COMMITMENTS AND CONTINGENCIES (Note 9)
MEMBER'S EQUITY
Member's equity	3,918		7,142
Accumulated other comprehensive loss	(346)		(344)
Total member's equity	3,572		6,798
TOTAL LIABILITIES AND MEMBER'S EQUITY	$	17,504	19,759

(UNAUDITED)


	March 31, 2024		December 31, 2023
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	399	2,017
Accounts receivable, less allowance of $11 and $13	572		545
Accounts receivable - affiliates	87		—
Notes receivable - affiliate	2,668		1,466
Other	232		244
Total current assets	3,958		4,272
Property, plant and equipment, net of accumulated depreciation of $3,779 and $3,665	7,413		7,398
OTHER ASSETS
Customer relationships and other intangible assets, net	4,067		4,237
Other, net	1,289		1,346
Total other assets	5,356		5,583
TOTAL ASSETS	$	16,727	17,253
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	32	31
Accounts payable	403		392
Accounts payable - affiliates	—		37
Accrued expenses and other liabilities
Salaries and benefits	121		195
Income and other taxes	113		105
Current operating lease liabilities	295		288
Interest	68		82
Other	54		78
Current portion of deferred revenue	312		300
Total current liabilities	1,398		1,508
LONG-TERM DEBT	10,155		8,952
DEFERRED REVENUE AND OTHER LIABILITIES
Deferred revenue	1,682		1,623
Operating lease liabilities	806		845
Other	682		709
Total deferred revenue and other liabilities	3,170		3,177
COMMITMENTS AND CONTINGENCIES (Note 8)
MEMBER'S EQUITY
Member's equity	2,034		3,644
Accumulated other comprehensive loss	(30)		(28)
Total member's equity	2,004		3,616
TOTAL LIABILITIES AND MEMBER'S EQUITY	$	16,727	17,253

See accompanying notes to consolidated financial statements.

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LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022
	2024		2023
	(Dollars in millions)
OPERATING ACTIVITIES
Net (loss) income	$	(~~1,928~~64)	~~149~~41
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	~~1,056~~364		~~1,178~~347
Loss on disposal group held for sale	113		—
Net loss on sale of businesses	22		77
Goodwill impairment	1,970		—
Deferred income taxes	(19)		19
Gain on sale of business	—		(119)
Net gain on early retirement of debt	(54)		—
Deferred income taxes	(20)		367
Changes in current assets and liabilities:
Accounts receivable	(4126)		2(15)
Accounts payable	(3020)		~~(37)~~27
Other assets and liabilities, net	12(69)		(~~141~~108)
Other assets and liabilities, affiliate	(5119)		8142
Changes in other noncurrent assets and liabilities, net	~~101~~238		~~117~~(30)
Other, net	5(35)		90(21)
Net cash provided by operating activities	~~1,233~~218		~~1,687~~379
INVESTING ACTIVITIES
Capital expenditures	(~~785~~204)		(~~877~~244)
Proceeds from sale of business	3		2,707
Proceeds from sale of property, plant and equipment and other assets	9		23
Proceeds from sale of property, plant and equipment and other assets	25		2
Increase in notes receivable - affiliate	(1,202)		—
Other, net	~~(12)~~—		—(4)
Net cash (used in) provided by investing activities	(769)		1,832
Net cash used in investing activities	(1,397)		(225)
FINANCING ACTIVITIES
Distributions	(411)		(1,210)
Net proceeds from issuance of long-term debt	1,325		—
Payments of long-term debt	(28)		(2,367)
Distributions	(1,756)		(110)
Other	(13)		—
Contributions	210		—
Net cash used in financing activities	(452)		(3,577)
Payments of long-term debt	(8)		(8)
Net increase (decrease) in cash, cash equivalents and restricted cash	12		(58)
Debt issuance and extinguishment costs and related fees	(210)		(11)
Cash, cash equivalents and restricted cash at beginning of period	164		191
Net cash used in financing activities	(439)		(129)
Cash, cash equivalents and restricted cash at end of period	$	176	133
Net (decrease) increase in cash, cash equivalents and restricted cash	(1,618)		25
Cash, cash equivalents and restricted cash at beginning of period	2,020		164
Cash, cash equivalents and restricted cash at end of period	$	402	189
Supplemental cash flow information:
Income taxes paid, net	$	(71)	(41)
Interest paid (net of capitalized interest of $15 and $12)	$	(302)	(326)
Interest paid (net of capitalized interest of $7 and $5)	$	(140)	(114)
Supplemental non-cash information regarding financing activities:
Issuance of senior secured notes as part of exchange offers (Note 6)	$	924	—
Issuance of senior secured notes as part of exchange offers (Note 5)	$	—	915
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	~~146~~399	~~130~~147
Cash and cash equivalents and restricted cash included in assets held for sale	28—		—40
Restricted cash included in Other current assets	—1		1—
Restricted cash included in Other, net noncurrent assets	2		2
Total	$	~~176~~402	~~133~~189

See accompanying notes to consolidated financial statements.

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LEVEL 3 PARENT, LLC

CONSOLIDATED STATEMENTS OF MEMBER'S 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)
MEMBER'S EQUITY
MEMBER'S EQUITY
Balance at beginning of period	$	3,644	7,119
Balance at beginning of period	$	4,215	13,018	7,142	13,360
Net (loss) income	(64)		41
Net (loss) income	(45)		(62)	(1,928)	149
Distributions	(1,756)		(1,025)
Distributions	(250)		(657)	(1,335)	(1,210)
Contributions	210		—
Other	~~(2)~~—		~~(1)~~41	39	~~(1)~~
Balance at end of period	32,~~918~~034		126,~~298~~176	~~3,918~~	~~12,298~~
ACCUMULATED OTHER COMPREHENSIVE LOSS
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance at beginning of period	(~~332~~28)		(~~466~~344)	~~(344)~~	~~(351)~~
Other comprehensive loss	(14)		(2)	(2)	(117)
Other comprehensive (loss) income	(2)		11
Balance at end of period	(~~346~~30)		(~~468~~333)	~~(346)~~	~~(468)~~
TOTAL MEMBER'S EQUITY	$	32,~~572~~004	115,~~830~~843	~~3,572~~	~~11,830~~

See accompanying notes to consolidated financial statements.

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LEVEL 3 PARENT, LLC

Notes To Consolidated Financial Statements

(UNAUDITED)

Unless the context requires otherwise, references in this report to "Level 3," “we,” “us,” "its," the “Company” and “our”, refer to Level 3 Parent, LLC and its predecessor, Level 3 Communications, Inc. and their respective subsidiaries. References to (i) "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries, (ii) “Level 3 Financing” refer to our finance subsidiary, Level 3 Financing, Inc., and (iii) “Qwest” refer to its affiliate Qwest Corporation.

(1) Background

General

We are ana ~~international~~ facilities-based technology and communications company ~~focused~~that onprovides ~~providing our customers with~~ a broad array of integrated products and services ~~necessary~~ to ~~fully~~our ~~participate~~domestic inand ~~our~~global ~~ever-evolving~~business ~~digital world~~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, -which ~~allowing~~allows our customers to rapidly evolve their IT programs to address dynamic changes. Our specific products and services are detailed in Note 43—Revenue Recognition.

During 2022 and 2023, we divested components of our business, referenced herein as the Europe, Middle East and Africa ("EMEA") business, divested November 1, 2023 and the Latin American business, divested August 1, 2022. Please refer to Note 2—Divestitures of the Latin American 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 neither of these divestitures represented a strategic shift for Level 3, they did not meet the criteria to be treated as discontinued operations and we continued to report our operating results for both 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. Transactions with our non-consolidated affiliates (Lumen Technologies and its other subsidiaries, referred to herein as affiliates) have not been eliminated.

Operating lease assets are included in other, net under ~~goodwill and~~ other assets on our consolidated balance sheets. Other, net included affiliate operating lease assets of $~~335~~283 million and $~~391~~311 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively. Additionally, current operating lease liabilities included the current portion of affiliate operating lease liabilities of $~~131~~136 million and $~~125~~129 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively, and operating lease liabilities included the noncurrent portion of affiliate operating lease liabilities of $~~224~~176 million and $~~286~~201 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively.

We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 4—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period.

Segments

Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to our CODM on a regular basis. As such, we have one reportable segment.

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We reclassified certain prior period amounts to conform to the current period presentation, including our revenue by product and service categories. See Note 3—Revenue Recognition for additional information. These changes had no impact on total operating revenue, total operating expenses or net (loss) income for any period.

During 2023, we identified errors in our previously reported consolidated financial statements related to accounts receivable and accounts payable. The errors are the result of understated revenues from one of our legacy mainframe billing systems and understated network expenses for periods prior to 2021. Notwithstanding this evaluation, we revised certain line items on our December 31, 2022 consolidated balance sheet in prior periods for these errors, which resulted in a decrease to our member's equity by $23 million, reflected in our January 1, 2023 and March 31, 2023 member's equity in our consolidated statements of member's 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.

Segments

Our operations are integrated into and reported as part of Lumen Technologies. Lumen's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment.

Change in Accounting Estimate

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 $7 million, $5 million net of tax, 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.

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~~a material 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

On January 1, 2022, 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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Adoption of Other ASU With No Impact

As of March 31, 2024, we adopted ASU 2023-01, “Leases (Topic 842): Common Control Arrangements”, and 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 ~~October~~December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-~~06,~~09 “~~Disclosure~~Income ~~Improvements:~~Taxes ~~Codification~~(Topic ~~Amendments~~740): inImprovements ~~Response~~ to ~~the~~Income ~~SEC’s~~Tax ~~Disclosure Update and Simplification Initiative~~Disclosures” (“ASU 2023-0609”). This ASU ~~incorporates~~requires ~~certain~~that ~~SEC~~public ~~disclosure~~business ~~requirements~~entities ~~into~~must ~~the~~annually ~~FASB Accounting Standards Codification~~ (~~“Codification”~~i). ~~The~~disclose ~~amendments~~specific categories in the ~~ASU~~rate ~~are~~reconciliation ~~expected~~and to(ii) ~~clarify~~provide oradditional ~~improve~~information ~~disclosure~~for ~~and~~reconciling ~~presentation~~items ~~requirements~~that ofmeet a ~~variety~~quantitative ofthreshold ~~Codification~~(if ~~Topics,~~the ~~allow~~effect ~~users~~of tothose ~~more~~reconciling ~~easily~~items ~~compare~~is ~~entities~~equal ~~subject~~ to ~~the~~or ~~SEC’s~~greater ~~existing~~than ~~disclosures~~5 ~~with~~percent ~~those~~of ~~entities~~the ~~that~~amount ~~were~~computed ~~not~~by ~~previously~~multiplying ~~subject~~pretax toincome ~~the~~or ~~requirements,~~loss ~~and~~by ~~align~~ the ~~requirements~~applicable instatutory ~~the~~income ~~Codification~~tax ~~with the SEC’s regulations~~rate).” ASU 2023-0609 will become effective for ~~each~~us ~~amendment~~in onfiscal ~~the~~year ~~effective~~2025 ~~date~~and ofearly ~~the~~adoption ~~SEC's~~is ~~corresponding disclosure rule changes~~permitted. As of ~~September~~March 3031, ~~2023~~2024, we dohad not ~~expect~~early adopted this ASU ~~2023-06~~and ~~will~~are ~~have~~currently ~~any~~evaluating its impact toon our consolidated financial statements, including our annual disclosure within our Income Taxes note.

