EX-99.2 3 d535949dex992.htm EX-99.2 EX-99.2
May 9, 2013
Avaya Q2 2013 Earnings Call
Exhibit 99.2

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2013 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 and our
Form 10-Q filed with the SEC on February 8, 2013. 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
May 9, 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.

©
2013 Avaya –
Proprietary. Use pursuant to your signed agreement or Avaya policy.
3
Fiscal Q2 2013 Financial Highlights
(Amounts other than Revenue and Cash Balance are non-GAAP unless specified)
Revenue of $1.12 billion declined 9.8% over the prior quarter
–
Revenue decrease comprised of:
–
Product revenue a 16.2% decline; Service revenue a 3.3% decline
Gross margin declined over the prior quarter to 53.7%
Operating income of $113 million
–
Operating margin of 10.1%
Adjusted EBITDA  of $172 million or 15.4% of revenue
Cash and cash equivalents balance of $302 million as of 3/31/13

©
2013 Avaya –
Proprietary. Use pursuant to your signed agreement or Avaya policy.
4
Income Statement
(Amounts non-GAAP (other than Revenue) and dollars in millions)
FQ2 2013
FQ1 2013
FQ2 2012
Revenue
$1,118
$1,240
$1,257
Gross Margin
53.7%
55.6%
52.8%
Operating Margin
10.1%
15.6%
11.0%
Adjusted EBITDA
$172
$251
$200
* For reconciliation of adjusted EBITDA for the first quarter of 2013 see our
Form 8-K filed with the SEC on February 5,2013 at www.sec.gov.
.

©
2013 Avaya –
Proprietary. Use pursuant to your signed agreement or Avaya policy.
5
Revenue by Geographic Region
(Amounts GAAP and dollars in millions)
FQ2 2013
FQ1 2013
FQ2 2012
Revenue
U.S.
$592
$670
$678
EMEA
$298
$331
$327
APAC
$116
$123
$117
AI
$112
$116
$135
Total
$1,118
$1,240
$1,257
% of Total Revenue
U.S.
53.0%
54.0%
53.9%
EMEA
26.7%
26.7%
26.0%
APAC
10.3%
9.9%
9.3%
AI
10.0%
9.4%
10.7%
Total
100.0%
100.0%
100.0%

©
2013 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)
FQ2 2013
FQ1 2013
FQ2 2012
Total Cash and Cash
Equivalents
$302
$285
$355
Cash from Operations
$82
$6
$41
Capital Expenditures and
Capitalized Software
$27
$30
$31
Days Sales Outstanding
55
55
53
Inventory Turns
8
9
9
Headcount
15,953
16,393
18,025

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2013 Avaya –
Proprietary. Use pursuant to your signed agreement or Avaya policy.
7
Adjusted EBITDA Reconciliation
2013
2012
2013
2012
Net loss
(192)
$           
(162)
$           
(277)
$           
(188)
$           
Interest expense
116
               
108
               
224
               
217
               
Interest income
-
                
(1)
                  
(1)
                  
(2)
                  
Provision for (benefit from) income taxes
3
                   
(24)
                
(6)
                  
(26)
                
Depreciation and amortization
107
               
143
               
221
               
286
               
34
                 
64
                 
161
               
287
               
Impact of purchase accounting adjustments
-
                
1
                   
-
                
1
                   
Restructuring charges, net
18
                 
90
                 
102
               
111
               
Sponsors' fees
2
                   
2
                   
4
                   
4
                   
Acquisition-related costs
-
                
2
                   
-
                
3
                   
Integration-related costs
5
                   
3
                   
9
                   
8
                   
Loss on extinguishment of debt
3
                   
-
                
6
                   
-
                
Third-party fees expensed in connection with the debt modification
14
                 
-
                
18
                 
-
                
Non-cash share-based compensation
1
                   
2
                   
3
                   
5
                   
Loss on investments and sale of long-lived assets, net
-
                
2
                   
-
                
3
                   
Goodwill impairment
89
                 
-
                
89
                 
-
                
Venezuela hyperinflationary and devaluation charges
1
                   
-
                
1
                   
-
                
(Gain) loss on foreign currency transactions
(17)
                
11
                 
(15)
                
12
                 
Pension/OPEB/nonretirement postemployment benefits and
  long-term disability costs
22
                 
23
                 
45
                 
45
                 
Adjusted EBITDA
172
$             
200
$             
423
$             
479
$             
Avaya Inc.
Supplemental Schedule of Non-GAAP Adjusted EBITDA
(Unaudited; in millions)
EBITDA
For the three months ended
March 31,
For the six months ended
March 31,

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2013 Avaya –
Proprietary. Use pursuant to your signed agreement or Avaya policy.
8
Non-GAAP Reconciliation
Mar. 31,
June 30
Sept. 30,
Dec. 31
Mar. 31
2012
2012
2012
2012
2013
GAAP Gross Profit
613
$     
623
$     
646
$     
666
$     
586
$     
GAAP Gross Margin
48.8%
49.8%
50.6%
53.7%
52.4%
Items excluded:
Amortization of technology intangible assets
49
         
47
         
46
         
22
         
14
         
Impairment of capitalized software development costs
-
       
2
           
4
           
-
       
-
       
Share-based compensation
1
           
1
           
1
           
1
           
-
       
Purchase accounting adjustments
1
           
1
           
1
           
-
       
-
       
Non-GAAP Gross Profit
664
$     
674
$     
698
$     
689
$     
600
$     
Non-GAAP Gross Margin
52.8%
53.9%
54.7%
55.6%
53.7%
Reconciliation of Non-GAAP Operating Income
GAAP Operating (Loss) Income
(66)
$     
23
$       
76
$       
23
$       
(72)
$     
Percentage of Revenue
-5%
2%
6%
2%
-6%
Items excluded:
Amortization of acquired assets
105
       
104
       
103
       
79
         
71
         
Restructuring and impairment charges, net
90
         
21
         
15
         
84
         
18
         
Acquisition/integration-related costs
6
           
6
           
6
           
5
           
6
           
Share-based compensation
2
           
2
           
1
           
2
           
1
           
Impairment of capitalized software development costs
-
       
2
           
4
           
-
       
-
       
Goodwill impairment
-
       
-
       
-
       
-
       
89
         
Purchase accounting adjustments
1
           
1
           
1
           
-
       
-
       
Non-GAAP Operating Income
138
$     
159
$     
206
$     
193
$     
113
$     
Percentage of Revenue
11.0%
12.7%
16.1%
15.6%
10.1%
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