![]() February 5, 2013 Avaya Q1 2013 Earnings Call The Power of We ™ Exhibit 99.2 |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 2 Forward - Looking Statements Certain statements contained in this presentation are forward-looking statements, including statements regarding our future financial and operating performance, as well as statements regarding our future growth plans and drivers. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will" or other similar terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a list and description of such risks and uncertainties, please refer to our filings with the SEC that are available at www.sec.gov and in particular, our 2012 Form 10-K. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation should be read in conjunction with our Form 8-K filed with the SEC on February 5, 2013. Within this presentation, we refer to certain non-GAAP financial measures that involve adjustments to GAAP measures. A reconciliation between our non-GAAP financial measures and GAAP financial measures is included on the last two slides of this presentation, which will be available on our web site at www.avaya.com/investors. |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 3 Fiscal Q1 2013 Financial Highlights (Amounts other than Revenue and Cash Balance are non-GAAP unless specified) Revenue of $1.24 billion declined 2.9% over the prior quarter – Revenue decrease comprised of: – Product revenue a 3.2% decline; Service revenue a 2.6% decline – U.S. Federal Government sector of approximately 60% of revenue decline; Americas International of approximately 38% of revenue decline Gross margin improved over the prior quarter to a record 55.6% Operating income of $193 million – Operating margin 15.6% Adjusted EBITDA of $251 million or 20.2% of revenue Cash balance of $285 million |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 4 Income Statement (Amounts non-GAAP (other than Revenue) and dollars in millions) FQ1 2013 FQ4 2012 FQ1 2012 Revenue $1,240 $1,277 $1,387 Gross Margin 55.6% 54.7% 54.4% Operating Margin 15.6% 16.1% 15.7% Adjusted EBITDA $251 $267* $279 * For reconciliation of adjusted EBITDA for the fourth quarter of 2012 see our Form 8-K filed with the SEC on December 11,2012 at www.sec.gov. |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 5 Revenue by Geographic Region (Amounts GAAP and dollars in millions) FQ1 2013 FQ4 2012 FQ1 2012 Revenue U.S. $670 $694 $748 EMEA $331 $327 $365 APAC $123 $126 $126 AI $116 $130 $148 Total $1,240 $1,277 $1,387 % of Total Revenue U.S. 54.0% 54.3% 53.9% EMEA 26.7% 25.6% 26.3% APAC 9.9% 9.9% 9.1% AI 9.4% 10.2% 10.7% Total 100.0% 100.0% 100.0% |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 6 Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ1 2013 FQ4 2012 FQ1 2012 Total Cash and Cash Equivalents $285 $337 $345 Cash from Operations 6 104 (10) Capital Expenditures and Capitalized Software $30 $37 $26 Days Sales Outstanding 55 55 49 Inventory Turns 9 10 10 Headcount 16,393 16,951 18,192 |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 7 Adjusted EBITDA Reconciliation 2012 2011 Net loss (85) $ (26) $ Interest expense 108 109 Interest income (1) (1) Benefit from income taxes (9) (2) Depreciation and amortization 114 143 127 223 Restructuring charges, net 84 21 Sponsors' fees 2 2 Acquisition-related costs - 1 Integration-related costs 4 5 Loss on extinguishment of debt 3 - Third-party fees expensed in connection with the debt modification 4 - Non-cash share-based compensation 2 3 Loss on investments and sale of long-lived assets, net - 1 Loss on foreign currency transactions 2 1 Pension/OPEB/nonretirement postemployment benefits and long-term disability costs 23 22 Adjusted EBITDA 251 $ 279 $ EBITDA For the three months ended December 31, |
![]() © 2012 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 8 Non-GAAP Reconciliation Dec. 31 Mar. 31, June 30 Sept. 30, Dec. 31 2011 2012 2012 2012 2012 GAAP Gross Profit 704 $ 613 $ 623 $ 646 $ 666 $ GAAP Gross Margin 50.8% 48.8% 49.8% 50.6% 53.7% Items excluded: Amortization of technology intangible assets 50 49 47 46 22 Impairment of capitalized software development costs - - 2 4 - Share-based compensation 1 1 1 1 1 Purchase accounting adjustments - 1 1 1 - Non-GAAP Gross Profit 755 $ 664 $ 674 $ 698 $ 689 $ Non-GAAP Gross Margin 54.4% 52.8% 53.9% 54.7% 55.6% Reconciliation of Non-GAAP Operating Income GAAP Operating Income (Loss) 82 $ (66) $ 23 $ 76 $ 23 $ Percentage of Revenue 6% -5% 2% 6% 2% Items excluded: Amortization of acquired assets 106 105 104 103 79 Restructuring and impairment charges, net 21 90 21 15 84 Acquisition/integration-related costs 6 6 6 6 5 Share-based compensation 3 2 2 1 2 Impairment of capitalized software development costs - - 2 4 - Purchase accounting adjustments - 1 1 1 - Non-GAAP Operating Income 218 $ 138 $ 159 $ 206 $ 193 $ Percentage of Revenue 15.7% 11.0% 12.7% 16.1% 15.6% Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin Avaya Inc. Supplemental Schedules of Non-GAAP Reconciliations (Unaudited; in millions) For the Three Months Ended |