<PAGE>

                     AS FILED WITH THE SEC ON JUNE 13, 2001
________________________________________________________________________________

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                FORM 10-Q/A #1

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000

                                       OR

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

FOR THE TRANSITION PERIOD FROM             TO

                        COMMISSION FILE NUMBER 001-11639

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

                            LUCENT TECHNOLOGIES INC.

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

               600 MOUNTAIN AVENUE, MURRAY HILL, NEW JERSEY 07974

                         Telephone Number: 908-582-8500

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

    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 [ ]

    At January 31, 2001, 3,403,607,833 common shares were outstanding.

________________________________________________________________________________





<PAGE>

                        PART 1 -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                   LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (AMOUNTS IN MILLIONS,
                                 EXCEPT PER SHARE
                                     AMOUNTS)
                                    (UNAUDITED)
<TABLE>
<CAPTION>
                                                                    THREE MONTHS
                                                                 ENDED DECEMBER 31,
                                                              ------------------------
                                                                2000            1999
                                                                ----            ----

<S>                                                           <C>             <C>
Revenues....................................................  $   5,841       $  8,065
Costs.......................................................      4,530          4,307
                                                              ---------       --------
Gross margin................................................      1,311          3,758
Operating expenses:
    Selling, general and administrative.....................      2,137          1,338
    Research and development................................      1,285            928
                                                              ---------       --------
        Total operating expenses............................      3,422          2,266
                                                              ---------       --------
Operating income (loss).....................................     (2,111)         1,492
Other income (expense) -- net...............................        (18)           252
Interest expense............................................        129             81
                                                              ---------       --------
Income (loss) from continuing operations before (benefit)
  provision for income taxes................................     (2,258)         1,663
(Benefit) provision for income taxes........................       (679)           539
                                                              ---------       --------
Income (loss) from continuing operations....................     (1,579)         1,124
Income from discontinued operations (net of tax expense of
  $67)......................................................     --                125
                                                              ---------       --------
Income (loss) before extraordinary item and cumulative
  effect of accounting change...............................     (1,579)         1,249
Extraordinary gain (net of tax expense of $762).............      1,154          --
Cumulative effect of accounting change (net of tax expense
  of $17)...................................................         30          --
                                                              ---------       --------
Net income (loss)...........................................  $    (395)      $  1,249
                                                              ---------       --------
                                                              ---------       --------
Earnings (loss) per common share -- basic:
    Income (loss) from continuing operations................  $   (0.47)      $   0.36
    Net income (loss).......................................  $   (0.12)      $   0.40
Earnings (loss) per common share -- diluted:
    Income (loss) from continuing operations................  $   (0.47)      $   0.34
    Net income (loss).......................................  $   (0.12)      $   0.38
Weighted average number of common shares
  outstanding -- basic......................................    3,387.2        3,154.5
Weighted average number of common shares
  outstanding -- diluted....................................    3,387.2        3,268.0
</TABLE>

            See notes to unaudited Consolidated Financial Statements

                                       1




<PAGE>

                   LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                              (DOLLARS IN MILLIONS
                             EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  2000           2000
                                                                  ----           ----
<S>                                                           <C>            <C>
                           ASSETS
Cash and cash equivalents...................................    $ 3,814         $ 1,467
Receivables less allowances of $551 at December 31, 2000 and
  $501 at September 30, 2000................................      7,286           9,558
Inventories.................................................      6,879           5,677
Contracts in process, net of contract billings of $7,066 at
  December 31, 2000 and $6,744 at September 30, 2000........      1,691           1,881
Deferred income taxes -- net................................      1,168           1,165
Other current assets........................................      2,071           1,742
                                                                -------         -------
    Total current assets....................................     22,909          21,490
Property, plant and equipment, net of accumulated
  depreciation of $7,295 at December 31, 2000 and $7,141 at
  September 30, 2000........................................      7,138           7,084
Prepaid pension costs.......................................      6,422           6,440
Goodwill and other acquired intangibles, net of accumulated
  amortization of $1,436 at December 31, 2000 and $1,072 at
  September 30, 2000........................................      9,580           9,945
Other assets................................................      3,992           3,833
                                                                -------         -------
    Total assets............................................    $50,041         $48,792
                                                                -------         -------
                                                                -------         -------
                        LIABILITIES
Accounts payable............................................    $ 2,628         $ 2,813
Payroll and benefit-related liabilities.....................      1,154           1,210
Debt maturing within one year...............................      5,030           3,483
Other current liabilities...................................      3,661           3,371
                                                                -------         -------
    Total current liabilities...............................     12,473          10,877
Postretirement and postemployment benefit liabilities.......      5,214           5,548
Long-term debt..............................................      3,099           3,076
Deferred income taxes -- net................................      1,074           1,266
Other liabilities...........................................      2,433           1,853
                                                                -------         -------
    Total liabilities.......................................     24,293          22,620
Commitments and contingencies

                    SHAREOWNERS' EQUITY
Preferred stock-par value $1.00 per share
    Authorized shares: 250,000,000; issued and outstanding
      shares: none..........................................     --              --
Common stock -- par value $.01 per share
Authorized shares: 10,000,000,000; issued and
   outstanding shares: 3,391,491,521 at December 31, 2000
   and 3,384,332,104 at September 30, 2000..................         34              34
Additional paid-in capital..................................     20,490          20,390
Guaranteed ESOP obligation..................................         (9)            (16)
Retained earnings...........................................      5,668           6,129
Accumulated other comprehensive income (loss)...............       (435)           (365)
                                                                -------         -------
        Total shareowners' equity...........................     25,748          26,172
                                                                -------         -------
        Total liabilities and shareowners' equity...........    $50,041         $48,792
                                                                -------         -------
                                                                -------         -------
</TABLE>

            See notes to unaudited Consolidated Financial Statements

                                       2




<PAGE>

                   LUCENT TECHNOLOGIES INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN MILLIONS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                THREE MONTHS
                                                                   ENDED
                                                                DECEMBER 31,
                                                              ----------------
                                                               2000      1999
                                                               ----      ----
<S>                                                           <C>       <C>
OPERATING ACTIVITIES:
    Net income (loss).......................................  $  (395)  $1,249
    Less: Income from discontinued operations...............    --         125
    Extraordinary gain......................................    1,154     --
    Cumulative effect of accounting change..................       30     --
                                                              -------   ------
    Income (loss) from continuing operations................   (1,579)   1,124
    Adjustments to reconcile income (loss) from continuing
      operations to net cash (used in) provided by operating
      activities:
        Depreciation and amortization.......................      868      455
        Provision for uncollectibles and customer
          financings........................................      370       30
        Tax benefit from employee stock options.............        8      456
        Deferred income taxes...............................     (139)     118
        Pension credit......................................     (348)    (235)
        Other adjustments for non-cash items................       36     (326)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
    Decrease (increase) in receivables......................    2,073     (196)
    Increase in inventories and contracts in process........   (1,170)    (297)
    Decrease in accounts payable............................     (180)    (684)
    Changes in other operating assets and liabilities.......   (1,043)    (306)
                                                              -------   ------
    Net cash (used in) provided by operating activities from
      continuing operations.................................   (1,104)     139
                                                              -------   ------
INVESTING ACTIVITIES:
    Capital expenditures....................................     (548)    (508)
    Purchases of investments................................      (41)     (65)
    Sales or maturity of investments........................        1      702
    Dispositions of businesses..............................    2,494        9
    Other investing activities..............................        3      (31)
                                                              -------   ------
    Net cash provided by investing activities from
      continuing operations.................................    1,909      107
                                                              -------   ------
FINANCING ACTIVITIES:
    Net proceeds from short-term borrowings.................    1,576      185
    Repayments of long-term debt............................    --        (375)
    Proceeds from issuance of common stock..................       69      557
    Dividends paid..........................................      (68)     (62)
                                                              -------   ------
    Net cash provided by financing activities from
      continuing operations.................................    1,577      305
    Effect of exchange rate changes on cash and cash
      equivalents...........................................      (35)     (11)
                                                              -------   ------
    Net cash provided by continuing operations..............    2,347      540
    Net cash used in discontinued operations................    --        (129)
                                                              -------   ------
    Net increase in cash and cash equivalents...............    2,347      411
        Cash and cash equivalents at beginning of year......    1,467    1,686
                                                              -------   ------
        Cash and cash equivalents at end of period..........  $ 3,814   $2,097
                                                              -------   ------
                                                              -------   ------
</TABLE>

