UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
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Annual report pursuant to Section 15(d) of the | |
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X __ |
Securities Exchange Act of 1934 |
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For the fiscal year ended December 31, 2004 |
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OR |
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Transition report pursuant to Section 15(d) of the | |
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Securities Exchange Act of 1934 |
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For the transition period from ____________ to___________
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Commission File Number: |
001 – 11639 |
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A. |
Full title of the plan and the address of the plan, if different from that of the issuer named below: |
LUCENT SAVINGS PLAN
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B. |
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
LUCENT TECHNOLOGIES INC.
600 MOUNTAIN AVENUE
MURRAY HILL, NJ 07974
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The total # of pages contained |
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in this Form 11-K filing is _18_ | |
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Exhibit Index can be found on | |
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page ______17___ |
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-1-
Table of Contents |
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3 |
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16 |
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17 |
-2-
Financial Statements
As of December 31, 2004 and 2003, and
for the year ended December 31, 2004
-3-
Lucent Savings Plan
Index to Financial Statements and Supplemental Schedule
As of December 31, 2004 and 2003 and for the Year Ended December 31, 2004
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Pages |
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5 | |
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Financial Statements: |
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6 | |
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7 | |
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8 – 14 | |
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Supplemental Schedule*: |
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Schedule H, line 4i - Schedule of Assets (Held at End of Year) As of |
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15 | |
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* Other schedules required by Section 2520.103-5 have been omitted because they are not applicable.
-4-
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator
of the Lucent Savings Plan:
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Lucent Savings Plan (the “Plan”) at December 31, 2004 and 2003, and the changes in net assets available for benefits for the year ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. This supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 24, 2005
-5-
Lucent Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 2004 and 2003
(Thousands of Dollars)
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2004 |
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2003 |
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Assets |
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Investments in Group Trust |
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$ 6,559,627 |
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$ 6,333,655 |
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Participant loans receivable |
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27,554 |
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27,091 |
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Total investments |
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6,587,181 |
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6,360,746 |
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Company contributions receivable |
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640 |
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814 |
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Employee contributions receivable |
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10,421 |
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9,755 |
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Total assets |
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6,598,242 |
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6,371,315 |
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Net assets available for benefits |
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$ 6,598,242 |
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$ 6,371,315 |
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The accompanying notes are an integral part of these financial statements.
-6-
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2004
(Thousands of Dollars)
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Additions to net assets attributed to |
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Contributions |
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Employee contributions |
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$ 186,010 |
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Company contributions |
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91,292 |
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Plan’s share of Group Trust investment gain |
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521,155 |
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Interest from participant loans |
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1,265 |
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Total additions |
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799,722 |
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Deductions from net assets attributed to |
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Distributions to participants |
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572,182 |
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Administrative expenses |
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200 |
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Total deductions |
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572,382 |
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Net increase before transfers |
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227,340 |
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Transfers from Lucent Technologies Inc. Employee Stock Ownership Plan |
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93 |
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Transfers to the Lucent Technologies Inc. Long Term Savings and Security Plan, net |
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(30 |
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Transfers to Agere Systems |
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(476 |
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Net increase |
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226,927 |
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Net assets available for benefits |
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Beginning of year |
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6,371,315 |
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End of year |
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$ 6,598,242 |
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The accompanying notes are an integral part of these financial statements.
-7-
Notes to Financial Statements
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1. |
Plan Description |
The following description of the Lucent Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan document and the Summary Plan Description for a more complete description of the Plan's provisions.
General
The Plan, formerly known as the Lucent Technologies Inc. Long Term Savings Plan for Management Employees, is a defined contribution plan established as of October 1, 1996 by Lucent Technologies Inc. (the "Company") to provide a convenient way for eligible management employees, as described in the Plan, to save on a regular and long-term basis. The Plan became effective as the successor to the AT&T Long Term Savings Plan for Management Employees. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Eligibility
An eligible employee, as described in the Plan, enters the Plan by authorizing a payroll contribution and directing a contribution among the different funds of the Plan.
