Avaya Reports Fourth Fiscal Quarter and Fiscal Year 2007 Results



    
    - Q4 Revenues increase to $1.429 Billion, the Highest Level in Six Years;
    4.8% increase compared to Prior Year

    - Q4 Sales of Products increase 7.8%, with a 9.5% increase in Converged
    Voice Applications Revenues and Company Record for IP Telephony Line
    Shipments

    - Q4 Gross Margin Increased to 47.4%

    - Q4 Cash Flows from Operations Total $228 Million, the Highest Quarterly
    Cash Flow in Three Years; FY07 Cash Flows from Operations Total $637
    Million

    - Q4 GAAP Operating Income was $35 Million; FY07 GAAP Operating Income was
    $276 Million

    - Q4 Non-GAAP Operating Income(1) was $139 Million; FY07 Non-GAAP
Operating
    Income(1) was $417 Million

    - Q4 GAAP EPS was 8 Cents; FY07 GAAP EPS was 47 Cents

    - Q4 Non-GAAP EPS(1) was 19 Cents; FY07 Non-GAAP EPS(1) was 61 Cents
    

    BASKING RIDGE, N.J., Oct. 18 /CNW/ -- Avaya Inc., (NYSE:   AV) a leading
global provider of business communications applications, systems and services,
today announced net income of $35 million and earnings per share of 8 cents
for the fourth fiscal quarter of 2007 on a U.S. generally accepted accounting
principles (GAAP) basis.  This compares with net income of $48 million and
earnings per share of 10 cents for the fourth fiscal quarter of 2006. 
Non-GAAP net income(1)  was $87 million or 19 cents per share compared with
non-GAAP net income(1) for the fourth fiscal quarter of 2006 of $80 million or
17 cents per share.
    Avaya's fourth fiscal quarter 2007 revenues increased 4.8 percent to
$1.429 billion compared to $1.364 billion in the same period last year.  The
company shipped a record number of IP lines and over one million IP lines for
the sixth consecutive quarter.  Sales of products increased 7.8 percent,
including a 9.5 percent increase in converged voice applications revenues.
Services revenues increased 5.4 percent and rental and managed services
revenues declined 10.6 percent.  U.S. revenues declined by 1.6 percent.  The
weaker U.S. dollar favorably impacted international regions, and accounted for
a $39 million year-over-year revenue increase.  EMEA and APAC revenues grew by
10.7 percent and 15.5 percent, respectively.  Revenues in the Americas, non-
U.S., grew by 25.3 percent.
    The company's gross margin increased to 47.4 percent for the fourth
fiscal quarter of 2007 compared to 46.6 percent for the same period last year.
    Selling, general and administrative expenses were $39 million higher, and
research and development expenses were relatively flat when compared to the
same period last year.
    The company reported operating income for the fourth fiscal quarter of
2007 of $35 million and non-GAAP operating income(1) of $139 million.  In the
fourth fiscal quarter of 2006, the company reported operating income of $75
million and non-GAAP operating income(1) of $137 million.  Operating income
for the fourth quarter of fiscal 2007 includes $7 million of business
restructuring charges and $97 million of merger-related costs, of which $90
million relates to the accelerated vesting of stock options and restricted
stock units in connection with the acquisition of Avaya by affiliates of
Silver Lake Partners and TPG Capital, two private equity firms.   These
amounts have been excluded in calculating non-GAAP operating income(1) and
non-GAAP net income(1) for the fourth quarter of fiscal 2007.
    Avaya's effective tax rate was 32.7% for the fourth quarter of fiscal
2007.  The provision for income taxes includes $21 million of favorable tax
items which have been excluded in calculating non-GAAP net income(1).
    Avaya generated $228 million in operating cash flow during the fourth
fiscal quarter of 2007 compared to $191 million in the fourth fiscal quarter
of 2006.  Avaya's cash balance at the end of the fourth quarter of fiscal 2007
was $1.270 billion, compared with $899 million as of September 30, 2006.

