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A flood of red ink stemming from the collapse of the tech bubble is finally paying off for Lucent (LU) .

The company said Wednesday that the congressional Joint Committee on Taxation has approved an $861 million payment based on credits the company piled up in a loss-soaked 2001. The payout comprises $816 million in tax refunds and $45 million in accrued interest.

Federal tax rules allow companies to take operating losses from one fiscal year and deduct them from a prior-year profit, producing a tax refund for the earlier year, according to the New York State Society of Certified Public Accountants Web site.

Lucent wanted to carry back its net operating loss from 2001, when it lost a staggering $16 billion amid the first round of a big restructuring push, to its fiscal year 1996. Lucent only recently returned to profitability after a long string of losses and revenue declines.

Lucent said in September that the Internal Revenue Service had approved the refund and that the company expected final approval from Congress.

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Separately, Lucent struck a tentative seven-year contract agreement with its two unions Tuesday, giving about 3,250 workers a 16% pay hike over the course of the pact.

Though the contract has yet to be ratified by the union, the terms require Lucent and its union to jointly set up a $400 million trust to cover the cost of retiree benefits. Analysts had estimated the potential cost of the retiree benefits would approach $500 million.

The potential resolution of the benefit expense, combined with the tax refund, could help lift some of the company's overhanging financial concerns.

Lucent says the refund will boost earnings for the fourth quarter ended Sept. 30, which the company reported last month. The shift will add 16 cents a share to earnings for the quarter and year ended that date. As a result, fourth-quarter earnings will rise to $1.21 billion, or 23 cents a share, and annual profits will hit $2 billion, or 42 cents a share.

Shares of the Murray Hill, N.J., telecom gearmaker rose a nickel to $3.72 in premarket trading Wednesday.