Travelusacc Discussion Threads

[maywillow] 21/3/2005 15:41

PARIS (AFX) - Alcatel SA said it has won railway equipment contracts in both
Poland and Hungary, as part of consortiums formed with local partners.
In Poland, Alcatel and Komunikacyjne Zaklady Automatyki i Teletechniki
(KZAiT) won a 30 mln eur order from PKP Polish Railway lines JSC to modernise
the railway node around the city Poznan, a part of the E20 railway transport
line running from Paris to Moscow.
In Hungary, Alcatel and Mavepcell won two contracts worth 42 mln eur to
install network signalling and train control systems in the Komarom railway
station, and on an 85 km stretch of track between Zalalovo and Boba, which
connects Budapest with Slovenia.
[e-mail]
js/jsa

[maywillow] 21/3/2005 08:04

PARIS (AFX) - Alcatel said it has no comment to make on a newspaper report
it is in talks to take a minority stake in Thales in exchange for its satellite
operations.
Without naming its source, Les Echos said the talks are based on Alcatel
receiving a stake in Thales smaller than the blocking majority that would force
it to launch a buyout.
"We have no comment to make on this," and Alcatel spokesman said.
No one was immediately available to comment at Thales or Alcatel or the
French finance ministry, which Les Echos said is aware of the talks.
Alcatel agreed in January to merge its space business with that of
Finmeccanica SpA.
[e-mail]
mrg/hjp

[maywillow] 21/3/2005 07:00

PARIS (AFX) - Alcatel is in talks to take a minority stake in Thales in
exchange for its satellite operations, Les Echos reported, without naming its
source.
It said the talks are based on Alcatel receiving a stake in Thales smaller
than the blocking majority that would allow it to launch a buyout.
The paper said the French government, which holds 31.3 pct of Thales, is
following the talks closely and could sell some of its stake to Alcatel.
[e-mail]
mrg/jfr

[maywillow] 17/3/2005 11:43

LONDON (AFX) - Greek telecom equipment provider Intracom said it will team
up with Raytheon and Alcatel to develop defense satellite communications
systems.
The three companies will target projects from the Greek armed forces,
Intracom said in a statement.
Source: Euro2day NewsWire
ma

[waldron] 15/3/2005 10:10

PARIS (AFX) - Alcatel said it won an order worth several million euros
toupdate both the submarine and land sections of the Sea-Me-We 3 optical data
cable network.
The submarine sections, linking UK to India via France, Portugal, Egypt,
Saudi Arabia, Djibouti in Africa and the United Arab Emirates, will be
upgradedto 10 Gbit/second to help roll out broadband services.
The work is scheduled to be completed by the end of 2005.
The submarine data cable sector was one of the hardest hit segments of the
tech market after the dotcom bust.
[e-mail]
mrg/ma

[waldron] 15/3/2005 09:48

PARIS (AFX) - Alcatel said it has renegotiated its undrawn 1.3 bln eur
credit line, lengthening, reducing and cutting the cost of the facility.
The credit line, for general corporate purposes, now runs until June 2009,
compared to June 2007, with a possible extension until 2011.
Alcatel said it was offered a facility of 1.18 bln eur by its banks and
chose to cap this at 1.0 bln.
It said one of the two financial covenants attached to the facility has been
dropped.
It did not reveal precise details on the new rate to be charged.
[e-mail]
mrg/ma

[ariane] 08/3/2005 12:40

RHK Names Alcatel as the Market Leader in Optical Networking for the Fourth Year Running

PARIS, March 8 /PRNewswire-FirstCall/ -- Alcatel (Paris: CGEP.PA and
NYSE: ALA) today announced that RHK has reconfirmed the company's #1 position
in the USD 9.8 billion worldwide optical networking market for the fourth
consecutive year with a 15.6% market share
Metro products, such as Optical Multi-Service Nodes (OMSN) and the 1696
Metro Span WDM, were the primary drivers of Alcatel's strong results, as
Alcatel customers build out their Triple Play, enterprise data and 3G mobile
networks. The significant success of Alcatel's newest optical products -
including the Alcatel 1678 Metro Core Connect and the 1626 Light Manager -
along with an increasing business from vertical markets, in particular the
transport and energy sectors, were important contributors.
"Ethernet service delivery, broadband adoption and 3G deployments have
been playing an increasing role in the optical networking market over 2004,"
stated Dana Cooperson, Group Director, Optical Networks at RHK. "Alcatel
offers a wide range of solutions to address these market demands and the
market has rewarded them with the number one position."
"Alcatel's confirmed its #1 position in a very challenging market
environment thanks to the ability to help its customers achieve new revenue
streams through advanced service offers such as Triple Play, 3G mobile and
security-related applications," said Romano Valussi, President of Alcatel's
optical network activities. "Alcatel's optical networking solutions enable
operators to simplify their network operations, to focus on time-to-market
and other key business activities, as well as to optimize bandwidth for
minimal cost of transported information."
About Alcatel
Alcatel provides communications solutions to telecommunication carriers,
Internet service providers and enterprises for delivery of voice, data and
video applications to their customers or employees. Alcatel brings its
leading position in fixed and mobile broadband networks; applications and
services, to help its partners and customers build a user-centric broadband
world. With sales of EURO 12.3 billion in 2004, Alcatel operates in more than
130 countries.
For more information, visit Alcatel on the Internet:



SOURCE Alcatel

[ariane] 07/3/2005 18:31

LONDON, March 7 (newratings.com) - Analysts at JP Morgan upgrade Alcatel (CGE.ETR) from "neutral" to "overweight," while raising their estimates for the company. The six-month target price is set to €12.

In a research note published this morning, the analysts mention that the company is poised to benefit significantly from the accelerating momentum of triple play deployments globally, given its leading position in the access market. Despite price and margin pressures, the trends in the mobile segment in the emerging markets are likely to be compelling in the near term, the analysts say. The EPS estimates for 2005 and 2006 have been raised to €0.50 and €0.59, respectively.

[ariane] 07/3/2005 12:35

PARIS (AFX) - Alcatel SA said it has won a broadband internet infrastructure
contract from Scarlet, an alternative telecom operator in Belgium and the
Netherlands, which has also named Alcatel a strategic technology supplier.
Financial terms of the order were not disclosed.
Scarlet plans to finalise its rollout of a digital subscriber line (DSL)
network by mid-2006, covering 75 pct of the population in both Belgium and the
Netherlands.
[e-mail]
js/cmr

[ariane] 05/3/2005 11:43

Alcatel Reports Fourth Quarter and Full Year 2004 Results

Confirmation of Return to Growth and Profit

PARIS, February 3 /PRNewswire-FirstCall/ --

Fourth quarter highlights:

- Sales up 10.7% yoy at Euro 3,812 million (13.4% at constant exchange
rate)
- Income from operations at Euro 393 million, a 10.3% operating margin
- Net income pre-goodwill at Euro 139 million
- Net cash position at Euro 752 million

Full year highlights:

- Sales up 5.7% at Euro 12,265 million (9.5% at constant exchange rate)
- Income from operations at Euro 978 million, a 8.0% operating margin
- Net income pre-goodwill at Euro 689 million

Note: All historical results are restated for optical fiber, mobile
handsets, and power systems, which are accounted for as "discontinued
operations".


Alcatel's Board of Directors (Paris: CGEP.PA and NYSE: ALA) reviewed and
approved fourth quarter and full year 2004 results. Fourth quarter sales were
up by 10.7% at Euro 3,812 million compared with Euro 3,443 million (up 13.4%
at constant exchange rate) in the same period last year. The gross margin was
34.4%. Income from operations amounted to Euro 393 million, a 10.3% operating
return on sales. Net income pre goodwill for the quarter was registered at
Euro 139 million or diluted Euro 0.10 per share (USD 0.14 per ADS) and net
income after goodwill at Euro 40 million or diluted Euro 0.03 per share (USD
0.04 per ADS).
For full year 2004, sales amounted to Euro 12,265 million, a 5.7%
increase compared to 2003. At a constant exchange rate, yearly sales
increased by 9.5%. The gross margin for full year 2004 was 37.3%. Income from
operations was registered at Euro 978 million, an 8.0% return on sales. Net
income pre goodwill amounted to Euro 689 million or diluted Euro 0.51 per
share (USD 0.68 per ADS) and net income after goodwill amounted to Euro 281
million or diluted Euro 0.21 per share (USD 0.28 per ADS).