    
    (1) Avaya defines non-GAAP operating income, non-GAAP net income and non-
        GAAP earnings per share as excluding the impact of restructuring
        charges, acquisition and merger-related charges and certain income tax
        items.  See ''Reconciliation of Non-GAAP Financial Measures"
        accompanying this release.
    Fiscal Year 2007 Results
    
    Revenues for fiscal 2007 were $5.279 billion compared to $5.148 billion
last year.  The weaker U.S. dollar favorably impacted international regions,
and accounted for the revenue increase.  The company earned GAAP net income of
$218 million and earnings per share of 47 cents for fiscal 2007, compared to
net income of $201 million and earnings per share of 43 cents for fiscal 2006.
Non-GAAP net income(1) was $281 million, or 61 cents per share for fiscal 2007
compared with $241 million, or 49 cents per share for fiscal 2006.  Fiscal
2007 GAAP operating income was $276 million compared to $263 million for
fiscal 2006.  Non-GAAP operating income(1) for fiscal 2007 was $417 million
compared to $367 million for fiscal 2006.  Operating cash flow for fiscal 2007
was $637 million compared to $647 million for fiscal 2006.
    
    Update on Closing of Acquisition of Avaya
    
    Avaya also confirmed today that the acquisition of the company by
affiliates of Silver Lake Partners and TPG Capital is scheduled to close by
the end of October.
    
    Fourth Quarter Highlights
    
    Since the end of the last quarter, Avaya has announced several customer
wins, new offers and awards including:
    Bell Canada announced an agreement to standardize on the full portfolio
of Avaya IP Telephony solutions.  This is the first time Bell Canada has
standardized a full product line in over 13 years.
    Black & Decker selected Avaya to power the company's communications.
Avaya will help Black & Decker build an IP Telephony-based network for nearly
200 locations with highly diverse needs around the globe. The implementation
will help the company improve productivity and customer service, control
costs, and support new ways of doing business.
    Avaya delivered an IP telephony system to Telemarketing Japan, Inc.
(TMJ), one of the major telemarketing outsourcers in Japan. The system allows
TMJ to centralize operations and management of their data center, enabling TMJ
to increase the overall availability of the system, reduce equipment cost and
to develop an infrastructure flexible to business expansion.
    As Villanova University, the most wired college in the U.S. (PC Magazine,
Dec. 2006), plots its technology future, new intelligent communications
networking and applications give it a powerful, flexible foundation to further
its vision and provide a wealth of new capabilities today. The new Avaya and
Extreme Networks IP telephony network now links 60 buildings on Villanova's
Philadelphia campus.  With new intelligent communications capabilities --
including converged networking, unified communications and contact center
applications -- the university now is extending its technology leadership and
improving campus safety.
    Avaya announced a new solution that provides users of Nokia "E Series"
business devices with one number access and advanced enterprise telephony
capabilities as they travel across private Wi-Fi and public cellular networks.
With a single Voice over IP-enabled mobile device, workers can "handoff" phone
calls using dual mode communications, as they travel from inside a company
building (Wi-Fi) to the outside environment (cellular) -- and vice versa. This
provides mobile workers a more convenient and productive way to manage their
communications, while giving organizations a more cost-effective way to manage
enterprise mobility.
    The solution -- Avaya one-X Mobile Dual Mode -- combines Avaya's IP-based
applications with Nokia E series business devices (Nokia E60, Nokia E61 and
Nokia E70 models) to deliver the full benefits of fixed mobile convergence.
Calls made to a worker's deskphone can be received on a Nokia E series
business device, ensuring mobile workers remain accessible to customers and
colleagues wherever they go.
    Avaya debuted new versions of its industry-leading self-service software.
The enhancements make it easier and more cost-effective to improve customer
service with speech automation, and provide a foundation for using self-
service to create faster, more productive business processes.  The new
products include Avaya Voice Portal 4.0, the company's flagship self-service
software, and Interactive Response 3.0, one of the industry's most widely-
deployed self-service platforms. Also unveiled was the new version of Avaya
Dialog Designer 4.0, a tool for developing next-generation speech self-service
applications.
    Avaya received Frost & Sullivan's 2007 North American Market Leadership
Award for Interactive Voice Response (IVR) based on its leading market share
and strategy in IVR solutions.  According to Frost & Sullivan's latest
research, Avaya leads the North American IVR market with a 22.7 percent share.
The company's success is led by sales of the Avaya Voice Portal, a software
platform that uses Web Services to provide companies with a faster, easier way
to deliver speech-enabled self-service across highly distributed enterprises.
    Avaya widened its lead in worldwide enterprise IP telephony revenues,
according to Synergy Research Group's 2Q 2007 Enterprise Voice Market Shares
Report.  With this report, Avaya marks another quarter of leadership in this
market, as more businesses around the globe evolve their voice networks to IP
telephony. Avaya is a global provider of business communications applications,
systems and services.
    The report shows Avaya as the #1 vendor in IP telephony revenues as
defined by Synergy with 25.4 percent of the global market for the second
quarter of 2007. In addition, the report shows that Avaya retained its
leadership position in the worldwide overall enterprise telephony market in
revenue, with nearly 19 percent of the market in the second quarter of 2007,
more than 2 percentage points over its nearest competitor.
    
