¹Participation levels are subject to adjustment, including for ongoing reconciliation and for potential additional participation in certain term loan transactions, which the Company intends to make available to all holders in connection with the consummation of such transactions.

²Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 includes $14 million and $125 million, respectively, from the EMEA business that we sold on Nov. 1, 2023, which will not recur in periods following the completion of this divestiture. Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2022 includes (i) $27 million and $1.3 billion of Adjusted EBITDA from our businesses divested in the second half of 2022 and 2023, which will not recur in periods following the completion of these divestitures and (ii) $59 million of previously deferred revenue recognized in Q1 2022 related to the CAF Phase II program, which lapsed on Dec. 31, 2021. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods. The post-closing net financial impacts of actual amounts received or paid by the Company under its post-closing agreements with the purchasers of the divested businesses was a net reduction of (i) $(40) million for the fourth quarter of 2023, (ii) $(179) million for the year 2023 and (iii) $(43) million for the fourth quarter and year 2022. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's financial performance following the completion of these divestitures.

Metric, as reported

Fourth Quarter

Full Year

($ in millions, except per share data)

2023

2022

2023

2022

Large Enterprise

$ 1,061

1,217

4,616

5,377

Mid-Market Enterprise

491

522

2,011

2,212

Public Sector

495

431

1,783

1,861

Enterprise Channels

2,047

2,170

8,410

9,450

Wholesale

741

835

3,125

3,591

Business Segment Revenue

2,788

3,005

11,535

13,041

Mass Markets Segment Revenue

729

795

3,022

4,437

Total Revenue⁽¹⁾⁽²⁾

$ 3,517

3,800

14,557

17,478

Cost of Services and Products

1,737

1,826

7,144

7,868

Selling, General and Administrative Expenses

896

671

3,198

3,078

Net Loss (Gain) on Sale of Businesses⁽³⁾

9

480

121

(113)

Loss on Disposal Group Held for Sale

—

40

—

40

Stock-based Compensation Expense

13

27

52

98

Net Loss

(1,995)

(3,069)

(10,298)

(1,548)

Net Income, Excluding Special Items⁽⁴⁾⁽⁵⁾

83

425

193

1,564

Adjusted EBITDA^(4)(6)(7)

888

810

4,146

6,703

Adjusted EBITDA, Excluding Special Items^(4)(6)(7)(8)

1,099

1,393

4,628

6,858

Net Loss Margin

(56.7) %

(80.8) %

(70.7) %

(8.9) %

Net Income Margin, Excluding Special Items⁽⁴⁾⁽⁵⁾

2.4 %

11.2 %

1.3 %

8.9 %

Adjusted EBITDA Margin⁽⁴⁾

25.2 %

21.3 %

28.5 %

38.4 %

Adjusted EBITDA Margin, Excluding Special Items⁽⁴⁾⁽⁸⁾

31.2 %

36.7 %

31.8 %

39.2 %

Net Cash Provided by Operating Activities

784

841

2,160

4,735

Capital Expenditures⁽⁹⁾

821

833

3,100

3,016

Unlevered Cash Flow⁽⁴⁾

196

264

158

3,059

Unlevered Cash Flow, Excluding Cash Special Items^(4)(10)

283

382

220

3,600

Free Cash Flow⁽⁴⁾

(37)

8

(940)

1,719

Free Cash Flow, Excluding Cash Special Items^(4)(10)

50

126

(878)

2,260

Net Loss per Common Share - Diluted

(2.03)

(3.08)

(10.48)

(1.54)

Net Income per Common Share - Diluted, Excluding Special Items⁽⁴⁾⁽⁵⁾

0.08

0.43

0.20

1.55

Weighted Average Shares Outstanding (in millions) - Diluted

983.8

995.6

983.1

1,007.5

⁽¹⁾ Revenue for the fourth quarter and full year 2023 includes $39 million and $454 million, respectively, from the EMEA business divested on Nov. 1, 2023, which will not recur in periods following the completion of this divestiture. Revenue for the fourth quarter and full year 2022 includes $135 million and $2.6 billion of revenue, respectively, from (i) the Latin American business divested Aug. 1, 2022, (ii) the 20-state ILEC business divested Oct. 3, 2022 and (iii) the EMEA business (the "divestitures" or the "divested businesses"), which will not recur in periods following the completion of these divestitures. The full year 2022 also includes $59 million of previously deferred revenue recognized in Q1 2022 related to the CAF Phase II program, which lapsed on Dec. 31, 2021. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods.