-------------------------------------------------------------------------
Key Figures Fourth Qtr Third Qtr Fourth Qtr Third Qtr Fourth Qtr
2004 2004 2003 2004 2003
In Euro million restated restated as as
except for EPS published published
-------------------------------------------------------------------------
Profit & Loss
-------------------------------------------------------------------------
Net Sales 3,812 3,009 3,443 3,044 3,765
-------------------------------------------------------------------------
Income from Operations 393 270 334 271 331
-------------------------------------------------------------------------
Net Income 139 187 (314) 187 (314)
pre-Goodwill
-------------------------------------------------------------------------
EPS Diluted 0.10 0.14 (0.23) 0.14 (0.23)
Pre-Goodwill (in Euro)
-------------------------------------------------------------------------
E/ADS* Pre-Goodwill 0.14 0.19 (0.31) 0.19 (0.31)
(In USD)
-------------------------------------------------------------------------
Net Income 40 84 (524) 84 (524)
-------------------------------------------------------------------------
EPS Diluted (in Euro) 0.03 0.06 (0.39) 0.06 (0.39)
-------------------------------------------------------------------------
E/ADS* (In USD) 0.04 0.08 (0.53) 0.08 (0.53)
-------------------------------------------------------------------------
Number of shares 1.36 1.36 1.34 1.36 1.34
(billion)
-------------------------------------------------------------------------


-------------------------------------------------------------------------
Key Figures Full Year Full Year Full Year
In Euro million except for EPS 2004 2003 2003
restated as
published
-------------------------------------------------------------------------
Profit & Loss
-------------------------------------------------------------------------
Net Sales 12,265 11,606 12,513
-------------------------------------------------------------------------
Income from Operations 978 449 332
-------------------------------------------------------------------------
Net Income pre-Goodwill 689 (1,377) (1,366)
-------------------------------------------------------------------------
EPS Diluted Pre-goodwill (in Euro) 0.51 (1.03) (1.03)
-------------------------------------------------------------------------
E/ADS* Pre-Goodwill (in USD) 0.68 (1.39) (1.39)
-------------------------------------------------------------------------
Net Income 281 (1,944) (1,944)
-------------------------------------------------------------------------
EPS Diluted (in Euro) 0.21 (1.46) (1.46)
-------------------------------------------------------------------------
E/ADS* (in USD) 0.28 (1.97) (1.97)
-------------------------------------------------------------------------
Number of shares (billion) 1.36 1.33 1.33
-------------------------------------------------------------------------

*E/ADS has been calculated using the US Federal Reserve Bank of New York
noon euro/dollar buying rate of USD1.35 as of December 31, 2004.


Serge Tchuruk, Chairman and CEO, summarized the Board's observations:
"2004 has been characterized by a strong turnaround at Alcatel in both
sales and profits. While carrier markets showed a modest recovery, Alcatel's
sales increased by close to 10% at a constant Euro/USD exchange rate. In
spite of very competitive market conditions our operating income came close
to the one billion Euro mark, which is twice last year's performance. A
positive free cash flow has been registered in both the fourth quarter and
full year, even after financing restructuring programs.
We are confident that Alcatel is on the right track. We have maintained
an aggressive strategy in developing or acquiring disruptive technologies,
like the mobile NGN from Spatial Wireless, and are now getting the benefits
of our applications and solutions approach. We are quite encouraged by the
50% revenue increase in 2004 in fixed/mobile applications and by major
successes in end-to-end solutions integration such as triple play.
An aggressive strategy has also been followed in establishing footprints
in certain high potential markets of the emerging world, accepting temporary
losses as an investment for future growth. The gross margin of the fourth
quarter was particularly impacted but we nevertheless reached our goal of a
double digit operating margin in that quarter under adverse currency
conditions.
We will maintain our strategic direction in 2005, closely monitoring our
operations in order to reach our priority target, which is a 10% operating
margin. In that regard, even if market conditions are likely to stay very
competitive, we are confident that the required selective commercial strategy
will leave room for revenue growth, given the positioning of our product
offering and our momentum in the market place. Considering this operating
margin target and the 5% reduction expected in comparable fixed expenses, we
will maintain some flexibility in the gross margin, permitting investment in
new markets or new technologies as required. After the execution of reserved
restructuring plans, new restructuring costs are now expected to be brought
down to about 1% of sales in 2005 and to be entirely financed by capital
gains.
In terms of business trends, we expect a positive inflection in fixed
communications by mid-year, with our sales fuelled by the triple play
momentum, a continuation of our growth in mobile communications, due to our
good positioning in emerging markets, and significant progress to be achieved
in vertical markets for our private communications group".
Outlook
"We anticipate a low to mid single digit growth rate in sales yoy for the
first quarter as well as for the full year 2005. Earnings per share
(pre-goodwill) should grow double digit for the full year beginning with a
positive EPS pre-goodwill in the seasonally low first quarter.
Note: The above guidance is based on French GAAP. Restated accounts in
IFRS will be published end March at which time guidance will be adjusted as
appropriate.

-------------------------------------------------------------------------
Segment Breakdown Fourth Qtr Third Qtr Fourth Qtr Full Year Full Year
In Euro million 2004 2004 2003 2004 2003
restated restated restated
-------------------------------------------------------------------------
Sales
-------------------------------------------------------------------------
Fixed Communications 1,533 1,209 1,558 5,131 5,364
-------------------------------------------------------------------------
Mobile Communications 1,076 894 846 3,301 2,929
-------------------------------------------------------------------------
Private Communications 1,236 935 1,103 3,965 3,627
-------------------------------------------------------------------------
Other & Eliminations (33) (29) (64) (132) (314)
-------------------------------------------------------------------------
Total 3,812 3,009 3,443 12,265 11,606
-------------------------------------------------------------------------
Income from Operations
-------------------------------------------------------------------------
Fixed Communications 149 118 143 429 155
-------------------------------------------------------------------------
Mobile Communications 139 103 124 401 315
-------------------------------------------------------------------------
Private Communications 97 68 95 235 123
-------------------------------------------------------------------------
Other & Eliminations 8 (19) (28) (87) (144)
-------------------------------------------------------------------------
Total 393 270 334 978 449
-------------------------------------------------------------------------

Note: The following comments are based on year on year comparisons.
Fourth Quarter Business Update
Fixed communications
Fourth quarter revenues decreased by 1.6% to Euro 1,533 million from Euro
1,558 million in the same period last year. Optical networks registered a
significant increase due to growth in optical multi-service networks with
good traction coming from new products such as metro core cross connects. The
access business was down due to a continued softness in North America with
the carriers' transition to new triple play technologies, and to some timing
delays in Chinese operators' decision to deploy equipment. DSL volume
shipments were registered at 4.8 million, bringing the cumulative total for
the year to 19.6 million, a 24% increase over 2003. The data business
registered a strong performance in the quarter with continued strength in
MSWAN, driven by broadband aggregation, and with a good ramp-up in IP service
routers. Fifteen new wins were registered during the quarter for the IP
multi-service edge router solution, including significant wins in North
America and China, bringing the full year cumulative total to 56 customers.
The traditional voice switching business decline was somewhat offset by
maintenance services and revenue recognition from NGN replacement business.
Twenty new customers were added during the fourth quarter for the NGN product
portfolio, bringing the cumulative total to 85 customers. Video solutions
registered a strong quarter with revenue coming from Taiwan, Russia, and
various countries in Western Europe.
Income from operations amounted to Euro 149 million, representing a 9.7%
return on sales, with significant contribution across the board and
continuing strong performance from the optics and IP divisions, compared to
losses in the same period last year.
Mobile communications
Fourth quarter revenue increased by 27.2% to Euro 1,076 million from Euro
846 million in the same period last year. Continued strong growth was
registered in emerging markets, with revenue coming from Russia, Brazil,
Algeria, Nigeria, and Thailand. In 3G, Alcatel was selected for a new network
in The Netherlands and a network extension in Austria while commercial
services were launched in France. An increase in revenues was registered in
the mobile core business driven by NGN solutions with strong deliveries in
North America and packet core offerings in Western Europe, Russia, and China.
Mobile applications also registered an increase, in particular, converged
voice/data and prepaid/postpaid payment solutions, bringing the overall
customer base to over 150. Video streaming solutions were successfully
deployed in China, Latin America and 3G video services were deployed and
commercially launched in Europe. Key strategic developments for the quarter
included the completion of the Spatial Wireless acquisition, strengthening
mobile core solutions.
Income from operations amounted to Euro 139 million, representing a 12.9%
return on sales, with double digit margins maintained despite the intense
competitive pricing environment.
Private communications
Fourth quarter revenue increased by 12.1% to Euro 1,236 million compared
with Euro 1,103 million in the same period last year. The IP telephony
business in Enterprise, representing one-third of the enterprise voice
shipments, once again registered a strong performance in Europe. Business in
Asia, in particular China, gained momentum due to high-end customer demand
for a wide array of voice services. Genesys continued its strong performance,
particularly in the US, moving more and more into large accounts as a result
of strategic partnerships. Leveraging its ETCS (European Transport Control
System) technology, rail communications grew its main line revenue,
particularly in Spain, in addition to increasing its sales in the UK urban
sector. Space sales resulted from a strong order backlog, particularly in the
commercial space segment. The growth of network end to end integration and
services activity was primarily driven by the increasing business in the
vertical markets of transport and energy.
Income from operations amounted to Euro 97 million, representing a 7.8%
return on sales. Significant contributions came from enterprise and rail
communication solutions.
The Board of Directors will propose to the Annual Shareholders Meeting to
continue not to pay any dividends to shareholders for 2004.
Alcatel will host an audio webcast at 1:00 p.m. Paris time (12:00 p.m.
London and 7:00 a.m. New York), which can be accessed at
or

