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Alcatel-Lucent : Alcatel-Lucent posts strong close to 2012



          Alcatel-Lucent : Alcatel-Lucent posts strong close to 2012

        Continued progress in Operational and Financial restructuring

 

  Key numbers for the fourth quarter 2012

·                     Revenues of Euro 4,096 million, up 13.8%
quarter-over-quarter and lower by 1.3% year-over-year on a reported basis

·                     Adjusted^2 gross profit of Euro 1,247 million or 30.4%
of revenues

·                     Adjusted^2 operating income^1 of Euro 117 million or
2.9% of revenues

·                     Published net loss of Euro (1,372) million or Euro
(0.60) per share

·                     Asset impairment charge of Euro (1,408) million

·                     Operating cash-flow^3 of Euro 702 million

·                     Net (debt)/cash of Euro 126 million as of December 31,
2012

 

Key numbers for the year 2012

·                     Revenues of Euro 14,446 million, lower by 5.7%
year-over-year on a reported basis

·                     Adjusted^2 gross profit of Euro 4,347 million or 30.1%
of revenues

·                     Adjusted^2 operating loss^1 of Euro (260) million or
-1.8% of revenues

·                     Published net loss of Euro (1,374) million or Euro
(0.61) per share

·                     Operating cash-flow^3 of Euro 693 million

·                     Net (debt)/cash of Euro 126 million as of December 31,
2012

Paris, February 7, 2013 - Alcatel-Lucent (Euronext Paris and NYSE: ALU) today
announced 2012 full year results in line with its guidance and costs savings
close to Euro 650 million, which is ahead of plan, and, in the fourth quarter
of 2012, a free cash-flow of Euro 355 million with an adjusted operating
margin of 2.9%.

 

Ben Verwaayen, CEO Alcatel-Lucent, commented: "Our fourth quarter reflects the
early progress of The Performance Program announced last July. We announced
clear choices on where we would operate, how we would operate and where we
would differentiate."

 

"We have seen progress on all these choices, and close 2012 ahead on our cost
reduction plans. We have addressed half of the previously margin-diluting
Managed Services contracts, and show continued and strong growth in IP and
Next Generation Wireless. We can see a clear statement of customer confidence
through growth in both our order book and backlog."

 

"In addition, we completed a Euro 2 billion financing which enables us to
extend our near-term maturities, stabilizes our balance sheet and provides us
with the flexibility to finalize The Performance Program."

 

"Using assumptions consistent with those disclosed in the documentation of our
secured loan, we performed our annual impairment test and booked a non cash
charge of Euro 1.4 billion related to the depreciation of goodwill and fixed
assets, and the corresponding impact on deferred tax."

 

Mr Verwaayen added: "Through 2013 we will remain focused on completing The
Performance Program. We will deploy our resources to customer relationships
where we are a true partner and in product areas where we can drive an
economic return for our shareholders."

 

 

 

 

 

MAIN POINTS

Fourth quarter revenue increased 13.8% sequentially and decreased -1.3%
year-over-year to Euro 4,096 million. At constant currency exchange rates and
perimeter, revenues increased 16.2% sequentially and decreased 3.9%
year-over-year. In the quarter, Networks witnessed a mid single-digit decline
year-over-year, a substantially lower rate than in the first three quarters of
the year. The IP business continued its growth trajectory, posting a
double-digit increase and its highest revenues level ever, while Wireless
stabilized after four quarters of double digit declines, driven by US service
providers stronger spending. Our Optics business declined at a double digit
rate, driven by muted spending in terrestrial and low point in submarine.
Resulting from a high comparison basis, our Wireline business declined at a
low double digit rate in the fourth quarter. The Software, Services &
Solutions (S3) segment shifted to positive territory, benefitting from Network
Applications' strong performance. Finally, our Enterprise segment posted a mid
single-digit decline. From a geographic standpoint, also adjusted for constant
currency and compared to the year ago period, North America posted a 10%
growth rate. Mixed trends in Asia Pacific resulted in a low double-digit
decline, traction in Japan being offset by continued low activity in China.
Cautious spending persisted in Europe, which also declined at a low
double-digit rate. Rest of world was resilient, driven by continuous traction
in Brazil and by Middle East and Africa, which returned back to growth after
several quarters of decline.

