Alcatel-Lucent announces the release of its 2015 audited financial statements

OREANDA-NEWS. Alcatel-Lucent will publish the Document de R?f?rence and Annual Report on Form 20-F filings of 2015 on April 28^th. The audited financial statements, which have been approved by the Board of Directors yesterday, will confirm the positive conclusion of The Shift Plan including revenues of Euro 14,275 million, an 8.3% year-over-year increase, an adjusted operating profit of Euro 1,029 million and a positive Free Cash-Flow before transaction costs of Euro 660 million.

The Annual Report will reflect changes to the preliminary unaudited financial statements disclosed on February 11^th, 2016 in relation to two specific accounting matters:

• A change in accounting treatment related to the recognition of certain deferred tax assets. Further to specific reviews, it was identified in April 2016 that certain IAS 12 guidance requires the recognition of deferred tax assets related to taxable temporary differences, even in loss-making entities. The Group accounting policy, which was in constant review with our external auditors, was consequently amended as reflected in our 2015 consolidated financial statements, while prior periods consolidated financial statements (2013 and 2014) were restated accordingly in the Annual Report.
• The effect of this correction is a non-cash item with the adjustments mainly relating to the balance sheet through increased equity and deferred tax assets, while the Profit and Loss (P&L) impact is limited. The change has no impact on the operating results of the Company, its compliance with loan covenants or any other contractual requirement. The amounts of tax losses carried forward are unaffected.
• A subsequent event in litigation provisions leading to the booking of an additional Euro (11) million reserve in remediation obligations following issuance of the US Environmental Protection Agency’s (EPA) Record of Decision on March 4^th.

Details of the changes can be found in the tables attached.

Change in accounting treatment for the recognition of deferred tax assets (excerpts from Note 4 of the audited and consolidated financial statements)

In 2015, we changed our accounting treatment for the recognition of certain deferred tax assets based on recent publications about IAS 12 – Income taxes, in particular the May 2014 IFRS Interpretations Committee Agenda Decision on IAS 12 - Income Taxes: recognition and measurement of deferred tax assets when an entity is loss-making.

Previously, reversals of certain types of taxable temporary differences were not considered as a suitable source of taxable profit supporting the recognition of deferred tax assets. In particular, taxable temporary differences related to over-funded pension and post-employment benefit plans in the US and in Belgium were disregarded for the recognition of deferred tax assets due to the difficulty in predicting the timing of their reversal and/or the very long-term profile of their potential reversals, even in the case of existence of loss carry-forwards with no expiration date. Therefore, no deferred tax assets were recognized on the basis of such deferred tax liabilities.

In 2015, a deferred tax asset is now recognized for (i) the carry-forward of unused tax losses to the extent the reversal of those taxable temporary differences enables the utilization of the unused tax losses, and (ii) deductible temporary differences as long as there are sufficient  existing taxable temporary differences of the appropriate type expected to reverse in the same period as these deductible differences. This treatment applies regardless of the entity’s expectations of future tax losses.

In accordance with IAS 8 – Accounting policies, changes in accounting estimates and errors, we have retrospectively applied this accounting treatment and restated our previously issued consolidated financial statements, including the related notes. The impact of this correction as well as the subsquent event are included in the tables below.

Further information on Alcatel-Lucent financial statements will be available in the Document de R?f?rence and Annual Report on Form 20-F for 2015 on April 28^th, 2016.

Impact of changes

In Euro million	2013	2014	2015
Net income (loss)as published (*)	(1,294)	(83)	286(*)
Correction from accounting treatment	(67)	11	(40)
Adjustment from litigation	-	-	(11)
Net income (loss) as restated	(1,361)	(72)	235

In Euro	2013	2014	2015
Basic earnings (loss) per share  as published (*)	-0.54	-0.04	0.09(*)
Correction from accounting treatment	-0.02	-	-0.01
Adjustment from litigation	-	-	-0.01
Basic earnings (loss) per share as restated	-0.56	-0.04	0.07

In Euro million	2013	2014	2015
Comprehensive income (loss) as published (*)	(104)	(1,141)	1,550(*)
Correction from accounting treatment	85	(197)	37
Adjustment from litigation	-	-	(11)
Comprehensive income (loss) as restated	(19)	(1,338)	1,576

In Euro million	January 1, 2013	December 31, 2013	December 31, 2014	December 31, 2015
Equity as published (*)	2,683	3,663	2,694	4,597(*)
Correction from accounting treatment	657	742	545	594
Adjustment from litigation	-	-	-	(11)
Equity as restated	3,340	4,405	3,239	5,180

In Euro million	December 31, 2013	December 31, 2014	December 31, 2015
Deferred tax assets as published (*)	1,000	1,516	1,740(*)
Correction from accounting treatment	742	545	594
Deferred tax assets as restated	1,742	2,061	2,334

In Euro million	Recognized	Unrecognized	Total
Tax losses carried forward as published (*)(**)	1,616	10,489	12,102
Correction from accounting treatment	305	(305)	-
Tax losses carried forward as restated	1,921	10,181	12,102

 ^(*) preliminary unaudited consolidated financial statements issued on February 11, 2016.

^(**) included €620 million of tax losses carried forward in Germany available as of December 31, 2015 but that are lost in 2016 as a result of the change of control.

About Alcatel-Lucent

Alcatel-Lucent has joined Nokia following successful exchange of shares, creating an innovation leader in next-generation technology and services for an IP connected world.