Non-GAAP operating income excludes the amortization of technology intangible assets, restructuring and impairment charges, acquisition and integration related costs, share based compensation, impairment of long lived assets and purchase accounting adjustments. We have included Non-GAAP operating income because we believe it provides additional useful information to investors regarding our operations by excluding those charges that management does not believe are reflective of the company's ongoing operating results when assessing the performance of the business.
The following tables reconcile GAAP measures to non-GAAP measures:
Avaya Inc. Supplemental Schedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) For the twelve For the three months months ended ended September 30, September 30, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Net income (loss) $ 10 $ (99) $ (344) $ (863) Interest expense 107 109 431 460 Interest income - (2) (3) (5) Provision for income taxes (54) 79 8 68 Depreciation and amortization 138 155 564 653 --------- --------- --------- ---------EBITDA 201 242 656 313 Impact of purchase accounting adjustments 1 2 3 - Restructuring charges, net 14 23 142 189 Sponsors' fees 2 2 7 7 Acquisition-related costs - 1 4 5 Integration-related costs 5 10 19 132 Loss on extinguishment of debt - - - 246 Third-party fees expensed in connection with the debt modification - - - 9 Non-cash share-based compensation 1 3 8 12 Write-down of assets held for sale to net realizable value 1 - 5 1 Loss on investments and sale of long-lived assets, net - - 3 1 Impairment of long-lived assets 4 - 6 - Reversal of contingent liability related to acquisition (1) - (1) - Loss (gain) on foreign currency transactions 14 (5) 21 (12) Pension/OPEB/nonretirement postemployment benefits and long-term disability costs 25 15 98 68 --------- --------- --------- ---------Adjusted EBITDA $ 267 $ 293 $ 971 $ 971 ========= ========= ========= =========
Avaya Inc. Supplemental Schedules of Non-GAAP Reconciliations (Unaudited; in millions) For the Twelve For the Three Months Ended Months Ended ---------------------------------- -------------------- Sept. Dec. Mar. June Sept. Sept. Sept. Sept. 30, 31, 31, 30, 30, 30, 30, 30, 2011 2011 2012 2012 2012 2010 2011 2012 ------ ------ ------ ------ ------ ------ ------ ------Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin GAAP Gross Profit $ 718 $ 704 $ 613 $ 623 $ 646 $2,172 $2,632 $2,586 GAAP Gross Margin 50.6% 50.8% 48.8% 49.8% 50.6% 42.9% 47.4% 50.0% Items excluded: Amortization of technology intangible assets 59 50 49 47 46 291 257 192 TSA - - - - - 54 26 - Impairment of capitalized software development costs - - - 2 4 - - 6 Share-based compensation 1 1 1 1 1 5 6 4 Purchase accounting adjustments 2 - 1 1 1 5 - 3 ------ ------ ------ ------ ------ ------ ------ ------ Non-GAAP Gross Profit $ 780 $ 755 $ 664 $ 674 $ 698 $2,527 $2,921 $2,791 ====== ====== ====== ====== ====== ====== ====== ====== Non-GAAP Gross Margin 55.0% 54.4% 52.8% 53.9% 54.7% 49.9% 52.7% 54.0% ====== ====== ====== ====== ====== ====== ====== ======Reconciliation of Non-GAAP Operating Income GAAP Operating Income (Loss) $ 84 $ 82 $ (66)$ 23 $ 76 (381)$ (94)$ 115 Percentage of Revenue 6% 6% -5% 2% 6% -8% -2% 2% Items excluded: Amortization of acquired assets 117 106 105 104 103 509 483 418 Restructuring and impairment charges, net 23 21 90 21 15 187 189 147 Acquisition/ integration- related costs 11 6 6 6 6 228 136 24 Share-based compensation 3 3 2 2 1 19 12 8 Impairment of capitalized software development costs - - - 2 4 - - 6 Strategic initiative costs - - - - - 6 - - Purchase accounting adjustments 2 - 1 1 1 5 - 3 ------ ------ ------ ------ ------ ------ ------ ------ Non-GAAP Operating Income $ 240 $ 218 $ 138 $ 159 $ 206 $ 573 $ 726 $ 721 ====== ====== ====== ====== ====== ====== ====== ====== Percentage of Revenue 16.9% 15.7% 11.0% 12.7% 16.1% 11.3% 13.1% 13.9% ====== ====== ====== ====== ====== ====== ====== ======
Media Inquiries:
Marijke Shugrue
908-953-7643 (office)
mshugrue@avaya.com
Investor Inquiries:
Matthew Booher
908-953-7500 (office)
mbooher@avaya.com
