The Power of We

™

Aug 8, 2013  

Avaya Q3 2013 Earnings Call

Exhibit 99.2

©

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 May 10, 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 Aug 8,

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.

3

©

2013 Avaya –

Proprietary. Use pursuant to your signed agreement or Avaya policy.

Fiscal Q3 2013 Financial Highlights

(Amounts other than Revenue and Cash Balance are non-GAAP unless specified)

Revenue of $1.15 billion increased 2.9% over the prior quarter

–

Revenue increase comprised of:

–

Product revenue a 5.9% increase; Service revenue a 0.2% increase

–

Product Book-to-Bill was greater than 1.0

Gross margin increased over the prior quarter to a record of 56.0%

Operating income of $171 million

–

Operating margin of 14.9%

Adjusted EBITDA  of $225 million or 19.5% of revenue

Cash and cash equivalents balance of $271 million as of 6/30/13

©

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)

FQ3 2013

FQ2 2013

FQ3 2012

Revenue

$1,150

$1,118

$1,250

Gross Margin

56.0%

53.7%

53.9%

Operating Margin

14.9%

10.1%

12.7%

Adjusted EBITDA

$225

$172

$225

* For reconciliation of adjusted EBITDA for the second quarter of 2013 see our

Form 10-Q filed with the SEC on May 10, 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)

FQ3 2013

FQ2 2013

FQ3 2012

Revenue

U.S.

$639

$592

$666

EMEA

$297

$298

$330

APAC

$105

$116

$128

AI

$109

$112

$126

Total

$1,150

$1,118

$1,250

% of Total Revenue

U.S.

55.6%

53.0%

53.3%

EMEA

25.8%

26.7%

26.4%

APAC

9.1%

10.3%

10.2%

AI

9.5%

10.0%

10.1%

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)

FQ3 2013

FQ2 2013

FQ3 2012

Total Cash and Cash

Equivalents

$271

$302

$271

Cash from Operations

$11

$82

($91)

Capital Expenditures and

Capitalized Software

$33

$27

$33

Days Sales Outstanding

52

55

52

Inventory Turns

8

8

9

Headcount

15,431

15,953

17,773

©

2013 Avaya –

Proprietary. Use pursuant to your signed agreement or Avaya policy.

7

Adjusted EBITDA Reconciliation

2013

2012

2013

2012

Net loss

(110)

$           

(166)

$           

(387)

$           

(354)

$           

Interest expense

122

107

346

324

Interest income

(1)

(1)

(2)

(3)

(Benefit from) provision for income taxes

(3)

88

(9)

62

Depreciation and amortization

110

140

331

426

118

168

279

455

Impact of purchase accounting adjustments

1

1

1

2

Restructuring charges, net

63

17

165

128

Sponsors' fees

1

1

5

5

Acquisition-related costs

1

1

1

4

Integration-related costs

3

6

12

14

Loss on extinguishment of debt

-

-

6

-

Third-party fees expensed in connection with the debt modification

-

-

18

-

Non-cash share-based compensation

4

2

7

7

Write-down of assets held for sale to net realizable value

-

4

-

4

(Gain) loss on investments and sale of long-lived assets, net

(1)

-

(1)

3

Goodwill impairment

-

-

89

-

Impairment of long-lived assets

1

2

1

2

Venezuela hyperinflationary and devaluation charges

-

-

1

-

Resolution of legal matters

10

-

10

-

Loss (gain) on foreign currency transactions

5

(5)

(10)

7

Pension/OPEB/nonretirement postemployment benefits and

  long-term disability costs

19

28

64

73

Adjusted EBITDA

225

$             

225

$             

648

$             

704

$             

Avaya Inc.

Supplemental Schedule of Non-GAAP Adjusted EBITDA

(Unaudited; in millions)

EBITDA

For the three months ended

June 30,

For the nine months ended

June 30,

©

2013 Avaya –

Proprietary. Use pursuant to your signed agreement or Avaya policy.

8

Non-GAAP Reconciliation

June 30,

Sept. 30,

Dec. 31,

Mar. 31,

June 30,

2012

2012

2012

2013

2013

GAAP Gross Profit

$    

$    

$    

$    

$    

GAAP Gross Margin

Items excluded:

Amortization of technology intangible assets

Impairment of capitalized software development costs

-

-

Share-based compensation

-

Purchase accounting adjustments

-

-

Non-GAAP Gross Profit

$    

$    

$    

$    

$    

Non-GAAP Gross Margin

Reconciliation of Non-GAAP Operating Income

GAAP Operating Income (Loss)

$      

$      

$      

$    

$      

Percentage of Revenue

Items excluded:

Amortization of acquired assets

Restructuring and impairment charges, net

Acquisition/integration-related costs

Share-based compensation

Impairment of capitalized software development costs

-

-

Incremental accelerated depreciation

-

-

-

-

Goodwill impairment

-

-

-

-

Resolution of legal matters

-

-

-

-

Purchase accounting adjustments

-

-

Non-GAAP Operating Income

$    

$    

$    

$    

$    

Percentage of Revenue

Reconciliation of Non-GAAP Gross Profit

and Non-GAAP Gross Margin

For the Three Months Ended

49.8%

47

2

1

674

53.9%

2%

104

21

6

2

2

1

159

12.7%

623

1

23

646

50.6%

46

4

1

698

76

1

54.7%

6%

103

15

6

1

4

1

206

16.1%

666

53.7%

689

55.6%

23

2%

79

84

193

15.6%

22

1

5

2

586

52.4%

600

53.7%

(72)

-6%

18

6

1

113

10.1%

14

71

89

56.0%

627

54.5%

13

644

14

1%

70

63

5

4

1

3

10

1

171

14.9%

1

2

1

Avaya Inc.

Supplemental Schedules of Non-GAAP Reconciliations

(Unaudited; in millions)