Alcatel-Lucent : Alcatel-Lucent announces Q2 2013 Results

          Alcatel-Lucent : Alcatel-Lucent announces Q2 2013 Results

                  Encouraging revenue growth in key segments
            and early progress in implementation of The Shift Plan

                                      

· Revenues of Euro 3,612 million, up 1.9% year-over-year, up 3.7%
year-over-year at constant currency

· Adjusted^2 gross profit of Euro 1,151 million or 31.9% of revenues

· Adjusted^2 operating income^1 of Euro 46 million or 1.3% of revenues

· Asset impairment charge of Euro (552) million

· Free cash-flow of Euro (248) million

· Net (debt)/cash of Euro (794) million as of June 30, 2013

Key numbers for the second quarter 2013





Paris, July 30, 2013 - Alcatel-Lucent (Euronext Paris and NYSE: ALU) has today
announced its second quarter2013 results, reporting year-over-year revenue
increase of 1.9% to Euro 3 612 million with particularly strong growth of more
than 25% in its IP division compared to the same period last year, at constant
exchange rates.

The gross margin was 31.9%, similar to last year and improving compared to
Q1'13 as a result of higher volumes and a more favorable product mix.



Fixed cost savings accelerated in the second quarter to Euro 120 million,
giving confidence in the Group's ability to meet the full-year savings target,
and leading to positive adjusted operating income of Euro 46 million in the
quarter. Free cash-flow was Euro (248) million due, in particular, to a
negative change in working capital requirement and higher restructuring costs.



As part of The Shift Plan, successful action has been taken to re-profile the
debt, and the Group remains open to take advantage of further debt market
opportunities. This is a key part of The Shift Plan. The measures already
implemented mean Alcatel-Lucent has less than Euro 450 million in debt
maturities before 2016.



Commenting on the Q2 results, Michel Combes, CEO Alcatel-Lucent said: "We are
at the beginning of our journey towards 2015 and cash remains a challenge.
Looking ahead, our clear focus will be maintaining a strict and disciplined
approach to implementing The Shift Plan across all of its industrial,
operational and financial dimensions."



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



MAIN POINTS

Second quarter revenue increased 1.9% year-over-year and increased 12.0%
sequentially to
Euro 3,612 million. At constant currency exchange rates and perimeter,
revenues increased 3.7% year-over-year and increased 11.6% sequentially.
Networks & Platforms grew 8% year-over-year with IP growing more than 25%,
Optics reducing its year-over-year decline rate from -15% in the first quarter
to -5% in the second quarter, driven by WDM growth, and Platforms also
witnessing strong performance. To a lower extent, we have seen some traction
in our Fixed networks and Wireless activities, where LTE and vectoring growth
were partially offset by declines in legacy technologies, as well as in
Services, which benefited from networks roll-outs. Focused Businesses declined
at a double-digit rate compared to the year-ago quarter, mainly driven by
Submarine. Finally, the reduction in Managed Services continued, reflecting
our restructuring efforts. From a geographic standpoint, also adjusted for
constant currency and compared to the year ago period, North America, up
nearly 20%, was the key driver for the total Group growth. Asia Pacific
sequentially reduced the pace of its decline between the first quarter and the
second quarter, with weakness in China being partially offset by continuous
good traction in Japan. Western Europe showed encouraging trends in the
quarter, resulting in nearly flat performance, while Eastern Europe declined
at a double digit rate. Middle East and Africa grew 9%, offset by a slowdown
in Central and Latin America, resulting in a 10% rate decline in the rest of
world area.



Adjusted^2 operating^1 income of Euro 46 million or 1.3% of revenue. Gross
margin came in at 31.9% of revenue for the quarter, compared to 31.8% in the
year ago quarter and 29.4% in the first quarter 2013. The sequential increase
in gross margin mainly resulted from higher volumes and favorable product mix.
Operating expenses decreased -4.4% year-over-year on a reported basis and
-4.3% adjusted for constant currency, reflecting results of our actions to
streamline our cost structure, strongly focusing on SG&A expenses (decreasing
-11.9% year-over-year on a reported basis and adjusted for constant currency
decreased -12.7%). On a sequential basis, operating expenses declined at -1.9%
as reported and decreased -3.0% at constant currency, also driven by SG&A
(decreasing -4.3% quarter-over-quarter on a reported basis and decreasing
-5.9% when adjusted for constant currency).