⁽²⁾ The post-closing revenue impact of amounts received by the Company under its post-closing agreements with the purchasers of the divested businesses was (i) $39 million for the fourth quarter of 2023, (ii) $117 million for the year 2023 and (iii) $33 million for the fourth quarter of 2022 and the full year 2022. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's current financial performance.

⁽³⁾ Reflects primarily (i) the pre-tax gain of $597 million recorded in operating income as a result of our Latin American business divestiture completed Aug. 1, 2022, (ii) the pre-tax gain of $176 million recorded in operating income as a result of our 20-state ILEC business divestiture completed Oct. 3, 2022 and (iii) the net loss of $102 million recorded for the year ended 2023 operating income and $660 million recorded for the year ended 2022 operating income as a result of our EMEA business divestiture completed Nov. 1, 2023.

⁽⁴⁾ See the attached schedules for definitions of non-GAAP metrics and reconciliations to GAAP figures.

⁽⁵⁾ Excludes Special Items (net of the income tax effect thereof), which positively impacted this metric by (i) $2.1 billion for the fourth quarter of 2023, (ii) $10.5 billion for the year 2023, (iii) $3.5 billion for the fourth quarter of 2022 and (iv) $3.1 billion for the year 2022.

⁽⁶⁾ Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 includes $14 million and $125 million, respectively, from the EMEA business, which will not recur in periods following the completion of this divestiture. Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2022 includes $27 million and $1.3 billion of Adjusted EBITDA from our businesses divested in the second half of 2022 and 2023, which will not recur in periods following the completion of these divestitures. The full year 2022 also includes $59 million of previously deferred revenue recognized in Q1 2022 related to the CAF Phase II program, which lapsed on December 31, 2021. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods.

⁽⁷⁾ The post-closing net financial impacts of actual amounts received or paid by the Company under its post-closing agreements with the purchasers of the divested businesses was a net reduction of (i) $(40) million for the fourth quarter of 2023, (ii) $(179) million for the year 2023 and (iii) $(43) million for the fourth quarter and year 2022. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's financial performance following the completion of these divestitures.

⁽⁸⁾ Excludes Special Items in the amounts of (i) $211 million for the fourth quarter of 2023, (ii) $482 million for the year 2023, (iii) $583 million for the fourth quarter of 2022 and (iv) $155 million for the year 2022.

⁽⁹⁾ Capital expenditures for the fourth quarter and full year 2023 includes $7 million and $98 million, respectively, of capital expenditures relating to the EMEA business, which will not recur in periods following the completion of this divestiture. Capital expenditures for the fourth quarter 2022 includes $38 million of capital expenditures relating to the divested businesses, which will not recur in periods following the completion of these divestitures. Capital expenditures for the full year 2022 includes (i) $424 million of capital expenditures relating to the divested businesses and (ii) $18 million of capital expenditures related to the CAF Phase II program, which lapsed on December 31, 2021. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions and programs to understand the impact they had on the Company's past, but not current or future, capital expenditures. Therefore, these amounts will impact the Company's ability to match its past capital expenditure activities in current and future periods.

⁽¹⁰⁾ Excludes cash paid for Special Items of (i) $87 million for the fourth quarter of 2023, (ii) $62 million for the year 2023, (iii) $118 million for the fourth quarter of 2022 and (iv) $541 million for the year 2022.

