<PAGE>   1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                   FORM 10-K

<TABLE>
<C>              <S>
      [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
                                     OR
      [ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                        COMMISSION FILE NUMBER 001-11639

                            LUCENT TECHNOLOGIES INC.

<TABLE>
<S>                                            <C>
                  A DELAWARE                                  I.R.S. EMPLOYER
                 CORPORATION                                   NO. 22-3408857
</TABLE>

               600 MOUNTAIN AVENUE, MURRAY HILL, NEW JERSEY 07974
                         TELEPHONE NUMBER 908-582-8500

    SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: SEE ATTACHED
                                  SCHEDULE A.

       SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:  NONE.

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

     At November 30, 1999, the aggregate market value of the voting stock held
by non-affiliates was approximately $233,000,000,000.

     At November 30, 1999, 3,141,898,168 common shares were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     (1) Portions of the registrant's annual report to security holders for the
fiscal year ended September 30, 1999 (Part II)

     (2) Portions of the registrant's definitive proxy statement dated December
21, 1999, issued in connection with the annual meeting of shareholders (Part
III)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                                   SCHEDULE A

     Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                    TITLE OF EACH CLASS                       EXCHANGE ON WHICH REGISTERED
                    -------------------                       ----------------------------
<S>                                                           <C>
Common Stock (Par Value $.01 Per Share).....................  New York Stock Exchange
6.90% Notes due July 15, 2001...............................  New York Stock Exchange
7.25% Notes due July 15, 2006...............................  New York Stock Exchange
6.50% Debentures due January 15, 2028.......................  New York Stock Exchange
5.50% Notes due November 15, 2008...........................  New York Stock Exchange
6.45% Debentures due March 15, 2029.........................  New York Stock Exchange
</TABLE>

                                        2
<PAGE>   3

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM                           DESCRIPTION                           PAGE
----                           -----------                           ----
<C>    <S>                                                           <C>
                                 PART I
 1.    Business....................................................    4
 2.    Properties..................................................   25
 3.    Legal Proceedings...........................................   26
 4.    Submission of Matters to a Vote of Security-Holders.........   26

                                 PART II
 5.    Market for Registrant's Common Equity and Related              26
       Stockholder Matters.........................................
 6.    Selected Financial Data.....................................   26
 7.    Management's Discussion and Analysis of Financial Condition    26
       and Results of Operations...................................
 8.    Financial Statements and Supplementary Data.................   26
 9.    Changes in and Disagreements with Accountants on Accounting    26
       and Financial Disclosure....................................

                                PART III
10.    Directors and Executive Officers of the Registrant..........   26
11.    Executive Compensation......................................   27
12.    Security Ownership of Certain Beneficial Owners and            27
       Management..................................................
13.    Certain Relationships and Related Transactions..............   27

                                 PART IV
14.    Exhibits, Financial Statement Schedules, and Reports on Form   28
       8-K.........................................................
</TABLE>

     This Report contains trademarks, service marks and registered marks of the
Company and its subsidiaries, and other companies, as indicated.

                                        3
<PAGE>   4

                                     PART I

ITEM 1. BUSINESS.

I. GENERAL

     Lucent Technologies Inc. ("Lucent") was incorporated in Delaware in
November 1995. Lucent has its principal executive offices at 600 Mountain
Avenue, Murray Hill, New Jersey 07974 (telephone number 908-582-8500). Lucent
was formed from the systems and technology units that were formerly a part of
AT&T Corp., including the research and development capabilities of Bell
Laboratories. Prior to February 1, 1996, AT&T conducted Lucent's original
business through various divisions and subsidiaries. On February 1, 1996, AT&T
began executing its decision to separate Lucent into a stand-alone company (the
"Separation") by transferring to Lucent the assets and liabilities related to
its business. In April 1996, Lucent completed the initial public offering of its
common stock ("IPO") and on September 30, 1996, became independent of AT&T when
AT&T distributed to its shareowners all of its Lucent shares. References to
"Lucent" include the historical operating results and activities of the business
and operations transferred to Lucent in the Separation. In 1996, Lucent changed
its fiscal year to begin October 1 and end September 30.

     Lucent is one of the world's leading designers, developers and
manufacturers of communications systems, software and products. Lucent is a
global leader in the sale of public and private communications systems,
supplying systems and software to most of the world's largest communications
network operators and service providers (together referred to as "service
providers"). Lucent is also a global leader in the sale of business
communications systems and in the sale of microelectronic components for
communications applications to manufacturers of communications systems and
computers. Lucent's research and development activities are conducted through
Bell Laboratories ("Bell Labs"), one of the world's foremost industrial research
and development organizations.

     The communications industry is experiencing rapid changes in the
technologies used to service customers' needs. Traditional circuit based
switching and data packet transmission are converging. This convergence of
technologies is driven by the growing demands on the transmission of information
using data, voice, video and fax, or any combination of these. The demand is
driven by the expansion of Internet traffic over existing networks -- both
wireline and wireless -- as well as the buildout of new and improved networks.
Lucent's strategy is to meet its customers' needs by offering an end-to-end
solutions platform, which brings together Lucent's core products with new
offerings obtained through strategic acquisitions and the research and
development of Bell Laboratories. This strategy brings together products related
to data, voice, optical, wireless, software, services and support.

     Lucent has three reportable segments: Service Provider Networks ("SPN"),
Enterprise Networks ("Enterprise"), and Microelectronics and Communications
Technologies ("MCT"). SPN provides public networking systems and software to
telecommunications service providers and public network operators around the
world. Enterprise develops, manufactures, markets and services advanced
communications products and data networking systems for business customers. MCT
designs and manufactures high-performance integrated circuits, power systems,
optical fiber and fiber cables, and optoelectronic components for applications
in the communications and computing industries. The three reportable operating
segments are strategic market units based on the customers and the markets
served.

II. SERVICE PROVIDER NETWORKS

  A.  General

     Lucent designs, develops, manufactures and services systems, including
software, which enable service providers to provide wireline and wireless
access, local, long distance and international voice, data and video and cable
services. The SPN segment includes the product groups responsible for Lucent's
optical networking, switching solutions, access, wireless networks and
communications software businesses. It also includes the businesses which are
focused on the needs of cable television operators and data networking systems
for service providers as well as the sales and support organizations responsible
for offers, sales, distribution, installation and maintenance for service
provider customers worldwide.
                                        4
<PAGE>   5

     Lucent's systems connect, route, manage and store voice, data and video in
any combination, and are used for: wireline access; local and long distance
switching; intelligent network services and signaling; wireless communications,
including both cellular and personal communications services ("PCS"); and
high-speed, broadband multi-functional communications. Lucent has a wireline
local access installed base (the number of access lines serviced by switches
manufactured by Lucent) of approximately 150 million lines.

     Lucent designs, develops, manufactures, sells, and services each of the
five broad elements that comprise communications networks for service providers:
switching systems, which route information through the network; transmission
systems (including optical networking and access products) which provide the
communications path through the network that carries information between points
in the network as well as to and from subscribers; operation support systems,
which enable service providers to manage the work flow, planning, surveillance,
management, provisioning and continuous testing of their networks; intelligent
network/application software, which enables service providers to offer a broad
array of enhanced and differentiated services; and cable systems, which provide
the transport media between points in a network (as described below under
Enterprise and MCT). These systems collectively comprise the infrastructure that
enables communications service providers to provide traditional narrow band
voice and data services and enables both new and traditional network operators
to offer broadband multi-media services.

     In fiscal year 1999, Lucent acquired or merged with several companies
related to the SPN segment's business, including: Nexabit, a developer of
high-speed switching equipment and software that directs traffic along
telecommunications networks; Ascend Communications, Inc., a developer,
manufacturer and seller of wide area networking solutions; Kenan Systems
Corporation, a developer of third-party billing and customer care software; Wave
Access Ltd., a developer of high-speed systems for wireless data communications;
and Quadritek Systems, Inc., a start-up developer of next-generation Internet
protocol network administration software solutions.

  B.  Switching Solutions

     Lucent manufactures, develops, markets and manages switching products and
software for the service provider market. Lucent's primary switching products
are the 5ESS(R) switch for local and long distance switching and international
gateways, the 4ESS(TM) Digital Switch for long distance and international
switching and the new 7R/E (TM) Packet Solutions switch.

     Lucent's primary switching solutions products include:

     - 5ESS(R)-2000 Switch for local, toll, international gateway and wireless
       network service providers around the globe. The 5ESS switch is used
       throughout the world to provide a combination of network applications,
       including local and long distance switching and international gateways,
       operator services, network signaling, intelligent networking and wireless
       switching. The 5ESS switch, with the Company's 5E12 AnyMedia(R) software,
       enables network operators to offer a large number of new data services
       and local number portability, as well as simultaneous wireline and
       wireless, local, long distance and international services.

     - 7R/E Packet Solutions portfolio (includes the 7R/E Call Feature Server)
       is for use by emerging or existing service providers to build new packet
       networks. In addition, the 7R/E Packet Driver allows existing service
       providers to evolve their circuit-based networks to packet networks to
       handle increasing data traffic as needed. It delivers both voice and data
       services over Internet protocol ("IP") or Asynchronous Transfer Mode
       ("ATM") networks. The 7R/E Packet Driver permits service providers to use
       a substantial percent of their existing hardware when they migrate to
       packet networks. The 7R/E OneLink Manager(TM) gives service providers a
       single tool to easily and cost-effectively handle operations,
       administration, management, and provisioning across all network elements.

     - GTD-5(R) Switch for local network service providers

     - 4ESS Switch for toll and international gateway applications

                                        5
<PAGE>   6

     - Subscriber loop carrier systems, including the SLC(R)-5 and SLC-2000,
       sold primarily to local exchange carriers

     - AnyMedia(R) Access System is a global platform designed to provide
       network access from any medium (copper/fiber and voice/data/video)

  C.  Optical Networking

     Lucent designs, manufactures and markets optical networking systems,
offering a complete portfolio of optical networking products. Lucent's family of
optical networking systems provides service providers with fast, efficient
information transport over fiber-optic lines. The enabler of optical networking
is photonics, a technology that uses light particles, or photons, to transport
information over hair-thin glass fibers.

     Most transmission systems currently comply with one of two similar
standards designed to promote the implementation of maximum transmission
capacity with the greatest simplicity and lowest cost for service providers. The
Synchronous Optical Network ("SONET") standard has been widely adopted in North
America. The Synchronized Digital Hierarchy ("SDH") predominates throughout the
rest of the world. Lucent markets transmission access systems supporting both
standards.

     Lucent's primary optical networking products include:

     - Dense Wavelength Division Multiplexing ("DWDM") systems such as the
       WaveStar(TM) 40G OLS and 400G OLS which use prism-like technology to
       combine the information generated by up to 80 individual lasers onto a
       single strand of fiber-optic cable.

     - Systems that automatically route large amounts of information from fiber
       to fiber, such as the WaveStar Bandwidth Manager and WaveStar DACS.

     - Systems that combine many low-speed electronic signals into a single
       high-speed signal, and then convert that signal to an optical signal for
       transmission over fiber-optic cable. Examples include the current SONET
       and SDH product lines (FT 2000, DDM 2000, ISM 2000, SLM 2000) as well as
       the new global product line (WaveStar(TM) 2.5G, WaveStar(TM) 10G,
       WaveStar(TM) 40G Express).

  D.  Wireless Networks

     Lucent manufactures and markets total-system solutions for the global
wireless networks industry. Lucent provides end-to-end capabilities for
operators to plan, deploy, operate and maintain mobile and fixed wireless
networks to maximum efficiency, and to competitively meet their customers'
needs. Lucent's portfolio includes Mobile Switching Centers, base station
products, and network support software. Lucent also provides global customer
technical support and training.

     Lucent's solutions for wireless network operators encompass all of the
major wireless mobile network standards, including AMPS, TDMA, CDMA and GSM,
spreading over a broad frequency spectrum including: 800 MHz, 900 MHz, 1800 MHz
or 1900 MHz. Lucent's solutions offer scaleable platforms for wireless services
that are fully compatible with the larger telecommunications environment of
today, yet are able to evolve to next-generation networks.

     Lucent's three primary wireless product families include:

     - Mobile Switching centers that provide the transfer of calls within the
       wireless network and interface to the public switched telephone networks.

     - Operations and maintenance centers which are software systems allowing
       for the provisioning, diagnostics and administration of the wireless
       networks.

     - Base station systems that are the radio systems that transmit and receive
       subscriber calls and manage handoffs as customers move from cell to cell.

                                        6
<PAGE>   7

  E.  Communications Software

     Lucent develops open, standards-based, multi-vendor software products and
services to help service providers manage their complex, converging voice and
data networks. Lucent's portfolio of software solutions includes software for
network and service management, billing and customer care, programmable
switching, and intelligent network services for wireline (fixed), wireless
(mobile), Internet, and converging networks. Lucent's solutions are modular and
scalable and designed to help reduce costs.