            See notes to unaudited Consolidated Financial Statements

                                       3




<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

1. BASIS OF PRESENTATION

    The accompanying unaudited Consolidated Financial Statements have been
prepared by Lucent Technologies Inc. ('Lucent' or the 'Company') pursuant to the
rules and regulations of the Securities and Exchange Commission ('SEC') and, in
the opinion of the Company, include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of results of operations,
financial position and cash flows as of and for the periods presented.

    The preparation of financial statements and related disclosures in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the period reported.
Actual results could differ from those estimates. Estimates are used in
accounting for, among other things, long-term contracts, allowances for
uncollectible receivables, inventory obsolescence, product warranty,
depreciation, employee benefits, taxes and contingencies. Estimates and
assumptions are reviewed periodically and the effects of revisions are reflected
in the Consolidated Financial Statements in the period they are determined to be
necessary.

    The Company believes that the disclosures made are adequate to keep the
information presented from being misleading. The results for the three months
ended December 31, 2000 are not necessarily indicative of financial results for
the full year. These financial statements should be read in conjunction with the
audited Consolidated Financial Statements and notes thereto included in Lucent's
latest Annual Report on Form 10-K for the year ended September 30, 2000 as
amended on Form 10-K/A filed on June 13, 2001.

    The balance sheet at September 30, 2000 has been derived from the audited
consolidated financial statements at that date.

    The financial information for the three months ended December 31, 1999 has
been restated to reflect the spin-off of Avaya Inc. as a discontinued operation
(see Note 2). In addition, certain reclassifications have been made to conform
to the current period presentation.

2. DISCONTINUED OPERATIONS

    On September 30, 2000, Lucent completed the spin-off of Avaya Inc. in a
tax-free distribution to its shareowners. Revenues and income from discontinued
operations were $1,840 and $125 (net of tax expense of $67), respectively, for
the three months ended December 31, 1999. Income from discontinued operations
includes an allocation of Lucent's interest expense totaling $18 for the three
months ended December 31, 1999, based upon the amount of debt assumed by Avaya.

3. SALE OF POWER SYSTEMS

    On December 29, 2000, Lucent completed the sale of its power systems
business to Tyco International Ltd. for $2,500 in cash. In connection with the
sale, Lucent recorded an extraordinary gain of $1,154 (net of tax of $762),
subject to potential purchase price adjustments to be resolved by the end of
fiscal year 2001. Lucent does not expect such adjustments, if any, to be
significant to its consolidated results of operations.

4. ACCOUNTING CHANGE -- DERIVATIVE FINANCIAL INSTRUMENTS

    Effective October 1, 2000, Lucent adopted Statement of Financial Accounting
Standards ('SFAS') No. 133, 'Accounting for Derivative Instruments and Hedging
Activities' ('SFAS 133'), and its corresponding amendments under SFAS No. 138.
SFAS 133 requires Lucent to measure all derivatives, including certain
derivatives embedded in other contracts, at fair value and to recognize them in
the Consolidated Balance Sheet as an asset or liability, depending on Lucent's

                                       4




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

rights or obligations under the applicable derivative contract. For derivatives
designated as fair value hedges, the changes in the fair value of both the
derivative instrument and the hedged item are recorded in other income
(expense). For derivatives designated as cash flow hedges, the effective
portions of changes in fair value of the derivative are reported in other
comprehensive income ('OCI') and are subsequently reclassified into earnings
when the hedged item affects other income (expense). Changes in fair value of
derivative instruments not designated as hedging instruments and ineffective
portions of hedges are recognized in other income (expense) in the current
period. The adoption of SFAS 133 as of October 1, 2000, resulted in a cumulative
after-tax reduction in net loss of $30 (net of tax of $17) and an $11 credit to
OCI. The reduction in net loss is primarily attributable to derivatives not
designated as hedging instruments, including foreign currency embedded
derivatives, equity warrants and other derivatives. For the three months ended
December 31, 2000, the change in fair market value of derivative instruments was
recorded in other income (expense) and was not material.

FOREIGN CURRENCY RISK

    Lucent conducts its business on a multinational basis in a wide variety of
foreign currencies. Lucent's foreign currency risk management policy is to hedge
100% of all recorded foreign currency receivables and payables and firmly
committed transactions and 50% of the first six months of a 12-month anticipated
exposure forecast, with the hedging of the remainder of the forecast to be
evaluated on an ongoing basis. This applies to all transactions with value
greater than or equal to the lesser of $5 or 10% of the relevant
subsidiary's 12-month trailing net revenues. This policy provides risk
management flexibility in cases where hedging costs may be excessive relative to
the actual risk and when there is greater cash flow uncertainty. To manage this
risk, Lucent enters into various foreign exchange forward and option contracts
to manage its exposure to changes in those foreign exchange rates.
Alternatively, Lucent may hedge foreign exchange risk in certain sales and
purchase contracts by embedding terms in the contracts that affect the ultimate
amount of cash flows under the contract. Principal currencies hedged as of
December 31, 2000, expressed in millions of U.S. dollars are as follows:

<TABLE>
<CAPTION>
                                                                      EMBEDDED FOREIGN CURRENCY
                              FORWARD AND OPTION CONTRACTS             DERIVATIVE INSTRUMENTS
                           -----------------------------------   -----------------------------------
                                                FAIR VALUE                            FAIR VALUE
        CURRENCY           NOTIONAL AMOUNT   ASSET (LIABILITY)   NOTIONAL AMOUNT   ASSET (LIABILITY)
        --------           ---------------   -----------------   ---------------   -----------------
<S>                        <C>               <C>                 <C>               <C>
Euros....................       $582               $(22)              $ 49                $(4)
Brazilian reals..........        180                  5                 21             --
Danish kroner............        207                  3             --                 --
Australian dollars.......         95                  3                307                 42
Japanese yen.............         91                 (7)            --                 --
</TABLE>

    Lucent has designated certain freestanding foreign currency derivatives as
hedging instruments under SFAS 133 against its intercompany and external
foreign-currency-denominated loans. These exposures make up a large proportion
of the notional value of Lucent's total foreign currency risk and are well
defined as to amounts and timing of repayments. The derivatives hedging these
exposures are designated as cash flow hedging instruments for anticipated cash
flows not to exceed twelve months. Lucent will continue to hedge all other types
of foreign currency risk to preserve the economic cash flows of the Company in
accordance with corporate risk management policies but generally does not expect
to designate related derivative instruments as hedges for cost/benefit reasons.
Accordingly, the changes in fair value of these undesignated freestanding
foreign currency derivative instruments are recorded in other income (expense)
in the period of change and are not material to Lucent due to the short
maturities of these instruments.