 

Adjusted^2 operating^1 income of Euro 117 million or 2.9% of revenue. Gross
margin came in at 30.4% of revenue for the quarter, compared to 34.4% in the
year ago quarter and 27.9% in the third quarter 2012. The year-over-year
decline in gross margin mainly results from unfavorable product and business
mix. The sequential increase in gross margin mainly results from higher
volumes and product and customer mix, especially in our S3 segment. Operating
expenses decreased 1.7% year-over-year on a reported basis and adjusted for
constant currency decreased 3.7% year-over-year, reflecting results of our
actions to streamline our cost structure, strongly focusing on SG&A expenses
(decreasing 7.8% year-over-year on a reported basis and adjusted for constant
currency decreased 10.1%). On a sequential basis, operating expenses were flat
as reported and slightly increased 1.5% at constant currency, driven by an
increase in R&D (+2.3% quarter-over-quarter when adjusted for constant
currency).

 

Fourth quarter reported net loss (group share) of Euro (1,372) million or Euro
(0.60) per share. This includes restructuring charges of Euro (247) million, a
post-retirement benefit plan amendment gain of Euro 169 million, a net
financial gain of Euro 97 million, an impairment charge of Euro (894) million
resulting from the impairment test review of our assets carried out at the end
of the fourth quarter 2012, using assumptions consistent with those disclosed
in the documentation of our credit facilities. It also includes a decrease of
Euro (514) million of recognized deferred tax based on assumptions consistent
with those used for the annual goodwill impairment test.

The reported net loss (group share) also includes Purchase Price Adjustments
(PPA entries in relation to the Lucent business combination) of Euro (255)
million pre-tax or Euro (163) million after tax.

 

Net (debt)/cash of Euro 126 million, versus Euro (84) million of net cash as
of September 30, 2012. The sequential increase in net cash of Euro 210 million
primarily reflects a positive operating cash-flow of Euro 702 million,
interest paid of Euro (6) million, taxes paid of Euro (8) million,
restructuring cash outlays of Euro (85) million, contribution to pensions and
OPEB of Euro (62) million and capital expenditures of Euro (186) million. The
positive operating cash-flow of Euro 702 million results from an adjusted
operating income of Euro 117 million and from a strong positive contribution
from the operating working capital requirements of Euro 259 million. The level
of receivables sold without recourse amounted to Euro 1,111 million, compared
to Euro 958 million as of September 30, 2012.

 

Funded status of Pensions and OPEB of Euro (1,308) million at end of December,
compared to Euro
 (1,961) million as of September 30, 2012. Excluding currency impact, this
deficit narrowing mainly results from a decrease of our benefit obligations of
Euro 172 million, due to updates in actuarial assumptions used for pensions
and post-retirement healthcare plans (including discount rates), from an
actual return of the plan assets for Euro 492 million, and from a one-time
credit of Euro 169 million related to plan amendments (of which Euro 131
million related to the option proposed in the second half of 2012 to deferred
vested participants of U.S. pension plans to elect a lump sum payment rather
than a pension payment). These effects were partially offset by Euro (253)
million of interest cost. The net effect of currency change was negligible on
the funded status this quarter.

Alcatel-Lucent reminds that according to the regulatory perspective - which
determines the funding requirements- and to preliminary assessment of the
company' US plans, no extra funding contribution will be required through at
least 2016.

 

On January 30, 2013 we closed our Senior Secured Credit Facilities
transaction. Following very strong demand from investors during the
syndication process managed by Credit Suisse AG and Goldman Sachs Bank USA, we
upsized the credit facilities to around Euro 2 billion from Euro 1.6 billion
with an average decrease in pricing across the three facilities of
approximately 90 basis points and a decrease in original issue discount of 150
basis points across the facilities. The financial covenant has been removed
and call protection on the term loan tranches has been reduced.

The proceeds will be used for the refinancing of certain existing indebtedness
and for working capital and general corporate purposes.

In connection with the transaction, existing unsecured revolving credit
facility has been terminated.

 

The Board has recommended not to pay a dividend for fiscal year 2012.

 

 

Reported RESULTS

 

In the fourth quarter, the reported net loss (group share) was Euro (1,372)
million or Euro (0.60) per diluted share (USD (0.80) per ADS) including the
negative after tax impact from Purchase Price Allocation entries of Euro (163)
million.

