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Exhibit 99.1
AVAYA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND SEPTEMBER 30, 2002
(UNAUDITED; DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
12/31/2002 9/30/2002 (a)
----------- ----------
ASSETS
Cash and cash equivalents $651 $597
Receivables less allowances of $115 at December 31, 2002
and $121 at September 30, 2002 750 876
Inventory 432 467
Deferred income taxes, net 174 160
Other current assets 217 203
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TOTAL CURRENT ASSETS 2,224 2,303
----------- ----------
Property, plant and equipment, net 866 896
Deferred income taxes, net 352 372
Goodwill 145 144
Other assets 156 182
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TOTAL ASSETS $3,743 $3,897
=========== ==========
LIABILITIES
Accounts payable $290 $374
Current portion of long-term debt - -
Business restructuring reserve 129 170
Payroll and benefit obligations 309 309
Deferred revenue 96 91
Other current liabilities 375 380
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TOTAL CURRENT LIABILITIES 1,199 1,324
----------- ----------
Long-term debt (b) 934 933
Benefit obligations 1,104 1,110
Other liabilities 505 530
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TOTAL NONCURRENT LIABILITIES 2,543 2,573
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</Table>
Commitments and contingencies
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<Table>
<Caption>
12/31/2002 9/30/2002 (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,
366,785,024 and 364,752,178 issued (including 584,239 and 557,353
treasury
shares) as of December 31, 2002 and September 30, 2002,
respectively 4 4
Additional paid-in capital 1,708 1,693
Accumulated deficit (1,220) (1,182)
Accumulated other comprehensive loss (487) (512)
Less treasury stock at cost (4) (3)
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TOTAL STOCKHOLDERS' EQUITY 1 -
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,743 $3,897
=========== ==========
</Table>
NOTES TO THE BALANCE
SHEETS:
(a) Certain prior year amounts have been reclassed to conform to the fiscal 2003
presentation.
(b) On December 23, 2003 the Company commenced an offer to exchange up to 70%,
or $336 million of the net book value as of December 31, 2002, of its
outstanding LYONs. The offer will expire on Jan. 27, 2003, at 12:00 p.m.
midnight, EST.
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AVAYA INC. AND SUBSIDIARIES
THREE MONTH COMPARATIVE STATEMENTS OF OPERATIONS
(UNAUDITED; DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
2002 2001(a)
------------------------ -----------------------
REVENUE
Products $605.2 $758.4
Services 461.6 548.1
------------------------ -----------------------
1,066.8 1,306.5
------------------------ -----------------------
COST
Products 358.9 462.5
Services 284.7 327.0
------------------------ -----------------------
643.6 789.5
------------------------ -----------------------
GROSS MARGIN 423.2 517.0
------------------------ -----------------------
OPERATING EXPENSES
Selling, general and administrative 344.6 418.4
Business restructuring and related
charges 4.2 5.5
Research and development 92.9 120.0
------------------------ -----------------------
TOTAL OPERATING EXPENSES 441.7 543.9
------------------------ -----------------------
OPERATING INCOME (LOSS) (18.5) (26.9)
Other income (expense) - net 3.2 5.6
Interest expense (18.8) (8.7)
------------------------ -----------------------
INCOME (LOSS) BEFORE INCOME TAXES (34.1) (30.0)
Provision (benefit) for income taxes 3.5 (10.5)
------------------------ -----------------------
NET INCOME (LOSS) $(37.6) $(19.5)
======================== =======================
EARNINGS (LOSS) PER SHARE - BASIC
AND DILUTED $(0.10) $(0.09)
BASIC AND DILUTED SHARES 366 287
EFFECTIVE TAX RATE - Provision
(Benefit) NM (35.0%)
</Table>
NM=Not Meaningful
(a)Certain prior year amounts have been reclassified to conform to the fiscal
2003 presentation.
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AVAYA INC. AND SUBSIDIARIES
OPERATING SEGMENTS
STATEMENTS OF REVENUE
(UNAUDITED; DOLLARS IN MILLIONS)
<Table>
<Caption>
REVENUE
FOR THE THREE MONTHS
FOR THE FISCAL YEAR ENDED ENDED
SEPTEMBER 30, 2002 (A) DECEMBER 31, 2002
-------------------------------------------------------------------
Q1 Q2 Q3 Q4 YTD Q1
-------------------------------------------------------------------
Converged Systems & Applications $563 $547 $492 $478 $2,080 $428
Small & Medium Business Solutions 59 59 58 60 236 56
Services 548 530 505 485 2,068 462
Connectivity 136 143 164 129 572 121
------- ------ ------ ------ ------ -----------------------
Total Avaya $1,306 $1,279 $1,219 $1,152 $4,956 $1,067
======= ====== ====== ====== ====== =======================
</Table>
(A) Certain prior year amounts have been reclassified to conform to the
fiscal 2003 presentation.
Notes:
- Converged Systems & Applications - Includes all enterprise telephony
products (ECLIPS and Definity families), VPNs and Data LAN & WAN equipment
and related Applications software.
- Small & Medium Business Solutions - Includes SME telephony products.
- Services - Includes Managed Services, Data Services, Outtasking,
Value Added Services, Network Consulting and Implementation.
- Connectivity - Includes Structured Cabling (SYSTIMAX-Registered
Trademark- & ExchangeMAX-Registered Trademark-) and Electronic Cabinets.