    Lucent's foreign currency embedded derivatives consist of sales and purchase
contracts with cash flows indexed to changes in or denominated in a currency
that neither party to the contract

                                       5




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

uses as their functional currency. Changes in the fair value of these embedded
derivatives are recorded in other income (expense) in the current period.

INTEREST RATE RISK

    Lucent uses a combination of financial instruments, including medium-term
and short-term financings, variable-rate debt instruments and to a lesser
extent, interest rate swaps to manage its interest rate mix of the total debt
portfolio and related overall cost of borrowing. To manage this mix in a
cost-effective manner, Lucent, from time to time, may enter into interest rate
swap agreements, in which it agrees to exchange various combinations of fixed
and/or variable interest rates based on agreed upon notional amounts. The
objective of maintaining this mix of fixed and floating rate debt allows Lucent
to manage its overall value of cash flows attributable to its debt instruments.
The interest rate swaps in effect at December 31, 2000 were designated as fair
value hedge instruments and their fair value was not material.

OTHER DERIVATIVES

    From time to time, Lucent may obtain warrants to purchase equity securities
in other companies to compliment its investment portfolio. Warrants that provide
for net share settlement are considered to be derivative instruments and are
generally not eligible to be designated as hedging instruments as there is no
corresponding underlying exposure.

5. COMPREHENSIVE INCOME (LOSS)

    Comprehensive income (loss) represents net income (loss) plus the results of
certain non-shareowners' equity changes not reflected in the Consolidated
Statements of Operations. The components of comprehensive income (loss), net of
tax, (except for foreign currency translation adjustments which are not
currently adjusted for income taxes since they relate to indefinite investments
in non-United States subsidiaries) are as follows:

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                         ---------------------
                                                           2000        1999
                                                           ----        ----
<S>                                                      <C>         <C>
Net income (loss)......................................    $(395)     $1,249
Other comprehensive income (loss):
    Foreign currency translation adjustments...........       12         (81)
    Unrealized investment gains (losses) arising during
      the period.......................................      (92)         45
Cumulative effect of change in accounting principle
  (SFAS 133) on other comprehensive income.............       11       --
Unrealized derivative losses on cash flow hedges.......       (1)      --
                                                           -----      ------
Comprehensive income (loss)............................    $(465)     $1,213
                                                           -----      ------
                                                           -----      ------
</TABLE>

                                       6




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

6. SUPPLEMENTARY BALANCE SHEET INFORMATION

    Inventories:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,   SEPTEMBER 30,
                                                         2000           2000
                                                         ----           ----
<S>                                                  <C>            <C>
Completed goods....................................     $3,543         $2,976
Work in process....................................      1,353          1,083
Raw materials......................................      1,983          1,618
                                                        ------         ------
    Total inventories..............................     $6,879         $5,677
                                                        ------         ------
                                                        ------         ------
</TABLE>

7. EARNINGS (LOSS) PER COMMON SHARE

    Basic earnings (loss) per common share is calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted earnings (loss) per share is calculated by dividing net income
(loss) by the sum of the weighted average number of common shares outstanding
plus all additional common shares that would have been outstanding if
potentially dilutive securities or common stock equivalents had been issued. As
a result of the net loss from continuing operations reported for the three
months ended December 31, 2000, approximately 55.5 potential common shares have
been excluded from the calculation of diluted earnings (loss) per share because
their effect would be anti-dilutive. In addition, options where the exercise
price was greater than the average market price of the common shares of 330.1
and 0.8 for the periods ending December 31, 2000 and 1999, respectively, were
excluded from the computation of diluted earnings (loss) per share.

    The following table sets forth the computation of basic and diluted earnings
(loss) per share:

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                         ---------------------
                                                           2000        1999
                                                           ----        ----
<S>                                                      <C>         <C>
Net income (loss)......................................   $ (395)     $1,249
Earnings (loss) per common share -- basic:
    Income (loss) from continuing operations...........   $(0.47)     $ 0.36
    Income from discontinued operations................    --           0.04
    Extraordinary gain.................................     0.34       --
    Cumulative effect of accounting change.............     0.01       --
                                                          ------      ------
        Net income (loss)..............................   $(0.12)     $ 0.40
                                                          ------      ------
                                                          ------      ------
Earnings (loss) per common share -- diluted:
    Income (loss) from continuing operations...........   $(0.47)     $ 0.34
    Income from discontinued operations................    --           0.04
    Extraordinary gain.................................     0.34       --
    Cumulative effect of accounting change.............     0.01       --
                                                          ------      ------
        Net income (loss)..............................   $(0.12)     $ 0.38
                                                          ------      ------
                                                          ------      ------
Dividends declared per common share....................   $ 0.02      $ 0.04
                                                          ------      ------
                                                          ------      ------
</TABLE>

                                       7




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                         ---------------------
NUMBER OF SHARES                                           2000        1999
----------------                                           ----        ----
<S>                                                      <C>         <C>
Common shares -- basic.................................   3,387.2     3,154.5
Effect of dilutive securities:
    Stock options......................................     --          108.1
    Other..............................................     --            5.4
                                                          -------     -------
Common shares -- diluted...............................   3,387.2     3,268.0
                                                          -------     -------
                                                          -------     -------
</TABLE>

8. OPERATING SEGMENTS

    Lucent reclassified the results of operations of Avaya as discontinued
operations (see Note 2). This business was previously disclosed as a separate
operating segment. The segment data included below has been restated to exclude
amounts related to Avaya. In addition, Agere Systems Inc. ('Agere') has filed a
Form S-1 registration statement with the SEC in anticipation of an initial
public offering. Microelectronics is now being managed internally based on the
composition of Agere. The results of Microelectronics presented by Lucent will
differ from the information reported by Agere because of different assumptions
and allocations required to be made by the two companies. Accordingly, Lucent
has revised its segment reporting to reflect this change which resulted in the
transfer of the optical fiber business to the Service Provider Networks ('SPN')
segment and the transfer of the power systems business to Other and corporate.

    Lucent operates in the global telecommunications networking industry and has
two reportable operating segments: SPN and Microelectronics. SPN provides public
networking systems, software and services to telecommunications service
providers and public network operators around the world and optical fiber for
applications in the communications and computing industries. Microelectronics
provides high-performance optoelectronic components and integrated circuits.

    Intersegment transactions that occur are based on current market prices, and
all intersegment profit is eliminated in consolidation. Lucent employs
shared-service concepts to realize economies of scale and efficient use of
resources. The costs of shared services and other corporate center operations
managed on a common basis are reflected in the SPN segment.

    Performance measurement and resource allocation for the reportable operating
segments are based on many factors. The primary financial measure used is
operating income, exclusive of goodwill and other acquired intangibles
amortization, and other costs from business acquisitions
(acquisition/integration-related costs).

