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AVAYA Inc. Reports Operating Results (10-K)

December 07, 2010 | About:
10qk

10qk

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AVAYA Inc. (AV) filed Annual Report for the period ended 2010-09-30.

Avaya Inc. has a market cap of $16.92 billion; its shares were traded at around $12.06 with and P/S ratio of 0.3. The dividend yield of Avaya Inc. stocks is 6.1%.

Highlight of Business Operations:

The fair value of foreign currency forward contracts is sensitive to changes in currency exchange rates. A 10% upward shift in the value of the foreign currencies that we trade against from the prevailing market rates would have had a negative impact of $3 million, $9 million and $23 million for fiscal 2010, 2009 and 2008, respectively. A 10% downward shift in the value of the foreign currencies that we trade against from the prevailing market rates would have had a negative impact of $28 million for fiscal 2010 and a positive impact of $8 million and $22 million for fiscal 2009 and 2008, respectively.

The Company uses interest rate swaps to manage the amount of its floating rate debt in order to reduce its exposure to variable rate interest payments associated with the senior secured credit facility. In connection with the debt arrangements entered into upon closing of the Merger, the Company entered into five interest rate swap agreements in November 2007 (2007 swaps). These swaps had an aggregate notional amount of $2,400 million. One of the 2007 swaps with a notional amount of $200 million matured on November 26, 2008 and one with a notional amount of $700 million matured on November 26, 2009. On March 5, 2008 the Company entered into two additional interest rate swaps (2008 swaps) with an aggregate notional amount of $800 million, one of which with a notional amount of $550 million matured on November 27, 2009. On August 23, 2010 the Company entered into two additional interest rate swaps (2010 swaps) with an aggregate notional amount of $1,500 million. The Company pays the counterparty fixed interest payments for the term of the swap, and receives variable interest payments based on three-month LIBOR from the counterparties. The net receipt or payment from the interest rate swap agreements is included in interest expense and is paid on the 26th day of each February, May, August and November. As of September 30, 2010, a 0.125% change in interest rates would result in a change in our annual interest expense of $1 million. Upon the expiration of two of our interest rate swap agreements in November 2010, a 0.125% change in interest rates would result in a change in our annual interest of $2 million.

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