Bear Stearns Nortel

Presentation to

Review of Aviator

April 2006

Table of Contents

Section

1 Review of Aviator

A Business Overview

B Historical Stock Price Performance

C Wall Street Coverage

D Current Valuation

E Historical and Projected Financial Review

F Officer and Director Profile

G Shareholder Profile

H Aviator Corporate Profile

2 Valuation of Aviator

A Aviator Top-Down Valuation

B Aviator Sum-of-the-Parts Valuation

C Enterprise Communications Group Valuation

D Enterprise Services Valuation

3 Pro Forma Merger Consequences—Nortel Acquires Aviator

A Transaction Considerations

B Pro Forma Merger Consequences

CONFIDENTIAL 8202529, v1

Section 1

Review of Aviator

Section 1-A

Business Overview

Snapshot of Aviator

Summary Income Statement ($ in millions)

FY Ending 9/30 2003A 2004A 2005E 2006E 2007E

Revenue $3,796.0 $4,069.0 $4,934.0 $5,316.0 $5,635.0Growth % NA 7.2 % 21.3 % 7.7 % 6.0%

EBIT $63.0 $324.0 $320.7 $393.4 $495.9Operating Margin % 1.7 % 8.0 % 6.5 % 7.4 % 8.8%

Aviator is a leading provider of communications systems, applications and services that help enterprises transform their businesses by redefining the way they work and interact with their customers, employees, business partners, suppliers and others. Aviator aims to help its customers optimize their enterprises in order to serve their own customers better, enabling them to reduce costs and grow revenue while preserving the security and reliability of their networks. A key component of Aviator’s strategy is to leverage its substantial experience and expertise in traditional voice communications systems to capitalize on the transition of these traditional voice systems to IP telephony systems. Aviator believes its comprehensive suite of IP telephony systems, communications applications and appliances transforms the enterprise communications system into a strategic asset of its customers.

Aviator

Global Communications Solutions (51% Revenue) Global Services (49% Revenue)

Large Communications Systems Maintenance

Small Communications Systems Implementation and Integration Services

Converged Voice Applications Rental and Managed Services

Aviator is a leading provider of communications systems, applications and services that help enterprises transform their businesses by redefining the way they work and interact with their customers, employees, business partners, suppliers and others. Aviator aims to help its customers optimize their enterprises in order to serve their own customers better, enabling them to reduce costs and grow revenue while preserving the security and reliability of their networks. A key component of Aviator’s strategy is to leverage its substantial experience and expertise in traditional voice communications systems to capitalize on the transition of these traditional voice systems to IP telephony systems. Aviator believes its comprehensive suite of IP telephony systems, communications applications and appliances transforms the enterprise communications system into a strategic asset of its customers.

Aviator

Global Communications Solutions (51% Revenue) Global Services (49% Revenue)

Large Communications Systems Maintenance

Small Communications Systems Implementation and Integration Services

Converged Voice Applications Rental and Managed Services

CONFIDENTIAL Draft of 8202529, v1, printed 4/19/2023 4/19/2023 1

Aviator—Global Communications Solutions


FY Ending 9/30 2004A 2005E 2006E 2007E

Revenue $2,048.0 $2,275.3 $2,450.1 $2,597.1Growth % NA 11.1 % 7.7 % 6.0%

EBIT $71.0 $110.6 $146.0 $189.4Operating Margin % 3.5 % 4.9 % 6.0 % 7.3%

Media servers

Media gateways

Telephone handsets

Contact Center Solutions

Extension to Cellular

Aviator IP Office

Telephone handsets

Media servers for voice applications

Voice messaging

Unified messaging products

Other applications that facilitate and enhance interaction in an enterprise with customers, partners, suppliers and employees

Global Communications Solutions sells communications systems and converged voice applications designed for both large and small enterprises. Aviator’s offerings in this segment include IP telephony systems, multi-media contact center infrastructure and applications in support of customer relationship management, unified communications applications and appliances, and traditional communications systems.

Global Communications Solutions

Large Communications Systems Small Communications Systems Converged Voice Applications

Media servers

Media gateways

Telephone handsets

Contact Center Solutions

Extension to Cellular

Aviator IP Office

Telephone handsets

Media servers for voice applications

Voice messaging

Unified messaging products

Other applications that facilitate and enhance interaction in an enterprise with customers, partners, suppliers and employees

Global Communications Solutions sells communications systems and converged voice applications designed for both large and small enterprises. Aviator’s offerings in this segment include IP telephony systems, multi-media contact center infrastructure and applications in support of customer relationship management, unified communications applications and appliances, and traditional communications systems.

Global Communications Solutions

Large Communications Systems Small Communications Systems Converged Voice Applications


Presentation Center, 03/21/06,

Pictures PPT 6937031 Slide#: 10

Aviator—Global Services


FY Ending 9/30 2004A 2005E 2006E 2007E

Revenue $1,761.0 $2,658.7 $2,865.9 $3,037.9Growth % NA 60.0 % 7.8 % 6.0 %

EBIT $249.0 $210.1 $249.0 $306.5Operating Margin % 14.1 % 7.9 % 8.7 % 10.1 %

Monitors and optimizes customers’ network performance to ensure availability.

Keeps enterprise communications networks current with the latest software releases, and, in the event of an outage, provides on-site support to help customers recover rapidly.

Helps customers leverage and optimize their multi-technology, multi-vendor environments.

Helps enterprises assess, design and install traditional and IP telephony networks, contact centers and unified communications networks.

Supports customers’ in-house staff and manages complex, multi-vendor, multi-technology networks.

Optimizes network performance and configurations, backs up systems, detects and resolves faults, performs moves, adds and changes and manages customers’ trouble tickets and inventories.

Global Services is focused on supporting Aviator’s customer base with comprehensive, end-to-end global service offerings that enable customers to plan, design, implement, monitor and manage their converged communications networks worldwide.

Global Services

Maintenance Implementation and Integration Services Rental and Managed Services

Monitors and optimizes customers’ network performance to ensure availability.

Keeps enterprise communications networks current with the latest software releases, and, in the event of an outage, provides on-site support to help customers recover rapidly.

Helps customers leverage and optimize their multi-technology, multi-vendor environments.

Helps enterprises assess, design and install traditional and IP telephony networks, contact centers and unified communications networks.

Supports customers’ in-house staff and manages complex, multi-vendor, multi-technology networks.

Optimizes network performance and configurations, backs up systems, detects and resolves faults, performs moves, adds and changes and manages customers’ trouble tickets and inventories.

Global Services is focused on supporting Aviator’s customer base with comprehensive, end-to-end global service offerings that enable customers to plan, design, implement, monitor and manage their converged communications networks worldwide.

Global Services

Maintenance Implementation and Integration Services Rental and Managed Services




Aviator—Market Share Analysis

Geographic RegionBusiness Area North America EMEA APAC

Voice

Services

Applications

Call Center

1 Nortel 26% 1 Siemens 16% 1 NEC 22%

2 Aviator 21 2 Alcatel 15 2 Fujitsu 9

3 NEC 10 3 Aviator 11 3 Oki 7

4 Mitel 5 4 Ericsson 10 4 Samsung 5

5 Cisco 5 5 Nortel 8 5 Nortel 5

6 Inter-Tel 5 6 Samsung 4 6 LG Electronics 5

1 Cisco 8% 1 HP 8.3% 1 Fujitsu 11%

2 Aviator 7 2 NextiraOne 5.0 2 HP 8

3 HP 5 3 Siemens 4.5 3 Cisco 7

4 Northrop Grumman 5 4 Cisco 3.9 4 IBM 5

5 Verizon 4 5 Nokia 3.5 5 NEC 4

6 IBM 3 6 IBM 3.4

1 Nortel 12% 1 Aviator 11% Not Available

2 Aviator 12 2 Nortel 9

3 Polycom 4 3 Polycom 6

4 Cisco 2 4 IBM 2

5 IBM 1 5 Cisco 1

6 Microsoft 1 6 Microsoft 1

1 Aviator 36% 1 Aviator 31% 1 Aviator 55%

2 Nortel 22 2 Nortel 23 2 Nortel 20

3 Siemens 7 3 Alcatel 11 3 NEC 4

4 Aspect 5 4 Aspect 5 4 Huawei 3


Aviator—Product Comparison

Review of Large IP PBXs (1,000 + Stations)(1)

Aviator S8710 Media Server,

Cisco IP Communications

Alcatel OmniPCX ShoreTel Siemens

Ratings G650 Gateway System Enterprise ShoreTel5 HiPath 4000

Architecture(2) 15 14 12 12 10.5 11

Endpoints(3) 20 20 19.5 19 17.5 18

Management and Admin(4) 15 11 12 12.5 11.5 11.5

Features(5) 20 17.5 17.5 15 17 16.5

Security(6) 10 8.5 9 5 5 5.5

Performance(7) 20 19 17 20 16.5 13

Total 100 90 87 83.5 78 75.5


Source: McKinsey Report.