     Lucent's primary communications software products include:

     - Operations Support Software -- Lucent's Kenan Systems provides
       established and growing service providers with service ready solution
       sets that include: convergent customer care and billing management;
       multiple switching software platforms; network performance and assurance;
       number portability; service activation, provisioning, and management;
       transport provisioning; and wireless/mobile network management. Some of
       our modular, scalable, leading-edge software products include: Arbor(R)
       Product Suite, Actiview(R) Service Management, ConnectVu(TM)
       Configuration Management, Integrated Transport Management, Mechanized
       Loop Testing, NetMinder(TM) System Network Performance, Network Fault
       Management, and OneVision(R) Network Management Solution.

     - Intelligent Network Services -- Lucent's Intelligent Network ("IN")
       provides a broad range of targeted, flexible, end-to-end solutions for
       wireline and wireless providers. The services run on a proven intelligent
       network platform that supports the world's major national and
       multi-national IN protocols. Our IN portfolio contains over 50 IN
       services including Calling Card Services, Prepaid, Number Portability and
       Over-the-Air Activation Function and several servers and platforms such
       as Service Control Point, Service Creation Environment and Compact
       Service Node.

     - Programmable Switching -- Lucent's Programmable Switching Solutions gives
       service providers and third parties the ability to quickly develop and
       deploy new advanced-type services. Our Programmable Switching Solutions
       include: SoftSwitch -- a Bell Labs-developed "software switch" that
       enables seamless connectivity between public and internet telephony
       networks, 7R/E -- a portfolio of ATM and IP Packet data networking
       solutions products delivering over 3,000 services to packet network
       operators, and multiple products from our recent acquisition of Excel
       Switching Corporation.

  F.  Data Networking -- Service Providers and Access

     Lucent develops, markets, sells and services data networking solutions for
service provider customers worldwide. For the service provider market, Lucent's
product and services portfolio includes ATM, Frame Relay, IP, Digital Subscriber
Line ("DSL"), Broadband ATM Access, Remote Access and Network Management
offerings.

     Lucent's primary data networking and access solutions for service providers
include:

     - Lucent's GRF multigigabit routers deliver high performance in dynamic
       heavy-traffic IP networking environments. Routers are network controllers
       that determine the best routing for data transmission between end
       stations. They perform their operations by looking at network layer
       information found in data packets and either forwarding the packets
       directly to a destination or sending them through a series of
       intermediate devices.

     - The GX Smart Core ATM product family includes the GX 550 Smart Core ATM
       Switch -- a scalable, high-capacity switching system that provides the
       necessary capacity, performance, and port fanout capabilities for carrier
       services. ATM switches incorporate a cell-based switching and
       multiplexing communications technology which permits transportation of
       substantially all traffic types (e.g., video, voice, data, interactive
       video, etc.). ATM is a connection-oriented technology -- i.e., before
       data can be transferred, a connection between the sending and receiving
       nodes must be established.

     - Lucent's NX64000 multi-terabit switch/router is an architectural
       innovation that provides high-speed optical interfaces and integrates
       substantially all of the key core requirements onto a single,
       carrier-class multi-service device. It provides features of ATM switches
       and high-capacity routers.
                                        7
<PAGE>   8

     - B-STDX Multiservice wide area network ("WAN") switches (deployed to build
       core frame relay networks) are carrier-class switches which are evolving
       as an access point to the next-generation WAN with the addition of
       internetworking modules for IP and ATM services for high-speed trunking
       and low-speed converged access. Frame relay technology allows bits to be
       packaged and sent out into the network with source and destination
       addresses. Products include the B-STDX 8000, B-STDX 9000 and B-STDX 8200.
       Another Lucent multi-service WAN switch is the CBX(TM) 500 which is of
       greater bandwidth than the B-STDX family of products. In addition, Lucent
       has its MAX family of WAN access switches.

     - Lucent's Stinger(TM) DSL Access Concentrator is a new carrier class DSL
       access concentrator. Access concentrators are call aggregation devices
       designed for large dial-in applications such as Internet service
       providers. They aggregate analog and digital calls over channelized lines
       such as T1/E1 and T3/E3. The Stinger offers features that ATM brings to
       multi-service networks, including effective bandwidth management and high
       availability. Addressing the needs of carriers implementing cell-based
       backbone networks, it features high-capacity traffic aggregation
       capabilities and performance. Other DSL access concentrators include the
       DSLTNT, DSL MAX 20 and the DSL Terminator 100 Access Concentrators.

  G.  NetCare(R) Professional Services -- Service Providers and Engineering
Services

     Lucent's NetCare Professional Services provides a comprehensive suite of
value added services in the communications industry. NetCare Professional
Services includes the full lifecycle of planning, design, implementation and
operations support services that allow customers to manage their networks.

     The NetCare Professional Services unit is focused on network planning and
design, consulting, integration and support services, including remote
diagnostics and around-the-clock network monitoring services. In addition,
NetCare Professional Services offers specialized solutions focused on clients'
network security, performance and service level management, Microsoft Windows
2000, and voice/data convergence requirements.

     The NetCare Professional Services unit is focused on network engineering,
provisioning, installation, and warranty and post-warranty support. In addition,
Netcare Professional Services offers specialized solutions for system upgrades
and conversions, system health assessments, capacity planning, network
optimization, and program/project management services of complex network
implementations.

  H.  Cable Communications

     Lucent's Cable Communications provides a set of integrated products and
services that enables cable network operators to offer customers full-featured,
reliable IP telephony service, high-speed data access and digital video over
their existing cable networks.

     Marketed as Lucent CableConnect(SM) Solutions, CableConnect is part of
Lucent's End to End Solution(SM)service program that includes all elements
needed to upgrade existing cable networks. CableConnect Solutions include
network management services (planning, implementation, and maintenance), a full
portfolio of network elements including switching and access infrastructure
components, cable headend products, and premises equipment for the subscriber's
home, as well as provisioning, billing, and customer care software platforms.

     Lucent's solutions deliver IP telephony and high-speed data access via the
PathStar(TM) Access Server and 7R/E.

  I.  Markets/Sales/Distribution

     The principal customers for Lucent's systems in the SPN segment are service
providers that provide wireline and wireless local, long distance and
international telecommunications services, including local, long distance and
international telecommunications companies, cable television companies and
internet service providers. Lucent's systems for service providers are installed
to expand the capacity and features offered by existing networks, to replace
older technology in existing networks and to establish new networks for entrants
into deregulated or previously unserved markets. See "Outlook -- Reliance on
Major Customers/Multi-Year Contracts."

                                        8
<PAGE>   9

     As a result of structural, public policy and technological changes since
the mid-1980's, the telecommunications industry has undergone a period of
significant growth in the number of lines in service and applications offered.
In developed markets, deregulation has permitted new market entrants to
construct networks. In response, existing service providers have expanded beyond
traditional offerings and are offering new services. In emerging markets,
privatization, competition and economic expansion have increased demand for the
systems marketed by Lucent's SPN business and its competitors. At the same time,
technological advances also have increased demand by reducing operating costs
and facilitating new applications, including multi-functional services.

     Lucent markets and sells its SPN systems worldwide, primarily through a
direct sales force. Many of Lucent's SPN sales are made pursuant to general
purchase agreements, which establish the terms and conditions and provide for
price determination to be made on a contract bid basis. In addition, certain of
the large infrastructure projects are conducted under long-term, fixed-price
contracts. See "Outlook -- Reliance on Major Customers/Multi-Year Contracts."

     As a result of the increasing complexity of SPN systems and the high cost
of developing and maintaining in-house expertise, service providers typically
demand complete, integrated turn-key projects. Service providers are
increasingly seeking overall network or systems solutions that require an
increased software content which would enable them to rapidly deploy new and
differentiable services. In response, Lucent has formed an organization focused
on turn-key network engineering projects for both public and private sector
customers. Lucent markets integrated solutions for the project and engineers,
designs and installs the network, including equipment and software manufactured
by both Lucent and third parties.

     Increasingly, as a result of the financial demands of major network
deployments, service providers are looking to their suppliers to arrange for
financing. The ability to provide financing is a requirement to conduct business
in certain emerging U.S. and non-U.S. markets and in some cases Lucent furnishes
or guarantees financing for customers. As a result, Lucent works with its
customers to structure and lay off financing packages. See "Outlook -- Future
Capital Requirements."

     In order to market its product line for service products worldwide, Lucent
has established wholly-owned subsidiaries and joint ventures with local
companies in many countries.

  J.  Competition

     Lucent believes that its key competitive assets in the SPN segment are its
broad product line, large installed base, relationship with key customers,
technological expertise and new product and software development capabilities.
Lucent's primary competitors in the service provider market are four very large
European and North American companies which have substantial technological and
financial resources and which offer similar broad product catalogs. These
competitors are Alcatel Alsthom, Northern Telecom Limited, Siemens AG and
Telefonaktiebolaget LM Ericsson. Lucent estimates that in 1998, Lucent and these
four competitors collectively accounted for approximately 39% of the world's
service provider network systems sales, with Lucent's accounting for about 11%
of world sales.

     In addition, in each of Lucent's product areas covered in the SPN segment,
Lucent faces significant competition from other companies which do business in
one or a number of such product areas. For example, in wireless systems,
Motorola, Inc. and Nokia Corporation, which are very large companies with
substantial technological and financial resources, are two additional
significant competitors. In optical networking and communications software,
competition in the markets includes hundreds of smaller competitors. Lucent is
also encountering competition from companies that design and manufacture data
networking equipment such as Cisco Systems Inc. As Lucent continues to expand
its SPN business, it is likely that other competitors will arise in each new
technology or market area.

  K.  Customer Dependency

     Historically, a limited number of customers have provided a substantial
portion of the SPN segment and total revenues. These customers include AT&T,
SPN's largest customer, as well as other large service providers such as the
Regional Bell Operating Companies ("RBOCs"). The communications industry is
experiencing a

                                        9
<PAGE>   10

consolidation of both U.S. and non-U.S. companies. The loss of any of these
customers, or any substantial reduction in orders by any of these customers,
could materially adversely affect Lucent's operating results in the SPN segment
and total results.

     Concurrent with this consolidation among the larger service providers, the
dynamics of the marketplace have created opportunities for new competitors to
enter the market. Lucent is diversifying its customer base in the SPN segment
and seeking out new types of customers globally. These new customers include
competitive access providers and local exchange carriers, wireless service
providers, cable television network operators and internet service providers.

  L.  Sources and Availability of Raw Materials -- See "Sources and Availability
of Raw Materials"

  M.  Seasonality

     Historically, revenues and earnings related to the SPN segment have been
higher in the first fiscal quarter. This is primarily due to the fact many of
Lucent's large customers in the SPN segment have historically delayed a
disproportionate percentage of their capital expenditures until the fourth
quarter of the calendar year (Lucent's first fiscal quarter). Lucent has taken
measures to manage the seasonality of its business related to the SPN segment by
changing the date on which its fiscal year ends as well as its compensation
programs for employees, resulting in a more uniform distribution of revenues and
earnings throughout the year.

  N.  Intellectual Property -- See "Patents, Trademarks and Other Intellectual
Property".

  O.  Industry Practices Impacting Working Capital

     Existing industry practices affect working capital and cash flow provided
by (or required for) operations include the level and variability of customer
orders relative to the volume of production, vendor lead times and/or materials
availability for critical high dollar parts, inventory levels held to achieve
rapid customer fulfillment, the provisions of extended payment terms to
customers, the provision of return/stock rotation rights for certain key
customers and distributors and the extension of financing terms. Also, see
"Outlook -- Future Capital Requirements".

III. ENTERPRISE NETWORKS

  A.  General

     Lucent designs, develops, manufactures and services voice and data
communications systems and software for small, mid-sized and large multinational
businesses, government agencies and schools. Enterprise primarily offers
premises-based communications servers for voice and data; e-business solutions;
call center and other customer relationship management software and
applications; messaging systems and applications; wireless systems; conferencing
systems; Internet-based and LAN and WAN products; Systimax network cabling for
buildings; and network management software, such as policy management and
directory services; and network design, integration and management and
maintenance services. Enterprise serves more than 1 million business locations
in the United States and more than 90 countries. Products are sold through
Lucent's direct sales force and through a network of distributors, dealers and
value added resellers.

     During fiscal year 1999, Lucent merged with Mosaix, Inc., a provider of
software that links companies' front and back offices and helps them deliver
more responsive and efficient customer service.

  B.  Enterprise Voice

     Lucent's core business communications system products are enterprise
communications servers and private switching systems (PBXs and key systems),
primarily located at the customer's premises, that permit a number of users to
access and use telephony, messaging, customer relationship management and
web-based applications via telephones or terminals. Lucent's communications
servers interoperate over LAN, WAN, wired and wireless networks, as well as in
stand-alone applications. As a market leader in communications systems in the
U.S.

                                       10
<PAGE>   11

market, Lucent offers wired and wireless communications systems for large
customers and systems for smaller businesses and home offices through an
extensive distribution network as well as through its direct sales capacity.

