SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------
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) :
June 24, 1999
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Lucent Technologies Inc.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-11639 22-3408857
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
600 Mountain Avenue, Murray Hill, New Jersey 07974
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(Address of principal executive offices) (Zip Code)
(908) 582-8500
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(Registrant's Telephone Number)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 24, 1999, Lucent Technologies Inc. ("Lucent"), a
Delaware corporation, and Ascend Communications, Inc. ("Ascend"), a
Delaware corporation, consummated a merger (the "Merger") whereby
Dasher Merger Inc. ("Merger Sub"), a Delaware corporation and a
wholly owned subsidiary of Lucent, was merged with and into Ascend
pursuant to a Merger Agreement (as amended, the "Merger Agreement"),
dated as of January 12, 1999 and amended as of May 16, 1999. As a
result of the Merger, Ascend has survived the merger as a wholly owned
Delaware subsidiary of Lucent, and will continue under the name
"Ascend Communications, Inc."
Prior to the Merger, the assets of Ascend were used to
provide, develop, manufacture and sell wide area networking solutions
for telecommunications carriers, Internet service providers and
corporate customers worldwide. Lucent intends to continue such uses
for the assets of Ascend.
Pursuant to the terms of the Merger Agreement, each issued
and outstanding share of common stock, par value $0.001 per share, of
Ascend ("Ascend Common Stock") was converted into the right to receive
1.65 shares of common stock, par value $0.01 per share, of Lucent
("Lucent Common Stock"). Lucent issued approximately 371 million
shares of Lucent Common Stock in exchange for all of the outstanding
shares of Ascend Common Stock. In addition, each option to purchase
Ascend Common Stock outstanding at the time of the Merger under
Ascend's stock option plans was converted into an option to purchase
the number of shares of Lucent Common Stock equal to the number of
shares of Ascend Common Stock subject to such option multiplied by the
exchange ratio for the Merger, and the associated exercise price was
adjusted accordingly.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The (i) consolidated audited balance sheet of Ascend as of
December 31, 1998 and 1997 and (ii) consolidated statements
of income and cash flows of Ascend for the fiscal years
ended December 31, 1998, 1997 and 1996 have been filed with
the Securities and Exchange Commission (the "SEC") as part
of Ascend's Annual Report on Form 10-K, for the fiscal year
ended December 31, 1998, as amended by Amendment No. 1
thereto filed on Form 10-K/A on May 19, 1999 and Amendment
No. 2 thereto filed on Form 10-K/A on May 21, 1999 (File No.
0-23774), and are incorporated herein by reference.
The (iii) unaudited consolidated balance sheet of Ascend as
of March 31, 1999 and (iv) unaudited consolidated statements
of income and cash flows of Ascend for the three months
ended March 31, 1999 and 1998 have been filed with the SEC
as part of Ascend's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, as amended by Amendment No. 1
thereto filed on Form 10-Q/A on May 21, 1999 (File No.
0-23774), and are incorporated herein by reference.
(b) Pro Forma Financial Information.
Unaudited pro forma combined condensed statements of income
of Lucent and Ascend for the six months ended March 31, 1999
and 1998, and the years ended September 30, 1998 and 1997
and the nine-month period ended September 30, 1996, and (ii)
the unaudited pro forma combined condensed balance sheet of
Lucent and Ascend at March 31, 1999 are included as Exhibit
99.1.
(c) Exhibits.
2.1 First Amendment to Agreement and Plan of Merger dated
as of May 16, 1999, by and among Lucent Technologies
Inc., Dasher Merger Inc. and Ascend Communications,
Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
99.1 Unaudited pro forma combined condensed statements of
income of Lucent and Ascend for the six months ended
March 31, 1999 and 1998, and the years ended September
30, 1998 and 1997 and the nine-month period ended
September 30, 1996, and the unaudited pro forma
combined condensed balance sheet of Lucent and Ascend
at March 31, 1999.
<PAGE>
Form 8-K
SIGNATURE
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.
By: /s/ James S. Lusk
--------------------------
Name: James S. Lusk
Title: Vice President and Controller
(Principal Accounting Officer)
Date: June 28, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit
- --------
2.1 First Amendment to Agreement and Plan of Merger dated as of
May 16, 1999, by and among Lucent Technologies Inc., Dasher
Merger Inc. and Ascend Communications, Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
99.1 Unaudited pro forma combined condensed statements of income
of Lucent and Ascend for the six months ended March 31, 1999
and 1998, and the years ended September 30, 1998 and 1997
and the nine-month period ended September 30, 1996, and the
unaudited pro forma combined condensed balance sheet of
Lucent and Ascend at March 31, 1999.
