1. Conduct a DuPont decomposition of Lucent's ROE by quarter. What factors contributed to the differences in Lucent's performance between those quarters?
(Calculate the change in Sales, Accounts Receiveable, Inventory and Gross Margin by (same) quarter.
EXHIBIT 1 LUCENT TECHNOLOGIES Selected Earnings Per Share Data For the Quarters Ended: Dec-99 Sep-99 Jun-99 Mar-99 Dec-98 0.36 0.310 .26 0.17 0.43 0.29 0.23 0.15 0.50 (0.07) 0.02 0.03 0.02 0.02 -16.28% 6.90% 13.04% 13.33% 5.00% 0.52 Earnings Per Share Analyst Expected Earnings Per Share Difference % Surprise LUCENT TECHNOLOGIES Consolidated Balance Sheets For the Quarters Ended: Jun-99 Mar-99 Dec.98 Dec-99 Sep-99 Sep-98 Jun-98 Mar-98 Dec-97 Sep-97 $ $ $ $ $ 685 $ $ $ $ 2.219 10,143 1,816 10.438 1.495 9486 1.099 5.792 374 969 5,576 369 1.225 6.295 1,350 5.373 2.973 2874 5.179 1.338 5.048 1.103 2.926 3,081 1.259 1.623 792 S 940 8.7529 .185 349 346 4.332 3.778 1.106 1.050 1.632 1.620 1,160 17.774 $ 17,351 5.751 5,645 6.935 6.886 6.210 6,068 5.380 1.164 1.504 1,168 $ 21,578 69 2.604 1214 1.469 1.332 1,477 1,046 1.333 1.583 1.405 1,554 482 13,305 1.943 $ $ 1.528 20,810 6.257 $ $ $ $ 12,709 $ $ 12.501 21,931 6.847 7.445 6.485 14,078 5.403 6.382 3.754 4957 13,256 4,729 0.121 3.322 6,078 6.253 3.597 832 289 2.299 25.270 500 6.132 3.462 1.002 279 2.407 5 24.064 1.120 6.407 3.172 1262 293 1.430 23.811 300 246 3,486 $38.634 470 3.002 38,735 3.340 37.156 2.750 32.140 S 2 271 31.641 S 2,437 2.079 $ $ $ 2720 S $ 24.752 $ Assets Cash Receivables Less Allowance Inventory Contracts in Process, net Deferred Taxes, net Other Current Assets Total Current Assets Property & Equipment (net) Accumulated Depreciation Pre-paid Pension Costs Deferred Taxes, net Capitalized Software Development Costs Other Assets Total Assets Liabilities and Shareholders' Equity Accounts Payable Payroll and Benet Liabilities Post-retirement and Post-employment Benefit Liabilities Debt Maturing within One Year Other Current Liabilities Total Current Liabilities Post-retirement and Post-employment Benefit Liabilities Long Term Debt Other Liabilities Total Liabilities Common Stock Additional Paid in Capital Guaranteed ESOP Obligations Retained Earnings Accumulated Other Comprehensive Income or LOSS Total Shareholders Equity Total Liabilities and Shareholders' Equity $ $ 2.706 $ $ 2.468 $ $ 2.8785 2.300 2.410 1.724 1.931 2178 2.864 2.162 1.321 103 2.872 3.69 9917 6,013 3.832 2.793 22,556 2040 2.511 187 2.231 3.459 10,428 6380 2.409 1.909 21,186 $ 1,727 $ 1.659 $ 1.490 5 2.34 2.048 2178 194 195 221 2.423 1,898 1,757 3.498 3.618 4 310 10.198 $ 9.418 $ 9.962 $ 6,288 62496 ,138 1945 1.978 2043 2.038 20,357 $ 19.028 $ 20,081 $ $ $ 11.956 3,185 4,059 11,582 6,471 3.710 $ 3.783 4.167 12.441 6,413 2404 $ 11,778 6,615 3.812 $ $ 2.538 3852 10.738 6,073 1.065 $ $ 25.113 24,753 $ 23,780 $ 23,204 $ $ 20,424 9.032 7339 4706 4.251 (63) 4,078 (63) 3.717 77 (49) 3,047 7 7 4,996 (34) 4.384 (322) ,051 $ 32 840 $ 5.240 (172) 12.403 5 37,156 (273) (251) 16,079 38.634 $ $ 9 $ $ 13,622 38 735 $ $ (198) 8,437 7 $ 