     Lucent's messaging and response systems store and forward voice, data and
images and conduct initial call processing, which integrates PBX and computer
functions. In addition, Lucent is a technological leader in the development of
speech recognition algorithms, which have been incorporated into both public and
private call processing applications, such as operator services.

     Lucent's Customer Relationship Management Systems (Call Centers) integrate
the hardware and software associated with computing, telephony, and multimedia
messaging and response applications. Call centers are the initial entry point
for customers to access businesses via the telephone and the Internet. Lucent's
systems permit the routing and administration of a large volume of incoming
calls, and the integration with business databases of customer and product
information. Lucent's call center systems are used by companies in diverse
industries such as financial services, retailing and transportation. The call
center environment in which these companies operate is characterized by hundreds
of service agents located in geographically dispersed networked sites,
processing tens of thousands of calls per day. For example, using these systems,
businesses can provide their customers with the ability to check balances or
order status, to place orders, and to receive additional information and
support.

     Lucent is also a worldwide leader in providing multimedia messaging
equipment and services to telephone companies, cellular service providers,
businesses, governments and educational institutions in more than 90 countries.
Messaging is a key productivity tool for corporations around the world. Lucent's
messaging systems are used by companies around the globe.

     Lucent's primary voice products for enterprise networks include:

     - Definity(R) communications servers include the flagship Definity
       Enterprise Communications Server (ECS), Definity ProLogix(TM) Solutions,
       and Definity One. All Definity servers transport telephony over three
       networks: voice, IP and ATM. All three servers support a range of
       applications, including messaging, conferencing, call centers and
       wireless. The Definity One, designed for small and branch offices, runs
       on an NT Server and supports up to 168 ports. Definity ProLogic
       Solutions, designed for small and mid-sized businesses, supports up to
       600 ports. The Definity ECS, designed for mid-sized and large businesses
       scales up to 25,000 ports.

     - Merlin Magix(TM) and Partner Advanced Communications System (ACS). Merlin
       Magix is a modular hybrid PBX system that gives small and mid-sized
       businesses the ability to access the Internet and public switched
       telephone network using a single platform. It is designed for up to 80
       lines.

     - CentreVu(R) Customer Care Solutions comprise a broad array of systems,
       software and professional services that include multimedia customer care
       and computer telephony applications, customer relationship management
       software, predictive dial solutions and interactive voice response
       solutions. CentreVu Supervisor gives call center supervisors the ability
       to monitor, administer and analyze the performance of call center
       operations from a desktop or laptop PC; CentreVu Explorer software
       collects and stores historical call information; CentreVu Exchange
       consolidates detailed call distribution and voice response reporting from
       multiple sites, making it easier for managers to analyze and allocate
       call center resources; CentreVu Advocate software uses predictive
       algorithms to automatically anticipate, control and optimize the
       allocation of call center resources to minimize caller wait times, reduce
       the number of abandoned calls, lower network costs and balance agent
       workloads while matching callers with the agents who can best serve their
       needs; CentreVu Internet Solutions enables callers to browse a web site
       and click on an icon to talk with an agent; CentreVu Response Solutions
       automates telephone interactions of all types -- using built-in scripts
       and digitized speech, it responds to callers, prompts the caller, looks
       up and delivers information and routes the call for additional service;
       CRM Central 2000 supports multimedia customer contacts, manages and
       delivers critical business and customer information, automatically
       triggers the work required to fulfill requests and monitors service
       levels to ensure quality.

     - Lucent Messaging Solutions includes a wide range of servers and software
       for enterprises and service providers. Major offers for enterprises
       include: Intuity(TM)Audix(TM) Multimedia Messaging System, which uses
       industry-standard components to meet the voice, fax and e-mail
       integration messaging needs of
                                       11
<PAGE>   12

       businesses of all sizes; Octel Messaging Servers that support up to
       30,000 users; Octel Unified Messenger(TM), which provides a single
       mailbox for voice, e-mail and fax that can be accessed and managed from a
       PC and telephone; Octel Visual Messenger, which allows users to view and
       manage all of their voice and fax messages from a PC; www.messenger, a
       standards-based tool that lets users access their messaging mailboxes
       through a web browser; and OctelDesigner(TM), which allows the creation
       of a wide range of customized voice/fax messaging and computer telephony
       applications. Lucent also offers messaging systems to telecommunications
       service providers, which, in turn, provide voice mail services to their
       residential, business and wireless customers. Lucent's AnyMedia(TM)
       Messaging family allows subscribers to send messages from anywhere, to
       anyone, at anytime, with any device, on any network.

  C.  Data Networking -- Enterprise

     Lucent provides a wide range of data networking solutions for enterprise
networks, LAN offerings, WAN products, firewall and virtual private networking
appliances, intrusion detection systems and IP address and policy management
software.

     In addition to certain products previously described under "Data
Networking -- Service Providers and Access," Lucent's primary data networking
products for enterprise networks include:

     - CAJUN(TM) CAMPUS SWITCHES -- a comprehensive family of LAN switches
       designed for increasing bandwidth requirements and demands associated
       with the convergence of data, voice and video applications across
       enterprise networks. These Ethernet, ATM and multifunction products range
       from stackable units, to modular chassis platforms capable of moving vast
       amounts of backbone network traffic easily and quickly. The Cajun Campus
       product suite supports from hundreds to tens of thousands of connections
       on a network and scales in performance from four gigabits per second to
       92 Gbps.

     - WAN SOLUTIONS -- a family of WAN solutions, including Pipeline Access
       Routers which provide branch offices with high-speed, secure access to
       the Internet, and its SuperPipe Multiservice Access Routers, which are
       designed for corporate telecommuters, remote offices and small businesses
       for Internet access, remote access, Virtual Private Networks ("VPN") and
       voice and video services.

     - LUCENT MANAGED FIREWALL -- this product lets network managers run
       multiple security zones for different customers or branch offices with
       different security policies, all from a central point, with secure remote
       access, centralized supervision and comprehensive management reporting.

     - LUCENT VPN GATEWAY -- comprised of the Lucent Managed Firewall, the IPSec
       client, the Security Management Server and the RealSecure
       intrusion-detection software, VPN Gateway allows service providers and
       enterprises to deliver secure networks across shared public networks.
       With the VPN Gateway, service providers and enterprise customers can
       manage hundreds of Lucent Managed Firewall appliances and thousands of
       IPSec clients.

     - POLICY MANAGEMENT AND IP ADDRESS SOFTWARE SOLUTIONS -- include
       RealNet(TM) Rules software, a JAVA-based, client/server policy management
       software application running on Windows NT and Sun Solaris, and QIP
       Enterprise 5.0, IP address management software. RealNet Rules platforms
       allow IT professionals to define specific rules, or policies, regarding
       how network resources will be used, by whom and at what times. RealNet
       Rules integrates with QIP Enterprise 5.0, an IP address management
       software used by network managers to automate and manage IP name and
       address services in mid-to-large organizations.

  D.  NetCare Professional Services -- Enterprise

     Lucent offers a wide range of NetCare Professional Services options to
enterprise network customers, including call center design, voice and data
networking, engineering, training, remote diagnostics and dedicated on-site
technicians. On-demand services involve routine testing and diagnostics,
maintenance and repair, moves, rearrangements and software and hardware upgrade
installations. Through Lucent's NetCare Professional Services portfolio of
services, enterprise customers have access to a range of services and support
for the design, integration, management, maintenance and operation of voice,
video and data networks.

                                       12
<PAGE>   13

  E.  Government Solutions

     Lucent's Government Solutions is a sales channel representing all of
Lucent's products, services and solutions to the Federal government marketplace.
The organization serves more than 1,000 agencies, departments and offices of the
U.S. government, both domestically and abroad. Government Solutions sells
through a direct sales force, through integrators and service providers and
through a growing network of distributors, dealers and value-added resellers.

  F.  Systimax

     Lucent's SYSTIMAX(R), a structured connectivity system for commercial
applications, provides broadband multifunctional LAN interconnections within a
building or campus and is available worldwide through authorized distributors
and resellers. A single SYSTIMAX copper or fiber cable is capable of carrying
data, voice, video and intelligent building management applications
simultaneously.

     Lucent's remote diagnostics and repair capability permits Lucent to
monitor, test, maintain and resolve problems from its regional service centers.
Many of Lucent's systems are designed with intelligent software which
establishes a real-time link between the customer premises and a regional
service center's expert system. This permits the customer to reduce its system
down-time and enables Lucent to automate many maintenance and repair tasks.

  G.  Markets/Sales/Distribution

     Lucent markets its systems and services in the Enterprise segment to large
and small businesses and government agencies through a large, direct sales force
and through a network of agents, dealers and distributors. In the United States,
Lucent effects these sales primarily through the direct sales force, while sales
elsewhere occur through dealers and distributors as well as the direct sales
force. Lucent's systems for the Enterprise segment are deployed in applications
for customer sales and service, conferencing and collaboration, mobility and
distributed work force, messaging and enterprise networking. Lucent fields a
large group of application specialists to design call center, distance learning
and other customized applications.

     Lucent believes that premises-based communications is transforming from
distinct voice and data networks to multimedia networks that will be able to
support any combination of voice, video and data communications simultaneously.
Lucent is designing certain business communications systems to enable its
customers to simplify their premises networks by combining separate voice, video
and data networks into a single architecture.

  H.  Competition

     Lucent believes that key competitive assets in its Enterprise segment are
service support, the ability to upgrade existing systems for new applications,
price and reliability. Lucent considers its working relationships with its
Enterprise customers and knowledge of their individual business needs to be
important competitive advantages. Lucent competes principally with three other
large companies with substantial technological and financial resources in the
Enterprise segment. These competitors are Alcatel, Northern Telecom Limited,
Siemens AG and Cisco. According to Phillips Infotech, in 1998 the first three of
these competitors and Lucent accounted for approximately 30% of the sales of
enterprise networks globally, with Lucent accounting for approximately 10%. In
addition, as the market transforms to multi-media systems, Lucent is
encountering competition from companies that design and manufacture data network
equipment.

  I.  Customer Dependency

     The Enterprise segment services well over a million customer locations
worldwide that range in size from small to medium to large businesses.
Enterprise's success depends on many segments of customers (small, medium, and
large businesses) and our ability to serve them better than our competitors. A
significant amount of the Enterprise segment's revenue comes from approximately
250 global accounts.

                                       13
<PAGE>   14

  J.  Sources and Availability of Raw Materials -- See "Sources and Availability
of Raw Materials"

  K.  Seasonality

     The Enterprise segment is not materially seasonal.

  L.  Intellectual Property -- See "Patents, Trademarks and Other Intellectual
Property"

  M.  Industry Practices Impacting Working Capital -- See "Outlook -- Future
Capital Requirements"

IV. MICROELECTRONICS AND COMMUNICATIONS TECHNOLOGIES

  A.  General

     Lucent designs, manufactures and sells integrated circuits ("ICs"),
electronic power systems, optical fiber cables, and optoelectronic components
for communications and computer applications. Lucent supplies these components
to manufacturers of communications systems and computers and also provides these
components for many of Lucent's own systems and products. Lucent offers products
in several IC product areas critical to communications applications, including
digital signal processors ("DSPs") for digital cellular phones and modems, ICs
for voice and data communications and standard-cell application specific
integrated circuits ("ASICs"). High performance cable is utilized in telephony,
data and video applications. Lucent also provides energy reserve systems, power
conversion products and optoelectronic products that are embedded into
communications and computer systems.

     During fiscal year 1999, Lucent acquired or merged with the following
companies related to the MCT segment's business: Spectran Corporation (acquired
61% ownership), a designer and manufacturer of specialty optical fiber and fiber
optic products; the Ethernet LAN Component business of Enable Semiconductor; and
Sybarus Technologies, a semiconductor design company.

  B.  Integrated Circuits

     Lucent's ICs are designed to provide advanced communications and control
functions for a wide variety of electronic products and systems. Lucent focuses
on IC products that are used in communications and computing and that require
high-performance and low-power chip architectures; complex large-scale chip
design in digital, analog and mixed-signal technologies; DSP architectures and
algorithms; high-frequency and high-voltage technologies; and high-speed data
and signal processing. Lucent offers a wide variety of standard, semi-custom and
custom products for cellular equipment, voice and data communications networks,
computers and computer peripherals, modems and consumer communications products.
Lucent has several GSM hardware/software platforms based upon a highly
integrated multiple-chip design for digital cellular phones that performs all
the key handset functions between the microphone and the antenna in both voice
and data services.

     Lucent's primary IC product groups include:

     - Access Products -- products that allow users to gain access to
       communications networks including ICs for modems, analog line cards data
       network interface cards, and PC and workstation input/output (I/O).

     - Networks and Communications Products -- products that provide high-speed
       switching and transmission of voice and data signals within the
       communications network.

     - Storage and Analog Products -- products targeted at the hard disk drive
       market (disk controllers, read channels and associated ICs) and the
       analog products market (preamps, line drivers and receivers, power
       management and other analog functions).

     - Wireless Products -- products for cellular and paging networks and
       terminals, cordless phones and digital answering machines.