<PAGE>
Exhibit 2.1
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of
May 16, 1999 ("First Amendment") by and among Lucent Technologies Inc.
("Lucent"), Dasher Merger Inc. ("Sub") and Ascend Communications, Inc.
("Ascend").
WHEREAS, Lucent, Sub and Ascend have entered into that certain
Agreement and Plan of Merger dated as of January 12, 1999 ("Merger
Agreement"), providing for the merger of Sub and Ascend upon the terms
and subject to the conditions contained therein; and
WHEREAS, Lucent, Sub and Ascend desire to amend the Merger
Agreement in certain respects in accordance with Section 7.03 thereof.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements set forth herein, the parties hereto agree as
follows:
1. Section 4.01(a) (ii) of the Merger Agreement is hereby amended by
deleting clause (w) thereof in its entirety and substituting therefore
the following:
"the issuance of Ascend Stock Options granted consistent with
past practice to new or promoted employees (other than executive
officers) of Ascend representing in the aggregate not more than
5.3 million shares of Ascend Common Stock (provided that the
vesting of such Ascend Stock Options shall not be accelerated as
a result of the Merger) and provided further, that any such
options issued after May 3, 1999 shall be issued to new employees
only,"
2. Section 5.08 of the Merger Agreement is hereby amended by
deleting paragraph (a) thereof in its entirety and substituting
therefor the following:
"From the Effective Time to the second anniversary of the
Effective Time (the "Continuation Period"), Lucent shall provide,
or cause to be provided, employee benefit plans, programs and
arrangements (other than stock options) to employees of Ascend
that are substantially equivalent in the aggregate to those
employee benefit plans, programs and arrangements of Ascend
provided to employees of Ascend as of the date hereof; provided,
however, that during the Continuation Period, employees of Ascend
shall be eligible for grants of stock options under Lucent's
stock option plans to the same extent as similarly situated
employees of Lucent; and, provided further that the substitution
of Lucent stock for Ascend stock under any employee benefit plan,
program or arrangement shall be disregarded for purposes of this
sentence. Notwithstanding the foregoing, for a period of no less
than one year after the Effective Time, Lucent shall provide
severance benefits to employees of Ascend that are no less
favorable than those provided to such employees as of the date
hereof."
3. References in the Merger Agreement to "the date hereof" or
"the date of this Agreement" shall refer to January 12, 1999.
4. The Merger Agreement, as amended by this First Amendment
shall remain in full force and effect in accordance with its terms.
This First Amendment may be executed in one or more counterparts.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to such terms in the Merger Agreement. No
modification of this First Amendment shall be valid unless in writing
and signed by the parties hereto. In the event of any conflict between
the provisions of this First Amendment and the provisions of the
Merger Agreement, the provisions of this First Amendment shall
control.
<PAGE>
IN WITNESS WHEREOF, Lucent, Sub and Ascend have caused this First
Amendment to be signed by their duly authorized respective officers,
all as of the date first written above.
LUCENT TECHNOLOGIES INC.,
By: /s/ Ernesto Rodriguez
---------------------------
Name: Ernesto Rodriguez
Title: Vice President
DASHER MERGER INC.,
by: /s/ Jean F. Rankin
---------------------------
Name: Jean F. Rankin
Title: Vice President and
Assistant Secretary
ASCEND COMMUNICATIONS, INC.,
by: /s/ Mory Ejabat
---------------------------
Name: Mory Ejabat
Title: President and
Chief Executive Officer
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference, in the Form 8-K of
Lucent Technologies Inc. to be filed with the Securities and Exchanges
Commission on June 28, 1999, of our report dated January 22, 1999,
with respect to the consolidated financial statements and schedule of
Ascend Communications, Inc. included in its Annual Report on Form 10-K
for the year ended December 31, 1998 as amended by Amendment No.1
thereto filed on Form 10-K/A on May 19, 1999 and Amendment No. 2
thereto filed on Form 10-K/A on May 21, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
----------------------------
Walnut Creek, California
June 22, 1999
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Form 8-K of
Lucent Technologies Inc. of our report dated January 22, 1997, except
for note M as to which the date is March 30, 1997, on our audit of the
consolidated financial statements and our report dated January 22,
1997 on our audit of the consolidated financial statement schedule of
Cascade Communications Corp. for the year ended December 31, 1996,
which reports are included in the Ascend Communications, Inc. Annual
Report on Form 10-K/A for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 22, 1999
<PAGE>
Exhibit 99.1
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements give effect to the merger of Lucent Technologies and Ascend
Communications under the pooling of interests method of accounting.
