Excluding business restructuring related expenses and reflecting the company’s adoption of certain provisions of Financial Accounting Standard (SFAS) Board’s Statement No. 142 related to the discontinuation of goodwill amortization. These results compare to net income from ongoing operations of $51 million or 16 cents per diluted share in the year ago quarter.
Revenues from Avaya’s ongoing operations for the first fiscal quarter of 2002 were $1.306 billion, a decrease of 26.8 percent, or $479 million compared to revenues from ongoing operations of $1.785 billion in the year ago quarter.
The company noted that revenues declined for all business segments in the U.S. due to weak economic conditions. However, IP port shipments increased 14 percent from the fourth fiscal quarter, to more than 57,000 ports from 50,000 ports, reflecting the company’s continued strength in the growing IP-PBX market.
U.S. economic conditions in the first quarter were even tougher than we had anticipated, hitting hard in our U.S. businesses as a group, and particularly in our Connectivity Solutions business, said Don Peterson, chairman and CEO, Avaya. Outside the U.S. our revenues grew by 19 percent over the previous quarter, and even with the weakness in the U.S., we continued to strengthen our market position in key areas and we added a fifth consecutive quarter of growth in IP port shipments.
We continue to execute on our plan to restructure our business by cutting costs and expenses, so that we can reinvest in faster-growing segments and take advantage of the eventual upside opportunity in the enterprise market, Peterson said.
While our results for the first fiscal quarter did not meet our expectations, the fact is that there were some bright spots, including our international growth, our ability to leverage our installed base, and our strengthening leadership positions during a difficult time, said Garry K. McGuire, chief financial officer, Avaya.
For our second fiscal quarter, due to the uncertain timing of the U.S. economic recovery, our revenue outlook is for approximately flat sequential revenues with a variance of plus or minus four percent. We will closely monitor revenue levels through January and February, and make any additional adjustments to expenses, as necessary, to reflect proper expense-to-revenue levels going forward. In order to achieve this, we will need to take actions in 2002 designed to yield further annualized savings of $200 million to $250 million. Our objective is to restore profitability as early as possible, but no later than the end of fiscal 2002, even at the low end of our revenue outlook, McGuire said.
Reported Results For First Fiscal Quarter, Including Restructuring Related Expenses
For the first fiscal quarter ended December 31, 2001, Avaya reported a net loss of $20 million, or a loss of 9 cents per diluted share, including $6 million in pre-tax expenses related to the company’s outsourcing of certain of its manufacturing operations. These results compare with net income of $16 million for the quarter ended December 31, 2000, including $59 million in pre-tax business restructuring related one-time and start-up expenses associated with the company’s spin-off.