Second quarter reported net loss (group share) of Euro (885) million or Euro
(0.39) per share. This includes restructuring charges of Euro (194) million,
an impairment charge of Euro (552) million resulting from the impairment test
review of our assets carried at the end of the second quarter 2013, using
assumptions consistent with The Shift Plan documentation, and Euro (180)
million of financial loss, which included Euro (108) million of interest
charges, Euro (26) million of net loss on debts repurchased during the quarter
and Euro (24) million of pension and OPEB financial component.

The reported net loss (group share) also includes Purchase Price Adjustments
(PPA entries in relation to the Lucent business combination) of Euro (22)
million pre-tax or Euro (14) million after tax.



Net (debt)/cash of Euro (794) million, versus Euro (358) million of net debt
as of March 31, 2013. The sequential increase in net debt of Euro (436)
million reflects an adjusted operating income of Euro 46 million, which was
more than offset by a negative change in operating working capital requirement
Euro(98) million mainly driven by an increase in inventories, by interest
paid of Euro (58) million, taxes paid of Euro (21) million, restructuring cash
outlays of Euro (114) million, contribution to pensions and OPEB of Euro (49)
million and capital expenditures of Euro (106) million. The level of
receivables sold without recourse increased by Euro 86 million to Euro 1,049
million as of June 30, 2013.

Funded status of Pensions and OPEB of Euro (96) million at end of June,
compared to Euro (422)million as of March 31, 2013. Excluding currency
impact, this deficit narrowing mainly results from a decrease of our benefit
obligations of Euro 1,348 million due to the increase of more than 45 bps in
the discount rates used for pensions and post-retirement healthcare plans, and
from a one-time credit of Euro 36 million related to plan amendments (the
Auxad French supplemental pension plan), both of which were partially offset
by a decline of Euro (858) million of actual return of the plan assets, driven
by the decrease of the bonds portfolio value, and Euro (235) 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.

                                      

Issuance of convertible bonds and repurchases of notes and convertible bonds.
Consistent with The Shift Plan, we reprofiled part of our 2014 to 2016
maturities as follows:

  o

- Between April and July, we made cash tender offers for the repurchase
and cancellation of notes and bonds maturing between 2014 and 2016 for a total
cash amount paid of Euro 1,242million (excluding accrued interest),
representing an aggregate nominal value of Euro 1,194million;

- In June, we issued a convertible bond (OCEANE), maturing July1, 2018.
It carries a 4.25% annual interest rate and the conversion price is Euro 1.80,
equivalent to a conversion premium of 37%. The proceeds of this offering were
approximately Euro 621million, representing a nominal value of
Euro629million.

Finally, prior to the Shift Plan announcement, we also made an offer to
purchase and cancel outstanding Alcatel-Lucent USA Inc. 2.875% Series B
convertible bonds due June 2025, using U.S.$764million in cash, corresponding
to a nominal value of U.S.$764million, representing approximately 99.8% of
such bonds.

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

Reported RESULTS



In the second quarter, the reported net loss (group share) was Euro (885)
million or Euro (0.39) per diluted share (USD (0.51) per ADS) including the
negative after tax impact from Purchase Price Allocation entries of
Euro (14) million.



Reported Profit & Loss             Second  Second  % change   First  % change
Statement                          quarter quarter   y-o-y   quarter   q-o-q
(In Euro million except for EPS)    2013    2012   (% or pt)  2013   (% or pt)
Revenues                            3,612   3,546    1.9%     3,226    12.0%
Gross profit                        1,151   1,126    2.2%      947     21.5%
in % of revenues                    31.9%   31.8%   0.1 pt    29.4%   2.5 pt
Operating income / (loss)(1)         24     (85)      Nm      (202)     Nm
in % of revenues                    0.7%    -2.4%   3.1 pt    -6.3%   7.0 pt
Net income (loss) (Group share)     (885)   (396)     Nm      (353)     Nm
EPS diluted (in Euro)              (0.39)  (0.17)     Nm     (0.16)     Nm
E/ADS* diluted (in USD)            (0.51)  (0.22)     Nm     (0.20)     Nm
Number of diluted shares (million) 2,271.3 2,268.4   0.1%    2,268.8   0.1%

2012 figures are represented to reflect the impacts of the retrospective
application of IAS 19 revised "Employee Benefits" and IFRS 11 "Joint
Arrangements" (see Note 4 of the consolidated financial statements).

