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                As filed electronically with the SEC on 12/22/97.

                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

              (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For The Fiscal Year Ended September 30, 1997

                                       OR

            ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        Commission File Number 001-11639

                            LUCENT TECHNOLOGIES INC.
           A DELAWARE                                 I.R.S. EMPLOYER
           CORPORATION                                NO. 22-3408857

               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, 1997, the aggregate market value of the voting stock held by
non-affiliates was approximately $51,500,000,000.

At November 30, 1997, 642,823,185 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, 1997 (Part II)

(2) Portions of the registrant's definitive proxy statement dated December 22,
1997, 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:

                                                 Name of each exchange on
         Title of each class                         which registered

Common Stock                                     New York Stock Exchange
  (Par Value $.01 Per Share)

6.90% Notes due July 15, 2001                    New York Stock Exchange

7.25% Notes due July 15, 2006                    New York Stock Exchange


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                                TABLE OF CONTENTS


                                     PART I

Item                             Description                           Page

 1.  Business ........................................................   1

 2.  Properties ......................................................  17
 3.  Legal Proceedings ...............................................  18
 4.  Submission of Matters to a Vote of Security-Holders .............  18

                                     PART II

                                   Description

 5.  Market for Registrant's Common Equity and Related Stockholder
       Matters .......................................................  19
 6.  Selected Financial Data .........................................  19
 7.  Management's Discussion and Analysis of Financial Condition and
       Results of Operations .........................................  19
 8.  Financial Statements and Supplementary Data .....................  19
 9.  Changes in and Disagreements with Accountants on Accounting
       and Financial Disclosure ......................................  19

                                    PART III

                                   Description

10.  Directors and Executive Officers of the Registrant ..............  19
11.  Executive Compensation ..........................................  19
12.  Security Ownership of Certain Beneficial Owners and Management ..  19
13.  Certain Relationships and Related Transactions ..................  19

                                     PART IV

                                   Description

14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.  19

See page 18 for "Executive Officers of the Registrant."

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


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                                     PART I

ITEM 1. BUSINESS.

GENERAL

   Lucent Technologies Inc. ("Lucent" or the "Company") was incorporated in
Delaware in November 1995. The Company has its principal executive offices at
600 Mountain Avenue, Murray Hill, New Jersey 07974 (telephone number
908-582-8500). Prior to February 1, 1996, AT&T Corp. ("AT&T") conducted the
Company's business through various divisions and subsidiaries.

   On February 1, 1996, AT&T began executing its decision to separate the
Company into a stand-alone company (the "Separation") by transferring to the
Company the assets and liabilities relating to the Company's business. On April
10, 1996 the Company issued 112,037,037 shares of its Common Stock in an Initial
Public Offering ("IPO"), and on September 30, 1996, the Company became
independent of AT&T when AT&T distributed to its shareowners all of its shares
in the Company. As used herein, references to the "Company" or "Lucent" include
the historical operating results and activities of the business and operations
transferred to the Company in the Separation.

   In 1996, the Company changed its fiscal year to begin October 1st and end
September 30th, and reported audited financial results for a short fiscal period
beginning January 1, 1996 and ending September 30, 1996. Accordingly, unless the
context otherwise requires, references herein to "fiscal 1996" or similar terms
mean the nine-month period January 1, 1996 through September 30, 1996.

   The Company is one of the world's leading designers, developers and
manufacturers of communications systems, software and products. The Company is a
global leader in the sale of public communications systems, and is a supplier of
systems or software to most of the world's largest network operators. The
Company 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. The Company's research
and development activities are conducted through Bell Laboratories ("Bell
Labs"), one of the world's foremost industrial research and development
organizations.

SYSTEMS FOR NETWORK OPERATORS

   The Company designs, develops, manufactures and services systems and software
which enable network operators to provide wireline and wireless access, local,
long distance and international voice, data and video services and cable
television service. The Company's networks, which include switching,
transmission and cable systems, are packaged and customized with application
software, operations support systems and associated professional services.

Systems and Services

   Communications Networking Systems. The Company designs, develops,
manufactures and services advanced communications networking systems, which
include equipment, software and associated professional services. These 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
multifunctional communications.

   The Company supplies each of the five broad elements that comprise
communications networks: switching systems, which route information through the
network; transmission systems, which provide the communications path through the
network that carries information between points in the network; 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.
These systems collectively comprise the infrastructure that enables
telecommunications network operators to provide traditional narrowband voice 


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and data services and that enables both new and traditional network operators to
offer broadband multimedia services.

   The Company has a wireline local access installed base (the number of access
lines serviced by switches manufactured by the Company) of approximately 120
million lines. The Company's primary switching products are the 5ESS(R) switch
for local and long distance switching and international gateways, and the
4ESS(TM) Digital Switch (the "4ESS switch") for long distance and international
switching.

   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(TM) 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.

   The 4ESS switch, which was developed for and is primarily deployed in AT&T's
network, is used to provide domestic and international long distance switching.
The 4ESS switch can handle over 1,000,000 peak hour calls.

   The Company designs, develops, manufactures and services a broad range of
transmission access and transport systems. Network operators use these systems
to transport any combination of voice, data and video between subscribers and
the central office or between points within a network engaged in local, national
or international communications.

   World standards for transmission systems have undergone rapid technological
change in recent years. One new standard, known as Synchronous Optical Network
("SONET") in North America and SDH in other markets, maximizes transmission
capability and simplifies network management for network operators. The Company
markets systems supporting both standards.

   The Company offers a broad line of transmission access systems for the
provision of a wide range of services, including traditional telecommunications
service and broadband multifunctional services. Transmission access systems
transport information between the subscriber and the central office. The
Company's products include SLC(R)-2000, which extends fiber-based optical
transmission into the local loop. The Company's products also include the
SDV-2000, a switched digital video system which extends fiber to the curb, and
ASOS, which enables network operators to manage the work flow, planning,
surveillance, provisioning and continuous testing of their multifunctional
networks.

   The Company's transmission transport systems are utilized for high capacity
communications between points within a communications network. Many of these
products are primarily digital and provide for the movement of any combination
of voice, data, and video across fiber, coaxial and microwave based media. The
Company's products include fiber transport systems (FT 2000), digital
multiplexer systems (DDM 2000) and the digital access and cross connect systems
(DACS family of products).

   The Company has announced enhancements to its high-capacity Dense Wavelength
Division Multiplexing (DWDM) product line including a solution that directly
supports a wide range of SONET and high-speed data rates used in metropolitan
areas -- Metro Optical Line Solution (OLS) allows service providers to
economically transport a wide range of services, such as voice, video and data,
with the same circuit pack over the same fiber.