-------------------------------------------------------------------------
Fourth quarter 2004 results (historical results restated)
-------------------------------------------------------------------------

PROFIT AND LOSS STATEMENT:

- Net Sales: Euro 3,812 million vs. Euro 3,443 million Q4 03 (up 10.7%)
and vs. Euro 3,009 million sequentially (up 26.7%).
- Geographical distribution of sales:
W. Europe: 45%
Other Europe: 7%
North America: 11%
Asia: 14%
RoW: 23%
- Gross margin: 34.4% (36.0% for Q4 2003).
- Selling, general and administration ("SG&A") costs: Euro (494) million
(13.0% of sales).
- Research and development ("R&D") expenses: Euro (424) million (11.1% of
sales).
- Income (loss) from operations: Euro 393 million
- Earnings before tax and amortization of goodwill: Euro 218 million and
included:
- Interest paid on convertible bonds Euro (11) million
- Net financial loss of Euro (45) million
- Restructuring costs of Euro (159) million
- Net other revenue/(expenses) of Euro 40 million
- Net Income Pre-Goodwill: Euro 139 million
- Net Income: Euro 40 million and included a related tax charge of Euro
(40) million, share in net income of equity affiliates and discontinued
activities of Euro (19) million, goodwill amortization of Euro (99)
million, and minority interests of Euro (20) million.
- Diluted EPS: Euro 0.03 [USD0.04 per ADS] based on an average of 1.36
billion shares.

BALANCE SHEET ITEMS:

- Operating working capital: Euro 612 million
- Cash and equivalents: Euro 5,111 million, compared to Euro 6,269
million at the end of Q4 2003.
- Net Cash: Euro 752 million.
- Cash from operations: Euro 392 million for the fourth quarter


-------------------------------------------------------------------------
Full year 2004 results (historical results restated)
-------------------------------------------------------------------------

PROFIT AND LOSS STATEMENT:

- Net Sales: Euro 12,265 million vs. Euro 11,606 million in 2003
(up 5.7%)
- Geographical distribution of sales:
W. Europe: 42%
Other Europe: 7%
North America: 15%
Asia: 15%
RoW: 21%
- Gross margin: 37.3% (35.4% for 2003).
- Selling, general and administration ("SG&A") costs: Euro (2,010)
million (16.4% of sales).
- Research and development ("R&D") expenses: Euro (1,587) million (12.9%
of sales).
- Income (loss) from operations: Euro 978 million
- Earnings before tax and amortization of goodwill: Euro 862 million and
included:
- Interest paid on convertible bonds Euro (44) million
- Net financial loss of Euro (132) million
- Restructuring costs of Euro (304) million
- Net other revenue/(expenses) of Euro 364 million
- Net Income Pre-Goodwill: Euro 689 million
- Net Income: Euro 281 million and included a related tax charge of Euro
(9) million, share in net income of equity affiliates and discontinued
activities of Euro (97) million, goodwill amortization of Euro (408)
million, and minority interests of Euro (66) million.
- Diluted EPS: Euro 0.21 [USD0.28 per ADS] based on an average of 1.36
billion shares.

BALANCE SHEET ITEMS:

- Operating working capital: Euro 612 million
- Cash and equivalents: Euro 5,111 million, compared to Euro 6,269
million at the end of 2003.
- Net Cash: Euro 752 million.
- Cash from operations: Euro 944 million

About Alcatel
Alcatel provides communications solutions to telecommunication carriers,
Internet service providers and enterprises for delivery of voice, data and
video applications to their customers or to their employees. Alcatel
leverages its leading position in fixed and mobile broadband networks,
applications and services to bring value to its customers in the framework of
a broadband world. With sales of EURO 12.3 billion in 2004, Alcatel operates
in more than 130 countries. For more information, visit Alcatel on the
Internet:
"Safe Harbor" statement under the Private Securities Litigation Reform
Act of 1995: This press release contains forward-looking statements relating
to (i) Alcatel's performance in future periods, including without limitation,
with respect to first quarter and full year 2005 revenue, income from
operations and EPS (ii) the benefits to Alcatel in 2005 from its
restructuring efforts and (iii) continued growth of Alcatel's market share.
These forward looking statements are based on current expectations, forecasts
and assumptions that involve risks and uncertainties that could cause actual
outcomes and results to differ materially from those projected. These risks
and uncertainties include: whether Alcatel can continue to implement its cost
cutting and restructuring efforts and whether these efforts will achieve
their expected benefits, including contributing to improved net income, among
other benefits; the economic situation in general (including exchange rate
fluctuations), and uncertainties in Alcatel's customers' businesses in
particular; customer demand for Alcatel's products and services; control of
costs and expenses; international growth; conditions and growth rates in the
telecommunications industry and general domestic and international economic
conditions; and the impact of each of these factors on expected sale
increases and realization of positive net income. For a further list and
description of such risks and uncertainties, see the reports filed by Alcatel
with the Securities and Exchange Commission. Alcatel disclaims any intention
or obligation to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.

Upcoming Events/Announcements

April 28, 2005 First Quarter Earnings Release
May 20, 2005 Annual Shareholders' Meeting
July 28, 2005 Second Quarter Earnings Release
October 27, 2005 Third Quarter Earnings Release



SOURCE Alcatel

[ariane] 05/3/2005 10:46

Alcatel's Transition to IFRS in 2005

PARIS, February 18 /PRNewswire-FirstCall/ -- Alcatel (Paris: CGEP.PA and
NYSE: ALA) today announced its plan to communicate the main quantative impact
resulting from the transition to new accounting standards, International
Financial Reporting Standards, (IFRS) on March 29, 2005.
This information will include the balance sheet at Jan 1st, 2004 and Dec
31, 2004, the 2004 quarterly and annual income statements as well as tables
reconciling the 2004 financial statements based on French GAAP to those
restated under IFRS.
A conference call with Alcatel's CFO, Jean-Pascal Beaufret, will be held
on March 30th (details will be provided prior to this date).
Attached is a note summarizing the steps taken by Alcatel to facilitate
the transition to IFRS and describing the main qualitative impact expected
from this transition. This information can also be found on Alcatel's web
site,
Alcatel will report first quarter 2005 results under these new accounting
standards on April 28, 2005.
About Alcatel
Alcatel provides communications solutions to telecommunication carriers,
Internet service providers and enterprises for delivery of voice, data and
video applications to their customers or employees. Alcatel brings its
leading position in fixed and mobile broadband networks; applications and
services, to help its partners and customers build a user-centric broadband
world. With sales of EURO 12.3 billion in 2004, Alcatel operates in more than
130 countries.
For more information, visit Alcatel on the Internet:

APPENDIX : Transition to IFRS
Preliminary remark:
All references to consolidated financial statements given in this
document are related to the consolidated financial statements under French
GAAP as of December 31,2004.
Fully aware of the challenges involved in the transition to International
Financial Reporting Standards (IFRS) in 2005 for its shareholders, investors,
customers, suppliers, and all stakeholders, as well as for its own internal
company operations, Alcatel set up, as early as 2003, a Steering Committee to:

- Define the timetable for the transition to IFRS;
- Evaluate the impacts on both valuation and presentation;
- Determine the training needs; and
- Adapt the information systems.