Contributions
Employee contributions of 1% to 25% of salary may be authorized. Prior to January 1, 2004, employee contributions ranged from 1% to 16% of salary. An employee may designate contributions as pre-tax contributions, after-tax contributions or a combination of pre-tax and after-tax contributions. The Internal Revenue Code (“IRC”) limits the maximum amount of an employee's contribution on a pre-tax basis to $13,000 and $12,000 in 2004 and 2003 respectively. For taxpayers age 50 and over, an additional catch-up contribution of $3,000 could be contributed to the Plan during 2004.
The Company matching contribution includes a fixed and a variable matching contribution. The participant contributions eligible for the Company matching contributions are the lesser of the amount actually contributed or the first 6% of the participant’s eligible compensation, as described in the Plan. The fixed matching contribution is 50% of eligible employee contributions and the variable matching contribution ranges from an additional 0% to 100% of eligible participant contributions. The fixed matching contribution is capped at $2,500 per year. The variable matching contribution is determined annually by the Company’s Board of Directors based upon the overall performance of the Company for the just concluded fiscal year. The Company elected to pay a variable match of 58 cents for every dollar contributed by an eligible employee into the Plan, up to 6% of the employee’s eligible compensation in 2004. The Company elected to pay a variable match of 23 cents in 2003. Employees are eligible for the fixed Company matching contributions immediately, without regard to time of service, in accordance with the participant's investment elections. Effective January 1, 2001, Company matching contributions were immediately vested in the Plan. Company contributions, which were made prior to the January 1, 2001 vesting date, and related earnings in which a terminated participant is not vested, are forfeited to the Company.
-8-
Lucent Savings Plan
Notes to Financial Statements
These forfeitures can be used to reduce future Company contributions. At December 31, 2004 and 2003, forfeited amounts totaled approximately $106,000 and $139,000, respectively.
Participant Loans
Loans are available to all active, retired, and terminated employees in an amount not less than $1,000, up to a maximum of the lesser of $50,000 or 50% of the participant's vested account balance. Upon default, as described in the Plan, participants are considered to have received a distribution and are subject to income taxes on the distributed amount. Loan terms are between 12 and 56 months. The loans are collateralized by the balance in the participant’s account and generally bear interest at the prime rate at the time the loan was originated. Interest rates on outstanding loans ranged from 4.0% to 10.5% at December 31, 2004. Principal and interest are paid through payroll deductions, coupon remittances and electronic fund transfers.
Distributions
When a participant retires with a service pension from the Lucent Retirement Income Plan or terminates employment because of disability, the entire vested amount in the participant's account can be distributed, at the participant's election, in a single payment or in Retiree Withdrawals as directed by the participant. If no distribution election is made by the participant, the account balance will remain in the Plan until a later date but not beyond age 70-1/2. When a participant dies, the entire amount in the participant’s account is allocated to the participant’s beneficiaries.
In the case of other terminations of employment (where the participant is not entitled to retire on an immediate pension or does not terminate because of disability), a single distribution can be made of all vested amounts in the participant's account. However, if the participant does not request a distribution, the participant's account shall remain in the Plan and shall be distributed only at (1) the participant's request, (2) when the participant attains age 70-1/2 through the payment of Minimum Required Distributions, as described in the Plan, or (3) upon the participant's death, whichever is earliest.
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2. |
Summary of Significant Accounting Policies |
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Payment of Benefits
Benefits are recorded when paid.