   The Company's operation support systems enhance a network operator's ability
to activate, manage and maintain its networks. These systems continuously
monitor network performance and activity level, and allow for rapid trouble
identification, load balancing and planning for network utilization. The
Company's systems support the efforts of network operators to reduce operating
costs and minimize labor by automating labor intensive tasks.

   The Company's network management systems offer a broad array of modular
software, including element managers designed for traditional telephony, video
and wireless; network managers that monitor, test and optimize the utilization
of a network; service managers that manage work flow; and business managers that
include customer service 


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systems. For example, the Company's NetMinder system is an advanced network
management routing system that mitigates network congestion through efficient
call routing and completion.

   The Company's A-I-NET(R) intelligent network products enable network
operators to offer new services that can be created, deployed or managed by
themselves, the Company, or third parties. Services created with A-I-NET
products include toll free calling (800 and 888 service in the United States),
call forwarding, call waiting, voice dialing and messaging.

   The Company has introduced products to address the growing demand for
emerging broadband multifunctional services which permit the simultaneous
transmission of any combination of voice, data and video, such as its high
capacity Asynchronous Transfer Mode ("ATM") switching product, the
GLOBEVIEW(R)-2000 Broadband System.

   In addition, the Company designs, develops, manufactures and services cable
systems, which include optical fiber, fiber optic cable, and apparatus for both
fiber and copper cable systems. The Company's cable systems are used to connect
various devices in a network and terminal devices to public and private
networks. These cable systems are deployed for outside plant and central office
wiring, and for traditional telephony, cable television, wireless networks and
broadband applications.

   The Company also supplies fiber optic cable systems, high strength, high
performance fiber for underseas cablers and outside plant turnkey systems, which
are generally large capital projects in emerging markets for the engineering and
construction of telecommunications infrastructure. The Company's TRUEWAVE(R)
optical fiber enables network operators to reduce their costs by increasing the
distance between optical amplifiers.

   Wireless Network Systems. The Company designs, develops, manufactures and
services wireless network infrastructure systems, which include the 5ESS switch,
base stations, wireless network software and operation support systems. These
systems provide network operators with the capability to offer a wide range of
cellular and other wireless communications services, including PCS, wireless
data and fixed wireless access.

   The Company's wireless cellular or PCS systems are in operation in 49 of the
top 50 United States Metropolitan Statistical Areas. The Company's primary
wireless system is the AUTOPLEX(R) System 1000 product family, which includes
the high capacity Series II base station. The base station contains the radio
transceiver that establishes wireless communications with a mobile telephone.
Base stations are arranged geographically so that mobile customers can be
"handed off" seamlessly from one base station to the next as they travel. The
network intelligence to accomplish this is housed in the Company's Mobile
Switching Center, which includes the 5ESS switch and which connects the base
stations to the public telephone network. The Company also offers base stations
for start-up applications and smaller markets, a minicell product for rural and
international markets and a microcell for congested, high traffic areas.

   Wireless technology is evolving from analog to digital. The Company provides
networks based on a variety of the leading air interface standards: AMPS, CDMA,
TDMA and GSM.

   In addition, the Company designs, develops, manufactures and services fixed
wireless access systems. The Company offers Wireless Subscriber Systems, which
support the AMPS standard, and the new AIRLOOPTM Wireless Local Loop system,
which utilizes CDMA technology. Also, the Company offers systems, based on the
DECT (digital enhanced cordless telephone) standard. All three systems enable
network operators to expand their networks in markets where traditional wireline
systems are not cost justified, and to provide telephone services as an
alternative to traditional network operators.

   The Company designs, develops, manufactures, and services CDPD-based wireless
data systems which enable wireless network operators to offer data services as
an overlay to their existing analog voice infrastructure without acquiring
additional spectrum or upgrading to a digital network. These systems offer the
increased reliability and efficiency of switched digital packet data systems.

   Due to the complexity of wireless systems, the Company also offers a broad
range of professional services, which include project management, site
acquisition, radio 


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frequency engineering, microwave relocation, construction management, cellular
optimization and wireless data support.

Markets

   The principal customers for the Company's systems are network operators that
provide wireline and wireless local, long distance and international
telecommunications services, including local, long distance and international
telecommunications companies and cable television companies. The Company's
systems for network operators 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."

   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
previously monopolistic markets. In response, existing network operators have
expanded beyond traditional franchises and are offering new services. In
emerging markets, privatization, competition and economic expansion have
increased demand for networking systems. At the same time, technological
advances also have increased demand by reducing operating costs and facilitating
new applications, including multifunctional services.

   The Company markets and sells its products worldwide primarily through a
direct sales force due to the complexity of these systems. Most of the Company's
sales of systems for network operators 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 -- Multi-Year Contracts" and "-- Seasonality."

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

   Increasingly, as a result of the financial demands of major network
deployments, network operators 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 foreign markets, and in some cases the Company
furnishes or guarantees financing for customers. As a result, the Company works
with its customers to structure and place financing packages. See "Outlook --
Future Capital Requirements."

   In order to market its product line worldwide, the Company has established
wholly owned subsidiaries and joint ventures with local companies in many
countries.

Competition

   The Company believes that its key competitive factors are its broad product
line, large installed base, relationship with key customers, technological
expertise and new product development capabilities. The Company's primary
competitors in the market for telecommunications systems 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. In 1996, the Company and these four competitors
collectively accounted for about 40% of the world's public network systems
sales, with the Company's sales accounting for about 10% of world sales.


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   In addition, in all of the Company's product areas other than switching, the
Company faces significant competition from other companies which do business in
one or a number of such product areas. For example, in wireless systems,
Northern Telecom Ltd., Telefonaktiebolaget LM Ericsson, Motorola, Inc. and Nokia
Corporation, which are very large companies with substantial technological and
financial resources, are significant competitors. In transmission and cable
systems, competition in the markets includes hundreds of smaller competitors.
The Company expects that it also may encounter competition from companies that
design and manufacture data network equipment.

BUSINESS COMMUNICATIONS SYSTEMS

   The Company designs, develops, manufactures and services communications
systems and products for large and small business customers, home offices and
government agencies. The Company's business communications systems can be
upgraded regularly with new software releases, can support local and wide area
voice and data networking and are often integral components of global enterprise
networks. The Company's systems primarily are customer premises-based private
switching systems and products, call center systems, voice processing systems,
which include voice messaging and voice response systems, and the associated
application software and professional support services. In addition, the Company
has begun to participate in the emerging multi-media products business. The
Company serves over 1.4 million business locations in the United States and
approximately 100,000 business locations in over 90 other countries.

Systems and Services

   The Company's core business communications system products are private
switching systems, generally PBXs and key systems, usually located at the
customer's premises, that permit a number of local telephones or terminals to
communicate with one another, with or without use of the public telephone
network. The Company offers wired and wireless communications systems, including
the DEFINITY(R) family of products for large customers and the MERLIN LEGEND(R)
and PARTNER(R) systems for smaller businesses and home offices. The DEFINITY
Enterprise Communication Server provides real-time voice and mixed-media call
processing. The FREEWORKS(TM) family of business mobility solutions enables
communication throughout the workplace with full freedom of movement.