Metrics⁽¹⁾

Fourth Quarter

YoY
Percent

Full Year

YoY
Percent

($ in millions)

2023

2022

Change

2023

2022

Change

Revenue By Sales Channel

Large Enterprise

$ 1,061

1,217

(13) %

4,616

5,377

(14) %

Mid-Market Enterprise

491

522

(6) %

2,011

2,212

(9) %

Public Sector

495

431

15 %

1,783

1,861

(4) %

Enterprise Channels

2,047

2,170

(6) %

8,410

9,450

(11) %

Wholesale

741

835

(11) %

3,125

3,591

(13) %

Business Segment Revenue

2,788

3,005

(7) %

11,535

13,041

(12) %

Mass Markets Segment Revenue

729

795

(8) %

3,022

4,437

(32) %

Total Revenue⁽²⁾

$ 3,517

3,800

(7) %

14,557

17,478

(17) %

Business Segment Revenue by Product Category

Grow

$ 1,078

1,091

(1) %

4,469

4,595

(3) %

Nurture

826

934

(12) %

3,465

4,094

(15) %

Harvest

639

777

(18) %

2,785

3,557

(22) %

Subtotal

2,543

2,802

(9) %

10,719

12,246

(12) %

Other

245

203

21 %

816

795

3 %

Business Segment Revenue

$ 2,788

3,005

(7) %

11,535

13,041

(12) %

Net (Loss) Income

$ (1,995)

(3,069)

(35) %

(10,298)

(1,548)

nm

Net (Loss) Income Margin

(56.7) %

(80.8) %

(30) %

(70.7) %

(8.9) %

nm

Net Income, Excluding Special Items

$ 83

425

(80) %

193

1,564

(88) %

Net Income Margin, Excluding Special Items

2.4 %

11.2 %

(79) %

1.3 %

8.9 %

(85) %

Adjusted EBITDA, Excluding Special Items⁽³⁾

$ 1,099

1,393

(21) %

4,628

6,858

(33) %

Adjusted EBITDA Margin, Excluding Special Items

31.2 %

36.7 %

(15) %

31.8 %

39.2 %

(19) %

Capital Expenditures⁽⁴⁾

$ 821

833

(1) %

3,100

3,016

3 %

⁽¹⁾ See the notes to our immediately preceding chart for information about our use of non-GAAP metrics, Special Items, and reconciliations to GAAP.

⁽²⁾ Revenue for the fourth quarter and year of 2023 and 2022 includes amounts from the 2022 and 2023 divestitures and the post-closing commercial agreements with the purchasers of the divested businesses. Refer to footnotes 1 and 2 on the preceding table for details.

⁽³⁾ Adjusted EBITDA excluding Special Items for the fourth quarter and year of 2023 and 2022 includes the financial impacts from the 2022 and 2023 divestitures and the post-closing commercial agreements with the purchasers of the divested businesses. Refer to footnotes 6 and 7 on the preceding table for details.

⁽⁴⁾ Capital expenditures for the fourth quarter and year of 2023 and 2022 includes the impacts of capital expenditures related to our divested businesses, which will not recur in periods following the completion of these divestitures. Refer to footnote 9 on the preceding table for details.

nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful.

Metric ⁽¹⁾⁽²⁾

Outlook

Adjusted EBITDA

$4.1 to $4.3 billion

Free Cash Flow⁽³⁾⁽⁴⁾

$100 to $300 million

Net Cash Interest

$1.25 to $1.35 billion

Capital Expenditures

$2.7 to $2.9 billion

Cash Income Taxes/(Refund)⁽⁴⁾

($200) to ($300) million

⁽¹⁾ For definitions of non-GAAP metrics and reconciliations to GAAP figures, see the attached schedules and our Investor Relations website.

⁽²⁾ Outlook measures in this chart and the accompanying schedules (i) exclude the effects of Special Items, goodwill impairments, future changes in our operating or capital allocation plans, unforeseen changes in regulation, laws or litigation, and other unforeseen events or circumstances impacting our financial performance and (ii) speak only as of Feb. 6, 2024. See "Forward-Looking Statements."

⁽³⁾ Assumes no discretionary pension plan contributions during 2024.

⁽⁴⁾ Includes an approximately $700 million tax refund received during the first quarter 2024.

