<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration No. 333-85219
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 9, 2000)
$1,800,000,000
LUCENT TECHNOLOGIES INC.
MEDIUM-TERM NOTES, SERIES A
LUCENT TECHNOLOGIES LOGO
Lucent Technologies Inc. may use this Prospectus Supplement to periodically
offer its Medium-Term Notes, Series A.
The final terms for each Note will be specified in a Pricing Supplement.
Unless the Pricing Supplement provides otherwise, the Notes may have the
following general terms:
- They will have maturities of more than 270 days.
- They may be subject to redemption or repayment at the option of Lucent or
the holder.
- They will be denominated in U.S. dollars.
- They may bear interest at a fixed or floating interest rate. Notes may be
issued at a discount that do not bear interest.
Floating interest rates may be based on any of the following formulas:
<TABLE>
<S> <C>
- -- Commercial Paper Rate -- Prime Rate
- -- Federal Funds Rate -- CMT Rate
- -- LIBOR -- Any other interest rate index
specified in the applicable Pricing
- -- Treasury Rate Supplement
</TABLE>
- They may be issued as indexed Notes.
- They will be issued in fully registered form, either in certificated or
book-entry form.
- Interest will be paid on the dates specified in the applicable Pricing
Supplement.
- They will be issued in minimum denominations of $25,000 and integral
multiples of $1,000 greater than $25,000.
- They will have an aggregate initial offering price not greater than
$1,800,000,000, less the amount of any other debt securities sold by
Lucent under the attached Prospectus after the date of this Prospectus
Supplement. The aggregate initial offering price includes the U.S. dollar
equivalent of any Notes denominated in a foreign currency.
- They will be offered from time to time on a reasonable best efforts basis
by the agents named below on Lucent's behalf. In addition, Lucent may
sell Notes to the agents as principals, and Lucent may sell Notes to
other agents, dealers or underwriters acting as agent or principals for
resale to investors or to dealers for resale by them, and Lucent may sell
Notes directly to investors on its own behalf.
<TABLE>
<CAPTION>
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS LUCENT
--------------- ------------------------ ------------------------------
<S> <C> <C> <C>
Per Note 100% .125%-.75% 99.875%-99.250%
Total $1,800,000,000 $2,250,000-$13,500,000 $1,797,750,000-$1,786,500,000
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE RELATED PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
March 9, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
- --------------------- ----
<S> <C>
About This Prospectus Supplement;
Pricing Supplements............... S-3
Terms of the Notes.................. S-3
United States Taxation.............. S-18
Supplemental Plan of Distribution... S-24
Legal Matters....................... S-25
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS PAGE
- ---------- ----
<S> <C>
Description of Lucent............... 3
Where to Find Additional Information 3
Regarding Lucent..................
Ratio of Earnings to Fixed 4
Charges...........................
Use of Proceeds..................... 5
Description of the Indenture and 5
Debt Securities...................
Description of the Warrants......... 11
Plan of Distribution................ 12
Legal Opinions...................... 13
Experts............................. 13
</TABLE>
-------------------------
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. Lucent
has not authorized anyone to provide you with information different from that
contained in this Prospectus Supplement and the accompanying Prospectus. Lucent
is offering to sell the Notes and seeking offers to buy the Notes only in
jurisdictions where such offers and sales are permitted. The information
contained in this Prospectus Supplement and the accompanying Prospectus is
accurate only as of the date of this Prospectus Supplement and the date of the
accompanying Prospectus, regardless of the time of delivery of this Prospectus
Supplement or any sale of the Notes. References in this Prospectus Supplement to
"U.S. dollars" or "U.S.$" or '$' are to the currency of the United States of
America.
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<PAGE> 3
ABOUT THIS PROSPECTUS SUPPLEMENT;
PRICING SUPPLEMENTS
Lucent may use this Prospectus Supplement, together with the attached
Prospectus and any attached Pricing Supplement, to offer its Medium-Term Notes,
Series A, from time to time. The total initial public offering price of Notes
that Lucent may offer by use of this Prospectus Supplement is $1,800,000,000 (or
the equivalent in foreign or composite currencies). That amount will be reduced
by the amount of any other Debt Securities issued under Lucent's shelf
registration statement (File No. 333-85219) (the "Registration Statement").
This Prospectus Supplement sets forth certain terms of the Notes that
Lucent may offer. It supplements the description of the Debt Securities
contained in the attached Prospectus. If information in this Prospectus
Supplement is inconsistent with the Prospectus, this Prospectus Supplement will
apply and will supersede that information in the Prospectus.
Each time Lucent issues Notes, Lucent will provide a Pricing Supplement to
this Prospectus Supplement. The Pricing Supplement will contain the specific
description of the Notes being offered and the terms of the offering. The
Pricing Supplement may also add, update or change information in this Prospectus
Supplement or the attached Prospectus. Any information in the Pricing
Supplement, including any changes in the method of calculating interest on any
Note, that is inconsistent with this Prospectus Supplement will apply and will
supersede that information in this Prospectus Supplement.
It is important for you to read and consider all information contained in
this Prospectus Supplement and the attached Prospectus and Pricing Supplement in
making your investment decision. You should also read and consider the
information in the documents Lucent has referred you to in "Where to Find
Additional Information Regarding Lucent" on page 3 of the attached Prospectus.
Capitalized terms in this Prospectus Supplement that are not defined in
this document are defined in the Prospectus.
TERMS OF THE NOTES
GENERAL
The Notes are part of a separate series of notes described in the
accompanying Prospectus which is not limited in aggregate principal amount.
The Pricing Supplement relating to each Note will describe the following
terms, as applicable:
- whether the Note is a Fixed Rate Note, a Floating Rate Note, a Discount
Note (as defined below) or a Zero Coupon Note;
- the Issue Price (expressed as a percentage of the aggregate principal
amount thereof) at which the Note will be issued;
- the Issue Date;
- the Maturity Date of the Note;
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- if the Note is a Fixed Rate Note, the Interest Rate, which is the rate
per annum at which the Note will bear interest, if any;
- if the Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate, the Interest Reset Period, the Interest Reset Date(s), the Interest
Payment Dates, the Index Maturity, the Maximum Interest Rate and the
Minimum Interest Rate, if any, and the Spread or Spread Multiplier, if
any, and any other terms relating to the particular method of calculating
the Interest Rate for the Note;
- whether the Note may be redeemed at Lucent's option or repaid at the
option of the holders prior to its Maturity Date, and if so, the
provisions relating to the redemption or repayment;
- whether the Note will be issued in certificated or book-entry form;
- any other terms of the Note not inconsistent with the provisions of the
Indenture.
A Discount Note is any Note that Lucent offers at a price less than its
stated redemption price at maturity, resulting in such Note being treated as if
it were issued with original issue discount for U.S. federal income tax
purposes.
MATURITY
The Notes will mature on any day more than 270 days after the Issue Date as
specified in the applicable Pricing Supplement.
INTEREST
Each Note will bear interest at either:
- a fixed rate, which may be zero in the case of Zero Coupon Notes, or
- a floating rate determined by reference to the interest rate basis or
combination of interest rate bases or interest rate formulas specified in
the applicable Pricing Supplement, which may be adjusted by a Spread or
Spread Multiplier.
Interest rates offered on any issuance of Notes may differ depending upon,
among other things, the aggregate principal amount of the Notes purchased in any
single transaction.
FORM AND PAYMENT OF NOTES IN REGISTERED FORM
Lucent will issue each Note in registered form initially as either a
Book-Entry Note or a Certificated Note. Except as set forth in the accompanying
Prospectus under "Description of the Indenture and Debt Securities," Book-Entry
Notes will not initially be issuable as Certificated Notes. Lucent will issue
the Notes in denominations of $25,000 or any amount in excess thereof which is
an integral multiple of $1,000. Unless otherwise specified in any applicable
Pricing Supplement, Lucent will issue the Notes at 100% of their principal
amount.
Principal and interest initially will be payable, and Certificated Notes
initially will be transferable and exchangeable, at the office of The Bank of
New York, as Trustee, provided that Lucent may pay interest on Certificated
Notes at its option by check mailed to the registered Holders of those Notes and
provided further that the holder of $10
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<PAGE> 5
million or more of Certificated Notes with similar tenor or terms will be
entitled to receive payment by wire transfer in U.S. dollars, but only if Lucent
has received in writing appropriate payment instructions no later than 15
calendar days prior to the applicable Interest Payment Date.
All percentages resulting from any calculations will be rounded, if
necessary, to the nearest one millionth of a percentage point (with five
ten-millionths of a percentage point being rounded upward) and all amounts in
U.S. dollars rounded to the nearest cent (with one-half cent being rounded
upward).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, at the annual rate stated on its face. Lucent
will pay interest on the Notes semi-annually on dates specified in the
applicable Pricing Supplement until the principal amount of the Note is paid or
made available for payment or upon the earlier of redemption or repayment.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Lucent will pay interest to the person in whose name a Fixed Rate Note is
registered at the close of business on the Record Date (in the case of a
Book-Entry Note, such person shall be a nominee of the Depositary Trust
Company), which will be the date (whether or not a Business Day) 15 calendar
days (unless otherwise specified in the applicable Pricing Supplement)
immediately preceding the Interest Payment Date set forth in the applicable
Pricing Supplement. Lucent will not make periodic payments of interest with
respect to any Zero-Coupon Note. Lucent will pay the interest payable on the
Maturity Date to the person in whose name the Fixed Rate Note is registered on
the Maturity Date and to whom principal is payable. Lucent will make the first
payment of interest on any Fixed Rate Note issued between a Record Date and an
Interest Payment Date on the second succeeding Interest Payment Date to the
registered owner at the close of business on the Record Date next preceding the
date of payment.