                                       14
<PAGE>   15

  C.  Optoelectronics

     Lucent designs, develops and manufactures optoelectronic products which
convert electricity to light (emitters) and light to electricity (detectors),
thereby facilitating optical transmission of information. These products include
semiconductor lasers, photodetectors, integrated transmitters and receivers and
advanced-technology erbium-doped fiber amplifiers. Lucent provides these
products worldwide to manufacturers serving the telecommunications, cable
television and network computing markets. Optoelectronic products extend the
transmission capacity of fiber to meet the requirements of such applications as
internet access video-on-demand, interactive video, teleconferencing, image
transmission and remote database searching. Lucent markets a number of advanced
products, including optoelectronic components that support telecommunication
transmission; long-wavelength optical data modules for data networking; and
analog lasers for use in cable television fiber optic transmission.

     Lucent's primary optoelectronic product groups include:

     - High-Speed Transport Products -- including lasers and receivers that
       enable fiber optic communications at speeds up to 40 Gb/s. These products
       support DWDM of up to 160 channels over a single optical fiber.

     - Fiber Amplifier Products -- amplifiers that extend the transmission
       distance capabilities of optical signals up to 700 kilometers.

     - Metro and Internetworking Products -- highly integrated modules and
       subsystems that enable DWDM in metropolitan areas.

     - Submarine Products -- high reliability products for undersea transmission
       system repeaters.

     - CATV and Enterprise Products -- products that support high-speed optical
       connectivity in cable TV (CATV), LAN and enterprise applications.

  D.  Power Systems

     Lucent designs, develops and manufactures energy systems and electronic
power supplies for the telecommunications and electronic data processing
industries. These products serve applications ranging from printers to large
telephone central offices. Products include AC/DC converters, AC/DC switching
power supplies, and energy systems that provide alarm, control and backup power
management.

     Lucent's primary products for power systems include:

     - Galaxy Power Systems (GPS) providing reliable DC power for
       telecommunications and data networking applications.

     - Board Mounted Power (BMP) modules offering regulated DC power, embedded
       within computer, networking and telecommunications equipment.

     - Titania point of load power products servicing the demanding power
       requirements of high speed processors.

  E.  Fiber Optics

     Lucent designs, develops, and manufactures an extensive line of fiber optic
products, including singlemode and multimode fiber and fiber cables. With 14
cable manufacturing facilities around the world, Lucent is one of the world's
leading suppliers of optical fiber cables.

     Lucent's primary fiber optic products include:

     - Applications based fibers (TrueWave(R) optical filber family for
       submarine and long haul, and AllWave(TM) fiber for metropolitan
       networks).

     - AllWave Advantage -- optical end to end fiber cable and connectivity
       solution for metro AllWave fiber based networks.

     - Smart fiber monitoring and connectorization systems (Smart LGX).

                                       15
<PAGE>   16

  F.  Intellectual Property Licensing

     The intellectual property licensing organization has the responsibility to
license, protect, and maintain Lucent's intellectual property and to enforce the
company's intellectual property rights. This responsibility includes the
licensing of Lucent's patents and technology to third parties and negotiating
agreements regarding Lucent's licensing of intellectual property from others.

  G.  Market/Sales/Distribution

     Lucent's MCT products are sold globally to service providers and
manufacturers of communications systems and computers through a combination of
direct sales, manufacturers' representatives and distributors. In addition,
Lucent's energy power systems and fiber optics generally are sold directly to
U.S. and foreign telephone companies. Lucent's MCT customers are competing in
markets characterized by rapid technological changes, decreasing product life
cycles, price competition and increased user applications. These markets have
experienced significant expansion in the number and types of products and
services they offer to end-users, particularly in personal computing, portable
access communication devices and expanded networking capability. As a result,
Lucent's MCT customers continue to demand products which are smaller, require
less power, are more complex, provide greater functionality and are produced
with shorter design cycles and less manufacturing lead time.

     In addition to the revenues from sales to third parties, ICs, Power
Systems, optoelectronic products and fiber optics are also key components of
Lucent's systems sold to the SPN and Enterprise segments. These MCT products
compete with products of third party manufacturers for inclusion in Lucent's SPN
and Enterprise systems and products.

     Lucent has traditionally sold its power products via direct sales to large
service providers and OEM's. Lucent has increased market coverage to both
Service Provider and OEM customers by building indirect sales channels.

  H.  Competition

     Lucent considers its technological leadership product leadership, and
relationships with key customers to be important competitive assets. The market
for MCT products is global and generally highly fragmented. Lucent's competitors
differ widely among product categories. Lucent's competitors in certain IC
product categories include Texas Instruments Incorporated, Conexant Systems
Incorporated, STMicroelectronics Incorporated and LSI Logic Corp.; in electronic
power systems, competitors include Astec, a subsidiary of Emerson Electric Co.,
Artesyn Technologies Inc. and Marconi plc; in optoelectronics, competitors
include Fujitsu Limited, Northern Telecom and JDS Uniphase Corporation; and in
optical fiber, competitors include Corning, Siecor, Alcatel, and Societe
Internationale Pirelli.

     Lucent believes that key competitive factors in the microelectronics and
communications technology marketplace are the early involvement in customers'
future applications requirements, the speed of product and technological
innovation, price, customer service and manufacturing capacity. Other important
competitive factors include quality, reliability and local manufacturing
presence.

  I.  Customer Dependency

     Lucent sells its MCT products to a wide variety of global electronic
systems manufacturers and service providers. Over the past several years, the
proportion of revenues gained from customers outside of Lucent has climbed
significantly. Because of the high fixed-cost nature of many MCT manufacturing
processes, the loss of any significant customer could have a material adverse
effect on Lucent's operating results in the MCT segment.

  J.  Sources and Availability of Raw Materials -- See "Sources and Availability
of Raw Materials"

                                       16
<PAGE>   17

  K.  Seasonality

     The MCT segment may experience variability in revenues due to limited
seasonality, changes in market conditions, the timing of product development
cycles and the life cycle of major programs by customers. However, the MCT
segment is not materially seasonal.

  L.  Intellectual Property -- See "Patents, Trademarks and Other Intellectual
Property"

  M.  Industry Practices Impacting Working Capital -- See "Outlook -- Future
Capital Requirements"

V. BELL LABORATORIES

     Lucent's SPN, Enterprise and MCT segments have been and will continue to be
supported by the technological expertise provided by Bell Labs, one of the
world's foremost industrial research and development organizations. Bell Labs
provides support for the businesses of Lucent and conducts basic research. Bell
Labs has made significant discoveries and advances in communications science and
technology, software design and engineering and networking. These contributions
include the invention of the transistor and the design and development of ICs
and many types of lasers. Areas of Bell Labs research and development work in
recent years include: networking software; data networking; lightwave
transmission, especially the wavelength division multiplexing systems ("WDM")
which offer greater transmission capacity than other transmission systems;
electronic switching technology, which enables rapid call processing, increased
reliability and reduced network costs; and microelectronics components, which
bring the latest advantages of very large scale integration to the full range of
products offered by the Company. Bell Labs' research and development activities
continue to focus on the core technologies critical to Lucent's success, which
are software, network design and engineering, microelectronics, photonics, data
networking and wireless/cellular.

     Bell Labs is a leader in software research, development and engineering for
communications applications. For example, its innovations in fault-tolerant
software have enabled Lucent to achieve a level of system reliability with
off-the-shelf commercial processors that allows Lucent to reduce its reliance on
custom microprocessors.

     Bell Labs has contributed many innovations in voice quality, is a leader in
the development of digital signal processing, and has developed a number of
innovative algorithms for high-quality speech and audio. These innovations have
contributed to Lucent's implementation of speech processing applications which
include text-to-speech synthesis, speech recognition and automatic translation
of speech from one language to another. They are used in many of Lucent's
products, including the elemedia(R) products for Internet applications, and are
sold to outside customers.

     Bell Labs also has led in the development of software-based networking
technologies that support Lucent's systems and products. Recently, it has
developed systems for digital cellular, PCS, mobile computing and wireless LANs.
Bell Lab's technology has allowed the recent introduction of data networking
products such as the Internet Telephony Server SP, PacketStar IP switch,
PacketStar IP Services platform and the WaveStar 400G high capacity WDM optical
networking system.

     Similarly, Bell Labs' advances extend to the microlasers used in today's
broadband multifunctional transmission systems, and to today's optical
amplifiers and TrueWave fiber. Current photonic research includes work on
passive optical networks, photonic switching and quantum wire lasers.

VI. RECENT DEVELOPMENTS

     On October 15, 1999, Lucent merged with International Network Services
(INS), a global provider of network consulting, design and integration. On
November 3, 1999, Lucent merged with Excel Switching Corporation, a Hyannis,
Massachusetts-based developer of programmable switches. On November 12, 1999,
Lucent merged with Xedia Corporation, a privately held Acton,
Massachusetts-based maker of routers for corporate networks.

                                       17
<PAGE>   18

VII. BACKLOG

     The Company's backlog, calculated as the aggregate of the sales price of
orders received from customers less revenue recognized, was approximately $6,900
million and $10,200 million on September 30, 1999 and 1998, respectively.
Approximately $1,800 million of the orders included in the September 30, 1999
backlog are scheduled for delivery after September 30, 2000. However, all orders
are subject to possible rescheduling by customers. Although the Company believes
that the orders included in the backlog are firm, some orders may be canceled by
the customer without penalty, and the Company may elect to permit cancellation
of orders without penalty where management believes that it is in the Company's
best interest to do so. About $1,630 million of the amount at September 30, 1999
is under large, multi-year contracts of which about $790 million is scheduled
for delivery after September 30, 2000 and is included in the $1,800 million
referred to above. The amount under large, long-term contracts is with the
Ministry of Post and Telecommunications of Saudi Arabia which requires annual
appropriations by the Saudi Arabian government.

VIII. PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS

     From October 1, 1997 to September 30, 1999, Lucent was issued 1,950 patents
in the United States and 3,305 in foreign countries. Lucent owns approximately
9,841 patents in the United States and 16,815 in foreign countries. These
foreign patents are, for the most part, counterparts of Lucent's United States
patents. Many of the patents owned by Lucent are licensed to others and Lucent
is licensed to use certain patents owned by others. In connection with the
Separation, Lucent has entered into an extensive cross-licensing agreement with
AT&T and NCR Corporation. See "Separation Agreements -- Patent Licenses and
Related Matters."

     Lucent markets its products primarily under its own name and mark. Lucent
considers its many trademarks to be valuable assets. Many of its trademarks are
registered throughout the world.

     Lucent relies on patent, trademark, trade secret and copyright laws both to
protect its proprietary technology and to protect Lucent against claims from
others. Lucent believes that it has direct intellectual property rights or
rights under cross-licensing arrangements covering substantially all of its
material technologies. Given the technological complexity of Lucent's systems
and products, however, there can be no assurance that claims of infringement
will not be asserted against Lucent or against Lucent's customers in connection
with their use of Lucent's systems and products, nor can there be any assurance
as to the outcome of any such claims. Lucent was assigned ownership of the
substantial majority of AT&T's patents in connection with the Separation.
Pursuant to the patent license agreement entered into among Lucent, AT&T and
NCR, Lucent has been given rights, subject to specified limitations, to pass
through to its customers certain rights under approximately 400 patents retained
by AT&T.

IX. SOURCES AND AVAILABILITY OF RAW MATERIALS

     Lucent makes significant purchases of electronic components, copper, glass,
silicon, and other materials and components from many U.S. and non-U.S. sources.
Lucent has been able to obtain sufficient materials and components from sources
around the world to meet its needs. Lucent also develops and maintains
alternative sources for essential materials and components. Occasionally,
additional inventories of specific components are maintained to minimize the
effects of potential shortages. Lucent does not have a concentration of sources
of supply of materials, labor or services that, if suddenly eliminated, could
severely impact its operations. See also "Outlook -- Readiness for Year 2000."

X. OUTLOOK

  A.  Forward Looking Statements

     This Form 10-K report contain forward-looking statements that are based on
current expectations, estimates, forecasts and projections about the industries
in which Lucent operates, management's beliefs and assumptions made by
management. In addition, other written or oral statements which constitute
forward-looking statements may be made by or on behalf of Lucent. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words and similar expressions are intended to identify such

                                       18
<PAGE>   19

forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions ("Future
Factors") which are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. Lucent undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.

     Future Factors include increasing price and product/services competition by
foreign and domestic competitors, including new entrants; rapid technological
developments and changes and Lucent's ability to continue to introduce
competitive new products and services on a timely, cost-effective basis; the mix
of products and services; the achievement of lower costs and expenses; customer
demand for Lucent's products and services; the ability to successfully integrate
acquired companies; readiness for Year 2000; the impact of Year 2000 on customer
spending habits; U.S. and non-U.S. governmental and public policy changes that
may affect the level of new investments and purchases made by customers; changes
in environmental and other domestic and foreign governmental regulations;
protection and validity of patent and other intellectual property rights;
reliance on large customers; technological, implementation and cost/financial
risks in the increasing use of large, multi-year contracts; the cyclical nature
of Lucent's business; the outcome of pending and future litigation and
governmental proceedings; the continued availability of financing, financial
instruments and financial resources in the amounts, at the times and on the
terms required to support Lucent's future business. These are representative of
the Future Factors that could affect the outcome of the forward-looking
statements. In addition, such statements could be affected by general industry
and market conditions and growth rates, general U.S. and non-U.S. economic
conditions including interest rate and currency exchange rate fluctuations and
other Future Factors.

