ALCATEL LUCENT FORM 20-F (Annual and Transition Report (foreign private issuer)) Filed 03/12/13 for the Period Ending 12/31/12 Telephone 331 55 14 10 10 CIK 0000886125 SIC Code 3661 - Telephone and Telegraph Apparatus Industry Communications & Networking Sector Technology Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (cid:1) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012 OR (cid:1) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR (cid:1) SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 1-11130 (Exact name of Registrant as specified in its charter) N/A (Translation of Registrant’s name into English) Republic of France (Jurisdiction of incorporation or organization) 3 avenue Octave Gréard 75007 Paris, France (Address of principal executive offices) Frank MACCARY Telephone Number 33 (1) 40 76 10 10 Facsimile Number 33 (1) 40 76 14 05 3 avenue Octave Gréard 75007 Paris, France (Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered American Depositary Shares, each representing one ordinary share, nominal value € New York Stock Exchange 2 per share* * Listed, not for trading or quotation purposes, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission. Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 2,326,563,826 ordinary shares, nominal value € 2 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:1) No  If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes (cid:1) No  Note — checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections. 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  No (cid:1) Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Non-accelerated filer  Accelerated filer (cid:1) (cid:1) Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP (cid:1) International Financial Reporting Standards as issued by the International Accounting Standards Board  Other (cid:1) If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: I tem 17 (cid:1) Item 18 (cid:1) If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:1) No  Table of Contents TABLE OF CONTENTS 1 SELECTED FINANCIAL DATA 1 6.3 Results of operations by business segment for the year 1.1 Condensed consolidated income statement and ended December 31, 2012 compared to the year ended statement of financial position data 2 December 31, 2011 55 1.2 Exchange rate information 3 6.4 Consolidated results of operations for the year ended December 31, 2011 compared to the year ended December 31, 2010 57 2 ACTIVITY OVERVIEW 5 6.5 Results of operations by business segment for the year ended December 31, 2011 compared to the year ended 2.1 Networks Segment 5 December 31, 2010 60 2.2 Software, services and solutions 6.6 Liquidity and capital resources 63 (S3) Segment 6 6.7 Contractual obligations and off-balance sheet contingent 2.3 Enterprise Segment 7 commitments 67 6.8 Outlook 71 3 RISK FACTORS 9 6.9 Qualitative and quantitative disclosures about market risks 71 3.1 Risks relating to the business 9 6.10 Legal matters 73 3.2 Legal risks 15 6.11 Research and development – expenditures 75 3.3 Risks relating to ownership of our ADSs 16 7 CORPORATE GOVERNANCE 77 4 INFORMATION ABOUT THE GROUP 17 7.1 Chairman’s corporate governance report 77 4.1 General 17 7.2 Compensation and long-term incentives 111 4.2 History and development 18 7.3 Regulated agreements 136 4.3 Structure of the main consolidated companies as of 7.4 Alcatel-Lucent Code of Conduct 138 December 31, 2012 23 7.5 Major differences between our corporate governance 4.4 Real estate and equipment 24 practices and NYSE requirements 139 4.5 Material contracts 26 8 ENVIRONMENTAL MATTERS; HUMAN 5 DESCRIPTION OF THE GROUP’S ACTIVITIES 29 RESOURCES 141 5.1 Business organization 29 8.1 Environment 141 5.2 Networks Segment 30 8.2 Human resources 142 5.3 Software, solutions and services (S3) Segment 35 9 INFORMATION CONCERNING OUR COMPANY 5.4 Enterprise Segment 36 AND OUR CAPITAL 145 5.5 Marketing, sales and distribution