Exhibit 99.1
Media Inquiries: |
| Investor Inquiries: |
Lynn Newman |
| Matthew Booher |
908-953-8692 (office) |
| 908-953-7500 (office) |
973-993-8033 (home) |
| mbooher@avaya.com |
lynnnewman@avaya.com |
|
|
AVAYA REPORTS FIRST FISCAL QUARTER 2006 RESULTS
• Diluted Earnings Per Share From Continuing Operations of 15 Cents Compared To 7 Cents Year-Over-Year
• Company Generates $106 Million in Operating Cash Flow in the Quarter
• Share Repurchase Program Continues: Diluted Common Shares Reduced By Three Percent Since Program Inception
FOR IMMEDIATE RELEASE: MONDAY, JANUARY 23, 2006
BASKING RIDGE, N. J. – Avaya Inc., (NYSE:AV) a leading global provider of business communications applications, systems and services, today reported income from continuing operations of $71 million or 15 cents per diluted share in the first fiscal quarter of 2006. The company said diluted earnings per share included a benefit of $13 million or three cents per diluted share, after taxes, related to a change in its vacation policy. In addition, diluted earnings per share included an expense of $3 million or one cent per diluted share, after taxes, related to the adoption of Statement of Financial Accounting Standards No. 123(R). SFAS 123(R), which requires the expensing of equity-based compensation, was effective for the company beginning on October 1, 2005.
In the same quarter last year the company reported income from continuing operations of $33 million or seven cents per diluted share.
The company’s first fiscal quarter 2006 revenues increased 8.8 percent to $1.249 billion, compared to revenues of $1.148 billion in the first fiscal quarter of 2005. The first quarter of 2006 included the full quarter contribution from the Tenovis acquisition. Avaya said its Global Communications Systems revenues rose 11.7 percent year-over-year and Avaya Global Services revenues increased 5.8 percent over the same period. The company’s operating income for the quarter was $107 million. Avaya generated $106 million in operating cash flow and had $726 million in cash at the end of the quarter.
- more -
“During the quarter, Avaya shipped its eight millionth IP line, with shipments increasing 16 percent compared to the year ago quarter,” said Don Peterson, chairman and CEO, Avaya. “Within the United States, IP telephony lines rose 21 percent over the same period. As we move through 2006, our global size and scale, technology and applications leadership and the scope and breadth of our solutions and services portfolio position us to benefit as enterprises continue to evolve to IP telephony.”
Share Repurchase Program
Avaya said it repurchased 7.9 million shares of common stock during the first fiscal quarter at an average price of $11.32, or a total of $90 million. Since the inception of the company’s share repurchase program during the second quarter of 2005, Avaya has repurchased a total of 19.5 million shares at an average price of $10.11, or a total of $197 million. Since the inception of the program the company has reduced its diluted common shares by three percent.
First Fiscal Quarter Highlights
Avaya announced several customer wins, market share updates, alliance partnerships and new solution offers since the last quarter.
• InfoTech named Avaya the leader in U.S. Enterprise Telephony with 21 percent share and in U.S. IP telephony with 22 percent share for the third calendar quarter of 2005.
• For the fourth consecutive quarter, the Dell ‘Oro Group named Avaya the global market leader in Enterprise Telephony in the third calendar quarter of 2005 with 19 percent market share two points ahead of the nearest competitor.
• For the eighth consecutive quarter, Synergy Research named Avaya worldwide leader in Enterprise IP Telephony in the third calendar quarter of 2005 with 22 percent of the global market by shipments and 25 percent by revenues.
• Miercom, a leading network consultancy and product test center, awarded the highest score ever recorded in its annual large-scale IP PBX shoot-out to Avaya, As a result, Avaya earned the “Best in Test” award for high-end IP PBX solutions from Business Communications Review magazine, which featured an article on the test results in its January 2006 issue. This is the second consecutive year Avaya won this award.
• Bank of Communications, one of the largest banks in China, will deploy 2500 lines of Avaya Interactive Voice Response systems to enhance customer self service at Shanghai HQ and several regional offices.
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• Aramex, a transportation company based in the Middle East, is implementing IP telephony at three sites in Dubai, with plans to roll out other offices in Jordan, New York, India and 200 offices across five continents with a total deployment to more than 4,000 employees.