Lumen Technologies, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(UNAUDITED)

($ in millions, except per share amounts; shares in thousands)

Three months ended
December 31,

(Decrease)
/ Increase

Twelve months ended
December 31,

(Decrease)
/ Increase

2023

2023

OPERATING REVENUE

$ 3,517

3,800

(7) %

14,557

17,478

(17) %

OPERATING EXPENSES

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

1,737

1,826

(5) %

7,144

7,868

(9) %

Selling, general and administrative

896

671

34 %

3,198

3,078

4 %

Net loss (gain) on sale of businesses

9

480

(98) %

121

(113)

nm

Loss on disposal group held for sale

—

40

nm

—

40

nm

Depreciation and amortization

751

796

(6) %

2,985

3,239

(8) %

Goodwill impairment

1,900

3,271

(42) %

10,693

3,271

nm

Total operating expenses

5,293

7,084

(25) %

24,141

17,383

39 %

OPERATING (LOSS) INCOME

(1,776)

(3,284)

(46) %

(9,584)

95

nm

OTHER (EXPENSE) INCOME

Interest expense

(290)

(280)

4 %

(1,158)

(1,332)

(13) %

Net gain on early debt retirement

—

205

nm

618

214

189 %

Other (expense) income, net

(76)

177

nm

(113)

32

nm

Total other (expense) income, net

(366)

102

nm

(653)

(1,086)

(40) %

Income tax benefit (expense)

147

113

30 %

(61)

(557)

(89) %

NET LOSS

$ (1,995)

(3,069)

(35) %

(10,298)

(1,548)

nm

BASIC LOSS PER SHARE

$ (2.03)

(3.08)

(34) %

(10.48)

(1.54)

nm

DILUTED LOSS PER SHARE

$ (2.03)

(3.08)

(34) %

(10.48)

(1.54)

nm

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

983,762

995,573

(1) %

983,081

1,007,517

(2) %

Diluted

983,762

995,573

(1) %

983,081

1,007,517

(2) %

DIVIDENDS PER COMMON SHARE

—

—

nm

—

0.75

nm

Exclude: Special Items⁽¹⁾

$ 2,078

3,494

(41) %

10,491

3,112

nm

NET INCOME EXCLUDING SPECIAL ITEMS

$ 83

425

(80) %

193

1,564

(88) %

DILUTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS

$ 0.08

0.43

(81) %

0.20

1.55

(87) %

⁽¹⁾ Excludes the Special Items described in the accompanying Non-GAAP Special Items table, net of the income tax effect thereof.

nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful.

Lumen Technologies, Inc.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

($ in millions)

December 31, 2023

December 31, 2022

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$ 2,234

1,251

Accounts receivable, less allowance of $67 and $85

1,318

1,508

Assets held for sale

104

1,889

Other

1,119

803

Total current assets

4,775

5,451

Property, plant and equipment, net of accumulated depreciation of $21,318 and $19,886

19,758

19,166

GOODWILL AND OTHER ASSETS

Goodwill

1,964

12,657

Other intangible assets, net

5,470

6,166

Other, net

2,051

2,172

Total goodwill and other assets

9,485

20,995

TOTAL ASSETS

$ 34,018

45,612

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Current maturities of long-term debt

$ 157

154

Accounts payable

1,134

1,044

Accrued expenses and other liabilities

Salaries and benefits

696

692

Income and other taxes

251

1,158

Current operating lease liabilities

268

344

Interest

168

181

Other

209

277

Liabilities held for sale

4

451

Current portion of deferred revenue

647

596

Total current liabilities

3,534

4,897

LONG-TERM DEBT

19,831

20,418

DEFERRED CREDITS AND OTHER LIABILITIES

Deferred income taxes, net

3,127

3,163

Benefit plan obligations, net

2,490

2,391

Deferred revenue

1,969

1,758

Other

2,650

2,611

Total deferred credits and other liabilities

10,236

9,923

STOCKHOLDERS' EQUITY

Common stock

1,008

1,002

Additional paid-in capital

18,126

18,080

Accumulated other comprehensive loss

(810)

(1,099)

Accumulated deficit

(17,907)

(7,609)

Total stockholders' equity

417

10,374

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 34,018

45,612

Lumen Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(UNAUDITED)

($ in millions)

Twelve months ended December 31,

2023

OPERATING ACTIVITIES

Net loss

$ (10,298)

(1,548)

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

Depreciation and amortization

2,985

3,239

Goodwill impairment

10,693

3,271

Net loss (gain) on sale of businesses

121

(113)

Loss on disposal group held for sale

—

40

Deferred income taxes

8

(1,230)

Provision for uncollectible accounts

100

133

Net gain on early retirement of debt

(618)

(214)

Unrealized loss on investments

97

191

Stock-based compensation

52

98

Changes in current assets and liabilities, net

(1,729)

