LUMEN Form 10-K Observations

By Clyde Just – Board of Directors, CenturyLink Retirees

We’ve had many questions from our members about how the company is doing.  While there is no end of speculation in the news, I thought I would go back and take a look at Lumen’s 10-K report for last year, that is, the fiscal year ending December 31, 2022.

First, a reminder of what a 10-K document is.
Here’s background from the SEC. (How to Read a 10-K – SEC.gov)

– If you want to follow or invest in a U.S. public company, you can find a wealth of information in the company’s annual report on Form 10-K. Among other things, the 10-K offers a detailed picture of a company’s business, the risks it faces, and the operating and financial results for the fiscal year. Company management also discusses its perspective on the business results and what is driving them.
– Most U.S. public companies are required to produce a 10-K each year and file it with the U.S. Securities and Exchange Commission (SEC). SEC rules require that 10-Ks follow a set order of topics. SEC rules also require companies to send an annual report to their shareholders when they are holding annual meetings to elect members of their boards of directors. There is a lot of overlap in the requirements for the 10-K and the annual report to shareholders, but there are also important differences.

Lumen’s 10-K 2022 report is 265 pages, shorter than the 2021 report with 306 pages, but still a long read. – Again, the audience for the document is the Lumen shareholders. In case there are negative outcomes in the future, each company writes its version to be able to tell shareholders, “We told you so.” While some predictions may seem dire, we believe the company management is fighting hard to regain its place in the market and gain trust to increase the price per share.

Some of the more interesting points for me are listed below, and you can open the document at – LUMEN 10-K

Pages 5-6: Definition of the “three brands” Lumen, Quantum Fiber, and CenturyLink.

Page 7: Financial Highlights for the last 3 years.

Pages 13-14: Breakdown of Business and Mass Market contributions for the past 3 years.

Pages 14-15: Products for the Business Segment.

Page 16: Products and Services for Mass Market.

Page 32: The top paragraph is rather interesting, talking about…

“company-sponsored benefit plans that cover our current and former U.S.-based employees had approximately 25,000 active employee participants, approximately 58,000 active and retired employees and surviving spouses eligible for post-retirement healthcare benefits, approximately 22,000 pension retirees and approximately 7,000 former employees with vested pension benefits” … and more.

Pages 42-43: Note the line item on the top of page 42 “Goodwill Impairment” as an expense and then on page 43 more discussion on this expense item.

Pages 46-48: Breakdown of the two revenue streams (Business and Mass Market) for the past several years.

Pages 109-121: Interesting information on Pension, Post Retirement, and other Post Employment Benefits.

Note: You’ve probably heard from the National Retiree Legislative Network that they’ve been successful in requesting changes to the Annual Funding Notice (AFN) for pensions.  If you receive a pension, you receive an AFN each spring.  The one you receive in 2023 will be the last one in the old format.  We look forward to 2024 when the new version is produced and we can write an article about how and why it tells us more about our pension funds status.