The Steering Committee, chaired by the Group's Chief Financial Officer,
brings together the managers of the consolidation, financial control, and
financial communication teams, who may be assisted by managers from internal
audit, treasury, taxation, and human resources depending on the topic. A team
permanently dedicated to this issue directs the more detailed work related to
standards governing tangible assets, long-term contracts (construction
contracts), research and development costs, accounting for convertible bonds
or notes redeemable for shares, goodwill and business combinations, financial
instruments, pensions and other employee benefits, share-based payments, off
balance sheet commitments and securitization schemes, provisions for
restructuring and other liabilities, and the presentation of financial
statements. The Auditors are closely associated in this process.
Timetable for the transition to IFRS
The application of IFRS is mandatory for listed companies of the European
Union with effect from 2005. Alcatel, which publishes financial statements on
a quarterly basis, intends to provide consolidated financial statements,
prepared under IFRS accounting and valuation principles, as of the
publication of its financial statements for the first quarter of 2005.
Comparative information for the previous period, restated using the same
accounting rules as those used in 2005, will also be provided. The
information provided in the notes to the consolidated financial statements at
the time of the quarterly statements will have a similar level of detail as
the previous information published in accordance with French accounting
standards. The application of International Accounting Standard (IAS) 34
(Interim Financial Reporting) will not be anticipated. Each quarter, Alcatel
will provide tables in accordance with IFRS 1 (First-time Adoption of IFRS)
that reconcile the 2004 financial statements, published in accordance with
French accounting standards, with the financial statements restated under
IFRS.
Actions undertaken by the Group in 2004 as part of the transition to IFRS
In 2004, the Group took a number of actions to better prepare readers and
preparers of the Group's financial statements for the impacts resulting from
the transition to IFRS. The main actions were:
- Internal actions
The Group implemented a large-scale training plan during 2004 for all
persons affected by this change in accounting standards: members of the
Executive Committee finance teams (accounting, consolidation, management
control, etc.) both at the Group's headquarters as well as all of its
reporting units and business divisions.
In addition to the specific, targeted training conducted at headquarters
as from January 2004, the main focus was a three-day training course for
financial statement preparers. This course was later adapted and presented in
the various geographic regions where the Group is present, driven by the
regional IFRS project managers and overseen and supervised by specialist
teams from headquarters and the Auditors. Training courses were conducted
through September 2004 in Germany, Belgium, the United States, Italy, Spain,
China, Brazil, and Mexico.
In addition, the training course presented at headquarters was filmed and
made available to all Alcatel employees via the Group's Intranet site.
The financial reporting system used by the Group has also been modified
to adapt it to the specific IFRS requirements, and to ensure that the
available information meets the disclosure needs, particularly in the area of
notes to the consolidated financial statements. Other information systems
have been adapted, when required, for the transition to IFRS.
In its 2004 accounts published in accordance with French accounting
standards, Alcatel anticipated the application of IFRS accounting rules. As
indicated in Note 1 to the 2004 quarterly and annual consolidated financial
statements, the Group anticipated as far as possible certain IFRS rules,
primarily with respect to business combinations (decision to abandon the use
of the "pooling of interests" method for the 2004 acquisitions and the
accounting treatment of in-process research and development costs) or the
recording of pensions and other employee benefits (application of the
"Conseil National de la Comptabilite" (CNC)'s recommendation in compliance
with IAS 19 Employee Benefits). To help the reader understand the future
impacts of the transition to IFRS, Alcatel has also made an effort to clarify
the financial statement presentation (presentation of impairment of goodwill
separately from recurring amortization, more detailed information on research
and development costs, etc.).
- External communication actions
Alcatel organized an analysts' meeting on April 5, 2004 to present the
main expected impacts of applying the new accounting standards for the Group.
The information presented at this meeting is available on the Group's website
(
Articles and analyses addressing the impact of the transition to IFRS in
Alcatel's business sector or within the Group were studied to ensure a
thorough understanding of the implications and a timely anticipation of the
main impacts of the transition.
Communication on the transition to IFRS in 2005
In addition to updating the descriptive summary of the main impacts
expected from the transition to the new accounting standards, the first
IFRS-based figures will be communicated on March 29, 2005. This information
will include the balance sheets at January 1, 2004 and December 31, 2004, the
2004 quarterly and annual income statements, as well as tables reconciling
the 2004 financial statements based on French accounting standards to those
restated under IFRS.
Impact of IFRS
The work to measure the impacts in terms of valuation and presentation is
being finalized. In addition, the European Community has approved a certain
number of standards that could be amended by the end of 2005, with the
possibility of early application of the changes in 2005.
Detailed interpretations or recommendations on the application of the
standards are not yet available and vary substantially from one expert to
another. If the Group had applied the standards earlier, certain transactions
might have been conducted differently. Hence, although the standards have an
impact on the past, they cannot forecast the potential accounting impacts of
future transactions. Finally, certain standards, applicable as of 2005, will
not be applied retrospectively to restate the opening balance sheet in
accordance with IFRS 1 (First-time Adoption of IFRS). The following
information is therefore not yet final and is subject to change during the
course of 2005.
- Property, plant and equipment
The application of IAS 16 (Property, Plant and Equipment) and IAS 36
(Impairment of Assets) should not have a significant impact on the Group's
financial statements. Alcatel has elected not to choose the option provided
by IFRS 1 (First-time Adoption of IFRS) that allows certain property, plant
and equipment to be recorded at fair value in the opening balance sheet.
Furthermore, the rules governing depreciation methods (determination of the
estimated useful life of the asset, inclusion of residual values, etc.) are
either already applied by the Group, or should not have any major impact on
the opening balance sheet. Marine vessels represent the main category of
property, plant and equipment that should be restated to comply with IFRS.
As far as impairment losses are concerned, the application of IAS 36
should have no major impact on the Group. In fact, because of the
unprecedented crisis that the Group has experienced in recent years,
impairment tests of property, plant and equipment have already been performed
in 2002, 2003, and 2004, using methods highly comparable to those described
in the standard, and, as a result, significant impairments were recognized as
indicated in Note 12b to the consolidated financial statements.
The fixed assets used in the context of financial leasing contracts are
already recognized as assets in the consolidated financial statements in
accordance with the criteria defined in IAS 17 (Leases). Finally, the Group
does not own any significant property within the scope of IAS 40 (Investment
Property).
Fixed assets to be sold, as defined in IFRS 5 (Non-current Assets Held
for Sale and Discontinued Operations), will be recorded as non-current assets
and will no longer be depreciated, with no significant impact on the 2004
income statement.
- Construction contracts
The principles of IAS 11 (Construction Contracts) are very close to those
already used by the Group to account for construction contracts (or long-term
contracts). In particular, the percentage of completion method of accounting
applied by the Group (see note 1 l to the consolidated financial statements)
complies with IAS 11. Contract segmentation and combination rules are also
very close to the Group's principles. The methods for recognizing reserves
for penalties (changes are recorded in contract revenues under IFRS but in
contract costs in the Group's financial statements), and accounting for the
financial impact in net sales of deferred payments when they are material,
will have a limited effect on the income statement presentation and no effect
on either the Group's gross profit or on IFRS opening shareholders' equity.
The presentation of assets and liabilities related to construction
contracts under specific balance sheet captions, and the application of
specific offset rules as required by IAS 11, will reduce the Group's working
capital, due to certain reserves for product sales being presented as a
deduction of this amount.
- Research and development costs
As indicated in Note 1e to the consolidated financial statements,
research and development costs are generally expensed within the Alcatel
Group, with the exception of certain software development costs. The
application of the principles defined in IAS 38 (Intangible Assets) will
require the Group to capitalize a part of the development costs that are
currently expensed when incurred. This will increase significantly the
intangible assets and shareholders' equity in the IFRS opening balance sheet.
Assuming a constant volume of research work, the capitalization of
certain development costs in accordance with IAS 38 should not have a
material impact on the Group's net income. However, full retrospective
application of this standard will not be possible due to the lack of prior
period information, which would have enabled the eligibility criteria for the
capitalization of certain expenditure to have been met, as set out in IAS 38.
For two or three years, this will have a positive impact on net income, which
will gradually dissipate. The impact of capitalization will be presented
under a specific income statement caption to better isolate the ramp-up
effect of the capitalization of development costs.
- Convertible bonds or notes mandatorily redeemable for shares
The convertible bonds (OCEANE) and notes mandatorily redeemable for
shares (ORANE) issued by the Group in 2002 and 2003 are compound financial
instruments (according to IAS 32) that include a debt component and an equity
component. The first-time adoption of IFRS will have the effect of recording
all or a part of convertible bonds or notes at January 1, 2004 within
shareholders' equity. The notes mandatorily redeemable for shares (ORANE) are
currently recorded in other equity and the convertible bonds (OCEANE) in
financial debt.
This method will have positive and negative effects on the future level
of financial expense, due, on the one hand, to accounting for prepaid