-9-
Lucent Savings Plan
Notes to Financial Statements
Valuation of Investments
The Lucent Technologies Inc. Long Term Savings and Security Plan and the Plan each have an interest in the assets of the Group Trust. The net asset value of the Plan's proportionate share of the Group Trust is calculated by the Trustee. The Trustee determines fair value of the underlying assets in the investment manager portfolios, taking into account values supplied by a reputable pricing or quotation service or quotations furnished by one or more reputable sources, such as securities brokers, dealers or investment bankers, mutual fund administrators, or other relevant information. Investments in registered investment companies are stated at fair value as determined by quoted market prices. Investments in the Company’s common shares and other securities listed on a national stock exchange are stated at fair value determined on the basis of the New York Stock Exchange closing price on December 31. Securities traded in over-the-counter markets and government obligations are stated at fair value based on the last bid prices or closing prices on December 31, as listed in published sources where available and, if not available, from other sources considered reliable. Contracts with insurance companies and financial institutions, which are fully benefit responsive, are stated at contract value (representing contributions made under the contracts plus accumulated interest at the contract rates) which approximates fair value. All other investments are stated at their fair value at close of business on December 31 as determined by the Trustee. Participant loans receivable are valued at the cost which approximates fair value.
Purchases and Sales of Investments
Purchases and sales of investments are recorded on a trade-date basis.
Plan’s Share of Group Trust Investment Gain
The Plan’s reported investment gain from Group Trust presented in the Statement of Changes in Net Assets Available for Benefits represents its interest in the Group Trust’s investment gain, which consists of the Group Trust’s interest, dividends and net appreciation in fair value of investments. The Group Trust records dividend income on investments held as of the ex-dividend dates and records interest income on the accrual basis. The Group Trust’s net appreciation in fair value of investments consists of the net realized gains (losses) and the unrealized appreciation (depreciation).
Transfers to Other Plans, Net
The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net amount of transfers from other plans.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Risks and Uncertainties
Investments held by the Group Trust are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the Statements of Net Assets
-10-
Lucent Savings Plan
Notes to Financial Statements
Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.
Derivatives
From time to time investment fund managers may use derivative financial instruments including forward exchange contracts and future contracts. Derivative instruments are used primarily to mitigate exposure to foreign exchange rate and interest rate fluctuations as well as to manage the investment mix in the portfolio.
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3. |
Tax Status |
The Internal Revenue Service determined and informed the Company by a letter dated August 27, 2004, that the Plan and related Group Trust are designed in accordance with applicable sections of the IRC. Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. Therefore, no provision for income taxes has been made.
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4. |
Guaranteed and Synthetic Investment Contracts |
The Group Trust holds investments in guaranteed and synthetic investment contracts as part of the Stable Value Fund. These investments are recorded at their contract values. This represents cost plus accrued interest of guaranteed investment contracts and fair value of the collateral plus the benefit responsive wrap value for synthetics, as the contracts are fully benefit-responsive. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are currently no reserves against contract values for credit risk of the contract issuers or otherwise.
The average yield of the guaranteed and synthetic investment contracts was approximately 3.79% and 4.46% for 2004 and 2003, respectively. The crediting interest rate was approximately 3.94% for 2004 and 4.14% for 2003. The crediting interest rate is based on a formula agreed upon with the issuer. Such rates are reviewed on a quarterly basis for resetting.
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5. |
Termination Priorities |
Although it has not expressed any intent to do so, the Company reserves the right under the Plan to amend or terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, the Plan provides that the net assets are to be distributed to participating employees in amounts equal to their respective interests in such assets.
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Lucent Savings Plan
Notes to Financial Statements
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6. |
Plan Expenses |
Plan participants pay investment manager and trustee fees and may share certain other administrative costs of the Plan with the Company. Investment manager and trustee fees are generally reflected in the calculation of each fund's net asset value per unit.
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7. |
Group Trust Investments |
The Lucent Technologies Inc. Long Term Savings and Security Plan and the Plan each have an interest in the assets of the Group Trust. Investment income and the Plan's interest in the net assets of the Group Trust are allocated based upon the respective participant balances within each fund for each plan. The Plan’s interest in the Group Trust was approximately 87% and 86% as of December 31, 2004 and 2003.