Lucent may change interest rates from time to time but no such change will
affect any Fixed Rate Notes previously issued or as to which Lucent has accepted
an offer. Each payment of interest will include interest accrued through the day
preceding the Interest Payment Date or Maturity Date or the date of redemption
or repayment. If any Interest Payment Date or the Maturity Date or the date of
redemption or repayment of a Fixed Rate Note falls on a day that is not a
Business Day, the payment will be made on the next Business Day as if it were
made on the date payment was due, and no interest will accrue on or after the
Interest Payment Date, Maturity Date or the date of redemption or repayment.
A "Business Day" with respect to any Note means, unless otherwise specified
in the applicable Pricing Supplement, any day, other than a Saturday or Sunday,
that is
- neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of
New York, and
- if the Note is a LIBOR Note (as defined below), a day on which dealings
in deposits in U.S. dollars are transacted in the London interbank market
(a "London Banking Day").
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<PAGE> 6
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Issue Date at an annual
rate equal to:
- the Initial Interest Rate set forth on the applicable Pricing Supplement
until the first Interest Reset Date and
- thereafter, at rates determined by reference to the Base Rate plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any,
each as specified in the applicable Pricing Supplement, until the
principal is paid or payment of the principal amount is duly provided
for.
The "Spread" is the number of basis points specified in the applicable
Pricing Supplement as being applicable to the Note. One basis point equals one
one-hundredth of a percentage point. The "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement as being applicable to the Note.
Any Floating Rate Note may also have either or both of the following:
- a maximum numerical interest rate limitation, or ceiling, on the rate of
interest that may accrue during any interest period (the "Maximum
Interest Rate") and
- a minimum numerical interest rate limitation, or floor, on the rate of
interest that may accrue during any interest period (the "Minimum
Interest Rate").
The applicable Pricing Supplement will designate one or more of the
following Base Rates as applicable to each Floating Rate Note:
- the Commercial Paper Rate (a "Commercial Paper Rate Note"),
- LIBOR (a "LIBOR Note"),
- the Treasury Rate (a "Treasury Rate Note"),
- the Federal Funds Rate (a "Federal Funds Rate Note"),
- the Prime Rate (a "Prime Rate Note"),
- the CMT Rate (a "CMT Rate Note") or
- any other Base Rate or interest rate formula specified in the applicable
Pricing Supplement.
Lucent may change the Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes from time to time, but no change will
affect any Floating Rate Note previously issued or as to which Lucent has
accepted an offer.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually, annually or otherwise (such period
being the "Interest Reset Period" for the Note, and the first day of each
Interest Reset Period being an "Interest Reset Date"), as specified in the
applicable Pricing Supplement.
If any Interest Reset Date for any Floating Rate Note would otherwise be a
day that is not a Business Day, the Interest Reset Date shall be postponed to
the next day that is a Business Day. In the case of a LIBOR Note, if the next
Business Day is in the next
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<PAGE> 7
succeeding calendar month, the Interest Reset Date shall be the immediately
preceding Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually, annually or as otherwise specified in the applicable Pricing
Supplement (the "Interest Payment Period").
If any Interest Payment for any Floating Rate Note would otherwise be a day
that is not a Business Day, the Interest Payment Date shall be postponed to the
next day that is a Business Day. In the case of a LIBOR Note, if the next
Business Day is in the next succeeding calendar month, the Interest Payment Date
shall be the immediately preceding Business Day. If the Maturity Date (or the
date of redemption or repayment) of any Floating Rate Note would fall on a day
that is not a Business Day, the payment of interest and premium, if any, and
principal may be made on the next succeeding Business Day, and no interest on
the payment will accrue for the period from and after the Maturity Date (or the
date of redemption or repayment).
Lucent will pay interest to the person in whose name the Floating Rate Note
is registered at the close of business on the Record Date (in the case of a
Global Note, such person shall be a nominee of the Depositary Trust Company),
which will be the date, whether or not a Business Day, 15 calendar days (unless
otherwise specified in the applicable Pricing Supplement) immediately preceding
the Interest Payment Date. Lucent will pay interest on the Maturity Date (or the
date of redemption or repayment) to the person in whose name a Floating Rate
Note is registered on that date and to whom principal shall be payable. Lucent
will make the first interest payment on any Floating Rate Note issued after a
Record Date and before the next succeeding Interest Payment Date on the second
succeeding Interest Payment Date to the registered owner at the close of
business on the Record Date next preceding the date of the payment.
Interest payments on each Interest Payment Date or on the Maturity Date or
the date of redemption or repayment for Floating Rate Notes will include accrued
interest from and including the Issue Date or from and including the last date
in respect of which interest has been paid or duly provided for, as the case may
be, to, but excluding, the Interest Payment Date or Maturity Date or the date of
redemption or repayment.
Accrued interest will be calculated by multiplying the principal amount of
a Floating Rate Note by an accrued interest factor. The accrued interest factor
will be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. The interest factor
(expressed as a decimal) for each such day will be computed by dividing the
interest rate applicable to such day by 360, in the case of Commercial Paper
Rate Notes, LIBOR Notes, Federal Funds Rate Notes and Prime Rate Notes, or by
the actual number of days in the year in the case of Treasury Rate Notes or CMT
Rate Notes.
The Initial Interest Rate will be the interest rate in effect for the
period from the Issue Date to the first Interest Reset Date set forth in the
applicable Pricing Supplement.
The "Interest Determination Date" pertaining to an Interest Reset Date for
Commercial Paper Rate Notes, Prime Rate Notes, Federal Funds Rate Notes or CMT
Rate Notes will be the second Business Day next preceding that Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR Note will be the second London Banking Day next preceding that Interest
Reset Date. The Interest Determination Date pertaining to an Interest Reset Date
for a Treasury Rate Note will be
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the day of the week in which the Interest Reset Date falls on which Treasury
bills of the Index Maturity (as defined below) specified on the face of the Note
are auctioned, but in no event shall the Interest Determination Date be after
the related Interest Payment Date.
Treasury bills are normally sold at auction on Monday of each week, unless
that day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that the auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is held on the preceding
Friday, that Friday will be the Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week for that Treasury Rate
Note. If an auction date falls on any Interest Reset Date for a Treasury Rate
Note, then the Interest Reset Date shall instead be the first Business Day
immediately following that auction date. If no auction is held in any week, or
on the preceding Friday, the Interest Determination Date shall be the Monday of
the week in which the Interest Reset Date falls.
If applicable, the "Calculation Date" pertaining to an Interest
Determination Date will be the first to occur of either
- the tenth calendar day after the Interest Determination Date or, if such
day is not a Business Day, the next succeeding Business Day or
- the Business Day preceding the date any payment is required to be made
for any period following the applicable Interest Reset Date or Maturity
Date (or the date of redemption or repayment).
Unless otherwise specified in the applicable Pricing Supplement, The Bank
of New York shall be the Calculation Agent with respect to Floating Rate Notes.
Upon request of the holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective on the next Interest Reset Date with respect to a
Floating Rate Note.
The "Index Maturity" will be the particular maturity specified in the
applicable Pricing Supplement of the type of instrument or obligation from which
a Base Rate is calculated.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest at the interest rate
calculated with reference to the Commercial Paper Rate and any Spread or Spread
Multiplier specified on the face of that Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield, calculated as described below, of the rate on such date
for commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates," or as set
forth in any successor publication of such Board ("H.15(519)"), under the
heading "Commercial Paper Non-financial." The following procedures will be
followed if the Commercial Paper Rate cannot be determined as described above:
- If such rate is not published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to that Interest Determination Date, then the
Commercial Paper
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Rate shall be the Money Market Yield of the rate on that Interest
Determination Date for commercial paper having the Index Maturity
designated in the applicable Pricing Supplement as set forth in the daily
update of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update or any successor site or
publication (the "H.15 Daily Update") having the Index Maturity set forth
in the applicable Pricing Supplement.
- If such rate is neither published in H.15(519) or in the H.15 Daily
Update by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the Commercial Paper
Rate for that Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic
mean of the offered rates of three leading dealers of commercial paper in
The City of New York, which may include The Bank of New York, selected by
the Calculation Agent (after consulting with Lucent) as of 11:00 a.m.,
New York City time, on that Interest Determination Date, for commercial
paper having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or
the equivalent, from a nationally recognized rating agency; provided,
however, that, if the selected dealers are not quoting as mentioned in
this sentence, the Commercial Paper Rate will be the Commercial Paper
Rate in effect on such Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
<TABLE>
<C> <C> <S>
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
LIBOR NOTES
Each LIBOR Note will bear interest at the interest rate calculated with
reference to LIBOR and any Spread or Spread Multiplier specified in that Note
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to an Interest Determination Date, LIBOR shall equal
either: (A) the arithmetic mean, as determined by the Calculation Agent, of
the offered rates that appear on the display specified in the applicable
Pricing Supplement on the LIBOR page of the Reuters Monitor Money Rates
Service (or such other relevant page as may replace that page on that
service) (the "Reuters Screen") or (B) the offered rate that appears on
page 3750 of the Dow Jones Telerate Service (or such other page as may
replace that page on that service) (the "Telerate Page"), in each case as
of 11:00 a.m., London time, on that Interest Determination Date. If neither
the Reuters Screen nor the Telerate Page is specified in the applicable
Pricing Supplement, LIBOR will be determined as if the Telerate Page had
been specified; provided, however, in the case of (A) above, if fewer than
two such offered rates appear on the Reuters Screen, or in the case of (B)
above, if no rate appears on the
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Telerate Page, LIBOR for that Interest Determination Date will be
determined as described in (ii) below.
(ii) If, on any Interest Determination Date, fewer than two offered
rates appear on the Reuters Screen or if no rate appears on the Telerate
Page, as the case may be, the Calculation Agent will request the principal
London office of each of four major banks in the London interbank market,
which may include The Bank of New York, as selected by the Calculation
Agent (after consulting with Lucent), to provide the Calculation Agent with
its quotation of the rate offered to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on that Interest
Determination Date for deposits in U.S. dollars having the Index Maturity
designated in the applicable Pricing Supplement, and in a principal amount
equal to an amount not less than $1,000,000 that is representative of a
single transaction in such market at such time (a "Representative Amount").