Aviator’s Challenges in Enterprise Voice


Source: BCR, January 2005.(1) Nortel declined the invitation to participate.(2) Includes: Call-control survivability; redundancy and fallover; IP-to-PSTN re-routing, VoIP bandwidth control; QOS support; scalability, standards support and interoperability; and

distributed-system networking.(3) Includes verification of endpoint support: IP hard phone, softphone, wireless, analog/fax support, Power-over-Ethernet; unique, specialty and advanced endpoint features, including video.(4) Based on management task completion, interface navigability and intuitiveness, on-screen help, real-time monitoring, reports and reporting.(5) Includes: Validation of 16 basic phone features; verification of common add-on subsystems (E911, voice mail, voice recognition/response, etc.), and evaluation of special and unique

“advanced” features.(6) Includes: Verification of encrypted call control, VoIP/RTP stream encryption, secure management access, vendor’s security documentation, services, security-infrastructure offerings and

affiliations.(7) Includes: Traffic load/call-completion testing, interactive/MOS voice-quality tests, latency measurements, verification of high-availability features.

Protecting its current installed base of voice customers

Risk of technology substitution from open standard IP-based technologies that could eliminate the need for specialized voice vendors (“Commoditization Effect”)

Dealing with the threat from IP-Centrex offerings, especially as service providers look for new revenue platforms

Changing financial metrics as customers migrate to IP

Well funded competitors like Cisco with significant data credibility

Protecting its current installed base of voice customers

Risk of technology substitution from open standard IP-based technologies that could eliminate the need for specialized voice vendors (“Commoditization Effect”)

Dealing with the threat from IP-Centrex offerings, especially as service providers look for new revenue platforms

Changing financial metrics as customers migrate to IP

Well funded competitors like Cisco with significant data credibility




Aviator—Summary of Recent Acquisitions

($ in millions)

Date TargetAmount

Paid Description

2004

12/15/04 Route Science $7M A maker of adaptive networking software (ANS) for enterprises and service providers.

11/18/04 Tenovis Germany GmbH 371 M A European-based provider of enterprise communications systems and services.

10/04/04 Spectel 106 M A provider of audio and web conferencing solutions.

08/04/04 Tata Telecom (now Aviator GlobalConnect Ltd.)

18M An India-based communication solutions provider and a distributor of Aviator products in India.

2003

11/26/03 Expanets 152 M A provider of converged communications for mid-sized businesses, and one of the largest resellers of Aviator’s products in the United States.

10/02/03 VISTA Information Technologies, Inc.

NA An IT services business unit that develops Java-based software for contact center platforms, interactive voice response systems, and CRM software.

2001

04/12/01 Quintus Corporation 30M A provider of electronic customer relationship management (eCRM) solutions.

03/07/01 Cyber IQ Systems NA Developer of data networking products including HyperCommerce, CyberSSL and MonsterSSL.

02/14/01 VPNet Technologies, Inc. 120M A privately held developer of virtual private network (VPN) solutions and devices.


Section 1-B

Historical Stock Price Performance

Aviator Stock Price Performance

Daily: May 9, 2004–May 9, 2005

6.00

8.00

10.00

12.00

14.00

16.00

18.00

$20.00

5/04 7/04 9/04 11/04 1/05 3/05 5/05

Price

0

10,000

20,000

30,000

40,000

50,000

60,000

Vol

um

e

Volume Price

A

B

D

E

C

F

GH

I

J

A 05/24/04: Announced a voluntary contribution of approx. $111M of its common stock to its pension plan.

B 07/06/04: Announced it had completed cash repurchases of $131.6 million in principal amount of its 11 1/8% senior secured notes during the third fiscal quarter.

C 07/27/04: Announced Q3 ’04 EPS of 16 cents versus consensus estimates of 12 cents.

D 10/26/04: Announced Q4 ’04 EPS of 19 cents versus consensus estimates of 18 cents.

E 10/28/04: Provided guidance for fiscal year 2005 including an operating margin between 8.5–9.0% and revenue growth between 25–27% compared to fiscal 2004 revenues of $4.1B.

F 11/01/04: Commenced a cash tender offer for any and all of its 11-1/8% Senior Secured Notes due 2009.

G 11/18/04: Announced a redemption for cash all of its outstanding Liquid Yield Option Notes due 2021 (“LYONs”) on December 20, 2004. The redemption price was $545.67 per $1,000 principal amount at maturity of LYONs.

H 01/25/05: Announced Q1 ’05 EPS of 17 cents versus consensus estimates of 18 cents.

I 02/24/05: Announced the successful completion of a new $400 million five-year unsecured revolving credit facility and the reduction of secured floating rate notes associated with the Tenovis acquisition.

J 04/19/05: Announced Q2 ’05 EPS of 9 cents versus consensus estimates of 18 cents.

Indexed Stock Price Performance

Indexed Comparison Graph

Daily: May 9, 2003–May 9, 2005

50

60

70

80

90

100

110

120

130%

5/04 7/04 9/04 11/04 1/05 3/05 5/05

50

60

70

80

90

100

110

120

130%

Aviator NASDAQ Global Communications Equipment Composite Global Enterprise Services Composite(1) (2)

Source: Thomson One Banker and Company press releases.

Source: Thomson One Banker.(1) Peer group includes Alcatel, Aspect, Cisco, Inter-Tel, InterVoice, Nortel and Polycom.(2) Peer group includes Black Box, Convergys, CGI Group, Getronics and Unisys.

Section 1-C

Wall Street Coverage

Wall Street Commentary

“Despite the earnings miss and pressure on the shares this morning, we still see some downside risk in sales and margins for the next several quarters. We believe that the year-over-year decline for core Aviator’s sales highlights sales of IP telephony products mostly just cannibalizes sales of traditional telephony products and the enterprise telephony industry as a whole has shown and is likely to continue to show limited growth.”

—Jiong Shao, Lehman Brothers (April 20, 2005)

“We believe that most of the issues are temporary, the Tenovis integration wiped out almost 50% of this quarter’s EPS and service revenue weakness explains the rest. The Tenovis integration had a highly detrimental effect—contributing a loss of $28m in the quarter. The integration of this company is clearly proving to be a more challenging task than envisioned by the company.”

—Tal Liani, Merrill Lynch & Co. (April 20, 2005)

“Despite these reductions to our top-line forecast and an assumed “market-even” growth outlook in our discounted cash flow model we still view the shares as grossly undervalued by the market. While we certainly acknowledge a lower bar has been set with the disappointing results for F2Q, we do not believe the current stock price fairly represents the company’s cash-generating potential over the longer term.”

—Timm Bechter, Legg Mason (April 20, 2005)

“We are maintaining our Neutral rating as we expect the current pause in VoIP demand to continue through calendar 2005. We believe that organic growth could be flat year-over-year with flat-to-down gross and net margins. We do not expect VoIP sales to be robust enough to overcome the declining legacy TDM business, in order to give Aviator significant growth to warrant a buy rating.”

—Gina Sockolow, The Buckingham Research Group (April 20, 2005)

Aviator Analyst Coverage

Analyst Bank Rating Price Target Date

Tavis McCourt Morgan Keegan Market Perform NA 05/03/05

Gina Sockolow Buckingham Research Group Neutral NM 04/25/05

Jiong Shao Lehman Brothers Neutral $7.40 04/21/05

Scott Coleman Morgan Stanley Attractive 16.00 04/20/05

Long Jiang UBS Buy 2 13.00 04/20/05

Frank Marsala First Albany Neutral NA 04/20/05

Ehud Gelblum JP Morgan Neutral NA 04/20/05

Manuel Recarey Kaufman Brothers Buy 12.00 04/20/05

Timm Bechter Legg Mason Buy 21.00 04/20/05

Eric Buck Janco Partners Market Perform 9.00 04/20/05

Jason Ader Thomas Weisel Peer Perform NA 04/20/05

Christin Armacost SG Cowen NA NA 04/20/05

Samuel Wilson JMP Securities Strong Buy 20.00 04/20/05

Inder Singh Prudential Overweight 14.00 04/20/05

B. Alex Henderson Smith Barney Buy 20.00 04/13/05

Section 1-D

Current Valuation

Current Valuation—Aviator

($ in millions, except per share data)

Stock Price Current Value Selected Balance Sheet Items (3/31/05)

Stock Price (5/27/05) $9.53 Fully Diluted Shares 489.298(1

)

Cash $688.3

52-week High 17.76 Equity Value $4,663.0 Total Debt 22.0

52-week Low 7.76 Enterprise Value 3,996.7 Shareholders’ Equity 1,238.3

Average—Last 30 days 9.00 Total Debt/Total Capitalization 1.7 %

Do not Delete!

Analyst Estimates Net Income Revenue EBITDA EBIT

CY 2007E $396.2 $5,719.5 $788.9 $513.8

CY 2006E 367.3 5,395.8 686.9 419.0

CY 2005E 296.8 5,029.5 626.4 338.9

Do not Delete!

Current Value as Equity Value/ Enterprise Value/

a Multiple of: Net Income Revenue EBITDA EBIT

CY 2007E 11.8x 0.70x 5.1x 7.8x

CY 2006E 12.7 0.74 5.8 9.5

CY 2005E 15.7 0.79 6.4 11.8

(1) Based on 477.043 million basic shares and 20.696 million in-the-money options with a weighted average strike price of $3.89.

