Sunday, July 23, 2006

Avaya Reports Revenue of $1.3 Billion, Lower Profits

Avaya's quarterly revenues increased 4.9 percent to $1.297 billion compared to $1.236 billion in the same period last year. Product sales worldwide rose 12 percent over the same period, with U.S. product sales rising 15 percent. The company's operating income for the quarter was $28 million. Avaya generated $181 million in operating cash flow and had $822 million in cash at the end of the quarter.

In the same quarter last year the company reported net income of $194 million or 40 cents per diluted share. These results include the net favorable impact of $123 million related to the settlement of certain tax matters and other deferred tax adjustments.

Avaya said its results were affected by $22 million in restructuring charges primarily in its EMEA region and a $29 million asset impairment charge partially offset by a $22 million benefit resulting from a favorable non-income tax settlement. The net negative pre-tax impact of these items was $29 million. The company also received a tax benefit totaling $21 million as a result of a transfer pricing adjustment and non-U.S. audit settlement.

"We delivered another solid quarter of product sales growth. Driven by a 23 percent increase in IP line shipments, overall product sales rose 12 percent, U.S. product sales increased 15 percent, and we shipped our 10 millionth IP line," said Garry K. McGuire, chief financial officer, Avaya. "While we are encouraged by these positive trends, higher costs and expenses during the quarter affected operating results. We remain focused on improving our cost and expense profile across geographies and businesses, particularly in Europe."

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