• Gas Natural, a leading natural gas distributor in Spain, is migrating to an IP contact center and converged communication network for over 1,000 distributed contact center agents and using mobility applications such as unified communication, softphone and wireless.
• During the FIFA World Cup™ Final Draw an Avaya converged communications network powered the first in a series of events leading to the 2006 FIFA World Cup. The new, open standards-based network reduced the cost of call traffic and enabled attendees, FIFA employees and accredited users to work flexibly and access the network from a variety of locations within the Messe, Germany complex.
• The company announced Avaya VPNremote™ for its family of Avaya 4600 model IP telephones. The feature embeds virtual private network remote capabilities into these IP telephones. Easily installed in a remote or home office, the solution provides telecommuters with an “always on” business-class, IP telephone.
• The new Avaya IP Video Telephony Solution integrates Avaya Communication Manager ™ software for IP telephony with desktop video conferencing, group video conferencing, and multipoint network solutions from Polycom. This enables video to be more easily used in daily communications and enables video conferencing across multiple parties using various communications devices by creating a unified network.
• A collaboration with Symbol Technologies integrates Symbol’s advanced data capture, mobile computing platforms and wireless infrastructure with Avaya’s Internet protocol telephony software and mobile client applications. This is particularly helpful for businesses in retail, healthcare, manufacturing environments where campus workers use mobile computers, scanners and other technologies.
Forward Looking Statements
Certain statements made in the earnings conference call 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:
3
• price and product competition;
• rapid or disruptive technological development, including the effects of the technology shift from traditional TDM to IP telephony;
• dependence on new product development;
• the mix of our products and services;
• 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 pressures and cancellations;
• general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations;
• risks related to inventory, including warranty costs, obsolescence charges, excess capacity, material and labor costs, and our distributors’ decisions regarding their own inventory levels;
• 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 our acquisition of Tenovis;
• the ability to successfully integrate acquired companies, including Tenovis, which has required significant management time and attention;
• the ability to attract and retain qualified employees;
• control of costs and expenses;
• U.S. and non-U.S. government regulation; and
• the ability to form and implement alliances.
For a further list and description of such risks and uncertainties, see the reports filed by Avaya with the SEC, which are available at www.sec.gov, particularly the information contained in Part I, Item 1, entitled “Forward Looking Statements,” of our fiscal 2005 Form 10-K. 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.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company’s results as determined by accounting principles generally accepted in the United States (GAAP), the company has also disclosed “net cash” in the supplementary materials accompanying the conference call discussing first quarter earnings results. Net cash is a non-GAAP financial measure which management believes provides useful information to investors.
The rationale for managements’ use of this non-GAAP measure is included as part of the Form 8-K furnished to the SEC today. The reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measures is included as part of the supplementary materials presented with the first quarter earnings materials. The supplementary materials are available on the Avaya investor relations website at www.avaya.com/investors and will be included in a subsequent filing of a Form 8-K with the SEC.
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Conference Call and Webcast
Avaya will host a conference call with a listen-only Q&A session to discuss these results at 5:00 p.m. EST on Monday, Jan. 23, 2006. To ensure you are on the call from the start, we suggest you access the call 10-15 minutes early by dialing:
Within and outside the United States: 706-634-2454.
For those unable to participate, there will be a playback available from 8:00 p.m. EST Jan. 23, through Jan. 30, 2006. For the replay, if you are calling from within the United States, please dial 800-642-1687. If you are calling from outside the United States, please dial 706-645-9291. The passcode for the replay is 3975038.
WEBCAST Information: Avaya will webcast this conference call live, with a listen-only Q&A session. To ensure that you are on the webcast, we suggest that you access our website (www.avaya.com/investors) 10-15 minutes prior to the start. Supplementary materials accompanying the conference call are available at the same location. Following the live webcast, a replay will be available on our archives at the same web address.
About Avaya
Avaya Inc. designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500®. Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services.