Section 1-E

Historical and Projected Financial Review

Aviator Historical Financial Review

Historical Income Statement Data ($ in millions)

Fiscal Year Ending September 30 2002 2003 2004 LTM 3/31/20056 Months Ended

3/31/05

Revenues $4,387.0 $3,796.0 $4,069.0 $4,462.0 $2,370.0

% Growth NA (13.5%)

7.2%

NM NM

Cost of Sales $2,523.0 $2,157.0 $2,124.0 $2,330.0 $1,264.0

Gross Profit $1,864.0 $1,639.0 $1,945.0 $2,132.0 $1,106.0

% Gross Margin 42.5%

43.2%

47.8%

47.8%

46.7%

Operating Expenses $2,218.0 $1,576.0 $1,621.0 $1,780.0 $966.0

Operating Income ($354.0)

$63.0 $324.0 $352.0 $140.0

% Operating Margin (8.1%)

1.7%

7.9%

7.9%

5.9%

Other Income (expense), net 1.0 (29.0)

(15.0)

(40.0)

(38.0)

Interest Expense (51.0)

(78.0)

(66.0)

(41.0)

(15.0)

Pretax Income ($404.0)

($44.0)

$243.0 $271.0 $87.0

Income Taxes (Benefit) $273.0 $84.0 ($49.0)

$43.0 $18.0

Effective Tax Rate NM NM NM 15.9%

20.7%

Net Income from Cont. Operations (677.0)

(128.0) 292.0 228.0 69.0

Diluted EPS ($2.47)

($0.34)

$0.64 $0.48 $0.15

EBITDA ($158.0)

$234.0 $471.0 $567.4 $287.4

% EBITDA Margin (3.6%)

6.2%

11.6%

12.4%

12.1%

Aviator Current Balance Sheet

Balance Sheet as of March 31, 2005 ($ in millions)

Cash and Cash Equivalents $855Receivables 793Inventories 364Deferred Income Taxes, net 69

Other Current Assets 139

Total Current Assets $2,220

Property, Plant and Equipment $747Deferred Income Taxes, net 360Goodwill 939Other Intangible Assets 390

Other Assets 187

Total Assets $4,843

Accounts Payable $403Debt Maturing within one year 74Payroll and Benefit Obligations 289Deferred Revenue 234

Other Current Liabilities 365

Total Current Liabilities $1,365

Long-Term Debt 114Benefit Obligations 1,595Deferred Income Taxes, net 119

Other Liabilities 411

Total Non Current Liabilities $2,239

Total Shareholders Equity 1,239

Total Liabilities and Shareholders Equity $4,843

Source: Company 10-K for period ended September 30, 2004 and Press release for period ended March 31, 2005. Shown as reported.

Aviator Financial Review

Income Statement Summary ($ in millions, except per share data)

FYE September 30, 2003A 2004A 2005E 2006E 2007E

Revenue $3,769.0 $4,069.0 $4,934.0 $5,316.0 $5,635.0% Growth NA 8.0

%21.3

%7.7%

6.0%

EBITDA $229.0 $471.0 $615.4 $659.5 $769.2% Margin 6.1

%11.6

%12.5

%12.4

%13.7

%

EBIT $58.0 $324.0 $320.7 $393.4 $495.9% Margin 1.5

%8.0%

6.5%

7.4%

8.8%

Diluted EPS(1) NA $0.64 $0.54 $0.70 $0.78% Growth NA NA (15.5

%)29.4

%11.3

%

First Call EPS LTGR 10.0%

Source: Earnings release for period ended March 31, 2005.

Section 1-F

Officer and Director Profile

Source: Aviator public filings, Wall Street research, and Bear Stearns estimates.(1) Based on 480.014 million basic shares and 20.696 million in-the-money options with a weighted average strike price of $3.89.

Aviator Organizational Chart

Thomas A. LesicaGroup Vice President,Global Information

Technology and Business Operations

Karyn MashimaSr. Vice President,

Strategy and Technology

Garry K. McGuireChief Financial Officerand Sr. Vice President,Corporate Development

Francis M. ScriccoGroup Vice President,

Avaya Global

Louis J. D’AmbrosioGroup Vice President,

Global Sales and Channels and Marketing

Maryanne DiMarzoSr. Vice President,Human Resources

Patricia R. HumeGlobal Vice President,

Small and Medium Business Solutions

David P. JohnsonGroup Vice President,

Europe, Middle East and Africa

Jocelyne J. AttalChief Marketing Officer

Pamela F. CravenSr. Vice President,

General Counsel & Secretary

Donald K. PetersonChairman &

Chief Executive Officer

Ravi SethiPresident,

Avaya Labs

Michael C. ThurkGroup Vice President,

Enterprise Communications Group







Avaya Global







Avaya Global





















Donald K. PetersonChairman &

Chief Executive Officer


Avaya Labs




Avaya Labs





Director Profile(1)Board CompositionInsiders 1 9.1 %

Outsiders 10 90.9

Total 11 100.0 %

DirectorsDirector

SinceTerm

Expires Age Position Description

Beneficial Ownership/

(% O/S)

Donald K. Peterson 2002 2007 55 Chairman and CEO Previously, Mr. Peterson had been executive vice president and chief financial officer of Lucent Technologies from 1996-2000. He has also served in various capacities at Northern Telecom, State Mutual Life Assurance Company and Nortel. He is a member of the board of directors of Reynolds and Reynolds Co.; a member of the board of trustees of Worcester Polytechnic Institute; a member of the Council on Foreign Relations; a member of the World Economic Forum; a member of the board of overseers of the Amos Tuck School of Business Administration, and a trustee for the Committee for Economic Development.

5,784,8341.3%

Joseph P. Landy 2003 2007 43 Co-president of Warburg Pincus Mr. Landy has been co-president of Warburg Pincus LLC since January 2002 and a managing general partner since October 2002. Mr. Landy is also a member of the board of Indus International Inc., Neustar, Inc., The Cobalt Group and ezGov, Inc.

70,095NM

Mark Leslie 2001 2007 58 Managing director of Leslie Ventures

Mr. Leslie is currently the managing director of Leslie Ventures, a private investment company. He is also an adjunct professor at Stanford Graduate School of Business and Stanford University—Graduate Engineering. Mr. Leslie served as chairman of the board of Veritas Software Corporation until December 2001 and remains on the board as a director. Mr. Leslie has also worked at Leslie Consulting (owner) and Rugged Digital Systems (CEO). Mr. Leslie is a director of WebEx Communications, Inc. and a number of privately held high-technology corporations.

98,721NM

Anthony P. Terracciano 2003 2007 65 Vice Chairman, American Water Works Company

Mr. Terracciano is vice chairman, American Water Works Company, Inc. and is the former chairman of Dime Bancorp. He has held executive positions with First Union Corporation, First Fidelity Bancorporation, Mellon Bank Corp. and Chase Manhattan Bank.

148,343NM

Bruce R. Bond 2002 2006 58 Former chairman and CEO of PictureTel Corporation

Mr. Bond is the former chairman and CEO of PictureTel Corporation. Mr. Bond is a retired global telecommunications executive with 23 years of experience in the Bell System, including Ohio Bell, AT&T, US West and Mountain Bell. He has also spent six years with British Telecom, in London, UK, responsible for transforming the Products and Services Group as well as leading the National Business Communications Group.

49,908NM

DirectorsDirector

SinceTerm

Expires Age Position Description

Beneficial Ownership/

(% O/S)

Dan C. Stanzione 2000 2006 59 President Emeritus, Bell Laboratories and former COO of Lucent Technologies

Dr. Stanzione, president emeritus, Bell Laboratories, served as chief operating officer of Lucent Technologies, Inc. from November 1997 to October 1999 and as the president of Bell Laboratories at Lucent. Dr. Stanzione is also a director of Quest Diagnostics, Inc.

125,942NM

Ronald L. Zarrella 2002 2006 54 Chairman and CEO of Bausch & Lomb

Mr. Zarrella is chairman and CEO of Bausch & Lomb. He was president of General Motors North America before returning to Bausch & Lomb as chairman and CEO in November 2001. He was previously with Bausch & Lomb from 1985 through 1994, first as president of its international division, then as president and COO. Mr. Zarrella is also a member of the board of US FIRST (For Inspiration and Recognition of Science and Technology).

64,939NM

Philip A. Odeen 2002 2005 69 Retired Chairman of TRW Inc. Mr. Odeen is the retired chairman of TRW Inc. Mr. Odeen was president and chief executive officer of BDM, which TRW acquired in 1997, and directed its growth and evolution as a multi-national information technology (IT) firm. Mr. Odeen has served in senior positions with the Office of the Secretary of Defense and the National Security Council staff. Mr. Odeen is also a member of the board of Convergys Corporation, The Reynolds and Reynolds Company and WGL Holdings, Inc.

125,131NM

Hellene S. Runtagh 2003 2005 56 Former President and CEO of Berwind Group

Ms. Runtagh is the former president and CEO of Berwind Group, an enterprise with businesses in multiple industries. Prior to joining Berwind, from 1997 to 2001, Ms. Runtagh held senior level positions at Universal Studios and General Electric Company. Ms. Runtagh is also a member of the board of Covad Communications Group and Lincoln Electric Holdings.

51,908NM

Paula Stern 2002 2005 59 Chairwoman of The Stern Group, Inc.