*E/ADS calculated using the US Federal Reserve Bank of New York noon
Euro/dollar buying rate of USD 1.3010 as of June 30, 2013; 1.2668 as of June
30, 2012 and USD 1.2816 as of March 31, 2013.

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 second quarter 2013
adjusted^2 net loss (group share) was Euro (871) million or Euro (0.38) per
diluted share (USD (0.50) per ADS), which includes restructuring charges of
Euro (194) million, an impairment of assets charge of Euro (552) million, a
post-retirement benefit plan amendment gain of Euro 41 million, a net
financial loss of Euro (180) million, an adjusted tax charge of Euro (36)
million, and non-controlling interest charge of Euro 2million.



Adjusted Profit & Loss           Second   Second  % change   First   % change
Statement                       quarter  quarter    y-o-y   quarter    q-o-q
(In Euro million except for
EPS)                              2013     2012   (% or pt)   2013   (% or pt)
Revenues                         3,612    3,546     1.9%     3,226     12.0%
Gross profit                     1,151    1,126     2.2%      947      21.5%
in % of revenues                 31.9%    31.8%    0.1 pt    29.4%    2.5 pt
Operating income / (loss)(1)       46      (30)      Nm      (179)      Nm
in % of revenues                  1.3%    -0.8%    2.1 pt    -5.5%    6.8 pt
Net income (loss) (Group share)  (871)    (363)      Nm      (339)      Nm
EPS diluted (in Euro)            (0.38)   (0.16)     Nm      (0.15)     Nm
E/ADS* diluted (in USD)          (0.50)   -0.20      Nm      (0.19)     Nm
Number of diluted shares
(million)                       2,271.3 2,268.4   0.1%    2,268.8   0.1%

2012 figures are represented to reflect the impacts of the retrospective
application of IAS 19 revised "Employee Benefits" and IFRS 11 "Joint
Arrangements" (see Note 4 of the consolidated financial statements).

*E/ADS calculated using the US Federal Reserve Bank of New York noon
Euro/dollar buying rate of USD 1.3010 as of June 30, 2013; 1.2668 as of June
30, 2012 and USD 1.2816 as of March 31, 2013.

Key figures



2012 figures are represented to reflect the impacts of the retrospective
application of IAS 19 revised "Employee Benefits" and IFRS 11 "Joint
Arrangements" (see Note 4 of the consolidated financial statements).



Geographic breakdown Second  Second  % change   First  % change
of revenues          quarter quarter   y-o-y   quarter   q-o-q
(In Euro million)     2013    2012   (% or pt)  2013   (% or pt)
North America         1,637   1,398    17.1%    1,545    6.0%
Asia Pacific           587     620     -5.3%     467     25.7%
Europe                 878     944     -7.0%     771     13.9%
RoW                    510     584    -12.7%     443     15.1%
Total group revenues  3,612   3,546    1.9%     3,226    12.0%





Group breakdown        Second  second  % change   First  % change
of revenues            quarter quarter   y-o-y   quarter   q-o-q
(In Euro million)       2013    2012   (% or pt)  2013   (% or pt)
Networks and Platforms  3,063   2,891    5.9%     2,713    12.9%
- o/w IP                624     516     20.9%     493     26.6%
- o/w Optics            422     454     -7.0%     342     23.4%
- o/w Wireless         1,010   1,021    -1.1%     966     4.6%
- o/w Fixed Networks    468     453     3.3%      405     15.6%
- o/w Platforms         262     213     23.0%     226     15.9%
- o/w Services          285     233     22.3%     293     -2.7%
- o/w Eliminations      (8)      1       Nm      (12)      Nm
Focused Businesses       272     333    -18.3%     244     11.5%
Managed Services         215     252    -14.7%     204     5.4%
Other and Eliminations   62      70       Nm       65       Nm
Total group revenues    3,612   3,546    1.9%     3,226    12.0%