In ~~August~~November 2023, the FASB issued ASU 2023-0507, “~~Business~~Segment ~~Combinations~~Reporting ~~– Joint Venture Formations~~ (~~Subtopic~~Topic ~~805-60~~280): ~~Recognition~~Improvements ~~and~~to ~~initial~~Reportable ~~Measurement~~Segment Disclosures” (“ASU 2023-0507”). This ASU ~~applies~~is intended to ~~the~~improve ~~formation~~reportable ofsegment ~~entities~~disclosure ~~that~~requirements ~~meet~~primarily ~~the~~through ~~definition~~enhanced ofdisclosures aabout ~~joint~~significant ~~venture~~segment ~~(or a corporate joint venture)~~expenses. ~~The~~This ~~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~~annual ~~first~~period ~~quarter of~~ fiscal ~~2025~~2024 and early adoption is permitted. As of ~~September~~March 3031, ~~2023~~2024, we do not expect ASU 2023-0507 will have any impact to our consolidated financial statements.

~~In August 2023, the FASB issued ASU 2023-04, “Liabilities~~ (~~Topic 405~~2): ~~Amendments~~Goodwill, toCustomer ~~SEC~~Relationships ~~Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121” (“ASU 2023-04”). This ASU amends~~ and ~~adds~~Other ~~various~~Intangible SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users. The 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.Assets

InCustomer ~~July~~relationships 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~~other ~~Compensation~~intangible ~~(Topic~~assets ~~718):~~consisted 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 superseded various SEC paragraphs within~~ the applicable codification to conform to past SEC staff Announcements. This ASU does not provide any new guidance. ASU 023-03 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.following:

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.


	March 31, 2024		December 31, 2023
	(Dollars in millions)
Customer relationships, less accumulated amortization of $4,047 and $3,896	$	3,655	3,810
Capitalized software, less accumulated amortization of $431 and $419	412		427
Total customer relationships and other intangible assets, net	$	4,067	4,237

InAs of March ~~2023~~31, ~~the FASB issued ASU 2023-01~~2024, ~~“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~~gross ~~life~~carrying toamount ~~the common control group. ASU 2023-01 will become effective for us in the first quarter~~ of ~~fiscal~~customer ~~2024~~relationships and ~~early~~capitalized ~~adoption~~software iswas ~~permitted~~$8.5 ~~As of September 30, 2023, we do not expect ASU 2023-01 will have any impact to our consolidated financial statements~~billion.

InOur ~~June~~goodwill ~~2022,~~was ~~the~~derived ~~FASB~~from ~~issued~~Lumen's ~~ASU~~acquisition ~~2022-03,~~of ~~“Fair~~us ~~Value~~where ~~Measurement~~the ~~(Topic~~purchase ~~820):~~price ~~Fair~~exceeded ~~Value~~the ~~Measurement~~fair value of ~~Equity~~the ~~Securities~~net ~~Subject~~assets acquired. We are required to ~~Contractual~~assess ~~Sale~~our ~~Restrictions”~~goodwill ~~(“ASU~~for ~~2022-03”).~~impairment ~~These~~annually, ~~amendments~~or ~~clarify~~under ~~that~~certain acircumstances, ~~contractual~~more ~~restriction~~frequently, onsuch ~~the~~as ~~sales~~when ofevents anor ~~investment~~changes in ancircumstances ~~equity~~indicate ~~security~~there ismay ~~not~~be ~~considered~~impairment. ~~part~~We ofare required to write down the ~~unit~~value of ~~account~~goodwill ofonly when our assessment determines the ~~equity~~carrying ~~security~~value ~~and,~~of ~~therefore,~~equity isof ~~not~~our ~~considered~~reporting inunit ~~measuring~~exceeds its fair value. ~~ASU~~Our ~~2022-03~~annual ~~will~~impairment ~~become~~assessment ~~effective~~date for usgoodwill inis ~~the~~October ~~first~~31, ~~quarter~~at ofwhich ~~fiscal~~date ~~2024~~we ~~and~~assess ~~early~~goodwill ~~adoption~~at isour ~~permitted~~reporting unit. AsIn ofreviewing ~~September~~the 30criteria for reporting units, we have determined that we are one reporting unit. During the second quarter of 2023, we dofully ~~not~~impaired ~~expect~~our ~~ASU~~remaining ~~2022-03~~goodwill ~~will~~balance, ~~have~~recognizing ~~any~~a ~~impact~~non-cash, tonon-tax-deductible ~~our~~goodwill ~~consolidated~~impairment ~~financial~~charge ~~statements~~of $2.0 billion in that period.

Total amortization expense for finite-lived intangible assets for the three months ended March 31, 2024 and 2023 totaled $186 million and $176 million, respectively.

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~~(2)~~We ~~Planned~~estimate ~~Divestiture~~that oftotal amortization expense for intangible assets for the ~~EMEA~~years ~~Business~~ending December 31, 2024 through 2028 will be as provided in the table below.

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 satisfaction of customary closing conditions, Level 3 Parent, LLC expects to close the transaction November 1, 2023, although it can provide no assurance to this effect.


	(Dollars in millions)
2024 (remaining nine months)	$	519
2025	649
2026	636
2027	594
2028	557

~~The~~(3) ~~actual~~Revenue ~~amount~~Recognition 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 docategorize not believe this divestiture represents a strategic shift for us. 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~~products ~~results~~and ~~for~~services ~~the~~revenue ~~EMEA~~among ~~business (~~the ~~"disposal~~following ~~group") in our consolidated operating results until the transaction is closed.~~ categories:

~~The~~•Grow, ~~pre-tax~~which ~~net~~includes ~~income~~products ofand ~~the~~services ~~disposal~~that ~~group~~we isanticipate ~~estimated~~will togrow, beincluding our colocation, dark fiber, Edge Cloud services, IP, managed security, Unified Communications and ~~reported~~Collaboration as("UC&C"), ~~follows~~wavelengths inservices ~~the~~and ~~table~~software-defined ~~below:~~wide area networks ("SD WAN");

	Three Months Ended September 30,			Nine Months Ended September 30,
	2023		2022	2023	2022
	(Dollars in millions)
EMEA business pre-tax net income (loss)	$	32	(21)	131	(55)

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 $90 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 $224 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 $616 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 $28 million and $113 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	54		56
Property, plant and equipment, net accumulated depreciation of $1,013 and $998	1,954		1,864
Customer relationships and other intangibles, net	103		100
Operating lease assets	215		156
Valuation allowance on assets held for sale (1)	(729)		(616)
Deferred tax assets	145		131
Other non-current assets	34		32
Total assets held for sale	$	1,873	1,842
Liabilities held for sale
Accounts payable	$	56	78
Salaries and benefits	20		23
Current portion of deferred revenue	28		28
Current operating lease liabilities	41		33
Other current liabilities	33		28
Deferred income taxes	60		38
Asset retirement obligations	31		30
Deferred revenue, non-current	99		85
Operating lease liabilities, non-current	106		103
Total liabilities held for sale	$	474	446

______________________________________________________________________

(1) Includes the impact of $341 million and $353 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)	$	—	1,970
Customer relationships, less accumulated amortization of $3,735 and $3,265	$	4,088	4,563
Capitalized software, less accumulated amortization of $401 and $387	428		410
Trade names, less accumulated amortization of $— and $130 (3)	—		—
Total other intangible assets, net	$	4,516	4,973

_______________________________________________________________________________

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

(2)We recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion during the second quarter of 2023.

(3)Trade names with a gross carrying value of $130 million became fully amortized during 2022 and were retired during the first quarter of 2023.

Our goodwill at December 31, 2022 was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired.

Second Quarter 2023 Goodwill Impairment Analysis

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

The sustained decline in Lumen's share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment; as such, we estimated the fair value 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 were below these comparable market multiples. For the three months ended June 30, 2023, based on our assessment performed as described above, we concluded the estimated fair value was less than our carrying value of equity. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.0 billion for the three months ended June 30, 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, 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.

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

	(Dollars in Millions)
As of December 31, 2022(1)	$	1,970
Impairment	(1,970)
As of September 30, 2023(1)	$	—

(1)Goodwill at September 30, 2023 and December 31, 2022 is net of accumulated impairment losses of $10.2 billion and $8.2 billion, respectively.

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Total amortization expense for finite-lived intangible assets for the three months ended September 30, 2023 and 2022 totaled $184 million and $187 million, respectively, and for the nine months ended September 30, 2023 and 2022 totaled $540 million and $565 million, respectively. As of September 30, 2023, the gross carrying amount of customer relationships, capitalized software, indefinite-life and other intangible assets was $8.7 billion.

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

	(Dollars in millions)
2023 (remaining three months)	$	172
2024	682
2025	663
2026	651
2027	609

(4) Revenue Recognition

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

•Grow, which includes products and services that we anticipate will grow, including our colocation, 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 network services;

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

•Other, which includes ~~equipment~~primarily ~~sales,~~managed ITand professional service solutions and ~~other~~content ~~services~~delivery network ("CDN") revenue, prior to the sale of substantially all of our CDN contracts in late 2023; and

•Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers.

From time to time, we may change the categorization of our products and services.

Disaggregated Revenue by Service Offering

The following ~~tables~~table ~~provide~~provides disaggregation of revenue from contracts with customers based on service offering for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023. It also ~~shows~~provides the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. The amounts in the tables below include ~~revenue for~~ the ~~Latin~~EMEA ~~American~~ business revenue prior to it being sold on ~~August~~November 1, ~~2022~~2023. See Note 2—~~Completed~~Divestitures ~~Divestiture~~ of the Latin American ~~Business~~ and ~~Planned~~EMEA ~~Divestiture~~Businesses ~~of European, Middle Eastern and African Business~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 for additional information on these divestitures.