5 31,641 5 (262) 5.534 5.534 26.720 (307) 304) 4.922 $ 50385 25 279 S 24.664 S $ $ $ (191) 3.387 23.811 $ 24,752 S EXHIBIT 4 $ $ $ $ $ Dec-99 9,905 5,259 4.646 1.90B 978 2.886 1.760 66 LUCENT TECHNOLOGIES Consolidated Statements of Income* For the Quarters Ended: Sep-99 Jun-99 Mar-99 Dec-98 Sep-98 10,575 $ 9,315 $ 8,220 $ 9,842 $ 8,574 5.708 4,834 4.327 4.630 4.443 4.869 4,481 3,893 5,212 4.131 2251 1.984 1.902 1.937 1.972 1.131 1,141 1.139 1,050 3.382 3.125 3.041 2.950 3,022 1.487 1.356 852 2,262 1,109 (43) Total Revenues Cost of Sales Gross Margin Selling. General and Administrative Expenses Research and Development Total Operating Expenses Operating Income Other Income (Expense), net Interest Expense Income Before Taxes Income Tax Expense Net Income Jun-98 7.642 4,087 3555 1.673 1.002 2.675 880 (17) Mar-98 6,184 3436 2.748 1.501 932 2.433 315 Dec-97 8,724 4,519 4, 205 1.555 829 2384 1.821 14 Sep-97 $ 6.933 3.873 3.060 1.600 835 2443 1.013 617 (65) 116 51 83 79 1,465 995 800 1.728 553 1.175 2.300 777 1,523 $ 288 102 235 348 1.756 632 1.124 $ $ 282 518 972 $ 829 $ 647 $ 457 $ 227 369 $ 186 $ $ Excludes one-time events and the cumulative effect of accounting changes EXHIBIT 5 Notos to Consolidated Financial Statements Supplementary Balance Sheet Information Jun-99 Mar-99 Dec-98 Sep-98 Jun-98 Dec-99 Sep-99 Mar-98 Dec-97 Sep-97 Inventories Finished Goods Work in Process Total Inventories 3 062.00 2318.00 5380.00 2946.00 2102.00 5048.00 2017.00 2262.00 5179.00 2281.00 2051.00 4332.00 1777.00 2001,00 3778.00 1578.00 1503.00 3081.00 1594.00 1379.00 2973.00 1463.00 1411.00 2874.00 1291.00 1313.00 2604.00 1611.00 1315.00 2926.00 EXHIBIT 1 LUCENT TECHNOLOGIES Selected Earnings Per Share Data For the Quarters Ended: Dec-99 Sep-99 Jun-99 Mar-99 Dec-98 0.36 0.310 .26 0.17 0.43 0.29 0.23 0.15 0.50 (0.07) 0.02 0.03 0.02 0.02 -16.28% 6.90% 13.04% 13.33% 5.00% 0.52 Earnings Per Share Analyst Expected Earnings Per Share Difference % Surprise LUCENT TECHNOLOGIES Consolidated Balance Sheets For the Quarters Ended: Jun-99 Mar-99 Dec.98 Dec-99 Sep-99 Sep-98 Jun-98 Mar-98 Dec-97 Sep-97 $ $ $ $ $ 685 $ $ $ $ 2.219 10,143 1,816 10.438 1.495 9486 1.099 5.792 374 969 5,576 369 1.225 6.295 1,350 5.373 2.973 2874 5.179 1.338 5.048 1.103 2.926 3,081 1.259 1.623 792 S 940 8.7529 .185 349 346 4.332 3.778 1.106 1.050 1.632 1.620 1,160 17.774 $ 17,351 5.751 5,645 6.935 6.886 6.210 6,068 5.380 1.164 1.504 1,168 $ 21,578 69 2.604 1214 1.469 1.332 1,477 1,046 1.333 1.583 1.405 1,554 482 13,305 1.943 $ $ 1.528 20,810 6.257 $ $ $ $ 12,709 $ $ 12.501 21,931 6.847 7.445 6.485 14,078 5.403 6.382 3.754 4957 13,256 4,729 0.121 3.322 6,078 6.253 3.597 832 289 2.299 25.270 500 6.132 3.462 1.002 279 2.407 5 24.064 1.120 6.407 3.172 1262 293 1.430 23.811 300 246 3,486 $38.634 470 3.002 38,735 3.340 37.156 2.750 32.140 S 2 271 31.641 S 2,437 2.079 $ $ $ 2720 S $ 24.752 $ Assets Cash Receivables Less Allowance Inventory Contracts in Process, net Deferred Taxes, net Other Current Assets Total Current Assets Property & Equipment (net) Accumulated