                                       8




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

    The following tables present Lucent's revenues and operating income (loss)
by reportable operating segment:

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                         ---------------------
                                                           2000        1999
                                                           ----        ----
<S>                                                      <C>         <C>
External Revenues
    Service Provider Networks..........................   $ 4,336     $6,801
    Microelectronics...................................     1,146        763
                                                          -------     ------
        Total reportable segments......................     5,482      7,564
Other and corporate(a).................................       359        501
                                                          -------     ------
            Total External Revenues....................     5,841      8,065
                                                          -------     ------
                                                          -------     ------
Intersegment Revenues
    Service Provider Networks..........................        72         78
    Microelectronics...................................       230        217
                                                          -------     ------
        Total reportable segments......................       302        295
Other and corporate(a).................................      (302)      (295)
                                                          -------     ------
            Total Intersegment Revenues................     --         --
                                                          -------     ------
                                                          -------     ------
Total Revenues
    Service Provider Networks..........................     4,408      6,879
    Microelectronics...................................     1,376        980
                                                          -------     ------
        Total reportable segments......................     5,784      7,859
Other and corporate(a).................................        57        206
                                                          -------     ------
            Total Revenues.............................   $ 5,841     $8,065
                                                          -------     ------
                                                          -------     ------
Operating income (loss)
    Service Provider Networks..........................    (1,904)     1,228
    Microelectronics...................................       187        234
                                                          -------     ------
        Total reportable segments(b)...................    (1,717)     1,462
Acquisition/integration-related costs..................     --           (61)
Goodwill and other acquired intangibles amortization...      (372)       (50)
Other and corporate(a).................................       (22)       141
                                                          -------     ------
Operating income (loss)................................   $(2,111)    $1,492
                                                          -------     ------
                                                          -------     ------
</TABLE>

---------

 (a) Other and corporate primarily includes the results of the power systems
     business (see Note 3), results from the Company's remaining consumer
     products business in the prior year quarter and other smaller units,
     including eliminations of internal business. The remaining consumer
     products business was sold in the second fiscal quarter of 2000.

 (b) Reportable segment operating income (loss) excludes goodwill and other
     acquired intangibles amortization, and acquisition/integration-related
     costs.

9. COMMITMENTS AND CONTINGENCIES

    In the normal course of business, Lucent is subject to proceedings, lawsuits
and other claims, including proceedings under laws and government regulations
related to environmental and other matters. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. Consequently,
the ultimate aggregate amount of monetary liability or financial impact with
respect to these matters at December 31, 2000, cannot be ascertained. While
these matters

                                       9




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

could affect the operating results of any one quarter when resolved in future
periods and while there can be no assurance with respect thereto, management
believes that after final disposition, any monetary liability or financial
impact to Lucent, from matters other than those described in the next paragraph,
beyond that provided for at December 31, 2000 would not be material to the
annual Consolidated Financial Statements.

    In addition, Lucent and certain of its former officers are defendants in
several purported shareholder class action lawsuits for alleged violations of
federal securities laws. Specifically, the complaints allege, among other
things, that beginning in late October 1999, Lucent and certain of its officers
misrepresented Lucent's financial condition and failed to disclose material
facts that would have an adverse impact on Lucent's future earnings and
prospects for growth. These actions seek compensatory and other damages, and
costs and expenses associated with the litigation. These actions are in the
early stages and the Company is unable to determine their potential impact on
the Consolidated Financial Statements. Lucent intends to defend these actions
vigorously. Also, Lucent has been served with several derivative complaints
filed by individual Lucent shareholders against the current members of Lucent's
Board of Directors, a former director and a current officer. These actions make
claims for breach of fiduciary duties allegedly owed to the Company, and seek
damages against the defendants and in favor of Lucent, as well as costs and
expenses associated with litigation for the individual plaintiffs. These
derivative actions are in the early stages and the Company is unable to
determine their potential impact on the Consolidated Financial Statements.

    In connection with the formation of Lucent from certain units of AT&T Corp.
and the associated assets and liabilities of those units and AT&T's distribution
of its remaining interest in Lucent to its shareowners, Lucent, AT&T and NCR
Corporation executed and delivered the Separation and Distribution Agreement,
dated as of February 1, 1996, as amended and restated, and certain related
agreements. The Separation and Distribution Agreement, among other things,
provides that Lucent will indemnify AT&T and NCR for all liabilities relating to
Lucent's business and operations and for all contingent liabilities relating to
Lucent's business and operations or otherwise assigned to Lucent. In addition to
contingent liabilities relating to the present or former business of Lucent, any
contingent liabilities relating to AT&T's discontinued computer operations
(other than those of NCR) were assigned to Lucent. The Separation and
Distribution Agreement provides for the sharing of contingent liabilities not
allocated to one of the parties, in the following proportions: AT&T: 75%,
Lucent: 22%, and NCR: 3%. The Separation and Distribution Agreement 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.

    In connection with the spin-off of Avaya, Lucent and Avaya executed and
delivered a Contribution and Distribution Agreement which provides for
indemnification by each company with respect to contingent liabilities primarily
relating to their respective businesses or otherwise assigned to each, subject
to certain sharing provisions. In the event the aggregate value of all amounts
paid by each company, in respect of any single contingent liability or any set
or group of related contingent liabilities, is in excess of $50 each company
will share portions in excess of the threshold amount based on agreed-upon
percentages. The Contribution and Distribution Agreement also provides for the
sharing of certain contingent liabilities, specifically: (1) any contingent
liabilities that are not primarily contingent liabilities of Lucent or
contingent liabilities associated with the businesses attributed to Avaya;
(2) certain specifically identified liabilities, including liabilities relating
to terminated, divested or discontinued businesses or operations; and
(3) shared contingent liabilities within the meaning of the Separation and
Distribution Agreement with AT&T Corp.

                                       10




<PAGE>

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                 (AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

ENVIRONMENTAL MATTERS

    Lucent's current and historical operations are subject to a wide range of
environmental protection laws. In the United States, these laws often require
parties to fund remedial action regardless of fault. Lucent has remedial and
investigatory activities under way at numerous current and former facilities. In
addition, Lucent 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 Separation and Distribution Agreement,
Lucent is responsible for all liabilities primarily resulting from or relating
to the operation of Lucent's business as conducted at any time prior to or after
the Separation including related businesses discontinued or disposed of prior to
the Separation, and Lucent's assets including, without limitation, those
associated with these sites. In addition, under such Separation and Distribution
Agreement, Lucent is required to pay a portion of contingent liabilities paid
out in excess of certain amounts by AT&T and NCR, including environmental
liabilities.

    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. Lucent records an environmental
reserve when it is probable that a liability has been incurred and the amount of
the liability is reasonably estimable. This practice is followed whether the
claims are asserted or unasserted. Management expects that the amounts reserved
will be paid out over the periods of remediation for the applicable sites, which
typically range from five to 30 years. Reserves for estimated losses from
environmental remediation are, depending on the site, based primarily on
internal or third-party environmental studies and estimates as to the number,
participation level and financial viability of any other PRPs, the extent of the
contamination and the nature of required remedial actions. Accruals are adjusted
as further information develops or circumstances change. The amounts provided
for in Lucent's consolidated financial statements for environmental reserves are
the gross undiscounted amounts of such reserves, without deductions for
insurance or third-party indemnity claims. In those cases where insurance
carriers or third-party indemnitors have agreed to pay any amounts and
management believes that collectibility of such amounts is probable, the amounts
are reflected as receivables in the financial statements. Although Lucent
believes that its reserves are adequate, there can be no assurance that the
amount of capital expenditures and other expenses which will be required
relating to remedial actions and compliance with applicable environmental laws
will not exceed the amounts reflected in Lucent's reserves or will not have a
material adverse effect on Lucent's financial condition, results of operations
or cash flows. Any possible loss or range of possible loss that may be incurred
in excess of that provided for at December 31, 2000 cannot be estimated.