540

Retirement benefits

(1)

46

Changes in other noncurrent assets and liabilities, net

730

258

Other, net

20

24

Net cash provided by operating activities

2,160

4,735

INVESTING ACTIVITIES

Capital expenditures

(3,100)

(3,016)

Proceeds from sale of businesses

1,746

8,369

Proceeds from sale of property, plant and equipment and other assets

165

120

Other, net

(12)

3

Net cash (used in) provided by investing activities

(1,201)

5,476

FINANCING ACTIVITIES

Payments of long-term debt

(185)

(8,093)

Net proceeds from (payments on) revolving line of credit

200

(200)

Dividends paid

(11)

(780)

Repurchases of common stock

—

(200)

Other, net

(22)

(40)

Net cash used in financing activities

(18)

(9,313)

Net increase in cash, cash equivalents and restricted cash

941

898

Cash, cash equivalents and restricted cash at beginning of period

1,307

409

Cash, cash equivalents and restricted cash at end of period

$ 2,248

1,307

Cash, cash equivalents and restricted cash:

Cash and cash equivalents

$ 2,234

1,251

Cash and cash equivalents and restricted cash included in assets held for sale

—

44

Restricted cash

14

12

Total

$ 2,248

1,307

Lumen Technologies, Inc.

OPERATING METRICS

(UNAUDITED)

Operating Metrics

4Q23

3Q23

4Q22

Mass Markets broadband subscribers

(in thousands)

Fiber broadband subscribers

916

896

832

Other broadband subscribers⁽¹⁾

1,842

1,940

2,205

Mass Markets total broadband subscribers⁽²⁾

2,758

2,836

3,037

Mass Markets broadband enabled units⁽³⁾

(in millions)

Fiber broadband enabled units

3.7

3.5

3.1

Other broadband enabled units

18.1

18.2

18.7

Mass Markets total broadband enabled units

21.8

21.7

21.8

⁽¹⁾ Other broadband subscribers are customers that primarily subscribe to lower speed copper-based broadband services marketed under the CenturyLink brand.

⁽²⁾ Mass Markets broadband subscribers are customers that purchase broadband connection service through their existing telephone lines, stand-alone telephone lines, or fiber-optic cables. Our methodology for counting our Mass Markets broadband subscribers includes only those lines that we use to provide services to external customers and excludes lines used solely by us and our affiliates. It also excludes unbundled loops and includes stand-alone Mass Markets broadband subscribers. We count lines when we install the service. Other companies may use different methodologies.

⁽³⁾ Represents the total number of units capable of receiving our broadband services at period end. Other companies may use different methodologies to count their broadband enabled units.

Lumen Technologies, Inc.

Non-GAAP Special Items

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

Special Items Impacting Adjusted EBITDA

4Q23

4Q22

4Q23

4Q22

Severance

$ 53

10

74

12

Consumer and other litigation

1

—

(3)

(3)

Net loss (gain) on sale of businesses⁽¹⁾

9

480

121

(113)

Loss on disposal group held for sale

—

40

—

40

Transaction and separation costs⁽²⁾

41

53

108

219

Net loss on sale of select CDN contracts

73

—

73

—

Real estate transactions⁽³⁾

34

—

109

—

Total Special Items impacting Adjusted EBITDA

$ 211

583

482

155

Actual QTD

Actual YTD

Special Items Impacting Net (Loss) Income

4Q23

4Q22

4Q23

4Q22

Severance

$ 53

10

74

12

Consumer and other litigation

1

—

(3)

(3)

Goodwill impairment

1,900

3,271

10,693

3,271

Net loss (gain) on sale of businesses⁽¹⁾

9

480

121

(113)

Loss on disposal group held for sale

—

40

—

40

Net gain on early retirement of debt⁽⁴⁾

—

(205)

(618)

(214)

Transaction and separation costs⁽²⁾

41

53

108

219

Net loss on sale of select CDN contracts

73

—

73

—

Real estate transactions⁽³⁾

34

—

109

—

Expense (income) from transition and separation services⁽⁵⁾

22

(82)

(128)

(152)

Total Special Items impacting Net (Loss) Income

2,133

3,567

10,429

3,060

Income tax effect of Special Items⁽⁶⁾

(55)

