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AS FILED WITH THE SEC ON FEBRUARY 10, 2004

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2003

OR

o 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 001-11639

LUCENT TECHNOLOGIES INC.

 

 A Delaware
Corporation
  I.R.S. Employer
No. 22-3408857		 

600 Mountain Avenue, Murray Hill, New Jersey 07974

Telephone Number: 908-582-8500

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 x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No o

At January 31, 2004, 4,259,927,559 common shares were outstanding.





2

INDEX

 

 

 

 

 

Part I – Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

 

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended December 31, 2003 and 2002

 3

 

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2003 and September 30, 2003

 4

 

 

 

 

 

 

Consolidated Statement of Changes in Shareowners’ Deficit for the Three Months Ended December 31, 2003

 5

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2003 and 2002

 6

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 7

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

 

 

 

Item 4.

 

Controls and Procedures

32

 

 

 

 

 

 

 

 

 

 

 

 

Part II – Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

33

 

 

 

 

Item 2.

 

Changes in Securities and Use of Proceeds

33

 

 

 

 

Item 6.

 

Exhibits and Reports on Form 8-K

33

 

 

 

 



3

Form 10-Q - Part I

PART I - Financial Information

Item 1.   

Financial Statements

LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

 

 

 

Three months ended December 31,

 

 

 

 

 

 

2003

 

2002

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Products

 

$

1,793

 

$

1,588

 

Services

 

 

466

 

 

487

 

 

 

 

 

Total revenues

 

 

2,259

 

 

2,075

 

 

 

 

 

Costs:

 

 

 

 

 

 

 

Products

 

 

981

 

 

1,208

 

Services

 

 

359

 

 

413

 

 

 

 

 

Total costs

 

 

1,340

 

 

1,621

 

 

 

 

 

Gross margin

 

 

919

 

 

454

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

 

327

 

 

396

 

Research and development

 

 

292

 

 

389

 

Business restructuring charges (reversals) and asset impairments, net

 

 

29

 

 

(19

)

 

 

 

 

Total operating expenses

 

 

648

 

 

766

 

 

 

 

 

Operating income (loss)

 

 

271

 

 

(312

)

Other income, net

 

 

79

 

 

22

 

Interest expense

 

 

113

 

 

94

 

 

 

 

 

Income (loss) before income taxes

 

 

237

 

 

(384

)

Benefit from income taxes

 

 

(101

)

 

(120

)

 

 

 

 

Net income (loss)

 

 

338

 

 

(264

)

Conversion and redemption costs – 8% redeemable convertible preferred stock

 

 

(1

)

 

(100

)

Preferred stock dividends and accretion

 

 

12

 

 

(25

)

 

 

 

 

Net income (loss) applicable to common shareowners

 

$

349

 

$

(389

)

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

Net income (loss) applicable to common shareowners – basic

 

$

0.08

 

$

(0.11

)

Net income (loss) applicable to common shareowners – diluted

 

$

0.07

 

$

(0.11

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding – basic

 

 

4,180

 

 

3,581

 

Weighted average number of common shares outstanding – diluted

 

 

5,136

 

 

3,581

 

See Notes to Unaudited Consolidated Financial Statements.



4

Form 10-Q - Part I

LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Millions, Except Per Share Amounts)
(Unaudited)

 

 

 

December 31,
2003

 

September 30,
2003

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,431

 

$

3,821

 

Short-term investments

 

 

846

 

 

686

 

Receivables, less allowance of $222 and $246

 

 

1,592

 

 

1,511

 

Inventories

 

 

690

 

 

632

 

Other current assets

 

 

847

 

 

1,183

 

 

 

 

 

Total current assets

 

 

7,406

 

 

7,833

 

Property, plant and equipment, net

 

 

1,534

 

 

1,593

 

Prepaid pension costs

 

 

4,837

 

 

4,659

 

Goodwill and other acquired intangibles, net

 

 

186

 

 

188

 

Other assets

 

 

1,456

 

 

1,492

 

 

 

 

 

Total assets

 

$

15,419

 

$

15,765

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

977

 

$

1,072

 

Payroll and benefit-related liabilities

 

 

806

 

 

1,080

 

Debt maturing within one year

 

 

917

 

 

389

 

Other current liabilities

 

 

2,630

 

 

2,474

 

 

 

 

 

Total current liabilities

 

 

5,330

 

 

5,015

 

Postretirement and postemployment benefit liabilities

 

 

4,731

 

 

4,669

 

Pension liabilities

 

 

2,384

 

 

2,494

 

Long-term debt

 

 

4,421

 

 

4,439

 

Company-obligated 7.75% mandatorily redeemable convertible
preferred securities of subsidiary trust

 

 

1,152

 

 

1,152

 

Other liabilities

 

 

1,234

 

 

1,367

 

 

 

 

 

Total liabilities

 

 

19,252

 

 

19,136

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

8.00% redeemable convertible preferred stock

 

 

—

 

 

868

 

SHAREOWNERS’ DEFICIT

 

 

 

 

 

 

 

Preferred stock — par value $1.00 per share; authorized shares: 250; issued and outstanding: none

 

 

—

 

 

—

 

Common stock — par value $.01 per share;
authorized shares: 10,000; 4,205 issued and 4,204 outstanding shares as of December 31, 2003, and 4,170 issued and 4,169 outstanding shares as of September 30, 2003

 

 

42

 

 

42

 

Additional paid-in capital

 

 

22,349

 

 

22,252

 

Accumulated deficit

 

 

(22,457

)

 

(22,795

)

Accumulated other comprehensive loss

 

 

(3,767

)

 

(3,738

)

 

 

 

 

Total shareowners’ deficit

 

 

(3,833

)

 

(4,239

)

 

 

 

 

Total liabilities, redeemable convertible preferred stock and shareowners’ deficit

 

$

15,419

 

$

15,765

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements.



5

Form 10-Q - Part I

LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS’ DEFICIT
(Dollars in Millions)
(Unaudited)

 

 

  

Shares of
Common
Stock

  

Common
Stock

  

Additional
Paid-In
Capital

  

Accumulated
Deficit

  

Accumulated
Other
Comprehensive
Loss

  

Total
Shareowners’
Deficit

  

 

 

 

 

 

 

 

 

Balance as of September 30, 2003

 

4,169

 

$

42

 

$

22,252

 

$

(22,795

)

$

(3,738

)

$

(4,239

)

Net income

 

 

 

 

 

 

 

 

 

 

338

 

 

 

 

 

338

 

Minimum pension liability adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

(4

)

Reclassification adjustment for realized gains on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

(75

)

 

(75

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

49

 

Unrealized holding gains on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

1

 

Issuance of common stock in connection with the exchange of convertible securities and certain other debt obligations

 

2

 

 

 

 

 

5

 

 

 

 

 

 

 

 

5

 

Issuance of common stock related to employee benefit plans

 

33

 

 

 

 

 

81

 

 

 

 

 

 

 

 

81

 

Preferred stock dividends and accretion

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

 

12

 

Other

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

(1

)