Three Months Ended September 30, 2023

Three Months Ended September 30, 2022

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

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)

Grow

~~988~~921

(~~151~~125)

~~837~~796

~~956~~975

(~~153~~162)

~~803~~813

Nurture

~~428~~385

(34)

~~425~~381

~~464~~438

(43)

~~460~~435

Harvest

~~264~~195

—

~~264~~195

~~316~~260

—

~~316~~260

Other

2630

—

2630

2654

—

2654

Affiliate Services

5759

(5759)

—

(57)

—

Total revenue

1,~~763~~590

(~~211~~188)

1,~~552~~402

1,~~819~~784

(~~214~~222)

1,~~605~~562

	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)
Grow	$	2,947	(465)	2,482	3,022	(518)	2,504
Nurture	1,296		(11)	1,285	1,462	(12)	1,450
Harvest	825		—	825	982	—	982
Other	76		—	76	82	—	82
Affiliate Services	167		(167)	—	170	(170)	—
Total revenue	$	5,311	(643)	4,668	5,718	(700)	5,018

_____________________________________________________________________

(1) Includes lease revenue which is not within the scope of ASC 606.

Operating Lease Income

We lease 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~~March 3031, ~~2023~~2024 and ~~2022~~2023, our gross rental income was $~~170~~146 million and $~~175~~181 million, which represents approximately 109% ~~of our operating revenue for both periods. For the nine months ended September 30, 2023~~ and ~~2022, our gross rental income was $525 million and $581 million, which represents approximately~~ 10% of our operating revenue, ~~for both periods~~respectively.

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~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023:

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
	(Dollars in millions)
Customer receivables (1)	$	~~567~~570	~~515~~544
Contract assets (2)	9		13
Contract assets	8		8
Contract liabilities (3)	239		222
Contract liabilities	237		222

_____________________________________________________________________

(1)Reflects gross customer receivables of $~~580~~581 million and $~~534~~557 million, net of allowance for credit losses of $1311 million and $1913 million, at ~~both~~March ~~September 30~~31, ~~2023~~2024 and December 31, ~~2022. As of September 30,~~ 2023 ~~and December 31~~, ~~2022, this amount excludes customer receivables classified as held for sale of $70 million and $76 million,~~ respectively.

~~(2)As of September 30, 2023 and December 31, 2022, amount excludes contract assets classified as held for sale of $11 million and $16 million, respectively.~~15

~~(3)As~~Contract liabilities are consideration we have received from our customers or billed in advance of ~~September~~providing ~~30,~~the ~~2023~~goods or services promised in the future. We defer recognizing this consideration until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and ~~December~~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 in our consolidated balance sheets. During the three months ended March 31, ~~2022~~2024, ~~amount~~we ~~excludes~~recognized $69 million of revenue that was included in contract liabilities ~~classified~~of $222 million as ~~held~~of ~~for~~January ~~sale~~1, of2024. During the three months ended March 31, 2023, we recognized $4779 million ~~and~~of revenue that was included in contract liabilities of $59 281 million as of January 1, ~~respectively~~2023, including contract liabilities that were classified as held for sale.

Contract liabilities are consideration we have received from our customers or billed in advance of providing the goods or services promised in the future. We defer recognizing this consideration 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 and liabilities held for sale in our consolidated balance sheets. During the three and nine months ended September 30, 2023, we recognized $21 million and $119 million, respectively, of revenue that was included in contract liabilities of $281 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 $20 million and $128 million, respectively, of revenue that was included in contract liabilities of $305 million as of January 1, 2022, including contract liabilities that were classified as held for sale.

Performance Obligations

As of ~~September~~March 3031, ~~2023~~2024, we expect to recognize approximately $34.91 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of ~~September~~March 3031, ~~2023~~2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of ~~2023~~2024, ~~2024~~2025 and thereafter was $~~517 million~~1.5 billion, $1.64 billion and $1.82 billion, respectively.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), and (ii) contracts that are classified as leasing arrangements 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~~.

Contract Costs

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

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
	Three Months EndedMarch 31, 2024			Three Months EndedMarch 31, 2023
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)
Beginning of period balance(1)(2)	$	69	102	78	101
Beginning of period balance(1)	$	70	97	76	106
Costs incurred	12		2417	1617	2023
Amortization	(1412)		(1815)	(1415)	(1716)
Change in contract costs held for sale	—		—	—(4)	1(14)
End of period balance(5)(6)	$	67	108	80	105
End of period balance(2)	$	70	99	74	99

	Nine Months EndedSeptember 30, 2023			Nine Months EndedSeptember 30, 2022
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)
Beginning of period balance(3)(4)	$	76	106	76	99
Costs incurred	39		68	45	63
Amortization	(44)		(52)	(41)	(57)
Change in contract costs held for sale	(4)		(14)	—	—
End of period balance(5)(6)	$	67	108	80	105

______________________________________________________________________

(1)Beginning of period balance for the three months ended ~~September~~March 3031, 2023 excludes $106 million of acquisition costs and ~~$14 million~~no of fulfillment costs classified as held for sale related to the EMEA business.

(2)~~Beginning~~End of period balance for the three months ended ~~September~~March 3031, ~~2022~~2023 excludes no$10 million of acquisition costs and $2814 million of fulfillment costs classified as held for sale (related to the ~~Latin~~EMEA ~~American~~ business~~, sold in the third quarter of 2022)~~.

(3)Beginning of period balance for the nine months ended September 30, 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 no acquisition costs and $27 million of fulfillment costs classified as held for sale (related to the Latin American business, sold in the third quarter of 2022).

(5)End of period balance for the three and nine 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.

(6)End of period balance for the three and nine months ended September 30, 2022 excludes no acquisition costs and no of fulfillment costs classified as held for sale (related to the Latin American business, sold in the third quarter of 2022).

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.

We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average expected contract life of approximately 3536 months for our 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 12the next twelve months in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.

2016

(54) 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 for our accounts receivable portfolio:

	(Dollars in millions)
Beginning balance at December 31, 2022(1)	$	19
Beginning balance at December 31, 2023	$	13
Provision for expected losses	5—
Write-offs charged against the allowance	(153)
Recoveries collected	31
Change in allowance in assets held for sale	1
Ending balance at March 31, 2024	$	11
Ending balance at September 30, 2023(1)	$	13

~~______________________________________________________________________~~17

(15)As ofLong-Term ~~September~~Debt ~~30, 2023~~ and ~~December~~Credit ~~31, 2022, amounts exclude a $4 million and $5 million allowance for credit losses classified as held for sale. See Note 2—Planned Divestiture of the EMEA Business.~~Facilities

21On March 22, 2024 (the "Effective Date"), Lumen Technologies, Inc ("Lumen"), Level 3 Financing, Inc. ("Level 3 Financing"), Qwest Corporation ("Qwest") and a group of creditors holding a majority of Lumen's consolidated debt (the "Consenting Debtholders" and, collectively with Lumen, Level 3 Financing 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"). Disclosures within this note will focus on the transactions impacting Level 3 Financing specifically. For detailed information about all transactions completed under the TSA, please see Note 5—Long-Term Debt and Credit Facilities in Item 1 of Part I of Lumen's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. The TSA Transactions, as they relate specifically to Level 3 Financing, include:

•Lumen and certain of the Consenting Debtholders agreed to exchange a substantial portion of Lumen’s senior secured notes (6the "Former Parent Secured Notes") ~~Long~~for newly-~~Term~~issued ~~Debt~~Lumen superpriority secured notes, Level 3 Financing first lien notes and cash;

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

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

•Level 3 Financing 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 a portion of the Former Parent Secured Notes and $50 million of which was comprised of non-cash lender fees; and

•Level 3, Level 3 Financing and certain of their affiliates (the "Level 3 Collateral Guarantors") agreed to guarantee a portion of Lumen's obligations under each of its two new revolving credit facilities established as part of the TSA Transactions, as described further below.

The following table reflects our consolidated long-term debt, including finance leases and other obligations, unamortized discounts and premiums, net and unamortized debt issuance costs, but excluding intercompany debt:

	Interest Rates (1)	Maturities (1)	~~September~~March 3031, ~~2023~~2024		December 31, ~~2022~~2023
			(Dollars in millions)
Level 3 Financing, Inc.
Senior Secured Debt: (2)
Secured Senior Debt:(2)
Senior notes	3.400% - 10.500%	2027 - 2030	$	2,425	1,500
New Facilities:
Tranche B 2027 Term Loan (3)	SOFR + 1.75%	2027	2,411		2,411
Term Loan B-1(3)	SOFR + 6.560%	2029	$	1,199	—
Senior Notes and other debt:
Term Loan B-2(3)	SOFR + 6.560%	2030	1,199		—
Senior notes (4)	3.625% - 4.625%	2027 - 2029	3,940		3,940
Former Facility(4)	SOFR + 1.75%	2027	12		2,411
Finance leases and other obligations(5)	Various	Various	266		291
First Lien Notes(5)	10.500% to 11.000%	2029 - 2030	3,846		925
Unamortized premiums, net			3		3
Second Lien Notes	3.875% to 4.875%	2029 - 2031	2,229		—
Unamortized debt issuance costs			(56)		(49)
Former Senior Notes	3.400% - 3.875%	2027 - 2029	—		1,500
Total long-term debt			8,989		8,096
Unsecured Senior Notes:
Less current maturities			(29)		(26)
Senior notes (6)	3.400% - 4.625%	2027 - 2029	1,865		3,940
Long-term debt, excluding current maturities			$	8,960	8,070
Finance leases and other obligations	Various	Various	252		259
Unamortized (discounts) premiums, net			(258)		2
Unamortized debt issuance costs			(157)		(54)
Total long-term debt			10,187		8,983
Less current maturities			(32)		(31)
Long-term debt, excluding current maturities			$	10,155	8,952

______________________________________________________________________

(1)As of ~~September~~March 3031, ~~2023~~2024. All references to "SOFR" refer to the Secured Overnight Financing Rate.

(2)~~See~~As ~~Note~~discussed ~~7—Long-Term~~further ~~Debt~~below in ~~our~~this ~~Annual~~Note, ~~Report~~the ondebt ~~Form~~listed ~~10-K~~under ~~for~~the caption “Senior Secured Debt” is either guaranteed by affiliates of the ~~year~~issuer, ~~ended~~secured, ~~December~~or 31both. As discussed further in footnote 6, ~~2022~~we ~~for~~reclassified ain ~~description~~the "March 31, 2024" column of the table above certain ~~affiliate~~notes ~~guarantees~~that ~~and~~were ~~liens~~secured ~~securing~~prior ~~this~~to ~~debt~~the Effective Date from “secured” to “unsecured” in light of amendments that released such prior security interests.

(3)The ~~Tranche~~Term Loan B-1 ~~2027~~and ~~Term~~B-2 ~~Loan~~each had an interest rate of 711.~~181~~889% ~~and 6.134%~~ as of ~~September~~March ~~30, 2023 and December~~ 31, ~~2022, respectively~~2024.