(73)

62

52

Total Special Items impacting Net (Loss) Income, net of tax

$ 2,078

3,494

10,491

3,112

Actual QTD

Actual YTD

Special Items Impacting Cash Flows

4Q23

4Q22

4Q23

4Q22

Severance

$ 48

7

67

37

Consumer and other litigation

—

—

(3)

—

Pension contribution⁽⁷⁾

—

—

—

319

Transaction and separation costs⁽²⁾

70

142

147

282

Income from transition and separation services⁽⁵⁾

(31)

(31)

(149)

(97)

Total Special Items impacting Cash Flows

$ 87

118

62

541

⁽¹⁾ Reflects primarily (i) the pre-tax gain of $597 million recorded in operating income as a result of our Latin American business divestiture completed Aug. 1, 2022, (ii) the pre-tax gain of $176 million recorded in operating income as a result of our 20-state ILEC business divestiture completed Oct. 3, 2022 and (iii) the net loss of $102 million recorded for the year ended 2023 operating income and $660 million recorded for the year ended 2022 operating income as a result of our EMEA business divestiture completed Nov. 1, 2023.

⁽²⁾ Transaction and separation costs associated with (i) the sale of our Latin American business on Aug. 1, 2022, (ii) the sale of our 20-state ILEC business on Oct. 3, 2022, (iii) the sale of our EMEA business on Nov. 1, 2023 and (iv) our evaluation of other potential transactions.

⁽³⁾ Real estate transactions include the Q2 and Q4 2023 loss on donation of real estate and acceleration of costs associated with our real estate rationalization program.

⁽⁴⁾ Reflects a gain as a result of (i) $19 million of debt exchanges in Q2 2023, (ii) $1.5 billion of debt exchanges in Q1 2023, (iii) $4.4 billion in early debt retirement in Q4 2022 and (iv) $2.3 billion in early debt retirement in Q3 2022. There were no comparable gains or losses during Q4 2023,Q3 2023, Q2 2022 or Q1 2022.

⁽⁵⁾ Income from transition and separation services includes charges we billed for transition services and IT professional services provided to the purchasers in connection with our 2022 and 2023 divestitures.

⁽⁶⁾ Tax effect calculated using the annualized effective statutory tax rate, excluding any non-recurring discrete items, which was 23.5% for all quarters of 2023 and 24.6% for all quarters of 2022.

⁽⁷⁾ Cash pension contribution following a revaluation of the pension obligation and pension assets for the Lumen Pension Plan, in connection with the closing of the sale of the 20-state ILEC business on Oct. 3, 2022.

Lumen Technologies, Inc.

Non-GAAP Cash Flow Reconciliation

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

4Q23

4Q22

4Q23

4Q22

Net cash provided by operating activities⁽¹⁾

$ 784

841

2,160

4,735

Capital expenditures

(821)

(833)

(3,100)

(3,016)

Free Cash Flow⁽¹⁾

(37)

8

(940)

1,719

Cash interest paid

252

273

1,138

1,365

Interest income

(19)

(17)

(40)

(25)

Unlevered Cash Flow⁽¹⁾

$ 196

264

158

3,059

Free Cash Flow⁽¹⁾

$ (37)

8

(940)

1,719

Add back: Severance⁽²⁾

48

7

67

37

Remove: Consumer and other litigation⁽²⁾

—

—

(3)

—

Add back: Pension contribution⁽²⁾

—

—

—

319

Add back: Transaction and separation costs⁽²⁾

70

142

147

282

Remove: Income from transition and separation services⁽²⁾

(31)

(31)

(149)

(97)

Free Cash Flow excluding cash Special Items⁽¹⁾

$ 50

126

(878)

2,260

Unlevered Cash Flow⁽¹⁾

$ 196

264

158

3,059

Add back: Severance⁽²⁾

48

7

67

37

Remove: Consumer and other litigation⁽²⁾

—

—

(3)

—

Add back: Pension contribution⁽²⁾

—

—

—

319

Add back: Transaction and separation costs⁽²⁾

70

142

147

282

Remove: Income from transition and separation services⁽²⁾

(31)

(31)

(149)

(97)

Unlevered Cash Flow excluding cash Special Items⁽¹⁾

$ 283

382

220

3,600

⁽¹⁾ Includes the impact of (i) $938 million in cash tax payments in Q2 2023 and (ii) $90 million in cash tax payments in Q1 2023 related to our divestitures completed on Aug. 1, 2022 and Oct. 3, 2022.

