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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 22, 1998
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Lucent Technologies Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
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1-11639 22-3408857
(Commission File Number) (IRS Employer Identification No.)
600 Mountain Avenue, Murray Hill, New Jersey 07974
(Address of principal executive offices) (Zip Code)
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(908) 582-8500
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(Registrant's Telephone Number)
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Item 5. Other Events.
On October 22, 1998, the registrant issued the press release attached
hereto as Exhibit 99 reporting its earnings for the quarter and fiscal year
ended September 30, 1998.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following Exhibit is filed with this report:
99 Press release dated October 22, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LUCENT TECHNOLOGIES INC.
Date: November 19, 1998 By: /s/ Donald K. Peterson
Name: Donald K. Peterson
Title: Executive Vice President and
Chief Financial Officer
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News Release [LUCENT TECHNOLOGIES LOGO]
LUCENT TECHNOLOGIES REVENUES INCREASE 23 PERCENT ON CONTINUING OPERATIONS IN
FOURTH FISCAL QUARTER - NET INCOME UP 49 PERCENT, EXCLUDING ONE-TIME ACQUISITION
CHARGES - REVENUES FOR FISCAL 1998 EXCEED $30 BILLION
FOR RELEASE: THURSDAY, OCTOBER 22, 1998
MURRAY HILL, N.J. - Lucent Technologies today reported revenues of $8.038
billion for the fourth fiscal quarter ended September 30, 1998, an increase of
23 percent on continuing operations(1) and 16 percent on a reported basis.
Revenues for the year-ago quarter were $6.933 billion on a reported basis.
Net income for the quarter increased 49 percent to $548 million, or 41 cents a
share(2), excluding one-time charges related to acquisitions (see note a).
Net income for the year-ago quarter, excluding one-time Octel Communications
acquisition charges (see note b), was $369 million, or 28 cents a share.
For the fiscal year ended September 30, 1998, revenues increased 20 percent on
continuing operations and 14 percent on a reported basis to $30.147 billion.
This compares with revenues of $26.360 billion in fiscal 1997 on a reported
basis.
Net income rose 52 percent to $2.287 billion or $1.72 a share for the fiscal
year, excluding one-time events (see note a - 12 mo. table). This compares with
net income of $1.507 billion or $1.17 a share for fiscal 1997, excluding
one-time Octel acquisition charges (see note b).
"Lucent had a very solid quarter, and we are continuing to see strong demand
across all of our businesses from both traditional and new customers." said
Richard McGinn, Lucent Technologies chairman and chief executive officer.
"We are particularly pleased by the 41 percent increase in revenue that
Lucent experienced outside the U.S. this quarter, which we believe bodes well
for our international growth strategy," McGinn said. "It is clear Lucent is
gaining market share."
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McGinn also noted that despite declines in the world semiconductor market,
Lucent's microelectronics business posted revenue growth of 10 percent for the
year, due to the company's leading position in semiconductors for communications
applications.
For the quarter, including one-time charges related to acquisitions (see note
a), the company reported net income of $388 million, or 29 cents a share.
Results for the quarter include a $17 million, pre-tax ($11 million, after-tax)
reversal of business restructuring reserves, which were recorded in December
1995.
In the year ago quarter, the company reported a net loss of $597 million, or 47
cents a share, including one-time charges associated with the acquisition of
Octel (see note b).
For the twelve months ended September 30, 1998, including one-time events (see
note a - 12 mo. table), the company reported net income of $970 million or 73
cents a share. Results include $100 million in pre-tax ($64 million, after-tax)
reversals of business restructuring reserves.
For the year ended September 30, 1997, the company reported net income of $541
million, or 42 cents a share, including one-time Octel acquisition charges. (see
note b - 12 mo. table).
REVIEW OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998
For the quarter, revenues for systems for network operators increased 22 percent
to $4.747 billion, revenues for business communications systems increased 35
percent to $2.438 billion, and revenues for microelectronic products increased 4
percent to $811 million.
SYSTEMS FOR NETWORK OPERATORS
Revenues increased by 22 percent over the year-ago quarter to $4.747 billion,
led by sales of switching and wireless systems with associated software, optical
networking systems, communications software, and data networking systems for
service providers.
Revenues, which were strong among both traditional and new customers, were led
by sales to RBOCs (Regional Bell Operating Companies), competitive local
exchange carriers, wireless service providers, and long distance carriers.
Continued demand for data services and Internet access in businesses and
residences contributed to the group's quarterly revenues.
