Management Software

LUCENT TECHNOLOGIES

The following is an excerpt from Lucent Technologies’ Management’s Discussion and Analysis of Financial Condition and Results
of Operations: Executive Summary. We design and deliver the systems, software, and services that drive next-generation communications networks. Backed by Bell Labs research and development, we use our strengths in mobility, optical, access, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for our customers, while enabling them to quickly deploy and better manage their networks. Our customer base includes communications service providers,
governments and enterprises worldwide. We have three segments organized around the products and services we sell. The reportable segments are Integrated Network Solutions (“INS”), Mobility Solutions
(“Mobility”) and Lucent Worldwide Services (“Services”). INS provides a broad range of software and wireline equipment related
to voice networking (primarily consisting of switching products, which we sometimes refer to as convergence solutions, and voice
messaging products), data and network management (primarily consisting of access and related data networking equipment
and operating support software) and optical networking. Mobility provides software and wireless equipment to support radio access
and core networks. Services provides deployment, maintenance, professional and managed services in support of both our product
offerings as well as multi-vendor networks. Beginning in fiscal 2001, the global telecommunications market deteriorated, resulting from a decrease in the competitivelocal exchange carrier market and a significant reduction in capital spending by established service providers.This trend intensified during fiscal 2002 and continued into fiscal 2003. Reasons for the market deterioration included general economic slowdown, network overcapacity, customer bankruptcies,
network build-out delays and limited availability of capital. We believe that the market for telecommunications equipment has stabilized and is starting to grow in certain areas. The growing demands of enterprises and consumers for additional services tailored to their needs is creating the need for a new convergence of networks, technologies and applications.

LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in Millions, Except per Share Amounts)
September 30, September 30,
2004 2003
Assets
Cash and cash equivalents $ 3,379 $ 3,821
Marketable securities 858 686
Receivables 1,359 1,511
Inventories 822 632
Other current assets 1,813 1,213
Total current assets 8,231 7,863
Marketable securities 636 —
Property, plant, and equipment, net 1,376 1,593
Prepaid pension costs 5,358 4,659
Goodwill, net 434 188
Other assets 928 1,608
Total assets $ 16,963 $ 15,911

Liabilities
Accounts payable $ 872 $ 1,072
Payroll and benefit-related liabilities 1,232 1,080
Debt maturing within one year 1 389
Other current liabilities 2,361 2,393
Total current liabilities 4,466 4,934
Postretirement/employment
benefit liabilities 4,881 4,669
Pension liabilities 1,874 2,494
Long-term debt 4,837 4,439
Liability to subsidiary trust issuing
preferred securities 1,152 1,152
Other liabilities 1,132 1,594
Total liabilities 18,342 19,282
Commitments and contingencies
8.00% redeemable convertible
preferred stock — 868
Shareowners’ Deficit
Preferred stock—par value $1.00 per
share; authorized shares:
250; issued and outstanding: none — —
Common stock—par value $.01 per
share;Authorized shares:10,000;
4,396 issued and 4,395 outstanding
shares as of September 30, 2004,
and 4,170 issued and 4,