Avaya to Cut 2,500 Jobs

July 29, 2002 -- Business communication network provider Avaya Inc. (Avaya.com) said it plans to cut 2,500 jobs, taking a $150 million restructuring in the current quarter.

The company said in its third quarter earnings report last week that it would lay off an unknown number of employees and expected to take a charge of $150 million to $250 million. In a Friday update, the company said it had already begun the layoffs and other restructuring efforts.

Avaya says the $150 million in restructuring costs include about $68 million related to the elimination of the 2,500 positions, between $60 million and $65 million for real estate consolidations and lease terminations and about $15 million in write-offs for assets that have lost value.

Approximately $125 million to $135 million of the restructuring charges will be paid in cash, with about one quarter of that being paid in the fourth fiscal quarter, ending September 30. The company will make another 40 percent of the cash payment in the first fiscal quarter of 2003, and the rest will be paid over the next few quarters.

The company will pay an additional $60 million in cash during the fourth fiscal quarter for a previously taken restructuring charge.

Avaya says it expects the restructuring to generate about $300 million in annualized savings. The company will begin to see benefits in the first fiscal quarter of 2003, with most of the rest starting in the second fiscal quarter.