expenses in shareholders' equity as of January 1, 2004 (ORANE), and, on the
other hand, to amortizing the equity component to financial income (OCEANE).
- Goodwill and business combinations
As indicated in the notes to the consolidated financial statements (note
1b and f and note 10), the Group has used, in the past, for major
acquisitions, the special exemption provided by paragraph 215 of Regulation
99-02, according to which the difference between the purchase price of the
business acquired and the corresponding share of net assets is recorded
directly in Group shareholders' equity.
Insofar as the Group has elected to adopt the IFRS 1 option not to
restate business combinations that do not comply with IFRS 3 (Business
Combinations) and which occurred prior to January 1, 2004, first-time
adoption of IFRS will not result in any changes to the accounting methods
previously applied.
Furthermore, for combinations prior to January 1, 2004, regardless of the
accounting method used, the review of assets and liabilities recorded in the
context of these combinations and the analysis of their compliance with IFRS
accounting principles should not have a significant impact on shareholders'
equity, with the exception of the accounting treatment of stock options
existing in the acquired company at the date of acquisition. Provision was
made based on the intrinsic value of these items, a treatment that does not
comply with the IFRS 2 (Share-based Payment) and IFRS 3 rules.
Other acquired assets and liabilities, in particular intangible assets
recorded in the consolidated financial statements resulting from business
combinations, are generally IFRS compliant. We have not identified any
significant unrecorded intangible assets that should have been recorded,
according to IFRS, separately from the goodwill in the combinations.
With respect to goodwill recorded at December 31, 2003 (see note 10 to
the consolidated financial statements), the application of an impairment test
based on the criteria defined in IAS 36 should not result in any significant
impairment loss in the opening balance sheet. Starting January 1, 2004,
goodwill is no longer amortized but is tested for impairment annually.
- Financial instruments
Under IFRS, financial assets available for sale (as defined in IAS 39)
will be recorded at fair value in the opening balance sheet. For listed
securities, the restatement will consist of recording, in opening
shareholders' equity, the difference between carrying value and market value,
net of any possible deferred tax impacts. Since the Group has few listed
securities, and because of the valuation rules used by the Group (see note 1s
for marketable securities), the impact on shareholders' capital can only be
positive, but will not be material. The market values of unconsolidated
listed securities are disclosed in notes 14 and 19 to the consolidated
financial statements.
With respect to customer receivables sold without recourse by the Group
(see note 15 to the consolidated financial statements), the derecognition of
these receivables from the Group's balance sheet should not result in a
significant restatement upon transition to IFRS, insofar as it is considered
that, for trade receivables sold without recourse, in case of non-payment,
substantially all of the risks and rewards associated with the asset have
been effectively transferred to the buyer. However, a more restrictive
interpretation of the concept of "substantial transfer of risks and rewards"
could result in an accounting treatment different from that adopted by the
Group.
In accordance with the provisions of IAS 39 on financial instruments,
derivatives will be recorded at fair value in the balance sheet. Most of the
interest rate derivatives are fair value hedges, and the changes in their
value should be largely offset in income by revaluations of the underlying
debt. Currency derivatives are also primarily used to hedge future cash flows
or firm commitments, except for those derivatives hedging commercial bids,
whose changes in fair value will impact income. The date for the first
application of IAS 39 (January 1, 2004 or January 1, 2005) has not yet been
decided.
The impacts resulting from recording hedges of commercial bids at market
value will be presented under a separate income statement caption, since the
accounting method used to record hedges under IAS 39 (derivatives not meeting
hedge accounting criteria) will lead to volatility in net income in the
period preceding the coming into force of the commercial contracts that is
liable to hinder an understanding of the Group's financial results.
- Retirement and other employee benefits
The methods for determining pensions and other post-employment benefits,
as described in notes 1i and 24 to the consolidated financial statements, are
compliant with IAS 19 (Employee Benefits), subject to interpretations
currently in progress, insofar as the Group has applied, starting January 1,
2004, the "Conseil National de la Comptabilite" recommendation 2003-R.01. The
impacts of applying this recommendation at January 1, 2004, particularly on
shareholders' equity, are presented in note 24 to the consolidated financial
statements.
- Share-based payment
The application of IFRS 2 (Share-based Payment) will modify the method of
accounting for stock options granted by the Group to its employees. Only
stock option plans established after November 2002, and whose stock options
had not yet vested at December 31, 2004, will be restated. This will affect
the 2003 and 2004 plans, as described in note 21c to the consolidated
financial statements, and the plans resulting from business combinations
completed after November 2002, under which the stock options had not yet
vested at December 31, 2004 (see notes 2 and 21c to the consolidated
financial statements). Alcatel decided not to adopt the full retrospective
application option provided for the standard, since, firstly, the fair values
of the stock options granted in the past had not been published and,
secondly, the method of valuing the stock options for determining the pro
forma income per share in accordance with U.S. GAAP (a specific note on the
application of SFAS 123 and SFAS 148 is published in Alcatel's 20F report) is
not identical to that adopted for the application of IFRS 2. The use,
therefore, of a Cox-Ross-Rubinstein binomial model was preferred over that of
a Black & Scholes model.
The impact on 2004 net income, restated in accordance with IFRS, will
correspond to the allocation of the fair value over the vesting period of the
stock options granted that fall within the scope of IFRS 2. This impact will
be presented under a specific income statement caption.
As the compensation expense does not result in an outflow of cash and as
the contra entry to the expense is recorded in consolidated reserves, the
application of this standard has no impact on shareholders' equity.
- Off balance sheet commitments and derecognition of financial assets and
liabilities
The Group's off balance sheet commitments are described in note 31 to the
consolidated financial statements. Complex schemes, in particular the
securitization schemes, are described in detail in the same note. At December
31, 2003, the Group participated in two structured securitization schemes
(the SVF program and a customer receivable securitization program). The
special purpose vehicle used in the SVF program was consolidated with effect
from January 1, 2004, following changes in the French accounting regulations.
The impact on the consolidated financial statements was described in note 30
to the December 31, 2003 consolidated financial statements. The impact on the
IFRS opening balance sheet is similar. The special purpose entity used in the
customer receivables securitization program was already consolidated at
December 31, 2003 and the application of IFRS to this program should not,
therefore, have a significant impact on the consolidated financial
statements. In addition, the carry-back receivable sold in 2002, as explained
in note 31, will be recorded as an asset at discounted value in the IFRS
opening balance sheet, as security for the corresponding financial liability
that results from the consideration received.
At this stage, other off balance sheet commitments described in note 31
do not require specific comment concerning the first-time adoption of IFRS.
- Reserves for restructuring and other liabilities
The Group has applied the CNC ("Comite Nationale de la Comptabilite)
regulation 00-06 to liabilities since January 1, 2002. Since it is very
similar to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets),
the Group does not anticipate that accounting for reserves for restructuring
and other liabilities will have a material impact on the IFRS opening balance
sheet. However, discussions are continuing, notably in the area of
convergence between IFRS and U.S. accounting standards, which could result in
stricter rules for recording restructuring reserves under IFRS. Since no
exposure draft has as yet been released by the IASB on this topic and as
these changes should not be applicable before 2006, Alcatel does not
envisage, at this stage, an early application of the amended standard.
- Presentation of financial statements
The application of IAS 1 (as revised December 2003) and, to a lesser
extent, the application of IAS 7 (Cash Flow Statements), IAS 14 (Segment
Reporting) and IFRS 5 (Non-current Assets Held for Sale and Discontinued
Operations) will have significant consequences on the manner of presenting
the financial information.
IFRS requires a distinction to be made between current and non-current
items in the balance sheet, which is different from the current presentation
that is based on the type and/or liquidity of assets and liabilities. In
addition, certain specific rules governing the off-setting of assets and
liabilities (for example, certain reserves for product sales relating to
construction contracts that have to be deducted from contract assets) may
result in reclassifications compared to current practice.
The suppression of the notion of extraordinary income or loss in IFRS
will result in the reclassification in operating income and/or financial
income of certain revenues and expenses currently recorded by the Group in
other revenue/expense (see note 1m, n, o and note 7 to the consolidated
financial statements). The extent of the changes in presentation will be such
that the Group envisages presenting the effect of the transition to IFRS in
its 2005 financial statements, by indicating, first, the 2005 and 2004 income
statements under IFRS and, second, the 2004 and 2003 income statements, under
French GAAP, on separate pages and using the income statement presentations
corresponding to each set of standards.
- Other standards
The other IAS/International Financial Reporting Standards do not require
any specific comment and the Group does not currently anticipate any major
impact on the IFRS opening balance sheet as a result of applying these other
standards. This is the case for IAS 2 (Inventories), IAS 12 (Income Taxes),
IAS 18 (Revenue), IAS 20 (Accounting for Government Grants and Disclosure of
Government Assistance), IAS 21 (Effects of Changes in Foreign Exchange
Rates), IAS 23 (Borrowing Costs), IAS 27 (Consolidated and Separate Financial
Statements), IAS 28 (Investments in Associates), IAS 29 (Financial Reporting
in Hyperinflationary Economies), and IAS 31 (Interests in Joint Ventures).
Moreover, Alcatel already applies some standards, notably IAS 19
(Employee Benefits), IAS 22 (Earnings Per Share), and IAS 24 (Related Party
Disclosures).