   The Company'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, the Company 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.
The Company's principal systems include the INTUITY(TM) AUDIX(R), DEFINITY(R)
AUDIX(R) voice messaging systems and Octel Messaging Division systems, for use
with the Company's or a competitor's PBX; INTUITY(TM) CONVERSANT(R), a
multi-lingual interactive voice response system which can recognize speech in
nine languages/dialects; and the INTUITY Multimedia Messaging System, a system
that combines voice messaging and voice-response technology into a single
desktop application.

   In September 1997, the Company acquired Octel Communications Corporation, a
provider of voice, fax and electronic messaging technologies that complement
those offered by the Company. Octel's enterprise voice mail products, including
unified messaging, work behind almost all types and models of PBX, central
office and wireless switches and can be networked together.

   The Company's call center systems 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 a
business' telephone sales and support operation. The Company'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. The
Company'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 telephone
service agents located in geographically dispersed networked sites, processing
tens of thousands of calls per hour. 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.


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   In September 1997, the Company introduced an enhanced portfolio of
intelligent switching, access and network management products to improve data
network performance. In addition, the Company introduced DEFINITY(R)ATM to meet
customer demand for voice-over-ATM solutions. On December 16, 1997, the Company
acquired Livingston Enterprises, Inc. ("Livingston"), a global provider of
equipment used by Internet service producers to connect their subscribers to the
Internet. In 1996 the Company acquired Agile Networks ("Agile"), a provider of
intelligent data switching products. On December 10, 1997, the Company announced
that it will acquire Prominet Corporation, a start-up developer of
high-performance local area network (LAN) switching equipment. The transaction
is expected to be completed by the end of the quarter ending March 31, 1998,
subject to satisfaction of certain conditions.

   In addition, the Company's SYSTIMAX(R) structured wiring system for business
customers provides broadband multifunctional LAN interconnections within a
building or campus. These systems are comprised of fiber optic and copper cable
and associated apparatus.

   The Company offers NetCare(R) Services, a wide range of professional service
options, including call center design, voice and data network engineering,
training, remote diagnostics and dedicated on-site technicians. Their on-demand
services involve routine testing and diagnostics, maintenance and repair, moves
and rearrangements, and software and hardware upgrade installations.

   The Company's remote diagnostics and repair capability permits the Company to
monitor, test, maintain and resolve problems from its regional service centers.
Many of the Company'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 the Company to automate many maintenance and repair tasks.

Markets

   The Company markets its systems and services 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, the Company
effects these sales primarily through the direct sales force, while sales
elsewhere occur through the efforts of dealers and distributors as well as the
direct sales force. The Company's systems are deployed in applications for
customer sales and service, conferencing and collaboration, mobility and
distributed work force, messaging and enterprise networking. The Company fields
a large group of application specialists to design call center, distance
learning and other customized applications.

   The Company 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.
The Company 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.

Competition

   The Company considers its working relationships with its customers and
knowledge of their individual business needs to be important competitive
factors. The Company competes principally with three other large companies with
substantial technological and financial resources in the sale of business
communication systems. These competitors are Northern Telecom Limited, Siemens
AG (through its subsidiary Siemens Rolm Communications, Inc.) and Alcatel
Alsthom. Together with the Company, in 1996 these competitors accounted for
approximately 46% of the sales of business communications systems globally, with
the Company accounting for approximately 10%. In addition, as the market
transforms to multimedia systems, the Company expects that it also may encounter
competition from companies that design and manufacture data network equipment.

   The Company believes that key competitive factors in this market are service
support, the ability to upgrade existing systems for new applications, price and
reliability.


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MICROELECTRONICS PRODUCTS

   The Company designs, manufactures and sells integrated circuits ("ICs"),
electronic power systems and optoelectronic components for communications
applications. These microelectronic products are important components of many of
the Company's own systems and products. The Company also supplies these
components to other manufacturers of communications systems and computers. The
Company offers products in several IC product areas critical to communications
applications, including digital signal processors ("DSPs") for digital cellular
phones and standard-cell application specific integrated circuits ("ASICs").

Products

   The Company's ICs are designed to provide advanced communications and control
functions for a wide variety of electronic products and systems. The Company
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. The Company offers a wide variety of standard,
semi-custom and custom products for cellular equipment, communications networks,
computers and computer peripherals, modems and consumer communications products.
Products include DSPs, ASICs, field programmable gate arrays and communications
ICs. The Company's products are manufactured using a variety of technologies,
from low-power, low-voltage submicron CMOS (complementary metal oxide
semiconductors) to high-frequency and high-voltage bipolar processes.

   The Company designs, develops and manufactures energy systems, electronic
power supplies and associated magnetic components for the telecommunications and
electronic data processing industries. These products serve applications ranging
from modems for personal computers to large telephone central offices. Products
include DC/DC converters, AC/DC switching power supplies, transformers,
inductors and energy systems that provide alarm, control, and backup power
management.

   The Company 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. The Company 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
video-on-demand, interactive video, teleconferencing, image transmission and
remote database searching. The Company markets a number of advanced products,
including critical 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. The Company
believes that its optoelectronic products have higher photonics reliability than
those of its competitors due to their low field failure rate and the Company's
evaluation methodologies in manufacturing that allow the detection and
elimination of early failures.

   The Company has jointly with Rockwell International Corporation developed an
interoperability specification enabling their K56 Flex(TM) modem chip sets to
interoperate. In addition, the Company and Furukawa Electric Co. Ltd. have
formed a partnership between two of their subsidiaries to manufacture
optoelectronic components. The Company also is part of the DTV team currently
consisting of the Company, Microsoft Corporation, Intel Corporation and Compaq
Computer Corporation, which is an informal arrangement with the objective of
accelerating the development of digital broadcast technology.

   In December 1996, the Company sold its operations for the design and
manufacture of printed circuit boards and backplanes.

Markets

   The Company's microelectronic products are sold globally to manufacturers of
communications systems and computers. In addition, the Company's energy power
systems are sold directly to U.S. and foreign telephone companies. The Company's
customers are competing in markets characterized by rapid technological changes,
decreasing product 


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life cycles, price competition and increased user applications. These markets
have experienced significant expansion in the number and types of products they
offer to end-users, particularly in personal computing and portable access
communication devices. As a result, the Company's customers continue to demand
components 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 1995, the Company also introduced a GSM hardware platform 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. The Company also sells the associated software product
elements necessary to support the GSM standard.

   In addition to the revenues from sales to third parties included in the
Company's consolidated financial results, the Company's microelectronics
products are also key components of its systems for network operators and
business communications systems. The Company's microelectronics products compete
with products of third-party manufacturers for inclusion in the Company's
systems and products.