Dr. Stern is chairwoman of The Stern Group, Inc., an economic analysis and international business and trade advisory firm. She is currently a member of the US President’s Advisory Committee for Trade Policy and Negotiations and previously served as chairwoman of the US International Trade Commission. Dr. Stern is also a member of the board of Avon Products, Inc., Hasbro, Inc. and The Neiman Marcus Group.

51,213NM

Richard F. Wallman 2003 2005 53 Former Senior Vice President and Chief Financial Officer of Honeywell International Inc.

Mr. Wallman is the former senior vice president and chief financial officer of Honeywell International Inc. Mr. Wallman previously served as chief financial officer of AlliedSignal Inc., prior to its merger with Honeywell. He also held various positions at IBM Corporation and Chrysler Corporation. Mr. Wallman is also a member of the board of Ariba, Inc., ExpressJet Holdings, Inc., Hayes-Lemmerz and Lear Corporation.

14,016NM

Shareholder Profile

Aviator Shareholder Profile

Institutional Ownership(1) Shares Held % of Total

Warburg Pincus(2) 47,955,205 10.0 %Dodge & Cox 24,811,519 5.2Fidelity Management & Research 16,979,323 3.5Lord, Abbett & Co. 16,214,594 3.4Barclays Global Investors 15,082,667 3.1Friess Associates 12,913,000 2.7SSgA Funds Management 11,960,949 2.5Vanguard Group 11,883,167 2.5Wellington Management 11,103,715 2.3AIM Management Group 10,080,020 2.1Calamos Advisors 7,282,718 1.5

Top 10 Institutions 186,266,877 38.8 %Top 15 Institutions 216,434,130 45.1Top 20 Institutions 236,594,164 49.3All Other Institutions 131,293,886 27.4

Total Institutions 367,888,050 76.6 %

Insider Ownership

Donald Peterson 1,250,174 0.3 %Louis D’Ambrosio 328,500 0.1Michael Thurk 214,130 0.0

1,792,804 0.4 %Other Officers and Directors 1,013,384 0.2

Total Insiders 2,806,188 0.6 %Other Shareholders 109,320,035 22.8

Basic Shares Outstanding 480,014,273 100.0 %

(1) Source: LionShares.(2) Holdings obtained at a cost basis of approximately $9.16 per share.

Section 1-H

Aviator Corporate Profile

Aviator Profile(1)

State of Incorporation Delaware

Headquarters Basking Ridge, NJ

Capital Stock 1,700,000,000 authorized common shares (480,014,016 basic shares outstanding). 200,000 authorized preferred shares (none outstanding).

Shareholder Meetings

Annual Meeting: Exact date and time determined by Board of Directors (usually February).

Special Meeting: Special shareholder meetings can be called by (i) the Chairman of the Board or (ii) the majority of the directors of the Board. Shareholders can not call special meetings.

Notice: Notice of a meeting must be given to all shareholders entitled to vote at least 10 business days but not more than 60 days in advance of the meeting.

Record Date: Determined by the Board of Directors; may not be more than 60 days prior to nor less than 10 days before the related shareholder meeting, dividend, or other distribution.

Business: Must be brought before meeting by (i) Board of Directors or presiding officer or (ii) on behalf of any stockholder of record who submits a timely request by certified mail (return receipt requested) that the proposal be included in the Company’s proxy statement. Such shareholder requests must comply with the provisions of Rule 14a-8 of the SEC act of 1934, as amended.

Aviator Profile (cont.)(1)

Directors

Number: Currently eleven directors; number determined by majority vote of directors then in office. Board must consist of at least three directors.

Staggered Terms: Yes. Nomination: New Directors can be nominated by (i) the Board or (ii) any shareholder

who provides proper and timely notice. For notice to be proper and timely, written notice must be made to the Secretary of the Corporation not later than the close of business on the 45th calendar day nor earlier than the close of business on the 75th calendar day prior to the first anniversary of the preceding year’s annual meeting.

Vacancies: Vacancies and newly created directorships are filled by a majority of the directors then in office, including vacancies as a result of removal or an enlargement of the board.

Removal: Any or all Directors may be removed for cause by a majority of shareholders at any annual or special shareholder meeting.

Cumulative Voting No (default Delaware state statute).

Shareholder Action by Written Consent

Yes; unanimous written consent of shareholders required (default Delaware statute).

Actions Requiring Super Majority Shareholder Vote

80% shareholder vote required to amend articles V, VIII and IX of the Charter including: Election of directors Re-election/removal of directors

(1) Sources: SharkRepellent.net, Company Corporate Charter as amended on 1/12/03 and Amended and Restated By-laws.

Aviator Profile (cont.)(1)

Amendments

Corporate Charter: As seen above, 80% vote required to amend certain provisions of relating to director voting and constituency.

By-laws: The by-laws may be amended by at least a majority of the total number of directors then necessary to constitute a full Board. Any by-law may be further amended or reinstated by a majority of shareholders by vote at either an annual or special shareholder meeting (provided the amendment is timely included in order of business).

Officer and Director Indemnification

All Officers and Directors of the Company are fully indemnified by the Company unless they are found to have not acted in good faith.

Shareholder Rights Plan Yes, triggered at 15%.


Section 2

Valuation of Aviator


Section 2-A

Aviator Top-Down Valuation

Summary Valuation of Aviator

Calendar Year Ending December 31, ($ in millions)

Aviator Enterprise Value Range as a Multiple of CY 2006E/2005E CY 2006E/2005E

Valuation Method Enterprise Value Range Revenues EBITDA EBIT Net Income(1) Revenues EBITDA EBITNet

Income

Discounted Cash Flow Analysis $4,500 – $5,7500.83

x–

1.07x

6.6x

–8.4

x10.7

x–

13.7x

13.8x

–17.1

x$5,395.8 $686.9 $419.0 $374.8

0.89 – 1.14 7.2 – 9.2 13.3 – 17.0 17.3 – 21.5 5,029.5 626.4 338.9 298.7

Comparable Company Analysis $4,500 – $5,5000.83

x– 1.02

x6.6

x– 8.0

x10.7

x– 13.1

x13.8

x– 16.5

x$5,395.8 $686.9 $419.0 $374.8

0.89 – 1.09 7.2 – 8.8 13.3 – 16.2 17.3 – 20.6 5,029.5 626.4 338.9 298.7

Comparable Acquisition Analysis $5,500 – $6,5001.02

x– 1.20

x8.0

x– 9.5

x13.1

x– 15.5

x16.5

x– 19.1

x$5,395.8 $686.9 $419.0 $374.8

1.09 – 1.29 8.8 – 10.4 16.2 – 19.2 20.6 – 24.0 5,029.5 626.4 338.9 298.7

BSC REFERENCE RANGE $4,500 – $6,2500.83

x– 1.16

x6.6

x– 9.1

x10.7

x– 14.9

x13.8

x– 18.5

x$5,395.8 $686.9 $419.0 $374.8

0.89 – 1.24 7.2 – 10.0 13.3 – 18.4 17.3 – 23.2 5,029.5 626.4 338.9 298.7

Add:Cash $688.3 – $688.3Option Proceeds 80.4 – 212.0 Assumes 20.696 million in-the-money options at a weighted average strike price of $3.89 and

31.130 million in-the-money options at a weighted average strike price of $6.81.

Less:Total Debt $22.0 – $22.0Minority Interest 0.0 0.0Total Adjustments $746.7 – $878.3

Gross Equity Value $5,246.7 $7,128.3

Gross Diluted Shares (M) 497.739 508.173

Equity Value Per Share $10.54 $14.03

Stock Price (05/27/05) $9.53 $9.53

Premium/(Discount) 10.6%

47.2 %

Valuation Matrix


Market Potential Price per Share$9.53 $10.00 $11.00 $12.00 $13.00 $14.00

Premium Over:Stock Price (05/27/05) $9.53 0.0

%4.9% 15.4% 25.9% 36.4% 46.9%

52-Week High 17.76 (46.3)

(43.7) (38.1) (32.4) (26.8) (21.2)

52-Week Low 7.76 22.8 28.9 41.8 54.6 67.5 80.4Average—Last 30 days 9.00 5.9 11.2 22.3 33.4 44.5 55.6

x Shares Outstanding plus Exercisable Options 497.739 497.739 497.739 497.739 508.173 508.173- Option Proceeds $80.4 $80.4 $80.4 $80.4 $212.0 $212.0Equity Value $4,663.0 $4,896.9 $5,394.7 $5,892.4 $6,394.2 $6,902.4

+ Debt $22.0 $22.0 $22.0 $22.0 $22.0 $22.0+ Minority Interest – – – – – –- Cash 688.3 688.3 688.3 688.3 688.3 688.3Enterprise Value $3,996.7 $4,230.6 $4,728.4 $5,226.1 $5,727.9 $6,236.1

Equity Value as a Multiple of:CY 2007E Net Income $396.2 11.8

x12.4x 13.6x 14.9x 16.1x 17.4x

CY 2006E Net Income 367.3 12.7 13.3 14.7 16.0 17.4 18.8CY 2005E Net Income 296.8 15.7 16.5 18.2 19.9 21.5 23.3