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Lucent Savings Plan
Notes to Financial Statements
The following tables present the fair value of investments held by the Group Trust as of December 31, 2004 and 2003 (in thousands):
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December 31, |
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2004 |
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2003 |
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Investments, at fair value |
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Non Interest Bearing Cash |
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$ |
46 |
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$ |
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Lucent International Equity Fund |
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269,337 |
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225,960 |
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Lucent Asset Allocation Income Fund |
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42,474 |
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43,724 |
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Lucent Asset Allocation Fund 2000 |
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103,576 |
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114,210 |
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Lucent Asset Allocation Fund 2010 |
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323,482 |
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320,707 |
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Lucent Asset Allocation Fund 2020 |
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352,450 |
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319,170 |
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Lucent Asset Allocation Fund 2030 |
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135,656 |
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118,045 |
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Lucent Asset Allocation Fund 2040 |
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25,998 |
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16,703 |
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Lucent Employer Stock Fund - Common Shares |
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654,793 |
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478,697 |
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Fidelity Equity Index Fund |
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1,074,679 |
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1,010,163 |
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Fidelity Magellan Fund |
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801,676 |
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805,790 |
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Lucent Bond Fund |
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212,824 |
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224,301 |
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Fidelity Institutional Cash Portfolio |
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495,334 |
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550,840 |
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Lucent Growth Equity Fund |
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71,516 |
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62,605 |
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Lucent Self Directed Brokerage |
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92,785 |
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77,777 |
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Small Cap Fund |
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134,208 |
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100,104 |
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U.S. Large Cap Value Equity Fund |
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519,066 |
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446,678 |
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Agere Class A Stock |
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1,362 |
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3,325 |
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Agere Class B Stock |
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32,639 |
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76,522 |
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Lucent Employer Shares Fund I |
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13,679 |
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11,894 |
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Lucent Employer Shares Fund II |
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29,517 |
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25,234 |
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5,387,097 |
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5,032,449 |
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Investments, at contract value |
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Guaranteed investment contracts |
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2,156,858 |
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2,307,773 |
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Total investments |
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$ |
7,543,955 |
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$ |
7,340,222 |
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* The 2004 guaranteed investment contacts are all synthetic investment contracts with the fair value of the underlying assets of $2,201,010 held in the Group Trust. The global wrapper value is ($44,151).
-13-
Lucent Savings Plan
Notes to Financial Statements
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Investment income for the Group Trust is as follows: |
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Year Ended |
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December 31, 2004 |
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Investment Gain |
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Net appreciation in fair value of investments |
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$ 564,894 |
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Interest and dividends |
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31,175 |
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$ 596,069 |
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As of December 31, 2004, investments in the Group Trust include approximately $2.8 billion in equity funds, $0.7 billion in common stock, $1.1 billion in fixed income securities, $2.2 billion in guaranteed investment contracts and $0.7 billion in Company stock. As of December 31, 2003, investments in the Group Trust include approximately $2.6 billion in equity funds, $0.6 billion in common stock, $1.2 billion in fixed income securities, $2.3 billion in guaranteed investment contracts and $0.6 billion in Company stock.
Investment income in the Group Trust includes $0.3 billion net gain related to equity funds, $0.1 billion net gain related to common stock, $0.1 billion net gain related to guaranteed investment contracts, and $0.1 billion net gain related to Company stock.
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8. |
Related Party Transactions |
Certain Plan investments are shares of mutual funds managed by affiliates of the Trustee and therefore, these transactions qualify as party-in-interest transactions.
The Group Trust invests in shares of Lucent common stock.
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Schedule H, line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2004
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Name of Issuer and Title of Issue |
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Description |
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Cost |
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Fair Value |
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Participant loans receivable * |
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(Interest rates range from 4.0% - 10.5%) |
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$ 27,554,300 |
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* Party-in-interest |
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-15-
Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
LUCENT SAVINGS PLAN
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Date: __June 24, 2005______ |
By: ___/s/ Susan E. Goodwin_________ | ||||||
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Susan E. Goodwin |
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Director - Human Resources, |
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North America Region Operations |
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(Plan Administration) |
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-16-
Exhibit
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Number |
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23 |
Consent of Independent Registered Public Accounting Firm |
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