Lucent Technologies continues restructuring, reducing workforce
July 24, 2001--"Today's announcement makes it clear -- we are taking a multitude of actions to turn around the business, and we're accelerating our progress," said Lucent Technologies Chairman and Chief Executive Officer Henry Schacht.
Lucent Technologies (NYSE: LU) announced that the company reported revenues from continuing operations of $5.82 billion for the third fiscal quarter, despite very challenging market conditions. This compares with $5.915 billion in revenues achieved in the second fiscal quarter of 2001. On a sequential basis, the pro forma loss per share from continuing operations improved 5 percent from a loss of 37 cents to a loss of 35 cents. The third fiscal quarter pro forma results exclude business restructuring and related one-time charges of $684 million, and the amortization of goodwill and acquired intangibles.
"Today's announcement makes it clear -- we are taking a multitude of actions to turn around the business, and we're accelerating our progress," said Lucent Technologies Chairman and Chief Executive Officer Henry Schacht.
Separately, the company announced it entered into a strategic manufacturing agreement with Celestica Inc. for the purchase of its manufacturing assets at Oklahoma City and Columbus, Ohio for up to $650 million.
The company also announced the sale of its Optical Fiber Solutions (OFS) business for $2.75 billion to Furukawa Electric Co., Ltd. (Tokyo: 5801) and Corning Incorporated. (NYSE: GLW).
Company reports clear, demonstrable progress with restructuring
* On track for annualized expense reduction of $2 billion
* Working capital improved by $3 billion
* Headcount reduced by more than 10,500
The company is on track to reduce its operational expenses by $2 billion on an annual basis by the end of the fiscal year through headcount reductions, product rationalizations, reduced financing costs and decreased discretionary spending.
Working capital has been reduced by $3 billion, $1 billion more than the original target, excluding business restructuring charges and other inventory reserves. In addition, Lucent reduced its forecasted capital spending by more than $700 million to approximately $1.5 billion for fiscal year 2001. This represents a $400 million decline from the prior year.
Lucent exceeded its target for work force reductions with the elimination of more than 10,500 positions since January. Additionally, in July, more than 8,500 employees accepted a voluntary retirement offer that Lucent made to accelerate its restructuring plans. In total, Lucent has reduced its work force by approximately 19,000 since January. In addition, the company has eliminated about 5,500 contractor positions since January to further reduce spending.
According to Lucent, the company is developing plans that would, when implemented:
* Reduce annual operating expenses by an additional $2 billion;
* Improve working capital performance by an additional $1 billion;
* Reduce the company's capital spending rate by an additional $750 million;
* Reduce its work force by another 15,000 to 20,000;
* Result in the company recording a charge in the range of $7 billion to $9 billion in the fourth fiscal quarter of 2001 related to the headcount reductions, product rationalizations and the associated asset write-offs. Approximately $2 billion of the charge will be cash-related.
* Return the company to profitability and positive cash flow during fiscal year 2002.
For the fourth fiscal quarter of 2001, Lucent expects to deliver sequential improvement on the bottom line, but due to market uncertainties, the company is no longer providing guidance for the top line.
Lucent continues to move forward with its intention to spin off Agere Systems Inc., formerly the microelectronics business, as a fully independent company, and has accounted for the financial results of that business as discontinued operations. The company may explore an alternative path for achieving full independence for Agere through a secondary public offering of the Agere shares held by Lucent if a change in the spin off plan is in the best interest of its shareholders.
About Lucent Technologies:
Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers systems, software and services for next-generation communications networks for service providers and enterprises. For more information, visit www.lucent.com.