(4)~~See~~Reflects ~~Note~~Level ~~7—Long-Term~~3 ~~Debt~~Tranche inB ~~our~~2027 ~~Annual~~Term ~~Report~~Loan onissued ~~Form~~under ~~10-K~~the ~~for~~Former ~~the~~Facilities, ~~year~~which ~~ended~~had ~~December~~an ~~31,~~interest ~~2022~~rate ~~for~~of a7.195% ~~description~~and of7.220% ~~guarantees~~as ~~provided~~of byMarch ~~certain~~31, ~~affiliates~~2024 ofand ~~Level~~December 331, ~~Financing~~2023, ~~Inc~~respectively.

(5)~~Excludes~~Includes ~~finance~~Level ~~lease~~3 ~~obligations~~Financing's 10.500% Senior Secured Notes due 2030 issued in early 2023, the terms of ~~our~~which ~~EMEA~~have ~~business~~been ~~classified~~amended asto ~~held~~be ~~for~~consistent ~~sale~~with Level 3 Financing's first lien notes issued on March 22, 2024.

(6)The total debt for these notes at March 31, 2024 includes the remaining aggregate principal amount due under the Former 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.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of ~~September~~March 3031, ~~2023~~2024 (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs, and intercompany debt), maturing during the following years:

	(Dollars in millions)
2023 (remaining three months)	$	9
2024 (remaining nine months)	$	24
2024	30
2025	37
2026	35
2027	~~4,180~~507
2028 and thereafter	4,751
2028	507
Total long-term debt	$	9,042
2029 and thereafter	9,492
Total long-term debt	$	10,602

Impact of Debt Transactions

Consummation of the above-described TSA Transactions substantially changed the structure and terms of our consolidated long-term debt. The principal changes impacting the Level 3 Financing financial statements specifically included:

•reducing the aggregate principal amount of our total consolidated debt maturities due on or before December 31, 2027 by approximately $3.7 billion (excluding finance leases and other obligations);

•increasing the average weighted interest rate payable under our consolidated long-term debt from 5.55% to 8.42%;

•increasing the portion of our consolidated long-term debt that is guaranteed, secured or both;

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

•raising $1.325 billion of new cash through the issuance of Level 3 Financing first lien notes maturing 2029.

Exchanges and Issuances

The following table sets forth the aggregate principal amount of (i) former debt of Level 3 exchanged for new Level 3 debt and (ii) new debt issued by Level 3 in exchange for former Level 3 debt (except as otherwise noted), in each case during the three months ended March 31, 2024 in connection with the TSA Transaction:


Former notes or facility exchanged	New notes or facility issued	Aggregate principal amount exchanged/issued (in millions)(1)
Term Loan B	Term Loan B-1, B-2	$	2,398
3.400% Senior Notes due 2027	10.500% First Lien Notes due 2029	668
3.875% Senior Notes due 2029	10.750% First Lien Notes due 2029	678
4.625% Senior Notes due 2027	4.875% Second Lien Notes due 2029	606
4.250% Senior Notes due 2028	4.500% Second Lien Notes due 2030	712
3.625% Senior Notes due 2029	3.875% Second Lien Notes due 2030	458
3.750% Senior Notes due 2029	4.000% Second Lien Notes due 2031	453
n/a	11.000% First Lien Notes due 2029(2)	1,575
Total		$	7,548

______________________________________________________________________

(1)See our long-term debt table above for information on the amount of former debt that remains outstanding as of March 31, 2024.

(2)Issued for cash and the other consideration described above.

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 $261 million which was included in our aggregate net gain on extinguishment of $54 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 $112 million in additional third-party costs. Of these amounts, $157 million lender fees were an offset to the gain on extinguishment and $61 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 $51 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 Level 3 during 2023, see Note 7—Long-Term Debt in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023.

Level 3 Financing Credit Agreement

On the Effective Date, Level 3 Financing, as borrower, Level 3 Financing Parent, the lenders party thereto and Wilmington Trust National Association, as administrative agent and collateral agent, entered into a Credit Agreement (the “New Level 3 Financing 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 Financing Facilities”).

Level 3 Financing’s obligations under the New Level 3 Financing Credit Agreement are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals). In addition, the 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 Financing’s obligations under the New Level 3 Financing Credit Agreement secured by a lien on substantially all of their assets.

Interest on borrowings under the New Level 3 Financing Credit Agreement is payable at the end of each interest period at a rate equal to, at Level 3 Financing’s option, term SOFR (subject to a 2.00% floor) plus 6.56% for term SOFR loans or a base rate plus 5.56% for base rate loans. Amounts outstanding under the New Level 3 Financing 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 Financing Facilities require Level 3 Financing to make certain specified mandatory prepayments upon the occurrence of certain transactions.

The New Level 3 Financing 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 Facility was reduced to approximately $12 million.

Level 3 Guarantees of Lumen Credit Agreements

Lumen’s obligations under the Superpriority Revolving/Term A Credit Agreement dated as of March 22, 2024 (the “RCF/TLA Credit Agreement”) are unsecured, but the Level 3 Collateral Guarantors have provided or, in certain cases after receiving necessary regulatory approvals, will provide an unconditional guarantee of payment of up to $150 million of Lumen’s obligations under both of the revolving credit facilities created under the RCF/TLA Credit Agreement. Certain of such guarantees will be secured by a lien on substantially all of the assets of the applicable Level 3 Collateral Guarantors. The guarantee by the Level 3 Collateral Guarantors may be reduced or terminated under certain circumstances.

Senior Notes

General Terms of Senior Notes

The Company’s consolidated indebtedness at March 31, 2024 included (i) first and second lien secured notes issued by Level 3 Financing and (ii) senior unsecured notes issued by Level 3 Financing. 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. Level 3 Financing 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

Level 3 Financing’s obligations under its first lien notes are secured by a first lien on substantially all of its assets (subject, in certain cases, to receipt of necessary regulatory approvals), and are guaranteed by the other Level 3 Collateral Guarantors (or, for certain such guarantors, 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 Financing Facilities. Level 3 Financing’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 Financing Facilities, except the lien securing such guarantees is a second lien.

New Issuances

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

On April 17, 2023, in connection with the Exchange Offers, Level 3 Financing, Inc. issued an additional $9 million of its 10.500% Senior Secured Notes due 2030 in exchange for $19 million aggregate principal amount of Lumen’s senior unsecured notes.

Supplier Finance Program

Pursuant to our purchase of network equipment under a supplier finance program implemented in 2021 with one of our key equipment vendors, we are obligated to make quarterly installment payments over a 5-year period and pay annual interest of 1.25% on unpaid balances. The first unsecured quarterly payment was due April 27, 2022, with remaining quarterly payments due through the end of the term on July 1, 2026. The supplier also agreed to certain milestone performance and other provisions that could result in us earning credits to be applied by us towards future equipment purchases. As of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, we have ~~not~~ received ~~significant~~approximately $17 million and $15 million of credits and our outstanding obligations under the plan ~~were~~was $5952 million and $6755 million, respectively,. As of ~~which~~March ~~$15 million~~31, ~~and~~2024, $1218 million ~~were~~was included in current maturities of long-term debt and ~~the~~$34 million ~~remaining~~was ~~balances~~included ~~were~~in ~~reflected as~~ the long-term debt.

Covenants

The ~~term~~New ~~loan~~Level ~~and~~3 ~~senior~~Financing ~~notes~~Credit ofAgreement and Level 3 Financing,’s ~~Inc.~~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, dispose of assets and merge or consolidate with any other person. Also, under certain circumstances in connection with a "“change of control"” of Level 3 Parent, ~~LLC,~~ or Level 3 Financing, ~~Inc.,~~ Level 3 Financing will be required to make an offer to repurchase oreach ~~repay~~series ~~certain~~ of its ~~long-term~~outstanding ~~debt~~senior notes at a price of 101% of the principal amount ~~of debt repurchased or repaid~~redeemed, plus accrued and unpaid interest.

Certain of Lumen's and our debt instruments contain cross-acceleration provisions.

Compliance

As of ~~September~~March 3031, ~~2023~~2024, we believe we were in compliance with the provisions and financial covenants contained in our debt agreements in all material respects.

(76) Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, ~~note~~notes receivable-affiliate and long-term debt (excluding finance leases and other obligations) and certain indemnification obligations. Due to their short-term nature, the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, ~~note~~notes receivable-affiliate 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~~used following the ~~below-described~~ fair value hierarchy.

We determined the fair values of our long-term debt, including the current portion, based primarily 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.

The three input levels in the hierarchy of fair value measurements are defined by the FASB are 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.

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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 financial liabilities as of March 31, 2024 and December 31, 2023, as well as the input level used to determine the fair values indicated below:

The following table presents the carrying amounts and estimated fair values of our following financial liabilities as of September 30, 2023 and December 31, 2022, as well as the input level used to determine the fair values indicated below:


		March 31, 2024			December 31, 2023
	Input Level	Carrying Amount		Fair Value	Carrying Amount	Fair Value
		(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases	2	$	9,935	8,683	8,724	6,418
Indemnifications related to the sale of the Latin American business(1)	3	86		86	86	86

		September 30, 2023			December 31, 2022
	Input Level	Carrying Amount		Fair Value	Carrying Amount	Fair Value
		(Dollars in millions)
Liabilities-Long-term debt, excluding finance leases	2	$	8,723	7,002	7,805	6,581
Indemnifications related to the sale of the Latin American business (1)	3	86		86	86	86

_______________________________________________________________________________

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

(87) Affiliate Transactions

We provide competitive local exchange carrier telecommunications services to our affiliates that we also provide to external customers. We believe these services are priced consistent with non-regulated rates charged to external customers. These services are billed directly to our affiliates and recognized as affiliate revenue on our consolidated statements of operations.

Costs are incurred directly by our affiliates for the services they use whenever possible. When such costs are not directly incurred, they are allocated among all affiliates based upon the most reasonable method, first using cost causative measures, or, if no cost causative measure is available, using a general allocator. Unlike other affiliates of Lumen, we do not operate as a shared service company to our affiliates and therefore any allocated affiliate revenue we earn reduces the affiliate charges incurred by us and is presented on a net basis within Operating expenses – affiliates on our consolidated statements of operations. From time to time, we may adjust the basis for allocating the costs of a shared service among affiliates. Any such changes in allocation methodologies are generally applied prospectively.

We also purchase services from our affiliates, including telecommunication services, insurance, flight services, and other support services such as legal, regulatory, finance, administration and executive support. Our affiliates charge us for those services using the allocation ~~methodology~~methodologies described above.

~~(9)~~On ~~Commitments~~March 22, ~~Contingencies~~2024, we entered into a $1.2 billion secured revolving credit facility with Lumen Technologies, Inc. with an 11% interest rate per annum. The principal amount is payable upon demand by us and ~~Other~~prepayable ~~Items~~by Lumen Technologies at any time, but no later than May 31, 2030, which maturity date may be extended for two additional one-year periods. The facility has covenants and is subject to other limitations, including a collateral agreement.