 

 

Reported                                          %                       %
Profit & Loss  Fourth  Fourth  % change  Third  change  Full    Full   change
Statement      quarter quarter  y-o-y   quarter q-o-q   Year    Year    y-o-y
(In Euro
million except                  (% or           (% or                   (% or
for EPS)        2012    2011     pt)     2012    pt)    2012    2011     pt)
Revenues        4,096   4,150   -1.3%    3,599  13.8%  14,446  15,327   -5.7%
Gross profit    1,247   1,428   -12.7%   1,004  24.2%   4,347   5,360  -18.9%
in % of
revenues        30.4%   34.4%  -4.0 pt   27.9%  2.5 pt  30.1%   35.0%  -4.9 pt
Operating
income /
(loss)(1)        66      210      Nm     (181)    Nm    (490)    251     Nm
in % of
revenues        1.6%    5.1%   -3.5 pt   -5.0%  6.6 pt  -3.4%   1.6%   -5.0 pt
Net income
(loss) (Group
share)         (1,372)   868      Nm     (146)    Nm   (1,374)  1,095    Nm
EPS diluted
(in Euro)      (0.60)   0.29      Nm    (0.06)    Nm   (0.61)   0.42     Nm
E/ADS* diluted
(in USD)       (0.80)   0.38      Nm    (0.08)    Nm   (0.80)   0.55     Nm
Number of
diluted shares
(million)      2,268.4 3,089.6  -26.6%  2,268.4  0.0%  2,268.1 2,865.9 -20.9%

 

*E/ADS calculated using the US Federal Reserve Bank of New York noon
Euro/dollar buying rate of USD 1.3186 as of December 31, 2012; 1.2973 as of
December 30, 2011 and USD 1.2856 as of September 30, 2012.

 

adjusted results

 

In addition to the reported results, Alcatel-Lucent is providing adjusted
results in order to provide meaningful comparable information, which exclude
the main non-cash impacts from Purchase Price Allocation (PPA) entries in
relation to the Lucent business combination. The fourth quarter 2012
adjusted^2 net loss (group share) was Euro (1,209) million or Euro (0.53) per
diluted share (USD (0.70) per ADS), which includes restructuring charges of
Euro (247) million, an impairment of assets charge of Euro (690) million, a
post-retirement benefit plan amendment gain of Euro 169 million, a net
financial gain of Euro 97 million, an adjusted tax charge of Euro (733)
million mainly related to the decrease of recognized deferred tax assets, and
non-controlling interest charge of Euro (60) million.

 

 

Adjusted
Profit &                         %               %                        %
Loss         Fourth   Fourth  change   Third   change   Full     Full   change
Statement   quarter  quarter   y-o-y  quarter  q-o-q    Year     Year   y-o-y
(In Euro
million
except for                     (% or           (% or                    (% or
EPS)          2012     2011     pt)     2012    pt)     2012     2011    pt)
Revenues     4,096    4,150    -1.3%   3,599   13.8%   14,446   15,327  -5.7%
Gross
profit       1,247    1,428   -12.7%   1,004   24.2%   4,347    5,360   -18.9%
in % of                                                                  -4.9
revenues     30.4%    34.4%   -4.0 pt  27.9%   2.5 pt  30.1%    35.0%     pt
Operating
income /
(loss)(1)     117      279      Nm     (125)     Nm    (260)     519      Nm
in % of                                                                  -5.2
revenues      2.9%     6.7%   -3.8 pt  -3.5%   6.4 pt  -1.8%     3.4%     pt
Net income
(loss)
(Group
share)      (1,209)    910      Nm     (112)     Nm   (1,102)   1,259     Nm
EPS diluted
(in Euro)    (0.53)    0.30     Nm     (0.05)    Nm    (0.49)    0.48     Nm
E/ADS*
diluted (in
USD)         (0.70)    0.39     Nm     (0.06)    Nm    (0.64)    0.62     Nm
Number of
diluted
shares
(million)   2,268.4  3,089.6  -26.6%  2,268.4   0.0%  2,268.1  2,865.9  -20.9%

 

*E/ADS calculated using the US Federal Reserve Bank of New York noon
Euro/dollar buying rate of USD 1.3186 as of December 31, 2012; 1.2973 as of
December 30, 2011 and USD 1.2856 as of September 30, 2012.

 

 

Key figures

 

 

Geographic                                                                %
breakdown      Fourth  Fourth  % change  Third  % change  Full   Full  change
of revenues    quarter quarter  y-o-y   quarter  q-o-q    Year   Year   y-o-y
(In Euro                        (% or            (% or                  (% or
million)        2012    2011     pt)     2012     pt)     2012   2011    pt)
North America   1,602   1,409   13.7%    1,459    9.8%   5,800  5,887   -1.5%
Asia Pacific     714     775    -7.9%     680     5.0%   2,510  2,642   -5.0%
Europe          1,110   1,276   -13.0%    893    24.3%   3,804  4,550  -16.4%
RoW              670     690    -2.9%     567    18.2%   2,332  2,248   3.7%
Total group
revenues        4,096   4,150   -1.3%    3,599   13.8%   14,446 15,327  -5.7%

 

 

