8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 2, 2005

AVAYA INC.

(Exact name of registrant as specified in its charter)

Delaware	1-15951	22-3713430
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
211 Mount Airy Road
Basking Ridge, NJ		07920
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (908) 953-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01.  Regulation FD Disclosure

In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Forward Looking Statements

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

Certain information set forth in this Form 8-K (other than historical data and information) may constitute forward-looking statements.   Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, Avaya Inc. (“Avaya” or the “Company”) also may provide oral or written forward-looking statements in other materials we release to the public.

Any or all of our forward-looking statements in this Form 8-K and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed and you are cautioned not to place undue reliance on these forward-looking statements. Actual future results may vary materially.

Except as may be required under the federal securities laws, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-K, 10-Q and 8-K reports to the SEC. Also note that we provide the following cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses. These are factors that we think could cause our actual results to differ materially from expected and historical results. Other factors besides those listed here could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

The risks and uncertainties referred to above include, but are not limited to:

•price and product competition,

•rapid technological development,

•dependence on new product development,

•the mix of our products and services,

•customer demand for our products and services,

•risks related to inventory, including warranty costs, obsolescence

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charges, excess capacity and material and labor costs,

•the ability to successfully integrate acquired companies,

•the ability to attract and retain qualified employees,

•control of costs and expenses,

•the ability to form and implement alliances,

•the economic, political and other risks associated with international sales and operations,

•U.S. and non-U.S. government regulation, and

•general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations.

Supplemental Disclosure

On Wednesday, March 2, 2005, Avaya is providing a set of materials to analysts and investors that includes information about Avaya’s financial position.  In particular, Avaya is providing more detail on its revenue growth (slide 10).  Avaya is also providing additional information regarding expected fiscal year 2005 dilution associated with the acquisition of Tenovis (slide 13).  In addition, Avaya is providing an update on its fiscal 2005 goals (slide 14).  A copy of those materials is attached as Exhibit 99.1.

WEBCAST Information: Avaya will webcast Avaya’s portion of the research conference live, which will begin at approximately 11:10 AM EST, with a listen-only Q&A session.  To ensure that you are on the webcast, we suggest that you access our website (http://investors.avaya.com) 10-15 minutes prior to the start.  Following the live webcast, a replay will be available on our archives at the same web address.

Non-GAAP Financial Measure

The Regulation FD disclosure referenced above includes information related to “adjusted revenue,” which refers to Avaya’s historical reported revenue excluding the effects of certain of Avaya’s acquisitions and currency impact.  This financial measure is a non-GAAP financial measure.

A “non-GAAP financial measure” is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”).  Pursuant to the requirements of Regulation G, the Company has included above a comparison of such non-GAAP financial measure to the most directly comparable GAAP financial measure.

Management believes that the presentation of this financial measure helps investors understand the performance of Avaya’s core business from period to period.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.

Item 9.01. Financial Statements and Exhibits.

99.1                         JMP Securities Research Conference Presentation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AVAYA INC.
Date:  March 2, 2005	By:	/s/ Garry K. McGuire
		Name: Garry K. McGuire
		Title:  Chief Financial Officer and Senior Vice President, Corporate Development

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EX-99.1

Exhibit 99.1

Searchable text section of graphics shown above

AVAYA

[GRAPHIC]

Fourth Annual JMP Securities

Research Conference

March 2, 2005

[LOGO]

Forward Looking Statement

The use of words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “intends,” “future,” “potential,” or “continue,” the negative of these terms and other comparable terminology are intended to identify forward-looking statements.

These statements are only predictions based on our current expectations and projections about future events. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements.

In this regard, you should specifically consider the numerous risks outlined in our SEC filings.

Presentation

Unless indicated otherwise, all results are presented in accordance with United States generally accepted accounting principles (GAAP).