WeOn ~~are~~March ~~subject~~22, to2024, ~~various~~we ~~claims~~amended and restated our unsecured credit facility with Lumen Technologies, ~~legal~~Inc. ~~proceedings~~under which we had $1.5 billion outstanding as of March 31, 2024, and ~~other~~December ~~contingent~~31, ~~liabilities~~2023. As of March 31, ~~including~~2024, the ~~matters~~interest ~~described~~rate ~~below,~~was ~~which~~11.32% ~~individually~~per orannum and is subject to certain adjustments as set forth in the ~~aggregate~~facility ~~could~~(SOFR ~~materially~~+ ~~affect~~6%). ~~our~~The ~~financial~~principal ~~condition,~~amount ~~future~~is ~~results~~payable ofupon ~~operations~~demand orby ~~cash~~us ~~flows.~~and Asprepayable aby ~~matter~~Lumen ofTechnologies ~~course~~at any time, webut ~~are~~no ~~prepared~~later tothan ~~both~~May ~~litigate~~31, ~~these~~2030, ~~matters~~which tomaturity ~~judgment~~date asmay ~~needed,~~be asextended ~~well~~for astwo toadditional ~~evaluate~~one-year periods. The facility has covenants and ~~consider~~is ~~reasonable~~subject ~~settlement~~to ~~opportunities~~other limitations.

As of March 31, 2024, Lumen Technologies, Inc. owed us approximately $2.7 billion under the above-mentioned secured and unsecured revolving credit facilities with Lumen Technologies, Inc.

During the three months ended March 31, 2024, we made a distribution of cash to Lumen Technologies, Inc. in the amount of approximately $1.8 billion, thereby reducing equity by the same amount, which was partially offset by a contribution from Lumen Technologies, Inc. for $210 million, thereby increasing equity by the same amount.

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We(8) ~~review our litigation accrual liabilities on a quarterly basis~~Commitments, ~~but~~Contingencies ~~in accordance with applicable accounting guidelines only establish accrual liabilities when losses are deemed probable~~ and ~~reasonably~~Other 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, we had accrued $39 million in the aggregate for our litigation and non-income tax contingencies which is included in other current liabilities, other liabilities, or liabilities held for sale on 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 $39 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.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 March 31, 2024, we had accrued $36 million in the aggregate for our litigation and non-income tax contingencies which is included in other current liabilities or other liabilities in our consolidated balance sheet as of such date. We cannot at this time estimate the reasonably possible loss or range of loss in excess of this $36 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.

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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 to 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 76—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.

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.

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 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 16—Commitments, Contingencies and Other Items to the consolidated financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022. 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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(10) Accumulated Other Comprehensive Income (Loss)

The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheets by component for the nine months ended September 30, 2023:

	Pension Plans		Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2022	$	21	(365)	(344)
Other comprehensive loss, net of tax	—		(2)	(2)
Net other comprehensive loss	—		(2)	(2)
Balance at September 30, 2023	$	21	(367)	(346)

The table below summarizes changes in accumulated other comprehensive income (loss) recorded on our consolidated balance sheets by component for the nine months ended September 30, 2022:

	Pension Plans		Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2021	$	3	(354)	(351)
Other comprehensive loss, net of tax	—		(229)	(229)
Amounts reclassified from accumulated other comprehensive income (loss)	—		112	112
Net other comprehensive loss	—		(117)	(117)
Balance at September 30, 2022	$	3	(471)	(468)

The tables below present further information about our reclassifications out of accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2022:

Three and Nine Months Ended September 30, 2022

Decrease (Increase)in Net Income

Affected Line Item in Consolidated Statement of Operations

(Dollars in millions)

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 expense

Net of tax

112

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~~(11)~~The ~~Other~~outcome ~~Financial~~of ~~Information~~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 16—Commitments, Contingencies and Other Items to the consolidated financial statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 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.

(9) Accumulated Other Comprehensive Loss

The table below summarizes changes in accumulated other comprehensive loss recorded on our consolidated balance sheets by component for the three months ended March 31, 2024:


	Pension Plans		Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2023	$	(1)	(27)	(28)
Other comprehensive loss, net of tax	—		(2)	(2)
Net other comprehensive loss	—		(2)	(2)
Balance at March 31, 2024	$	(1)	(29)	(30)

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


	Pension Plans		Foreign Currency Translation Adjustment and Other	Total
	(Dollars in millions)
Balance at December 31, 2022	$	21	(365)	(344)
Other comprehensive income, net of tax	—		11	11
Net other comprehensive income	—		11	11
Balance at March 31, 2023	$	21	(354)	(333)

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(10) 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
	March 31, 2024		December 31, 2023
	(Dollars in millions)
Prepaid expenses	$	~~110~~114	99123
Contract fulfillment costs	4749		4450
Contract acquisition costs	3940		4240
Contract assets	76		106
Other	1723		225
Total other current assets(1)	$	220	197
Total other current assets	$	232	244

(111)~~Excludes~~ ~~$54 million~~Subsequent ~~and $56 million of other current assets related to EMEA business that were classified as held for sale as of September 30, 2023 and December 31, 2022, respectively.~~Event

~~(12)~~During ~~Subsequent~~April ~~Events~~2024 Lumen announced plans to reduce its workforce by less than 7% as a part of its efforts to change its workforce composition to reflect our ongoing transformation and cost reduction opportunities that align with its shapeshifting and focus on its strategic priorities. As a result of this plan, we expect to incur severance and related costs in the range of approximately $25 million to $35 million. This plan is expected to be substantially completed by the end of the second quarter of 2024. We do not expect to incur any material impairment or exit costs related to this plan. These workforce reductions are considered a subsequent event for the purposes of the March 31, 2024 financial statements, and therefore, we have not accrued any severance or related costs as of March 31, 2024.

~~Distributions to Parent~~28

As of the date of this report, $50 million of distributions were made to our ultimate parent in the fourth quarter of 2023.

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

On October 10, 2023, Lumen 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.

Workforce Reduction

On October 31, 2023, Lumen announced a plan to reduce its global workforce as part of its ongoing efforts to reorganize it for growth by right-sizing its operations to improve its profitability. The workforce reduction is expected to be substantially completed by the end of the fourth quarter of 2023. As a result of this plan, we expect to incur severance and related costs in the range of approximately $17 to $27 million. The Company does not expect to incur any material impairment or exit costs related to this plan. The workforce reduction is considered a subsequent event for the purposes of these financial statements, and therefore, no accrual for severance and related costs has been recorded as of September 30, 2023.

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 Lumen and its subsidiaries to, among other things, extend maturities of the debt instruments of Lumen and Level 3 Financing, Inc. In addition, the creditors have committed to provide $1.2 billion of financing to Lumen 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, references in this report to “Level 3 Communications, Inc.,” "Level 3," “we,” “us,” "its," the “Company” and “our” refer to Level 3 Parent, LLC and its consolidated subsidiaries, including Level 3 Financing, Inc. ("Level 3 Financing"). References to "Lumen Technologies" or "Lumen" refer to our ultimate parent company, Lumen Technologies, Inc. and its consolidated subsidiaries.

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 ana ~~international~~ facilities-based technology and communications company ~~engaged~~that inprovides ~~providing~~ a broad array of integrated ~~communication~~products and services to our domestic and global business customers.

On August 1, 2022, we sold our Latin American business. For additional information regarding this divestiture, see Note 2—Completed Divestiture of the Latin American Business and Planned Divestiture of European, Middle Eastern and African 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.

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. inOn ~~March~~a ~~2020.~~regular ~~Beginning~~basis, inwe ~~the~~review ~~second half of 2020~~ and ~~continuing~~rationalize ~~into 2023, we rationalized~~ our ~~leased~~lease footprint and ~~ceased~~may ~~using~~incur ~~13 leased property locations that were underutilized. These lease cancellations resulted in~~ accelerated lease costs, ~~but~~when ~~will lower our future operating costs. In conjunction with our plans to continue to reduce costs,~~ we ~~expect~~determine to ~~continue~~cease ~~our~~using ~~real~~underutilized ~~estate~~leased ~~rationalization~~property ~~efforts~~locations. ~~and~~We ~~expect~~did tonot incur ~~additional~~material accelerated ~~real~~lease ~~estate~~ costs induring ~~future periods. Additionally, as discussed further elsewhere herein,~~ the ~~pandemic~~three ~~and~~months ~~macroeconomic~~ended ~~changes~~March ~~arising therefrom have resulted in (i) increases in certain revenue streams and decreases in others~~31, (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 customers2024. ~~None of these effects, individually or in the aggregate, have to date materially impacted our financial performance or financial position.~~

28Additionally, as discussed further elsewhere herein, macroeconomic changes 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.

Continued inflationary pressures, supply constraints or business uncertainty could materially impact our financial results 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.

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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If any of the above-listed factors intensify, 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 the impacts of the pandemic and the macroeconomic changes arising therefrom, see (i) the remainder of this item, including "—Liquidity and Capital Resources—Overview" and (ii) Item 1A of Part II of this report.

Products, Services and Revenue

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

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

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

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

•Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers.

From time to time, we may change the categorization of our products and services.

Results of Operations

Results in this section include the results of our ~~Latin~~EMEA ~~American~~ business prior to it being sold on ~~August~~November 1, ~~2022~~2023.

The following table summarizes the results of our consolidated operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~September~~March 3031, ~~2022~~2023:

	Three Months Ended September 30,			Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022	2023	2022
	2024		2023
	(Dollars in millions)
Operating revenue	$	1,590	1,784
Operating revenue	$	1,763	1,819	5,311	5,718
Operating expenses	1,633		1,649
Operating expenses	1,675		1,485	6,937	4,913
Operating (loss) income	(43)		135
Operating income (loss)	88		334	(1,626)	805
Other expense, net	(39)		(72)
Other expense, net	(146)		(84)	(316)	(259)
(Loss) income before income taxes	(82)		63
(Loss) income before income taxes	(58)		250	(1,942)	546
Income tax (benefit) expense	(18)		22
Income tax (benefit) expense	(13)		312	(14)	397
Net (loss) income	$	(64)	41
Net (loss) income	$	(45)	(62)	(1,928)	149

For a discussion of certain trends that impact our business, see the MD&A discussion of trends impacting Lumen’s non-mass markets business included in Lumen’s reports filed with the SEC, including its Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~March 3031, ~~2023~~2024.