  B.  General Market Competition

     Lucent continues to face significant competition and expects that the level
of competition on pricing and product offerings will intensify. Lucent expects
that new competitors will enter its markets as a result of the trend toward
global expansion by foreign and domestic competitors as well as continued
changes in technology and public policy. These competitors may include entrants
from the telecommunications, software, data networking and semiconductor
industries. Existing competitors have, and new competitors may have, strong
financial capability, technological expertise, well-recognized brand names and a
global presence. Such competitors include Alcatel Alsthom, Cisco Systems, Inc.,
Ericsson, Northern Telecom Limited, Motorola, Nokia and Siemens AG. As a result,
Lucent's management periodically assesses market conditions and redirects
Lucent's resources to meet the challenges of competition. Steps Lucent may take
include acquiring or investing in new businesses and ventures, partnering with
existing businesses, delivering new technologies, closing and consolidating
facilities, disposing of assets, reducing work force levels or withdrawing from
markets. See also, the "Competition" section above under "Service Provider
Networks," "Enterprise Networks" and "Microelectronic and Communications
Technologies."

  C.  Dependence on New Product Development

     The markets for Lucent's principal products are characterized by
rapidly-changing technology, evolving industry standards, frequent new product
introductions and evolving methods of building and operating communications
systems for service providers and business customers. Lucent's operating results
will depend to a significant extent on its ability to continue to introduce new
systems, products, software and services successfully on a timely basis and to
reduce costs of existing systems, products, software and services. The success
of these and other new offerings is dependent on several factors, including
proper identification of customer needs, cost, timely completion and
introduction, differentiation from offerings of Lucent's competitors and market
acceptance. In addition, new technological innovations generally require a
substantial investment before any assurance is available as to their commercial
viability, including, in some cases, certification by U.S. and non-U.S.
standards-setting bodies.

  D.  Reliance on Major Customers/Multi-Year Contracts

     The contribution of AT&T to Lucent's total revenues and percentage of total
revenues for the three years ended September 30, 1999, 1998 and 1997 were $4,587
million (12%), $3,841 million (12.1%), and
                                       19
<PAGE>   20

$3,789 million (13.7%), respectively. In addition, sales to seven service
providers including AT&T, some of which may vary from year to year, constituted
approximately 29.7% and 34.4% of total revenues in the twelve months ended
September 30, 1999 and 1998, respectively.

     The purchasing behavior of Lucent's largest customers has increasingly been
characterized by the use of fewer, larger contracts. Lucent has significant
contracts for the sale of infrastructure systems to service providers which
extend over a multi-year period, and expects to enter into similar contracts in
the future. These contracts typically involve longer negotiating cycles, require
the dedication of substantial amounts of working capital and other resources,
and in general require costs that may substantially precede recognition of
associated revenues. Moreover, in return for larger, longer-term purchase
commitments, customers often demand more stringent acceptance criteria, which
can also cause revenue recognition delays. Lucent has increasingly provided or
arranged long-term financing for customers as a condition to obtain or bid on
infrastructure projects. Certain multi-year contracts involve new technologies
that may not have been previously deployed on a large-scale commercial basis. On
its multi-year contracts, Lucent may incur significant initial cost overruns and
losses that are recognized in the quarter in which they become ascertainable.
Further, profit estimates on such contracts are revised periodically over the
lives of the contracts, and such revisions can have a significant impact on
reported earnings in any one quarter. See "Future Capital Requirements," and the
Customer Dependency" section above under "Service Provider Networks,"
"Enterprise Networks" and "Microelectronic and Communications Technologies".

  E.  Readiness for Year 2000

     Lucent is in the final phase of a major effort to minimize the impact of
the Year 2000 date change on Lucent's products, information technology systems,
facilities and production infrastructure. The Year 2000 challenge is a priority
within Lucent at every level of the Company. Primary Year 2000 preparedness
responsibility rests with program offices which have been established within
each of Lucent's product groups and corporate centers. A corporate-wide Lucent
Year 2000 Program Office ("LYPO") monitors and reports on the progress of these
offices. Each program office has a core of full-time individuals augmented by a
much larger group who have been assigned specific Year 2000 responsibilities in
addition to their regular assignments. Further, Lucent has engaged third parties
to assist in its readiness efforts in certain cases. LYPO has established a
methodology to measure, track and report Year 2000 readiness status consisting
of five steps: inventory; assessment; remediation; testing; and deployment. In
addition, LYPO tracks and reports on the development and deployment of Year 2000
contingency plans.

     Lucent has completed programs to make its commercially available products
Year 2000 ready and has developed evolution strategies for customers who own
non-Year 2000 ready Lucent products. All of the upgrades and products needed to
support customer migration are generally available.

     Lucent is completing its extensive efforts to alert customers who have
non-Year 2000 ready products, including direct mailings, phone contacts and
participation in user and industry groups. Lucent also has a Year 2000 website
www.lucent.com/y2k that provides Year 2000 product information. Lucent continues
to cooperate in the Year 2000 information sharing efforts of the Federal
Communications Commission and other governmental bodies.

     Lucent believes it has sufficient resources to provide timely support to
its customers that require product migrations or upgrades. However, because this
effort is heavily dependent on customer cooperation, Lucent monitors customer
response and takes steps to encourage customer responsiveness, as necessary.

     With very few exceptions, Lucent has completed the five steps of its Year
2000 readiness program with respect to its factories, information systems and
facilities. LYPO has developed a formal "exceptions" tracking process to approve
and track a small number of cases in which factors such as third party
dependencies prevented project completion by Lucent's internal target date of
June 30, 1999. Virtually all of the exceptions identified have since been
closed. In addition, Lucent has implemented various change management mechanisms
to allow the Company to maintain Year 2000 readiness even as systems are
modified or replaced to address non-Year 2000 business needs.

                                       20
<PAGE>   21

     To ensure the continued delivery of third party products and services,
Lucent's procurement organization has analyzed Lucent's supplier base and has
sent surveys to approximately 5,000 suppliers. To supplement this effort, Lucent
has conducted more detailed readiness reviews of the Year 2000 status of the
suppliers ranked as most critical based on the nature of their relationship with
Lucent, the product/service provided and/or the content of their survey
responses. Over ninety percent 90% of Lucent's critical suppliers have reported
completion of their Year 2000 readiness efforts. However, Lucent continues to
monitor the Year 2000 status of all of its critical suppliers to minimize its
Year 2000 supply chain risk and is developing appropriate contingency responses
as the risks become clearer.

     Lucent has committed considerable resources to Year 2000 contingency
planning throughout the enterprise. These plans focus on risks posed by the Year
2000 date change, as well as other sensitive dates such as February 29, 2000.
Lucent's plans are designed both to mitigate the impact of Year 2000 failures,
as well as providing emergency response mechanisms and supporting the prompt
resumption of regular operations. Lucent is currently in the process of
completing the preparations necessary to support the implementation of its
contingency plans. In addition, the plans are updated as new information is
obtained, the risks posed by external dependencies become clearer and customer
support needs become more focused.

     A network of corporate center and business group communications centers,
staffed on a continuous basis during the period before and after the Year 2000
date transition, will support Lucent's contingency planning efforts. These
communications centers will facilitate the handling of Year 2000 issues that may
arise. An initial test of the Lucent Communications Center network was conducted
in connection with the September 9, 1999 date. The September 9, 1999 date passed
with no reported impact on Lucent's business.

     The risk to Lucent resulting from the failure of third parties in the
public and private sector to attain Year 2000 readiness is the same as other
firms in Lucent's industry and other business enterprises generally. The
following are representative of the types of risks that could result in the
event of one or more major failures of Lucent's information systems, factories
or facilities to be Year 2000 ready, or similar major failures by one or more
major third party suppliers to Lucent: (1) information systems -- could include
interruptions or disruptions of business and transaction processing such as
customer billing, payroll, accounts payable and other operating and information
processes, until systems can be remedied or replaced; (2) factories and
facilities -- could include interruptions or disruptions of manufacturing
processes and facilities with delays in delivery of products, until
non-compliant conditions or components can be remedied or replaced; and (3)
major suppliers to Lucent -- could include interruptions or disruptions of the
supply of raw materials, supplies and Year 2000 ready components which could
cause interruptions or disruptions of manufacturing and delays in delivery of
products, until the third party supplier remedied the problem or contingency
measures were implemented. Risks of major failures of Lucent's principal
products could include adverse functional impacts experienced by customers, the
costs and resources for Lucent to remedy problems or replace products where
Lucent is obligated or undertakes to take such action and delays in delivery of
new products.

     Lucent believes that it is taking the necessary steps to resolve Year 2000
issues; however, given the possible consequences of failure to resolve
significant Year 2000 issues, there can be no assurance that any one or more
such failures would not have a material adverse effect on Lucent. Lucent
estimates that the cost of efforts to prepare for Year 2000 from calendar year
1997 through 2000 is about $560 million, of which an estimated $515 million has
been spent as of September 30, 1999. Lucent has been able to reprioritize work
projects to largely address Year 2000 readiness needs within its existing
organizations. As a result, most of these costs represent costs that would have
been incurred in any event. These amounts cover costs of the Year 2000 readiness
work for inventory, assessment, remediation, testing, deployment and contingency
planning, including fees and charges of contractors for outsourced work and
consultant fees. Costs for previously contemplated updates and replacements of
Lucent's internal systems and information systems infrastructure have been
excluded without attempting to establish whether the timing of non-Year 2000
replacement or upgrading was accelerated.

     While the Year 2000 cost estimates above include additional costs, Lucent
believes, based on available information, that it will be able to manage its
total Year 2000 transition without any material adverse effect on its business
operations, products or financial prospects.

                                       21
<PAGE>   22

     The actual outcomes and results could be affected by Future Factors
including, but not limited to, the continued availability of skilled personnel,
cost control, the ability to locate and remediate software code problems,
critical suppliers and subcontractors meeting their commitments to be Year 2000
ready and provide Year 2000 ready products and timely actions by customers.

  F.  European Monetary Union -- Euro

     On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
and adopted the Euro as their new common legal currency. The Euro is currently
trading on currency exchanges and the legacy currencies will remain legal tender
in the participating countries for a transition period between January 1, 1999
and January 1, 2002. During the transition period, cash-less payments can be
made in the Euro, and parties can elect to pay for goods and services and
transact business using either the Euro or a legacy currency. Between January 1,
2002 and July 1, 2002, the participating countries will introduce Euro notes and
coins and withdraw all legacy currencies so that they will no longer be
available.

     Lucent has in place a joint European-United States team representing
affected functions within the Company. This team has been evaluating Euro
related issues which may affect Lucent as they develop, including its
pricing/marketing strategy, conversion of information technology systems,
existing contracts and currency risk and risk management in the participating
countries. The Euro conversion may affect cross-border competition by creating
cross-border price transparency.

     Lucent will continue to evaluate issues involving the introduction of the
Euro as further accounting, tax and governmental legal and regulatory guidance
is available. Based on current information and Lucent's current assessment,
Lucent does not expect that the Euro conversion will have a material adverse
effect on its business or financial condition.

  G.  Future Capital Requirements

     Lucent's working capital requirements and cash flow provided by (or used
in) operating activities can vary greatly from quarter to quarter, depending on
the volume of production, the timing of deliveries, the build-up of inventories,
the payment terms offered to customers, and the extension of credit to
customers.

     Service providers, inside and outside the United States, increasingly have
required their suppliers to arrange or provide long-term financing for them as a
condition to obtaining or bidding on infrastructure projects. These projects may
require financing in amounts ranging from modest sums to over a billion dollars.
Lucent has increasingly provided or arranged long-term financing for customers.
As market conditions permit, Lucent's intention is to lay off these long-term
financing arrangements, which may include both commitments and drawn down
borrowings, to financial institutions and investors. This enables Lucent to
reduce the amount of its commitments and free up additional financing capacity.

     As of September 30, 1999, Lucent had made commitments or entered into an
agreement to extend credit to customers up to an aggregate of approximately
$7,100 million. As of September 30, 1999, approximately $1,600 million had been
advanced and was outstanding. In addition, as of September 30, 1999, Lucent had
made commitments or entered into agreements to guarantee debt of customers up to
an aggregate of approximately $420 million of which approximately $310 million
was outstanding.

     In addition to the above arrangements, Lucent will continue to provide or
commit to financing where appropriate for its business. The ability of Lucent to
arrange or provide financing for its customers will depend on a number of
factors, including Lucent's capital structure and level of available credit, and
its continued ability to lay off commitments and drawn down borrowings on
acceptable terms.

