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LUCENT TECHNOLOGIES INC.
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Patricia F. Russo, Chairman and CEO of Lucent Technologies Inc., sent the
following letter to employees on April 2, 2006:
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LUCENT TECHNOLOGIES TODAY NEWSFLASH
Sunday, April 2, 2006
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In This Issue:
* A Message from Pat Russo
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Dear Colleagues,
As you know, Lucent and Alcatel announced this morning
that we have signed a definitive merger agreement to
create the first truly global communications solutions provider.
This combination of two experienced and well-respected
global communications leaders represents a strategic fit
of vision, geography, solutions and people.
The combined company created by this merger of equals
will be incorporated in France, with executive offices in
Paris. However, the North American operations and global
Bell Labs headquarters will be in New Jersey. Further
information about the terms and structure of the transaction
can be found in our joint press release, which can be
accessed at the following link:
HTTP://WWW.LUCENT.COM/PRESS/0406/060402.COA.HTML
Obviously, today's news signals the beginning of an
exciting new chapter for our company. But as with any
significant change, it is natural for such excitement to be
accompanied by apprehension. With that in mind, I wanted
to briefly speak to the rationale behind the transaction,
the benefits this merger will provide and our vision for
the future of our combined company.
WHY MERGE? WHY NOW?
As you know, our two companies considered such a merger in
2001. Since then, our industry has undergone tremendous
change, and both Lucent and Alcatel have individually
adapted with more streamlined operations, stronger
financials and the introduction of innovative solutions for
converged services. As a result, we each come to today's
announcement from a much stronger position than we did when
we explored this option five years ago.
Despite this, it is clear that what we can accomplish
together exceeds what we could do alone. Thanks to the
progress both companies have made and the opportunities we
see ahead, our new company will be well-positioned to enhance
long-term value for our shareowners, customers and employees.
Together we will have:
* A stronger financial base
* Clear leadership in next-gen networks as the global leader
in convergence
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* The broadest portfolio of products and services in the
industry
* Deep relationships with every major service provider
* A growing momentum in high-end enterprise technologies and
markets
* The industry's premier R&D capabilities, including Bell
Labs
* An experienced international management team with a common
vision and proven track record
* An enhanced global footprint with presence in more than
130 countries
HELPING CUSTOMERS ADDRESS NEW CHALLENGES
This strategic combination makes sense for both of our
companies -- and our customers -- because of three industry
forces: Competition, Consolidation and Convergence.
Competition: Our customers' competitive landscape is
rapidly changing as the telecom, media and Internet worlds
continue to converge. At the same time, we are seeing
increased competition among our direct competitors.
Consolidation: As the industry continues to consolidate,
our customers will benefit from a partner with the ability
to design, build and manage their networks to deliver the
advanced communications experience that end-users are
seeking.
Convergence: Our customers are experiencing greater
complexity as they strive to deliver converged services,
seamlessly and securely, across a variety of networks and
devices.
In the end, the winners in this industry will be defined
by who responds most quickly, and with the most agility,
to these changing dynamics. This merger will create the
broadest wireless, wireline and services portfolio in the
industry, and we will be in great position to address these
dynamics.
CREATING A TRULY GLOBAL FORCE
This merger also represents a strong geographic match. For
the past four years, you have heard me talk about the
importance of being a truly global company. With this
merger, we will become just that. A quick look at the
numbers confirms this. While Lucent gets 66 percent of its
revenues from North America and Alcatel gets about half of
its revenues from Europe, the combined company will have a
more balanced global presence -- with about a third coming
from North America, about a third from Europe, and about a
third from a combination of the Caribbean and Latin
America, the Middle East, Africa, Asia and the Pacific
region.
BELL LABS
I know some of you may have questions about the future of
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Bell Labs,especially considering its ongoing work with the
U.S. government. First let me assure you that Bell Labs
will continue to be one of the driving forces behind our
success. In fact, this merger will enable us to accelerate
our investments in the types of innovative R&D that have
been Bell Labs' calling card. When combined with the R&D
resources of Alcatel, we will have one of the industry's
largest R&D organizations and a distinct time-to-market
advantage.
NEW SUBSIDIARY TO BE CREATED
The combined company intends to form a separate, independent
U.S. subsidiary holding certain contracts with U.S.
government agencies. This subsidiary would be separately
managed by a board, to be composed of three independent U.S.
citizens acceptable to the U.S. government. This type of
structure is routinely used to protect certain government
programs in the course of mergers involving non-U.S.
parties.
IMPACT ON OUR GLOBAL EMPLOYEE BASE
While I recognize this announcement is being met with mixed
emotions due to the eventual workforce reductions that will
accompany it, I truly believe that in the long run, this
transaction will generate exciting new possibilities for our
employees through an enhanced ability to invest in
innovation and the increased availability of global growth
opportunities.
This transaction is expected to take six to 12 months to
be completed. In the meantime, both companies will continue
to operate their businesses independently. Therefore, we need
to remain focused on serving our customers and delivering on
our commitments.
As I wrote in my letter on March 24, I have seen you
achieve incredible feats over the last four years in
bringing Lucent back to profitability. Your accomplishments
have positioned us to enter into this merger from a position
of strength and will give the combined company a decisive
advantage as we work to seize the opportunities that lie
before us. In Alcatel, we have found a merger partner that
has a common vision of where networks are going, a common
understanding of customer needs and a common culture of
technical excellence. All of this leads me to one
conclusion: the future of our combined company is a bright
one.
I look forward to sharing in that future with this
incredibly talented team. I know you will bring the same
innovative spirit, technical excellence and integrity that
have always defined us to this next chapter of our story.