2930

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Operating Revenue

The following table summarizes our consolidated operating revenue recorded under our revenue categories described above:

	Three Months Ended September 30,
	Three Months Ended March 31,
	2023		2022	% Change
	2024		2023	% Change
	(Dollars in millions)
Grow	$	~~988~~921	~~956~~975	3(6)	%
Nurture	~~428~~385		~~464~~438	(812)	%
Harvest	~~264~~195		~~316~~260	(1625)	%
Other	2630		2654	—(44)	%
Affiliate Services	5759		57	—4	%
Total operating revenue	$	1,~~763~~590	1,~~819~~784	(311)	%

	Nine Months Ended September 30,
	2023		2022	% Change
	(Dollars in millions)
Grow	$	2,947	3,022	(2)	%
Nurture	1,296		1,462	(11)	%
Harvest	825		982	(16)	%
Other	76		82	(7)	%
Affiliate Services	167		170	(2)	%
Total operating revenue	$	5,311	5,718	(7)	%

Our total operating revenue decreased by $194 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. Approximately $168 million of the decrease was due to the sale of the EMEA business and select CDN contracts in the fourth quarter of 2023. More specifically, within each revenue category:

~~Our~~•Grow ~~total operating revenue~~ decreased by ~~$56~~ ~~million and~~ $~~407~~ 54 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 as compared to ~~the~~March ~~three~~31, ~~and~~2023 ~~nine~~due ~~months~~to ~~ended~~a ~~September~~decrease ~~30,~~of ~~2022.~~approximately ~~Approximately~~ $~~58 million~~81 ~~and $418~~ million, ~~respectively,~~associated ofwith ~~these decreases were due to~~ the sale of the ~~Latin~~EMEA ~~American~~ business. inThis ~~the~~decline ~~second~~was ~~half~~partially ofoffset ~~2022.~~by ~~More~~growth ~~specifically,~~in ~~within~~IP ~~each~~services ~~revenue~~of ~~category:~~$35 million;

•~~Grow~~Nurture ~~increased by $32 million and~~ decreased by $7553 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ compared to ~~September~~March 3031, ~~2022~~2023. ~~The~~Approximately ~~three and nine months ended September 30, 2022 included approximately~~ $~~41 million~~27 ~~and $305~~ million, ~~respectively,~~ of ~~Grow~~the ~~revenue~~decrease ~~associated~~was ~~with~~attributable to the sale of the ~~Latin~~EMEA ~~American~~ business. ~~For~~The ~~the~~remainder ~~three~~of ~~months ended September 30, 2023, these declines were fully offset and for~~ the ~~nine~~decline ~~months~~is ~~ended~~principally ~~September~~attributable ~~30,~~to ~~2023, these~~ declines ~~were partially offset by growth~~ in ~~most~~traditional ~~products,~~VPN ~~primarily~~services ~~due to an increase~~ of $~~64 million~~16 ~~and $220~~ million, ~~respectively, in products such as IP, dark fiber, wavelengths~~ and ~~colocation~~Ethernet ~~for~~services ~~the~~of ~~three~~$14 ~~and nine months ended September 30, 2023.~~million;

•~~Nurture~~Harvest decreased by $3665 million ~~and $166 million~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively,~~ compared to ~~September~~March 3031, ~~2022~~2023. ~~due~~Approximately ~~primarily~~$26 tomillion ~~a decrease~~ of ~~approximately~~the ~~$14 million~~decrease ~~and~~was ~~$99 million,~~attributable ~~respectively,~~to ~~associated with~~ the sale of the ~~Latin~~EMEA ~~American~~ business ~~for the three and nine months ended September 30, 2023~~. The remainder of the decline is principally attributable to ~~declines~~a ~~in Ethernet services of~~ $~~13 million~~33 ~~and $49~~ million, ~~respectively,~~decline ~~and declines~~ in ~~VPN~~legacy ~~data~~voice ~~network services of $11 million~~ and ~~$25 million,~~private ~~respectively,~~line ~~for the three and nine months ended September 30, 2023~~services;

30•Other decreased by $24 million for the three months ended March 31, 2024 compared to March 31, 2023 approximately $29 million of which was attributable to the sale of select CDN contracts in the fourth quarter of 2023.

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•Harvest decreased by $52 million and $157 million for the three and nine months ended September 30, 2023 compared to September 30, 2022 due primarily to the decline in legacy voice services of $34 million and $123 million, respectively, for the three and nine months ended September 30, 2023. The decrease in Harvest revenue additionally includes a decrease of approximately $3 million and $14 million associated with the sale of the Latin American business for the three and nine months ended September 30, 2023. ;

•Other decreased for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to a decrease in IT solutions revenue.

Operating Expenses

The following table summarizes our consolidated operating expenses:

	Three Months Ended September 30,
	Three Months Ended March 31,
	2023		2022	% Change
	2024		2023	% Change
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	~~779~~672	~~785~~771	(113)	%
Selling, general and administrative	~~342~~337		~~269~~286	2718	%
Gain on sale of business	—		(119)	nm
Loss on sale of business	22		77	(71)	%
Loss on disposal group held for sale	28		—	nm
Operating expenses - affiliates	238		168	42	%
Operating expenses - affiliates	172		173	(1)	%
Depreciation and amortization	364		347	5	%
Depreciation and amortization	354		377	(6)	%
Total operating expenses	$	1,633	1,649	(1)	%
Total operating expenses	$	1,675	1,485	13	%

	Nine Months Ended September 30,
	2023		2022	% Change
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	2,281	2,472	(8)	%
Selling, general and administrative	946		901	5	%
Gain on sale of business	—		(119)	nm
Loss on disposal group held for sale	113		—	nm
Operating expenses - affiliates	571		481	19	%
Depreciation and amortization	1,056		1,178	(10)	%
Goodwill impairment	1,970		—	nm
Total operating expenses	$	6,937	4,913	41	%

_______________________________________________________________________________

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

Cost of services and products (exclusive of depreciation and amortization) decreased by $699 million ~~and $191 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022,~~2023. This decrease was primarily due to a decrease of ~~$35 million~~approximately ~~and~~ $~~214~~ 126 million ~~for~~due ~~the~~to ~~three and nine months ended September 30, 2023, respectively, associated with~~ the sale of the ~~Latin~~EMEA ~~American~~ business in the ~~second~~fourth ~~half~~quarter of ~~2022~~2023, ~~partially~~as ~~offset~~well byas ~~increases~~reduction of ~~$8 million~~approximately ~~and~~ $25 17 million, ~~respectively,~~ in ~~real~~employee-related ~~estate~~expense ~~and~~from ~~power~~lower ~~costs.~~headcount ~~Cost~~in ofour ~~services~~retained ~~and~~business. ~~products~~These ~~(exclusive~~decreases ofwere ~~depreciation~~partially ~~and~~offset ~~amortization)~~by ~~for the three months ended September 30, 2023 also increased from the three months ended September 30, 2022 due to~~ an increase ~~in facilities costs~~ of $1040 million ~~and an increase~~ in ~~employee~~facilities ~~related expenses of $9 million~~costs.

Selling, General and Administrative

Selling, general and administrative increased by $7351 million ~~and $45 million, respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023. The increase was primarily due to ana increase of $~~50 million~~92 ~~and $98~~ million, ~~respectively,~~ in ~~direct~~legal ~~employee-related~~and ~~expenses~~other ~~and~~professional anfees, ~~increase~~mainly ofdriven $4by ~~million~~our ~~and~~debt ~~$19 million~~transaction, ~~respectively,~~partially inoffset ~~marketing~~by ~~and~~a ~~advertising~~decrease ~~expenses~~of ~~for~~approximately ~~the~~$25 ~~three~~million ~~and~~due ~~nine~~to ~~months~~the ~~ended~~sale ~~September~~of ~~30,~~the ~~2023.~~EMEA ~~Additionally,~~business ~~for~~in the ~~three~~fourth ~~months~~quarter ~~ended~~of ~~September 30,~~ 2023, ~~allocated~~as ~~employee~~well ~~related costs increased $11 million~~ as ~~compared~~recognition toof ~~the three months ended September 30, 2022. These increases were partially offset by~~ a ~~decrease~~deferred gain of $~~8 million~~22 ~~and $73~~ million ~~for~~on the ~~three and nine months ended September 30, 2023, respectively, associated with the~~ sale of ~~our~~select ~~Latin~~CDN ~~American~~contracts ~~business~~ in the ~~second~~fourth ~~half~~quarter of ~~2022~~2023.

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

For a discussion of the loss on the ~~disposal~~sale ~~group~~of ~~held~~business ~~for sale~~ that we recognized for the three ~~and nine~~ months ended ~~September~~March 3031, 2023, see Note 2—~~Planned~~Divestitures ~~Divestiture~~ of the Latin American and EMEA ~~Business~~Businesses 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, 2023.

Operating Expenses - Affiliates

Operating expenses - affiliates ~~decreased by $1 million and~~ increased by $9070 million, ~~respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022. The three and nine months ended September 30,~~ 2023 ~~as compared to the comparable periods for September 30~~, ~~2022~~primarily ~~decreased~~ due to a $2958 million ~~reduction~~higher inethernet allocated affiliate costs due to lower operating expenses in 2023. This decrease was partially offset for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 and ~~fully~~other ~~offset~~legacy ~~for~~direct ~~the~~telecommunication ~~nine~~services ~~months ended September 30, 2023 compared to the nine months ended September 30, 2022 by $15 million~~ and $8712 million ~~higher utilization~~ of ~~affiliates'~~allocated ~~sales and operational~~ employee ~~services, increased allocated corporate~~ expense ~~due~~provided to ~~Lumen's~~us ~~2022 ILEC divestiture and $13 million and $32 million higher pricing and utilization of direct access and government services provided~~ by ~~affiliates,~~our ~~respectively~~affiliates.

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Depreciation and Amortization

The following table provides detail regarding depreciation and amortization expense:

Three Months Ended September 30,

Three Months Ended March 31,

2023

2022

% Change

2024

2023

% Change

(Dollars in millions)

Depreciation

~~170~~178

~~190~~171

~~(11)~~4

Amortization

~~184~~186

~~187~~176

~~(2)~~6

Total depreciation and amortization

~~354~~364

~~377~~347

~~(6)~~5

	Nine Months Ended September 30,
	2023		2022	% Change
	(Dollars in millions)
Depreciation	$	516	613	(16)	%
Amortization	540		565	(4)	%
Total depreciation and amortization	$	1,056	1,178	(10)	%

Depreciation expense increased by $7 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due a $12 million increase from the accelerated depreciation of CDN assets and an $8 million increase due to decommissioned assets, which were partially offset by a decrease of $7 million due to changes in depreciation lives of fiber assets as discussed in Note 1—Background "— Change in Accounting Estimates" and a decrease of $6 million due to net decline in depreciable assets.