That merger was consummated on June 24, 1999. These pro forma
statements are presented for illustrative purposes only, and therefore
are not necessarily indicative of the operating results and financial
position that might have been achieved had the merger occurred as of
an earlier date, nor are they necessarily indicative of operating
results or financial position which may occur in the future. Lucent's
per share data has been restated to account for its two-for-one stock
splits effective on April 1, 1999 and on April 1, 1998.
The unaudited pro forma combined condensed balance sheet as of
March 31, 1999 was prepared by combining Lucent's unaudited condensed
consolidated balance sheet at March 31, 1999, with Ascend's unaudited
condensed balance sheet at March 31, 1999, giving effect to the merger
as though it had been consummated on March 31, 1999.
The unaudited pro forma combined condensed statements of income
for the periods presented were prepared by combining Lucent's
consolidated statements of income for the six months ended March 31,
1999, for each of the two years in the period ended September 30, 1998
and for the nine-month period ended September 30, 1996 with Ascend's
statements of income for the six months ended March 31, 1999, for each
of the two years in the period ended December 31, 1998 and for the
nine-month period ended December 31, 1996, and giving effect to the
merger as though it had occurred at the beginning of the earliest
period presented. Information for Ascend for the six-month period
ended March 31, 1999 was calculated by adding the three-month period
ended December 31, 1998 to the three-month period ended March 31,
1999.
Certain reclassifications have been made to the unaudited pro
forma combined condensed financial statements to conform to the
presentation expected to be used by the merged companies. No
adjustments have been made in these unaudited pro forma combined
condensed financial statements to conform the accounting policies of
the combining companies. The nature and extent of such adjustments, if
any, are not expected to be significant.
As a result of the merger, Lucent and Ascend will incur certain
merger related expenses currently estimated to be approximately $78
million. These merger related expenses have not been reflected in the
unaudited pro forma combined condensed financial statements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
LUCENT AT ASCEND AT COMBINED AT
MARCH 31, MARCH 31, PRO FORMA MARCH 31,
1999 1999 ADJUSTMENTS 1999(a)
------------- ------------ ----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Cash, cash equivalents and short-term
investments........................... $ 792 $ 708 $ -- $ 1,500
Accounts receivable - net............... 8,752 454 -- 9,206
Inventories............................. 4,332 242 -- 4,574
Contracts in process - net.............. 1,106 -- -- 1,106
Deferred income taxes - net............. 1,632 179 -- 1,811
Other current assets.................... 1,160 53 -- 1,213
------- ------ ----- -------
Total current assets............... 17,774 1,636 -- 19,410
Property, plant and equipment - net..... 5,751 283 -- 6,034
Prepaid pension costs................... 6,210 -- -- 6,210
Deferred income taxes - net............. -- -- -- --
Capitalized software development
costs................................. 346 -- -- 346
Other assets............................ 2,759 846 -- 3,605
------- ------ ----- -------
Total assets....................... $32,840 $2,765 $ -- $35,605
======= ====== ===== =======
LIABILITIES
Accounts payable........................ $ 2,410 $ 129 $ -- $ 2,539
Payroll and benefit-related
liabilities........................... 1,724 46 -- 1,770
Postretirement and postemployment
benefit liabilities................... 184 -- -- 184
Debt maturing within one year........... 3,185 -- -- 3,185
Other current liabilities............... 4,059 282 -- 4,341
------- ------ ----- -------
Total current liabilities.......... 11,562 457 -- 12,019
Postretirement and postemployment
benefit liabilities................... 6,471 -- -- 6,471
Long-term debt.......................... 3,716 -- -- 3,716
Other liabilities....................... 2,040 10 -- 2,050
------- ------ ----- -------
Total liabilities.................. $23,789 $ 467 $ -- $24,256
Commitments and contingencies
SHAREOWNERS' EQUITY
Preferred stock......................... $ -- $ -- $ -- $ --
Common stock............................ 27 --(b) 3(c) 30
Additional paid-in capital.............. 4,996 2,118 (3)(c) 7,111
Guaranteed ESOP obligation.............. (34) -- -- (34)