Breakdown of group            Second  Second  % change   First  % change
operating income (1) (loss)   quarter quarter   y-o-y   quarter   q-o-q
(in Euro million)              2013    2012   (% or pt)  2013   (% or pt)
Networks and Platforms          81      (3)      Nm      (107)     Nm
In % of revenues               2.6%    -0.1%   2.7 pt    -3.9%   6.5 pt
Focused Businesses              19      29       Nm       (9)      Nm
In % of revenues               7.0%    8.7%    -1.7 pt   -3.7%   10.7 pt
Managed Services                (3)    (28)      Nm       (5)      Nm
In % of revenues               -1.4%  -11.1%   9.7 pt    -2.5%   1.1 pt
Other and Eliminations         (51)    (28)      Nm      (58)      Nm
Total group op. income (loss)   46     (30)      Nm      (179)     Nm
In % of revenues               1.3%    -0.8%   2.1 pt    -5.5%   6.8 pt









Cash Flow highlights               Second quarter First quarter Second quarter
(In Euro million)                       2013          2013           2012
Net (debt)/cash at beginning of
period                                 (358)           147           778
Adjusted operating income / (loss)       46           (179)          (30)
Depreciation & Amort and adjusted
OP non cash (1)                         210            181           213
Op. Cash Flow before change in
WCR*                                    256             2            183
Change in operating WCR                 (98)          (72)          (175)
Change in other working capital
(2)                                     (58)          (74)          (191)
Operating Cash Flow (3)                 100           (144)         (183)
Interest                                (58)          (101)          (24)
Taxes                                   (21)          (28)           (38)
Cash contribution to pension &
OPEB                                    (49)          (43)           (55)
Restructuring cash outlays             (114)          (100)          (80)
Cash flow from operating
activities                             (142)          (416)         (380)
Capital expenditures (incl. R&D
cap.)                                  (106)          (117)         (130)
Free Cash Flow                         (248)          (533)         (510)
Discontinued, Cash from financing
& Forex                                (188)           28             1
Change in net(debt)/cash position      (436)          (505)         (509)
Net (debt)/cash at end of period       (794)          (358)          269
* 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                     June 30, March 31, June 30,
(In Euro million)                                    2013     2013      2012
Total non-current assets                            9,989    10,900    12,532
 of which Goodwill & intangible assets, net       4,378     5,065    6,120
 of which Prepaid pension costs                   2,667     2,808    2,798
 of which Other non-current assets                2,944     3,027    3,614
Total current assets                                10,461   11,819    11,447
 of which OWC assets                              4,597     4,611    5,471
 of which other current assets                     931       959      968
 of which marketable securities, cash & cash
equivalents                                         4,933     6,249    5,008
Total assets                                        20,450   22,719    23,979
                                                                   
Statement of position - Liabilities and equity     June 30, March 31, June 30,
(In Euro million)                                    2013     2013      2012
Total equity                                        2,195     2,933    4,244
 of which attributable to the equity owners of
the parent                                          1,463     2,191    3,376
 of which non controlling interests                732       742      868
Total non-current liabilities                       10,567   11,874    11,308
 of which pensions and other post-retirement
benefits                                            4,369     4,824    6,262
 of which long term debt                          5,113     5,915    4,000
 of which other non-current liabilities           1,085     1,135    1,046
Total current liabilities                           7,688     7,912    8,427
 of which provisions                              1,591     1,656    1,479
 of which short term debt                          600       779      844
 of which OWC liabilities                         4,154     4,137    4,717
 of which other current liabilities               1,343     1,340    1,387
Total liabilities and shareholder's equity          20,450   22,719    23,979





BUSINESS COMMENTARY



NETWORKS & PLATFORMS

For the second quarter 2013, revenues for Networks & Platforms were Euro 3,063
million, an increase of 5.9% compared to Euro 2,891 million in the year-ago
quarter and a 12.9% increase compared to Euro 2,713 million in the first
quarter 2013. At constant currency exchange rates, Networks & Platforms
revenues increased 8.1% year-over-year and increased 12.5% sequentially. The
segment posted an adjusted^2 operating^1 income of Euro 81 million or an
operating margin of 2.6% compared to an adjusted^2 operating^1 loss of Euro
(3) million or a margin of -0.1% in the year-ago period.



