Progress continues to be made with the growth of our new organization. We now number over 2000 members and, as you can tell from our new website, we have become better organized and more people are becoming actively involved.

As a result of a volunteer (Marty Valliant) attending the National Legislative Retirees Network (NLRN) conference a few weeks ago we have joined forces with them to work on issues that are relevant to both organizations. You will start to see more about their work at the national legislative level on our web site. You can visit their web site to learn more about them. Use the "Links" on our web site or http://www.nrln.org. Also, check out the additional web sites we now have listed on our website which may be of interest to you.

One way we can seek to prevent further reductions in our benefits (more on this at the end of this update) is to assist Lucent on issues affecting its sales and profitability. One such issue involves local telephone competition, and the rates the local Bell Companies are allowed to charge new competitors.

If the "free market" rates favored by the Bells to recover their true costs are approved and go into effect it will likely benefit Lucent. If such rates are approved, the Bells will be in a better position to invest new capital in their networks. Competitors may also feel forced to invest in dedicated network equipment in order to maintain parity with the Bells.

Last week the FCC ruled on this matter and turned much of the rate determination over to State regulatory commissions. We believe that with enough effort by all of us, we can help shape the changes that will be forthcoming. We are just starting to work on position papers. We need your help to get this effort off the ground. If you would like to be involved, please contact your Regional head (see the website for name and address). Watch for more information on this on the site once position papers are complete.

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On the termination of death benefits issue, we are collecting information and documentation from numerous sources to help us determine our legal position. We are securing and will be talking with outside counsel to help us see what options are available to us. For those of you who have hard copy information about this benefit received from the Company when you retired, we would appreciate your sharing that with us (Please forward to Ken Raschke – kraschke@triad.rr.com).

Unfortunately after Henry Schacht’s comments at the annual shareholders meeting last week, we believe securing legal counsel is necessary. At the meeting, when asked if further cuts to retiree benefits were forthcoming, his answer was that it is a possibility. We must be proactive in determining how we, as retirees can help protect ourselves from further cuts by Lucent.

This is an expensive process and the largest liability we are likely to incur on behalf of the LRO. Your dues are critical to this work. Please make sure you make your dues payment immediately after joining. Mail your checks to Bob Janish. For those of you who have already forwarded your dues either for the lifetime option or annually, we thank you for the support.

Members have asked for an extended payment option to become lifetime members. This is now available. If a member prefers to pay the lifetime membership of $350 in installments, the final balance must be paid within three years from the date of the initial payment.

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Two other items of interest:
The first is a report from Bill Kadereit, Head of the LRO Southwest Region, who attended the Lucent Annual Meeting in Dallas. Following is his assessment of the meeting. The, planned meeting with Lucent executives.

Announcements and Voting

Pat Russo was named Chairman and CEO. Voting results: 1) Voting for Directors - Golden 90%; Hillis 79%. 2) For the Long Term Incentive Plan - 71%. 3) For the reverse stock split - 72%. 4) For Evelyn Davis Proposal to repeal Classified Board - 56%. Note that neither 2 nor 3 received 75% of the vote.

The Chairman said no decision has been made to reverse split the stock. The board will review during 2002. The reverse split price target is $15-$25.

Elimination of the Death Benefit

The Chairman offered that the Management Pension Trust was over funded (by AT&T) at the time Lucent was formed in 1996 and has not been funded since. ERISA permits transfer of Trust funds in excess of 120% of the funding requirement to be used for payment of other benefits. That over funding has been spent. Eliminating the Death Benefit reduced the benefit liability and enabled Lucent to avoid funding the Trust in 2003. Lucent must be financially successful to avoid a dilemma in 2004 and beyond.

The Chairman said we know it hurts; we made a tough decision to save the cash. A Death Benefit is not ERISA protected; in fact, the Lucent death benefit had been eliminated earlier for those on role (January 1998). Using the Lucent benefit elimination to justify the retiree decision appeared to imply that former AT&T employees had no better claim to the benefit than current Lucent employees. Executives stated future reinstatement of the death benefit is not being considered.

Hospital and Medical Benefits

When asked if retirees faced the possibility of paying more for benefits or even losing them, there was give and take but the Chairman’s’ final answer was yes. He said costs were increasing 12-15% a year and that people could help by not going to the doctor so often. He stated that annual average doctor visits were 13 per year in the United States. He stated Lucent is now paying 50% of all Health Care Costs.

Retiree and other benefits took center stage. Other questions were related to stock options, outsourcing, reduction of managers, patents, and manager compensation.

With 125,000 retirees and soon to be 35,000 actives, Lucent is very legacy bound!

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Finally, we need everyone’s assistance in spreading the word about our organization and help in recruiting new members. There is now a way to sign up retirees who do not have Internet access. Your Regional head can provide you with the methodology that we are using for that endeavor.

Keep checking the website. Be involved and get active!