10. RECENT PRONOUNCEMENT

    In December 1999, the SEC issued Staff Accounting Bulletin 101, 'Revenue
Recognition in Financial Statements' ('SAB 101'). SAB 101 provides guidance on
the recognition, presentation and disclosure of revenues in financial statements
and requires adoption no later than the fourth quarter of fiscal 2001. The
Company is currently evaluating the impact of SAB 101 and its related
interpretations to determine the effect it will have on the Company's
consolidated financial position and results of operations.

                                       11





<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

OVERVIEW

    Lucent Technologies ('Lucent' or the 'Company') designs and delivers the
systems, software, silicon and services for next-generation communications
networks for service providers and enterprises. Backed by research and
development of Bell Labs, Lucent focuses on high-growth areas such as broadband
and mobile Internet infrastructure; communications software; communications
semiconductors and optoelectronics; Web-based enterprise solutions that link
private and public networks; and professional network design and consulting
services.

    During the fiscal year ended September 30, 2000 and continuing through the
first fiscal quarter of 2001, various initiatives were undertaken to reorganize
the Company to become more focused and better positioned to capitalize on market
opportunities. This reorganization included:

     On September 30, 2000 Lucent completed the spin-off of Avaya Inc., formerly
     its enterprise networks business.

     In December 2000, Agere Systems Inc. ('Agere'), Lucent's microelectronics
     business, filed a Form S-1 registration statement with the Securities and
     Exchange Commission ('SEC') in anticipation of an initial public offering
     ('IPO') (this report does not constitute the offering of any securities,
     which will be made only by a prospectus filed with the SEC). Lucent plans
     to distribute the remaining shares through a tax-free distribution to its
     shareholders ('Distribution'). The IPO and Distribution are subject to
     certain conditions, including a favorable tax ruling by the IRS. In
     connection with the IPO, the Company may be adjusting its capital structure
     including a possible reduction in the amount of debt outstanding. See
     additional comments on the Distribution under LIQUIDITY AND CAPITAL
     RESOURCES.

     On December 29, 2000 Lucent completed the sale of its power systems
     business to Tyco International Ltd, for $2.5 billion in cash.

     On January 24, 2001, Lucent announced its restructuring program (see
     Restructuring Plan).

    On a total basis, Lucent reported a net loss of $395 million, or $0.12 loss
per basic and diluted share for the quarter ended December 31, 2000, as compared
with net income in the prior year quarter of $1,249 million, or $0.38 per
diluted share. The net loss for the current quarter includes an extraordinary
gain of $1,154 million, or $0.34 per basic and diluted share, related to the
sale of the power systems business, and a gain from a cumulative effect of
accounting change of $30 million, or $0.01 per basic and diluted share, related
to the adoption of Statement of Financial Accounting Standard No. 133 ('SFAS
133') -- 'Accounting for Derivative Instruments and Hedging Activities' (see
Note 4 of the accompanying Consolidated Financial Statements). Net income for
the prior year quarter includes $125 million from discontinued operations ($0.04
per share-diluted).

RESTRUCTURING PLAN

    On January 24, 2001, Lucent announced a restructuring plan to primarily
streamline its Service Provider Networks ('SPN') business and corporate
operations including reducing its cost structure and improving working capital.

    As part of the business-restructuring plan, Lucent expects to record a
charge to earnings in the range of $1.2 billion to $1.6 billion in the second
fiscal quarter of 2001. The charge relates to headcount reductions, elimination
of certain product lines and associated asset writedowns and facility
consolidations. As of February 2001, the Company has identified $1.2 billion in
restructuring and asset writedown actions and expects to solidify plans for up
to an additional $400 million in charges by the end of the fiscal quarter ending
March 31, 2001.

                                       12




<PAGE>

    This restructuring plan will allow the Company to concentrate its
investments, resources and management attention on optical, data and wireless
solutions, along with the network design, consulting and integration services to
support them. Lucent will continue to review its internal processes throughout
fiscal year 2001, which may result in additional cost structure improvements and
associated business restructuring charges as it moves from a multi-divisional
company to one with a single focus on the service provider market.

RESULTS OF OPERATIONS -- THREE MONTHS ENDED DECEMBER 31, 2000 VERSUS
THREE MONTHS ENDED DECEMBER 31, 1999

REVENUES

    Total revenues for the current quarter decreased 27.6% to $5,841 million
compared with the prior year quarter. Sales within the United States decreased
35.0% and non-U.S. revenues decreased 13.7% compared with the prior year
quarter. The non-U.S. sales represented 41.7% of total revenues compared with
35.0% in the prior year quarter. The substantial decline in revenues largely
contributed to the substantial loss from continuing operations. The decrease
occurred in the Company's SPN segment (see below) and resulted primarily from a
significant sales decline in North America due to an overall softening in the
competitive local exchange carrier market, slowdown in capital spending by
established service providers, lower sales in hardware, significantly lower
software sales, a more selective vendor financing program and the Company's move
to a fulfillment model with distributors.

REVENUES BY SEGMENT

    Lucent operates in the global telecommunications networking industry and has
two reportable operating segments: SPN and Microelectronics. SPN provides public
networking systems, software and services to telecommunications service
providers and public network operators around the world and optical fiber for
applications in the communications and computing industries. Microelectronics
provides high-performance optoelectronic components and integrated circuits.

    Agere has filed a Form S-1 registration statement with the SEC in
anticipation of an initial public offering. Microelectronics is now being
managed internally based on the composition of Agere. Accordingly, Lucent has
revised its segment reporting to reflect this change which resulted in the
transfer of optical fiber to the SPN segment.

    The following table presents Lucent's revenues by segment and the
approximate percentage of total revenues for the three months ended December 31,
2000 and 1999 (in millions):

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                         DECEMBER 31,
                                                 -----------------------------
                                                  2000             1999
                                                  ----             ----
<S>                                              <C>      <C>     <C>      <C>
SPN............................................  $4,336    74%    $6,801    84%
Microelectronics...............................   1,146    20        763    10
Other and Corporate............................     359     6        501     6
                                                 ------   ---     ------   ---
    Total Lucent...............................  $5,841   100%    $8,065   100%
                                                 ------   ---     ------   ---
                                                 ------   ---     ------   ---
</TABLE>

    Revenues from SPN decreased $2,465 million, or 36.2% compared to the prior
year quarter. Revenue decreases were primarily attributable to the factors noted
above and a substantial reduction of revenues to AT&T in the U.S. and the wind
down of a project with Saudi Telecommunications Company (STC) in Saudi Arabia.

    Revenues generated from service providers in the United States decreased
40.1% for the first fiscal quarter of 2001 in comparison to the prior year
quarter. Sales generated outside the United States decreased 28.9% over the
prior year quarter.

                                       13




<PAGE>

    Revenues from Microelectronics increased $383 million, or 50.2% over the
prior year quarter, reflecting growth in optoelectronic components, wired and
wireless local area network systems and customized chips for computing and
high-speed communications products.

    Revenues from within the United States increased 42.8% in comparison to the
prior year quarter. Revenue from outside the United States increased 55.1% in
comparison to the year-ago quarter, reflecting increases in all regions.