                                   %                                      %
Group breakdown Fourth  Fourth  change   Third  % change  Full   Full  change
of revenues     quarter quarter  y-o-y  quarter  q-o-q    Year   Year   y-o-y
(In Euro                         (% or           (% or                  (% or
million)         2012    2011     pt)    2012     pt)     2012   2011    pt)
Networks         2,421   2,476   -2.2%   2,187   10.7%   8,819  9,654   -8.6%
 - o/w IP         574     454    26.4%    490    17.1%   1,968  1,585   24.2%
 - o/w Optics     565     724   -22.0%    480    17.7%   2,076  2,605  -20.3%
 - o/w Wireless   913     893    2.2%     837     9.1%   3,415  4,122  -17.2%
 - o/w Wireline   388     419    -7.4%    389    -0.3%   1,409  1,393   1.1%
 - o/w
eliminations     (19)    (14)     Nm      (9)      Nm     (49)   (51)    Nm
Software,
Services &
Solutions        1,387   1,315   5.5%    1,155   20.1%   4,564  4,461   2.3%
- o/w Services   1,147   1,158   -0.9%   1,058    8.4%   4,034  3,963   1.8%
- o/w Network
Applications      240     157    52.9%    97    ca.2,5x   530    498    6.4%
 Enterprise       207     215    -3.7%    188    10.1%    764    822    -7.1%
Other &
eliminations      81      144     Nm      69       Nm     299    390     Nm
Total group
revenues         4,096   4,150   -1.3%   3,599   13.8%   14,446 15,327  -5.7%

 

 

 

Breakdown of                                                              %
group            Fourth  Fourth  % change  Third  % change  Full  Full change
operating income
(1) (loss)       quarter quarter  y-o-y   quarter  q-o-q    Year  Year  y-o-y
(in Euro                          (% or            (% or                (% or
million)          2012    2011     pt)     2012     pt)     2012  2011   pt)
Networks          (103)    82       Nm     (149)     Nm    (452)  263    Nm
In % of revenues  -4.3%   3.3%   -7.6 pt   -6.8%   2.5 pt  -5.1%  2.7% -7.8 pt
Software,
Services &
Solutions          235     170    38.2%     55     ca.4x    297   227   30.8%
In % of revenues  16.9%   12.9%   4.0 pt   4.8%   12.1 pt   6.5%  5.1% 1.4 pt
Enterprise          8      11       Nm      (7)      Nm     (12)   25    Nm
In % of revenues  3.9%    5.1%   -1.2 pt   -3.7%   7.6 pt  -1.6%  3.0% -4.6 pt
Other &
eliminations      (23)     16       Nm     (24)      Nm     (93)   4     Nm
Total group op.
income (loss)      117     279      Nm    (125 )     Nm    (260 ) 519    Nm
In % of revenues  2.9%    6.7%   -3.8 pt   -3.5%   6.4 pt  -1.8%  3.4% -5.2 pt

 

 

 

 

 

                                Fourth     Third    Fourth      Full    Full
Cash Flow highlights            quarter   quarter   quarter     Year    Year
(In Euro million )               2012      2012      2011       2012    2011
Net (debt)/cash at beginning
of period                        (84)       236      (620)      (31)     362
Adjusted operating income /
(loss)                            117      (125)      279       (260)    519
Depreciation & Amort and
adjusted OP non cash (1)          245       239       129        903     738
Op. Cash Flow before change in
WCR*                              362       114       408        643    1,257
Change in operating  WCR          259       14        289        346    (200)
Change in other working
capital (2)                       81       (121)      108       (296)   (135)
Operating Cash Flow (3)           702        7        805        693     922
Interest                          (6)      (88)      (12)       (203)   (253)
Taxes                             (8)      (12)        2        (57)    (55)
Cash contribution to pension &
OPEB                             (62)      (31)      (44)       (190)   (185)
Restructuring cash outlays       (85)      (93)      (83)       (340)   (344)
Cash flow from operating
activities                        541      (217)      668       (97)     85
Capital expenditures (incl.
R&D cap.)                        (186)     (143)     (163)      (582)   (558)
Free Cash Flow                    355      (360)      505       (679)   (473)
Discontinued, Cash from
financing & Forex                (145)      40        84         836     80
Change in net(debt)/cash
position                          210      (320)      589        157    (393)
Net (debt)/cash at end of
period                            126      (84)      (31)        126    (31)
* Before changes in working capital, interest/tax paid, restructuring cash
outlay and pension & OPEB cash outlay
1) non cash items included in adjusted OP.
2) Changes in other working capital and cash impacts of P&L items below
adjusted OP.

