Dear Avaya Shareholder,
On October 25th we reported our 4th quarter and year-end results.
As these results demonstrate, we ended the fiscal year with a solid
performance in the fourth quarter.
Driven by higher product sales, revenues increased on sequentially
in all major regions. In the U.S., revenues were up 7% sequentially,
with sales of products up 16%.
For fiscal 2005, operating income, income from continuing operations
and EPS, each as adjusted for certain items discussed in our fourth
quarter earnings release, increased despite the challenges we faced
during the year.
Revenues for the year rose 20.5%, due to acquisitions in international
markets. These acquisitions strengthen our position in key regions
and greatly diversify our revenue base. During 2005, we further
strengthened our balance sheet, eliminating virtually all of our
debt. With our strong cash position and solid operating cash flow,
we initiated a stock repurchase program and repurchased a total
of 11.5 million shares during fiscal 2005.
Looking Ahead
As we move into our 2006 fiscal year, we are well positioned in
the IP telephony market, which we believe offers significant potential.
The transition to IP is moving along at a healthy pace and we believe
that it will broaden in key regions, such as Europe. This quarter
we shipped our 7 millionth IP telephony line – more than any
other company.*
While the early driver behind the IP telephony migration was cost
savings, businesses are now beginning to understand that IP’s
greater value lies in integrating communication applications and
business applications. We call this “Intelligent Communications”
– giving workers, customers and even business processes the
ability to be linked to the right person at the right time by the
right medium – and it builds directly on our strength in voice
applications.
We’re excited about the opportunities ahead in 2006. We are
sharply focused on executing our strategy and plans, and on capturing
those opportunities for our shareholders.
Donald K. Peterson
Chairman and Chief Executive Officer
*According to Synergy Research
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