If at least two quotations are provided, LIBOR will be the arithmetic mean
of all quotations received by the Calculation Agent. If fewer than two
quotations are provided, LIBOR will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., New York City time, on such Interest
Determination Date by three major U.S. banks, which may include The Bank of
New York, selected by the Calculation Agent (after consulting with Lucent),
for loans in U.S. dollars to leading European banks having the Index
Maturity designated in the Pricing Supplement, commencing on the second
London Banking Day immediately following that Interest Determination Date
and in a Representative Amount, provided, however, that if fewer than three
banks selected by the Calculation Agent are quoting as mentioned in this
sentence, LIBOR for such date will be LIBOR in effect on such Interest
Determination Date.
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest at the interest rate calculated
with reference to the Treasury Rate and any Spread or Spread Multiplier
specified in that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, that the rate for an Interest Reset Date will be the rate
for the related Interest Determination Date which appears on either the Telerate
Page 56 or the Telerate Page 57 opposite the Index Maturity under the heading
"INVESTMENT RATE".
- If on the Calculation Date for an Interest Reset Date United States
Treasury bills on the Index Maturity have been auctioned on the Interest
Reset Date but the rate does not appear on either the Telerate Page 56 or
Telerate Page 57, the rate for the Interest Reset Date will be the Bond
Equivalent Yield of the rate set forth in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying such
rate, for the related Interest Determination Date in respect of the Index
Maturity under the caption "U.S. Government securities/Treasury
bills/Auction high".
- If on the Calculation Date for an Interest Reset Date United States
Treasury bills of the Index Maturity have been auctioned on the Interest
Reset Date but the rate does not appear on either the Telerate Page 56 or
Telerate Page 57 and the rate is not set forth in the H.15 Daily Update
in respect of the Index Maturity under the caption "U.S. Government
securities/Treasury bills/Auction high" or another recognized electronic
source, the rate for the Interest Reset Date will be the Bond
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Equivalent Yield of the auction rate for those treasury bills as
announced by the United States Department of Treasury.
- If the United States Treasury bills of the Index Maturity are not
auctioned during any period of seven consecutive calendar days ending on
and including any Friday and an Interest Reset Date would have occurred
if Treasury bills had been auctioned during that seven-day period, an
Interest Reset Date will be deemed to have occurred on the day during
that seven-day period on which Treasury bills would have been auctioned
in accordance with the usual practices of the United States Department of
the Treasury, and the rate for that Interest Reset Date will be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 p.m., New
York City time, on such Interest Determination Date, of three leading
primary United States government securities dealers selected by the
Calculation Agent (after consulting with Lucent) for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that
if the selected dealers are not quoting as mentioned in this sentence,
the Treasury Rate will be the Treasury Rate in effect on such Interest
Determination Date.
FEDERAL FUNDS RATE NOTES
Each Federal Funds Rate Note will bear interest at the interest rate
calculated with reference to the Federal Funds Rate and any Spread or Spread
Multiplier specified in that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on that day for Federal Funds as published in H.15(519) under the heading
"Federal Funds (effective) as displayed on Bridge Telerate Inc. or any successor
service on page 120 or any page that replaces page 120." The following
procedures will be followed if the Federal Funds Rate cannot be determined as
described above:
- If the above rate does not appear on Telerate page 120 and is not
published in H.15 (519) by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Federal Funds Rate shall be the rate on such Interest Determination Date
as published in the H.15 Daily Update under the heading "Federal Funds
(Effective)."
- If such rate is not published in either H.15(519) or the H.15 Daily
Update by 3:00 p.m., New York City time, on the Calculation Date
pertaining to an Interest Determination Date, the Federal Funds Rate for
that Interest Determination Date shall be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by each of three leading
brokers of Federal Funds transactions in New York City, which may include
The Bank of New York, selected by the Calculation Agent (after consulting
with Lucent) prior to 11:00 a.m., New York City time, on that Interest
Determination Date; provided, however, that if the selected brokers are
not quoting as mentioned in this sentence, the Federal Funds Rate with
respect to that Interest Determination Date will remain the Federal Funds
Rate then in effect on that Interest Determination Date.
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PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate calculated
with reference to the Prime Rate and any Spread or Spread Multiplier specified
in that Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" means, with respect to any Interest Determination Date, the rate on such
date as published in H.15(519) under the heading "Bank Prime Loan." The
following procedures will be followed if the Prime Rate cannot be determined as
described above:
- In the event that such rate is not published by 9:00 a.m., New York City
time, on the Calculation Date pertaining to such Interest Determination
Date, then the Prime Rate will be the rate on the Interest Determination
Date as published in the H.15 Daily Update opposite the caption "Bank
Prime Loan".
- If such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date in either H.15(519) or the H.15 Daily Update, then
the Prime Rate will be determined by the Calculation Agent and will be
the arithmetic mean of the rates of interest publicly announced by each
bank that appears on the Reuters Screen USPRIME1 Page as that bank's
prime rate or base lending rate as in effect for that Interest
Determination Date. "Reuters Screen USPRIME1 Page" means the display
designated as page "USPRIME1" on the Reuters Monitor Money Rates Service
(or any other page as may replace the USPRIME1 page on that service for
the purpose of displaying prime rates or base lending rates of major
United States banks).
- If fewer than four such rates but more than one such rate appear on the
Reuters Screen USPRIME1 Page for such Interest Determination Date, the
Prime Rate shall be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by 360 as of the close of business on
the Interest Determination Date by at least two major money center banks
in New York City selected by the Calculation Agent (after consulting with
Lucent).
- If fewer than two such rates appear on the Reuters Screen USPRIME1 Page,
the Prime Rate will be determined by the Calculation Agent and will be
the arithmetic mean of the prime rates furnished in New York City by
three substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, in each case
having total equity capital of at least U.S. $500,000,000 and being
subject to supervision or examination by Federal or State authority,
which may include The Bank of New York, selected by the Calculation Agent
(after consulting with Lucent) to provide such rate or rates; provided,
however, that if the selected banks are not quoting as mentioned in this
sentence, the Prime Rate will remain the Prime Rate in effect on the
Interest Determination Date.
CMT RATE NOTES
Each CMT Rate Note will bear interest at the interest rate calculated with
reference to the CMT Rate and any Spread or Spread Multiplier specified in that
Note and any applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" means, with respect to any Interest Determination Date, the rate on such
date as displayed on the Designated CMT Telerate Page (as defined below) under
the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7051, the rate on that CMT Rate Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. The following procedures will be followed if
the CMT Rate cannot be determined as described above:
- If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for that CMT Rate Interest Determination Date
will be the treasury constant maturity rate for the Designated CMT
Maturity Index as published in the relevant H.15(519).
- If such rate is no longer published, or if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the CMT Rate
for that CMT Rate Interest Determination Date will be the treasury
constant maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index), for
the CMT Rate Interest Determination Date with respect to the Interest
Reset Date as may then be published by either the Board of Governors of
the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and published
in the relevant H.15(519).
- If such information is not provided by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate for the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent, and will
be a yield to maturity, based on the arithmetic mean of the secondary
market closing offer side prices as of approximately 3:30 P.M., New York
City time, on the CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in The
City of New York (which may include the Agents or their affiliates)
selected by the Calculation Agent after consulting with Lucent (from five
Reference Dealers selected by the Calculation Agent after consulting with
Lucent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than the
Designated CMT Maturity Index minus one year.
- If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for the CMT Rate Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side
prices as of approximately 3:30 P.M., New York City time, on the CMT Rate
Interest Determination Date of three Reference Dealers in The City of New
York (from five Reference Dealers selected by the Calculation Agent after
consulting with Lucent and eliminating the highest
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quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is
the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an
amount of at least $100 million.
- If three or four (and not five) of the Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean
of the offer prices obtained and neither the highest nor the lowest of
such quotes will be eliminated; provided however, that if fewer than
three Reference Dealers selected by the Calculation Agent (after
consulting with Lucent) are quoting as described herein, the CMT Rate
will be the CMT Rate in effect on the CMT Rate Interest Determination
Date.
- If two Treasury Notes with an original maturity as described in the third
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement, or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
BOOK-ENTRY NOTES
Upon issuance, all Fixed Rate Book-Entry Notes having the same Issue Date,
Interest Rate, Interest Payment Dates, redemption provision, repayment
provision, and Maturity Date and all Floating Rate Book-Entry Notes having the
same Base Rate, Initial Interest Rate, Interest Reset Dates, Interest Reset
Period, Spread or Spread Multiplier, Index Maturity, redemption provision,
repayment provision, and Maturity Date will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary Trust Company ("DTC") and registered in
the name of a nominee of DTC.
DTC has advised Lucent and the Agent as follows: DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the
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Agents), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies, that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Upon the issuance of Notes by Lucent represented by a Book-Entry Note, DTC
will credit, on its book-entry registration and transfer system, the respective
principal amounts of the Notes represented by the Book-Entry Note to the
accounts of participants. The accounts to be credited shall be designated by the
Agents, or by Lucent if the Notes are offered and sold directly by Lucent.