 

 

Statement of position - Assets         December 31, September 30, December 31,
(In Euro million)                          2012         2012          2011
Total non-current assets                  10,709       12,830        12,974
   of which Goodwill & intangible
assets, net                               4,995         5,951        6,163
   of which Prepaid pension costs         2,797         3,261        2,765
   of which Other non-current assets      2,917         3,618        4,046
Total current assets                      10,656       10,741        11,229
   of which OWC assets                    4,855         5,189        5,448
   of which other current assets           872           847         1,308
   of which marketable securities,
cash & cash equivalents                   4,929         4,705        4,473
Total assets                              21,365       23,571        24,203
                                                                        
Statement of position - Liabilities
and equity                             December 31, September 30, December 31,
(In Euro million)                          2012         2012          2011
Total equity                              2,691         4,175        4,601
   of which attributable to the equity
owners of the parent                      1,946         3,349        3,854
   of which non controlling interests      745           826          747
Total non-current liabilities             10,350       11,352        11,224
   of which pensions and other
post-retirement benefits                  5,330         6,187        5,706
   of which long term debt                3,954         3,964        4,290
   of which other non-current
liabilities                               1,066         1,201        1,228
Total current liabilities                 8,324         8,044        8,378
   of which provisions                    1,649         1,466        1,579
   of which short term debt                857           814          329
   of which OWC liabilities               4,447         4,451        4,482
   of which other current liabilities     1,371         1,313        1,988
Total liabilities and shareholder's
equity                                    21,365       23,571        24,203

 

 

 

BUSINESS COMMENTARY

 

NETWORKS

For the fourth quarter 2012, revenues for the Networks segment were Euro 2,421
million, a decrease of 2.2% compared to Euro 2,476  million in the year-ago
quarter and a 10.7% increase compared to Euro 2,187 million in the third
quarter 2012. At constant currency exchange rates, Networks revenues decreased
5.0% year-over-year and increased 13.2% sequentially. The segment posted an
adjusted^2 operating^1 loss of Euro (103) million or an operating margin of
-4.3%, compared to an adjusted^2 operating^1 income of Euro 82 million or a
margin of 3.3% in the year ago period.

 

Key highlights:

·                     Revenues for the IP division reached their highest level
ever at Euro 574 million, increasing 26.4% from the year ago quarter. Growth
was driven by continuous progression in the Americas and by our breakthroughs
in Japan and China, which drove the Asia-Pacific region to witness a record
quarter in IP revenues, above Euro 100 million. Looking at full year 2012, the
IP division sales increased 24.2%, marking a year of growth acceleration
compared to 2011. Meeting the growing demand for all-IP network transformation
and mobile backhaul, our IP routers have now been selected by more than 500
customers worldwide. Indonesia's Indosat or Airtel Africa for their mobile
backhaul are two examples of the most recent wins. Strengthening our mobile
backhaul offering, we also announced the expansion of our portfolio to offer
service providers a cost-effective approach to deliver backhaul services
across a variety of wireless cell types, now including small cells. The strong
traction of the 7950 XRS core router has already translated into 6 wins,
including Telefonica to upgrade their IP networks initially in Argentina and
the Czech Republic, and into more than 20 trials.

·                     Revenues for the Optics division were Euro 565 million,
a decrease of 22.0% from the year-ago quarter. Against the secular decline of
legacy optics, persisting throughout the year at around -30%, our WDM
portfolio has slowed down its pace of decline, from -14% in first half 2012 to
almost flat in second half 2012, and now representing more than half of our
terrestrial optics revenues. The traction of our next generation solution is
highlighted by its WDM flagship product, the 1830 Photonic Service Switch
(PSS): in 2012, it represented 24% of terrestrial optics revenues, close to
double compared to the previous year. The relative share of 100G shipments has
also witnessed a strong increase, from 5% in 2011 to 12% in 2012 and we are
ranked #1 in 100G ports shipped to date, with 29% market share (source:
Dell'Oro) and 85 customers in 45 countries. Going forward, 1830 platform and
100G will be the key drivers for the recovery of terrestrial optics. In our
submarine business, our order book grew this quarter, and we recently
announced 5 wins, from upgrades, such as the trans-Pacific system between
Japan and California, to turnkey deployments, like 100G Pacific Caribbean
Cable System (PCCS), which will link Florida to Ecuador and a number of other
countries.