    Forward-Looking Statements
    
    Certain statements made in this press release are forward-looking
statements within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995.  These statements regarding Avaya's
expected performance and outlook for operating results are based on current
expectations, forecasts and assumptions that involve risks and uncertainties
that could cause actual outcomes and results to differ materially. These risks
and uncertainties include, but are not limited to:

    
    -- price and product competition, including from competitors who may offer
       products and applications similar to those we offer as part of another
       offering, and from current leaders in information technology which
       benefit from the convergence of enterprise voice and data networks;
    -- rapid or disruptive technological development, including the effects of
       the technology shift from traditional TDM to IP telephony;
    -- dependence on new product development;
    -- customer demand for our products and services, including risks
       specifically associated with the services business and, in particular,
       the maintenance and rental and managed services lines of business,
       primarily due to renegotiations of customer contracts and changes in
       scope, pricing erosion and cancellations;
    -- supply issues related to our outsourced manufacturing operations,
       logistics, distribution or components;
    -- risks related to inventory, including warranty costs, obsolescence
       charges, excess capacity, material and labor costs, and our
       distributors' decisions regarding their own inventory levels;
    -- general industry and market conditions and growth rates and general
       domestic and international economic conditions including interest rate
       and currency exchange rate fluctuations;
    -- the economic, political and other risks associated with international
       sales and operations, including increased exposure to currency
       fluctuations and to European economies as a result of a large
       percentage of our business being conducted in Europe;
    -- the ability to successfully integrate acquired companies, which may
       require significant management time and attention;
    -- the ability to attract and retain qualified employees;
    -- control of costs and expenses, including difficulties in completing
       restructuring actions in a timely and efficient manner due to labor
       laws and required approvals;
    -- U.S. and non-U.S. government regulation; and
    -- the ability to form and implement alliances.
    
    In addition, we may not be able to complete the proposed sale of the
company on the terms summarized in Avaya's filings with the SEC or on other
acceptable terms, or at all, due to a number of factors, including the failure
to satisfy customary closing conditions.
    For a further list and description of such risks and uncertainties,
please refer to the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Risk Factors" sections of Avaya's
filings with the SEC, including, but not limited to, its annual report on Form
10-K and quarterly reports on Form 10-Q, which are available at www.sec.gov. 
Avaya disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
    
    Use of Non-GAAP Financial Measures
    
    In an effort to provide investors with additional information regarding
the company's results as determined by GAAP, the company has also disclosed
non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share
in this press release.
    These non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the United States
and they have limitations in that they do not reflect all amounts associated
with Avaya's results of operations as determined in accordance with GAAP.
These measures should only be used in evaluating Avaya's results of operations
together with the corresponding GAAP measures.
    Avaya believes that the presentation of non-GAAP operating income, non-
GAAP net income and non-GAAP earnings per share, which exclude the impact of
restructuring charges, acquisition and merger-related charges and certain
income tax items, provides meaningful supplemental information regarding
Avaya's performance.  These non-GAAP financial measures also help investors
compare Avaya's financial results for the current quarter to its financial
results for prior quarters and the prior fiscal year.  In addition, Avaya's
management uses these measures when reviewing the company's financial results
and to further understand the company's operating performance.
    The reconciliation of these non-GAAP measures to their most directly
comparable GAAP financial measures is included at the end of this press
release.
    