SOURCE Alcatel

[maywillow] 03/3/2005 08:52

PARIS (AFX) - Alcatel said it won an order from Royal KPN NV to update its
DSL network.
No financial details were available.
The upgrade will increase bandwidth for the end-user, Alcatel said, adding
that it is the Dutch operator's first step towards triple-play.
[e-mail]
mrg/wf

[maywillow] 02/3/2005 09:18

PARIS (AFX) - Alcatel said it agreed to acquire UK-based Native Networks, a
manufacturer of optical and ethernet infrastucture for telecoms operators for 55
mln usd cash.
Privately-owned Native, currently funded by venture capital, has been a
partner of Alcatel in Ethernet packet ring technology since February 2003.
Native's products are aimed at allowing operators to increase the number of
services that can be offered over a single network.
[e-mail]
mrg/jfr

[maywillow] 01/3/2005 08:14

FRANKFURT (AFX) - The iNavSat consortium of European Aeronautic Space and
Defence Co NV, Thales SA and Inmarsat Ventures has won a concession to operate
Galileo, the new satellite-based European navigation system, die Welt reported.
The information was published by the German daily in a pre-release of an
article due to be included in today's edition.
INavSat has been competing for the contract with a second group, Eurely,
formed by Alcatel SA, Finmeccanica SpA, and Spain's Aena and Hispasat.
The winner, which is officially due to be announced this morning, will hold
a 20 year concession on Galileo that one study estimates will generate revenues
of 500 mln eur per year to 2020.
[e-mail]
aud/jms

[maywillow] 24/2/2005 18:10

PARIS (AFX) - Alcatel SA's Ba3 debt rating has been placed under review for
a possible upgrade by Moody's Investors Service, perhaps by more than just one
notch, but the agency said it has no plans to improve the rating to investment
grade.
The likely rating increase reflects the return to revenue growth for Alcatel
last year, after a decline in 2003, and a sharp increase in operating margins to
8 pct from 2.7 pct.
During the review, Moody's said it will evaluate demand in the company's
telecommunications markets, the scope for further cost reductions, and its
strategy for making cash flow less volatile.
[e-mail]
js/lam

[ariane] 19/2/2005 07:07

Alcatel's Transition to IFRS in 2005

PARIS, February 18 /PRNewswire-FirstCall/ -- Alcatel (Paris: CGEP.PA and
NYSE: ALA) today announced its plan to communicate the main quantative impact
resulting from the transition to new accounting standards, International
Financial Reporting Standards, (IFRS) on March 29, 2005.
This information will include the balance sheet at Jan 1st, 2004 and Dec
31, 2004, the 2004 quarterly and annual income statements as well as tables
reconciling the 2004 financial statements based on French GAAP to those
restated under IFRS.
A conference call with Alcatel's CFO, Jean-Pascal Beaufret, will be held
on March 30th (details will be provided prior to this date).
Attached is a note summarizing the steps taken by Alcatel to facilitate
the transition to IFRS and describing the main qualitative impact expected
from this transition. This information can also be found on Alcatel's web
site,
Alcatel will report first quarter 2005 results under these new accounting
standards on April 28, 2005.
About Alcatel
Alcatel provides communications solutions to telecommunication carriers,
Internet service providers and enterprises for delivery of voice, data and
video applications to their customers or employees. Alcatel brings its
leading position in fixed and mobile broadband networks; applications and
services, to help its partners and customers build a user-centric broadband
world. With sales of EURO 12.3 billion in 2004, Alcatel operates in more than
130 countries.
For more information, visit Alcatel on the Internet:

APPENDIX : Transition to IFRS
Preliminary remark:
All references to consolidated financial statements given in this
document are related to the consolidated financial statements under French
GAAP as of December 31,2004.
Fully aware of the challenges involved in the transition to International
Financial Reporting Standards (IFRS) in 2005 for its shareholders, investors,
customers, suppliers, and all stakeholders, as well as for its own internal
company operations, Alcatel set up, as early as 2003, a Steering Committee to:

- Define the timetable for the transition to IFRS;
- Evaluate the impacts on both valuation and presentation;
- Determine the training needs; and
- Adapt the information systems.