of our products 37 9.1 Legal information 145 5.6 Competition 38 9.2 Specific provisions of the by-laws and of law 145 5.7 Technology, research and development 38 9.3 Share capital and diluted capital 150 5.8 Intellectual property 39 9.4 Authorizations related to the capital 151 5.9 Sources and availability of materials 39 9.5 Use of authorizations 151 5.10 Seasonality 40 9.6 Changes in our capital over the last five years 152 5.11 Our activities in certain countries 40 9.7 Purchase of Alcatel Lucent shares by the company 152 6 OPERATING AND FINANCIAL REVIEW AND 9.8 Outstanding instruments giving right to shares 154 PROSPECTS 41 9.9 American depositary shares, taxation and certain other matters 155 6.1 Overview of 2012 50 9.10 Documents on display 162 6.2 Consolidated results of operations for the year ended December 31, 2012 compared to the year ended December 31, 2011 52 10 STOCK EXCHANGE AND SHAREHOLDING 163 10.1 Listing 163 10.2 Trading over the last five years 163 10.3 Shareholder profile 164 Table of Contents 10.4 Breakdown of capital and voting rights 165 11.4 Statutory auditors’ fees 175 10.5 Employees and management’s shareholding 167 11.5 Audit committee financial expert 176 10.6 Other information on the share capital 169 11.6 Code of ethics 176 10.7 Trend of dividend per share over five years 170 11.7 Financial statements 176 10.8 General Shareholders’ Meeting 170 11.8 Exhibits 177 11.9 Cross-reference table between Form 20-F and this document 177 11 CONTROLS AND PROCEDURES, STATUTORY AUDITORS’ FEES AND OTHER MATTERS 173 11.1 Controls and procedures 173 SIGNATURE 1 80 11.2 Report of independent registered public accounting firms 174 12 CONSOLIDATED FINANCIAL STATEMENTS OF 11.3 Statutory auditors 175 ALCATEL-LUCENT AND ITS SUBSIDIARIES 1 81 Table of Contents SELECTED FINANCIAL DATA 1 SELECTED FINANCIAL DATA Our consolidated financial statements have been prepared in accordance with On November 30, 2006, historical Alcatel and Lucent Technologies Inc., since International Financial Reporting Standards (“IFRS”) as adopted by the renamed Alcatel-Lucent USA Inc. (“Lucent”), completed a business combination European Union. IFRS, as adopted by the European Union, differs in certain pursuant to which Lucent became a wholly owned subsidiary of Alcatel. respects from the International Financial Reporting Standards issued by the International Accounting Standards Board. However, our consolidated financial As a result of the purchase accounting treatment of the Lucent business statements presented in this document in accordance with IFRS would be no combination required by IFRS, our results for 2012, 2011, 2010, 2009 and 2008 different if we had applied International Financial Reporting Standards issued by included several negative, non-cash impacts of purchase accounting entries. the International Accounting Standards Board. As permitted by U.S. securities On October 19, 2011, Alcatel-Lucent announced that it had received a binding laws, we no longer provide a reconciliation of our net income and shareholders’ equity as reflected in our consolidated financial statements to U.S. GAAP. offer of U.S. $ 1.5 billion from a company owned by the Permira funds for the acquisition of its Genesys business. The closing of the deal was completed on February 1, 2012. As a result of this transaction, our 2011, 2010, 2009 and 2008 financial results pertaining to the Genesys business are treated as discontinued operations. 1 1 Table of Contents 1 SELECTED FINANCIAL DATA 1.1 CONDENSED CONSOLIDATED INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION DATA 1.1 CONDENSED CONSOLIDATED INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION DATA For the year ended December 31, (In millions, except per share data) 2012 (1) 2012 2011 2010 2009 2008 Income Statement Data Revenues U.S.