Competition

   The Company considers its technological leadership, product leadership, and
relationships with key customers to be important competitive factors. The market
for microelectronic products is global and generally highly fragmented. The
Company's competitors differ widely among product categories. The Company's
competitors in certain IC product categories include Texas Instruments
Incorporated, Rockwell International Corporation and LSI Logic Corp.; in
electronic power systems include Astec Industries, Inc. and Unitech plc (through
its subsidiary, NEMEC-Lambda); and in optoelectronics include Fujitsu Limited
and Northern Telecom Limited.

   The Company believes that key competitive factors in the microelectronics
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.

CONSUMER PRODUCTS

   During fiscal 1997, the Company continued to design, manufacture, service and
lease communications products for consumer, small office and home office use
through its Consumer Products business.

   The Consumer Products business offered a broad selection of telephone
products for the consumer market, including corded telephones, cordless
telephones and a broad line of analog, digital, stand-alone and integrated
telephone answering systems, offered in corded and cordless versions. In 1997,
Consumer Products introduced 22 new or redesigned products through September 30.

   On October 1, 1997, the Company contributed its Consumer Products business to
a new venture, Philips Consumer Communications L.P., formed by the Company and
Philips Electronics N.V. ("Philips"). The venture, which is 40% owned by the
Company, is a worldwide provider of a complete range of personal communications
products, including digital and analog wireless phones, corded and cordless
phones, digital cellular and PCS phones developed by the Company's Consumer
Products group, answering machines, and pagers.

OTHER SYSTEMS AND PRODUCTS

   The Company designs, develops and manufactures systems which support the
United States federal government's need for specially designed integrated
solutions for military and civilian use.

   In October 1997, the Company sold its Advanced Technology Systems ("ATS")
unit. ATS designed and manufactured custom defense systems for the United States
government. The Company sold its subsidiary, Paradyne, which designed and
manufactured modems and other data communications equipment, in July 1996, and
in December 1996 sold its Custom Manufacturing Services business.


                                       8
<PAGE>   12

BELL LABORATORIES

   The Company has 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
the Company 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; lightwave transmission, which offers 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 the Company'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 the Company to achieve a level of system reliability with
off-the-shelf commercial processors that allows the Company to reduce its
reliance on custom microprocessors. Its recently introduced Inferno(TM) software
provides for secure networking in a distributed computing environment.

   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 the Company'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 the
Company's products, including the elemedia(TM) products for Internet
applications.

   Bell Labs also has led in the development of software-based networking
technologies that support the Company's systems and products. Recently, it has
developed systems for digital cellular, PCS, mobile computing and wireless LANs,
and its research in ATM led to the Company's offering of the first large ATM
switch in 1993. Bell Lab's technology has allowed the recent introduction of
data networking products such as the Internet Telephony Server SP.

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

NEW ORGANIZATION

   Effective November 1, 1997, the Company moved to the following organization.

   Microelectronics: integrated circuits and optoelectronics products and the
sales and service force serving this customer group.

   Intellectual Property: acquiring, managing and creating value from the
Company's portfolio of intellectual property.

   Business Communications Systems: all voice-related products currently part of
the previous Business Communications Systems portfolio including the Octel
Messaging Division and the sales and service force serving enterprise customers.
Includes the Company's Government Solutions.

   Data Networking Systems: data networking offerings targeted at enterprise and
Internet Service Provider (ISP) customers and the Internet Protocol and ATM core
switching data offers to service provider customers. Includes the Agile and
Livingston acquisitions. Its dedicated sales force works through the existing
global service provider and enterprise sales forces and sells directly to ISPs
and indirect channels.


                                       9
<PAGE>   13

   Wireless Networks: wireless products, software and support for the service
provider market. It sells its products through the Global Service Provider sales
group.

   Switching and Access Systems: switching and access products and software for
the carrier market. It sells its products through the Global Service Provider
sales group.

   Optical Networking: sonet-SDH, wave division multiplexing and access offers.
Its products are sold through the Global Service Provider sales group.

   Network Products: fiber products, including SYSTIMAX(R) and Power Systems
products. Its products are sold through the Global Service Provider sales group,
indirect channels and the Microelectronics sales force.

   Communications Software: software products focused in application areas such
as intelligent network applications, network management and operations and
Internet software. Its products are sold through the Global Service Provider and
enterprise sales forces as well as indirect channels.

   New Ventures: creates new ventures to get technology to market faster and the
Company's existing internal ventures, including Inferno and elemedia.

   Global Service Provider Business: marketing and sales, service and support
and program management for network operator and service provider customers
around the world, including local, long-distance, Internet and wireless service
providers.

   Bell Labs: provides research and development to support the Company's
products and services, and conducts basic research.

BACKLOG

   The Company's backlog, calculated as the aggregate of the sales price of
orders received from customers less revenue recognized, was approximately
$12,141 million and $12,100 million on September 30, 1997 and 1996,
respectively. Approximately $6,800 million of orders included in the September
30, 1997 backlog are scheduled for delivery after September 30, 1998. 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 $4,500 million of the amount
at September 30, 1997 is under large, multi-year contracts of which about $3,000
million is scheduled for delivery after September 30, 1998 and is included in
the $6,800 million referred to above. Approximately $3,600 million at September
30, 1997 and $4,000 million at September 30, 1996 are under large, long-term
contracts with the Ministry of Post and Telecommunications of Saudi Arabia which
require annual appropriations of the Saudi Arabian government.

SOURCES AND AVAILABILITY OF MATERIALS

   The Company makes significant purchases of electronic components, copper,
glass, silicon, and other materials and components from many domestic and
foreign sources. The Company has been able to obtain sufficient materials and
components from sources around the world to meet its needs. The Company 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. The Company does not
have a concentration of sources of supply of materials, labor or services that,
if suddenly eliminated, could severely impact its operations.

PATENTS AND TRADEMARKS

   From October 1, 1996 to September 30, 1997, the Company was issued 811
patents in the United States and 1,947 in foreign countries. The Company owns
approximately 8,700 patents in the United States and 15,000 in foreign
countries. These foreign patents are counterparts of the Company's United States
patents. Many of the patents owned by the Company are licensed to others and the
Company is licensed to use certain patents owned by others. In connection with
the Separation, the Company has entered into an extensive cross-licensing
agreement with AT&T and NCR Corporation ("NCR"). See "Separation Agreements
-- Patent Licenses and Related Matters."