Depreciation Pre-paid Pension Costs Deferred Taxes, net Capitalized Software Development Costs Other Assets Total Assets Liabilities and Shareholders' Equity Accounts Payable Payroll and Benet Liabilities Post-retirement and Post-employment Benefit Liabilities Debt Maturing within One Year Other Current Liabilities Total Current Liabilities Post-retirement and Post-employment Benefit Liabilities Long Term Debt Other Liabilities Total Liabilities Common Stock Additional Paid in Capital Guaranteed ESOP Obligations Retained Earnings Accumulated Other Comprehensive Income or LOSS Total Shareholders Equity Total Liabilities and Shareholders' Equity $ $ 2.706 $ $ 2.468 $ $ 2.8785 2.300 2.410 1.724 1.931 2178 2.864 2.162 1.321 103 2.872 3.69 9917 6,013 3.832 2.793 22,556 2040 2.511 187 2.231 3.459 10,428 6380 2.409 1.909 21,186 $ 1,727 $ 1.659 $ 1.490 5 2.34 2.048 2178 194 195 221 2.423 1,898 1,757 3.498 3.618 4 310 10.198 $ 9.418 $ 9.962 $ 6,288 62496 ,138 1945 1.978 2043 2.038 20,357 $ 19.028 $ 20,081 $ $ $ 11.956 3,185 4,059 11,582 6,471 3.710 $ 3.783 4.167 12.441 6,413 2404 $ 11,778 6,615 3.812 $ $ 2.538 3852 10.738 6,073 1.065 $ $ 25.113 24,753 $ 23,780 $ 23,204 $ $ 20,424 9.032 7339 4706 4.251 (63) 4,078 (63) 3.717 77 (49) 3,047 7 7 4,996 (34) 4.384 (322) ,051 $ 32 840 $ 5.240 (172) 12.403 5 37,156 (273) (251) 16,079 38.634 $ $ 9 $ $ 13,622 38 735 $ $ (198) 8,437 7 $ 5 31,641 5 (262) 5.534 5.534 26.720 (307) 304) 4.922 $ 50385 25 279 S 24.664 S $ $ $ (191) 3.387 23.811 $ 24,752 S EXHIBIT 4 $ $ $ $ $ Dec-99 9,905 5,259 4.646 1.90B 978 2.886 1.760 66 LUCENT TECHNOLOGIES Consolidated Statements of Income* For the Quarters Ended: Sep-99 Jun-99 Mar-99 Dec-98 Sep-98 10,575 $ 9,315 $ 8,220 $ 9,842 $ 8,574 5.708 4,834 4.327 4.630 4.443 4.869 4,481 3,893 5,212 4.131 2251 1.984 1.902 1.937 1.972 1.131 1,141 1.139 1,050 3.382 3.125 3.041 2.950 3,022 1.487 1.356 852 2,262 1,109 (43) Total Revenues Cost of Sales Gross Margin Selling. General and Administrative Expenses Research and Development Total Operating Expenses Operating Income Other Income (Expense), net Interest Expense Income Before Taxes Income Tax Expense Net Income Jun-98 7.642 4,087 3555 1.673 1.002 2.675 880 (17) Mar-98 6,184 3436 2.748 1.501 932 2.433 315 Dec-97 8,724 4,519 4, 205 1.555 829 2384 1.821 14 Sep-97 $ 6.933 3.873 3.060 1.600 835 2443 1.013 617 (65) 116 51 83 79 1,465 995 800 1.728 553 1.175 2.300 777 1,523 $ 288 102 235 348 1.756 632 1.124 $ $ 282 518 972 $ 829 $ 647 $ 457 $ 227 369 $ 186 $ $ Excludes one-time events and the cumulative effect of accounting changes EXHIBIT 5 Notos to Consolidated Financial Statements Supplementary Balance Sheet Information Jun-99 Mar-99 Dec-98 Sep-98 Jun-98 Dec-99 Sep-99 Mar-98 Dec-97 Sep-97 Inventories Finished Goods Work in Process Total Inventories 3 062.00 2318.00 5380.00 2946.00 2102.00 5048.00 2017.00 2262.00 5179.00 2281.00 2051.00 4332.00 1777.00 2001,00 3778.00 1578.00 1503.00 3081.00 1594.00 1379.00 2973.00 1463.00 1411.00 2874.00 1291.00 1313.00 2604.00 1611.00 1315.00 2926.00