Driving the convergence of voice and data communications with business applications – and distinguished by comprehensive worldwide services – Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com
5
Avaya Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited; Dollars and Shares in Millions, except per share amounts)
|
| For the three months ended |
| ||||
|
| 2005 |
| 2004 |
| ||
REVENUE |
|
|
|
|
| ||
Sales of products |
| $ | 591 |
| $ | 554 |
|
Services |
| 501 |
| 477 |
| ||
Rental and managed services |
| 157 |
| 117 |
| ||
|
| 1,249 |
| 1,148 |
| ||
COST |
|
|
|
|
| ||
Sales of products |
| 277 |
| 245 |
| ||
Services |
| 321 |
| 308 |
| ||
Rental and managed services |
| 62 |
| 52 |
| ||
|
| 660 |
| 605 |
| ||
GROSS MARGIN |
| 589 |
| 543 |
| ||
|
|
|
|
|
| ||
OPERATING EXPENSES |
|
|
|
|
| ||
Selling, general and administrative |
| 385 |
| 357 |
| ||
Research and development |
| 97 |
| 98 |
| ||
TOTAL OPERATING EXPENSES |
| 482 |
| 455 |
| ||
|
|
|
|
|
| ||
OPERATING INCOME |
| 107 |
| 88 |
| ||
Other income (expense), net |
| 5 |
| (38 | ) | ||
Interest expense |
| (1 | ) | (10 | ) | ||
|
|
|
|
|
| ||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
| 111 |
| 40 |
| ||
|
|
|
|
|
| ||
Provision for income taxes |
| 40 |
| 7 |
| ||
INCOME FROM CONTINUING OPERATIONS |
| 71 |
| 33 |
| ||
6
|
| For the three months ended |
| ||||
|
| 2005 |
| 2004 |
| ||
DISCONTINUED OPERATIONS |
|
|
|
|
| ||
(Loss) from discontinued operations |
| — |
| (2 | ) | ||
Provision (benefit) for income taxes |
| — |
| — |
| ||
(LOSS) FROM DISCONTINUED OPERATIONS |
| — |
| (2 | ) | ||
|
|
|
|
|
| ||
NET INCOME |
| $ | 71 |
| $ | 31 |
|
|
|
|
|
|
| ||
EARNINGS PER SHARE - BASIC |
|
|
|
|
| ||
Earnings per share from continuing operations |
| $ | 0.15 |
| $ | 0.07 |
|
Earnings per share from discontinued operations |
| — |
| — |
| ||
EARNINGS PER SHARE |
| $ | 0.15 |
| $ | 0.07 |
|
|
|
|
|
|
| ||
EARNINGS PER SHARE - DILUTED |
|
|
|
|
| ||
Earnings per share from continuing operations |
| $ | 0.15 |
| $ | 0.07 |
|
Earnings per share from discontinued operations |
| — |
| — |
| ||
EARNINGS PER SHARE |
| $ | 0.15 |
| $ | 0.07 |
|
|
|
|
|
|
| ||
Weighted Average Shares Outstanding - Basic shares |
| 471 |
| 460 |
| ||
Weighted Average Shares Outstanding - Diluted shares |
| 478 |
| 492 |
|
7
Avaya Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2005 and September 30, 2005
(Unaudited; Dollars in Millions, except per share amounts)
|
| December 31, 2005 |
| September 30, 2005 (a) |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 726 |
| $ | 750 |
|
Accounts Receivable less allowances of $56 and $58 as of December 31, 2005 and September 30, 2005, respectively |
| 811 |
| 862 |
| ||
Inventory |
| 282 |
| 288 |
| ||
Deferred tax asset, net |
| 136 |
| 143 |
| ||
Other current assets |
| 137 |
| 128 |
| ||
TOTAL CURRENT ASSETS |
| 2,092 |
| 2,171 |
| ||
|
|
|
|
|
| ||
Property, plant and equipment, net |
| 715 |
| 738 |
| ||
Deferred tax asset, net |
| 888 |
| 911 |
| ||
Intangible assets (b) |
| 317 |
| 337 |
| ||
Goodwill (c) |
| 904 |
| 914 |
| ||
Other assets |
| 162 |
| 148 |
| ||
TOTAL ASSETS |
| $ | 5,078 |
| $ | 5,219 |
|
|
|
|
|
|
| ||
LIABILITIES |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 381 |
| $ | 402 |
|
Debt maturing within one year |
| 5 |
| 5 |
| ||
Payroll and benefit obligations |