     Lucent believes that its credit facilities, cash flow from operations,
long- and short-term debt financings and receivables securitizations, will be
sufficient to satisfy its future working capital, capital expenditure, research
and development and debt service requirements. Lucent has a shelf registration
statement to register the possible offering from time to time of long-term debt
of which $1,800 million remained available at September 30, 1999. Lucent
believes that it will be able to access the capital markets on terms and in
amounts that will be satisfactory to it, and that it will be able to obtain bid
and performance bonds, to arrange or provide customer financing as
                                       22
<PAGE>   23

necessary, and to engage in hedging transactions on commercially acceptable
terms, although there can be no assurance that Lucent will be successful in
regard to any of the foregoing.

  H.  Growth Outside the United States, Foreign Exchange and Interest Rates

     Lucent intends to continue to pursue growth opportunities in markets
outside the United States. In many markets outside the United States,
long-standing relationships between potential customers of Lucent and their
local providers and protective regulations, including local content requirements
and type approvals, create barriers to entry. In addition, pursuit of such
growth opportunities outside the United States may require significant
investments for an extended period before returns on such investments, if any,
are realized. Such projects and investments could be adversely affected by
reversals or delays in the opening of foreign markets to new competitors,
exchange controls, currency fluctuations, investment policies, repatriation of
cash, nationalization, social and political risks, taxation and other factors,
depending on the country in which such opportunity arises. Difficulties in
foreign financial markets and economies, and of foreign financial institutions,
could adversely affect demand from customers in the affected countries.

     Lucent is exposed to market risk from changes in foreign currency exchange
rates and interest rates, which could impact its results of operations and
financial condition. Lucent manages its exposure to these market risks through
its regular operating and financing activities and, when deemed appropriate,
through the use of derivative financial instruments. A significant change in the
value of the dollar against the currency of one or more countries where Lucent
sells products to local customers or makes purchases from local suppliers may
materially adversely affect Lucent's results. Lucent attempts to mitigate any
such effects through the use of foreign currency contracts, although there can
be no assurances that such attempts will be successful.

     While Lucent hedges certain foreign currency transactions, the decline in
value of non-U.S. dollar currencies, may, if not reversed, adversely affect
Lucent's ability to contract for product sales in U.S. dollars because Lucent's
products may become more expensive to purchase in U.S. dollars for local
customers doing business in the countries of the affected currencies.

  I.  Legal Proceedings and Environment -- See "Environmental Matters" and "Item
3. Legal Proceedings".

  J.  Seasonality -- See "Seasonality" above under "Service Provider Networks,"
"Enterprise Networks" and "Microelectronic and Communications Technologies."

  K.  Intellectual Property -- See "Patents, Trademarks and Other Intellectual
Property Rights" above.

XI. OPERATING REVENUE, RESEARCH AND DEVELOPMENT EXPENSE AND FOREIGN AND DOMESTIC
OPERATIONS

     For information about the consolidated operating revenues contributed by
Lucent's major classes of products and services, consolidated research and
development expenses, and foreign and domestic operations, see revenue tables
and discussion on pages 31 through 34, Consolidated Statements of Income on page
44 and Note 12 thereto on pages 58 through 60 of Lucent's annual report to
security holders for the fiscal year ended September 30, 1999. Such information
is incorporated herein by reference pursuant to General Instruction G(2).

XII. EMPLOYEE RELATIONS

     On September 30, 1999, Lucent employed approximately 153,000 persons,
including 76.5% located in the United States. Of these domestic employees, about
40% are represented by unions, primarily the Communications Workers of America
("CWA") and the International Brotherhood of Electrical Workers ("IBEW"). Lucent
entered into new five-year agreements with the CWA and IBEW expiring May 31,
2003.

XIII. ENVIRONMENTAL MATTERS

     Lucent's current and historical operations are subject to a wide range of
environmental protection laws. In the United States, these laws often require
parties to fund remedial action regardless of fault. Lucent has remedial and
investigatory activities underway at numerous current and former facilities. In
addition, Lucent was named a
                                       23
<PAGE>   24

successor to AT&T as a potentially responsible party ("PRP") at numerous
"Superfund" sites pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") or comparable state statutes.
Under the Separation and Distribution Agreement, Lucent is responsible for all
liabilities primarily resulting from or relating to the operation of Lucent's
business as conducted at any time prior to or after the Separation including
related businesses discontinued or disposed of prior to the Separation, and
Lucent's assets including, without limitation, those associated with these
sites. In addition, under such Separation and Distribution Agreement, Lucent is
required to pay a portion of contingent liabilities paid out in excess of
certain amounts by AT&T and NCR, including environmental liabilities.

     It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. Lucent records an environmental
reserve when it is probable that a liability has been incurred and the amount of
the liability is reasonably estimable. This practice is followed whether the
claims are asserted or unasserted. Management expects that the amounts reserved
will be paid out over the periods of remediation for the applicable sites which
typically range from 5 to 30 years. Reserves for estimated losses from
environmental remediation are, depending on the site, based primarily upon
internal or third-party environmental studies, and estimates as to the number,
participation level and financial viability of any other PRPs, the extent of the
contamination and the nature of required remedial actions. Accruals are adjusted
as further information develops or circumstances change. The amounts provided
for in Lucent's consolidated financial statements for environmental reserves are
the gross undiscounted amount of such reserves, without deductions for insurance
or third-party indemnity claims. In those cases where insurance carriers or
third-party indemnitors have agreed to pay any amounts and management believes
that collectibility of such amounts is probable, the amounts are reflected as
receivables in the financial statements. Although Lucent believes that its
reserves are adequate, there can be no assurance that the amount of capital
expenditures and other expenses which will be required relating to remedial
actions and compliance with applicable environmental laws will not exceed the
amounts reflected in Lucent's reserves or will not have a material adverse
effect on Lucent's financial condition, results of operations or cash flows. Any
amounts of environmental costs that may be incurred in excess of those provided
for at September 30, 1999 cannot be determined.

     On November 16, 1998, Lucent signed a Consent Order with the Pennsylvania
Department of Environmental Protection settling alleged violations resulting
from etching equipment being installed in 1991 and 1992 without undergoing the
proper state air permit with payment of a civil penalty of approximately
$294,000, a portion of which will be devoted to the creation of community
environmental projects.

XIV. SEPARATION AGREEMENTS

     For the purposes of governing certain of the relationships between Lucent
and AT&T (including NCR) following the Separation, the Company, AT&T and NCR
entered into the Separation and Distribution Agreement and the Ancillary
Agreements to which they are parties (collectively, the "Separation
Agreements"). The Ancillary Agreements include the Employee Benefits Agreement;
the Brand License Agreement; the Patent License Agreement and other
patent-related agreements; the Technology License Agreement and other
technology-related agreements; and the Tax Sharing Agreement and other
tax-related agreements. Certain of the Separation Agreements, including certain
of the Agreements summarized below, are exhibits to this Form 10-K.

     Reference is made to such exhibits for the full text of the provisions of
those Agreements, and the agreement summaries below are qualified in their
entirety by reference to the full text of such Agreements. Capitalized terms
used in this section and not otherwise defined in this Form 10-K shall have
their respective meanings set forth in the Separation and Distribution Agreement
(except that the term "Company" is used in lieu of the term "Lucent") or other
Separation Agreement.

  Separation and Distribution Agreement

     Under the Separation and Distribution Agreement, Lucent assumed or agreed
to assume, and agreed to perform and fulfill, all the "Lucent Liabilities" (as
defined in such Agreement) in accordance with their respective terms. Without
limitation, the Lucent Liabilities generally include all liabilities and
contingent liabilities relating to Lucent's present and former business and
operations, and contingent liabilities otherwise

                                       24
<PAGE>   25

assigned to Lucent; contingent liabilities related to AT&T's discontinued
computer operations (other than those of NCR) were assigned to the Company. The
Separation and Distribution Agreement provides for the sharing of contingent
liabilities not allocated to one of the parties in specified proportions, and
also provides that each party will share specified portions of contingent
liabilities related to the business of any of the other parties that exceed
specified levels.

     Ability to Terminate Certain Rights.  The Separation and Distribution
Agreement provides that certain rights granted to Lucent and the members of
Lucent Group will be subject to the following provisions. Except as otherwise
expressly provided, in the event that, at any time prior to February 1, 2001,
Lucent or any member of Lucent Group offers, furnishes or provides any
Telecommunications Services of the type offered by the AT&T Services Business as
of the Closing Date, then AT&T may, in its sole discretion: (a) terminate all or
any portion of the rights granted by AT&T under the Brand License Agreement (b)
exercise the right to require Lucent to transfer to AT&T certain personnel,
information, technology and software under the Supplemental Agreements; (c)
terminate all or any portion of the rights to patents and technology of AT&T or
any member of the AT&T Group granted to Lucent and the members of Lucent Group
pursuant to the Patent License Agreement and the Technology License Agreement;
and (d) direct Lucent and the members of Lucent Group to reconvey to AT&T all
interests in any and all patents and technology in which Lucent or any member of
Lucent Group was granted an undivided one-half interest pursuant to the Patent
Assignments or the Technology Assignment and Joint Ownership Agreements. Lucent
and the members of Lucent Group will not be deemed to offer, furnish or provide
any Telecommunications Services (and the foregoing provisions will not apply)
solely by virtue of certain specified investments in Persons that offer, furnish
or provide Telecommunications Services or by virtue of offering, furnishing or
providing Telecommunications Services below a specified de minimis amount.

  Employee Benefits Agreement

     AT&T and Lucent entered into the Employee Benefits Agreement that governs
the employee benefit obligations of the Company, including both compensation and
benefits, with respect to active employees and retirees assigned to the Company.
Pursuant to the Employee Benefits Agreement, Lucent assumed and agreed to pay,
perform, fulfill and discharge, in accordance with their respective terms, all
Liabilities (as defined) to, or relating to, former employees of AT&T or its
affiliates employed by Lucent and its affiliates and certain former employees of
AT&T or its affiliates (including retirees) who either were employed in Lucent
Business (as defined) or who otherwise are assigned to Lucent for purposes of
allocating employee benefit obligations (including all retirees of Bell Labs).

  Patent Licenses and Related Matters

     The Company, AT&T and NCR executed and delivered assignments and other
agreements, including a patent license agreement, related to patents then owned
or controlled by AT&T and its subsidiaries. The patent assignments divided
ownership of patents, patent applications and foreign counterparts among the
Company, AT&T and NCR, with the substantial portion of those then owned or
controlled by AT&T and its subsidiaries (other than NCR) being assigned to the
Company. A small number of the patents assigned to Lucent are jointly owned with
either AT&T or NCR. Certain of the patents that Lucent jointly owns with AT&T
are subject to a joint ownership agreement under which each of Lucent and AT&T
has full ownership rights in the patents. The other patents that Lucent jointly
owns with AT&T, and the patents that Lucent jointly owns with NCR, are subject
to defensive protection agreements with AT&T and NCR, respectively, under which
Lucent holds most ownership rights in the patents exclusively. Under these
defensive protection agreements, AT&T or NCR, as the case may be, has the
ability, subject to specified restrictions, to assert infringement claims under
the patents against companies that assert patent infringement claims against
them, and has consent rights in the event Lucent wishes to license the patents
to certain third parties or for certain fields of use under specified
circumstances. The defensive protection agreements also provide for one-time
payments from AT&T and NCR to the Company.

     The patent license agreement entered into by the Company, AT&T and NCR
provides for cross-licenses to each company, under each of the other company's
patents that are covered by the licenses, to make, use, lease, sell and import
any and all products and services of the businesses in which the licensed
company (including specified related companies) is now or hereafter engaged. The
cross-licenses also permit each company, subject
                                       25
<PAGE>   26

to specified limitations, to have third parties make items under the other
companies' patents, as well as to pass through to customers certain rights under
the other companies' patents with respect to products and services furnished to
customers by the licensed company. In addition, the rights granted to Lucent and
AT&T include the right to license third parties under each of the other
company's patents to the extent necessary to meet existing patent licensing
obligations as of March 29, 1996, and AT&T has the right, subject to specified
restrictions and procedures, to ask Lucent to license third parties under a
limited number of identified patents that were assigned to the Company.

  Technology Licenses and Related Matters

     The Company, AT&T and NCR executed and delivered assignments and other
agreements, including the Technology License Agreement, related to technology
then owned or controlled by AT&T and its subsidiaries. Technology includes
copyrights, mask works and other intellectual property other than trademarks,
trade names, trade dress, service marks and patent rights. The technology
assignments divide ownership of technology among the Company, AT&T and NCR, with
Lucent and AT&T owning technology that was developed by or for, or purchased by,
Lucent's business or AT&T's services business, respectively, and NCR owning
technology that was developed by or for, or purchased by, NCR. Technology that
is not covered by any of these categories is owned jointly by Lucent and AT&T
or, in the case of certain specified technology, owned jointly by the Company,
AT&T and NCR.

     The Technology License Agreement entered into by the Company, AT&T and NCR
provides for royalty-free cross-licenses to each company to use the other
companies' technology existing as of April 10, 1996, except for specified
portions of each company's technology as to which use by the other companies is
restricted or prohibited.