·                     Revenues for the Wireless division stabilized to Euro
913 million, an increase of 2.2% from the year-ago quarter, after four
straight quarters of double-digit declines. Looking at the full year 2012, the
transition from 2G/3G to 4G in North America and an overall continued
cautiousness in the rest of the world has led to a 35% decline of our legacy
technologies, partially offset by a healthy LTE growth. In the fourth quarter,
our 4G LTE business, driven by stronger spending by US service providers,
marked its highest quarter of revenues ever and the quality of our solution is
again demonstrated through our selection by Oi in Brazil, by Rio Tinto in
Western Australia, and by several African operators such as Smile in Tanzania
and Uganda. Service providers see an increasing need to use small cells to
boost coverage and capacity. Our lightRadio Metro Cells are currently in
trials with major service providers, and was used by Telstra to provide
additional coverage during Australia's Melbourne Cup. We also announced that
Taiwan-based Askey Computer Corporation will license our residential small
cell software to enable development of products to enhance the quality and
speed of 3G services within homes.

·                     Revenues in 2012 marked the first full year of growth of
our Wireline business since the merger of Alcatel and Lucent, driven by fiber
roll-outs for nationwide broadband initiatives. In the fourth quarter,
resulting from a higher comparison base, wireline sales declined 7.4% from
their year-ago level to Euro 388 million. The IPDSLAM business was slightly
declining, offset by the fiber business slightly growing, driven by the
Americas. We shipped close to 1 million GPON ports and on the backdrop of the
copper networks revitalization, our Vectoring solution continued its success
in the market, with nine commercial contracts to-date and more than 40 trials
around the world. Simultaneous traction in both fiber and copper technologies
is reflected in the diversity of our recently announced wins: while Turk
Telekom deployed our VDSL2 solution for HD-TV services, Bristol Tennessee
Essential Services (BTES) in the US rolled our 1 Gigabit broadband services
using our GPON technology and Tunisiana selected both our GPON and VDSL2
products.

·                     Sales of our High Leverage Networks (HLN) products
increased 7% from the year-ago quarter, reaching Euro 1,281 million in the
fourth quarter 2012. At constant currency rates, HLN sales increased 5%
compared to the year ago quarter. This accounts for 53% of Networks sales,
compared to 48% a year-ago. Full year next-generation Networks products
revenues increased 16% in 2012 compared to the prior year.

·                     The decline in adjusted operating margin from the
year-ago quarter was largely due to product and geographic mix, especially in
wireless.

 

S3 (Software, Services and Solutions)

For the fourth quarter 2012, revenues for the S3 segment were Euro 1,387
million, an increase of 5.5% compared to Euro 1,315 million in the year-ago
quarter and an increase of 20.1% compared to Euro 1,155  million in the third
quarter 2012. At constant currency exchange rates, S3 revenues increased 3.0%
year-over-year and increased 22.5% sequentially. The segment posted an
adjusted^2 operating^1 income of Euro 235 million or 16.9% of revenues,
compared to an adjusted^2 operating^1 income of Euro 170 million or a margin
of 12.9% in the year ago quarter.

 

Key highlights:

·                     Revenues in our Services business were Euro 1,147
million, a 0.9% decrease compared to the year-ago quarter. Reflecting our
initiative to review and restructure our Managed Services business, sales have
slowed down from double-digit growth in the first half of 2012 to a low
single-digit decline in the fourth quarter. As of the end of 2012, we have
addressed half of the margin dilutive contracts while continuing to look for
new opportunities which carry higher value-added content. As an example, we
were recently selected by Reliance Communications in India, for an end-to-end
network managed services contract that extends our existing relationship with
the service provider for over USD 1 billion over 8 years and includes advanced
real-time optimization tools to improve network performance across their
wireless, wireline, long-distance, fiber and utilities functions, and the
streamlining of their operations. Our Professional Services business continued
previous quarter trends, growing at a double-digit rate, driven by an increase
in strategic industry projects, particularly in the EMEA and APAC regions. Our
maintenance revenues were resilient in the fourth quarter, led by strength in
the Americas, slightly offset by other regions. Network Build & Implementation
(NBI) returned to growth, mainly driven by 4G wireless rollouts in North
America.

·                     Network Applications revenues increased 52.9% from their
year-ago level, to Euro 240 million in the fourth quarter, leading to an
overall full year growth of 6.4%. Most notably in the fourth quarter, two
segments showed strong growth compared to the year-ago quarter, driven by the
completion of projects in the Americas that were launched earlier in the year:
both Subscriber Data Management and IMS Voice over LTE system benefitted from
the migration to LTE in North America. This highlights the significant market
opportunities in those activities going forward. Traction for our Customer
Experience Solutions business (CxS) (formerly Motive) continued as revenues
grew at a high single digit rate in 2012. In the fourth quarter, we were
selected by BT to upgrade its suite of Motive Customer Experience Solutions
with the latest software and will deploy the new Motive Data Collection
Manager (DCM), which is used to track the performance of communication devices
in peoples' homes. Elsewhere across our Network Applications portfolio,
Indonesia's Telkomsel selected our Proactive Services to identify and optimize
network performance to improve service quality, monitor network performance
and ensure network reliability. We also announced that our Cloudband(TM)
carrier cloud management solution now supports an expanded array of open
source cloud computing software as well as networking equipment from leading
technology vendors. 