| 245 |
| 300 |
| ||
Deferred revenue |
| 236 |
| 244 |
| ||
Other current liabilities |
| 318 |
| 368 |
| ||
TOTAL CURRENT LIABILITIES |
| 1,185 |
| 1,319 |
| ||
|
|
|
|
|
| ||
Long-term debt |
| 25 |
| 25 |
| ||
Benefit obligations |
| 1,577 |
| 1,561 |
| ||
Deferred tax liability, net |
| 89 |
| 96 |
| ||
Other liabilities |
| 267 |
| 257 |
| ||
TOTAL NON-CURRENT LIABILITIES |
| 1,958 |
| 1,939 |
| ||
|
|
|
|
|
| ||
Commitments and contingencies |
|
|
|
|
|
8
|
| December 31, 2005 |
| September 30, 2005 (a) |
| ||
STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
Series A junior participating preferred stock, par value $1.00 per share, 7.5 million shares authorized; none issued and outstanding |
| — |
| — |
| ||
Common stock, par value $0.01 per share, 1.5 billion shares authorized, 469,845,994 and 471,328,963 issued (including 274,192 and 207,053 treasury shares) as of December 31, 2005 and September 30, 2005, respectively |
| 5 |
| 5 |
| ||
Additional paid-in capital |
| 2,821 |
| 2,895 |
| ||
Retained earnings (accumulated deficit) |
| 18 |
| (53 | ) | ||
Accumulated other comprehensive loss |
| (905 | ) | (883 | ) | ||
Less treasury stock at cost |
| (4 | ) | (3 | ) | ||
TOTAL STOCKHOLDERS’ EQUITY |
| 1,935 |
| 1,961 |
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 5,078 |
| $ | 5,219 |
|
Notes to the Balance Sheets:
(a) Certain prior year amounts have been reclassified to conform to the current period presentation.
(b) Intangible assets include $216 million related to Tenovis and $33 million related to Spectel as of December 31, 2005.
(c) Goodwill includes $549 million related to Tenovis, $65 million related to Spectel and $29 million related to Nimcat as of December 31, 2005.
9
Avaya Inc. and Subsidiaries
Operating Segments
Revenue and Operating Income from Continuing Operations
Quarterly Trend
(Unaudited; Dollars in Millions)
REVENUE
|
| For the Fiscal Year Ended |
| For the Fiscal Year Ended |
| ||||||||||||||||||||||||||
|
| Q1 |
| Q2 |
| Q3 |
| Q4 |
| YTD |
| Q1 |
| Q2 |
| Q3 |
| Q4 |
| YTD |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Global Communications Solutions |
| $ | 592 |
| $ | 625 |
| $ | 648 |
| $ | 707 |
| $ | 2,572 |
| $ | 661 |
|
|
|
|
|
|
| $ | 661 |
| |||
Avaya Global Services |
| 556 |
| 597 |
| 588 |
| 589 |
| 2,330 |
| 588 |
|
|
|
|
|
|
| 588 |
| ||||||||||
Corporate |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
|
|
|
|
| — |
| ||||||||||
Total Avaya |
| $ | 1,148 |
| $ | 1,222 |
| $ | 1,236 |
| $ | 1,296 |
| $ | 4,902 |
| $ | 1,249 |
| $ | — |
| $ | — |
| $ | — |
| $ | 1,249 |
|
OPERATING INCOME FROM CONTINUING OPERATIONS
|
| For the Fiscal Year Ended |
| For the Fiscal Year Ended |
| ||||||||||||||||||||||||||
|
| Q1 |
| Q2 |
| Q3 |
| Q4 |
| YTD |
| Q1 |
| Q2 |
| Q3 |
| Q4 |
| YTD |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Global Communications Solutions |
| $ | 25 |
| $ | (12 | ) | $ | 1 |
| $ | 43 |
| $ | 57 |
| $ | 43 |
|
|
|
|
|
|
| $ | 43 |
| |||
Avaya Global Services |
| 56 |
| 27 |
| 37 |
| 46 |
| 166 |
| 60 |
|
|
|
|
|
|
| 60 |
| ||||||||||
Corporate (A) |
| 7 |
| 37 |
| 38 |
| (7 | ) | 75 |
| 4 |
|
|
|
|
|
|
| 4 |
| ||||||||||
Total Avaya |
| $ | 88 |
| $ | 52 |
| $ | 76 |
| $ | 82 |
| $ | 298 |
| $ | 107 |
| $ | — |
| $ | — |
| $ | — |
| $ | 107 |
|
(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.