    Revenues from Other and Corporate decreased $142 million, or 28.3% compared
to the prior year quarter. The decrease is largely due to revenues generated in
the prior year quarter from the Company's remaining consumer products business,
which was sold in the second fiscal quarter of 2000, partially offset by
increased revenues in the current quarter from the power systems business, which
was sold on December 29, 2000.

GROSS MARGIN

    As a percentage of revenue, gross margin decreased to 22.4%, or 24.2
percentage points from 46.6% in the prior year quarter. The lower gross margin
was primarily due to decreased sales volumes across all SPN product lines except
optical fiber, reduced sales of high-margin software products, costs associated
with an infrastructure built to support higher revenue levels and an increasing
proportion of lower margin sales as the Company continues to expand into
non-U.S. markets.

OPERATING EXPENSES

    Selling, general and administrative expenses (SG&A) increased $799 million,
or 59.7%, to $2,137 million compared with $1,338 million in the prior year
quarter. Approximately $340 million of the increase, which is primarily related
to notes receivable, represents reserves for customer financing and
uncollectibles reflecting ongoing credit concerns in the emerging service
provider market. The remainder of the increase is attributable to amortization
of goodwill and other acquired intangibles and costs associated with an
infrastructure built to support a higher revenue base.

    Amortization of goodwill and other acquired intangibles was $372 million for
the quarter compared with $50 million for the prior year quarter. The increase
is from acquisitions made subsequent to the first fiscal quarter of 2000. As a
result of these acquisitions, amortization of goodwill and other acquired
intangibles in fiscal year 2001 will be significantly higher than the prior
year.

    Research and development expense increased $357 million, or 38.5%, to $1,285
million from $928 million in the prior year quarter. The increase is primarily
due to acquisitions made during fiscal year 2000 and new product development,
particularly in Internet infrastructure, optical networking, next-generation
3G/UMTS wireless and microelectronics.

OTHER INCOME (EXPENSE) -- NET

    Other income (expense), net, was an expense of $18 million for the quarter
compared to other income of $252 million in the prior year quarter. The change
between periods was largely due to foreign exchange losses and lower gains on
sales of investments. The prior year quarter included a $189 million gain from
the sale of an equity investment.

INTEREST EXPENSE

    Interest expense for the quarter increased $48 million to $129 million
reflecting higher average short-term debt levels coupled with an increase in
weighted average interest rates as compared to the same prior year quarter.

(BENEFIT) PROVISION FOR INCOME TAXES

    For the first fiscal quarter of 2001, the Company recorded a benefit for
income taxes of $679 million on a pre-tax loss from continuing operations of
$2,258 million, yielding an effective tax benefit rate of 30.1%. This rate is
lower than the U.S. statutory rate primarily from the impact of non-tax
deductible goodwill amortization on the pre-tax loss from continuing operations
offset in

                                       14




<PAGE>

part by research and development tax credits. For the prior year quarter, the
Company recorded a provision for income taxes of $539 million on pre-tax income
from continuing operations of $1,663 million, yielding an effective tax
provision rate of 32.4%. This rate is lower than the U.S. statutory rate
primarily due to research and development tax credits and the tax impact of
non-U.S. activity.

CASH FLOWS -- THREE MONTHS ENDED DECEMBER 31, 2000 VERSUS
THREE MONTHS ENDED DECEMBER 31, 1999

OPERATING ACTIVITIES

    Net cash used in operating activities was $1,104 million in the current
quarter primarily due to the loss from continuing operations (adjusted for
non-cash items) of $784 million, increase in inventories and contracts in
process of $1,170 million and changes in other assets and liabilities of $1,043
million. These increases were partially offset by a decrease in receivables of
$2,073 million. (see Financial Condition)

    Net cash provided by operating activities of $139 million in the prior year
quarter was primarily due to net income from continuing operations (adjusted for
non-cash items) of $1,622 million offset in part by increases in receivables of
$196 million and inventories and contracts in process of $297 million, decrease
in accounts payable of $684 million and changes in operating assets and
liabilities of $306 million.

INVESTING ACTIVITIES

    Net cash provided by investing activities was $1,909 million in the current
quarter, which primarily consisted of the cash proceeds received from the sale
of the power systems business offset in part by capital expenditures of $548
million.

    Net cash provided by investing activities was $107 million in the prior year
quarter which primarily consisted of proceeds from the sales of investments of
$702 million offset by $508 million of capital expenditures.

FINANCING ACTIVITIES

    Net cash provided by financing activities in the current quarter of $1,577
million is primarily from borrowings of short-term debt which largely consisted
of commercial paper issuances and the transfer of $500 million of notes
receivable with recourse that was accounted for as a secured borrowing.

    Net cash provided by financing activities in the prior quarter of $305
million was primarily from the proceeds from issuances of common stock related
to the exercise of stock options offset by repayments of long-term debt.

FINANCIAL CONDITION

    Total assets as of December 31, 2000 increased $1,249 million, or 2.6%, from
September 30, 2000 largely due to increases in cash and cash equivalents and
inventories, offset by decreases in receivables. Cash and cash equivalents
increased $2,347 million primarily as a result of the proceeds received at the
end of the quarter from the sale of the power systems business. Receivables
decreased $2,272 million, or 23.8% largely as a result of lower sales volume and
the sale of $615 million of receivables. Inventories increased $1,202 million,
or 21.2% primarily as a result of anticipated sales to customers that were not
fully realized in the first fiscal quarter of 2001.

    Total liabilities increased $1,673 million, or 7.4%, from September 30,
2000. This increase was primarily due to increases in debt maturing within one
year which largely consisted of issuances of commercial paper and $500 million
of short-term debt in connection with the transfer of customer notes receivable
with recourse that was accounted for as a secured borrowing.

LIQUIDITY AND CAPITAL RESOURCES

    The Company is currently negotiating new credit facility arrangements with
certain financial institutions. It is expected that the facilities will consist
of (1) a 364 day facility of $2.0 billion,

                                       15




<PAGE>

which replaces an existing $2.0 billion credit facility which expires on
February 22, 2001 and (2) a 364 day facility of $2.5 billion, which is
anticipated to be initially available to Lucent and assumable by Agere upon the
consummation of its IPO. In addition, Lucent expects to amend its existing $2.0
billion five year facility terminating in February 2003 to contain provisions
similar to the 364 day facilities. These facilities are expected to be secured
by the Company's assets including a pledge by Lucent of its shares of Agere
common stock. Some of our other existing and future financings and obligations
are expected to be similarly secured. Lucent expects that these credit
facilities and some of the other financings and obligations will include
customary financial covenants that require Lucent to have minimum net worth,
minimum earnings before interest, income taxes, depreciation and amortization,
and satisfy a ratio test based on a minimum level of current assets (until the
Distribution), and also include customary restrictive covenants. After
consummation of the expected Agere IPO and the assumption of $2.5 billion of
Lucent debt by Agere, the pledge of Agere's shares held by Lucent will be
released if Lucent is in compliance with all of these covenants. Also, the
Distribution is subject to Lucent being in compliance with these covenants at
the time of Distribution and Lucent having generated $2.5 billion of additional
funds or reduction in debt from non-operating sources, either through a
debt/equity exchange in connection with the IPO or from other sources.