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Building Shareholder Value

[GRAPHIC]

Technology Transition

Strategic Differentiation

Global Reach

Financial Strength

Operating Leverage

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Avaya Strategy to Build Shareholder Value

Leverage Incumbency and Technology

[CHART]

Global Enterprise Telephony Installed Base Total Lines (M)

Technology Transition Drives Growth Opportunity

Source: Avaya analysis based on independent industry analyst reports

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Strategic Differentiation & Integrated Value Proposition

North America Telephony Base

[CHART]

•Clear focus on the enterprise

•Voice experience and expertise

•Significant installed base

•Global services organization

•Comprehensive applications portfolio

•Customer ROI

•Migration Choices

Source: Avaya analysis based on independent industry analyst reports

5

Tenovis Fills a Strategic Need for Avaya

EMEA Telephony Base

[CHART]

•Leading European incumbent vendor with significant size, scale and footprint

•Opportunity to upgrade installed base and win new customers

•Combination offers market presence throughout EMEA

•Strongly positioned to capture IP adoption growth opportunities as technology transition accelerates in EMEA

Source: Avaya analysis based on independent industry analyst reports

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AVAYA

[GRAPHIC]

FY2005 Update

Q1 FY2005 Results

Market Summary

•Maintained #1 position in market share in IP Telephony for the fourth consecutive quarter at 25%*

•Total large enterprise telephony line shipments rose by 9% over the year ago quarter

•Large enterprise IP line shipments were up more than 50% over the year ago quarter

•During the quarter we shipped our 5 millionth IP line

•Recent wins:

– U.S. – Merrill Lynch	– Mexico – Prosa
– U.K. – Honda	– Japan – Rakuten

* Based on Q3 CY04 market share data

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Q1 FY2005 Results

Financial Summary

•Revenues grew 18% quarter over quarter including the impact of acquisitions

•Product sales up 15%

•Rental and managed services up 60%

•Services up 15%

•Revenue from GCS segment up 23%

•International revenues were up 77.7% including acquisitions quarter over quarter

•Gross margin increased to 47.3% from 46.1%

•Operating income rose 70% from $52M to $88M

•Operating margin was 7.7% vs. 5.4%

•Strong cash position of $911M

•Debt decreased by $225M to $368M, which includes the $347M assumed from Tenovis at 11/18/04

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Q1 FY2005 Key Performance Drivers

Revenue Growth

•Business is growing organically

	Total Revenue						Product Sales
	Q1 FY04			Q1 FY05			Q1 FY04			Q1 FY05
Reported Revenue	$	971		$	1,148		$	482		$	554
Adjustments
Tenovis & Spectel				(129		)				(39		)
AGC*				(5		)				(2		)
Expanets*	(28		)	(22		)	(8		)	(0		)
Currency Impact				(12		)				(6		)
Adjusted Revenue**	949			974			474			507
Q/Q Change				2.6		%				7.0		%

 * Estimates

** Non-GAAP financial measure

10

Product Sales Growth

Rate of Growth Should Accelerate Throughout the Year

[CHART]

 * Product sales growth excluding acquisitions and currency impact (previous slide)

** Q4 FY04 excludes reversal of $8M of reserve for sales returns and allowances

11

Growing Product Gross Margins

[CHART]

* Q4 FY04 excludes the reversal of $8M of reserve for sales returns and allowances and $1M of associated costs

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FY2005 Tenovis EPS Impact

	Q1		Q2*		Q3*		Q4*	Total*
Tenovis EPS Impact	(0.014	)	(0.07	)	(0.03 – 0.04	)	0.02 – 0.03	(0.10	)

Significant Items

•Amortization of intangibles (non-cash)

•Integration expenses

•Vacation accruals

•Foreign currency impact

•Cost and revenue synergies

* Estimates

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Avaya FY05 Key Performance Drivers

	FY04 With Allocation Changes		Original FY05 Goals	Update
Total Revenue	4,055		Growth of approximately 25% to 27%	Growth of at least 28%
Gross Margin	46.8	%	Solid improvement for the year	No change
Operating Expense	39.1	%	Modest increase	No change
Operating Income	311		Growth of approximately 40%	No change
Operating Margin%	7.7	%	8.5% to 9%	No change

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Focused on Achieving Our Annual Goals

•Building momentum in key areas that drive our performance and ability to build value…

•The transition in the enterprise telephony market is moving ahead and is broadening into other key geographic areas.

•We’re well positioned in our core market and now have the scope and scale to compete more effectively in all regions around the world.

•We’re moving forward quickly with our plans to integrate Tenovis and to capture the potential it offers.

•We’re maintaining our leadership and managing our business to generate profitable growth.

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AVAYA

[GRAPHIC]

Fourth Annual JMP Securities

Research Conference

March 2, 2005