Payments of principal of and interest, if any, on the Book-Entry Note
registered in the name of DTC or its nominee will be made by Lucent through the
Paying Agent to DTC or its nominee, as the case may be, as the registered owner
of a Book-Entry Note. Neither Lucent, the Trustee, any Paying Agent nor the
registrar for the Notes will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interest in a Book-Entry Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Lucent has been advised that DTC, upon receipt of any payment of principal
or interest in respect of a Book-Entry Note, will credit immediately the
accounts of the related participants with payments in amounts proportionate to
their respective holdings in principal amount of beneficial interest in such
Book-Entry Note as shown on the records of DTC. Lucent expects that payments by
participants to owners of beneficial interests in a Book-Entry Note will be
governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name." Such payments will be the responsibility of such
participants.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by Lucent within 90 days, Lucent will
issue Notes in certificated form in exchange for each Book-Entry Note. In
addition, Lucent may at any time determine not to have Notes represented by one
or more Book-Entry Notes, and, in that event, will issue Notes in certificated
form in exchange for the Book-Entry Note or Notes representing such Notes. In
any such instance, an owner of a beneficial interest in a Book-Entry Note will
be entitled to physical delivery in certificated form of Notes equal in
principal amount to such beneficial interest and to have such Notes registered
in its name. Notes so issued in certificated form will be issued in
denominations of $25,000 or any amount in excess thereof which is an integral
multiple of $1,000 or, in the case of Notes denominated in a foreign currency,
unless a higher minimum denomination is required by applicable law, in
denominations of the equivalent of U.S. $25,000 (rounded down to a integral
multiple of 1,000 units of such foreign currency) or any amount in excess
thereof which is an integral multiple of 1,000 units of such foreign currency,
and will be issued in fully registered form only.
SINKING FUND
Unless otherwise specified in the applicable Pricing Supplement, Lucent
will not provide a sinking fund for any of the Notes.
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REDEMPTION
Lucent will not be able to redeem any of the Notes prior to their Maturity
Date unless provided for in the applicable Pricing Supplement. In any applicable
Pricing Supplement relating to a Note, Lucent may specify that it may redeem a
Note at its option on a date(s) specified prior to the Note's Maturity Date at a
price(s) set forth in the applicable Pricing Supplement, together with accrued
interest to the date of redemption. Lucent may redeem any of the Notes that are
redeemable and remain outstanding either in whole or in part, from time to time,
upon not less than 30, nor more than 60 days notice. If less than all of the
Notes with like tenor and terms are redeemed, the Trustee shall select the Notes
to be redeemed by a method the Trustee shall deem fair and appropriate.
The amount of any Discount Note payable in the event of redemption by
Lucent or acceleration of the Maturity Date thereof, in lieu of the stated
principal amount due at the Maturity Date, shall be the Amortized Face Amount of
such Discount Note as of the date of such redemption, repayment or acceleration.
The "Amortized Face Amount" of a Discount Note shall be the amount equal to:
- the Issue Price of that Discount Note set forth in the applicable Pricing
Supplement plus
- the portion of the difference between the Issue Price and the principal
amount of the Discount Note that has accrued at the yield to maturity set
forth in the Pricing Supplement (computed in accordance with generally
accepted United States bond yield computation principles) at the date as
of which the Amortized Face Amount is calculated.
In no event shall the Amortized Face Amount of any Discount Note exceed its
stated principal amount. See also "United States Taxation," below.
REPAYMENT AND REPURCHASE
A holder of the Notes will not be entitled to repayment prior to the Notes'
Maturity Date unless provided for in the applicable Pricing Supplement. Lucent,
in the applicable Pricing Supplement relating to a Note, may specify that a Note
will be repayable at the option of the holder on a date(s) specified prior to
its Maturity Date at a price(s) set forth in the applicable Pricing Supplement,
together with accrued interest to the date of repayment.
In order for a Note to be repaid, the Paying Agent (Lucent has initially
appointed the Trustee as Paying Agent) must receive, at least 30 but not more
than 45 days prior to the repayment date:
- the Note with the form entitled "Option to Elect Repayment" on the
reverse of the Note duly completed, or
- a facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States of
America setting forth the name of the holder of the Note, the principal
amount of the Note, the principal amount of the Note that is to be
repaid, the certificate number or a description of the tenor and terms of
the Note, a statement that the option to elect repayment is being
exercised
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thereby and a guarantee that the Note to be repaid with the form entitled
"Option to Elect Repayment" on the reverse of the Note duly completed
will be received by the Paying Agent not later than five Business Days
after the date of such facsimile transmission or letter and such Note and
form duly completed are received by the Paying Agent by such fifth
Business Day.
Exercise of the repayment option by the holder of a Note shall be
irrevocable. The repayment option may be exercised by the holder of a Note for
less than the entire principal amount of the Note provided that the principal
amount of the Note remaining outstanding after repayment is an authorized
denomination.
Lucent may at any time purchase Notes at any price in the open market or
otherwise. Notes purchased by Lucent may be held or resold or, at its sole
discretion, may be surrendered to the Trustee for cancellation.
LIMITATIONS ON CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of Lucent, the claim of
the holder of a Discount Note may, under Section 502(b)(2) of Title 11 of the
United States Code, be limited to the Issue Price of such Note plus that portion
of any original issue discount that is amortized from the Issue Date to the
commencement of the proceeding.
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UNITED STATES TAXATION
GENERAL
This section summarizes the material U.S. Federal tax consequences to
holders of Notes. It represents the views of our tax counsel, Cravath, Swaine &
Moore. However, the discussion is limited in the following ways:
- The discussion only covers you if you buy your Notes in the initial
offering.
- The discussion only covers you if you hold your Notes as a capital asset
(that is, for investment purposes), and if you do not have a special tax
status.
- The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of Notes. We
suggest that you consult your tax advisor about the consequences of
holding Notes in your particular situation.
- The discussion is based on current law. Changes in the law may change the
tax treatment of the Notes.
- The discussion does not cover state, local or foreign law.
- The discussion does not cover every type of Note that we might issue. If
we intend to issue a Note of a type not described in this summary,
additional tax information will be provided in the Pricing Supplement for
the Note.
- The discussion does not apply to you if you are a Non-U.S. Holder (as
defined below) of Notes and if you (a) own 10% or more of the voting
stock of Lucent, (b) are a "controlled foreign corporation" with respect
to Lucent, or (c) are a bank making a loan in the ordinary course of its
business.
- We have not requested a ruling from the Internal Revenue Service (the
"IRS") on the tax consequences of owning the Notes. As a result, the IRS
could disagree with portions of this discussion.
IF YOU ARE CONSIDERING BUYING NOTES, WE SUGGEST THAT YOU CONSULT YOUR TAX
ADVISORS ABOUT THE TAX CONSEQUENCES OF HOLDING THE NOTES IN YOUR PARTICULAR
SITUATION.
TAX CONSEQUENCES TO U.S. HOLDERS
This section applies to you if you are a "U.S. Holder." A "U.S. Holder" is:
- an individual U.S. citizen or resident alien;
- a corporation, or entity taxable as a corporation, that was created under
U.S. law (federal or state); or
- an estate or trust whose worldwide income is subject to U.S. federal
income tax.
If a partnership holds Notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding Notes, we suggest
that you consult your tax advisor.
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INTEREST
The tax treatment of interest paid on the Notes depends upon whether the
interest is "Qualified Stated Interest."
"Qualified Stated Interest" is any interest that meets all the following
conditions:
- It is payable at least once each year.
- It is payable over the entire term of the Note.
- It is payable at a single fixed rate or under a single formula.
- The Note has a maturity of more than one year from its issue date.
If any interest on a Note is Qualified Stated Interest, then
- If you are a cash method taxpayer (including most individual holders),
you must report that interest in your income when you receive it.
- If you are an accrual method taxpayer, you must report that interest in
your income as it accrues.
If any interest on a Note is not Qualified Stated Interest, it is subject
to the rules for original issue discount ("OID") described below.
DETERMINING AMOUNT OF OID
Notes that have OID are subject to additional tax rules. The amount of OID
on a Note is determined as follows:
- The amount of OID on a Note is the "stated redemption price at maturity"
of the Note minus the "issue price" of the Note. If this amount is zero
or negative, there is no OID.
- The "stated redemption price at maturity" of a Note is the total amount
of all principal and interest payments to be made on the Note, other than
Qualified Stated Interest. In a typical case where all interest is
Qualified Stated Interest, the stated redemption price at maturity is the
same as the principal amount.
- The "issue price" of a Note is the first price at which a substantial
amount of the Notes are sold to the public.
- Under a special rule, if the OID determined under the general formula is
very small, it is disregarded and not treated as OID. This disregarded
OID is called "de minimis OID". If all the interest on a Note is
Qualified Stated Interest, this rule applies if the amount of OID is less
than the following items multiplied together: (a) .25% ( 1/4 of 1%), (b)
the number of full years from the issue date to the maturity date of the
Note, and (c) the principal amount.
ACCRUAL OF OID INTO INCOME
If a Note has OID, the following consequences arise:
- You must include the total amount of OID as ordinary income over the life
of the Note.
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- You must include OID in income as the OID accrues on the Notes, even if
you use the cash method of accounting. This means that you are required
to report OID in income, and in some cases pay tax on that income, before
you receive the cash that corresponds to that income.
- OID accrues on a Note on a "constant yield" method. This method takes
into account the compounding of interest. Under this method, the accrual
of OID on a Note, combined with the inclusion into income of any
Qualified Stated Interest on the Note, will result in your being taxable
at approximately a constant percentage of your unrecovered investment in
the Note.
- The accruals of OID on a Note will generally be less in the early years
and more in the later years.
- If any of the interest paid on the Note is not Qualified Stated Interest,
that interest is taxed solely as OID. It is not separately taxed when it
is paid to you.
- Your tax basis in the Note is initially your cost. It increases by any
OID (not including Qualified Stated Interest) you report as income. It
decreases by any principal payments you receive on the Note, and by any
interest payments you receive that are not Qualified Stated Interest.
NOTES SUBJECT TO ADDITIONAL TAX RULES
Additional or different tax rules apply to several types of Notes that we
may issue.
Short-Term Notes: We may issue Notes with a maturity of one year or less.
These are referred to as "Short-Term Notes."
- No interest on these Notes is Qualified Stated Interest. Otherwise, the
amount of OID is calculated in the same manner as described above.