The Steering Committee, chaired by the Group's Chief Financial Officer,
brings together the managers of the consolidation, financial control, and
financial communication teams, who may be assisted by managers from internal
audit, treasury, taxation, and human resources depending on the topic. A team
permanently dedicated to this issue directs the more detailed work related to
standards governing tangible assets, long-term contracts (construction
contracts), research and development costs, accounting for convertible bonds
or notes redeemable for shares, goodwill and business combinations, financial
instruments, pensions and other employee benefits, share-based payments, off
balance sheet commitments and securitization schemes, provisions for
restructuring and other liabilities, and the presentation of financial
statements. The Auditors are closely associated in this process.
Timetable for the transition to IFRS
The application of IFRS is mandatory for listed companies of the European
Union with effect from 2005. Alcatel, which publishes financial statements on
a quarterly basis, intends to provide consolidated financial statements,
prepared under IFRS accounting and valuation principles, as of the
publication of its financial statements for the first quarter of 2005.
Comparative information for the previous period, restated using the same
accounting rules as those used in 2005, will also be provided. The
information provided in the notes to the consolidated financial statements at
the time of the quarterly statements will have a similar level of detail as
the previous information published in accordance with French accounting
standards. The application of International Accounting Standard (IAS) 34
(Interim Financial Reporting) will not be anticipated. Each quarter, Alcatel
will provide tables in accordance with IFRS 1 (First-time Adoption of IFRS)
that reconcile the 2004 financial statements, published in accordance with
French accounting standards, with the financial statements restated under
IFRS.
Actions undertaken by the Group in 2004 as part of the transition to IFRS
In 2004, the Group took a number of actions to better prepare readers and
preparers of the Group's financial statements for the impacts resulting from
the transition to IFRS. The main actions were:
- Internal actions
The Group implemented a large-scale training plan during 2004 for all
persons affected by this change in accounting standards: members of the
Executive Committee finance teams (accounting, consolidation, management
control, etc.) both at the Group's headquarters as well as all of its
reporting units and business divisions.
In addition to the specific, targeted training conducted at headquarters
as from January 2004, the main focus was a three-day training course for
financial statement preparers. This course was later adapted and presented in
the various geographic regions where the Group is present, driven by the
regional IFRS project managers and overseen and supervised by specialist
teams from headquarters and the Auditors. Training courses were conducted
through September 2004 in Germany, Belgium, the United States, Italy, Spain,
China, Brazil, and Mexico.
In addition, the training course presented at headquarters was filmed and
made available to all Alcatel employees via the Group's Intranet site.
The financial reporting system used by the Group has also been modified
to adapt it to the specific IFRS requirements, and to ensure that the
available information meets the disclosure needs, particularly in the area of
notes to the consolidated financial statements. Other information systems
have been adapted, when required, for the transition to IFRS.
In its 2004 accounts published in accordance with French accounting
standards, Alcatel anticipated the application of IFRS accounting rules. As
indicated in Note 1 to the 2004 quarterly and annual consolidated financial
statements, the Group anticipated as far as possible certain IFRS rules,
primarily with respect to business combinations (decision to abandon the use
of the "pooling of interests" method for the 2004 acquisitions and the
accounting treatment of in-process research and development costs) or the
recording of pensions and other employee benefits (application of the
"Conseil National de la Comptabilite" (CNC)'s recommendation in compliance
with IAS 19 Employee Benefits). To help the reader understand the future
impacts of the transition to IFRS, Alcatel has also made an effort to clarify
the financial statement presentation (presentation of impairment of goodwill
separately from recurring amortization, more detailed information on research
and development costs, etc.).
- External communication actions
Alcatel organized an analysts' meeting on April 5, 2004 to present the
main expected impacts of applying the new accounting standards for the Group.
The information presented at this meeting is available on the Group's website
(
Articles and analyses addressing the impact of the transition to IFRS in
Alcatel's business sector or within the Group were studied to ensure a
thorough understanding of the implications and a timely anticipation of the
main impacts of the transition.
Communication on the transition to IFRS in 2005
In addition to updating the descriptive summary of the main impacts
expected from the transition to the new accounting standards, the first
IFRS-based figures will be communicated on March 29, 2005. This information
will include the balance sheets at January 1, 2004 and December 31, 2004, the
2004 quarterly and annual income statements, as well as tables reconciling
the 2004 financial statements based on French accounting standards to those
restated under IFRS.
Impact of IFRS
The work to measure the impacts in terms of valuation and presentation is
being finalized. In addition, the European Community has approved a certain
number of standards that could be amended by the end of 2005, with the
possibility of early application of the changes in 2005.
Detailed interpretations or recommendations on the application of the
standards are not yet available and vary substantially from one expert to
another. If the Group had applied the standards earlier, certain transactions
might have been conducted differently. Hence, although the standards have an
impact on the past, they cannot forecast the potential accounting impacts of
future transactions. Finally, certain standards, applicable as of 2005, will
not be applied retrospectively to restate the opening balance sheet in
accordance with IFRS 1 (First-time Adoption of IFRS). The following
information is therefore not yet final and is subject to change during the
course of 2005.
- Property, plant and equipment
The application of IAS 16 (Property, Plant and Equipment) and IAS 36
(Impairment of Assets) should not have a significant impact on the Group's
financial statements. Alcatel has elected not to choose the option provided
by IFRS 1 (First-time Adoption of IFRS) that allows certain property, plant
and equipment to be recorded at fair value in the opening balance sheet.
Furthermore, the rules governing depreciation methods (determination of the
estimated useful life of the asset, inclusion of residual values, etc.) are
either already applied by the Group, or should not have any major impact on
the opening balance sheet. Marine vessels represent the main category of
property, plant and equipment that should be restated to comply with IFRS.
As far as impairment losses are concerned, the application of IAS 36
should have no major impact on the Group. In fact, because of the
unprecedented crisis that the Group has experienced in recent years,
impairment tests of property, plant and equipment have already been performed
in 2002, 2003, and 2004, using methods highly comparable to those described
in the standard, and, as a result, significant impairments were recognized as
indicated in Note 12b to the consolidated financial statements.
The fixed assets used in the context of financial leasing contracts are
already recognized as assets in the consolidated financial statements in
accordance with the criteria defined in IAS 17 (Leases). Finally, the Group
does not own any significant property within the scope of IAS 40 (Investment
Property).
Fixed assets to be sold, as defined in IFRS 5 (Non-current Assets Held
for Sale and Discontinued Operations), will be recorded as non-current assets
and will no longer be depreciated, with no significant impact on the 2004
income statement.
- Construction contracts
The principles of IAS 11 (Construction Contracts) are very close to those
already used by the Group to account for construction contracts (or long-term
contracts). In particular, the percentage of completion method of accounting
applied by the Group (see note 1 l to the consolidated financial statements)
complies with IAS 11. Contract segmentation and combination rules are also
very close to the Group's principles. The methods for recognizing reserves
for penalties (changes are recorded in contract revenues under IFRS but in
contract costs in the Group's financial statements), and accounting for the
financial impact in net sales of deferred payments when they are material,
will have a limited effect on the income statement presentation and no effect
on either the Group's gross profit or on IFRS opening shareholders' equity.
The presentation of assets and liabilities related to construction
contracts under specific balance sheet captions, and the application of
specific offset rules as required by IAS 11, will reduce the Group's working
capital, due to certain reserves for product sales being presented as a
deduction of this amount.
- Research and development costs
As indicated in Note 1e to the consolidated financial statements,
research and development costs are generally expensed within the Alcatel
Group, with the exception of certain software development costs. The
application of the principles defined in IAS 38 (Intangible Assets) will
require the Group to capitalize a part of the development costs that are
currently expensed when incurred. This will increase significantly the
intangible assets and shareholders' equity in the IFRS opening balance sheet.
Assuming a constant volume of research work, the capitalization of
certain development costs in accordance with IAS 38 should not have a
material impact on the Group's net income. However, full retrospective
application of this standard will not be possible due to the lack of prior
period information, which would have enabled the eligibility criteria for the
capitalization of certain expenditure to have been met, as set out in IAS 38.
For two or three years, this will have a positive impact on net income, which
will gradually dissipate. The impact of capitalization will be presented
under a specific income statement caption to better isolate the ramp-up
effect of the capitalization of development costs.
- Convertible bonds or notes mandatorily redeemable for shares
The convertible bonds (OCEANE) and notes mandatorily redeemable for
shares (ORANE) issued by the Group in 2002 and 2003 are compound financial
instruments (according to IAS 32) that include a debt component and an equity
component. The first-time adoption of IFRS will have the effect of recording
all or a part of convertible bonds or notes at January 1, 2004 within
shareholders' equity. The notes mandatorily redeemable for shares (ORANE) are
currently recorded in other equity and the convertible bonds (OCEANE) in
financial debt.
This method will have positive and negative effects on the future level
of financial expense, due, on the one hand, to accounting for prepaid
expenses in shareholders' equity as of January 1, 2004 (ORANE), and, on the
other hand, to amortizing the equity component to financial income (OCEANE).
- Goodwill and business combinations
As indicated in the notes to the consolidated financial statements (note
1b and f and note 10), the Group has used, in the past, for major
acquisitions, the special exemption provided by paragraph 215 of Regulation
99-02, according to which the difference between the purchase price of the
business acquired and the corresponding share of net assets is recorded