    At December 31, 2000, Lucent maintained approximately $4.8 billion in credit
facilities including $0.8 billion of foreign subsidiary credit facilities, of
which a portion is used to support Lucent's commercial paper program. At
December 31, 2000, approximately $0.4 billion was drawn by foreign subsidiaries
and the remaining $4.4 billion was undrawn.

    On December 21, 2000, Moody's Investors Service lowered Lucent's credit
rating on senior unsecured long-term debt from A2 to A3 and Standard & Poor's
lowered its rating from A to BBB+. Moody's lowered its commercial paper rating
from Prime-1 to Prime-2 and Standard & Poor's lowered its commercial paper
rating from A-1 to A-2. On January 24, 2001 Moody's lowered the senior unsecured
long-term debt from A3 to Baa1. On February 12, 2001, Moody's lowered Lucent's
credit rating on senior unsecured long-term debt from Baa1 to Baa3 and Standard
& Poor's lowered its rating from BBB+ to BBB-. Also on that date, Moody's
lowered its commercial paper rating from Prime-2 to Prime-3 and Standard &
Poor's lowered its rating from A-2 to A-3. All of the ratings have negative
outlooks. Lucent believes that it will have sufficient capital resources to
fulfill its own operational and capital needs, as well as to extend credit to
customers when appropriate, although there can be no assurance that this will
occur.

    Future financings will be arranged to meet Lucent's requirements with the
timing, amount and form of issue depending on the prevailing market and general
economic conditions. Lucent's lower credit ratings may make commercial paper and
certain other short-term borrowings unavailable or of limited availability to
Lucent. Based upon the timely completion of the new credit facilities currently
being negotiated, Lucent anticipates that borrowings under its bank credit
facilities, short-and long-term debt financings, receivable securitizations, and
the proceeds from the planned IPO of Agere Systems will be adequate to satisfy
its future cash requirements, although there can be no assurance that this will
be the case.

NOTES RECEIVABLE AND FINANCIAL GUARANTEES

    Lucent's customers worldwide are requiring their suppliers to arrange or
provide long-term financing for them as a condition of obtaining or bidding on
infrastructure projects. These projects may require financing in amounts ranging
from modest sums to more than a billion dollars. Lucent has increasingly
provided or arranged long-term financing for customers, and continually monitors
and reviews the creditworthiness of such arrangements. As market conditions
permit, Lucent's intention is to sell or transfer these long-term financing
arrangements, which may include both commitments and drawn-down borrowings, to
financial institutions and other investors. This enables Lucent to reduce the
amount of its commitments and free up additional financing capacity.

    As of December 31, 2000, Lucent had made commitments or entered into
agreements to extend credit to certain customers for an aggregate of
approximately $5.7 billion. In addition, Lucent is finalizing an agreement with
a customer to extend $1.6 billion of credit. Excluding amounts that are not
available because the customer has not yet satisfied the conditions precedent

                                       16




<PAGE>

for borrowing, at December 31, 2000, approximately $2.3 billion in loan
commitments was undrawn and available for borrowing and approximately $1.8
billion had been advanced and was outstanding. As part of the revenue
recognition process, Lucent determines whether the notes receivable under these
contracts are reasonably assured of collection based on various factors, among
which is the ability of Lucent to sell these notes.

    In addition, Lucent had made commitments to guarantee customer debt of about
$1.8 billion at December 31, 2000. Excluding amounts not available for guarantee
because conditions precedent have not been satisfied, approximately $860 million
of guarantees was undrawn and available and about $740 million was outstanding
on December 31, 2000.

    Lucent has a credit process that monitors the drawn and un-drawn commitments
and guarantees of debt to its customers. Customers are reviewed on a quarterly
or annual basis depending upon their risk profile. As part of Lucent's review,
it assesses the customers short-term and long-term liquidity position, current
operating performance versus plan, execution challenges facing the Company,
changes in competitive landscape, industry and macro economic conditions, and
changes to management and sponsors. Depending upon the extent of any
deterioration of a customer's credit profile or non-compliance of our legal
documentation, the Company undertakes actions that could include canceling the
commitment, forcing the borrower to take corrective measures, and increasing
reserves. These actions are designed to mitigate unexpected events that could
have an impact on the Company's future results of operations and cash flows,
however, there can be no assurance that this will be the case. In the fourth
quarter of fiscal 2000 and continuing through the first quarter of 2001, the
telecommunications sector, particularly competitive local exchange carriers,
experienced a deterioration in market conditions that resulted in Lucent
recording additional provisions of approximately $270 million in the current
fiscal quarter as compared to the similar period of the prior year. In addition,
beginning in the first fiscal quarter of 2001, the Company implemented a more
selective customer-financing program. The overall vendor financing exposure,
coupled with a continued decline in telecommunications market conditions,
negatively impacted results of operations in the current fiscal quarter and
could cause revenue, results of operations and cash flows in the
current fiscal year 2001 to be lower than fiscal year 2000.

    Lucent will continue to provide or commit to financing where appropriate for
its business. The ability of Lucent to arrange or provide financing for its
customers will depend on a number of factors, including Lucent's capital
structure, credit rating and level of available credit, and its continued
ability to sell or transfer commitments and drawn-down borrowings on acceptable
terms. Lucent believes that it will be able to access the capital markets on
terms and in amounts that will be satisfactory to Lucent 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 this will be the case.

RISK MANAGEMENT

    Lucent is exposed to market risk from changes in foreign currency exchange
rates, interest rates and equity prices that could impact its results of
operations and financial condition. Lucent manages its exposure to these market
risks through its regular operating and financing activities and, when deemed
appropriate, hedges these risks through the use of derivative financial
instruments. Lucent uses the term hedge to mean a strategy designed to manage
risks of volatility in prices or rate movements on certain assets, liabilities
or anticipated transactions and it creates a relationship in which the gains or
losses on derivative instruments are expected to counter-balance the losses or
gains on the assets, liabilities or anticipated transactions exposed to such
market risks. Lucent uses derivative financial instruments as risk management
tools and not for trading or speculative purposes. In addition, derivative
financial instruments are entered into with a diversified group of major
financial institutions in order to manage Lucent's exposure to nonperformance on
such instruments.

    Lucent uses derivative financial instruments, including foreign exchange
forward contracts and to a lesser extent option contracts and interest rate swap
agreements to manage changes in foreign exchange rates and interest rates that
may affect the eventual cash flows in foreign currencies or underlying financial
instruments. The Company believes that its hedge activities achieve hedge

                                       17




<PAGE>

effectiveness by creating a relationship whereby the gains and losses on its
derivative instruments counter-balance the changes in value of the designated
assets, liabilities and forecasted transactions being hedged.

    Effective October 1, 2000, Lucent adopted SFAS 133 -- 'Accounting for
Derivative Instruments and Hedging Activities' and its corresponding amendments
under SFAS No. 138. The adoption of SFAS 133 resulted in a cumulative after-tax
reduction in net loss of $30 million (net of tax of $17 million) and an $11
million credit to other comprehensive income (OCI) in the first quarter of
fiscal year 2001. The reduction in net loss is primarily attributable to
derivatives not designated as hedging instruments, including foreign currency
embedded derivatives, equity warrants and other derivatives (for further
description see Note 4).

    Lucent has not changed its policy regarding how exposures are managed since
the year ended September 30, 2000. Lucent continuously monitors all of its
foreign currency exposures. Lucent cannot predict whether it will incur foreign
exchange losses in the future; however, if significant foreign exchange losses
are experienced, they could have a material adverse effect on the results of
operations, financial condition and cash flows of Lucent.