Key highlights:

· Revenues for the IP division were Euro 624 million, increasing 20.9%
from the year ago quarter and 25.6% at constant currency, driven by strength
in our edge routers and carrier ethernet switches across all regions,
especially in the US and APAC, as well as a return to growth in EMEA. We are
also seeing continued interest in the combination of our IP and Optical
portfolios, as evidenced by wins with Wind Telecommunications in Italy and
Epsilon in Singapore, who are each leveraging both portfolios to meet data
demands. Our IP Core router is gaining further traction, with a number of new
7950 XRS wins in the quarter, including the world's largest global Internet
Exchange Point, the DE-CIX in Frankfurt, Germany, for a total of 10 wins and
more than 20 trials to date. Nuage Networks(TM), our venture focused on
software defined networking (SDN) solutions, is seeing success in the market,
with a number of active trials, with particular interest in North America and
Europe.

· Revenues for the Optics division were Euro 422 million, a decrease of
7.0% from the year-ago quarter. Our WDM portfolio showed mid-single digit
growth in the quarter, led by the US and APAC, as well as strong progress in
our order book, growing almost 40% year-over-year. This growth partly offset
the continued declines in our legacy products, now representing 25% of our
optical revenues. Our 1830 Photonic Service Switch represented 31% of optical
revenues in the second quarter, and it has now been deployed with more than
290 customers across the world. We continue to be a strong player in the 100G
market as shipments now represent 27% of total WDM line cards shipments in
Q2'13, compared to 19% in Q1'13.

· Revenues for the Wireless division were Euro 1,010 million, a decline
of 1.1% from the year-ago quarter. Trends from the first quarter continued
into the second, where we witnessed strong growth in LTE and RFS, which was
offset by an overall decline in 2G/3G technologies. Our CDMA revenues now
represent approximately 20% of wireless revenues, and for the first time were
surpassed by LTE revenues, as the US continues to drive growth in LTE. In the
quarter, we also continued to focus on driving small cell adoption, as our
technology was recently selected by Verizon Wireless and Bouygues Telecom in
France to help add capacity and coverage to their mobile networks.
Furthermore, the lightRadio(TM) Metro Radio that was unveiled with China
Mobile in the first quarter, was recently used to provide live TD-LTE coverage
at Mobile Asia Expo.

· Revenues for the Fixed Networks division were Euro 468 million, an
increase of 3.3% from the year-ago quarter, reflecting continued strong growth
in copper, especially in the US and Europe. This was partially offset by
weakness in ONT fiber products, representing now less than 30% of fixed
networks products. Our VDSL2 vectoring products are now being used by 13
customers, including 2 new contracts in the second quarter, in addition to be
involved in more than 45 trials. Leveraging our vectoring technology, we
recently conducted, along with A1, a subsidiary of Telekom Austria Group, the
first trial of our G.fast Vectoring innovation that can upgrade existing
copper networks into ultra-broadband access systems capable of delivering
speeds of up to 1 gigabit per second.

· Revenues for the Platforms division were Euro 262 million, an increase
of 23.0% from the year-ago quarter. In the quarter, we saw good traction
across most activities within the Platforms division, particularly Advanced
Communications (IMS), Subscriber Data Management, the Motive Customer
Experience Solutions business (CxS) and Payment & Charging businesses. The
basis for growth in these businesses has primarily been the introduction of
LTE services such as Voice over LTE (VoLTE), trends towards shared data plans
as well as overall smartphone proliferation on networks. Deutsche Telekom
selected Alcatel-Lucent and our CloudBand portfolio as a trial partner for
their Terastream project; one of the most advanced Network Function
Virtualization implementation projects in the industry.