ITEM 2. PROPERTIES.

     At September 30, 1999, Lucent operated 40 manufacturing sites, of which 19
were located in the United States, occupying in excess of 19 million square feet
substantially all of which were owned. The remaining 21 sites were located in 14
countries.

     At September 30, 1999, Lucent operated 241 warehouse sites, of which 202
were located in the United States, occupying in excess of 4 million square feet,
substantially all of which were leased. The remaining 39 sites were located in
24 countries.

     At September 30, 1999, Lucent operated 973 office sites (administration,
sales, field service), of which 662 were located in the United States, occupying
in excess of 16 million square feet, of which 10 million square feet of which
were leased. The remaining 311 sites were located in 57 countries.

     At September 30, 1999, Lucent operated additional sites in 17 cities, of
which 11 were located in the United States, with significant research and
development activities, occupying in excess of 8 million square feet, of which
approximately 2 million square feet were leased.

     Lucent believes its plants and facilities are suitable and adequate to meet
its current needs.

ITEM 3. LEGAL PROCEEDINGS.

     In the normal course of business, Lucent is subject to proceedings,
lawsuits and other claims, including proceedings under laws and regulations
related to environmental and other matters. (Also see Item 1. "Business -- XIV
Separation Agreements" regarding the assumption by Lucent of certain liabilities
and contingent liabilities.) All such matters are subject to many uncertainties
and outcomes are not predictable with assurance. Consequently, Lucent is unable
to ascertain the ultimate aggregate amount of monetary liability or financial
impact with respect to these matters at September 30, 1999. While these matters
could affect operating results of any one quarter when resolved in future
periods and, while there can be no assurance with respect thereto, it is
management's opinion that after final disposition, any monetary liability or
financial impact to Lucent beyond that provided in the consolidated balance
sheet at September 30, 1999 would not be material to Lucent's annual
consolidated financial statements.
                                       26
<PAGE>   27

     See also the discussion in Item 1. "Business -- XIII. Environmental
Matters" for additional legal proceedings, and environmental matters and
proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

     During the fourth quarter of the fiscal year covered by this report on Form
10-K, no matter was submitted to a vote of Security-Holders.

                                    PART II

ITEMS 5. THROUGH 8.

     The information required by these items is included in pages 29 through 64
of the Company's annual report to security holders for the fiscal year ended
September 30, 1999. The referenced pages of the Company's annual report to
security holders have been filed as Exhibit 13 to this document. Such
information is incorporated herein by reference, pursuant to General Instruction
G(2). The New York Stock Exchange is the principal market for the Company's
Common Shares. As of November 30, 1999, there were approximately 1,677,810
shareholders of record.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in this separate disclosure because the Company did not furnish
such information in its definitive proxy statement prepared in accordance with
Schedule 14A.

                      EXECUTIVE OFFICERS OF THE REGISTRANT
                            (AS OF DECEMBER 1, 1999)

<TABLE>
<CAPTION>
                                                                                  BECAME LUCENT
                                                                                    EXECUTIVE
                NAME                  AGE                                          OFFICER ON
                ----                  ---                                         -------------
<S>                                   <C>   <C>                                   <C>
Richard A. McGinn...................  53    Chairman of the Board and Chief            2-96
                                            Executive Officer
Bernardus J. Verwaayen..............  47    Vice Chairman                              9-97
John T. Dickson.....................  53    Executive Vice President and Chief        10-99
                                            Executive Officer, Microelectronics
                                            and Communications Technologies
Arun N. Netravali...................  53    President, Bell Labs                      10-99
William T. O'Shea...................  52    Executive Vice President and Chief        10-99
                                            Executive Officer, Enterprise
                                            Networks
Donald K. Peterson..................  50    Executive Vice President and Chief         2-96
                                            Financial Officer
Richard J. Rawson...................  47    Senior Vice President and General          2-96
                                            Counsel
Patricia F. Russo...................  47    Executive Vice President and Chief         2-96
                                            Executive Officer, Service Provider
                                            Networks
</TABLE>

                                       27
<PAGE>   28

     All of the above executive officers have held high level managerial
positions with the Company and prior thereto with AT&T or its affiliates for
more than the past five years, except in the case of Messrs. Peterson and
Verwaayen who have held such positions since September 1, 1995 and September 1,
1997, respectively. Prior to joining AT&T, Mr. Peterson held various senior
executive positions at Northern Telecom, Inc., a telecommunications equipment
company, which included President of Nortel Communications Systems, Inc. (from
January 1993 to September 1995). Mr. Verwaayen joined the Company after serving
as President of PTT Telecom, the national telecommunications operator of the
Netherlands since May 1988. He was a co-founder of Unisource, the pan-European
alliance of Telia of Sweden, Swiss Telecom and PTT Telecom.

     Officers are not elected for a fixed term of office but hold office until
their successors have been elected.

  Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and officers to file reports of holdings and transactions in the
Company's Common Shares with the Securities and Exchange Commission and the New
York Stock Exchange. Based on Company records and other information, the Company
believes that all SEC filing requirements applicable to its directors and
officers with respect to the Company's fiscal year ending September 30, 1999
were complied with.

     The other information required by Item 10 is included in the Company's
definitive proxy statement dated December 21, 1999, on pages 10 through 12. Such
information is incorporated herein by reference, pursuant to General Instruction
G(3).

ITEMS 11. THROUGH 13.

     The information required by Items 11 through 13 is included in the
Company's definitive proxy statement dated December 21, 1999, on pages 7 through
9, page 13 and pages 23 through page 37. Such information is incorporated herein
by reference, pursuant to General Instruction G(3).

                                       28
<PAGE>   29

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a) Documents filed as a part of this Form 10-K:

<TABLE>
<CAPTION>
                                                              PAGES
                                                              -----
<S>                                                           <C>
(1) Management's Discussion and Analysis of Results of
Operations and Financial Condition..........................   *
(2) Report of Management....................................   *
(3) Report of Independent Accountants.......................   *
(4) Financial Statements:
  (i) Consolidated Statements of Income.....................   *
  (ii) Consolidated Balance Sheets..........................   *
  (iii) Consolidated Statements of Changes in Shareowners'
     Equity.................................................   *
  (iv) Consolidated Statements of Cash Flows................   *
  (v) Notes to Consolidated Financial Statements............   *
(5) Financial Statement Schedules:
  (i) Report of Independent Accountants.....................   31
  (ii) Schedule II -- Valuation and Qualifying Accounts.....   32
</TABLE>

     Separate financial statements of subsidiaries not consolidated and 50
percent or less owned persons are omitted since no such entity constitutes a
"significant subsidiary" pursuant to the provisions of Regulation S-X, Article
3-09.
---------------
* Incorporated herein by reference to the appropriate portions in pages 29
  through 64 of the Company's annual report to security holders for the fiscal
  year ended September 30, 1999. (See Part II and Exhibit 13.)

     (6) Exhibits:

     The following documents are filed as Exhibits to this report on Form 10-K
or incorporated by reference herein. Any document incorporated by reference is
identified by a parenthetical referencing the SEC filing which included such
document.

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
<S>                   <C>
(3)(i)                Articles of Incorporation of the registrant, as amended
                      February 17, 1999 (Exhibit 3(i) to Quarterly Report on Form
                      10-Q for the quarter ended March 31, 1999, File No.
                      001-11639).
(3)(ii)               By-Laws of the registrant, as amended, October 24, 1999
(4)(i)                Indenture dated as of April 1, 1996 between Lucent
                      Technologies Inc. and the Bank of New York, as Trustee
                      (Exhibit 4A to Registration Statement on Form S-3 No.
                      333-01223).
(4)(iii)              Other instruments in addition to Exhibit 4(i) which define
                      the rights of holders of long term debt, of the registrant
                      and all of its consolidated subsidiaries, are not filed
                      herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
                      Pursuant to this regulation, the registrant hereby agrees to
                      furnish a copy of any such instrument to the SEC upon
                      request.
(10)(i)1              Separation and Distribution Agreement by and among Lucent
                      Technologies Inc., AT&T Corp. and NCR Corporation, dated as
                      of February 1, 1996 and amended and restated as of March 29,
                      1996 (Exhibit 10.1 to Registration Statement on Form S-1 No.
                      333-00703).
(10)(i)2              Tax Sharing Agreement by and among Lucent Technologies Inc.,
                      AT&T Corp. and NCR Corporation, dated as of February 1, 1996
                      and amended and restated as of March 29, 1996 (Exhibit 10.6
                      to Registration Statement on Form S-1 No. 333-00703).
</TABLE>

                                       29
<PAGE>   30

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
<S>                   <C>
(10)(i)3              Employee Benefits Agreement by and between AT&T and Lucent
                      Technologies Inc., dated as of February 1, 1996 and amended
                      and restated as of March 29, 1996 (Exhibit 10.2 to
                      Registration Statement on Form S-1 No. 333-00703).
(10)(i)4              Rights Agreement between Lucent Technologies Inc. and First
                      Chicago Trust Company of New York, as Rights Agent, dated as
                      of April 4, 1996 (Exhibit 4.2 to Registration Statement on
                      Form S-1 No. 333-00703).
(10)(i)5              Amendment to Rights Agreement between Lucent Technologies
                      Inc. and First Chicago Trust Company of New York, dated as
                      of February 18, 1998.
(10)(ii)(B)1          Brand License Agreement by and between Lucent Technologies
                      Inc. and AT&T, dated as of February 1, 1996 (Exhibit 10.5 to
                      Registration Statement on Form S-1 No. 333-00703).
(10)(ii)(B)2          Patent License Agreement among AT&T, NCR and Lucent
                      Technologies Inc., effective as of March 29, 1996 (Exhibit
                      10.7 to Registration Statement on Form S-1 No. 333-00703).
(10)(ii)(B)3          Amended and Restated Technology License Agreement among
                      AT&T, NCR and Lucent Technologies Inc., effective as of
                      March 29, 1996 (Exhibit 10.8 to Registration Statement on
                      Form S-1 No. 333-00703).
(10)(iii)(A)(1)       Lucent Technologies Inc. Short Term Incentive Program
                      (Exhibit (10)(iii)(A)(2) to the Quarterly Report on Form
                      10-Q for the quarter ended March 31, 1998).*
(10)(iii)(A)2         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Exhibit(10)(iii)(A)1 to Quarterly Report on Form 10-Q for
                      the quarter ended March 31, 1998).*
(10)(iii)(A)3         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Plan) Restricted Stock Unit Award Agreement.
(10)(iii)(A)4         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Plan) Nonstatutory Stock Option Agreement.
(10)(iii)(A)5         Lucent Technologies Inc. Deferred Compensation Plan (Exhibit
                      (10)(iii)(A)3 to the Annual Report on Form 10-K for the
                      period ended September 30, 1998).*
(10)(iii)(A)6         Pension Plan for Lucent Non-Employee Directors (Exhibit
                      10.11 to Registration Statement on Form S-1 No. 333-00703).*
                      (This plan has been terminated)
(10)(iii)(A)7         Lucent Technologies Inc. Stock Retainer Plan for
                      Non-Employee Directors (Exhibit (10)(iii)(A)5 to the Annual
                      Report on Form 10-K for the period ended September 30,
                      1998).*
(10)(iii)(A)8         Lucent Technologies Inc. Excess Benefit and Compensation
                      Plan (Exhibit (10)(iii)(A)5 to Annual Report on Form 10-K
                      for Transition Period ended September 30, 1996).*
(10)(iii)(A)9         Lucent Technologies Inc. Mid-Career Pension Plan (Exhibit
                      (10)(iii)(A)6 to Annual Report on Form 10-K for Transition
                      Period ended September 30, 1996).*
(10)(iii)(A)10        Lucent Technologies Inc. Non-Qualified Pension Plan (Exhibit
                      (10)(iii)(A)7 to Annual Report on Form 10-K for Transition
                      Period ended September 30, 1996).*
(10)(iii)(A)11        Lucent Technologies Inc. Officer Long-Term Disability and
                      Survivor Protection Plan (Exhibit (10)(iii)(A)8 to the
                      Annual Report on Form 10-K for Transition Period ended
                      September 30, 1996).*
(10)(iii)(A)12        Employment Agreement of Mr. Verwaayen dated June 12, 1997
                      (Exhibit (10)(iii)(A)(1)) to the Annual Report on Form 10-K
                      for the period ended September 30, 1997).*
(10)(iii)(A)13        Employment Agreement of Mr. Peterson dated August 8, 1995
                      (Exhibit (10)(iii)(A)(9) to the Annual Report on Form 10-K
                      for the period ended September 30, 1997).*
(10)(iii)(A)14        Consulting Agreement of Mr. Schacht, effective March 1, 1998
                      (Exhibit (10)(iii)(A)5 to the Quarterly Report on Form 10-Q
                      for the period ended March 31, 1998).*
(10)(iii)(A)15        Description of the Lucent Technologies Inc. Supplemental
                      Pension Plan. (Exhibit (10)(iii)(A)13 to the Annual Report
                      on Form 10-K for the period ended September 30, 1998).*
</TABLE>

                                       30
<PAGE>   31

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
<S>                   <C>
(10)(iii)(A)16        Lucent Technologies Inc. 1999 Stock Compensation Plan for
                      Non-Employee Directors (Exhibit 10(iii)(A)14 to the Annual
                      Report on Form 10-K for the period ended September 30,
                      1998).*
(10)(iii)(A)17        Lucent Technologies Inc. Voluntary Life Insurance Plan
                      (Exhibit 10(iii)(A)15 to the Annual Report on Form 10-K for
                      the period ended September 30, 1998).
(12)                  Computation of Ratio of Earnings to Fixed Charges.
(13)                  Specified portions (pages 29 through 64) of the Company's
                      Annual Report to security holders for the year ended
                      September 30, 1999.
(21)                  List of subsidiaries of Lucent Technologies Inc.
(23)                  Consent of PricewaterhouseCoopers LLP
(24)                  Powers of Attorney executed by officers and directors who
                      signed this report.
(27)                  Financial Data Schedule.
</TABLE>

---------------
* Management contract or compensatory plan or arrangement.

