EX-99.1 2 a05-6930_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

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[LOGO]

 

Q2 FY2005
Earnings Conference Call

 

April 19, 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).

 

2



 

Building Shareholder Value

 

Profitable Growth

 

Strategic Differentiation

 

Global Reach

 

Financial Strength

 

Operating Leverage

 

Technology Transition

 

3



 

Q2 FY2005 Results

Financial Summary

 

                  Revenues grew 21% year over year including the impact of acquisitions

 

                        Product sales up 9.7%

 

                        Rental and managed services up $115M

 

                        Services up 11.9%

 

                  Tenovis revenue was $237M for the quarter

 

                        Excluding Tenovis revenue was $985M, down 2% year over year

 

                  Gross margin was 46.1%, down .7 from a year ago and 1.2 sequentially

 

                  Operating income declined from $60M to $52M including Tenovis dilution of $28M

 

                  Operating margin was 4.3%

 

                  Cash position remained strong at $855M

 

                  Debt decreased by $180M to $188M

 

4



 

Revenue

Quarterly trend

 

[CHART]

 

5



 

Gross and Operating Margins

 

Gross Margin ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

($)

 

 

471

 

488

 

538

 

543

 

563

 

%

 

 

46.8

%

48.0

%

50.0

%

47.3

%

46.1

%

 

Operating Income ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

($)

 

 

60

 

92

 

119

 

88

 

52

 

%

 

 

6.0

%

9.1

%

11.1

%

7.7

%

4.3

%

 

6



 

Segment Results

Global Communications Solutions

 

Revenue ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

Revenue

 

 

493

 

506

 

565

 

592

 

625

 

 

Q2 FY05 Segment Highlights

 

            Revenue increased 26.8% vs. a year ago, largely attributed to Tenovis

 

            Excluding Tenovis sales were flat vs. a year ago

 

            Gross margins improved due to greater efficiencies in manufacturing and higher percentage of software in product

 

            Operating losses reported primarily due to the dilutive impact of Tenovis

 

Operating Income (Loss) ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

($)

 

 

(3

)

17

 

55

 

25

 

(12

)

%

 

 

(0.6

)%

3.4

%

9.7

%

4.2

%

(1.9

)%

 

7



 

Avaya Global Services

 

Revenue ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

Revenue

 

 

511

 

510

 

511

 

556

 

597

 

 

Q2 FY05 Segment Highlights

 

                  Revenue increased 16.8% vs. a year ago, attributed to Tenovis

 

                  Maintenance, implementation and integration and rental and managed services increased year over year

 

                  U.S. service revenue declined

 

                  Operating margin was down due to the decrease in U.S. revenue and higher fixed costs in the U.S. coupled with the dilution from Tenovis

 

Operating Income ($M)

 

[CHART]

 

 

 

Q2 FY04

 

Q3 FY04

 

Q4 FY04

 

Q1 FY05

 

Q2 FY05

 

($)

 

 

63

 

68

 

65

 

56

 

27

 

%

 

 

12.3

%

13.3

%

12.7

%

10.1

%

4.5

%

 

8



 

Cash Flows

Six Months Ended March 31, 2005

 

 

 

($ in millions)

 

 

 

 

 

Net Cash Provided by Operating Activities

 

$

60

 

 

 

 

 

Net Cash Used in Investing Activities

 

(450

)

 

 

 

 

Net Cash Used in Financing Activities

 

(380

)

 

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

8

 

 

 

 

 

Net Decrease in Cash and Cash Equivalents

 

(762

)

 

 

 

 

Cash and Cash Equivalents as of 9/30/04

 

1,617

 

 

 

 

 

Cash and Cash Equivalents as of 3/31/05

 

$

855

 

 

9



 

Balance Sheet

Cash

 

[CHART]

 

10



 

Debt

 

[CHART]

 

11



 

Net Cash*

 

[CHART]

 

Strong Net Cash Position

 

                  Decrease of only $120 million year over year

 

                  Significantly paid down debt

 

                  Cash outlay for acquisitions of $409M, net of cash in those business

 


*                 Net Cash is defined as cash and cash equivalents less total debt. At 3/31/05 this amount is calculated as cash and cash equivalents of $855M less total debt of $188M

 

12



 

Days Sales Outstanding

 

DSO (1-point Method)

 

[CHART]

 

13



 

[LOGO]

 

Q2 FY2005
Earnings Conference Call

 

April 19, 2005

 



 

[LOGO]

 

Supplemental
Information

 



 

[LOGO]

 

Reconciliations for Comparative Purposes

 

(in $ millions)

 

Six Months Ended

 

 

 

Three Months Ended

 

 

 

Three Months Ended

 

 

 

March 31,

 

%

 

March 31,

 

%

 

March 31,

 

December 31,

 

%

2005

 

2004

 

Growth

 

2005

 

2004

 

Growth

 

2005

 

2004

 

Growth

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

$

2,370

 

$

1,977

 

20

%

$

1,222

 

$

1,006

 

21

%

$

1,222

 

$

1,148

 

6.0

%

Tenovis

 

361

 

 

18

%

237

 

 

24

%

237

 

124

 

 

Excluding Tenovis

 

$

2,009

 

$

1,977

 

2

%

$

985

 

$

1,006

 

(2

)%

$

985

 

$

1,024

 

(4.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

$

140

 

$

112

 

25

%

$

52

 

$

60

 

(13

)%

 

 

 

 

 

 

Tenovis

 

(35

)

 

(31

)%

(28

)

 

(47

)%

 

 

 

 

 

 

Excluding Tenovis

 

$

175

 

$

112

 

56

%

$

80

 

$

60

 

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

5.9

%

5.7

%

 

 

4.3

%

6.0

%

 

 

 

 

 

 

 

 

Tenovis

 

(9.7

)%

 

 

 

(11.8

)%

 

 

 

 

 

 

 

 

 

Excluding Tenovis

 

8.7

%

5.7

%

 

 

8.1

%

6.0

%

 

 

 

 

 

 

 

 

 

16



 

 

 

Three Months Ended
March 31,

 

 

 

2005

 

2004

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

As Reported

 

$

0.07

 

$

0.22

 

 

 

 

 

 

 

Less: Results of Tenovis Operations

 

(0.06

)

 

 

 

 

 

 

 

Favorable Settlement of Certain Tax Matters

 

 

0.19

 

 

 

 

 

 

 

Loss on Senior Secured Notes Extinguishment

 

 

(0.05

)

 

 

 

 

 

 

Loss on Sale of CommScope Common Shares

 

 

(0.01

)

 

 

$

0.13

 

$

0.09

 

 

17