· Revenues for the Services division were Euro 285 million, an increase
of 22.3% from the year-ago quarter. Strong growth continued in Network Build
and Implementation (NBI) as well as Integration Services, both of which
benefitted from network rollouts in the US. We were recently awarded a three
year frame agreement to provide a mobile video optimization solution to
Norway's Telenor Group, which included our professional services.

· The improvement in adjusted operating margin from the year-ago quarter
reflects the positive impact of higher volumes and favorable shifts in product
and geographical mix, with particularly strong contribution from the IP
routing and improved contributions from Optics and Platforms.



FOCUSED BUSINESSES

For the second quarter 2013, revenues for the Focused Businesses segment were
Euro 272 million, a decrease
of -18.3% compared to Euro 333 million in the year-ago quarter and an increase
of 11.5% compared to
Euro 244 million in the first quarter 2013. At constant currency exchange
rates, Focused Businesses revenues decreased -18.9% year-over-year and
increased 11.9% sequentially. The segment posted an adjusted^2 operating^1
income of Euro 19 million or 7.0% of revenues, compared to an adjusted^2
operating^1 income of Euro 29 million or a margin of 8.7% in the year-ago
quarter.



Key highlights:

· Revenues from our Focused Businesses decreased -18.3% in the second
quarter with declines in both our Enterprise and Submarine businesses. Within
our Enterprise business, the continuous single-digit decline in our legacy
voice telephony business, remained in-line with market evolution, and was
partially offset by strength in Unified Communications and acceleration of
traction in network infrastructure, both growing at a double-digit rate. Our
Submarine business witnessed its first period of sequential growth in over a
year, accompanied by robust order book growth. In the quarter, we signed 8 new
contracts including the Bay of Bengal Gateway consortium and Telkom Indonesia.

· While revenues declined during the quarter, adjusted operating margin
of our Focused Businesses remained resilient.



MANAGED SERVICES

For the second quarter of 2013, revenues in our Managed Services business were
Euro 215 million, a decrease
of -14.7% compared to Euro 252 million in the year-ago quarter and an increase
of 5.4% compared to
Euro 204 million in the first quarter 2013. At constant currency exchange
rates, our Managed Services business declined -13.1% compared to the year-ago
quarter and increased 6.4% sequentially. The business posted an adjusted^2
operating^1 loss of Euro (3) million or -1.4% of revenues, compared to an
adjusted^2 operating^1 loss of Euro (28) million or a margin of -11.1% in the
year-ago quarter.

Key highlights:

· Revenues from our Managed Services decreased 14.7%, as our efforts to
restructure this business continue to impact revenues. As of the second
quarter of 2013, we have successfully addressed 14 of the 15 planned contracts
as part of our Performance Program. In parallel, we have entered into 5 new
and extension contracts, including Surfline in Africa, where we will build,
operate and manage their 4G LTE network.

· The strong year-over-year improvement in the adjusted operating margin
of the Managed Services business reflects ongoing actions to reduce the cost
structure of this business, resulting mainly from exiting and restructuring
contracts as part of our Performance Program.



Alcatel-Lucent will host a press and analyst conference at 1 p.m. CET which
will be available live via conference call or audio webcast. All details on
www.alcatel-lucent.com/2q2013.



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





Notes

The Board of Directors of Alcatel-Lucent met on July 29, 2013, examined the
Group's condensed consolidated financial statements at June 30, 2013, and
authorized their issuance.

These condensed consolidated financial statements are unaudited. They are
available on our website http://www.alcatel-lucent.com/2q2013

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.





2013 Upcoming events

October 31, 2013: Third quarter 2013 results



About Alcatel-Lucent (Euronext Paris and NYSE: ALU)

Alcatel-Lucent  is  at  the  forefront  of  global  communications,  providing 
products  and   innovations  in   IP  and   cloud  networking,   as  well   as 
ultra-broadband fixed  and  wireless access  to  service providers  and  their 
customers, enterprises and institutions throughout the world.

