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.
These non-GAAP measures are not based on any comprehensive set of accounting rules or principals and have limitations as analytical tools in that they do not reflect all of the amounts associated with Avaya's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate Avaya's results of operations in conjunction with the corresponding GAAP measures.
The following tables reconcile GAAP measures to non-GAAP measures:
Avaya Inc. Supplemental Schedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) For the three months ended December 31, ------------------------ 2012 2011 ----------- -----------Net loss $ (85) $ (26) Interest expense 108 109 Interest income (1) (1) Benefit from income taxes (9) (2) Depreciation and amortization 114 143 ----------- -----------EBITDA 127 223 Restructuring charges, net 84 21 Sponsors' fees 2 2 Acquisition-related costs - 1 Integration-related costs 4 5 Loss on extinguishment of debt 3 - Third-party fees expensed in connection with the debt modification 4 - Non-cash share-based compensation 2 3 Loss on investments and sale of long-lived assets, net - 1 Loss on foreign currency transactions 2 1 Pension/OPEB/nonretirement postemployment benefits and long-term disability costs 23 22 ----------- -----------Adjusted EBITDA $ 251 $ 279 =========== =========== Avaya Inc. Supplemental Schedules of Non-GAAP Reconciliations (Unaudited; in millions) For the Three Months Ended ----------------------------------------------------- Dec. 31 Mar. 31, June 30 Sept. 30, Dec. 31 2011 2012 2012 2012 2012 --------- --------- --------- --------- ---------Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin GAAP Gross Profit $ 704 $ 613 $ 623 $ 646 $ 666 GAAP Gross Margin 50.8% 48.8% 49.8% 50.6% 53.7% Items excluded: Amortization of technology intangible assets 50 49 47 46 22 Impairment of capitalized software development costs - - 2 4 - Share-based compensation 1 1 1 1 1 Purchase accounting adjustments - 1 1 1 - --------- --------- --------- --------- --------- Non-GAAP Gross Profit $ 755 $ 664 $ 674 $ 698 $ 689 ========= ========= ========= ========= ========= Non-GAAP Gross Margin 54.4% 52.8% 53.9% 54.7% 55.6% ========= ========= ========= ========= =========Reconciliation of Non-GAAP Operating Income GAAP Operating Income (Loss) $ 82 $ (66) $ 23 $ 76 $ 23 Percentage of Revenue 6% -5% 2% 6% 2% Items excluded: Amortization of acquired assets 106 105 104 103 79 Restructuring and impairment charges, net 21 90 21 15 84 Acquisition/integ ration-related costs 6 6 6 6 5 Share-based compensation 3 2 2 1 2 Impairment of capitalized software development costs - - 2 4 - Purchase accounting adjustments - 1 1 1 - --------- --------- --------- --------- --------- Non-GAAP Operating Income $ 218 $ 138 $ 159 $ 206 $ 193 ========= ========= ========= ========= ========= Percentage of Revenue 15.7% 11.0% 12.7% 16.1% 15.6% ========= ========= ========= ========= =========
Media Inquiries:
Marijke Shugrue
908-953-7643 (office)
[email protected]
Investor Inquiries:
Matthew Booher
908-953-7500 (office)
[email protected]