~~Depreciation~~Amortization expense ~~decreased~~increased by $~~20 million~~10 ~~and $97~~ million, ~~respectively,~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023, primarily due to ~~the discontinuation during the fourth quarter of 2022 of the depreciation of the tangible EMEA assets that we plan to divest, resulting in~~ a ~~decrease of~~ $~~47 million~~10 ~~and $136~~ million, ~~respectively,~~increase ofassociated ~~depreciation~~with ~~expense during~~ the ~~three~~accelerated ~~and~~amortization ~~nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022. The decreases were partially offset by higher depreciation expense~~ of ~~$16 million~~certain ~~and~~CDN ~~$34 million,~~software ~~respectively, associated with net growth in depreciable~~ assets.

Amortization expense decreased by $3 million and $25 million, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, primarily due to a decrease of $10 million and $26 million, respectively, due to the discontinuation during the fourth quarter of 2022 of the amortization of the intangible EMEA assets that we plan to divest and a decrease of $7 million in amortizable assets for the nine months ended September 30, 2023. The decreases were partially offset by accelerated amortization of decommissioned applications of $8 million and $10 million, respectively, for the three and nine months ended September 30, 2023.

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 Lumen's share price during the second quarter of 2023 was considered a triggering event requiring evaluation of goodwill impairment.

When we performed an impairment test during the second quarter of 2023, we concluded that the estimated fair value of our reporting unit was less than our 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 $2.0 billion in the second 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.

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Other Consolidated Results

The following table summarizes other expense, net and income tax expense:

	Three Months Ended September 30,
	Three Months Ended March 31,
	2023		2022	% Change
	2024		2023	% Change
	(Dollars in millions)
Interest expense	~~(123)~~$	(129)	(9993)	2439	%
Interest income - affiliate	1622		1916	~~(16)~~38	%
Other expense, net	(39)		(4)	nm
Net gain on early retirement of debt (Note 5)	54		—	nm
Total other expense, net	$	(146)	(84)	74	%
Other expense, net	14		5	180	%
Income tax (benefit) expense	$	(13)	312	nm
Total other expense, net	$	(39)	(72)	(46)	%
Income tax (benefit) expense	$	(18)	22	nm

	Nine Months Ended September 30,
	2023		2022	% Change
	(Dollars in millions)
Interest expense	$	(336)	(284)	18	%
Interest income - affiliate	47		50	(6)	%
Other expense, net	(27)		(25)	8	%
Total other expense, net	$	(316)	(259)	22	%
Income tax (benefit) expense	$	(14)	397	nm

_______________________________________________________________________________

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 increased by $~~24 million~~36 ~~and $52~~ million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023. The increase was due to ~~the~~an increase in ~~the~~ average interest rates from 4.1367% to 56.2068% and ~~from~~an ~~3.89%~~increase toin ~~4.78% respectively, for~~ the ~~three~~average ~~and~~outstanding ~~nine~~long-term ~~months~~debt ~~ended~~of ~~September~~approximately ~~30,~~$1.0 ~~2022~~billion ~~compared~~for to the three ~~and nine~~ months ended ~~September~~March 3031, 2023, ~~which~~as ~~was~~compared ~~partially~~to ~~offset by~~ the ~~decrease in average outstanding long-term debt of $0.3 billion and $0.8 billion for the~~ three ~~and nine~~ months ended ~~September~~March 3031, ~~2023, respectively~~2024.

Interest Income - Affiliate

Interest income - affiliate ~~decreased~~increased by $3 6 million for ~~both~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, as compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023. Approximately $3 million of this increase was driven by higher rates on the unsecured $1.5 billion facility with Lumen and approximately $3 million of this increase was interest earned on the new secured $1.2 billion facility with Lumen. See Note 7—Affiliate Transactions to the financial statements included in Item 1 Part I of this report for more information on these facilities.

Other Income, Net

The following table summarizes our total other income, net:


	Three Months Ended March 31,
	2024		2023
	(Dollars in millions)
Foreign currency (loss) gain	$	(10)	3
Interest income	22		1
Other	2		1
Total other income, net	$	14	5

Interest Income

Interest income increased for the three months ended March 31, 2024 and 2023 primarily due to a higher average cash and cash equivalents balance during the period and higher interest rates earned thereon.

Income Tax Expense

For the three months ended March 31, 2024 and 2023, our effective income tax rate was 22.0% and 34.9%, respectively.

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Other Expense, Net

The following table summarizes our total other expense, net:

	Three Months Ended September 30,
	2023		2022
	(Dollars in millions)
Gain on extinguishment of debt	$	—	9
Foreign currency loss	(43)		(21)
Interest income	2		5
Other	2		3
Total other expense, net	$	(39)	(4)

	Nine Months Ended September 30,
	2023		2022
	(Dollars in millions)
Gain on extinguishment of debt	$	—	9
Foreign currency loss	(29)		(41)
Interest income	5		5
Other	(3)		2
Total other expense, net	$	(27)	(25)

Income Tax (Benefit) Expense

For the three months ended September 30, 2023 and 2022, our effective income tax rate was 22.4% and 124.8%, respectively. For the nine months ended September 30, 2023 and 2022, our effective income tax rate was 0.7% and 72.7%, respectively. The effective tax rate for the three and nine months ended September 30, 2022 was significantly impacted by the gain on the sale of our Latin American business. Without the gain on the sale of our Latin American business, our effective tax would have been 28.0% and 28.5%, respectively, for the three and nine months ended September 30, 2022.The effective tax rate for the nine months ended September 30, 2023 includes a $389 million unfavorable impact of a non-deductible goodwill impairment charge recorded in the second quarter of 2023.

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Liquidity and Capital Resources

Overview

As of ~~September~~March 3031, ~~2023~~2024, we held cash and cash equivalents of $~~173~~399 million, ~~$27 million~~ of which ~~is classified as held for sale. As of such date, we had approximately~~ $5038 million ofwas ~~cash and cash equivalents~~ held in foreign bank accounts for funding our foreign operations. Due to various factors, our access to foreign cash is generally more restricted than our access to domestic cash.

We anticipate that any future liquidity needs will be met through (i) our cash provided by operating activities, (ii) amounts due to us from Lumen Technologies, (iii) proceeds from ~~the~~our recently completed ~~divestiture of our Latin American business~~divestitures, (iv) our ability to refinance our debt obligations to the extent permitted under applicable debt covenants and (v) capital contributions, advances or loans from Lumen Technologies or its affiliates if and to the extent they have available funds or access to funds that they are willing and able to contribute, advance or loan.

WeIn ~~are~~August ~~currently~~2022, ~~experiencing~~the ~~competitive~~Inflation Reduction Act was signed into law, ~~macroeconomic~~which, ~~and~~among ~~financial~~other ~~pressures~~things, ~~including~~implemented ~~operational~~a ~~challenges~~corporate ~~resulting~~alternative ~~from~~minimum ~~inflation~~tax (“CAMT”) on adjusted financial statement income effective for tax periods occurring after December 31, ~~dis-synergies~~2022. ~~resulting~~The ~~from~~CAMT had no material impact on our ~~2022~~financial ~~divestiture~~results ~~and~~as of December 31, to2023. In addition, the Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a ~~lesser~~new ~~extent,~~global ~~shortages~~minimum tax of ~~certain~~15% ~~components~~intended ~~and~~to ~~other~~be ~~supplies~~effective ~~that~~on weJanuary ~~use~~1, in2024. ~~our~~While ~~business~~the U.S. ~~These~~has ~~and~~not ~~other~~yet ~~factors~~adopted ~~contributed~~the toPillar usTwo ~~recognizing~~rules, avarious ~~goodwill~~other ~~impairment~~governments inaround the ~~fourth~~world ~~quarter~~are ofenacting ~~2022~~legislation, ~~and~~some of which are effective for tax periods after December 31, ~~coupled~~2023. ~~with~~While the ~~sustained~~global ~~decline~~minimum intax ~~Lumen's~~will ~~share~~increase ~~price~~our ~~during~~administrative ~~the~~and ~~second~~compliance ~~quarter~~burdens, ofwe ~~2023~~expect ~~contributed~~that toit uswill ~~recognizing~~have an ~~additional~~immaterial ~~goodwill~~impact ~~impairment~~on ~~for~~our ~~the~~financial ~~three~~statements ~~months~~for ~~ended~~tax ~~June~~period 30ending December 31, ~~2023~~2024.

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

~~During~~As ~~2022,~~discussed wein ~~agreed~~Note to2—Divestitures ~~divest~~of ~~our~~the Latin American and EMEA ~~business~~Businesses ~~subject~~in toItem ~~the~~8 ~~receipt~~of Part II of ~~various~~our ~~approvals~~Annual ~~and~~Report on Form 10-K for the ~~satisfaction~~year ofended ~~other~~December ~~customary~~31, ~~conditions.~~2023, ~~See~~we ~~Note~~sold ~~2—Planned~~our ~~Divestiture~~Latin ofAmerican ~~the~~and EMEA ~~Business~~Businesses on August 1, 2022 and November 1, 2023, respectively. As further described inelsewhere ~~previous reports~~herein, these transactions have provided ~~or are expected to provide~~ us with a substantial amount of cash proceeds, but ~~ultimately~~have ~~will~~also ~~reduce~~reduced our base of income-generating assets that generate our recurring cash from operating activities.

Debt Instruments and Financing Arrangements

On March 22, 2024, the TSA Parties completed transactions contemplated under the TSA, which included Level 3 Financing privately placing $1.575 billion aggregate principal amount of newly-issued first lien notes. As of ~~September~~March 3031, ~~2023~~2024, our long-term debt (including current maturities and finance leases but excluding unamortized (discounts) premiums, net and unamortized debt issuance costs) outstanding totaled $910.06 billion, approximately $8.5 billion ~~See~~of which is secured. For more information on the terms and impact of the TSA Transaction and our consolidated debt, see (i) Note 65—Long-Term Debt and Credit Facilities to the financial statements included in Item 1 Part I of this report and (ii) our Current Report on Form 8-K dated March 22, 2024.

~~Pursuant~~Subject to ~~exchange~~market ~~offers~~conditions ~~commenced~~and onto ~~March 16, 2023 (~~the ~~“Exchange~~extent ~~Offers”),~~permitted onunder ~~March~~applicable ~~31,~~debt ~~2023~~covenants, ~~Level~~from 3time ~~Financing,~~to ~~Inc.~~time ~~issued~~we ~~$915~~expect ~~million~~to ofcontinue ~~its~~to ~~10.500%~~issue ~~Senior~~term ~~Secured~~debt ~~Notes~~or ~~due~~senior ~~2030~~notes into ~~exchange~~refinance ~~for~~our $1maturing debt.~~535~~ ~~billion~~The availability, interest rate and other terms of ~~Lumen’s~~any ~~outstanding~~new ~~senior~~borrowings ~~unsecured~~will ~~notes.~~be Onimpacted ~~April 17,~~by ~~2023,~~the ~~Level~~ratings 3assigned ~~Financing,~~us ~~Inc.~~by ~~issued~~the anthree ~~additional~~major ~~$9 million~~credit ofrating ~~its~~agencies, 10among other factors.~~500%~~ ~~Senior~~As ~~Secured~~of ~~Notes~~the ~~due~~filing ~~2030~~date inof ~~exchange~~this report, the credit ratings for ~~$19 million~~the ~~aggregate~~senior ~~principal~~secured ~~amount~~and unsecured debt of ~~Lumen’s~~Level ~~senior~~3 ~~unsecured~~Financing, ~~notes~~Inc. were as follows:

Subject to market conditions and to the extent permitted under applicable debt covenants, from time to time we plan to continue to issue term debt or senior notes to refinance our maturing debt. The availability, interest rate and other terms of any new borrowings will be impacted by the ratings assigned us by the three major 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 Level 3 Financing, Inc. were as follows:

Borrower

Moody's Investor Services, Inc.