     The Company will furnish, without charge, to a security holder upon request
a copy of the annual report to security holders and the proxy statement,
portions of which are incorporated herein by reference thereto. The Company will
furnish any other exhibit at cost.

     (b) Reports on Form 8-K during the last quarter of the fiscal year covered
by this Report:

     On August 2, 1999 Lucent filed a report on Form 8-K which presented the:
(1) restated consolidated financial information, including restated consolidated
financial statements, at September 30, 1998 and 1997 and for the years ended
September 30, 1998 and 1997 and the nine months ended September 30, 1996; and
(2) restated financial information, including restated condensed consolidated
financial statements, as of March 31, 1999 and for the six months ended March
31, 1999 and 1998, in each case giving retroactive effect to the merger between
Lucent and Ascend for all periods presented..

                                       31
<PAGE>   32

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareowners of Lucent Technologies Inc.:

     Our audits of the consolidated financial statements referred to in our
report dated October 25, 1999 appearing in the 1999 Annual Report to the
Shareowners of Lucent Technologies Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the consolidated financial statement schedule listed
in Item 14(5)(ii) of this Form 10-K. In our opinion, this consolidated financial
statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.

PricewaterhouseCoopers LLP
New York, New York
October 25, 1999

                                       32
<PAGE>   33

                            LUCENT TECHNOLOGIES INC.
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                              DOLLARS IN MILLIONS

<TABLE>
<CAPTION>
               COLUMN A                   COLUMN B              COLUMN C              COLUMN D     COLUMN E
               --------                   --------              --------              --------     --------
                                                                ADDITIONS
                                                       ---------------------------
                                         BALANCE AT    CHARGED TO     CHARGED TO                    BALANCE
                                        BEGINNING OF    COSTS &     OTHER ACCOUNTS                 AT END OF
             DESCRIPTION                   PERIOD       EXPENSES        (NET)        DEDUCTIONS     PERIOD
             -----------                ------------   ----------   --------------   ----------    ---------
<S>                                     <C>            <C>          <C>              <C>           <C>
Year 1999
Allowance for doubtful accounts              416           68             37             159(a)       362
Reserves related to business
  restructuring and facility
  consolidation                              251           --             --             233(b)        18
Deferred tax asset valuation allowance       261           66             15             163          179
Inventory valuation (c)                      845          279            (68)            234          822
Year 1998
Allowance for doubtful accounts              363          132            (59)             20(a)       416
Reserves related to business
  restructuring and facility
  consolidation                              569           --             --             318(b)       251
Deferred tax asset valuation allowance       234           31             45              49          261
Inventory valuation (c)                      880          257             30             322          845
Year 1997
Allowance for doubtful accounts              276          120              5              38(a)       363
Reserves related to business
  restructuring and facility
  consolidation                            1,289           --             --             720(b)       569
Deferred tax asset valuation allowance       208           86              3              63          234
Inventory valuation (c)                      815          382             19             336          880
</TABLE>

---------------
(a) Amounts written off as uncollectible, payments or recoveries.

(b) Included in these deductions were cash payments of $77, $176, and $483 for
    the years ended September 30, 1999, 1998 and 1997, respectively. In
    addition, Lucent reversed $141, $100, and $201 for the years ended September
    30, 1999, 1998 and 1997, respectively.

(c) Certain prior year amounts have been reclassified to conform to the 1999
    presentation.

                                       33
<PAGE>   34

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          LUCENT TECHNOLOGIES INC.
                                          By:        /s/ JAMES S. LUSK
                                            ------------------------------------
                                            James S. Lusk
                                            Senior Vice President and Controller

December 21, 1999

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<S>                                                <C>
Principal Executive Officer
Richard A. McGinn
  Chief Executive Officer
Principal Financial Officer
    Donald K. Peterson
       Executive Vice President and
       Chief Financial Officer
Principal Accounting Officer                                              By: /s/ JAMES S. LUSK
    James S. Lusk                                  --------------------------------------------
       Senior Vice President and                                                  James S. Lusk
       Controller                                                            (attorney-in-fact)
                                                                              December 21, 1999

Directors
  Paul A. Allaire
  Carla A. Hills
  Richard A. McGinn
  Drew Lewis
  Donald S. Perkins
  Henry B. Schacht
  Franklin A. Thomas
  John A. Young
</TABLE>

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

                                       34
<PAGE>   35

                                 EXHIBIT INDEX

     The following documents are filed as Exhibits to this report on Form 10-K
or incorporated by reference herein. Any document incorporated by reference is
identified by a parenthetical referencing the SEC filing which included such
document.

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
<S>                   <C>
(3)(i)                Articles of Incorporation of the registrant, as amended
                      February 17, 1999 (Exhibit 3(i) to Quarterly Report on Form
                      10-Q for the quarter ended March 31, 1999, File No.
                      001-11639).
(3)(ii)               By-Laws of the registrant, as amended, October 24, 1999
(4)(i)                Indenture dated as of April 1, 1996 between Lucent
                      Technologies Inc. and the Bank of New York, as Trustee
                      (Exhibit 4A to Registration Statement on Form S-3 No.
                      333-01223).
(4)(iii)              Other instruments in addition to Exhibit 4(i) which define
                      the rights of holders of long term debt, of the registrant
                      and all of its consolidated subsidiaries, are not filed
                      herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
                      Pursuant to this regulation, the registrant hereby agrees to
                      furnish a copy of any such instrument to the SEC upon
                      request.
(10)(i)1              Separation and Distribution Agreement by and among Lucent
                      Technologies Inc., AT&T Corp. and NCR Corporation, dated as
                      of February 1, 1996 and amended and restated as of March 29,
                      1996 (Exhibit 10.1 to Registration Statement on Form S-1 No.
                      333-00703).
(10)(i)2              Tax Sharing Agreement by and among Lucent Technologies Inc.,
                      AT&T Corp. and NCR Corporation, dated as of February 1, 1996
                      and amended and restated as of March 29, 1996 (Exhibit 10.6
                      to Registration Statement on Form S-1 No. 333-00703).
(10)(i)3              Employee Benefits Agreement by and between AT&T and Lucent
                      Technologies Inc., dated as of February 1, 1996 and amended
                      and restated as of March 29, 1996 (Exhibit 10.2 to
                      Registration Statement on Form S-1 No. 333-00703).
(10)(i)4              Rights Agreement between Lucent Technologies Inc. and First
                      Chicago Trust Company of New York, as Rights Agent, dated as
                      of April 4, 1996 (Exhibit 4.2 to Registration Statement on
                      Form S-1 No. 333-00703).
(10)(i)5              Amendment to Rights Agreement between Lucent Technologies
                      Inc. and First Chicago Trust Company of New York, dated as
                      of February 18, 1998 (Exhibit (10)(i)5 to the Annual Report
                      on Form 10-K for the period ended September 30, 1998).
(10)(ii)(B)1          Brand License Agreement by and between Lucent Technologies
                      Inc. and AT&T, dated as of February 1, 1996 (Exhibit 10.5 to
                      Registration Statement on Form S-1 No. 333-00703).
(10)(ii)(B)2          Patent License Agreement among AT&T, NCR and Lucent
                      Technologies Inc., effective as of March 29, 1996 (Exhibit
                      10.7 to Registration Statement on Form S-1 No. 333-00703).
(10)(ii)(B)3          Amended and Restated Technology License Agreement among
                      AT&T, NCR and Lucent Technologies Inc., effective as of
                      March 29, 1996 (Exhibit 10.8 to Registration Statement on
                      Form S-1 No. 333-00703).
(10)(iii)(A)(1)       Lucent Technologies Inc. Short Term Incentive Program
                      (Exhibit (10)(iii)(A)(2) to the Quarterly Report on Form
                      10-Q for the quarter ended March 31, 1998).*
(10)(iii)(A)2         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Exhibit(10)(iii)(A)1 to Quarterly Report on Form 10-Q for
                      the quarter ended March 31, 1998).*
(10)(iii)(A)3         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Plan) Restricted Stock Unit Award Agreement.
(10)(iii)(A)4         Lucent Technologies Inc. 1996 Long Term Incentive Program
                      (Plan) Nonstatutory Stock Option Agreement.
(10)(iii)(A)5         Lucent Technologies Inc. Deferred Compensation Plan (Exhibit
                      (10)(iii)(A)3 to the Annual Report on Form 10-K for the
                      period ended September 30, 1998).*
</TABLE>

                                       35
<PAGE>   36

<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER
    -------
<S>                   <C>
(10)(iii)(A)6         Pension Plan for Lucent Non-Employee Directors (Exhibit
                      10.11 to Registration Statement on Form S-1 No. 333-00703).*
                      (This plan has been terminated)
(10)(iii)(A)7         Lucent Technologies Inc. Stock Retainer Plan for
                      Non-Employee Directors (Exhibit (10)(iii)(A)5 to the Annual
                      Report on Form 10-K for the period ended September 30,
                      1998).*
(10)(iii)(A)8         Lucent Technologies Inc. Excess Benefit and Compensation
                      Plan (Exhibit (10)(iii)(A)5 to Annual Report on Form 10-K
                      for Transition Period ended September 30, 1996).*
(10)(iii)(A)9         Lucent Technologies Inc. Mid-Career Pension Plan (Exhibit
                      (10)(iii)(A)6 to Annual Report on Form 10-K for Transition
                      Period ended September 30, 1996).*
(10)(iii)(A)10        Lucent Technologies Inc. Non-Qualified Pension Plan (Exhibit
                      (10)(iii)(A)7 to Annual Report on Form 10-K for Transition
                      Period ended September 30, 1996).*
(10)(iii)(A)11        Lucent Technologies Inc. Officer Long-Term Disability and
                      Survivor Protection Plan (Exhibit (10)(iii)(A)8 to the
                      Annual Report on Form 10-K for Transition Period ended
                      September 30, 1996).*
(10)(iii)(A)12        Employment Agreement of Mr. Verwaayen dated June 12, 1997
                      (Exhibit (10)(iii)(A)(1)) to the Annual Report on Form 10-K
                      for the period ended September 30, 1997).*
(10)(iii)(A)13        Employment Agreement of Mr. Peterson dated August 8, 1995
                      (Exhibit (10)(iii)(A)(9) to the Annual Report on Form 10-K
                      for the period ended September 30, 1997).*
(10)(iii)(A)14        Consulting Agreement of Mr. Schacht, effective March 1, 1998
                      (Exhibit (10)(iii)(A)5 to the Quarterly Report on Form 10-Q
                      for the period ended March 31, 1998).*
(10)(iii)(A)15        Description of the Lucent Technologies Inc. Supplemental
                      Pension Plan. (Exhibit (10)(iii)(A)13 to the Annual Report
                      on Form 10-K for the period ended September 30, 1998).*
(10)(iii)(A)16        Lucent Technologies Inc. 1999 Stock Compensation Plan for
                      Non-Employee Directors (Exhibit 10(iii)(A)14 to the Annual
                      Report on Form 10-K for the period ended September 30,
                      1998).*
(10)(iii)(A)17        Lucent Technologies Inc. Voluntary Life Insurance Plan
                      (Exhibit 10(iii)(A)15 to the Annual Report on Form 10-K for
                      the period ended September 30, 1998).
(12)                  Computation of Ratio of Earnings to Fixed Charges.
(13)                  Specified portions (pages 29 through 64) of the Company's
                      Annual Report to security holders for the year ended
                      September 30, 1999.
(21)                  List of subsidiaries of Lucent Technologies Inc.
(23)                  Consent of PricewaterhouseCoopers LLP
(24)                  Powers of Attorney executed by officers and directors who
                      signed this report.
(27)                  Financial Data Schedule.
</TABLE>

---------------
* Management contract or compensatory plan or arrangement.

     The Company will furnish, without charge, to a security holder upon request
a copy of the annual report to security holders and the proxy statement,
portions of which are incorporated herein by reference thereto. The Company will
furnish any other exhibit at cost.

                                       36