$19,048 € 14,446 € 15,327 € 15,658 € 14,841 € 16,636 Income (loss) from operating activities before restructuring costs, litigations, gain/(loss) on disposal of consolidated entities, impairment of assets, and post-retirement benefit plan amendments (646) (490) 251 (70) (384) (112) Restructuring costs (646) (490) (203) (371) (598) (561) Impairment of assets (1,179) (894) - - - (4,725) Income (loss) from operating activities (2,185) (1,657) 117 (377) (744) (5,358) Income (loss) from continuing operations (2,791) (2,117) 730 (325) (666) (5,247) Net income (loss) (1,913) (1,451) 1,144 (292) (504) (5,173) Net income (loss) attributable to equity owners of the parent (1,812) (1,374) 1,095 (334) (524) (5,215) Earnings per ordinary share Net income (loss) before discontinued operations attributable to the equity owners of the parent per share • basic (2) U.S.$(1.17) € (0.89) 0.30 (0.16) (0.30) (2.34) • diluted (3) U.S.$(1.17) € (0.89) 0.28 (0.16) (0.30) (2.34) Dividend per ordinary share (4) - - - - - - Dividend per ADS (4) - - - - - - At December 31, (In millions) 2012 (1) 2012 2011 2010 2009 2008 Statement of Financial Position Data Total assets U.S.$28,172 € 21,365 € 24,203 € 24,876 € 23,896 € 27,373 Marketable securities and cash and cash equivalents 6,500 4,929 4,473 5,689 5,570 4,593 Bonds, notes issued and other debt - long-term part 5,214 3,954 4,290 4,112 4,179 3,998 Current portion of long-term debt and short-term debt 1,130 857 329 1,266 576 1,097 Capital stock 6,135 4,653 4,651 4,637 4,636 4,636 Equity attributable to the equity owners of the parent after appropriation (5) 2,566 1,946 3,854 3,545 3,740 4,633 Non-controlling interests 982 745 747 660 569 591 (1) Translated solely for convenience into dollars at the noon buying rate of € 1.00 = U.S.$1.3186 on December 31, 2012. (2) Based on the weighted average number of shares issued after deduction of the weighted average number of shares owned by our consolidated subsidiaries at December 31, without adjustment for any share equivalent: – ordinary shares:2,268,089,691 in 2012, 2,265,024,193 in 2011, 2,259,877,263 in 2010, 2,259,696,863 in 2009 and 2,259,174,970 in 2008. (3) Diluted earnings per share takes into account share equivalents having a dilutive effect after deduction of the weighted average number of share equivalents owned by our consolidated subsidiaries. Net income is adjusted for after-tax interest expense related to our convertible bonds. The dilutive effect of stock option plans is calculated using the treasury stock method. The number of shares taken into account is as follows: – ordinary shares: 2,268,089,691 in 2012, 2,865,930,999 in 2011, 2,259,877,263 in 2010, 2,259,696,863 in 2009 and 2,259,174,970 in 2008. (4) Under French company law, payment of annual dividends must be made within nine months following the end of the fiscal year to which they relate. Our Board of Directors has announced that it will propose not to pay a dividend for 2012 at our Annual Shareholders’ Meeting to be held on May 7, 2013. (5) Amounts presented are net of dividends distributed. Equity attributable to equity owners of the parent before appropriation was € 1,946 million, € 3,854 million, € 3,545 million, € 3,740 million and € 4,633 million as of December 31, 2012, 2011, 2010, 2009 and 2008 respectively and dividends proposed or distributed amounted to € 0 million as of December 31, 2012, 2011, 2010, 2009 and 2008. 2 Table of Contents SELECTED FINANCIAL DATA 1.2 EXCHANGE RATE INFORMATION 1.2 EXCHANGE RATE INFORMATION The table below shows the average noon buying rate of euro for each year from The table below shows the high and low noon buying rates expressed in U.S. 2008 to 2012. As used in this document, the term “noon buying rate” refers to dollars per euro for the previous six months. the rate of exchange for the euro, expressed in U.S. dollars per euro, as certified by the Federal Reserve Bank of New York for customs purposes. Period High Low March 2013 (through March 8) U.S.$ 1.3098 U.S.