- You may make certain elections concerning the method of accrual of OID on
Short-Term Notes over the life of the Notes.
- If you are an accrual method taxpayer, a bank, a securities dealer, or in
certain other categories, you must include OID in income as it accrues.
- If you are a cash method taxpayer not subject to the accrual rule
described above, you do not include OID in income until you actually
receive payments on the Note. Alternatively, you can elect to include OID
in income as it accrues.
- Two special rules apply if you are a cash method taxpayer and you do not
include OID in income as it accrues. First, if you sell the Note or it is
paid at maturity, and you have a taxable gain, then the gain is ordinary
income to the extent of the accrued OID on the Note at the time of the
sale that you have not yet taken into income. Second, if you borrow money
(or do not repay outstanding debt) to acquire or hold the Note, then
while you hold the Note you cannot deduct any interest on the borrowing
that corresponds to accrued OID on the Note until you include the OID in
your income.
Floating Rate Notes: Floating Rate Notes are subject to special OID rules.
- If the interest rate is based on a single fixed formula based on
objective financial information (which may include a fixed interest rate
for the initial period), all the
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interest will be Qualified Stated Interest. The amount of OID (if any),
and the method of accrual of OID, will then be calculated by converting
the Note's initial floating rate into a fixed rate and by applying the
general OID rules described above.
- If the Note has more than one formula for interest rates, it is possible
that the combination of interest rates might create OID. We suggest that
you consult your tax advisor concerning the OID accruals on such a Note.
Other Categories of Notes: Additional rules may apply to certain other
categories of Notes. You should consult your tax advisor in these situations.
These categories of Notes include:
- Notes with contingent payments;
- Notes that you can put to Lucent before their maturity;
- Notes that are callable by Lucent before their maturity, other than
typical calls at a premium;
- Indexed Notes with an index tied to currencies; and
- Notes that are extendable at your option or at the option of Lucent.
PREMIUM AND DISCOUNT
Additional special rules apply in the following situations involving a
discount or premium:
- If you buy a Note in the initial offering for more than its stated
redemption price at maturity, the excess amount you pay will be "bond
premium." You can use bond premium to reduce your taxable interest income
over the life of your Note.
- Similarly, if a Note has OID and you buy it in the initial offering for
more than the issue price, the excess (up to the total amount of OID) is
called "acquisition premium." The amount of OID you are required to
include in income will be reduced by this amount over the life of the
Note.
- If you buy a Note in the initial offering for less than the initial
offering price to the public, special rules concerning "market discount"
may apply.
Appropriate adjustments to tax basis are made in these situations. We
suggest that you consult your tax advisor if you are in one of these situations.
ACCRUAL ELECTION
You can elect to be taxed on the income from the Note in a different manner
than described above. Under the election:
- No interest is Qualified Stated Interest.
- You include amounts in income as it economically accrues to you. The
accrual of income is in accordance with the constant yield method, based
on the compounding of interest. The accrual of income takes into account
stated interest, OID (including de minimis OID), market discount, and
premium.
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- Your tax basis is increased by all accruals of income and decreased by
all payments you receive on the Note.
SALE OR RETIREMENT OF NOTES
On your sale or retirement of your Note:
- You will have taxable gain or loss equal to the difference between the
amount received by you and your tax basis in the Note. Your tax basis in
the Note is your cost, subject to certain adjustments.
- Your gain or loss will generally be capital gain or loss, and will be
long-term capital gain or loss if you held the Note for more than one
year.
- If (a) you purchased the Note with de minimis OID, (b) you did not make
the election to accrue all OID into income, and (c) you receive the
principal amount of the Note upon the sale or retirement, then you will
generally have capital gain equal to the amount of the de minimis OID.
- If you sell the Note between interest payment dates, a portion of the
amount you receive reflects interest that has accrued on the Note but has
not yet been paid by the sale date. That amount is treated as ordinary
interest income and not as sale proceeds.
- All or part of your gain may be ordinary income rather than capital gain
in certain cases. These cases include sales of Short-Term Notes, Notes
with market discount, Notes with contingent payments, or Foreign Currency
Notes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under the tax rules concerning information reporting to the IRS:
- Assuming you hold your Notes through a broker or other securities
intermediary, the intermediary must provide information to the IRS
concerning interest, OID and retirement proceeds on your Notes, unless an
exemption applies.
- Similarly, unless an exemption applies, you must provide the intermediary
with your Taxpayer Identification Number for its use in reporting
information to the IRS. If you are an individual, this is your social
security number. You are also required to comply with other IRS
requirements concerning information reporting.
- If you are subject to these requirements but do not comply, the
intermediary must withhold 31% of all amounts payable to you on the Notes
(including principal payments). If the intermediary withholds payments,
you may use the withheld amount as a credit against your federal income
tax liability.
- All individuals are subject to these requirements. Some holders,
including all corporations, tax-exempt organizations and individual
retirement accounts, are exempt from these requirements.
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TAX CONSEQUENCES TO NON-U.S. HOLDERS
This section applies to you if you are a "Non-U.S. Holder." A "Non-U.S.
Holder" is:
- an individual that is a nonresident alien;
- a corporation organized or created under non-U.S. law; or
- an estate or trust that is not taxable in the U.S. on its worldwide
income.
WITHHOLDING TAXES
Generally, payments of principal and interest on the Notes will not be
subject to U.S. withholding taxes.
However, for the exemption from withholding taxes to apply to you, you must
meet one of the following requirements:
- You provide your name, address, and a signed statement that you are the
beneficial owner of the Note and are not a U.S. Holder. This statement is
generally made on Form W-8 or Form W-8BEN.
- You or your agent claim an exemption from withholding tax under an
applicable tax treaty. This claim is generally made on Form 1001 or Form
W-8BEN.
- You or your agent claim an exemption from withholding tax on the ground
that the income is effectively connected with the conduct of a trade or
business in the U.S. This claim is generally made on Form 4224 or Form
W-8ECI.
We suggest that you consult your tax advisor about the specific methods for
satisfying these requirements. These procedures will change on January 1, 2001.
In addition, a claim for exemption will not be valid if the person receiving the
applicable form has actual knowledge that the statements on the form are false.
Even if you comply with these conditions, withholding tax might arise if
the amount of interest payable on a Note is based on the earnings or other
attributes of Lucent. If this exception applies, additional information will be
provided in the Pricing Supplement.
SALE OR RETIREMENT OF NOTES
If you sell a Note or it is redeemed, you will not be subject to federal
income tax on any gain unless one of the following applies:
- The gain is connected with a trade or business that you conduct in the
U.S.
- You are an individual, you are present in the U.S. for at least 183 days
during the year in which you dispose of the Note, and certain other
conditions are satisfied.
- The gain represents accrued interest or OID, in which case the rules for
interest would apply.
S-23
<PAGE> 24
U.S. TRADE OR BUSINESS
If you hold your Note in connection with a trade or business that you are
conducting in the U.S.:
- Any interest on the Note, and any gain from disposing of the Note,
generally will be subject to income tax as if you were a U.S. Holder.
- If you are a corporation, you may be subject to the "branch profits tax"
on your earnings that are connected with your U.S. trade or business,
including earnings from the Note. This tax is 30%, but may be reduced or
eliminated by an applicable income tax treaty.
ESTATE TAXES
If you are an individual, your Notes will not be subject to U.S. estate tax
when you die. However, this rule only applies if, at your death, payments on the
Notes were not connected to a trade or business that you were conducting in the
U.S.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. rules concerning information reporting and backup withholding are
described above. These rules apply to Non-U.S. Holders as follows:
- Principal and interest payments you receive will be automatically exempt
from the usual rules if you provide the tax certifications needed to
avoid withholding tax on interest, as described above. The exemption does
not apply if the recipient of the applicable form knows that the form is
false. In addition, interest payments made to you will be reported to the
IRS on Form 1042-S.
- Sale proceeds you receive on a sale of your Notes through a broker may be
subject to information reporting and/or backup withholding if you are not
eligible for an exemption. In particular, information reporting and
backup reporting may apply if you use the U.S. office of a broker, and
information reporting (but not backup withholding) may apply if you use
the foreign office of a broker that has certain connections to the U.S.
We suggest that you consult your tax advisor concerning information
reporting and backup withholding on a sale.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Lucent is offering the Notes on a continuing basis through Salomon Smith
Barney Inc., Banc of America Securities LLC, Bear, Stearns & Co. Inc., Chase
Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner and Smith
Incorporated and Morgan Stanley & Co. Incorporated. These Agents have agreed to
use their reasonable best efforts to solicit orders for the purchase of the
Notes. Lucent reserves the right to sell Notes directly to investors on its own
behalf in those jurisdictions where Lucent is authorized to do so. Lucent will
have the sole right to accept orders to purchase Notes and may reject any
proposed purchase of Notes in whole or in part. Each Agent will have the right,
in its discretion reasonably exercised, to reject any proposed purchase of Notes
through it in whole or in part. Payment of the purchase price of Notes will be
required to be made in immediately available funds. With respect to Notes with
maturity periods that are thirty years or shorter, Lucent will pay each Agent a
commission ranging from .125% to .750%, depending upon the maturity period of
the Notes sold, of the principal amount of Notes sold through that Agent. With
respect to Notes sold with maturity periods in excess of thirty years, the
commission amount shall be negotiated by Lucent and the Agent. Lucent will not
pay any commissions on sales made directly by Lucent.
S-24
<PAGE> 25
Lucent may also sell Notes to an Agent as principal for resale to one or
more investors and other purchasers at varying prices related to prevailing
market prices at the time of resale or, if set forth in the applicable Pricing
Supplement, at a fixed public offering price, as determined by the Agent. After
any initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price), the concession and the discount may be changed. In
addition, an Agent may offer Notes purchased by it as principal to other
dealers. Notes sold by an Agent to a dealer may be sold at a discount and,
unless otherwise specified in the applicable Pricing Supplement, the discount
allowed to the dealer will not be in excess of the discount received by the
Agent from Lucent. Unless otherwise specified in the applicable Pricing
Supplement, any Note purchased by an Agent as principal will be purchased at
100% of the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity.