Underpinning Alcatel-Lucent  in  driving the  industrial  transformation  from 
voice telephony to high-speed digital delivery of data, video and  information 
is Bell  Labs, an  integral part  of  Alcatel-Lucent and  one of  the  world's 
foremost   technology   research   institutes,   responsible   for   countless 
breakthroughs that  have shaped  the networking  and communications  industry. 
Alcatel-Lucent innovations have  resulted in the  company being recognized  by 
Thomson Reuters as a Top 100 Global  Innovator, as well as being named by  MIT 
Technology  Review  as  amongst  2012's   Top  50  "World's  Most   Innovative 
Companies".  Alcatel-Lucent  has  also  been  recognized  for  innovation   in 
sustainability, being ranked  Technology Supersector Leader  by the Dow  Jones 
Sustainability  Index   in  2012   for  making   global  communications   more 
sustainable, affordable  and  accessible,  all in  pursuit  of  the  company's 
mission to realize the potential of a connected world.

With revenues of Euro  14.4 billion in 2012,  Alcatel-Lucent is listed on  the 
Paris and New York  stock exchanges (Euronext and  NYSE: ALU). The company  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 
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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 "gradual recovery expected" and
"confidence to our full-year savings target". 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 (and in particular
those to which we have decided to focus our resources), our ability to obtain
the price we estimated by a given date for those activities we want to divest,
to improve our level of free cash-flow, or to achieve all the goals of our
Performance Program and of our Shift Plan, including headcount reduction,
product mix and site rationalization, and to exit unprofitable contracts and
markets 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, our ability to procure financing
for our operations at an affordable cost, 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, 2012, 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.









ADJUSTED PROFORMA RESULTS





In Euro million
except for EPS            Q1-2013               Q2-2013               H1-2013
(unaudited)        Reported PPA Adjusted Reported PPA Adjusted Reported PPA  Adjusted
                                                                    
Revenues              3,226       3,226    3,612       3,612    6,838        6,838
Cost of sales (a)   (2,279)     (2,279)  (2,461)     (2,461)  (4,740)      (4,740)
                                                                    
Gross Profit            947   0      947    1,151   0    1,151    2,098    0    2,098
                                                                    
Administrative and
selling expenses
(b)                   (542)   8    (534)    (519)   8    (511)  (1,061)   16  (1,045)
Research and
Development costs
(c)                   (607)  15    (592)    (608)  14    (594)  (1,215)   29  (1,186)
                                                                    
Operating income
(loss) (1)            (202)  23    (179)       24  22       46    (178)   45    (133)
                                                                    
Restructuring
costs                 (122)       (122)    (194)       (194)    (316)        (316)
Impairment of
assets                    0           0    (552)       (552)    (552)        (552)
Post-retirement
benefit plan
amendment                55          55       41          41       96           96
Litigations             (2)         (2)      (1)         (1)      (3)          (3)
Gain/(los) on
disposal of
consolidated
entities                  2           2        0           0        2            2
                                                                    
Income (loss) from
operating
activities            (269)  23    (246)    (682)  22    (660)    (951)   45    (906)
                                                                    
Financial result
(net)                 (152)   0    (152)    (180)   0    (180)    (332)    0    (332)
                                                                    
Share in net
income(losses) of
equity affiliates         2           2        1           1        3            3
Income tax benefit
(expense) (d)            51 (9)       42     (28) (8)     (36)       23 (17)        6
                                                                    
Income (loss) from
continuing
operations            (368)  14    (354)    (889)  14    (875)  (1,257)   28  (1,229)
                                                                    
Income (loss) from
discontinued
activities              (1)         (1)        2           2        1            1
                                                                    
Net Income (loss)     (369)  14    (355)    (887)  14    (873)  (1,256)   28  (1,228)
                                                                    
of which :
Equity owners of
the parent            (353)  14    (339)    (885)  14    (871)  (1,238)   28  (1,210)

Non-controlling
interests              (16)        (16)      (2)         (2)     (18)         (18)
                                                                    