Enterprise Value as a Multiple of:CY 2007E Revenue $5,719.5 0.70

x0.74x 0.83x 0.91x 1.00x 1.09x

CY 2006E Revenue 5,395.8 0.74 0.78 0.88 0.97 1.06 1.16CY 2005E Revenue 5,029.5 0.79 0.84 0.94 1.04 1.14 1.24

CY 2007E EBITDA $788.9 5.1x

5.4x 6.0x 6.6x 7.3x 7.9x

CY 2006E EBITDA 686.9 5.8 6.2 6.9 7.6 8.3 9.1CY 2005E EBITDA 626.4 6.4 6.8 7.5 8.3 9.1 10.0

CY 2007E EBIT $513.8 7.8 8.2x 9.2x 10.2x 11.1x 12.1xNote: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.(1) Multiple of Equity Value.

xCY 2006E EBIT 419.0 9.5 10.1 11.3 12.5 13.7 14.9CY 2005E EBIT 338.9 11.8 12.5 14.0 15.4 16.9 18.4

Discounted Cash Flow Analysis


TV-Forward Revenue Multiple TV-Forward EBITDA Multiple TV-Forward EBIT Multiple TV-Forward Unlevered NI MultipleWACC 0.85x 1.00x 1.15x 6.5x 7.5x 8.5x 9.0x 10.0x 11.0x 14.0x 15.0x 16.0x

PV of Period Cash Flows 15.00% $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3 $1,345.3

PV of Terminal Value 3,075.8 3,618.6 4,161.3 3,539.5 4,084.1 4,628.6 3,419.5 3,799.5 4,179.4 3,510.7 3,761.5 4,012.3

PV of Enterprise $4,421.11 $4,963.89 $5,506.68 $4,884.87 $5,429.41 $5,973.95 $4,764.87 $5,144.82 $5,524.77 $4,856.06 $5,106.82 $5,357.59

Implied FCF Growth Rate 6.8%

7.9%

8.8%

7.8%

8.7%

9.4%

7.6%

8.3%

8.8%

7.7%

8.2%

8.6%

PV per Share(1) $10.32 $11.41 $12.49 $11.25 $12.34 $13.42 $11.01 $11.77 $12.53 $11.19 $11.69 $12.19



PV of Enterprise $4,276.0 $4,798.4 $5,320.8 $4,722.3 $5,246.4 $5,770.5 $4,606.8 $4,972.5 $5,338.2 $4,694.6 $4,935.9 $5,177.3


8.9%

9.8%

8.7%

9.6%

10.4%

8.5%

9.2%

9.8%

8.7%

9.1%

9.5%

PV per Share(1) $10.03 $11.08 $12.12 $10.92 $11.97 $13.02 $10.69 $11.42 $12.15 $10.87 $11.35 $11.83



PV of Enterprise $4,137.1 $4,640.1 $5,143.1 $4,566.9 $5,071.5 $5,576.0 $4,455.7 $4,807.7 $5,159.8 $4,540.2 $4,772.5 $5,004.9


9.8%

10.7%

9.7%

10.6%

11.3%

9.4%

10.1%

10.7%

9.6%

10.1%

10.5%

PV per Share(1) $9.76 $10.76 $11.76 $10.61 $11.62 $12.63 $10.39 $11.09 $11.80 $10.56 $11.02 $11.49



PV of Enterprise $4,004.3 $4,488.7 $4,973.1 $4,418.2 $4,904.1 $5,390.1 $4,311.1 $4,650.2 $4,989.2 $4,392.5 $4,616.3 $4,840.1


10.8%

11.7%

10.6%

11.5%

12.3%

10.4%

11.1%

11.7%

10.6%

11.0%

11.4%

PV per Share(1) $9.49 $10.46 $11.42 $10.32 $11.29 $12.26 $10.10 $10.78 $11.46 $10.27 $10.71 $11.16

Note: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.

Free Cash Flow Analysis—WholeCo

($ in millions)

Projected FYE September 30,2005 2006 2007 2008 2009 2010

Revenue $4,934.0 $5,316.0 $5,635.0 $5,973.1 $6,331.6 $6,711.5

EBITDA $615.4 $659.5 $769.2 $847.9 $952.8 $1,010.0

Depreciation & Amortization (294.7)

(266.1)

(273.3)

(280.5)

(288.0)

(305.3)

EBIT $320.7 $393.4 $495.9 $567.4 $664.8 $704.7EBIT Margin 6.5

%7.4%

8.8%

9.5%

10.5%

10.5%

Taxes ($38.7)

($42.8)

($109.1)

($192.9)

($226.0)

($239.6)

Tax Rate 12.1%

10.9%

22.0%

34.0%

34.0%

34.0%

Unlevered Net Income $282.0 $350.6 $386.8 $374.5 $438.8 $465.1

Depreciation & Amortization $294.7 $266.1 $273.3 $280.5 $288.0(Increase)/Decrease in Working Capital (49.1

)(65.2

)(26.0

)(25.5

)(23.8

)Capital Expenditures & Additions to Intangible Assets (155.2

)(172.7

)(171.6

)(173.5

)(175.4

)Other Cash Flows 3.4 9.6 (11.4

)(9.0

)(9.8

)

Unlevered Free Cash Flow $375.8 $388.4 $451.1 $447.1 $517.7Note: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.Note: Discounted back to May 01, 2005.(1) Assumes $855.0 million cash, $80.4 million option proceeds, $188.0 million debt and 500.710 gross diluted shares.

% Growth NA 3%

16%

(1%)

16%

Comparable Company Trading Analysis—Aviator

($ in millions, except per share amounts)

Stock Price Equity Enterprise Enterprise Value/CY 2005E Enterprise Value/CY 2006E P/ECompany 05/09/05 Value Value Revenue EBITDA EBIT Revenue EBITDA EBIT CY 2005E CY 2006E

Aviator $9.08 $4,185.6 $ 3,518.6 0.70x

5.6x

10.4x 0.65x

5.1x

8.4x

15.7x

12.7x

Enterprise CommunicationsAlcatel 10.95 15,286.5 14,812.2 0.88

x6.8x 9.6x 0.85

x6.4

x9.0

x14.5

x12.0

xAspect 9.02 575.3 415.5 1.12 4.9 6.6 1.06 4.3 5.4 15.8 13.5Cisco 18.21 117,893.7 101,368.7 3.93 11.1 12.6 3.53 9.9 11.2 19.3 17.0Inter-Tel 19.23 588.3 373.4 0.83 5.8 6.4 0.77 5.1 5.8 13.8 12.0InterVoice 11.00 434.9 394.7 2.35 11.7 15.1 2.11 9.2 11.4 18.4 16.9Nortel 2.62 9,330.1 10,079.1 1.14 12.6 19.9 1.08 9.1 12.5 29.7 18.6Polycom 15.66 1,562.4 1,347.5 2.33 10.1 13.9 2.10 8.5 11.5 20.3 17.2

Mean 1.80x

9.0x

12.0x 1.64x

7.5x

9.6x

18.8x

15.3x

Median 1.14 10.1 12.6 1.08 8.5 11.2 18.4 16.9

Enterprise / Telecom ServicesBlack Box 34.21 607.6 637.4 1.14

x8.3

x9.6x 0.95

x6.7

x8.0

x14.8

x12.5

xConvergys 13.04 1,862.9 2,163.4 0.81 5.6 9.1 0.76 5.1 8.2 13.7 12.1CGI Group 5.61 2,506.0 2,684.5 0.82 5.4 8.1 0.75 4.8 6.8 12.5 10.8Getronics 1.62 1,372.2 1,335.0 0.39 6.1 9.7 0.36 5.1 6.7 11.5 9.0Unisys 6.88 2,320.6 2,711.2 0.46 5.6 27.3 0.44 4.3 10.0 NM 19.7

Mean 0.72x

6.2x

12.8x 0.65x

5.2x

7.9x

13.1x

12.8x

Median 0.81 5.6 9.6 0.75 5.1 8.0 13.1 12.1

Aviator—Implied Enterprise ValueEnterprise CommunicationsAlcatel $10.35 $10.02 $7.99 $10.63 $10.35 $9.06 $10.08 $10.33Aspect 12.69 7.59 5.94 12.87 7.35 6.01 10.86 11.37Cisco 40.95 15.35 10.03 39.51 15.19 10.89 12.91 13.98Inter-Tel 9.78 8.80 5.85 9.78 8.49 6.40 9.68 10.32InterVoice 25.07 16.10 11.75 24.28 14.20 11.05 12.38 13.89Nortel 12.94 17.31 14.96 13.12 14.06 12.01 19.09 15.12Polycom 24.90 14.18 10.93 24.17 13.16 11.14 13.53 14.12

Enterprise/Telecom ServicesBlack Box 12.98 11.90 7.98 11.74 10.66 8.17 10.26 10.65Convergys 9.62 8.51 7.64 9.68 8.55 8.38 9.62 10.36CGI Group 9.73 8.30 6.95 9.58 8.11 7.21 8.89 9.40Getronics 5.38 9.15 8.09 5.42 8.56 7.13 8.27 8.10Unisys 6.14 8.55 20.02 6.28 7.36 9.88 NA 15.92


Comparable Transaction Multiples and Implied Valuation—Aviator

($ in millions)