Retained earnings....................... 4,384 180 -- 4,564
Accumulated other comprehensive income (loss) (322) -- -- (322)
------- ------ ----- -------
Total shareowners' equity.......... $ 9,051 $2,298 $ -- $11,349
------- ------ ----- -------
Total liabilities and shareowners' equity... $32,840 $2,765 $ -- $35,605
======= ====== ===== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
PRO FORMA
LUCENT ASCEND COMBINED
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31, PRO FORMA MARCH 31,
1999 1999 ADJUSTMENTS 1999
------------- ------------- ----------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues................................... $ 17,484 $ 985 $ -- $ 18,469
Costs...................................... 8,725 375 -- 9,100
------------- ----------- ----- -------------
Gross margin............................... 8,759 610 -- 9,369
Operating expenses:
Selling, general and administrative... 3,688 238 -- 3,926
Research and development.............. 2,070 159 -- 2,229
Purchased in-process research and
development......................... 39 243 -- 282
------------- ----------- ----- -------------
Total operating expenses................... $ 5,797 $ 640 $ -- $ 6,437
------------- ----------- ----- -------------
Operating income (loss).................... 2,962 (30) -- 2,932
Other income - net......................... 37 21 -- 58
Interest expense........................... 173 -- -- 173
------------- ----------- ----- -------------
Income (loss) before income tax............ 2,826 (9) -- 2,817
Provision for income taxes................. 956 80 -- 1,036
------------- ----------- ----- -------------
Income (loss) before cumulative effect of
accounting change........................ 1,870 (89) -- 1,781
Cumulative effect of accounting change..... 1,308 -- -- 1,308
Net income (loss).......................... $ 3,178 $ (89) $ -- $ 3,089
============= =========== ===== =============
Net income (loss) per common share - basic:
Income (loss) before cumulative effect
of accounting change................ 0.70 (0.40) -- 0.59
Cumulative effect of accounting
change.............................. 0.49 -- -- 0.43
------------- ----------- ----- -------------
Net income (loss)..................... 1.19 (0.40) -- 1.02
Net income (loss) per common
share - diluted:
Income (loss) before cumulative effect
of accounting change................ 0.68 (0.40) -- 0.57
Cumulative effect of accounting
change.............................. 0.48 -- -- 0.42
------------- ----------- ----- -------------
Net income (loss)..................... 1.16 (0.40) -- 0.99
Weighted average number of common shares
(in millions):
Basic................................. 2,663.5 221.8 144.2(d) 3,029.5
Diluted............................... 2,738.7 238.6 155.1(d) 3,132.4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
PRO FORMA
LUCENT ASCEND COMBINED
FOR THE TWELVE FOR THE TWELVE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31, PRO FORMA SEPTEMBER 30,
1998 1998 ADJUSTMENTS 1998
-------------- -------------- ----------- --------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.................................... $ 30,328 $1,479 $ -- $ 31,807
Costs....................................... 16,171 544 -- 16,715
------------- ------ ----- -------------
Gross margin................................ 14,157 935 -- 15,092
Operating expenses:
Selling, general and administrative.... 6,502 363 -- 6,865
Research and development............... 3,689 216 -- 3,905
Purchased in-process research and
development.......................... 1,416 267 -- 1,683
------------- ------ ----- -------------
Total operating expenses.................... $ 11,607 $ 846 -- $ 12,453
------------- ------ ----- -------------
Operating income............................ 2,550 89 -- 2,639
Other income - net.......................... 100 28 -- 128
Interest expense............................ 254 -- -- 254
------------- ------ ----- -------------
Income before income tax.................... 2,396 117 -- 2,513
Provision for income taxes.................. 1,341 137 -- 1,478
------------- ------ ----- -------------
Net income (loss)........................... $ 1,055 $ (20) -- $ 1,035
============= ====== ===== =============
Net income (loss) per common share:
Basic.................................. 0.40 (0.10) N/A 0.35
Diluted................................ 0.39 (0.10) N/A 0.34
Weighted average number of common shares (in millions):
Basic.................................. 2,635.0 199.3 129.5(d) 2,963.8
Diluted................................ 2,692.5 210.4 136.8(d) 3,039.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