10
Avaya Inc. and Subsidiaries
Condensed Statements of Cash Flows
For the Three Months Ended December 31, 2005 and 2004
(Unaudited; Dollars in Millions)
|
| For the three months ended |
| For the three months ended |
| ||
|
|
|
|
|
| ||
Net cash provided by (used in) operating activities of continuing operations |
| $ | 106 |
| $ | (36 | ) |
|
|
|
|
|
| ||
Net cash (used in) investing activities of continuing operations |
| (42 | )(a) | (400 | )(a) | ||
|
|
|
|
|
| ||
Net cash (used in) financing activities of continuing operations |
| (84 | )(b) | (288 | )(b) | ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash and cash equivalents |
| (4 | ) | 18 |
| ||
|
|
|
|
|
| ||
Net decrease in cash and cash equivalents |
| (24 | ) | (706 | ) | ||
|
|
|
|
|
| ||
Cash and cash equivalents at beginning of fiscal year |
| 750 |
| 1,617 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents at end of period |
| $ | 726 |
| $ | 911 |
|
(a) Includes capital expenditures of $26 and $22 and capitalized software development costs of $18 and $14 for the three months ended December 31, 2005 and 2004, respectively. Includes $383 relating to acquisition of businesses, net of cash acquired for the three months ended December 31, 2004.
(b) Includes $90 related to the repurchase of common stock for the three months ended December 31, 2005 and $314 related to the repurchase of the senior secured notes for the three months ended December 31, 2004.
11
Avaya Inc. and Subsidiaries
Supplemental Revenue Tables
(Unaudited, Dollars in Millions)
Revenue by Geography
|
|
|
|
|
|
|
|
|
| First Fiscal Quarter |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mix |
|
|
|
|
| |||||||||
1Q05 |
| 2Q05 |
| 3Q05 |
| 4Q05 |
| Dollars in millions |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| Change |
| |||||||||
$ | 734 |
| $ | 689 |
| $ | 717 |
| $ | 768 |
| U.S. |
| $ | 734 |
| $ | 734 |
| 59 | % | 64 | % | $ | — |
| 0.0 | % |
|
|
|
|
|
|
|
| Outside the U.S: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
278 |
| 387 |
| 377 |
| 378 |
| EMEA - Europe/Middle East/Africa |
| 364 |
| 278 |
| 29 | % | 24 | % | 86 |
| 30.9 | % | |||||||
74 |
| 89 |
| 83 |
| 90 |
| APAC - Asia Pacific |
| 87 |
| 74 |
| 7 | % | 6 | % | 13 |
| 17.6 | % | |||||||
62 |
| 57 |
| 59 |
| 60 |
| Americas, non-U.S. |
| 64 |
| 62 |
| 5 | % | 6 | % | 2 |
| 3.2 | % | |||||||
414 |
| 533 |
| 519 |
| 528 |
| Total outside the U.S. |
| 515 |
| 414 |
| 41 | % | 36 | % | 101 |
| 24.4 | % | |||||||
$ | 1,148 |
| $ | 1,222 |
| $ | 1,236 |
| $ | 1,296 |
| Total revenue |
| $ | 1,249 |
| $ | 1,148 |
| 100 | % | 100 | % | $ | 101 |
| 8.8 | % |
Revenue by Type
|
|
|
|
|
|
|
|
|
| First Fiscal Quarter |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mix |
|
|
|
|
| |||||||||
1Q05 |
| 2Q05 |
| 3Q05 |
| 4Q05 |
| Dollars in millions |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| Change |
| |||||||||
$ | 554 |
| $ | 543 |
| $ | 566 |
| $ | 631 |
| Sales of products |
| $ | 591 |
| $ | 554 |
| 47 | % | 48 | % | $ | 37 |
| 6.7 | % |
477 |
| 498 |
| 497 |