TargetTransaction Equity Enterprise Enterprise Value/Forward Forward

Acquiror Target Date Value Value Revenue EBITDA EBIT P/EEnterprise CommunicationsScanSoft Nuance 05/09/2005 $212.5 $113.8 1.49

xNA 49.5

x42.1

xAvaya Tenovis 11/18/2004 370.5 635.5 1.00 6.5

xNA NA

Polycom PictureTel 05/22/2001 357.7 358.4 0.92 6.7 15.7 20.7Alcatel Genesys 09/28/1999 1,526.8 1,465.3 7.25 26.1 33.8 53.0Nortel Periphonics 08/23/1999 419.6 392.0 2.27 14.7 19.9 31.1InterVoice Brite Voice 04/26/1999 172.0 159.5 0.97 10.5 16.8 27.4

Enterprise/Telecom ServicesNortel PEC Solutions 04/26/2005 471.1 448.0 1.65

x11.9

x13.2

x22.5

xIBM Corio 01/25/2005 182.0 174.1 2.94 NA NM NMWarburg-Providence Telcordia 11/18/2004 1,350.0 1,350.0 1.53 7.7 8.9 NACisco NetSolve 09/09/2004 128.0 89.0 2.21 NA NM NMAvaya Expanets 11/26/2003 152.0 152.0 0.36 NA NM NACGI AMS 03/09/2004 858.0 795.7 0.78 8.9 17.3 31.3GTCR Syniverse 02/14/2002 770.0 770.0 2.45 6.3 7.4 NA

Aviator—Implied ValuationAcquiror Target

Enterprise Communications

ScanSoft Nuance $16.21 NA NM NMAvaya Tenovis 11.35 9.48 NA NAPolycom PictureTel 10.56 9.73 11.55 11.58Alcatel Genesys 72.93 33.57 23.14 29.39Nortel Periphonics 23.86 19.56 14.24 17.31InterVoice Brite Voice 11.05 14.40 12.25 15.27Enterprise/Telecom ServicesNortel PEC Solutions $17.77 $16.12 $9.95 $12.57IBM Corio 30.46 NA NA NAWarburg-Providence Telcordia 16.57 10.96 7.19 NACisco NetSolve 23.27 NA NA NAAvaya Expanets 5.02 NA NA NACGI AMS 9.21 12.37 12.57 17.42GTCR Syniverse 25.64 9.24 6.23 NA

Note: Based on Aviator’s Forward Revenue of $4934.0 million, Forward EBITDA of $615.4 million, Forward EBIT of $320.7 million, and Forward Net Income of $276.2 million. Note: Based on Aviator’s Cash of $855.0 million, Debt of $188.0 million, and Option Proceeds of $80.4 million.

Weighted Average Cost of Capital Analysis—AviatorAssumptions

Risk-free Rate(1) 4.39 %

Market Risk Premium(2) 7.20

Aviator Marginal Tax Rate 12.0

Do not Delete!

Unlevered Beta CalculationComparable Company Barra Beta Debt/Equity(3) Unlevered Beta(4)

Enterprise CommunicationsAlcatel 1.62 39.1% 1.20Aspect 1.64 0.1 1.64Cisco 1.45 0.0 1.45Inter-Tel 1.32 0.0 1.32InterVoice 1.41 2.4 1.38Nortel 2.21 40.1 1.63Polycom 1.61 0.0 1.61Mean 1.61 11.7% 1.46Enterprise/Telecom ServicesBlack Box 1.24 6.7% 1.17Convergys Corporation 1.14 18.1 0.98CGI Group 1.00 14.7 0.89Getronics 1.99 15.1 1.76Unisys 1.75 45.3 1.25Mean 1.43 20.0% 1.21Consolidated Mean 1.53 15.1% 1.36Aviator 2.44 4.5 2.35

Do not Delete!

WACC Calculation—Based on Aviator’s Unlevered BetaDebt/ Debt/ Levered Cost of Pre-Tax Cost of Debt

Equity(4) Capitalization Beta(5) Equity(6) 6.00% 7.00% 8.00% 9.00% 10.00%

10.0%

9.1% 2.56 22.8% 21.2% 21.3% 21.4% 21.4% 21.5%

20.0 16.7 2.76 24.3 21.1 21.3 21.4 21.6 21.730.0 23.1 2.97 25.8 21.0 21.2 21.4 21.7 21.940.0 28.6 3.18 27.3 21.0 21.2 21.5 21.7 22.050.0 33.3 3.38 28.7 20.9 21.2 21.5 21.8 22.1

WACC Calculation—Based on Industry Average Unlevered BetaDebt/ Debt/ Levered Cost of Pre-Tax Cost of Debt


10.0%

9.1% 1.53 15.4% 14.5% 14.6% 14.7% 14.7% 14.8%

20.0 16.7 1.66 16.3 14.5 14.6 14.8 14.9 15.130.0 23.1 1.78 17.2 14.5 14.7 14.9 15.1 15.340.0 28.6 1.90 18.1 14.4 14.7 14.9 15.2 15.450.0 33.3 2.03 19.0 14.4 14.7 15.0 15.3 15.6

Note: Based on Aviator’s Forward Revenue of $4934.0 million, Forward EBITDA of $615.4 million, Forward EBIT of $320.7 million, and Forward Net Income of $276.2 million. Note: Based on Aviator’s Cash of $855.0 million, Debt of $188.0 million, and Option Proceeds of $80.4 million.

Note: Barra Beta as of May 9, 2005.WACC = Kd * D/(D+E) + Ke * E/(D+E) .(1) Yield on 20-year Treasury Bond as of March 9, 2005.(2) Long-term horizon expected equity risk premium. Source: Ibbotson Associates.(3) Total debt divided by market value of equity.(4) Unlevered Beta = Predicted Beta / (1+ (1-tax)*D/E).(5) Levered Beta = Unlevered Beta * (1+(1-tax)*D/E)).(6) Cost of Equity = Risk-free Rate + (Levered Beta * Market Risk Premium) + Market Capitalization Premium.

Section 2-B

Aviator Sum-of-the-Parts Valuation

Sum-of-the-Parts Valuation

($ in millions)

Value Range as a Multiple of CY 2006E/2005E CY 2006E/2005E

Valuation Method Enterprise Value Range Revenues EBITDA EBITUnlevered Net

Income Revenues EBITDA EBITUnlevered Net Income

Global Communications Group $2,000 – $2,5000.80

x–

1.01x

7.8x

–9.8

x12.7

x–

15.9x

14.5

x–

18.1

x$2,486.8 $256.3 $156.9 $138.0

0.86 – 1.08 9.1 – 11.3 16.7 – 20.9 19.0 – 23.8 2,319.0 220.4 119.5 105.1

Global Services $2,500 – $3,750 0.86 – 1.29 5.8 – 8.7 9.5 – 14.2 10.8 – 16.2 2,908.9 433.0 263.4 231.80.92 – 1.38 6.1 – 9.2 11.4 – 17.1 12.9 – 19.4 2,710.5 406.7 219.8 193.4

BSC REFERENCE RANGE $4,500 – $6,2500.83

x

–1.16

x6.5

x

–9.1

x10.7

x

–14.9

x12.2

x

– 16.9

x$5,395.8 $689.3 $420.2 $369.8

0.89x

– 1.24 7.18 – 9.97 13.3 – 18.4 15.1 – 20.9 5,029.5 627.1 339.3 298.6

Section 2-C

Enterprise Communications Group Valuation

Summary Valuation—Global Communications Group

($ in millions)

Global Communications Solutions Value Range as a Multiple of CY 2006E/2005E CY 2006E/2005E

Valuation MethodEnterprise

Value Range Revenues EBITDA EBIT Unlevered Net Income Revenues EBITDA EBITUnlevered

Net Income

Discounted Cash Flow Analysis $2,000 – $2,600 0.80x

– 1.05x

7.8x

– 10.1x

12.7x

– 16.6x

14.5x

– 18.8x

$2,486.8 $256.3 $156.9 $138.0

0.86 – 1.12 9.1 – 11.8 16.7 – 21.8 19.0 – 24.7 2,319.0 220.4 119.5 105.1

Comparable Company Analysis $2,000 – $2,500 0.80x

– 1.01x

7.8 – 9.8 12.7 – 15.9 14.5 – 18.1 $2,486.8 $256.3 $156.9 $138.0

0.86 – 1.08 9.1 – 11.3 16.7 – 20.9 19.0 – 23.8 2,319.0 220.4 119.5 105.1

Comparable Acquisition Analysis $2,200 – $2,600 0.88x

– 1.05x

8.6 – 10.1 14.0 – 16.6 15.9 – 18.8 $2,486.8 $256.3 $156.9 $138.0

0.95 – 1.12 10.1 – 11.8 18.4 – 21.8 20.9 – 24.7 2,319.0 220.4 119.5 105.1

BSC REFERENCE RANGE $2,000 – $2,500 0.80x

– 1.01x

7.8 – 9.8 12.7 – 15.9 14.5 – 18.1 $2,486.8 $256.3 $156.9 $138.0

0.86 – 1.08 9.1 – 11.3 16.7 – 20.9 19.0 – 23.8 2,319.0 220.4 119.5 105.1

Valuation Matrix at Selected Enterprise Values—Global Communications Segment

($ in millions)