    About Avaya
    
    Avaya delivers Intelligent Communications solutions that help companies
transform their businesses to achieve marketplace advantage. More than 1
million businesses worldwide, including more than 90 percent of the FORTUNE
500 (R), use Avaya solutions for IP Telephony, Unified Communications, Contact
Centers and Communications Enabled Business Processes. Avaya Global Services
provides comprehensive service and support for companies, small to large. For
more information visit the Avaya Web site: http://www.avaya.com.



    
                                  Avaya Inc.
                        Consolidated Statements of Income
      (Unaudited; Dollars and Shares in Millions, except per share amounts)
    

    
                                          For the three    For the twelve
                                           months ended     months ended
                                          September 30,    September 30,
                                           2007    2006    2007     2006
      REVENUE
        Sales of products                   $744    $690   $2,628   $2,510
        Services                             542     514    2,067    2,017
        Rental and managed services          143     160      584      621
                                           1,429   1,364    5,279    5,148
      COST
        Sales of products                    349     312    1,241    1,168
        Services                             334     349    1,294    1,325
        Rental and managed services           68      68      272      265
                                             751     729    2,807    2,758
      GROSS MARGIN                           678     635    2,472    2,390
    

    
      OPERATING EXPENSES
        Selling, general and
         administrative                      427     388    1,611    1,595
        Research and development             112     110      444      428
        Restructuring charges, net             7      62       36      104
        Merger-related costs                  97     -        105      -
      TOTAL OPERATING EXPENSES               643     560    2,196    2,127
    

    OPERATING INCOME                        35      75      276      263

    
      Other income, net                       17       8       40       24
      Interest expense                         -     -         (1)      (3)
    

    INCOME BEFORE INCOME TAXES              52      83      315      284

    Provision for income taxes              17      35       97       83

    NET INCOME                             $35     $48     $218     $201

    EARNINGS PER SHARE - BASIC           $0.08   $0.11    $0.48    $0.43

    EARNINGS PER SHARE - DILUTED         $0.08   $0.10    $0.47    $0.43

    
      Weighted Average Shares Outstanding
       - Basic                               457     454      454      463
      Weighted Average Shares Outstanding
       - Diluted                             467     459      461      469
    



    
                                      Avaya Inc.
                                  Operating Segments
                             Revenue and Operating Income
                                   Quarterly Trend
                          (Unaudited; Dollars in Millions)
    

    REVENUE

    
                                              For the Fiscal Year Ended
                                                  September 30, 2006
                                         Q1      Q2      Q3      Q4     YTD
    

    
         Global Communications
          Solutions                      $661    $661    $704    $760  $2,786
         Avaya Global Services            588     577     593     604   2,362
         Corporate                        -       -       -       -       -
               Total Avaya             $1,249  $1,238  $1,297  $1,364  $5,148
    


    
         OPERATING INCOME
                                             For the Fiscal Year Ended
                                                 September 30, 2006
                                         Q1      Q2      Q3      Q4     YTD
    

    
         Global Communications
          Solutions                       $43     $32     $36     $86    $197
         Avaya Global Services             60      41      34      36     171
         Corporate: (A)                     4     (20)    (42)    (47)   (105)
               Total Avaya               $107     $53     $28     $75    $263
    



    
         REVENUE
                                             For the Fiscal Year Ended
                                                 September 30, 2007
                                         Q1      Q2      Q3      Q4     YTD
    

    
         Global Communications
          Solutions                      $682    $698    $686    $804  $2,870
         Avaya Global Services            598     596     590     625   2,409
         Corporate                        -       -       -       -       -
               Total Avaya             $1,280  $1,294  $1,276  $1,429  $5,279
    


    
         OPERATING INCOME
                                             For the Fiscal Year Ended
                                                 September 30, 2007
                                         Q1      Q2      Q3      Q4     YTD
    

    
         Global Communications
          Solutions                       $22     $38     $25     $90    $175
         Avaya Global Services             53      56      63      75     247
         Corporate: (A)                    15     (13)    (18)   (130)   (146)
               Total Avaya                $90     $81     $70     $35    $276
    