Concurrently with the offering of the Notes through the Agents or otherwise
as described in this Prospectus Supplement, Lucent may issue other Debt
Securities as described in the accompanying Prospectus.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 (the "Securities
Act"). Lucent has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the Agent may be required to make in respect thereof.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each Agent may make a market in the
Notes, but the Agent is not obligated to do so and may discontinue any
market-making at any time without notice. There can be no assurance of a
secondary market for any Notes or that the Notes will be sold.
Each Agent and certain of its affiliates may from time to time engage in
transactions with, and perform investment banking, commercial lending and other
financial services for, Lucent and certain of its affiliates in the ordinary
course of business.
One of Lucent's directors, Henry B. Schacht, is also a director of The
Chase Manhattan Corporation and The Chase Manhattan Bank. Both are affiliates of
Chase Securities Inc.
LEGAL MATTERS
The validity of the Notes will be passed upon for Lucent by Jean F. Rankin,
Vice President-Law. As of March 8, 2000, Jean F. Rankin owned options for 70,600
shares of Lucent common stock. Cravath, Swaine & Moore, New York, New York will
pass upon the validity of the Notes for the Agents. Certain legal matters
relating to the federal tax consequences of the issuance of the Notes and other
matters relating thereto will be passed upon for Lucent by Cravath, Swaine &
Moore, as special tax counsel to Lucent. Cravath, Swaine & Moore also acts as
counsel for Lucent from time to time.
S-25
<PAGE> 26
PROSPECTUS
$1,800,000,000
LUCENT TECHNOLOGIES
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
-------------------------
This Prospectus is part of a Registration Statement which Lucent has filed
with the Securities and Exchange Commission as part of a shelf registration
process. Under this process, Lucent may sell Debt Securities, Warrants, or both
in one or more offerings up to a total dollar amount of $1,800,000,000. The
purpose of this Prospectus is to provide the general terms and conditions of the
Debt Securities and Warrants that Lucent intends to issue. The specific terms
and conditions of Debt Securities or Warrants issued in any particular offering
will be provided in supplements to this Prospectus as well as any additions,
update or modifications of this Prospectus. You should read this Prospectus and
any Prospectus Supplement carefully before you make your investment decision.
-------------------------
Neither the Securities and Exchange Commission, nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus and any accompanying Prospectus
Supplement. Any representation to the contrary is a criminal offense.
-------------------------
The date of this Prospectus is March 9, 2000
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Lucent............ 3
Where to Find Additional
Information Regarding Lucent... 3
Ratio of Earnings to Fixed
Charges........................ 4
Use of Proceeds.................. 5
Description of the Indenture and
Debt Securities................ 5
Description of the Warrants...... 11
Plan of Distribution............. 12
Legal Opinions................... 13
Experts.......................... 13
</TABLE>
2
<PAGE> 28
DESCRIPTION OF LUCENT
Lucent was incorporated in Delaware in November 1995 and has its principal
executive offices at 600 Mountain Avenue, Murray Hill, New Jersey 07974
(telephone number 908-582-8500). Lucent was formed from the systems and
technology units that were formerly a part of AT&T Corp., including the research
and development capabilities of Bell Laboratories. Prior to February 1, 1996,
AT&T conducted Lucent's original business through various divisions and
subsidiaries. On February 1, 1996, AT&T began separating Lucent into a
stand-alone company by transferring to Lucent the assets and liabilities related
to its business. In April 1996, Lucent completed the initial public offering of
its common stock and on September 30, 1996, became independent of AT&T when AT&T
distributed all of its Lucent shares to its shareowners.
Lucent designs, builds, and delivers a wide range of public and private
networks, communication systems and software, data networking systems, business
telephone systems and microelectronic components. Lucent is a global leader in
the sale of public communications systems, and is a supplier of systems or
software to most of the world's largest network operators. Lucent is also a
global leader in the sale of business communications systems and in the sale of
microelectronic components for communications applications to manufacturers of
communications systems and computers. Lucent's research and development
activities are conducted through Bell Laboratories, one of the world's foremost
industrial research and development organizations.
WHERE TO FIND ADDITIONAL INFORMATION REGARDING LUCENT
Lucent is subject to the information requirements of the Securities
Exchange Act of 1934 and files annual, quarterly, and current reports, proxy
statements and other information with the SEC. You may read and copy any reports
or other information that Lucent files with the SEC at the SEC's Public
Reference Room located at 450 Fifth Street, N.W., Washington D.C. 20549. You may
also receive copies of these documents upon payment of a duplicating fee, by
writing to the SEC's Public Reference Section. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room in
Washington D.C. and other locations. Lucent's SEC filings are also available to
the public through the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information that we
file with them into this document. This means that we can disclose important
information to you by referring you to other documents previously filed
separately with the SEC, including Lucent's annual, quarterly and current
reports. The information incorporated by reference is considered to be a part of
this document, except for any information that is modified or superseded by
information contained in this document or any other subsequently filed document.
The information incorporated by reference is an important part of this
Prospectus and the accompanying Prospectus Supplement. Any information that we
file later with the SEC, specifically, those documents filed pursuant to
sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, will
automatically update and supersede the information in this Prospectus and the
accompanying Prospectus Supplement.
3
<PAGE> 29
The following documents have been filed by Lucent with the SEC (File No.
1-11639) and are incorporated by reference into this Prospectus:
<TABLE>
<CAPTION>
LUCENT SEC FILINGS (FILE NO. 1-11639) PERIOD
- ------------------------------------- ------
<S> <C>
1. Annual Report on Form 10-K, Fiscal Year ended September 30, 1999
as amended by Form 8-K filed
February 11, 2000
2. Quarterly Reports on Form 10-Q Quarter ended December 31, 1999
3. Current Reports on Form 8-K Filed October 29, 1999, November 19,
1999, January 7, 2000, February 11,
2000 and March 1, 2000
</TABLE>
Copies of the above documents, along with exhibits specifically
incorporated by reference by this Prospectus or the Prospectus Supplement and
the Company's 1998 Annual Report to Shareowners, may be obtained without charge
from the Secretary's Department, Lucent Technologies Inc., 600 Mountain Avenue,
Murray Hill, New Jersey 07974 (telephone number: 908-582-8500).
No person is authorized to give any information or represent anything not
contained in this Prospectus and the accompanying Prospectus Supplement. We are
only offering the Debt Securities and Warrants in places where sales of those
securities are permitted. The information contained in this Prospectus and any
accompanying Prospectus Supplement, as well as information incorporated by
reference, is current only as of the date of that information. Lucent's
business, financial condition, results of operations and prospects may have
changed since that date.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited ratio of earnings to fixed
charges for Lucent and its subsidiaries for each of the periods indicated.
Certain prior year amounts have been reclassified to the current year
classification. For purposes of computing the ratio of earnings to fixed
charges, fixed charges consist of interest expense on all indebtedness plus that
portion of operating lease rental expense that is representative of the interest
factor. Earnings are defined as income (loss) from continuing operations before
income taxes, less interest capitalized, less undistributed earnings of less
than 50% owned affiliates and plus fixed charges. Prior period ratios have been
restated to give retroactive effect to mergers and to exclude discontinued
operations.
<TABLE>
<S> <C>
3-month period ended December 31, 1999...................... 11.8
12-month period ended September 30, 1999.................... 9.6
12-month period ended September 30, 1998.................... 6.7
12-month period ended September 30, 1997.................... 4.7
9-month period ended September 30, 1996..................... 3.3
12-month period ended December 31, 1995..................... *
</TABLE>
- -------------------------
* For the year ended December 31, 1995, the ratio of earnings to fixed charges
computation indicates that earnings were inadequate to cover fixed charges by
$1,057 million.
4
<PAGE> 30
USE OF PROCEEDS
The Company intends to use the proceeds from the sale of the Debt
Securities and Warrants for general corporate purposes including debt repayment
and refinancing, capital expenditures and acquisitions. The specific purpose of
any individual issuance of Debt Securities or Warrants to purchase debt
securities will be described in an appropriate Prospectus Supplement. The amount
and timing of the sales of the Debt Securities and Warrants will depend on
market conditions.
DESCRIPTION OF THE INDENTURE AND DEBT SECURITIES
The Debt Securities will be issued under and controlled by an Indenture
dated as of April 1, 1996, between Lucent and The Bank of New York, as Trustee.
The following sections briefly outline the provisions of the Indenture. The
Indenture has been filed as an exhibit to the Registration Statement and you
should read it in its entirety in order to completely understand its terms and
conditions. Lucent and the Trustee, with the consent of a majority in principal
amount of the outstanding Debt Securities of each series affected, may modify or
supplement the terms of the Indenture. Any modification would result in a
Supplemental Indenture. However, no Supplemental Indenture may, without the
consent of each holder affected, change: (1) a maturity date; (2) the principal
amount; (3) any premium; (4) the interest rate; (5) the time of interest
payment; (6) the authorized currency; or (7) the percentage of outstanding Debt
Securities required for debt holder action. In addition to the Indenture, Lucent
and the Bank of New York have had, and continue to have, other customary banking
agreements and arrangements, including stock transfer agent, lending and
depository relationships.
GENERAL TERMS
The Debt Securities:
- represent direct, unsecured, unsubordinated obligations of Lucent;
- will rank equally with Lucent's other unsecured, unsubordinated debt;
- may be issued in one or more series with the same or various maturities;
- may be issued at a price of 100% of their principal amount or at a
premium or discount;
- may be issued in registered or bearer form and certificated or
uncertificated form; and
- may be represented by one or more global notes registered in the name of
a designated depository's nominee, and if so, beneficial interests in the
global note will be shown on and transfers will be made only through
records maintained by the designated depository and its participants.