·                     Our "Strategic Industries" Services business (including
transportation, energy, and the public sector) had strong growth in the
quarter, driven by APAC and EMEA regions, both increasing in the double digit
range compared to the year-ago quarter. During the fourth quarter, we
introduced new network technology that will allow utility companies to make
power distribution across an entire smart-grid - from power generation through
to customer delivery, utilizing our Internet routing technology.

·                     The adjusted operating margin of our S3 business
substantially improved compared to the year ago quarter. This was driven by a
decrease in our fixed costs, significant improvements in our Managed Services
activity and product mix in our Network Applications businesses.

 

 

 

 

Enterprise

For the fourth quarter of 2012, revenues in our Enterprise business were Euro
207 million, a decrease of 3.7% compared to Euro 215 million in the year-ago
quarter and an increase of 10.1% compared to Euro 188 million in the third
quarter 2012. At constant currency exchange rates, our Enterprise business
declined 4.7% compared to the year-ago quarter and increased 10.6%
sequentially. The segment posted an adjusted^2 operating^1 income of Euro 8
million or 3.9% of revenues, compared to an adjusted^2 operating^1 income of
Euro 11 million or a margin of 5.1% in the year ago quarter.

Key highlights:

·                     Revenues from our Enterprise business decreased 3.7% in
the fourth quarter with a stabilization in orders. From a regional
perspective, we saw declines in Europe that were partially compensated by
growth in Asia Pacific. In the fourth quarter, we continued our success in the
sector of education, with new wins in emerging countries, and in the
datacenter sector. We continue to see a global ramp-up of our innovations with
OpenTouch, now with more than 200 clients using our platform and an
accelerating portion of multimedia users. In the quarter, CandIT Media, a
digital media solutions company in Belgium, selected our application fluent
approach, using our OmniSwitch 6900 to create a "content aware" digital
network to support large traffic peaks specific to media flows.

·                     The year-over-year slight decline in the adjusted
operating margin of the Enterprise business was driven by lower volumes and
product mix despite a moderate decrease in operating expenses in the fourth
quarter.

 

 

 

Alcatel-Lucent will host a press and analyst conference at its headquarters at
1 p.m. CET which can be followed through audio webcast at
http://www.alcatel-lucent.com/4q2012

 

 

 

 

                           -----------------------

 

Notes

The Board of Directors of Alcatel-Lucent met on February 6, 2013, examined the
Group's consolidated financial statements at December 31, 2012, and authorized
their issuance.

All reported figures are currently being audited. All adjusted figures are
unaudited. Consolidated Financial Statements available on our website
http://www.alcatel-lucent.com/4q2012

1-        Operating income (loss) is the Income (loss) from operating
activities before restructuring costs, litigations, impairment of assets, gain
(loss) on disposal of consolidated entities and post-retirement benefit plan
amendments.

2-        "Adjusted" refers to the fact that it excludes the main impacts from
Lucent's purchase price allocation.

3-        "Operating cash-flow" is defined as cash-flow after changes in
working capital and before interest/tax paid, restructuring cash outlay and
pension & OPEB cash outlay. 2011 figures have been re-presented following the
change of presentation disclosed in Note 4 of the consolidated financial
statements.

 

2013 Upcoming events

April 26, 2013: First quarter 2013 results

 

 

 

ABOUT ALCATEL-LUCENT (EURONEXT PARIS AND NYSE: ALU)

The long-trusted  partner of  service providers,  enterprises and  governments 
around the  world, Alcatel-Lucent  is  a leading  innovator  in the  field  of 
networking and communications technology,  products and services. The  company 
is  home  to  Bell  Labs,  one  of  the  world's  foremost  research  centers, 
responsible  for   breakthroughs  that   have   shaped  the   networking   and 
communications industry.