    
        (A) The segments are managed as two individual businesses and, as a
            result, include certain allocated costs and expenses of shared
            services, such as information technology, human resources, legal
            and finance.  At the beginning of each fiscal year, the amount of
            certain corporate overhead expenses, including targeted annual
            incentive awards, to be charged to operating segments is
            determined and fixed for the entire year in the annual plan.  The
            annual incentive award accrual is adjusted quarterly based on
            actual year to date results and those estimated for the remainder
            of the year.  This adjustment of the annual incentive award
            accrual, as well as any other over/under absorption of corporate
            overheads against plan is recorded and reported within the
            Corporate caption.  In addition, certain items such as charges
            related to restructuring actions, as well as merger-related costs,
            are not allocated to the operating segments and remain
            in Corporate.  Included in merger-related costs for the fourth
            quarter of fiscal 2007 is $90 million related to the accelerated
            vesting of stock options and restricted stock units in connection
            with the acquisition of Avaya by affiliates of Silver Lake
            Partners and TPG Capital, two private equity firms.
    




    
                               Avaya Inc.
                   Condensed Statements of Cash Flows
         For the Twelve Months Ended September 30, 2007 and 2006
                    (Unaudited; Dollars in Millions)
    


    
                                        For the twelve       For the twelve
                                         months ended         months ended
                                      September 30, 2007   September 30, 2006
    


    
     Net cash provided by operating
      activities                              $637             $647
     Net cash (used for) investing
      activities                              (360)(a)         (189)(a)
     Net cash provided by (used for)
      financing activities                      54 (b)         (315)(b)
     Effect of exchange rate changes
      on cash and cash equivalents              40                6
     Net increase in cash and cash
      equivalents                              371              149
     Cash and cash equivalents at
      beginning of the period                  899              750
     Cash and cash equivalents at end
      of the period                         $1,270             $899
    

    
     (a) Includes capital expenditures of $120 and $117 and capitalized
         software development costs of $93 and $71 for the twelve months
         ended September 30, 2007 and 2006, respectively.
    

    
         The twelve months ended September 30, 2007 also include $147 used for
         the acquisition of Ubiquity and $15 used for the acquisition of
         Traverse Networks.
    

    
     (b) The net cash provided by financing activities as of September 30,
         2007 includes $115 received from the exercise of stock options.
    

    
         The twelve months ended September 30, 2007 and 2006 include $94 and
         $328, respectively, related to the repurchase of Avaya common stock.
    



    
                                  Avaya Inc.
                         Supplemental Revenue Tables
                       (Unaudited, Dollars in Millions)
    

    
      Revenue by Geography
                                            Fourth Fiscal Quarter
                                Dollars           Mix
      4Q06  1Q07  2Q07  3Q07    in millions 2007 2006 2007 2006      Change
      $788  $732  $746   $694   U.S.        $775 $788  54%  58%    $(13)  -2%
    

    
                                Outside
                                the U.S.:
       183   186   178    172   Germany      192  183  13%  13%       9    5%
    

    
                                EMEA -
                                Europe/
                                Middle East/
                                Africa
                                (Excluding
       208   203   190    216   Germany)     241  208  17%  15%      33   16%
    

    391   389   368    388   Total EMEA   433  391  30%  28%      42   11%

    
                                APAC - Asia
       110    88   111    116   Pacific      127  110   9%   8%      17   15%
    

    
                                Americas,
        75    71    69     78   non-U.S.      94   75   7%   6%      19   25%
    

    
                                Total
                                outside
       576   548   548    582   the U.S.     654  576  46%  42%      78   14%
    

    
                                Total
    $1,364 $1,280 $1,294 $1,276 revenue   $1,429 $1,364  100% 100%  $65    5%
    

    
      Revenue by Type
                                               Fourth Fiscal Quarter
                                Dollars                Mix
      4Q06  1Q07  2Q07  3Q07    in millions   2007 2006 2007 2006      Change
    

    
                                Sales of
      $690  $619  $639  $626    products     $ 744 $690  52%  50%   $54    8%
    

    514   509   509   507    Services(b)    542  514  38%  38     28    5%

    
                                Rental and
                                managed
                                services
       160   152   146   143    (a),(b)        143  160  10%  12   (17)  -11%
    

    
                                Total
    $1,364 $1,280 $1,294 $1,276 revenue    $1,429 $1,364 100% 100% $65    5%
    


    
      Sales of Products by Channel
                                               Fourth Fiscal Quarter
                                Dollars                Mix
      4Q06  1Q07  2Q07  3Q07    in millions   2007 2006 2007 2006      Change
    