                                       10
<PAGE>   14

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

OUTLOOK

Forward Looking Statements

   This Outlook section and other sections of this Form 10-K report contain
forward-looking statements, including prospective financial and non-financial
information, that are based on current expectations, estimates, forecasts and
projections about the industries in which the Company operates, management's
beliefs and assumptions made by management. Any Annual Report to Shareowners,
Quarterly Report to Shareowners, Form 10-Q or Form 8-K of the Company may
include forward-looking statements. In addition, other written or oral
statements which constitute forward-looking statements may be made by or on
behalf of the Company. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such 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. The Company
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 the Company's ability to continue to introduce
competitive new products and services on a timely, cost effective basis; the mix
of products/services; the achievement of lower costs and expenses; domestic and
foreign governmental and public policy changes which 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 increasing use of
large, multi-year contracts; the cyclical nature of the Company's business; the
outcome of pending and future litigation and governmental proceedings and
continued availability of financing, financial instruments and financial
resources in the amounts, at the times and on the terms required to support the
Company'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 domestic and international economic conditions including
interest rate and currency exchange rate fluctuations and other Future Factors.

   For a further description of Future Factors that could cause actual results
to differ materially from such forward-looking statements, see the remainder of
this OUTLOOK section including the other sections referred to in this section.

Competition

   The Company continues to face significant competition and expects that the
level of competition on pricing and product offerings will increase. The Company
expects that new and different competitors will enter its markets as a result of
both 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 and well-recognized
brand names.

Dependence On New Product Development

   The markets for the Company'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 network operators and business customers. The Company'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 


                                       11
<PAGE>   15

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 the Company'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 international and domestic standards-setting bodies.

Reliance On Major Customers

   Historically, the Company has relied on a limited number of customers for a
substantial portion of its total revenues, including AT&T which continues to be
a significant customer. In terms of total revenues, the Company's largest
customer has been AT&T, although other large customers may purchase more of any
particular system or product line. The contribution of AT&T to the Company's
total revenues and percentage of total revenues for the year and nine months
ended September 30, 1997 and 1996 and the year ended December 31, 1995 were
$3,731 million (14.2%), $1,970 million (12.4%) and $2,119 million (9.9%),
respectively.

   In addition, sales to eight network operators including AT&T (reduced from 10
in 1996 due to mergers), some of which may vary from year to year, constituted
approximately 41%, 39% and 38% of total revenues in the twelve months ended
September 30, 1997 and 1996 and calendar year ended December 31, 1995,
respectively. The Company is continuing to diversify its customer base;
nevertheless, the Company expects that a significant portion of its future
revenues will continue to be generated by a limited number of customers. See
"Business." The loss of any of these customers or any substantial reduction in
orders by any of these customers could materially adversely affect the Company's
operating results.

Readiness For Year 2000

   The Company has taken actions to understand the nature and extent of the work
required to make its systems, products and infrastructure Year 2000 compliant.
The Company began work several years ago to prepare its products and its
financial, information and other computer-based systems for the Year 2000,
including replacing and/or updating existing legacy systems. The Company
continues to evaluate the estimated costs associated with these efforts based on
actual experience. While these efforts will involve additional costs, the
Company 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.

Multi-Year Contracts

   The purchasing behavior of the Company's large customers has increasingly
been characterized by the use of fewer, but larger contracts, which contributes
to the variability of the Company's results. These contracts typically involve
longer negotiating cycles, require the dedication of substantial amounts of
working capital and other resources, and in general require costs which 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.
The Company has significant contracts for the sale of infrastructure systems to
network operators which extend over a multi-year period, and expects to enter
into similar contracts in the future, with the uncertainties discussed above.
The Company 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 which may not have been previously
deployed on a large-scale commercial basis. Related to these contracts, the
Company may incur significant initial cost overruns and losses which would be
recognized in the quarter in which they became 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.

Seasonality

   The Company's sales continue to be highly seasonal. Many of the Company's
large customers have historically delayed a disproportionate percentage of their
capital expenditures until the fourth quarter of the calendar year.
Consequently, the 


                                       12
<PAGE>   16

Company's results of operations for the first three quarters of each calendar
year historically have, in the aggregate, been significantly less profitable
than the fourth calendar quarter.

Future Capital Requirements

   The Company'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.

   Network operators, domestically and internationally, 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.
In this regard, the Company entered into a credit agreement in October 1996 to
provide Sprint Spectrum* LP ("Sprint PCS") long-term financing of $1,800 million
for purchasing equipment and services for its PCS network. In May 1997, under
the $1,800 million credit facility provided by the Company to Sprint PCS, the
Company closed transactions to lay off $500 million of loans and undrawn
commitments and $300 million of undrawn commitments to a group of institutional
investors and Sprint Corporation (a partner in Sprint PCS), respectively. As of
September 30, 1997, $146 million of these commitments were not yet drawn down by
Sprint PCS. As of November 30, 1997, the Company had also entered into
agreements to extend credit of up to an aggregate of approximately $550 million
to two other PCS operators for possible future sales. The Company has committed
to, and is continuing to propose, to provide financing where appropriate for its
business. The ability of the Company to arrange or provide financing for network
operators will depend on a number of factors, including the Company's capital
structure and general market conditions.

   The Company believes that its credit facilities, cash flow from operations
and long- and short-term debt financings, will be sufficient to satisfy its
future working capital, capital expenditure, research and development and debt
service requirements. The Company has a shelf registration statement to register
the possible offering from time to time of long-term debt of which $1,960
million remains available at September 30, 1997. The Company 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 necessary, and to engage in
hedging transactions on commercially acceptable terms, although there can be no
assurance that the Company will be successful in this regard.

International Growth, Foreign Exchange and Interest Rates

   The Company intends to continue to pursue growth opportunities in
international markets. In many international markets, long-standing
relationships between potential customers of the Company and their local
providers, and protective regulations, including local content requirements and
type approvals, create barriers to entry. In addition, pursuit of such
international growth opportunities 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.

   The Company 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. The Company 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 the Company sells products to local customers or makes purchases from
local suppliers may materially adversely affect the 

----------
* SPRINT SPECTRUM is a service mark of Sprint Communications Company, L.P.


                                       13
<PAGE>   17

Company's results. The Company 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 the Company hedges transactions with non-U.S. customers, the decline in
value of the Asia/Pacific currencies, or declines in currency values in other
regions, may, if not reversed, adversely affect future product sales because the
Company's products may become more expensive to purchase for local customers
doing business in the countries of the affected currencies.

Legal Proceedings and Environment

   See discussion below under ENVIRONMENTAL MATTERS and ITEM 3. LEGAL
PROCEEDINGS.

Employee Relations

   See discussion below under EMPLOYEE RELATIONS.