 

Alcatel-Lucent  innovations   are   regularly  recognized   by   international 
institutions for their positive impact on society. In 2012 and for the  second 
year running, Alcatel-Lucent  was named  one of  the Thomson  Reuters Top  100 
Global Innovators, recognition  for the  company's continued  addition to  its 
world-class patent  portfolio, one  of the  largest in  the telecom  industry. 
Alcatel-Lucent has also been  recognized for its sustainability  performance.  
In 2012 the company was ranked Technology Supersector Leader by the Dow  Jones 
Sustainability  Index.  Through  its  innovations,  Alcatel-Lucent  is  making 
communications more sustainable,  more affordable  and more  accessible as  we 
pursue our mission of Realizing the Potential of a Connected World.

 

With operations throughout the world,  Alcatel-Lucent is a local partner  with 
global reach. The Company achieved revenues  of Euro 14.4 billion in 2012  and 
is incorporated in France and headquartered in Paris..

 

For more information, visit Alcatel-Lucent on:  http://www.alcatel-lucent.com, 
read     the     latest     posts      on     the     Alcatel-Lucent      blog 
http://www.alcatel-lucent.com/blog  and   follow  the   Company  on   Twitter: 
http://twitter.com/Alcatel_Lucent.

Alcatel-Lucent Press Contacts

SIMON                                            POULTER                       
simon.poulter@alcatel-lucent.com              T : +33 (0)1 40 76 50 84

VALERIE                       LA                       GAMBA                   
valerie.la_gamba@alcatel-lucent.com           T : + 33 (0)1 40 76 49 91

           

ALCATEL-LUCENT INVESTOR RELATIONS

FRANK                                            MACCARY                       
frank.maccary@alcatel-lucent.com                T : + 33 (0)1 40 76 12 11

TOM                                             BEVILACQUA                     
thomas.bevilacqua@alcatel-lucent.com          T : + 1 908-582-7998

CORALIE                                            SPAETER                     
coralie.spaeter@alcatel-lucent.com               T : +33 (0)1 40 76 49 08

 

 

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS

Except for historical information, all other information in this presentation
consists of forward-looking statements within the meaning of the US Private
Securities Litigation Reform Act of 1995, as amended. These forward looking
statements include statements regarding the future financial and operating
results of Alcatel-Lucent, such as for example "2015 target: 6% -9% adjusted
operating profit margin", "2015 : ~+1.5% CAGR (compound annual growth rate)",
"2015: 35% - 37% of gross margin" and "2015: significant decrease in SG&A -
25.5% - 29% decrease as % of sales". Words such as "will," "expects," "looks
to," "anticipates," "targets," "projects," "intends," "guidance", "maintain",
"plans," "believes," "estimates," "aim," "goal," "outlook," "momentum,"
"continue," "reach," "confident in," "objective," 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 guaranties of future performance and involve certain risks,
uncertainties and assumptions that are difficult to assess, including broad
trends not within our control such as the economic climate in the world, and
in particular in those geographical areas where we are most active. Therefore,
actual outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements, in particular with regard to
product demand being as expected, of which a continued significant growth in
some of our activities such as IP, our ability to obtain the price we
estimated by a given date for those activities we want to divest, or to
achieve all the goals of our Performance Program,  including headcount
reduction, site rationalization, and to exit unprofitable contracts and market
at a reasonable cost. These risks and uncertainties are also based upon a
number of factors including, among others, our ability to realize the full
value of our existing and future intellectual property portfolio in a complex
technological environment (including defending ourselves in infringement suits
and licensing on a profitable basis our patent portfolio), our ability to
operate effectively in a highly competitive industry and to correctly identify
and invest in the technologies that become commercially accepted, demand for
our legacy products and the technologies we pioneer, the timing and volume of
network roll-outs and/or product introductions, difficulties and/or delays in
our ability to execute on our other strategic plans, our ability to
efficiently co-source or outsource certain business processes and more
generally control our costs and expenses, the risks inherent in long-term
sales agreements, exposure to the credit risk of customers or foreign exchange
fluctuations, reliance on a limited number of suppliers for the components we
need, the social, political risks we may encounter in any region of our global
operations, the costs and risks associated with pension and postretirement
benefit obligations and our ability to avoid unexpected contributions to such
plans, changes to existing regulations or technical standards, existing and
future litigation, compliance with environmental, health and safety laws, and
the impact of each of these factors on our results of operations and cash. For
a more complete list and description of such risks and uncertainties, refer to
Alcatel-Lucent's Annual Report on Form 20-F for the year ended December 31,
2011, as well as other filings by Alcatel-Lucent 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,
Alcatel-Lucent disclaims any intention or obligation to update any
forward-looking statements after the distribution of this presentation,
whether as a result of new information, future events, developments, changes
in assumptions or otherwise.

 

Alcatel-Lucent 2012

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the
information contained therein.

Source: Alcatel-Lucent via Thomson Reuters ONE
HUG#1676260
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