PRO FORMA
LUCENT ASCEND COMBINED
FOR THE TWELVE FOR THE TWELVE FOR THE TWELVE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31, PRO FORMA SEPTEMBER 30,
1997 1997 ADJUSTMENTS 1997
-------------- -------------- ----------- --------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.................................... $26,444 $1,167 $ -- $27,611
Costs....................................... 14,905 413 -- 15,318
------- ------ --------- -------
Gross margin................................ 11,539 754 -- 12,293
Operating expenses:
Selling, general and administrative....... 5,820 435 -- 6,255
Research and development.................. 3,029 156 -- 3,185
Purchased in-process research and
development............................ 1,024 231 -- 1,255
------- ------ --------- -------
Total operating expenses.................... $ 9,873 $ 822 $ -- $10,695
------- ------ --------- -------
Operating income (loss)..................... 1,666 (68) -- 1,598
Other income - net.......................... 75 23 -- 98
Interest expense............................ 238 -- -- 238
------- ------ --------- -------
Income (loss) before income tax............. 1,503 (45) -- 1,458
Provision for income taxes.................. 929 79 -- 1,008
------- ------ --------- -------
Net income (loss)........................... $ 574 $ (124) $ -- $ 450
======= ====== ========= =======
Net income (loss) per common share:
Basic..................................... 0.22 (0.66) N/A 0.16
Diluted................................... 0.22 (0.66) N/A 0.15
Weighted average number of common shares (in millions):
Basic..................................... 2,582.6 189.1 122.9(d) 2,894.6
Diluted................................... 2,602.7 199.8 129.8(d) 2,932.3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
PRO FORMA
LUCENT ASCEND COMBINED
FOR THE NINE FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31, PRO FORMA SEPTEMBER 30,
1996 1996(e) ADJUSTMENTS 1996
------------- ------------ ----------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.................................... $15,897 $ 742 $ -- $16,639
Costs....................................... 9,295 259 -- 9,554
------- ------ --------- -------
Gross margin................................ 6,602 483 -- 7,085
Operating expenses:
Selling, general and administrative....... 4,264 165 -- 4,429
Research and development.................. 1,843 78 -- 1,921
Purchased in-process research and
development............................ -- -- -- --
------- ------ --------- -------
Total operating expenses.................... $ 6,107 $ 243 $ -- $ 6,350
------- ------ --------- -------
Operating income............................ 495 240 -- 735
Other income - net.......................... 55 13 -- 68
Interest expense............................ 175 -- -- 175
------- ------ --------- -------
Income before income tax.................... 375 253 -- 628
Provision for income taxes.................. 146 99 -- 245
------- ------ --------- -------
Net income.................................. $ 229 $ 154 $ -- $ 383
======= ====== ========= =======
Net income per common share:
Basic.................................. 0.10 0.86 N/A 0.14
Diluted................................ 0.10 0.78 N/A 0.14
Weighted average number of common shares (in millions):
Basic.................................. 2,408.8 179.7 116.9(d) 2,705.4
Diluted................................ 2,409.2 197.3 128.2(d) 2,734.7
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(a) The combined financial information for Lucent and Ascend for
the fiscal year ending September 30, 1999 will reflect a
one-time adjustment to beginning retained earnings to adjust
for the net loss of $197 reported by Ascend for the quarter
ended December 31, 1998.
(b) As of March 31, 1999, there were outstanding 222,656,000 shares
of Ascend common stock, par value $0.001 per share, and the
aggregate par value of the outstanding Ascend common stock was
$0.2.
(c) This adjustment reflects the difference in par value between
Lucent common stock and Ascend common stock.
(d) Under the merger agreement, each outstanding share of Ascend
common stock has been converted into the right to receive 1.65
shares of Lucent common stock. The 1.65 exchange ratio was used
in computing share and per share amounts in the unaudited pro
forma combined condensed financial statements.
(e) Information for the nine-month period ended December 31, 1996
was calculated by subtracting the March 31, 1996 three-month
period from the financial statements for the year ended
December 31, 1996.
N/A - Not applicable