Within the U.S., revenues increased by about 14 percent over the year-ago
quarter. Revenues outside the U.S. increased about 49 percent and represented
approximately 29 percent of the group's revenues for the quarter.
For the 12 months ended September 30, 1998, revenues increased 20 percent to
$18.752 billion.
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BUSINESS COMMUNICATIONS SYSTEMS
Revenues increased 35 percent to $2.438 billion compared to the year-ago
quarter. The group's results were primarily driven by sales of Definity(R)
Enterprise Communications Servers - including those with call center
applications, sales of messaging systems - including those provided by Octel,
enterprise data networking systems, SYSTIMAX(R) networking systems, and
services.
Within the U.S., revenues increased by about 30 percent over the year-ago
quarter. Revenues outside the U.S. increased about 57 percent and represented
approximately 20 percent of the group's revenues for the quarter.
For the 12 months ended September 30, 1998, revenues grew 26 percent to $8.093
billion.
MICROELECTRONIC PRODUCTS
Revenues increased 4 percent over the year-ago quarter to $811 million, driven
by sales of chips for communications and computing, including data networking,
mass storage, network communications, and optoelectronics components. Increased
revenues from power systems also contributed to the increase.
Within the U.S., revenues decreased approximately 4 percent over the year-ago
quarter. Revenues outside the U.S. increased about 12 percent and represented
approximately 53 percent of the group's revenues.
For the 12 months ended September 30, 1998, revenues rose 10 percent to $3.027
billion.
COSTS AND EXPENSES
As a percentage of revenue, gross margin for the quarter improved to 47.1
percent from 44.1 percent in the year-ago quarter, reflecting a more favorable
mix of products and services as well as improved management of costs.
Selling, general and administrative expenses (SG&A) accounted for 22.7 percent
of revenues in the quarter, compared to 23.2 percent in the period a year-ago,
excluding Octel charges.
Excluding one-time acquisition charges, as a percentage of revenue, research and
development spending for the quarter increased to 12.1 percent from 12 percent
during the 1997 period, due to investments in high growth areas such as
wireless, data networking, and optical networking, as well as switching and
access systems.
Excluding one-time acquisition charges, net income for the quarter was driven by
revenue growth, higher gross margins, and a decrease in the company's effective
tax rate to 36 percent, compared to 38.1 percent in the year-ago quarter.
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Separately, the company announced today its intention to end its joint venture
with Royal Philips Electronics, Philips Consumer Communications (PCC), of which
Lucent is a 40 percent minority interest holder. It is expected that Lucent and
Philips will each regain control of the original businesses that were
contributed to the venture by November 30, 1998.
Lucent plans to sell its portion of the venture that includes the leading corded
and cordless phones and answering machines in the U.S. market, as well as a
telephone leasing business. The company will continue to make these products and
the leasing service available through existing outlets until a buyer can be
found. Lucent will close down its wireless handset portion of the venture.
Included in results for the fiscal fourth quarter is a charge associated with
the writedown of the company's investment in PCC, offset by one-time gains
related to the sale of an investment and certain business operations, including
the Bell Labs Design Automation Group.
Lucent Technologies, headquartered in Murray Hill, N.J., designs, builds and
delivers a wide range of public and private networks, communications systems and
software, data networking systems, business telephone systems and
microelectronic components. Bell Labs is the research and development arm for
the company. For more information on Lucent Technologies, visit the company's
web site at http://www.lucent.com.
This news release contains forward-looking statements based on current
expectations, forecasts and assumptions that involve risks and uncertainties
that could cause actual outcomes and results to differ materially. These risks
and uncertainties include price and product competition, dependence on new
product development, reliance on major customers, readiness for Year 2000,
control of costs and expenses, international growth, general industry and market
conditions and growth rates and general domestic and international economic
conditions including interest rate and currency exchange rate fluctuations. For
a further list and description of such risks and uncertainties, see the reports
filed by Lucent with the Securities and Exchange Commission. Lucent disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
(1) Includes revenues for Lucent's Systems for Network Operators,
Microelectronic Products and Business Communications Systems businesses
(including Octel Communications, Livingston Enterprises and other recently
acquired businesses), and excludes revenues from the company's former Consumer
Products business, which became part of a venture owned by Lucent and Philips
Electronics N.V.; and from Lucent's Advanced Technology Systems business, which
the company sold. For the twelve months ended September 30, 1998, the
calculation of revenue growth on a continuing operations basis also excludes
revenues from the company's former Custom Manufacturing Services business, which
was sold.