Intellectual Property

   The Company relies on patent, trademark, trade secret and copyright laws both
to protect its proprietary technology and to protect the Company against claims
from others. The Company 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 the
Company's systems and products, however, there can be no assurance that claims
of infringement will not be asserted against the Company or against the
Company's customers in connection with their use of the Company's systems and
products, nor can there be any assurance as to the outcome of any such claims.
The Company 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 the Company, AT&T and NCR, the Company has been given rights,
subject to specified limitations, to pass through to its customers certain
rights under approximately 400 patents retained by AT&T. There can be no
assurance that the Company's customers and potential customers will be satisfied
with the pass-through rights available to them under the patents retained by
AT&T or with any indemnification commitments the Company may be willing to
provide in connection therewith. See "Separation Agreements -- Patent Licenses
and Related Matters" and "-- Technology Licenses and Related Matters."

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

   For information about the consolidated operating revenues contributed by the
Company's major classes of products and services, consolidated research and
development expenses, and foreign and domestic operations, see revenue tables
and discussion on pages 37 through 40, Consolidated Statements of Income on page
46 and Note 10 thereto on page 59 of the Company's annual report to security
holders for the fiscal year ended September 30, 1997. Such information is
incorporated herein by reference pursuant to General Instruction G(2).

EMPLOYEE RELATIONS

   At September 30, 1997, the Company employed approximately 134,000 persons, of
whom 75% were located in the United States. Of these domestic employees, 42% are
represented by unions, primarily the Communications Workers of America and the
International Brotherhood of Electrical Workers ("IBEW"). The Company's labor
agreements with these unions expire on May 30, 1998.

ENVIRONMENTAL MATTERS

   The Company's current and historical manufacturing and research operations
are subject to a wide range of environmental protection laws in the United
States and other countries. In the United States, these laws often require
parties to fund remedial action regardless of fault. The Company has remedial
and investigatory activities underway at about 40 current and former facilities.
In addition, the Company was named a 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 terms of the Separation and
Distribution Agreement, the Company is responsible for all liabilities primarily


                                       14
<PAGE>   18

resulting from or related to the operation of the Company's Business as
conducted at any time prior to, on or after the Separation including related
businesses discontinued or disposed of prior to the Separation, and the
Company's assets including, without limitation, those associated with these
sites. In addition, under the Separation and Distribution Agreement, the Company
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. The Company 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 for
will be paid out over the period of remediation for the applicable site which
ranges 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 the
Company's consolidated financial statements in respect of 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 the Company
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 the Company's reserves or will not have
a material adverse effect on the financial condition of the Company or the
Company's results of operations or cash flows. Any amounts of environmental
costs that may be incurred in excess of those provided for at September 30, 1997
cannot be determined.

   On July 31, 1991, the United States Environmental Protection Agency filed a
civil complaint in the U.S. District Court for the Southern District of Illinois
against AT&T (with respect to the Company's businesses) and nine other parties
seeking enforcement of its CERCLA Section 106 cleanup order, issued in November
1990 for the NL Granite City Superfund site in Granite, Illinois. This complaint
seeks past costs, civil penalties of $25,000 per day and treble damages related
to certain United States costs. The Company is contesting liability.

   A complaint issued by the United States Environmental Protection Agency
Region III on July 31, 1991 pursuant to Section 3008a of the Resource
Conservation and Recovery Act of 1976 alleging violations of various waste
management regulations at the Company's Richmond Works in Richmond, Virginia,
and negotiations between AT&T Nassau Metals Corporation ("Nassau"), a wholly
owned subsidiary of the Company, and the New York State Department of
Environmental Conservation over waste management practices of a Nassau plant in
Staten Island, New York, were reported in Item 1 and Item 3 of the Company's
Form 10-K for the transition period ended September 30, 1996. Both matters have
been settled with the Company paying penalties and a payment to an environmental
fund of about $1.1 million in the aggregate and agreeing to do an environmental
assessment of one of the sites.

SEPARATION AGREEMENTS

   For the purposes of governing certain of the relationships between the
Company 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 Interim Services and Systems
Replication Agreement; the General Purchase Agreement and the supplemental
agreements related thereto; 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; the Tax
Sharing Agreement and other tax-related agreements; and certain agreements
providing for the assignment of, and the establishment of transitional
arrangements with respect to, real property. Certain of the Separation
Agreements, including certain of the Agreements summarized below, are exhibits
to this Form 10-K. 


                                       15
<PAGE>   19

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, the Company 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 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 the Company and the members of
the Company 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, the Company or any member of the Company 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) terminate all or any remaining portion of the purchase
commitments made by AT&T and the members of the AT&T Group in the General
Purchase Agreement; (c) exercise the right to require the Company to transfer to
AT&T certain personnel, information, technology and software under the
Supplemental Agreements; (d) 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 the
Company and the members of the Company Group pursuant to the Patent License
Agreement and the Technology License Agreement; and (e) direct the Company and
the members of the Company Group to reconvey to AT&T all interests in any and
all patents and technology in which the Company or any member of the Company
Group was granted an undivided one-half interest pursuant to the Patent
Assignments or the Technology Assignment and Joint Ownership Agreements. The
Company and the members of the Company 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 the Company 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, the
Company 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 the Company and its
affiliates and certain former employees of AT&T or its affiliates (including
retirees) who either were employed in the Company Business (as defined) or who
otherwise are assigned to the Company 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 


                                       16
<PAGE>   20

to the Company are jointly owned with either AT&T or NCR. Certain of the patents
that the Company jointly owns with AT&T are subject to a joint ownership
agreement under which each of the Company and AT&T has full ownership rights in
the patents. The other patents that the Company jointly owns with AT&T, and the
patents that the Company jointly owns with NCR, are subject to defensive
protection agreements with AT&T and NCR, respectively, under which the Company
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 the Company 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 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 the Company 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
the Company 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
the Company and AT&T owning technology that was developed by or for, or
purchased by, the Company'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
the Company 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, 1997, the Company operated 45 manufacturing and repair
sites, of which 15 were located in the United States, occupying in excess of
16.0 million square feet, of which approximately 2 million square feet were
leased. The remaining 30 sites were located in 18 countries.

   At September 30, 1997, the Company operated 137 warehouse sites, of which 96
were located in the United States, occupying in excess of 5.0 million square
feet, substantially all of which were leased. The remaining 41 sites were
located in 22 countries.

   At September 30, 1997, the Company operated 1016 office sites
(administration, sales, field service), of which 816 were located in the United
States, occupying in excess of 16.0 million square feet, substantially all of
which were leased. The remaining 200 sites were located in 56 countries.

   At September 30, 1997, the Company operated additional sites in 15 cities, of
which 14 were located in the United States, with significant research and
development 


                                       17
<PAGE>   21

activities, occupying in excess of 9.0 million square feet, of which
approximately 1.4 million square feet were leased.

   The Company believes its plants and facilities are suitable and adequate, and
have sufficient productive capacity, to meet its current needs.

ITEM 3. LEGAL PROCEEDINGS.

