Tax Basis Worksheet

Avaya, Inc.

TAX INFORMATION FOR SHAREOWNERS OF LUCENT TECHNOLOGIES INC.

Lucent Technologies Inc. distributed its shares of Avaya Inc. common stock to Lucent shareowners on Sept. 30, 2000, as expected. Lucent and Avaya are now two fully Independent, publicly owned companies. This document contains information related to the special distribution of the Avaya shares: 

 BACKGROUND INFORMATION

Lucent shareowners of record on Sept. 20, 2000, received a distribution of 1 share of common stock of Avaya for every 12 shares of Lucent stock owned. Full shares of Avaya should have been received on or about Sept. 30. As previously announced, shareowners entitled to a fractional share of Avaya will receive a cash payment instead. The check contained in this package represents this cash payment. The fractional shares of Avaya common stock have been aggregated and sold through an independent agent, with the net proceeds being paid as appropriate to those entitled to a fractional share.

TAX INFORMATION

Lucent received a ruling from the Internal Revenue Services that the distribution of Avaya common stock qualifies as a tax-free distribution for federal income tax purposes in the United States. This means that, in general, Lucent shareowners will not recognized a gain or loss related to receipt of Avaya shares, except in connection with cash received in lieu of a fractional share. The taxable gain or loss that must be recognized for income tax purposes will be equal to the difference between the cash received and the shareowner’s tax basis in the fractional share (you can determine your tax basis using the worksheet that follows).

 TAX BASIS ALLOCATION

It is necessary to determine your “tax basis” to calculate your net gain or loss on the sale of stock. This tax basis is then compared to the sale price of that stock to determine your net gain or loss. If you bought your shares (and did not acquire them as a gift or in a similar fashion), “tax basis” refers to your cost of acquiring your shares of stock. If you did not acquire your shares by purchasing them, consult your tax advisor to determine your tax basis. Because of the spin-off, you must divide – or allocate – the tax basis of your pre-spin-off Lucent shares between your post-spin-off Lucent shares and your newly received Avaya shares. (The worksheet follows, will help you do this). If you acquired

pre-spin-off Lucent shares at different times and costs (including shares received through a dividend reinvestment plan), you will need to calculate a separate tax basis for each group of Lucent shares, as well as the Avaya shares received in connection with these Lucent shares.

Click here for Calculation Worksheet

 SHAREOWNER STATEMENT

United States Treasury Department regulation require that you sign and attach to your income tax return a statement setting forth certain prescribed information about the Lucent/Avaya stock distribution. Enclosed in this package is a statement you can use for this purpose when you file your 2000 federal income tax return.

Inquiries concerning your Avaya account should be directed to: 1-866-22AVAYA

 Or write to:       Avaya Shareholders Services

                        C/O The Bank of New York

                        Church Street Station

                        P.O. Box 11033

                        New York, NY 10286-1033

E-mail:             avshareholders@bankofny.com

Inquiries concerning your Lucent account should be directed to: 1-888-LUCENT6

 Or write to:     Lucent Shareholders Services

                        C/O The Bank of New York

                        Church Street Station

                        P.O. Box 11009

                        New York, NY 10286-1009

E-mail:             lu-shareholders-svcs@email.bony.com 

CONSULT YOUR TAX ADVISOR

The information in this document represents our understanding of federal income tax laws and regulations, and does not constitute tax advice. It does not purport to be complete or to describe the consequences that may apply to particular categories of shareowners. You should consult your own tax advisor regarding the particular consequences of the stock distribution, including the applicability and effect of any state, local foreign tax laws.