$ 1.2988 Year Average rate (1) February 2013 U.S.$ 1.3692 U.S.$ 1.3054 2012 U.S.$ 1.2909 January 2013 U.S.$ 1.3584 U.S.$ 1.3047 2011 U.S.$ 1.4002 December 2012 U.S.$ 1.3260 U.S.$ 1.2930 2010 U.S.$ 1.3209 November 2012 U.S.$ 1.3010 U.S.$ 1.2715 2009 U.S.$ 1.3955 October 2012 U.S.$ 1.3133 U.S.$ 1.2876 2008 U.S.$ 1.4695 September 2012 U.S.$ 1.3142 U.S.$ 1.2566 (1) The average of the noon buying rate for euro on the last business day of On March 8, 2013, the noon buying rate was € 1.00 = U.S. $1.2992. each month during the year. 3 1 Table of Contents 1 SELECTED FINANCIAL DATA 1.2 EXCHANGE RATE INFORMATION 4 Table of Contents ACTIVITY OVERVIEW 2.1 NETWORKS SEGMENT 2 ACTIVITY OVERVIEW The charts below set forth the three operating segments that comprised our organization in 2012: Networks, S3 (Software, Services and Solutions) and Enterprise. In 2012, our Networks segment was organized into four businesses: IP, Optics, Wireless and Wireline. According to independent industry analysis, in 2012, we were able to maintain or grow our market position in key next generation technologies, such as IP/MPLS service provider edge routers, 100Gbps WDM (Wavelength Division Multiplexing) products and GPON (Gigabit Passive Optical Network) technology. We were also able to maintain our leadership position in areas such as CDMA, submarine optics, VDSL2 (Very High speed Digital Subscriber Line) and Ethernet mobile backhaul. 2.1 NETWORKS SEGMENT IP Position Activities Market positions We are a world leader and privileged partner of service Central focus is on the IP intelligent router market. Our • #2 in IP/MPLS service provider edge routers with providers, enterprises and governments in transforming technology allows service providers to enrich the end- 25% market share based on revenues in 2012 their networks to an all-IP (Internet Protocol) architecture. user experience which creates sustainable value. (1) • #1 in Ethernet mobile backhaul with 22% market share bas ed on revenues in the first half of 2012 (1) (1) Industry analysts OPTICS Position Activities Market positions As a leader in optical networking, we help more than 1,000 By leveraging Bell Labs innovations, we design, • #2 in total optical networking with 14% m arket service providers and large strategic industries to manufacture and market optical networking equipment share based on revenues in 2012 (1) transform their transmission infrastructures in the to transport information over fiber optic connections framework of a High Leverage Network™, ensuring over long distances on land (terrestrial) or under sea • #1 in 100Gbps port shipments lifetime-to-date through 2012 (1) reliable transport of data at the lowest cost per bit and (submarine), as well as for short distances in enabling new revenue generating services and metropolitan and regional areas. The portfolio also applications. includes microwave wireless transmission equipment. (1) Industry analysts WIRELESS Position Activities Market positions We are one of the world’s leading suppliers of wireless Our activities focus on wireless product offerings for 2G • #1 in CDMA with 37% m arket share based on communications infrastructure across a variety of (GSM/GPRS/EDGE, CDMA), 3G (UMTS/HSPA/EV- revenues in 2012 (1) technologies. DO) and 4G networks (LTE). • #5 in GSM/GPRS/EDGE Radio Access Networks As a key element to our portfolio, lightRadio™ enables with 6% m arket share based on revenues in operators to add wireless capacity quickly and cost- 2012 (1) effectively where it is needed to address increasing demand for mobile broadband data services. • #4 in W-CDMA Radio Access Networks with 9% market share based on revenues in 2012 (1) • #3 in LTE with 16% ma rket share based on revenues in 2012 (1) • Market leader in small cells with 46 commercial deployments through the end of 2012; #1 in consumer and e nterprise contracts for small cells in 2012 (1) (1) Industry analysts 5 2