   In the normal course of business, the Company 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 --
Separation Agreements -- Separation and Distribution Agreement" regarding the
assumption by the Company of certain liabilities and contingent liabilities.)
All such matters are subject to many uncertainties and outcomes are not
predictable with assurance. Consequently, the Company is unable to ascertain the
ultimate aggregate amount of monetary liability or financial impact with respect
to these matters at September 30, 1997. 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 the
Company beyond that provided in the consolidated balance sheet at September 30,
1997 would not be material to the Company's annual consolidated financial
statements.

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

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

   No matter was submitted to a vote of security holders in the final quarter of
the fiscal year covered by this report.

                      Executive Officers of the Registrant
                            (as of December 1, 1997)

                                                                      Became
                                                                      Lucent
                                                                      Executive
                                                                      Officer On
        Name                Age
        ----                ---

Henry B. Schacht*............63...Chairman of the Board.................2-96

Richard A. McGinn*...........51...Chief Executive Officer...............2-96
                                  and President

Donald K. Peterson...........48...Executive Vice President and..........2-96
                                  Chief Financial Officer

Richard J. Rawson............45...Senior Vice President,................2-96
                                  General Counsel and Secretary

Patricia F. Russo............45...Executive Vice President,.............2-96
                                  Corporate Staff Operations

Daniel C. Stanzione..........52...Executive Vice President..............2-96
                                  and Chief Operating Officer

Bernardus J. Verwaayen.......45...Executive Vice President and..........9-97
                                  Chief Operating Officer

----------
* Member of the Board of Directors.

   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 


                                       18
<PAGE>   22

years, except in the case of Messrs. Peterson and Verwaayen 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), Vice
President of Finance of Northern Telecom, Inc. (from January 1991 to January
1993) and Group Vice President of Northern Telecom, Inc. (from September 1987 to
January 1991). Mr. Verwaayen joined the Company after serving since May 1988 as
President of PTT Telecom, the national telecommunications operator of the
Netherlands. 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.

                                     PART II

Items 5. through 8.

   The information required by these items is included in pages 34 through 63 of
the Company's annual report to security holders for the fiscal year ended
September 30, 1997. 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, 1997, there were approximately 1,760,000
shareholders of record.

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

   None.

                                    PART III

Items 10. through 13.

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 ("SEC") 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, 1997
were complied with.

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

   The other information required by Items 10 through 13 is included in the
Company's definitive proxy statement dated December 22, 1997, on pages 8
through 13 and pages 29 through page 45. Such information is incorporated herein
by reference, pursuant to General Instruction G(3).

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     (a)  Documents filed as a part of the report:

          (1)  Financial Statements:
                                                                      Pages
               Report of Management ................................    *

----------
* Incorporated herein by reference to the appropriate portions in pages 34
through 63 of the Company's annual report to security holders for the fiscal
year ended September 30, 1997. (See Part II.)


                                       19
<PAGE>   23

               Report of Independent Auditors ......................    *

               Statements:
                 Consolidated Statements of Income ................     *
                 Consolidated Balance Sheets ......................     *
                 Consolidated Statements of Changes in
                  Shareowners' Equity..............................     *
                 Consolidated Statements of Cash Flows ............     *
                 Notes to Consolidated Financial Statements .......     *

          (2)  Financial Statement Schedules:

               Report of Independent Auditors .....................    23

               Schedules:

               II -- Valuation and Qualifying Accounts ............    24

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.

           (3) Exhibits:

               Exhibits identified in parentheses below, on file with the SEC,
               are incorporated herein by reference as exhibits hereto.

Exhibit
Number

              (3)(i)        Articles of Incorporation of the registrant, as
                            amended April 8, 1996 (Exhibit 3(i) to Form 8-K
                            dated July 18, 1996, File No. 001-11639).

              (3)(ii)       By-Laws of the registrant, as amended July 17, 1996
                            (Exhibit 3(ii) to Form 8-K dated July 18, 1996, File
                            No. 001-11639).

              (4)(a)        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)(b)        Other instruments in addition to Exhibit 4(a) 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      Lucent Technologies Inc. Operating Agreement between
                            Lucent Technologies and AT&T Capital Corporation,
                            dated as of April 2, 1996 (Exhibit 10.13 to
                            Registration Statement on Form S-1 No. 333-00703).

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


                                       20
<PAGE>   24

              (10)(i)5      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)(ii)(B)1  General Purchase Agreement by and between AT&T Corp.
                            and Lucent Technologies Inc., dated February 1, 1996
                            and amended and restated as of March 29, 1996
                            (Exhibit 10.3 to Registration Statement on Form S-1
                            No. 333-00703).

              (10)(ii)(B)2  Interim Services and Systems Replication Agreement
                            by and among AT&T, Lucent Technologies Inc. and NCR,
                            dated as of February 1, 1996 and amended and
                            restated as of March 29, 1996 (Exhibit 10.4 to
                            Registration Statement on Form S-1 No. 333-00703).

              (10)(ii)(B)3  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)4  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)5  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. 1996 Long Term Incentive
                            Program (Exhibit(10)(iii)(A)1 to Annual Report on
                            Form 10-K for Transition Period ended September 30,
                            1996).*

              (10)(iii)(A)2 Lucent Technologies Inc. Deferred Compensation
                            Plan.*

              (10)(iii)(A)3 Pension Plan for Lucent Non-Employee Directors
                            (Exhibit 10.11 to Registration Statement on Form S-1
                            No. 333-00703).*

              (10)(iii)(A)4 Lucent Technologies Inc. Stock Retainer Plan for
                            Non-Employee Directors.*

              (10)(iii)(A)5 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)6 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)7 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)8 Lucent Technologies Inc. Officer Long-Term
                            Disability and Survivor Protection Plan (Exhibit
                            (10)(iii)(A)8 to Annual Report on Form 10-K for
                            Transition Period ended September 30, 1996).*

              (10)(iii)(A)9 Employment Agreement of Mr. Verwaayen dated June 12,
                            1997.*

             (10)(iii)(A)10 Employment Agreement of Mr. Peterson dated August
                            8, 1995.*

             (10)(iii)(A)11 Description of the Lucent Technologies Inc.
                            Supplemental Pension Plan.*

              (12)          Computation of Ratio of Earnings to Fixed Charges.

              (13)          Specified portions (pages 34 through 63) of the
                            Company's Annual Report to security holders for the
                            year ended September 30, 1997.

              (21)          List of subsidiaries of Lucent Technologies Inc.

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


                                       21
<PAGE>   25

              (23)          Consent of Coopers & Lybrand L.L.P.

              (24)          Powers of Attorney executed by officers and
                            directors who signed this report.

              (27)          Financial Data Schedule.


                                       22
<PAGE>   26

   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:

      No Reports on Form 8-K were filed by the Company during the last quarter
of the fiscal year covered by this Report on Form 10-K.