    $302  $259  $277  $258    Direct        $332 $302  45%  44%   $30   10%

    388   360   362   368    Indirect       412  388  55%  56%    24    6%

    
                                Total sales
      $690  $619  $639  $626    of products   $744 $690 100% 100%   $54    8%
    


    GCS Revenue by Class

    
                                               Fourth Fiscal Quarter
                                Dollars                Mix
      4Q06  1Q07  2Q07  3Q07    in millions   2007 2006 2007 2006      Change
    

    
                                Large
                                Communications
      $483  $435 $440   $437    Systems       $519 $483  64%   64%   $36   7%
    

    
                                Small
                                Communications
        96    85   84     74    Systems         85   96  11%   13    (11) -11%
    

    
                                Converged
                                Voice
        169   151  162    153   Applications   185  169  23%   22%    16    9%
    

    12    11   12     22   Other           15   12   2%    1%     3   25%

    
                                Total
                                revenue
       $760  $682 $698   $686   - GCS         $804 $760 100%  100%   $44    6%
    

    AGS Revenue by Class

    
                                                Fourth Fiscal Quarter
                              Dollars                    Mix
    4Q06  1Q07  2Q07  3Q07    in millions   2007 2006 2007 2006      Change
                              Product
                               Support
    $404  $411  $412   $408    Services(b)  $416 $404  67%  67%     $12    3%
                              Consulting and
                               Systems
                               Integ-
     111    98    97     99    ration(b)     126  111  20%  18%      15   14%
                              Global Managed
      89    89    87     83     Services(b)   83   89  13%  15%      (6)  -7%
                              Total revenue
    $604  $598  $596   $590     - AGS       $625 $604 100% 100%     $21    3%
    

    
    (a) The services portion falls within the global managed services line in
        the AGS Revenue by Class chart and the product portion is spread among
        the applicable line items in the GCS Revenue by Class chart.
    

    
    (b) Prior year revenue amounts have been reclassified to conform to
        current period presentation.
    



    
                                  Avaya Inc.
                         Supplemental Revenue Tables
                       (Unaudited, Dollars in Millions)
    

    
    Revenue by Geography
                                        Twelve Months Ended September 30,
                                                       Mix
    Dollars in millions               2007    2006  2007  2006      Change
    U.S.                            $2,947  $2,994   56%   58%  $(47)     -2%
    Outside the U.S:
       Germany                         728     733   14%   14%    (5)     -1%
       EMEA - Europe/Middle
        East/Africa
        (Excluding Germany)            850     765   16%   15%    85      11%
       Total EMEA                    1,578   1,498   30%   29%    80       5%
       APAC - Asia Pacific             442     383    8%    8%    59      15%
       Americas, non-U.S.              312     273    6%    5%    39      14%
       Total outside the U.S.        2,332   2,154   44%   42%   178       8%
    Total revenue                   $5,279  $5,148  100%  100%  $131       3%
    

    
    Revenue by Type
                                        Twelve Months Ended September 30,
                                                       Mix
    Dollars in millions               2007    2006  2007  2006      Change
    Sales of products               $2,628  $2,510   50%   49%  $118       5%
    Services (b)                     2,067   2,017   39%   39%    50       2%
    Rental and managed
     services (a),(b)                  584     621   11%   12%   (37)     -6%
    Total revenue                   $5,279  $5,148  100%  100%  $131       3%
    

    
    Sales of Products by Channel
                                        Twelve Months Ended September 30,
                                                       Mix
    Dollars in millions               2007    2006  2007  2006      Change
    Direct                          $1,126  $1,097   43%   44%   $29       3%
    Indirect                         1,502   1,413   57%   56%    89       6%
    Total sales of products         $2,628  $2,510  100%  100%  $118       5%
    

    
    GCS Revenue by Class
                                        Twelve Months Ended September 30,
                                                       Mix
    Dollars in millions               2007    2006  2007  2006      Change
    Large Communications Systems    $1,831  $1,765   64%   63%   $66       4%
    Small Communications Systems       328     370   11%   13%   (42)    -11%
    Converged Voice Applications       651     605   23%   22%    46       8%
    Other                               60      46    2%    2%    14      30%
    Total revenue - GCS             $2,870  $2,786  100%  100%   $84       3%
    