| 499 |
| Services |
| 501 |
| 477 |
| 40 | % | 42 | % | 24 |
| 5.0 | % | |||||||
117 |
| 181 |
| 173 |
| 166 |
| Rental and managed services* |
| 157 |
| 117 |
| 13 | % | 10 | % | 40 |
| 34.2 | % | |||||||
$ | 1,148 |
| $ | 1,222 |
| $ | 1,236 |
| $ | 1,296 |
| Total revenue |
| $ | 1,249 |
| $ | 1,148 |
| 100 | % | 100 | % | $ | 101 |
| 8.8 | % |
Sales of Products by Channel
|
|
|
|
|
|
|
|
|
| First Fiscal Quarter |
| |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mix |
|
|
|
|
| |||||||||
1Q05 |
| 2Q05 |
| 3Q05 |
| 4Q05 |
| Dollars in millions |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| Change |
| |||||||||
$ | 261 |
| $ | 265 |
| $ | 279 |
| $ | 322 |
| Direct |
| $ | 268 |
| $ | 261 |
| 45 | % | 47 | % | $ | 7 |
| 2.7 | % |
293 |
| 278 |
| 287 |
| 309 |
| Indirect |
| 323 |
| 293 |
| 55 | % | 53 | % | 30 |
| 10.2 | % | |||||||
$ | 554 |
| $ | 543 |
| $ | 566 |
| $ | 631 |
| Total sales of products |
| $ | 591 |
| $ | 554 |
| 100 | % | 100 | % | $ | 37 |
| 6.7 | % |
*: 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.
12
GCS Revenue by Class
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| First Fiscal Quarter |
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| Mix |
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1Q05 |
| 2Q05 |
| 3Q05 |
| 4Q05 |
| Dollars in millions |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| Change |
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$ | 354 |
| $ | 393 |
| $ | 393 |
| $ | 445 |
| Large Communications Systems |
| $ | 413 |
| $ | 354 |
| 63 | % | 60 | % | $ | 59 |
| 16.7 | % |
69 |
| 78 |
| 93 |
| 91 |
| Small Communications Systems |
| 88 |
| 69 |
| 13 | % | 12 | % | 19 |
| 27.5 | % | |||||||
150 |
| 145 |
| 151 |
| 164 |
| Converged Voice Applications |
| 151 |
| 150 |
| 23 | % | 25 | % | 1 |
| 0.7 | % | |||||||
19 |
| 9 |
| 11 |
| 7 |
| Other |
| 9 |
| 19 |
| 1 | % | 3 | % | (10 | ) | -52.6 | % | |||||||
$ | 592 |
| $ | 625 |
| $ | 648 |
| $ | 707 |
| Total revenue - GCS |
| $ | 661 |
| $ | 592 |
| 100 | % | 100 | % | $ | 69 |
| 11.7 | % |
AGS Revenue by Class
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| First Fiscal Quarter |
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| Mix |
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1Q05 |
| 2Q05 |
| 3Q05 |
| 4Q05 |
| Dollars in millions |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| Change |
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$ | 371 |
| $ | 372 |
| $ | 378 |
| $ | 370 |
| Maintenance |
| $ | 380 |
| $ | 371 |
| 65 | % | 67 | % | $ | 9 |
| 2.4 | % |
103 |
| 122 |
| 117 |
| 125 |
| Implementation and integration services |
| 123 |
| 103 |
| 21 | % | 18 | % | 20 |
| 19.4 | % | |||||||
79 |
| 96 |
| 88 |
| 87 |
| Managed services |
| 85 |
| 79 |
| 14 | % | 14 | % | 6 |
| 7.6 | % | |||||||
3 |
| 7 |
| 5 |
| 7 |
| Other |
| — |
| 3 |
| 0 | % | 1 | % | (3 | ) | -100.0 | % | |||||||
$ | 556 |
| $ | 597 |
| $ | 588 |
| $ | 589 |
| Total revenue - AGS |
| $ | 588 |
| $ | 556 |
| 100 | % | 100 | % | $ | 32 |
| 5.8 | % |
13