Unless we state otherwise in a prospectus supplement, we will not offer, sell or
deliver any bearer debt securities, including any bearer securities issued in
global form, to any United States person. By United States person we mean a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or of any
of its political subdivisions, or an estate or trust whose income is subject to
United States federal income taxation regardless of its source.
5
<PAGE> 31
The Prospectus Supplement for any individual issuance of Debt Securities
will describe in detail, if applicable:
- the total principal amount of the Debt Securities;
- the percentage of the principal amount at which the Debt Securities will
be sold;
- the date(s) on which the Debt Securities will mature, or whether such
Debt Securities will be payable on demand;
- the interest rate(s) that the Debt Securities will bear and the method of
calculating the rate(s);
- the interest payment date(s);
- the terms for redemption or early repayment;
- the authorized denominations in which the Debt Securities will be issued;
- the currency in which the Debt Securities will be denominated;
- the currency in which the principal of or any premium or interest will be
payable, if different than the currency in which the Debt Securities are
denominated;
- the manner in which payments of principal of and any premium or interest
on the Debt Securities will be determined if the payment is to be based
upon one or more indexes;
- whether the Debt Securities will be issuable in registered or bearer form
or both, and whether the Debt Securities shall be certificated or
uncertificated;
- whether the Debt Securities will be represented by one or more global
securities and, if so, whether any such global securities will be in
registered or bearer form, the identity of the depository for such global
security or securities and the method of transferring beneficial
interests in such global security or securities;
- information regarding book-entry procedures;
- whether and under what circumstances the Company will pay additional
amounts on any Debt Securities held by a person who is not a United
States person in respect of taxes or similar charges withheld and, if so,
whether the Company will have the option to redeem the Debt Securities
rather than pay such additional amounts; and
- any other terms, including any terms which may be required by or
advisable under United States laws and regulations and laws of other
relevant jurisdictions or advisable in connection with the marketing of
the Debt Securities.
PAYMENT AND TRANSFER
Unless we state otherwise in a Prospectus Supplement, if you have Debt
Securities in registered form, we will make principal and interest payments at
the office of the paying agent or agents that we will name in the Prospectus
Supplement or by mailing a check to you at the address we have for you in the
register. You may also exchange registered Debt Securities at the office of the
transfer agent for an equal aggregate principal amount of registered Debt
Securities of the same series having the same maturity date, interest rate and
other terms as long as the debt securities are issued in authorized
denominations.
If you have Debt Securities in bearer form, we will pay interest to you
when you present and surrender the interest coupon for that interest payment at
the office of our
6
<PAGE> 32
paying agent located outside the United States. Bearer securities and coupons
are transferable by delivery. Unless we describe other procedures in a
Prospectus Supplement, you will be able to transfer registered Debt Securities
at the office of the transfer agent or agents we name in the Prospectus
Supplement.
Bearer Debt Securities may be exchanged for an equal aggregate principal
amount of registered or bearer Debt Securities of the same series having the
same date of maturity, interest rate, original issue date and other terms in
such authorized denominations as may be requested upon delivery of the bearer
Debt Securities with all unpaid coupons to a transfer or paying agent as
specified in the Prospectus Supplement and upon fulfillment of all other
requirements of such agent.
A Prospectus Supplement will describe the procedures for exchanging bearer
Debt Securities, if applicable. Registered Debt Securities can never be
exchanged for bearer Debt Securities.
Neither Lucent nor the Trustee will impose any service charge for any
transfer or exchange of a Debt Security, however, we may ask you to pay any
taxes or other governmental charges in connection with a transfer or exchange of
Debt Securities.
Unless we indicate otherwise in an applicable Prospectus Supplement, we
will issue Debt Securities only in denominations of $25,000 and integral
multiples of $1,000 over $25,000. If we issue Debt Securities in a foreign
currency, we will specify the authorized denominations in the Prospectus
Supplement.
If we issue original issue discount Debt Securities, we will describe the
special United States federal income tax and other considerations of a purchase
of original issue discount Debt Securities in the Prospectus Supplement.
Original issue discount Debt Securities are securities that are issued at a
substantial discount below their principal amount because they pay no interest
or pay interest that is below market rates at the time of issuance.
COVENANTS
For your benefit, we have agreed in the Indenture to restrict certain of
our activities as long as the Debt Securities are outstanding. Some of those
restrictions are described below. Because several definitions are both specific
and complex, we have provided a separate definitions section to help you to
understand certain capitalized terms in this section.
LIMITATION ON SECURED INDEBTEDNESS.
We have agreed in the Indenture that we will not, nor will we permit any
Restricted Subsidiary to, create, assume, incur or guarantee any Secured
Indebtedness unless we secure the Debt Securities to the same extent as such
Secured Indebtedness. However, we may incur Secured Indebtedness without
securing these Debt Securities if, immediately after incurring the Secured
Indebtedness, the aggregate amount of all Secured Indebtedness and the
discounted present value of all net rentals payable under leases entered into in
connection with sale and leaseback transactions described below would not exceed
15% of Consolidated Net Tangible Assets. The aggregate amount of all Secured
Indebtedness in the preceding sentence excludes Secured Indebtedness which is
secured to the same extent as the amount of Debt Securities that is being repaid
concurrently. (Section 4.03)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
We have agreed in the Indenture that we will not, nor will we permit any
Restricted Subsidiary to, enter into any lease longer than three years,
excluding leases of newly
7
<PAGE> 33
acquired, improved or constructed property, covering any Principal Property of
Lucent or any Restricted Subsidiary that is sold to any other person in
connection with the lease, unless either
(a) immediately thereafter, the sum of:
(i) the discounted present value of all net rentals payable under all
such leases entered into after January 31, 1996 (except any such
leases entered into by a Restricted Subsidiary before it became a
Restricted Subsidiary); and
(ii) the aggregate amount of all Secured Indebtedness, excluding Secured
Indebtedness which is secured to the same extent as the Debt
Securities,
does not exceed 15% of Consolidated Net Tangible Assets, or
(b) an amount equal to the greater of:
(i) the net proceeds to Lucent or a Restricted Subsidiary from such
sale; and
(ii) the discounted present value of all net rentals payable thereunder,
is used within 180 days to retire long-term debt of Lucent or a Restricted
Subsidiary. However, debt which is subordinate to the Debt Securities or
which is owed to Lucent or a Restricted Subsidiary does not qualify.
(Section 4.04)
LIMITATION ON CONSOLIDATION, MERGER, SALE OR CONVEYANCE OF ASSETS.
Lucent is permitted to consolidate with or merge into any other corporation
or convey or transfer substantially all of its properties and assets to any
other person or corporation, if the person or corporation is authorized to
acquire and operate Lucent's property. We have agreed that the successor
corporation will expressly agree to pay the principal of and any premium or any
interest on all the Debt Securities and the performance of every covenant in the
Indenture that we would otherwise have to perform. The Indenture does not
contain any covenants or provisions which would protect the holders of Debt
Securities in the event of a highly leveraged transaction. (Section 5.01)
CERTAIN DEFINITIONS.
"Secured Indebtedness" means indebtedness of Lucent or any Restricted
Subsidiary secured by any lien upon any Principal Property or the stock or
indebtedness of a Restricted Subsidiary or any conditional sale or other title
retention agreement covering any Principal Property or Restricted Subsidiary.
