MURRAY HILL, N.J., Oct. 11 (UPI) -- Telecommunications equipment maker Lucent Technologies said Friday it will report a wider than expected fourth-quarter loss and cut an additional 10,000 jobs and take a $3 billion charge due to a decline in its pension assets.
The company said it expects to post a fourth-quarter loss of as much as 65 cents a share. It previously forecast a loss of 45 cents a share.
The company said that by the end of fiscal year 2003, it expects to have 35,000 employees, about 10,000 less than it expects to employ by the end of this year.
Lucent said it would record a charge of about $3 billion due to a decline in its pension assets, primarily as a result of declines in the stock market.
Patricia Russo, chief executive officer, said, "Despite the market challenges, we intend to return to profitability in fiscal 2003 and we are taking more aggressive restructuring actions to bring our breakeven down even further.
"Based on conversations with our customers, we are tightly focusing our investments on the nearest and clearest market opportunities that will help them expand their existing networks and offer next generation services. We will play to our core strengths in optical, circuit and packet switching, mobility and network operations software and increase our focus on services," Russo said.
The company also indicated it still expects a 20 to 25 percent sequential decline from third fiscal quarter revenues of $2.95 billion, consistent with its previous guidance.
Frank D'Amelio, chief financial officer, said, "In light of our revised forecasts for fiscal 2003 and our new breakeven plan developed in the last few weeks, we re-evaluated several balance sheet items, including inventory.
"The resulting charges will significantly increase the previously forecasted pro forma loss of 45 cents per share for the fourth fiscal quarter. Although we have not finalized our results at this point, we anticipate an increase in the pro forma loss of up to 20 cents a share," D'Amelio said.
The company also announced that it has cancelled its $1.5 billion credit facility and its $500 million accounts receivable securitization vehicle in order to avoid an anticipated default on the financial covenants.
Lucent said it had no outstanding balance on the credit facility, which was scheduled to expire in February 2003, and nothing drawn against the accounts receivable securitization vehicle.
"Since we didn't expect to draw on our existing credit facility before it expired in February, we thought it made the most sense to cancel the facility now instead of risking the anticipated default on our covenants," said D'Amelio.
"We are in discussions with our bankers concerning a new and smaller credit facility," D'Amelio added.
The company also said it has notified lenders that it will exercise its right to re-purchase certain real estate properties, for approximately $100 million, under existing lease agreements.
The facilities will be sold as part of the restructuring efforts. The company said it was taking this action given the high probability of defaulting on the terms of the agreement.
