Avaya?s Fourth Fiscal Quarter Revenue Increases 4 Percent Sequentially From Third Fiscal Quarter

--Company Reports Net Income Of $66 Million
--Company Earns 15 Cents Per Diluted Share In Fourth Fiscal Quarter On A GAAP Basis
-- Cash Balance Increases For Fifth Straight Quarter To $1.192 Billion, Putting Company In Net Cash* Position

BASKING RIDGE, N. J. /Wi-Fi Technology News/-- Avaya Inc., (NYSE:AV) a leading global provider of communications networks and services for businesses, today reported fourth fiscal quarter net income of $66 million or earnings of 15 cents per diluted share for the fourth fiscal quarter ended Sept. 30, 2003.

These results compare to net income of $8 million or earnings of 2 cents per diluted share in the third fiscal quarter of 2003.

Fourth fiscal quarter revenue of $1.118 billion was 4.3 percent higher than third fiscal quarter revenue of $1.072 billion.

These results are reported in accordance with U.S. generally accepted accounting principles (GAAP).

Avaya noted its cash balance increased for the fifth straight quarter to $1.192 billion, giving the company a net cash* position, for the first time since its inception, of $239 million. Selling, general and administrative expenses declined $30 million sequentially from the third fiscal quarter and operating income for the fourth fiscal quarter was $87 million, an increase of $70 million from the third fiscal quarter.

In the fourth fiscal quarter of 2002, Avaya reported a net loss of $544 million or a loss of $1.50 per diluted share on revenue of $1.152 billion.

CEO Comments
"As I review the fiscal year just completed, I see Avaya in a substantially different position from where we were at our spin-off three years ago and compared to where we were just 12 months ago," said Don Peterson, chairman and CEO, Avaya. "Today, we are profitable, with a proven financial discipline that has helped provide us with a strengthened financial position. We have a scalable business and financial model that allows us to compete effectively for the opportunity in our marketplace. We are the market leader in IP telephony, with solution and services offers customers can use to extend their existing technology investments to improve operational performance. We?ll continue to focus on three themes: performance, potential and positioning Avaya for profitable revenue growth."

Fiscal 2003 Results
Revenue for fiscal 2003 was $4.338 billion compared to revenue of $4.956 billion for fiscal 2002, a decline of 12.5 percent.
The company had a net loss of $88 million or a loss of 23 cents per diluted share for fiscal 2003, compared to a net loss of $666 million or a loss of $2.44 per diluted share for fiscal 2002.

Company Comments On Presentation Of Significant Events
Avaya has provided information about significant quarterly events in a table, along with the dollar value of the events. Beginning this quarter, however, the company will not provide the net per share effect of the events on quarterly earnings. Investors and others interested in the company will be able to use the information about such events to make their own assessment of the per share effect of the significant events on earnings.

Among the significant events included in this quarter?s results is a gain of $46 million as a result of curtailing pension and post-retirement plans.

Business Highlights
Since the end of the last quarter Avaya has made a number of key announcements, including:

Grupo Santander, Spain?s largest financial service group, will implement an Avaya converged communications network to support its new financial campus in Madrid. The 12-building facility will accommodate up to 5,000 people connected by the Avaya network and will centralize virtually all of Santander?s IP telephony services.

Mobistar, Belgium?s second largest mobile network operator, will use Avaya?s MultiVantage? Communication Applications-based solution to IP-enable its contact centers and eight Mobistar sites. The network will support 1,700 Mobistar employees, including Mobistar representatives at major client sites. The IP functionality lets Mobistar people work remotely at customer sites where they will be able to easily log onto the Mobistar network and have the same access to features and information as if they were physically in the office.

The University of South Florida has upgraded its communications network with a converged Avaya Internet Protocol (IP) telephony solution. The new converged network is enhancing services and lowering operational costs for university faculty, staff and over 40,000 students. The upgrade to a converged voice and data network allowed school officials to reuse nearly 95 percent of its existing network infrastructure to support more than 16,000 IP, digital and analog phones. Avaya Global Services provided design and implementation services for the new network, including extensive project management to ensure that the large voice and data network would perform at optimal levels.

Avaya acquired service delivery technologies and two business units from VISTA Information Technologies Inc. The acquisitions enhance Avaya Global Services? delivery of end-to-end design, implementation and management services for converged, multi-vendor networks and advanced multimedia contact centers. The acquired software tools will help streamline integration of complex multi-channel, multi-vendor contact center networks and enhance remote network management capabilities.

The Avaya Customer Interaction Suite extends Avaya?s patented predictive routing technology to contact center customers who come to the center via e-mail or the Web. Previously, this capability was only available when a customer called the contact center on a telephone. This new capability enables businesses to serve a larger number of customers more effectively. The suite also helps ensure contact centers comply with updated state and national regulatory rules, including "Do Not Call" registries. The suite helps contact centers manage business priorities while adhering to new regulatory requirements, and provides tools to generate a consolidated compliance report.

About Avaya
Avaya Inc. designs, builds and manages communications networks for more than 1 million businesses worldwide, including 90 percent of the FORTUNE 500?. Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol (IP) telephony systems and communications software applications and services.

Driving the convergence of voice and data communications with business applications - and distinguished by comprehensive worldwide services -Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com.

For more information, visit http://www.avaya.com/investors/
For the earnings statement, visit: http://www.avaya.com/doc/pb/event/oct21tables.html.

Leo Cheung, Investor Inquiries
Avaya
908-953-4031 (office)
leocheung@avaya.com

Source: Avaya