Enterprise Value$2,000.0 $2,100.0 $2,200.0 $2,300.0 $2,400.0 $2,500.0

Enterprise Value as a Multiple of:

CY 2007E Unlevered Net Income $172.6 11.6 x 12.2 x 12.7 x 13.3 x 13.9 x 14.5 x

CY 2006E Unlevered Net Income 138.0 14.5 15.2 15.9 16.7 17.4 18.1


CY 2007E Revenue $2,636.0 0.76 x 0.80 x 0.83 x 0.87 x 0.91 x 0.95 x

CY 2006E Revenue 2,486.8 0.80 0.84 0.88 0.92 0.97 1.01

CY 2005E Revenue 2,319.0 0.86 0.91 0.95 0.99 1.03 1.08

CY 2007E EBITDA $298.3 6.7 x 7.0 x 7.4 x 7.7 x 8.0 x 8.4 x

CY 2006E EBITDA 256.3 7.8 8.2 8.6 9.0 9.4 9.8

CY 2005E EBITDA 220.4 9.1 9.5 10.0 10.4 10.9 11.3

CY 2007E EBIT $196.2 10.2 x 10.7 x 11.2 x 11.7 x 12.2 x 12.7 x

CY 2006E EBIT 156.9 12.7 13.4 14.0 14.7 15.3 15.9

CY 2005E EBIT 119.5 16.7 17.6 18.4 19.2 20.1 20.9 x

Note: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.Note: EBITDA, EBIT, and Unlevered Net Income are all adjusted for allocation of corporate overhead.

Discounted Cash Flow Analysis—Global Communications Group


Forward Revenue Multiple Forward EBITDA Multiple Forward EBIT MultipleWACC 1.00x 1.10x 1.20x 8.0x 9.0x 10.0x 9.5x 10.5x 11.5x

PV of Period Cash Flows 14.50% $508.7 $508.7 $508.7 $508.7 $508.7 $508.7 $508.7 $508.7 $508.7PV of Terminal Value 1,700.2 1,870.2 2,040.2 1,786.1 2,009.3 2,232.6 1,529.3 1,690.3 1,851.2

PV of Enterprise $2,208.8 $2,378.9 $2,548.9 $2,294.7 $2,518.0 $2,741.3 $2,038.0 $2,198.9 $2,359.9

Implied FCF Growth Rate 8.9% 9.4% 9.8% 9.2% 9.8% 10.2% 8.3% 8.9% 9.4%


PV of Enterprise $2,170.7 $2,337.4 $2,504.2 $2,254.9 $2,473.9 $2,692.9 $2,003.0 $2,160.9 $2,318.8



PV of Enterprise $2,133.3 $2,296.9 $2,460.5 $2,216.0 $2,430.8 $2,645.7 $1,968.9 $2,123.8 $2,278.7



PV of Enterprise $2,096.8 $2,257.3 $2,417.9 $2,177.9 $2,388.7 $2,599.5 $1,935.5 $2,087.5 $2,239.5



Free Cash Flow Analysis—Global Communications Group

($ in millions)


Revenue $2,275.3 $2,450.1 $2,597.1 $2,752.9 $2,918.1 $3,093.2

EBITDA $212.3 $244.8 $290.9 $320.4 $359.7 $406.2


(98.8)

(101.4)

(104.1)

(106.9)

(113.3)

EBIT $110.6 $146.0 $189.4 $216.3 $252.8 $292.9EBIT Margin 4.9

%6.0%

7.3%

7.9%

8.7%

9.5%

Taxes ($13.3)

($15.9)

($41.7)

($73.5)

($86.0)

($99.6)

Tax Rate 12.1%

10.9%

22.0%

34.0%

34.0%

34.0%


Depreciation & Amortization $101.7 $98.8 $101.4 $104.1 $106.9Deferred Taxes – – – – –(Increase)/Decrease in Working Capital (16.9

)(24.2

)(9.6

)(9.4

)(8.8

)Capital Expenditures (53.5

)(64.1

)(63.7

)(64.4

)(65.1


)(3.3

)(3.6

)

Unlevered Free Cash Flow $129.6 $144.2 $171.6 $169.7 $196.2

Note: Discounted back to May 1, 2005.

Comparable Company Multiples and Implied Valuation—Global Communications Group

($ in millions)

Stock Price Equity Enterprise Enterprise Value/CY 2005E Enterprise Value/CY 2006E P/E

Company 05/09/05 Value Value Revenue EBITDA EBIT Revenue EBITDA EBIT CY 2005E CY 2006E

Aviator $9.08 $4,185.6 $3,518.6 0.70x

5.6 x 10.4x

0.65 x 5.1x

8.4x

15.7x

12.7 x

Enterprise Communications

Alcatel 10.95 15,286.5 14,812.2 0.88x

6.8 x 9.6x

0.85 x 6.4x

9.0x

14.5x

12.0 x

Aspect 9.02 575.3 415.5 1.12 4.9 6.6 1.06 4.3 5.4 15.8 13.5

Cisco 18.21 117,893.7 101,368.7 3.93 11.1 12.6 3.53 9.9 11.2 19.3 17.0

Inter-Tel 19.23 588.3 373.4 0.83 5.8 6.4 0.77 5.1 5.8 13.8 12.0

InterVoice 11.00 434.9 394.7 2.35 11.7 15.1 2.11 9.2 11.4 18.4 16.9

Nortel 2.62 9,330.1 10,079.1 1.14 12.6 19.9 1.08 9.1 12.5 29.7 18.6

Polycom 15.66 1,562.4 1,347.5 2.33 10.1 13.9 2.10 8.5 11.5 20.3 17.2

Mean 1.80x

9.0 x 12.0x

1.64x 7.5x

9.6x

18.8x

15.3 x

Median 1.14 10.1 12.6 1.08 8.5 11.2 18.4 16.9

Global Communications Group—Implied Enterprise Value

Alcatel $2,045.3 $1,501.5 $1,145.4 $2,108.1 $1,649.2 $1,414.7 $1,525.8 $1,662.8

Aspect 2,585.7 1,072.9 783.4 2,626.5 1,091.5 844.6 1,663.9 1,858.5

Cisco 9,108.5 2,438.6 1,505.0 8,773.4 2,549.4 1,757.1 2,027.0 2,348.5

Inter-Tel 1,913.5 1,286.1 768.6 1,912.3 1,302.3 917.0 1,454.6 1,659.1

InterVoice 5,443.4 2,570.3 1,809.1 5,257.9 2,366.2 1,785.7 1,934.1 2,331.9

Nortel 2,643.3 2,784.2 2,375.0 2,682.5 2,339.8 1,965.8 3,125.2 2,562.3

Polycom 5,402.9 2,233.3 1,664.8 5,234.1 2,172.2 1,802.9 2,138.4 2,375.6


Comparable M&A Transaction Multiples and Implied Valuation—Global Communications Group

($ in millions)Target

Transaction Equity Enterprise Enterprise Value/Forward ForwardAcquiror Target Date Value Value Revenue EBITDA EBIT P/E

ScanSoft Nuance 05/09/2005 $212.5 $113.8 1.49x NA 49.5x 42.1x

Avaya Tenovis 11/18/2004 370.5 635.5 1.00x 6.5x NA NA

UT Starcom Commworks (3Com) 04/23/2004 100.0 100.0 0.91x NA NA NA

Cisco Latitude 11/12/2003 92.5 69.9 2.20x NA NA NA

Melita Concerto 10/06/2003 141.9 113.8 1.07x 18.0x 23.0x 38.1x

Polycom PictureTel 05/22/2001 357.7 358.4 0.92x 6.7x 15.7x 20.7x

Cisco Active Voice 11/10/2000 295.3 275.8 3.21x 47.6x 96.3x 122.1x

Alcatel Genesys 09/28/1999 1,526.8 1,465.3 7.25x 26.1x 33.8x 53.0x

Nortel Periphonics 08/23/1999 419.6 392.0 2.27x 14.7x 19.9x 31.1x

InterVoice Brite Voice 04/26/1999 172.0 159.5 0.97x 10.5x 16.8x 27.4x

Cisco Geotel 04/12/1999 1,914.1 1,854.4 25.73x 85.7x 92.3x 132.5x

Nortel Bay Networks 06/15/1998 8,520.3 7,912.7 2.70x NA NA NA

Lucent Octel 07/17/1997 1,755.8 1,665.5 2.74x 14.4x 22.8x 34.7x

Global Communication Group—Implied ValuationAcquiror Target

ScanSoft Nuance $3,463.3 NA NM NM

Avaya Tenovis 2,319.0 1,432.8 NA NA

UT Starcom Commworks (3Com) 2,110.3 NA NA NA

Cisco Latitude 5,101.8 NA NA NA

Melita Concerto 2,481.3 3,967.6 2,748.1 4,006.0

Polycom PictureTel 2,133.5 1,476.8 1,875.9 2,176.5

Cisco Active Voice 7,443.9 NM NM NM

Alcatel Genesys NM NM NM NM

Nortel Periphonics NM 3,240.2 2,377.7 3,270.0

InterVoice Brite Voice 2,249.4 2,314.5 2,007.3 2,881.0

Cisco Geotel NM NM NM NM

Nortel Bay Networks 6,261.2 NA NA NA

Lucent Octel 6,354.0 3,174.1 2,724.2 3,648.5

Note: The P/E multiple is applied to Unlevered Net Income.Note: Based on Enterprise Communications segment Forward Revenue of $2319.0 million, Forward EBITDA of $220.4 million, Forward EBIT of $119.5 million, and Forward Net Income of $105.1

million.