directly in Group shareholders' equity.
Insofar as the Group has elected to adopt the IFRS 1 option not to
restate business combinations that do not comply with IFRS 3 (Business
Combinations) and which occurred prior to January 1, 2004, first-time
adoption of IFRS will not result in any changes to the accounting methods
previously applied.
Furthermore, for combinations prior to January 1, 2004, regardless of the
accounting method used, the review of assets and liabilities recorded in the
context of these combinations and the analysis of their compliance with IFRS
accounting principles should not have a significant impact on shareholders'
equity, with the exception of the accounting treatment of stock options
existing in the acquired company at the date of acquisition. Provision was
made based on the intrinsic value of these items, a treatment that does not
comply with the IFRS 2 (Share-based Payment) and IFRS 3 rules.
Other acquired assets and liabilities, in particular intangible assets
recorded in the consolidated financial statements resulting from business
combinations, are generally IFRS compliant. We have not identified any
significant unrecorded intangible assets that should have been recorded,
according to IFRS, separately from the goodwill in the combinations.
With respect to goodwill recorded at December 31, 2003 (see note 10 to
the consolidated financial statements), the application of an impairment test
based on the criteria defined in IAS 36 should not result in any significant
impairment loss in the opening balance sheet. Starting January 1, 2004,
goodwill is no longer amortized but is tested for impairment annually.
- Financial instruments
Under IFRS, financial assets available for sale (as defined in IAS 39)
will be recorded at fair value in the opening balance sheet. For listed
securities, the restatement will consist of recording, in opening
shareholders' equity, the difference between carrying value and market value,
net of any possible deferred tax impacts. Since the Group has few listed
securities, and because of the valuation rules used by the Group (see note 1s
for marketable securities), the impact on shareholders' capital can only be
positive, but will not be material. The market values of unconsolidated
listed securities are disclosed in notes 14 and 19 to the consolidated
financial statements.
With respect to customer receivables sold without recourse by the Group
(see note 15 to the consolidated financial statements), the derecognition of
these receivables from the Group's balance sheet should not result in a
significant restatement upon transition to IFRS, insofar as it is considered
that, for trade receivables sold without recourse, in case of non-payment,
substantially all of the risks and rewards associated with the asset have
been effectively transferred to the buyer. However, a more restrictive
interpretation of the concept of "substantial transfer of risks and rewards"
could result in an accounting treatment different from that adopted by the
Group.
In accordance with the provisions of IAS 39 on financial instruments,
derivatives will be recorded at fair value in the balance sheet. Most of the
interest rate derivatives are fair value hedges, and the changes in their
value should be largely offset in income by revaluations of the underlying
debt. Currency derivatives are also primarily used to hedge future cash flows
or firm commitments, except for those derivatives hedging commercial bids,
whose changes in fair value will impact income. The date for the first
application of IAS 39 (January 1, 2004 or January 1, 2005) has not yet been
decided.
The impacts resulting from recording hedges of commercial bids at market
value will be presented under a separate income statement caption, since the
accounting method used to record hedges under IAS 39 (derivatives not meeting
hedge accounting criteria) will lead to volatility in net income in the
period preceding the coming into force of the commercial contracts that is
liable to hinder an understanding of the Group's financial results.
- Retirement and other employee benefits
The methods for determining pensions and other post-employment benefits,
as described in notes 1i and 24 to the consolidated financial statements, are
compliant with IAS 19 (Employee Benefits), subject to interpretations
currently in progress, insofar as the Group has applied, starting January 1,
2004, the "Conseil National de la Comptabilite" recommendation 2003-R.01. The
impacts of applying this recommendation at January 1, 2004, particularly on
shareholders' equity, are presented in note 24 to the consolidated financial
statements.
- Share-based payment
The application of IFRS 2 (Share-based Payment) will modify the method of
accounting for stock options granted by the Group to its employees. Only
stock option plans established after November 2002, and whose stock options
had not yet vested at December 31, 2004, will be restated. This will affect
the 2003 and 2004 plans, as described in note 21c to the consolidated
financial statements, and the plans resulting from business combinations
completed after November 2002, under which the stock options had not yet
vested at December 31, 2004 (see notes 2 and 21c to the consolidated
financial statements). Alcatel decided not to adopt the full retrospective
application option provided for the standard, since, firstly, the fair values
of the stock options granted in the past had not been published and,
secondly, the method of valuing the stock options for determining the pro
forma income per share in accordance with U.S. GAAP (a specific note on the
application of SFAS 123 and SFAS 148 is published in Alcatel's 20F report) is
not identical to that adopted for the application of IFRS 2. The use,
therefore, of a Cox-Ross-Rubinstein binomial model was preferred over that of
a Black & Scholes model.
The impact on 2004 net income, restated in accordance with IFRS, will
correspond to the allocation of the fair value over the vesting period of the
stock options granted that fall within the scope of IFRS 2. This impact will
be presented under a specific income statement caption.
As the compensation expense does not result in an outflow of cash and as
the contra entry to the expense is recorded in consolidated reserves, the
application of this standard has no impact on shareholders' equity.
- Off balance sheet commitments and derecognition of financial assets and
liabilities
The Group's off balance sheet commitments are described in note 31 to the
consolidated financial statements. Complex schemes, in particular the
securitization schemes, are described in detail in the same note. At December
31, 2003, the Group participated in two structured securitization schemes
(the SVF program and a customer receivable securitization program). The
special purpose vehicle used in the SVF program was consolidated with effect
from January 1, 2004, following changes in the French accounting regulations.
The impact on the consolidated financial statements was described in note 30
to the December 31, 2003 consolidated financial statements. The impact on the
IFRS opening balance sheet is similar. The special purpose entity used in the
customer receivables securitization program was already consolidated at
December 31, 2003 and the application of IFRS to this program should not,
therefore, have a significant impact on the consolidated financial
statements. In addition, the carry-back receivable sold in 2002, as explained
in note 31, will be recorded as an asset at discounted value in the IFRS
opening balance sheet, as security for the corresponding financial liability
that results from the consideration received.
At this stage, other off balance sheet commitments described in note 31
do not require specific comment concerning the first-time adoption of IFRS.
- Reserves for restructuring and other liabilities
The Group has applied the CNC ("Comite Nationale de la Comptabilite)
regulation 00-06 to liabilities since January 1, 2002. Since it is very
similar to IAS 37 (Provisions, Contingent Liabilities and Contingent Assets),
the Group does not anticipate that accounting for reserves for restructuring
and other liabilities will have a material impact on the IFRS opening balance
sheet. However, discussions are continuing, notably in the area of
convergence between IFRS and U.S. accounting standards, which could result in
stricter rules for recording restructuring reserves under IFRS. Since no
exposure draft has as yet been released by the IASB on this topic and as
these changes should not be applicable before 2006, Alcatel does not
envisage, at this stage, an early application of the amended standard.
- Presentation of financial statements
The application of IAS 1 (as revised December 2003) and, to a lesser
extent, the application of IAS 7 (Cash Flow Statements), IAS 14 (Segment
Reporting) and IFRS 5 (Non-current Assets Held for Sale and Discontinued
Operations) will have significant consequences on the manner of presenting
the financial information.
IFRS requires a distinction to be made between current and non-current
items in the balance sheet, which is different from the current presentation
that is based on the type and/or liquidity of assets and liabilities. In
addition, certain specific rules governing the off-setting of assets and
liabilities (for example, certain reserves for product sales relating to
construction contracts that have to be deducted from contract assets) may
result in reclassifications compared to current practice.
The suppression of the notion of extraordinary income or loss in IFRS
will result in the reclassification in operating income and/or financial
income of certain revenues and expenses currently recorded by the Group in
other revenue/expense (see note 1m, n, o and note 7 to the consolidated
financial statements). The extent of the changes in presentation will be such
that the Group envisages presenting the effect of the transition to IFRS in
its 2005 financial statements, by indicating, first, the 2005 and 2004 income
statements under IFRS and, second, the 2004 and 2003 income statements, under
French GAAP, on separate pages and using the income statement presentations
corresponding to each set of standards.
- Other standards
The other IAS/International Financial Reporting Standards do not require
any specific comment and the Group does not currently anticipate any major
impact on the IFRS opening balance sheet as a result of applying these other
standards. This is the case for IAS 2 (Inventories), IAS 12 (Income Taxes),
IAS 18 (Revenue), IAS 20 (Accounting for Government Grants and Disclosure of
Government Assistance), IAS 21 (Effects of Changes in Foreign Exchange
Rates), IAS 23 (Borrowing Costs), IAS 27 (Consolidated and Separate Financial
Statements), IAS 28 (Investments in Associates), IAS 29 (Financial Reporting
in Hyperinflationary Economies), and IAS 31 (Interests in Joint Ventures).
Moreover, Alcatel already applies some standards, notably IAS 19
(Employee Benefits), IAS 22 (Earnings Per Share), and IAS 24 (Related Party
Disclosures).


SOURCE Alcatel

[grupo guitarlumber] 16/2/2005 10:18

PARIS (AFX) - Alcatel SA said it has won a 41 mln eur order to supply and
install a telecommunications and security system for the Dubai International
Airport.
The contract was awarded by the Dubai Department of Civil Aviation, and
construction work is scheduled for completion in mid-2007.
"This project is our largest communications contract won to date against
strong competition for an airport," said Frederic Rose, president of Alcatel's
integration and services activities.
[e-mail]
js/cml

[ariane] 15/2/2005 11:57

Updating with more details of contract)

CANNES, France (AFX) - Alcatel SA said it won a contract worth 685 mln usd
from Nigerian operator Globacom to provide multimedia services on its fixed line
and mobile networks.
Under the terms of the deal, Alcatel will expand Globacom's national mobile
network capacity from its current 2.5 mln subscribers to 10 mln by the end of
2005.
It will also provide technology for voice, video and data services.
[e-mail]
jad/cw/tc