(2) All earnings per share reported in this release are Diluted EPS and reflect
the effect of a two-for-one stock split effective April 1, 1998.
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FOURTH FISCAL QUARTER INCOME STATEMENT (UNAUDITED; MILLIONS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
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For the Three Months Ended
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9/30/98 9/30/98(a) 9/30/97(b) CHANGE(c)
REVENUES 8,038 8,038 6,933 15.9%
COSTS 4,255 4,255 3,873 9.9%
GROSS MARGIN 3,783 3,783 3,060 23.6%
SELLING, GENERAL AND ADMINISTRATIVE 1,828 1,828 1,608 13.7%
RESEARCH AND DEVELOPMENT 1,137 973 835 16.5%
TOTAL OPERATING EXPENSES 2,965 2,801 2,443 14.7%
OPERATING INCOME 818 982 617 59.2%
OTHER INCOME (EXPENSE), NET (40) (40) 51 (178.4)%
INTEREST EXPENSE 86 86 72 19.4%
INCOME BEFORE INCOME TAXES 692 856 596 43.6%
INCOME TAX EXPENSE 304 308 227 35.7%
NET INCOME 388 548 369 48.5%
EARNINGS PER SHARE - BASIC 0.30 0.42 0.29 44.8%
EARNINGS PER SHARE - DILUTED 0.29 0.41 0.28 46.4%
EFFECTIVE TAX RATE (%) 43.9% 36.0% 38.1% (2.1)
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a. Excludes one-time, pre-tax charges of $164 million ($160 million,
after-tax) for in-process research and development related to the
Company's acquisitions of SDX, MassMedia, LANNET, and JNA.
b. Excludes one-time, after-tax charges of $966 million related to the
Company's acquisition of Octel.
c. Change is between the three-month period ended 9/30/98, excluding one-time
charges related to the Company's acquisitions of SDX, MassMedia, LANNET,
and JNA, and the corresponding 1997 period, excluding one-time charges
related to the Company's acquisition of Octel.
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FISCAL YEAR 1998 INCOME STATEMENT (UNAUDITED; MILLIONS OF DOLLARS, EXCEPT
PER SHARE AMOUNTS)
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For the Twelve Months Ended
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9/30/98 9/30/98(a) 9/30/97(b) CHANGE(c)
REVENUES 30,147 30,147 26,360 14.4%
COSTS 16,156 16,156 14,890 8.5%
GROSS MARGIN 13,991 13,991 11,470 22.0%
SELLING, GENERAL AND 6,436 6,436 5,758 11.8%
ADMINISTRATIVE
RESEARCH AND DEVELOPMENT 5,094 3,678 3,102 18.6%
TOTAL OPERATING EXPENSES 11,530 10,114 8,860 14.2%
OPERATING INCOME 2,461 3,877 2,610 48.5%
OTHER INCOME, NET 163 14 141 (90.1)%
INTEREST EXPENSE 318 318 305 4.3%
INCOME BEFORE INCOME TAXES 2,306 3,573 2,446 46.1%
INCOME TAX EXPENSE 1,336 1,286 939 37.0%
NET INCOME 970 2,287 1,507 51.8%
EARNINGS PER SHARE - BASIS 0.74 1.75 1.18 48.3%
EARNINGS PER SHARE - DILUTED 0.73 1.72 1.17 47.0
EFFECTIVE TAX RATE (%) 57.9% 36.0% 38.4% (2.4)
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a. Excludes one-time, after-tax charges of $1.412 billion for in-process
research and development related to the Company's acquisitions of
Livingston, Prominet, Yurie, Optimay, SDX, MassMedia, LANNET, and JNA and
the $149 million, pre-tax ($95 million, after-tax) gain on the sale of
ATS.
b. Excludes one-time, after-tax charges of $966 million related to the
Company's acquisition of Octel.
c. Change is between the twelve-month period ended 9/30/98, excluding
one-time charges related to the Company's acquisitions of Livingston,
Prominet, Yurie, Optimay, SDX, MassMedia, LANNET, and JNA, as well as the
gain on the sale of ATS, and the corresponding 1997 period, excluding
one-time charges related to the Company's acquisition of Octel.
For more information, reporters may contact:
Jeff Baum
Lucent Technologies
908-582-7635 (office)
Email: [email protected]
Bill Price
Lucent Technologies
908-582-4820 (office)
Email: [email protected]
