Lucent could get $816 million tax refund

CHICAGO: Lucent Technologies Inc. said U.S. tax officials have approved an $816 million refund to the company which could be recognized in its 2005 fiscal year, pending congressional approval.

It is too early to determine the refund's impact on a per-share basis, a company spokesman said.

The refund, disclosed in a regulatory filing with the Securities and Exchange Commission, carries back to 1996 when telecommunications equipment maker Lucent was still a part of AT&T Corp.

Lucent said the Internal Revenue Service had agreed to the refund stemming from its 2001 operating losses. The $816 million includes $139 million that the IRS had previously approved.

"Added cash is a positive, but since we are not concerned about solvency, it has little impact on the stock valuation," said Morgan Keegan analyst Simon Leopold in a research note.

He reiterated his "market perform" rating on Lucent shares, which edged up two cents to $3.10 in midday New York Stock Exchange trading.

Lucent said the refund must still meet approval of an IRS audit of the company's 2001 fiscal-year federal income tax return. In addition, it must be reviewed and approved by the Congressional Joint Committee on Taxation.

If approved, the claim will be recognized as a tax benefit, the Lucent spokesman said.

Standard & Poor's Rating Services said the refund would not affect its debt ratings for Murray Hill, New Jersey based Lucent.

S&P said in a statement, "The refund would further bolster the company's liquidity, which stood at $4.7 billion on June 30, 2004. Standard & Poor's believes the company will continue to prudently manage its balance sheet."

(Additional reporting in Washington by Justin Hyde)