I will be in Paris on Monday co-hosting events for the
media and analyst communities. In my absence, Frank
D'Amelio will host a webcast on Monday at 1:30 p.m. Eastern
time to provide further details on the transaction. I will
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be back in New Jersey Tuesday morning to host an All-
Employee Broadcast, and I look forward to speaking with you
and answering your questions about this transaction.
Sincerely,
Pat
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[To read Lucent's Safe Harbor for Forward Looking
Statements, cut and paste the following URL in its entirety
into your browser:
HTTP://MYLUCENT.APP.LUCENT.COM/PLS/PORTAL30/DOCS/FOLDER/CONT_PR/WTS/SAFE.HTML
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Lucent Technologies Today is published by Lucent PR for
the people of Lucent. It is not intended for external
audiences.
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SAFE HARBOR FOR FORWARD LOOKING STATEMENTS AND OTHER IMPORTANT INFORMATION:
This communication contains statements regarding the proposed transaction
between Lucent and Alcatel, the expected timetable for completing the
transaction, future financial and operating results, benefits and synergies of
the proposed transaction and other statements about Lucent and Alcatel's
managements' future expectations, beliefs, goals, plans or prospects that are
based on current expectations, estimates, forecasts and projections about Lucent
and Alcatel and the combined company, as well as Lucent's and Alcatel's and the
combined company's future performance and the industries in which Lucent and
Alcatel operate and the combined company will operate, in addition to
managements' assumptions. These statements constitute forward-looking statements
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Words such as "expects," "anticipates," "targets," "goals," "projects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking statements
which are not statements of historical facts. These forward-looking statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to assess. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements. These risks and uncertainties
are based upon a number of important factors including, among others: the
ability to consummate the proposed transaction; difficulties and delays in
obtaining regulatory approvals for the proposed transaction; difficulties and
delays in achieving synergies and cost savings; potential difficulties in
meeting conditions set forth in the definitive merger agreement entered into by
Lucent and Alcatel; fluctuations in the telecommunications market; the pricing,
cost and other risks inherent in long-term sales agreements; exposure to the
credit risk of customers; reliance on a limited number of contract manufacturers
to supply products we sell; the social, political and economic risks of our
respective global operations; the costs and risks associated with pension and
postretirement benefit obligations; the complexity of products sold; changes to
existing regulations or technical standards; existing and future litigation;
difficulties and costs in protecting intellectual property rights and exposure
to infringement claims by others; and compliance with environmental, health and
safety laws. For a more complete list and description of such risks and
uncertainties, refer to Lucent's Form 10-K for the year ended September 30, 2005
and Alcatel's Form 20-F for the year ended December 31, 2005 as well as other
filings by Lucent and Alcatel with the US Securities and Exchange Commission.
Except as required under the US federal securities laws and the rules and
regulations of the US Securities and Exchange Commission, Lucent and Alcatel
disclaim any intention or obligation to update any forward-looking statements
after the distribution of this communication, whether as a result of new
information, future events, developments, changes in assumptions or otherwise.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
In connection with the proposed transaction, Alcatel and Lucent intend to file
relevant materials with the Securities and Exchange Commission (the "SEC"),
including the filing by Alcatel with the SEC of a Registration Statement on Form
F-6 and a Registration Statement on Form F-4 (collectively, the "Registration
Statements"), which will include a preliminary prospectus and related materials
to register the Alcatel American Depositary Shares ("ADS"), as well as the
Alcatel ordinary shares underlying such Alcatel ADSs, to be issued in exchange
for Lucent common shares, and Lucent and Alcatel plan to file with the SEC and
mail to their respective stockholders an Proxy Statement/Prospectus relating to
the proposed transaction. The Registration Statements and the Proxy
Statement/Prospectus will contain important information about Lucent, Alcatel,
the transaction and related matters. Investors and security holders are urged to
read the Registration Statements and the Proxy Statement/Prospectus carefully
when they are available. Investors and security holders will be able to obtain
free copies of the Registration Statements and the Proxy Statement/Prospectus
and other documents filed with the SEC by Lucent and Alcatel through the web
site maintained by the SEC at www.sec.gov. In addition, investors and security
holders will be able to obtain free copies of the Registration Statements and
the Proxy Statement/Prospectus when they become available from Lucent by
contacting Investor Relations at www.lucent.com, by mail to 600 Mountain Avenue,
Murray Hill, New Jersey 07974 or by telephone at 908-582-8500 and from Alcatel
by contacting Investor Relations at www.alcatel.com, by mail to 54, rue La
Boetie, 75008 Paris, France or by telephone at 33-1-40-76-10-10.
Lucent and its directors and executive officers also may be deemed to be
participants in the solicitation of proxies from the stockholders of Lucent in
connection with the transaction described herein. Information regarding the
special interests of these directors and executive officers in the transaction
described herein will be included in the Proxy Statement/Prospectus described
above. Additional information regarding these directors and executive officers
is also included in Lucent's proxy statement for its 2006 Annual Meeting of
Stockholders, which was filed with the SEC on or about January 3, 2006. This
document is available free of charge at the SEC's web site at www.sec.gov and
from Lucent by contacting Investor Relations at www.lucent.com, by mail to 600
Mountain Avenue, Murray Hill, New Jersey 07974 or by telephone at 908-582-8500.
Alcatel and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of Lucent in
connection with the transaction described herein. Information regarding the
special interests of these directors and executive officers in the transaction
described herein will be included in the Proxy Statement/Prospectus described
above. Additional information regarding these directors and executive officers
is also included in Alcatel's Form 20-F filed with the SEC on March 31, 2006.
This document is available free of charge at the SEC's web site at www.sec.gov
and from Alcatel by contacting Investor Relations at www.alcatel.com, by mail to
54, rue La Boetie, 75008 Paris, France or by telephone at 33-1-40-76-10-10.