Standard & Poor's

Fitch Ratings

Level 3 Financing, Inc.

Unsecured

Caa2

CCC-

Secured

B3/Caa2

B/B-

B+/CCC

Borrower

Moody's Investor Services, Inc.

Standard & Poor's

Fitch Ratings

Level 3 Financing, Inc.

Unsecured

CCC+

Secured

BB-

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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 may find it more difficult to borrow 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~~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, ~~lower our aggregate interest costs,~~ improve our financial flexibility or otherwise enhance our debt profile. WeSubject ~~plan~~ to continue to pursue similar transactions in the future to the extent feasible. Whether and when we implement any additional such transactions depends on a wide variety of factors, including without limitation market conditions, ~~our~~restrictions ~~upcoming debt maturities, our cash requirements and limitations~~ under our debt covenants., ~~There~~and isother nolimitations, ~~guarantee that~~ we ~~will~~expect beto ~~successful~~opportunistically inpursue ~~implementing~~similar ~~any~~transactions ~~such~~in ~~transactions~~the orfuture ~~attaining~~to ~~our~~the ~~stated~~extent ~~objectives~~feasible. We may not disclose these transactions in advance, unless required by applicable law or material in nature or amount. See Note 65—Long-Term Debt and Credit Facilities for additional information.

Letters of Credit

It is customary for us to use various financial instruments in the normal course of business. These instruments include letters of credit. Letters of credit are conditional commitments issued on our behalf in accordance with specified terms and conditions. As of ~~September~~March 3031, ~~2023~~2024, we had outstanding letters of credit or other similar obligations of approximately $32 million, all of which were collateralized by restricted cash.

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.

Cash Flow Activities

The following table summarizes our consolidated cash flow activities:

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2022	$ Change
	2024		2023	$ Change
	(Dollars in millions)
Net cash provided by operating activities	$	~~1,233~~218	~~1,687~~379	(~~454~~161)
Net cash (used in) provided by investing activities	(769)		1,832	2,601
Net cash used in investing activities	(1,397)		(225)	1,172
Net cash used in financing activities	(~~452~~439)		(~~3,577~~129)	~~(3,125)~~310

Operating Activities

Net cash provided by operating activities decreased by $~~454~~161 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, primarily due to lower net income adjusted for non-cash expenses and ~~gains~~income, partially ~~driven~~as bya result of the sale of ~~the~~our ~~Latin~~EMEA ~~American~~ business in ~~the~~late ~~second~~2023, ~~half~~and ofan ~~2022~~increase in accounts receivable. Cash provided by operating activities is subject to variability period over period as a result of timing, including the collection of receivables and payments of interest, accounts payable and bonuses.

Investing Activities

Net cash (used in) ~~provided by~~ investing activities ~~changed~~increased by $21.62 billion for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023. The ~~change~~increase was primarily due to ~~the~~a ~~receipt~~issuance of ~~pre~~short-~~tax~~term ~~cash~~notes ~~proceeds~~receivable of- ~~$2.7~~affiliate ~~billion~~to ~~from~~our ~~the~~ultimate ~~sale~~parent ofcompany ~~the~~under ~~Latin American business in~~ the ~~prior~~credit ~~year~~facility ~~period~~described ~~and~~elsewhere ~~a decrease in capital expenditures in the current year period~~herein.

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Financing Activities

Net cash used in financing activities ~~decreased~~increased by $~~3.1~~310 ~~billion~~million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 primarily due to aan ~~decrease~~increase in distributions paid to our parent, ~~and~~partially aoffset ~~decrease~~by inproceeds ~~debt repayments~~ from ~~the~~issuance ~~prior~~of ~~year~~new ~~period~~debt.

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Other Matters

We are subject to various legal proceedings and other contingent liabilities that individually or in the aggregate could materially affect our financial condition, future results of operations or cash flows. See Note 98—Commitments, Contingencies and Other Items for additional information.

Lumen Technologies is involved in several legal proceedings to which we are not a party that, if resolved against it, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of Lumen Technologies, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in Lumen's quarterly and annual reports filed with the SEC. Because we are not a party to any of the matters, we have not accrued any liabilities for these matters.

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~~increases ~~"net~~broadband ~~neutrality" rules similar to those adopted under the Obama Administration~~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 potential impact of this legislation on us. 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.

Market Risk

At ~~September~~March 3031, ~~2023~~2024, we were exposed to market risk from changes in interest rates on our variable rate long-term debt obligations.

As of ~~September~~March 3031, ~~2023~~2024, we had approximately $810.84 billion (excluding unamortized (discounts) premiums, net, unamortized debt issuance costs and finance leases) of long-term debt outstanding, 7377% of which bears interest at fixed rates and is therefore not exposed to interest rate risk. We also held approximately $2.4 billion of unhedged floating rate debt based on the secured overnight financing rate ("SOFR"). A hypothetical increase of 100 basis points in SOFR relative to this debt would decrease our annual pre-tax earnings by approximately $24 million.

WeCertain ~~conduct~~shortcomings aare ~~portion~~inherent ~~of our business~~ in ~~currencies other than~~ the ~~U.S.~~method ~~dollar,~~of ~~the~~analysis ~~currency~~presented in ~~which our consolidated financial statements are reported. Our European subsidiaries use, and prior to~~ the ~~August~~computation ~~1, 2022 divestiture~~ of ~~our~~exposures ~~Latin~~to ~~American~~market ~~business,~~risks. ~~certain~~Actual ofvalues ~~our~~may ~~former~~differ ~~Latin~~materially ~~American~~from ~~subsidiaries~~those ~~used~~disclosed ~~the~~by ~~local~~us ~~currency~~from astime ~~their functional currency, as the majority of their sales and purchases are or were transacted in their local currencies. Although we continue~~ to ~~evaluate~~time ~~strategies~~if tomarket ~~mitigate~~conditions ~~risks~~vary ~~related~~from to the ~~effect~~assumptions ofused ~~fluctuations~~ in ~~currency~~the ~~exchange~~analyses ~~rates, we will likely recognize gains or losses from international transactions~~performed. ~~Accordingly,~~These ~~changes~~analyses inonly ~~foreign~~incorporate ~~currency rates relative to~~ the ~~U.S.~~risk ~~dollar~~exposures ~~could~~that ~~positively~~existed orat ~~negatively~~March ~~impact~~31, ~~our operating results~~2024.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuant to General Instruction H(2).

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Other Information

Lumen's and 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 ultimate controlling member Lumen Technologies, Inc., and all amendments to those reports, in the "Investor Relations" section of our website (ir.lumen.com) under the heading "SEC Filings." These reports are available on our website as soon as reasonably practicable after they are electronically filed with the SEC.

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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~~March 3031, ~~2023~~2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective, as of ~~September~~March 3031, ~~2023~~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 98—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 98 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—Legal and Regulatory Risks—Our pending legal proceedings could have a material adverse impact on our financial condition and operating results 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~~disclosure ~~included~~immediately in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.below:

40We 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 near-term debt obligations, obtaining new credit facilities and raising $1.325 billion in new cash. 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-K for the year ended December 31, 2023. Moreover, the extension of our 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 benefits we anticipate receiving from completing our March 22, 2024 transactions.

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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.

ExhibitNumber			Description
4.1*			Supplement, dated as of October 26, 2023, to the Supplemental Indenture dated as of April 15, 2020, among Level 3 Financing, Inc., as Issuer, The Bank of New York Mellon Trust Company, N.A., as Trustee and Notes Collateral Agent, and Level 3 Parent, LLC and several of its subsidiaries, as guarantors, clarifying which subsidiaries are guarantors of the 3.400% Senior Secured Notes due 2027 of Level 3 Financing, Inc.
4.1			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 3.400% Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.6 to Registrant’s Current Report on Form 8-K (File No. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.2*			Supplement, dated as of October 26, 2023, to the Supplemental Indenture dated as of April 15, 2020, among Level 3 Financing, Inc., as Issuer, The Bank of New York Mellon Trust Company, N.A., as Trustee and Notes Collateral Agent, and Level 3 Parent, LLC and several of its subsidiaries, as guarantors, clarifying which subsidiaries are guarantors of the 3.875% Senior Secured Notes due 2029 of Level 3 Financing, Inc.
4.2			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 3.875% Senior Secured Notes due 2029 (incorporated by reference to Exhibit 4.7 to Registrant’s Current Report on Form 8-K (File No. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.3*			Supplemental Indenture, dated as of October 23, 2023, among Level 3 Financing, Inc., as Issuer, The Bank of New York Mellon Trust Company, N.A., as Trustee and Notes Collateral Agent, and 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 10.500% Senior Secured Notes due 2030 of Level 3 Financing, Inc.
4.3			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 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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
31.1*			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
4.4			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
31.2*			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
4.5			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
32.1*			Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
4.6			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
32.2*			Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
4.7			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
101*			The following materials from the Quarterly Report on Form 10-Q of Level 3 Parent, LLC for the quarter ended September 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Consolidated Statements of Operations, (ii) Consolidated Statements Of Comprehensive (Loss) Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Member's Equity and (vi) Notes to Consolidated Financial Statements.
4.8			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).
104*			Cover page formatted as Inline XBRL and contained in Exhibit 101.
4.9			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.10			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).
4.11			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.12			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).
4.13			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).

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4.14			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).
4.15			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.16			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).
4.17			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.18			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).
4.19			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
4.20			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).
4.21			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
10.1			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
10.2			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. 001-35134) filed with the Securities and Exchange Commission on March 28, 2024).
31.1*			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*			The following materials from the Quarterly Report on Form 10-Q of Level 3 Parent, LLC for the quarter ended March 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Consolidated Statements of Operations, (ii) Consolidated Statements Of Comprehensive (Loss) Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Member's Equity and (vi) 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~~April 3130, ~~2023~~2024.


			LEVEL 3 PARENT, LLC
			By:			/s/ Andrea Genschaw
						Andrea Genschaw Senior Vice President, Controller (Principal Accounting Officer)

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