However, this definition specifically excludes all indebtedness:
- that was outstanding on February 1, 1996;
- incurred after January 31, 1996 to finance the acquisition, improvement
or construction of such property and either secured by purchase money
mortgages or liens placed on such property within 180 days of
acquisition, improvement or construction;
- secured by liens on Principal Property or the stock or indebtedness of
Restricted Subsidiaries and existing at the time of acquisition of the
property, stock or indebtedness;
- owing to Lucent or any other Restricted Subsidiary;
- existing at the time a corporation becomes a Restricted Subsidiary;
8
<PAGE> 34
- incurred to finance the acquisition or construction of property in favor
of any country or any political subdivisions; and
- replacing, extending or renewing of any such indebtedness (to the extent
such indebtedness is not increased). (Section 1.01)
"Principal Property" means land, land improvements, buildings and
associated factory, laboratory, office and switching equipment (excluding all
products marketed by Lucent or any of its subsidiaries) constituting a
manufacturing, development, warehouse, service, office or operating facility
owned by or leased to Lucent or a Restricted Subsidiary, located within the
United States and having an acquisition cost plus capitalized improvements in
excess of 1.25 per cent of Consolidated Net Tangible Assets as of the date of
such determination, other than any such property financed through the issuance
of tax-exempt governmental obligations, or which the Board of Directors
determines is not of material importance to Lucent and its Restricted
Subsidiaries taken as a whole, or in which the interest of Lucent and all its
subsidiaries does not exceed 50%. (Section 1.01)
"Consolidated Net Tangible Assets" means the total assets of Lucent and its
Subsidiaries, less current liabilities and certain intangible assets (other than
product development costs). (Section 1.01)
"Restricted Subsidiary" means any Subsidiary of Lucent which has
substantially all its property in the United States, which owns or is a lessee
of any Principal Property and in which the investment of Lucent and all its
Subsidiaries exceeds 1.25 per cent of Consolidated Net Tangible Assets as of the
date of such determination, other than certain financing Subsidiaries and
Subsidiaries formed or acquired after January 31, 1996 for the purpose of
acquiring the business or assets of another person and that do not acquire all
or any substantial part of the business or assets of Lucent or any Restricted
Subsidiary. Additionally, this definition includes any other Subsidiary
designated by Lucent's Board of Directors as a Restricted Subsidiary. (Section
1.01)
"Subsidiary" means any corporation a majority of the voting shares of which
are at the time owned or controlled directly or indirectly, by Lucent or a
Subsidiaries. (Section 1.01)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default under the Indenture occurs and continues, either the
Trustee or the holders of 25% in principal amount of the outstanding Debt
Securities of any series affected may declare the principal of all of the Debt
Securities of such series to be due and payable. (Section 6.01). Any individual
issuance of Debt Securities may have additional or different Events of Default
from the Events of Default described herein. The Prospectus Supplement relating
to any individual issuance will describe such additions or modifications. A
default under our other indebtedness will not be a default under the Indenture,
and a default under one series of Debt Securities under the Indenture will not
necessarily be a default under another series. Unless otherwise specified in a
Prospectus Supplement, an event of default occurs when:
- Lucent fails to pay interest due on any Debt Security for 90 days;
- Lucent fails to pay principal of or premium on any Debt Securities when
due;
- Lucent breaches any agreement under the Indenture which continues for 90
days after written notice by the Trustee or holders of 25% of the
principal amount of the Debt Securities of any affected series; or
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<PAGE> 35
- Lucent takes certain legal actions relating to bankruptcy, insolvency and
reorganization. (Section 6.01)
If a default occurs, the Trustee will notify the holders of such series of
all uncured and unwaived defaults known to it within 90 days. For the purpose of
this provision, default means any event which is, or after notice or passage of
time or both would be, an Event of Default. However, if the Trustee determines
in good faith that withholding notices is in the interest of the holders of such
series it may do so except in the case of a payment default. (Section 7.05)
The Trustee, subject to its duty during an Event of Default in respect of
any series of Debt Securities to act with the required standard of care, can
refuse to perform any duty or exercise any right or power unless it received
indemnity satisfactory to it. If indemnity is provided, the Indenture provides
that the holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting
proceedings for remedies available to the Trustee, or exercising any trust or
power conferred on the Trustee, in respect of such series. (Sections 6.06 and
7.01)
If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee or the holders of at least 25% in aggregate principal
amount of the Debt Securities of the series may require us to repay the entire
principal of the Debt Securities of such series or, if the Debt Securities are
original issue discount securities, the appropriate portion of the principal,
immediately. The holders of a majority of the aggregate principal amount of the
Debt Securities of the affected series can rescind this accelerated payment
requirement or waive any past default or Event of Default or allow us to not
comply with any provision of the Indenture. However, they cannot waive a default
in payment of principal of, premium, if any, or interest on, any of the Debt
Securities of such series. (Sections 6.01 and 6.06)
The terms for any series of Debt Securities may provide that the holders of
Debt Securities of such series shall act as one class together with the holders
of Debt Securities of one or more other series in voting, giving notice,
waiving, giving directions or taking any other specified, permitted or
authorized action.
DISCHARGE AND DEFEASANCE
If we deposit with the Trustee sufficient cash or U.S. government
securities to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the Debt Securities of a
particular series, then at our option, we will be discharged from our
obligations with respect to the Debt Securities of such series or we will no
longer be under any obligation to comply with certain restrictive covenants
under the Indenture, and certain Events of Default will no longer apply to us.
The sufficiency of the deposit must be certified by a nationally recognized firm
of independent public accountants. (Sections 8.01 and 8.06)
If we achieve discharge and defeasance, the holders of the Debt Securities
of the affected series will not be entitled to the benefits of the Indenture
except for registration of transfer and exchange of Debt Securities and
replacement of lost, stolen or mutilated Debt Securities. Such holders may look
only to such deposited funds or obligations for payment.
Additionally, Lucent must deliver to the Trustee an opinion of counsel to
the effect that the deposit and related defeasance would not cause the holders
of the Debt Securities to recognize income, gain or loss for Federal income tax
purposes.
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DESCRIPTION OF THE WARRANTS
The Company may issue Warrants for the purchase of Debt Securities.
Warrants may be issued independently or together with any Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Debt Securities. The Warrants will be issued in one or more series under a
Warrant Agreement to be entered into between Lucent and a bank or trust company,
as Warrant Agent. The details of any series of Warrants will be set forth in the
applicable Prospectus Supplement. The Warrant Agent will act solely as an agent
of the Company in connection with the Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following summarizes certain provisions of
the form of Warrant Agreement. You should read the form of Warrant agreement
which was filed on an exhibit to the Registration Statement.
GENERAL TERMS
The Prospectus Supplement for any individual issuance will describe in
detail, if applicable:
- The offering price and currency for which the Warrants may be purchased;
- The dates upon which the right to exercise the Warrants will commence and
expire;
- If the Warrants are not continuously exercisable, the specific date or
dates on which they can be exercised;
- Whether the Warrants will be issued in registered or bearer form or both
and whether they will be issued in certificated or uncertificated form;
- The terms of the Debt Securities which holders of Warrants can purchase
and the price to be paid to Lucent upon exercise;
- If the Debt Securities to be purchased upon will be issued in bearer
form, any applicable restrictions;
- If Warrants are issued together with a series of Debt Securities, the
name of such Debt Securities, their terms, the number of Warrants
accompanying each such Debt Security, and the date that the Warrants and
Debt Securities will become separately transferable;
- Any special United States Federal tax implications of the Warrants or
their exercise; and
- Any other specific terms of the Warrants.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, transferred, and exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of their Warrants, holders of
Warrants will not have any of the rights of holders of the Debt Securities.
EXERCISE OF WARRANTS
Warrant holders will be able to purchase the principal amount of Debt
Securities at the exercise price designated in the Prospectus Supplement
relating to the Warrants. Warrants may not be exercised after 5:00 P.M. New York
time on the expiration date. Any Warrants unexercised by that time and date will
become void. Unless otherwise set
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forth in the applicable Prospectus Supplement, holders of Warrants may exercise
them by delivering properly completed Warrant certificates and payment of the
exercise price to the Warrant Agent at its corporate trust office. As soon as
practicable after such delivery, we will issue and deliver to the indicated
holder the Debt Securities purchasable upon exercise. If a holder does not
exercise all the Warrants represented by a particular certificate, we will also
issue a new certificate for the remaining number of Warrants.
PLAN OF DISTRIBUTION
Lucent may sell the Debt Securities and Warrants in four ways:
- through underwriters;
- through dealers;
- through agents; and
- directly to purchasers.
If Lucent uses underwriters in an offering of securities using this
Prospectus, we will execute an underwriting agreement with one or more
underwriters. The names of those underwriters and the terms of the transaction
will be set forth in the applicable Prospectus Supplement. The underwriting
agreement will provide that the obligations of the underwriters with respect to
a sale of the offered securities are subject to specified conditions precedent
and that the underwriters will be obligated to purchase all of the offered
securities if any are purchased. Underwriters may sell those securities through
dealers. The underwriters may change the initial offering price and any
discounts or concessions allowed or re-allowed or paid to dealers. If Lucent
uses underwriters in an offering of securities using this Prospectus, the
applicable Prospectus Supplement will contain a statement regarding the
intention, if any, of the underwriters to make a market in the offered
securities. If Lucent uses a dealer in an offering of securities using this
Prospectus, we will sell the offered securities to the dealer as principal. The
dealer may then resell those securities to the public or other dealers at a
fixed price or varying prices to be determined at the time of resale. If Lucent
designates an agent or agents in an offering of securities using this
Prospectus, unless otherwise indicated in a Prospectus Supplement, that agent
will be acting on a best efforts basis for the period of its appointment.
Underwriters, dealers or agents participating in a distribution of
securities using this Prospectus may be deemed to be underwriters under the
Securities Act and any discounts and commissions received by them and any profit
realized by them on resale of the offered securities, whether received from us
or from purchasers of offered securities for whom they act as agents, will be
disclosed in the Prospectus Supplement. Pursuant to agreements that we may enter
into, underwriters, dealers or agents who participate in the distribution of
securities by use of this prospectus may be entitled to indemnification by us
against certain liabilities, including liabilities under the Securities Act, or
contribution with respect to payments that those underwriters, dealers or agents
may be required to make.
We may offer to sell securities, either at a fixed price or prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices.
We may authorize underwriters, and agents to solicit offers by certain
institutions to purchase securities pursuant to delayed delivery contracts
providing for payment and
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delivery on a future date specified in the Prospectus Supplement. Institutions
with which delayed delivery contracts may be made include commercial and savings
banks, insurance companies, educational and charitable institutions and other
institutions we may approve. The obligations of any purchaser under any delayed
delivery contract will not be subject to any conditions except that any related
sale of offered securities to underwriters shall have occurred and the purchase
by an institution of the securities covered by its delayed delivery contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which that institution is subject. Any
commission paid to agents and underwriters soliciting purchases of securities
pursuant to delayed delivery contracts accepted by us will be detailed in the
Prospectus Supplement.
We may also use this Prospectus to directly solicit offers to purchase
securities. Except as set forth in the applicable Prospectus Supplement, none of
our directors, officers or employees, nor those of our bank subsidiaries will
solicit or receive a commission in connection with those direct sales. Those
persons may respond to inquiries by potential purchasers and perform ministerial
and clerical work in connection with direct sales.
LEGAL OPINIONS
The validity of the Debt Securities and Warrants offered in this
Prospectus, as well as certain other legal matters, will be passed upon by Jean
F. Rankin, Vice President-Law. As of March 8, 2000, Jean F. Rankin owned options
for 70,600 shares of Lucent Common Stock. Cravath, Swaine & Moore is passing
upon the legality of the Debt Securities and Warrants for the Underwriters,
dealers and agents, if any. Cravath, Swaine & Moore also acts as counsel for
Lucent from time to time.
EXPERTS
The consolidated financial statements and financial statement schedule
incorporated in this Prospectus by reference have been incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
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$1,800,000,000
LUCENT TECHNOLOGIES INC.
MEDIUM-TERM NOTES, SERIES A
LUCENT TECHNOLOGIES LOGO
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PROSPECTUS SUPPLEMENT
March 9, 2000
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SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
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