    
    AGS Revenue by Class
                                        Twelve Months Ended September 30,
                                                       Mix
    Dollars in millions               2007    2006  2007  2006     Change
    Product Support Services (b)    $1,647  $1,621   68%   69%   $26       2%
    Consulting and Systems
     Integration (b)                   420     401   18%   17%    19       5%
    Global Managed Services (b)        342     340   14%   14%     2       1%
    Total revenue - AGS             $2,409  $2,362  100%  100%   $47       2%
    


    
    (a) The services portion falls within the managed services line in the AGS
    Revenue by Class chart and the product portion is spread among the
    applicable line items in the GCS Revenue by Class chart.
    (b) Prior year revenue amounts have been reclassified to conform to
    current period presentation.
    




    
                                     Avaya Inc.
                   Reconciliation of Non-GAAP Financial Measures
       (Unaudited; Dollars and Shares in Millions, except per share amounts)
    

    
                                            For the three     For the three
       Operating Income:                     months ended      months ended
                                             September 30,     September 30,
                                                 2007              2006
    

    GAAP Operating Income                      $35               $75

    
       Items Included in Operating
        Income:
            Restructuring charges, net             (7)              (62)
            Merger-related costs                  (97)                -
            Total Items Included in
             Operating Income                    (104)              (62)
    

    Non-GAAP Operating Income                 $139              $137


    
                                            For the three     For the three
       Net Income:                           months ended      months ended
                                             September 30,     September 30,
                                                 2007              2006
    

    GAAP Net Income                            $35               $48

    
       Items Included in Net Income:
            Restructuring charges, net,
             after tax                             (4)              (43)
            Merger-related costs, after  tax      (69)                -
            Net favorable tax items included
             in provision for income taxes         21                11
            Total Items Included in Net Income    (52)              (32)
    

    Non-GAAP Net Income                        $87               $80

    Diluted Shares                             467               459

    
       Non-GAAP EPS (Non-GAAP Net Income
        / Diluted Shares)                       $0.19             $0.17
       GAAP EPS                                 $0.08             $0.10
    


    
       Avaya defines non-GAAP operating income, non-GAAP net income and non-
       GAAP earnings per share as excluding the impact of restructuring
       charges, acquisition and merger-related charges and certain income tax
       items.
    



    
                                     Avaya Inc.
                   Reconciliation of Non-GAAP Financial Measures
       (Unaudited; Dollars and Shares in Millions, except per share amounts)
    

    
                                            For the twelve    For the twelve
       Operating Income:                     months ended      months ended
                                             September 30,     September 30,
                                                 2007              2006
    

    GAAP Operating Income                     $276              $263

    
       Items Included in Operating Income:
            Restructuring charges, net            (36)             (104)
            Merger-related costs                 (105)                -
            Total Items Included in
             Operating Income                    (141)             (104)
    

    Non-GAAP Operating Income                 $417              $367


    
                                            For the twelve    For the twelve
       Net Income:                           months ended      months ended
                                            September 30,     September 30,
                                                 2007              2006
    

    GAAP Net Income                           $218              $201

    
       Items Included in Net Income:
            Restructuring charges, net,
             after tax                            (23)              (72)
            Merger-related costs, after tax       (74)                -
            Net favorable tax items included
             in provision for income taxes         34                32
            Total Items Included in Net Income    (63)              (40)
    

    Non-GAAP Net Income                       $281              $241

    Diluted Shares                             461               469

    
       Non-GAAP EPS (Non-GAAP Net Income
        / Diluted Shares)                       $0.61             $0.49
       GAAP EPS                                 $0.47             $0.43
    


    
       Avaya defines non-GAAP operating income, non-GAAP net income and non-
       GAAP earnings per share as excluding the impact of restructuring
       charges, acquisition and merger-related charges and certain income tax
       items.
    




For further information:

For further information: Media, Lynn Newman, +1-908-953-8692, 
+1-908-672-1321 - mobile, lynnnewman@avaya.com, or Investors, Matthew Booher, 
+1-908-953-7500, mbooher@avaya.com, both of Avaya Inc. Web Site:
http://www.avaya.com/

Organization Profile

AVAYA INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890