⁽²⁾ Refer to Non-GAAP Special Items table for details of the Special Items impacting cash included above.

Lumen Technologies, Inc.

Adjusted EBITDA Non-GAAP Reconciliation

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

4Q23

4Q22

4Q23

4Q22

Net loss

$ (1,995)

(3,069)

(10,298)

(1,548)

Income tax (benefit) expense

(147)

(113)

61

557

Total other expense (income), net

366

(102)

653

1,086

Depreciation and amortization expense

751

796

2,985

3,239

Stock-based compensation expense

13

27

52

98

Goodwill impairment

1,900

3,271

10,693

3,271

Adjusted EBITDA⁽¹⁾

$ 888

810

4,146

6,703

Add back: Severance⁽²⁾

53

10

74

12

Add back: Consumer and other litigation⁽²⁾

1

—

(3)

(3)

Add back: Net loss (gain) on sale of businesses⁽²⁾

9

480

121

(113)

Add back: Loss on disposal group held for sale⁽²⁾

—

40

—

40

Add back: Transaction and separation costs⁽²⁾

41

53

108

219

Add back: Net loss on sale of select CDN contracts⁽²⁾

73

—

73

—

Add back: Real estate transaction costs⁽²⁾

34

—

109

—

Adjusted EBITDA excluding Special Items⁽¹⁾

$ 1,099

1,393

4,628

6,858

Net income excluding Special Items⁽²⁾

$ 83

425

193

1,564

Total revenue

$ 3,517

3,800

14,557

17,478

Net Loss Margin

(56.7) %

(80.8) %

(70.7) %

(8.9) %

Net Income Margin, excluding Special Items

2.4 %

11.2 %

1.3 %

8.9 %

Adjusted EBITDA Margin

25.2 %

21.3 %

28.5 %

38.4 %

Adjusted EBITDA Margin excluding Special Items

31.2 %

36.7 %

31.8 %

39.2 %

⁽¹⁾ Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 include the financial impacts of the EMEA business divested on Nov. 1, 2023. Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2022 include the financial impacts of (i) the Latin American business divested on Aug. 1, 2022, the 20-state ILEC business divested on Oct. 3, 2022 and the EMEA business divested on Nov. 1, 2023 and (ii) the CAF Phase II program, which lapsed on Dec. 31, 2021. Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 and 2022 include the financial impacts from the post-closing commercial agreements with the purchasers of the divested businesses. Refer to footnote 1 on the first page of this release for details.

⁽²⁾ Refer to Non-GAAP Special Items table for details of the Special Items included above.

Lumen Technologies, Inc.

2024 OUTLOOK ^{(1) (2) (3) (4)}

(UNAUDITED)

($ in millions)

Adjusted EBITDA Outlook

Twelve Months Ended December 31, 2024

Range

Low

High

Net (loss) income

$ (100)

400

Income tax expense

50

250

Total other expense, net

1,190

920

Depreciation and amortization expense

2,900

2,700

Stock-based compensation expense

60

30

Adjusted EBITDA

$ 4,100

4,300

Free Cash Flow Outlook

Twelve Months Ended December 31, 2024

Range

Low

High

Net cash provided by operating activities

$ 2,800

3,200

Capital expenditures

(2,700)

(2,900)

Free Cash Flow

$ 100

300

⁽¹⁾ For definitions of non-GAAP metrics and reconciliation to GAAP figures, see the above schedules and our Investor Relations website.

⁽²⁾ Outlook measures in this chart (i) exclude the effects of Special Items, goodwill impairments, future changes in our operating or capital allocation plans, unforeseen changes in regulation, laws or litigation, and other unforeseen events or circumstances impacting our financial performance and (ii) speak only as of Feb. 6, 2024. See "Forward-Looking Statements."

⁽³⁾ Assumes no discretionary pension plan contributions during 2024.

⁽⁴⁾ Includes an approximately $700 million tax refund received during the first quarter 2024.