                                                                    
Earnings per share
: basic              (0.16)      (0.15)   (0.39)      (0.38)   (0.55)       (0.53)
Earnings per share
: diluted            (0.16)      (0.15)   (0.39)      (0.38)   (0.55)       (0.53)
                                                                    
(1) Income (loss) from operating activities before restructuring costs, impairment of
assets, gain / (loss) on disposal of consolidated entities, litigations and
post-retirement benefit plan amendment
 Corresponds to the measure of operating income (loss) of the segments (refer to
note 5 of the consolidated financial statements at June 30, 2013).
PPA : Purchase Price Allocation entries related to Lucent business combination
Nature of PPA - non cash amortization charges included in Reported Accounts but
excluded from Adjusted Accounts (cf. Note 3 to our Consolidated Financial Statements
as of December 31, 2009)
These impacts are non recurring due to the different amortization periods depending
of the nature of the adjustments, as indicated herefater.
 (a) Depreciation of the reevaluation to fair value of productive tangible assets
 (b) Amortization of intangibles assets - long term customer relationship (5-8
years)
 (c) Amortization of intangibles assets : Acquired technologies (5-10 years) and In
Process R&D (5-7 years)
 (d) Normative tax impact at 39% on above PPA adjustments excluding goodwill
impairment











RESTATEMENT OF 2012 BREAKDOWN BY OPERATING SEGMENTS



In Euro Million                                         
Revenues                     Q2'13 Q1'13 FY'12  Q4'12 Q3'12  Q2'12
Networks and Platforms       3,063 2,713 11,924 3,445  2,984  2,891
IP                             624   493  2,141   619    542    516
Optics                         422   342  1,825   529    437    454
Wireless                     1,010   966  4,069 1,093  1,034  1,021
Fixed Networks                 468   405  1,796   490    480    453
Platforms                      262   226  1,047   398    214    213
Services                       285   293  1,060   325    282    233
Other & eliminations           (8)  (12)   (14)   (9)    (5)      1
Focused Businesses             272   244  1,236   302    288    333
Managed Services               215   204  1,000   276    259    252
Other and Eliminations          62    65    289    73     69     70
Total                        3,612 3,226 14,449 4,096  3,600  3,546
                                                       
                                                       
Adj. operating income (loss) Q2'13 Q1'13 FY'12  Q4'12 Q3'12  Q2'12
Networks and Platforms          81 (107)   (89)   136   (70)    (3)
in % of revenues              2.6% -3.9%  -0.7%  3.9%  -2.3%  -0.1%
Focused Businesses              19   (9)     42     4    (5)     29
in % of revenues              7.0% -3.7%   3.4%  1.3%  -1.7%   8.7%
Managed Services               (3)   (5)  (132)   (4)   (30)   (28)
in % of revenues             -1.4% -2.5% -13.2% -1.4% -11.6% -11.1%
Other and Elimination         (51)  (58)   (84)  (21)   (21)   (28)
Total                           46 (179)  (263)   115  (126)   (30)
in % of revenues              1.3% -5.5%  -1.8%  2.8%  -3.5%  -0.8%







PRELIMINARY NEW STRUCTURE



In Euro Million                         
Revenues                     Q2'13 Q1'13  Q2'12
Core Networking              1,571  1,310  1,474
IP Routing                     624    494    516
IP Transport                   531    429    620
IP Platforms                   416    387    338
Access                       1,827  1,711  1,837
Wireless Access              1,071  1,025  1,045
Fixed Access                   525    465    512
Licensing                       16     17     28
Managed Services               215    204    252
Other                          243    232    258
Eliminations                   -29    -27    -23
Total group revenues         3,612  3,226  3,546
                                       
                            bq    bp     bl
Adj. operating income (loss) Q2'13 Q1'13  Q2'12
Core Networking                136   (13)      0
in % of revenues              8.7%  -1.0%   0.0%
Access                        (74)  (133)      4
in % of revenues             -4.1%  -7.8%   0.2%
Other                         (16)   (33)   (34)
in % of revenues             -6.6% -14.2% -13.2%
Total                           46  (179)   (30)
in % of revenues              1.3%  -5.5%  -0.8%



Alcatel-Lucent Q2 2013

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