                         REPORT OF INDEPENDENT AUDITORS

To the Shareowners of Lucent Technologies Inc.:

   Our report on the consolidated financial statements of Lucent Technologies
Inc. and subsidiaries has been incorporated by reference in this Form 10-K from
page 45 of the 1997 Annual Report to the Shareowners of Lucent Technologies Inc.
In connection with our audits of such financial statements, we have also audited
the related consolidated financial statement schedule listed in the index on
page 20 of this Form 10-K.

   In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.


                                             COOPERS & LYBRAND L.L.P.

New York, New York
October 21, 1997


                                       23
<PAGE>   27

<TABLE>
<CAPTION>
                                                     Lucent Technologies Inc.
                                       Schedule II - Valuation and Qualifying Accounts
                                                           In Millions

              Column A                            Column B            Column C             Column D            Column E
-----------------------------------------       ------------   -----------------------     ----------         -----------

                                                              -------Additions-------
                                                 Balance at   Charged to    Charged to                       Balance at
Description                                     Beginning of    Costs &       Other                             End
                                                  Period       Expenses      Accounts    Deductions(a)       of Period
------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>          <C>            <C>                <C>  
Year 1997

Allowance for doubtful accounts                     273           111            5             37                 352
Reserves related to business restructuring
  and facility consolidation                      1,289           201(b)         -            519(b)              569
Deferred tax asset valuation allowance              208            86            3             63                 234
Inventory valuation                                 644           221           19            247                 637

Year 1996

Allowance for doubtful accounts                     248            64            -             39                 273
Reserves related to business restructuring
  and facility consolidation                      1,907           (98)           -            520               1,289
Deferred tax asset valuation allowance              142             7          102(d)          43                 208
Inventory valuation                                 790            92            9            247                 644

Year 1995

Allowance for doubtful accounts                     206            94           (3)            49                 248
Reserves related to business restructuring
  and facility consolidation                        133         1,774            -              -               1,907
Deferred tax asset valuation allowance               96            46            -              -                 142
Inventory valuation                                 591           336(c)         -            137                 790
</TABLE>

(a)   Amounts written off as uncollectible, payments or recoveries.
(b)   See Note 5 of the Notes to Consolidated Financial Statements for
      background information.
(c)   Includes $194 related to business restructuring in the fourth quarter of
      1995.
(d)   Relates to net asset additions and net liability reductions from AT&T. See
      Note 1 of the Notes to Consolidated Financial Statements for Background
      information.


                                       24
<PAGE>   28

                                   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.


By James S. Lusk
   Vice President and Controller

December 22, 1997

   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.

Principal Executive Officer:               #
                                            #
   Richard A. McGinn       #
                          Chief Executive   #
                          Officer and       #
                          President         #

Principal Financial Officer:                #
                                            #
   Donald K. Peterson   Executive           #
                        Vice President and  #
                        Chief Financial     #
                        Officer             #
                                            #
Principal Accounting Officer:               #
                                            #
   James S. Lusk          Vice President    ##  By  James S. Lusk
                          and Controller    #       (attorney-in-fact)*
                                            #
Directors:                                  #
                                            #       December 22, 1997
                                            #
Paul A. Allaire                             #
Carla A. Hills                              #
Drew Lewis                                  #
Richard A. McGinn                           #
Paul H. O'Neill                             #
Donald S. Perkins                           #
Henry B. Schacht                            #
Franklin A. Thomas                          #
John A. Young                               #
                                            #
                                            #
                                            #  * As Principal Accounting Officer
                                            #    and by power of attorney
                                           #


                                       25
<PAGE>   29
                                EXHIBIT INDEX

               Exhibits identified in parentheses below, on file with the SEC,
               are incorporated herein by reference as exhibits hereto.

Exhibit
Number

              (3)(i)        Articles of Incorporation of the registrant, as
                            amended April 8, 1996 (Exhibit 3(i) to Form 8-K
                            dated July 18, 1996, File No. 001-11639).

              (3)(ii)       By-Laws of the registrant, as amended July 17, 1996
                            (Exhibit 3(ii) to Form 8-K dated July 18, 1996, File
                            No. 001-11639).

              (4)(a)        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)(b)        Other instruments in addition to Exhibit 4(a) 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      Lucent Technologies Inc. Operating Agreement between
                            Lucent Technologies and AT&T Capital Corporation,
                            dated as of April 2, 1996 (Exhibit 10.13 to
                            Registration Statement on Form S-1 No. 333-00703).

<PAGE>   30

              (10)(i)5      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)(ii)(B)1  General Purchase Agreement by and between AT&T Corp.
                            and Lucent Technologies Inc., dated February 1, 1996
                            and amended and restated as of March 29, 1996
                            (Exhibit 10.3 to Registration Statement on Form S-1
                            No. 333-00703).

              (10)(ii)(B)2  Interim Services and Systems Replication Agreement
                            by and among AT&T, Lucent Technologies Inc. and NCR,
                            dated as of February 1, 1996 and amended and
                            restated as of March 29, 1996 (Exhibit 10.4 to
                            Registration Statement on Form S-1 No. 333-00703).

              (10)(ii)(B)3  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)4  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)5  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. 1996 Long Term Incentive
                            Program (Exhibit(10)(iii)(A)1 to Annual Report on
                            Form 10-K for Transition Period ended September 30,
                            1996).*

              (10)(iii)(A)2 Lucent Technologies Inc. Deferred Compensation
                            Plan.*

              (10)(iii)(A)3 Pension Plan for Lucent Non-Employee Directors
                            (Exhibit 10.11 to Registration Statement on Form S-1
                            No. 333-00703).*

              (10)(iii)(A)4 Lucent Technologies Inc. Stock Retainer Plan for
                            Non-Employee Directors.*

              (10)(iii)(A)5 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)6 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)7 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)8 Lucent Technologies Inc. Officer Long-Term
                            Disability and Survivor Protection Plan (Exhibit
                            (10)(iii)(A)8 to Annual Report on Form 10-K for
                            Transition Period ended September 30, 1996).*

              (10)(iii)(A)9 Employment Agreement of Mr. Verwaayen dated June 12,
                            1997.*

             (10)(iii)(A)10 Employment Agreement of Mr. Peterson dated August
                            8, 1995.*

             (10)(iii)(A)11 Description of the Lucent Technologies Inc.
                            Supplemental Pension Plan.*

              (12)          Computation of Ratio of Earnings to Fixed Charges.

              (13)          Specified portions (pages 34 through 63) of the
                            Company's Annual Report to security holders for the
                            year ended September 30, 1997.

              (21)          List of subsidiaries of Lucent Technologies Inc.

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


                                      
<PAGE>   31

              (23)          Consent of Coopers & Lybrand L.L.P.

              (24)          Powers of Attorney executed by officers and
                            directors who signed this report.

              (27)          Financial Data Schedule.