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

    Lucent uses a combination of financial instruments, including medium-term
and short-term financings, variable-rate debt instruments and to a lesser
extent, interest rate swaps to manage its interest rate mix of the total debt
portfolio and related overall cost of borrowing. To manage this mix in a
cost-effective manner, Lucent, from time to time, may enter into interest rate
swap agreements in which it agrees to exchange various combinations of fixed
and/or variable interest rates based on agreed-upon notional amounts. Lucent had
no material interest rate swap agreements in effect at December 31, 2000 or
September 30, 2000.

    Lucent's investment portfolio consists of equity investments accounted for
under the cost and equity methods as well as equity investments in publicly held
companies that are classified as available-for-sale. These available-for-sale
securities are exposed to price fluctuations and are generally concentrated in
the high-technology communications and semi-conductor industries, many of which
are small capitalization stocks. Lucent generally does not hedge its equity
price risk; however, on occasion, may use equity derivative financial
instruments that are subject to equity price risks to complement its investment
strategies. As of December 31, 2000, Lucent had no outstanding hedging
instruments for its equity price risk.

OTHER INFORMATION

    On November 21, 2000, Lucent announced that it had identified an issue
impacting revenue in the fourth fiscal quarter of 2000. The Company informed the
SEC and initiated a review by its outside counsel and outside auditors. In late
December, the Company announced the results of the review, which resulted in
certain adjustments to fourth fiscal quarter results. Lucent also informed the
SEC and is cooperating fully with the SEC's review of these matters.

FORWARD-LOOKING STATEMENTS

    This Management's Discussion and Analysis of Results of Operations and
Financial Condition and other sections of this report contain forward-looking
statements that are based on current expectations, estimates, forecasts and
projections about the industries in which Lucent operates, management's beliefs,
and assumptions made by management. In addition, other written or oral
statements that constitute forward-looking statements may be made by or on
behalf of Lucent. Words such as 'expects,' 'anticipates,' 'intends,' 'plans,'
'believes,' 'seeks,' 'estimates,' variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions ('Future Factors') that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecast in such forward-

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<PAGE>

looking statements. Except as required under the federal securities laws and the
rules and regulations of the Securities and Exchange Commission, Lucent does not
have any intention or obligation to update publicly any forward-looking
statements after the distribution of this Form 10-Q/A, whether as a result of
new information, future events or otherwise.

    Future Factors include increasing price, products and services competition
by U.S. and non-U.S. 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 and services; the availability of manufacturing capacity, components
and materials; the ability to recruit and retain talent; the achievement of
lower costs and expenses; credit concerns in the emerging service provider
market; customer demand for the Company's products and services; the ability to
successfully integrate the operations and business of acquired companies; timely
completion of the proposed IPO and distribution of Lucent's remaining shares of
Agere; the timely completion of the new credit facilities being negotiated; the
successful implementation of the strategic reorganization; U.S. and non-U.S.
governmental and public policy changes that may affect the level of new
investments and purchases made by customers; changes in environmental and other
U.S. and non-U.S. governmental regulations; protection and validity of patent
and other intellectual property rights; reliance on large customers and
significant suppliers; the ability to supply customer financing; technological,
implementation and cost/financial risks in the use of large, multiyear
contracts; the Company's credit ratings; 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 U.S. and
non-U.S. 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 discussion in
Lucent's Form 10-K for the year ended September 30, 2000 -- Item 1. section
VIII. OUTLOOK and Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Forward-Looking Statements.

EUROPEAN MONETARY UNION -- EURO

    Several member countries of the European Union have established fixed
conversion rates between their existing sovereign currencies and the Euro and
have adopted the Euro as their new single legal currency. The legacy currencies
will remain legal tender in the participating countries for a transition period
until January 1, 2002. During the transition period, cashless payments can be
made in the Euro. Between January 1, 2002 and July 1, 2002, the participating
countries will introduce Euro notes and coins and withdraw all legacy currencies
so that they will no longer be available.

    Lucent has in place a joint European-United States team representing
affected functions within the Company. This team is evaluating Euro-related
issues affecting the Company that include its pricing/marketing strategy,
conversion of information technology systems and existing contracts.

    The Euro conversion may affect cross-border competition by creating
cross-border price transparency.

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

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<PAGE>

                                    PART II.
                               OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    Since early January 2001, Lucent has been served with at least five
derivative complaints in Chancery Court in the State of Delaware. The actions
were filed by individual Lucent shareholders against the current members of
Lucent's Board of Directors, a former director and a current officer. The
actions are substantially similar to each other and make claims for breach of
the fiduciary duty of good faith and other fiduciary duties allegedly owed to
the Company. The actions seek damages against the defendants and in favor of
Lucent, as well as costs and expenses associated with litigation for the
individual plaintiffs. Lucent expects all of these derivative complaints to be
consolidated in a single action. These actions are in the early stages and the
Company is unable to determine their potential impact on the Consolidated
Financial Statements.

    Lucent is aware of several purported shareholder class actions that have
been filed against the Company and certain of its current and former officers
for alleged violations of federal securities laws in addition to the purported
shareholder class actions described in the Company's Annual Report on Form 10-K
for fiscal year 2000. The claims and relief sought in these newly-filed actions
are substantially similar to the claims and relief sought in the purported class
actions previously described in the Annual Report and, as with those actions,
Lucent is unable to determine their potential impact on the Consolidated
Financial Statements. Lucent intends to defend these actions vigorously.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

    (a) Exhibits:

        None.

    (b) Reports on Form 8-K:

    The following reports on Form 8-K were filed during the current quarter to
furnish company press releases.

        Current Report on Form 8-K dated and filed December 28, 2000 was filed
    pursuant to Item 9 (Regulation FD Disclosures).

        Current Report on Form 8-K dated December 21, 2000 and filed
    December 22, 2000 was filed pursuant to Item 5 (Other Events).

        Current Report on Form 8-K dated and filed November 21, 2000 was filed
    pursuant to Item 5 (Other Events) and Item 7 (Financial Statements, Pro
    Forma Financial Information and Exhibits).

        Current Report on Form 8-K dated November 13, 2000 and filed
    November 15, 2000 was filed pursuant to Item 5 (Other Events) and Item 7
    (Financial Statements, Pro Forma Financial Information and Exhibits).

        Current Report on Form 8-K dated and filed November 15, 2000 was filed
    pursuant to Item 9 (Regulation FD Disclosures).

        Current Report on Form 8-K dated October 23 and filed October 24, 2000
    was filed pursuant to Item 9 (Regulation FD Disclosures).

        Current Report on Form 8-K dated October 23 and filed October 24, 2000
    was filed pursuant to Item 9 (Regulation FD Disclosures).

        Current Report on Form 8-K dated October 10, 2000 and filed October 12,
    2000 was filed pursuant to Item 5 (Other Events) and Item 7 (Financial
    Statements, Pro Forma Financial Information and Exhibits).

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                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                          LUCENT TECHNOLOGIES INC.
                                          Registrant

                                                 /S/ MARK R. WHITE
Date June 13, 2001                        .....................................

                                                      MARK R. WHITE
                                           SENIOR VICE PRESIDENT AND CONTROLLER
                                              (PRINCIPAL ACCOUNTING OFFICER)

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