Cost of Capital Analysis—Enterprise Communications Group

Assumptions



Harris Marginal Tax Rate 12.0

Unlevered Beta CalculationBarra Debt/ Unlevered

Comparable Company Beta Equity(3) Beta(4)

Global Communications GroupAlcatel 1.62 39.1 % 1.20Aspect 1.64 0.1 1.64Cisco 1.45 0.0 1.45Inter-Tel 1.32 0.0 1.32InterVoice 1.41 2.4 1.38Nortel 2.21 40.1 1.63Polycom 1.61 0.0 1.61

Consolidated Mean 1.61 11.7 % 1.46

Aviator 2.44 4.5 % 2.35

Do not Delete!

WACC Calculation—Based on Industry Average Unlevered Beta—Global Communications GroupDebt/ Debt/ Levered Cost of Pre-Tax Cost of Debt


10.0 % 9.1 % 1.59 15.9 % 14.9 % 15.0 % 15.1 % 15.1 % 15.2 %20.0 16.7 1.72 16.8 14.9 15.0 15.2 15.3 15.530.0 23.1 1.85 17.7 14.8 15.0 15.3 15.5 15.740.0 28.6 1.98 18.6 14.8 15.1 15.3 15.6 15.850.0 33.3 2.11 19.6 14.8 15.1 15.4 15.7 16.0

Note: The P/E multiple is applied to Unlevered Net Income.Note: Based on Enterprise Communications segment Forward Revenue of $2319.0 million, Forward EBITDA of $220.4 million, Forward EBIT of $119.5 million, and Forward Net Income of $105.1 million.

Section 2-D

Enterprise Services Valuation

Note: Barra Beta as of May 9, 2005.WACC = Kd * D/(D+E) + Ke * E/(D+E) .(1) Yield on 20-year Treasury Bond as of May 9, 2005.(2) Long-term horizon expected equity risk premium. Source: Ibbotson Associates.(3) Total debt divided by market value of equity.(4) Unlevered Beta = Predicted Beta/(1+ (1-tax)*D/E).(5) Levered Beta = Unlevered Beta * (1+(1-tax)*D/E).(6) Cost of Equity = Risk-free Rate + (Levered Beta * Market Risk Premium) + Market Capitalization Premium.

Summary Valuation—Global Services

($ in millions)

Global Services Value Range as a Multiple of CY 2006E/2005E CY 2006E/2005E

Valuation MethodEnterprise

Value Range Revenues EBITDA EBIT Unlevered Net Income Revenues EBITDA EBITUnlevered

Net Income

Discounted Cash Flow Analysis $2,500 – $3,500 0.80x

– 1.05x

7.8x

– 8.1x

9.5x

– 13.3x

10.8x

– 15.1x

$2,908.9 $433.0 $263.4 $231.8

0.86 – 1.12 6.1 – 8.6 11.4 – 15.9 12.9 – 18.1 2,710.5 406.7 219.8 193.4

Comparable Company Analysis $2,500 – $3,500 0.86x

– 1.20x

5.8 – 8.1 9.5 – 13.3 10.8 – 15.1 $2,908.9 $433.0 $263.4 $231.8

0.92 – 1.29 6.1 – 8.6 11.4 – 15.9 12.9 – 18.1 2,710.5 406.7 219.8 193.4

Comparable Acquisition Analysis $2,750 – $4,000 0.95x

– 1.38x

6.4 – 9.2 10.4 – 15.2 11.9 – 17.3 $2,908.9 $433.0 $263.4 $231.8

1.01 – 1.48 6.8 – 9.8 12.5 – 18.2 14.2 – 20.7 2,710.5 406.7 219.8 193.4

BSC REFERENCE RANGE $2,500 – $3,750 0.86x

– 1.29x

5.8 – 8.7 9.5 – 14.2 10.8 – 16.2 $2,908.9 $433.0 $263.4 $231.8

0.92 – 1.38 6.1 – 9.2 11.4 – 17.1 12.9 – 19.4 2,710.5 406.7 219.8 193.4


Valuation Matrix at Selected Enterprise Values—Global Services

($ in millions)

Enterprise Value$2,500.0 $2,750.0 $3,000.0 $3,250.0 $3,500.0 $3,750.0

Enterprise Value as a Multiple of:

CY 2007E Unlevered Net Income $279.5 8.9 x 9.8 x 10.7 x 11.6 x 12.5 x 13.4 x



CY 2007E Revenue $3,083.5 0.81 x 0.89 x 0.97 x 1.05 x 1.14 x 1.22 x

CY 2006E Revenue 2,908.9 0.86 0.95 1.03 1.12 1.20 1.29

CY 2005E Revenue 2,710.5 0.92 1.01 1.11 1.20 1.29 1.38

CY 2007E EBITDA $491.8 5.1 x 5.6 x 6.1 x 6.6 x 7.1 x 7.6 x

CY 2006E EBITDA 433.0 5.8 6.4 6.9 7.5 8.1 8.7

CY 2005E EBITDA 406.7 6.1 6.8 7.4 8.0 8.6 9.2

CY 2007E EBIT $317.6 7.9 x 8.7 x 9.4 x 10.2 x 11.0 x 11.8 x

CY 2006E EBIT 263.4 9.5 10.4 11.4 12.3 13.3 14.2

CY 2005E EBIT 219.8 11.4 12.5 13.6 14.8 15.9 17.1



Discounted Cash Flow Analysis—Global Services

($ in millions)

Forward Revenue Multiple Forward EBITDA Multiple Forward EBIT MultipleWACC 0.80x 0.95x 1.10x 5.0x 6.0x 7.0x 7.5x 8.5x 9.5x


PV of Enterprise $2,527.2 $2,837.4 $3,147.5 $2,793.6 $3,177.7 $3,561.7 $2,925.7 $3,199.3 $3,472.9



PV of Enterprise $2,485.6 $2,789.7 $3,093.8 $2,746.8 $3,123.5 $3,500.1 $2,876.3 $3,144.7 $3,413.1



PV of Enterprise $2,444.8 $2,743.1 $3,041.4 $2,701.0 $3,070.5 $3,439.9 $2,828.1 $3,091.3 $3,354.5



PV of Enterprise $2,405.0 $2,697.6 $2,990.2 $2,656.3 $3,018.7 $3,381.1 $2,780.9 $3,039.1 $3,297.3




Free Cash Flow Analysis—Global Services

($ in millions)


Revenue $2,658.7 $2,865.9 $3,037.9 $3,220.2 $3,413.5 $3,618.3

EBITDA $403.1 $417.5 $479.5 $528.7 $594.3 $672.2


(168.4)

(173.0)

(177.6)

(182.3)

(193.2)

EBIT $210.1 $249.0 $306.5 $351.1 $412.0 $478.9EBIT Margin 7.9

%8.7%

10.1%

10.9%

12.1%

13.2%

Taxes ($25.3)

($27.1)

($67.4)

($119.4)

($140.1)

($162.8)

Tax Rate 12.1%

10.9%

22.0%

34.0%

34.0%

34.0%


Depreciation & Amortization $193.0 $168.4 $173.0 $177.6 $182.3Deferred Taxes – – – – –(Increase)/Decrease in Working Capital (32.2

)(41.3

)(16.4

)(16.1

)(15.1

)Capital Expenditures (101.7

)(109.3

)(108.6

)(109.8

)(111.0


)(5.7

)(6.2

)

Unlevered Free Cash Flow $246.2 $245.9 $279.8 $277.7 $321.9


Note: Discounted back to May 1, 2005.

Comparable Company Trading Analysis—Global Services

($ in millions)

Stock Price Equity Enterprise Enterprise Value/CY 2005E Enterprise Value/CY 2006E P/ECompany 05/09/05 Value Value Revenue EBITDA EBIT Revenue EBITDA EBIT CY 2005E CY 2006E

Aviator $9.08 $4,185.6 $3,518.6 0.70x

5.6x

10.4x

0.65x

5.1x

8.4x

15.7x

12.7x

Enterprise ServicesBlack Box $34.21 $607.6 $637.4 1.14

x8.3

x9.6

x0.95

x6.7

x8.0

x14.8

x12.5

x

Convergys 13.04 1,862.9 2,163.4 0.81 5.6 9.1 0.76 5.1 8.2 13.7 12.1

CGI Group 5.61 2,506.0 2,684.5 0.82 5.4 8.1 0.75 4.8 6.8 12.5 10.8

Getronics 1.62 1,372.2 1,335.0 0.39 6.1 9.7 0.36 5.1 6.7 11.5 9.0

Unisys 6.88 2,320.6 2,711.2 0.46 5.6 27.3 0.44 4.3 10.0 NM 19.7

Mean 0.72x

6.2x

12.8x

0.65x

5.2x

7.9x

13.1x

12.8x

Median 0.81 5.6 9.6 0.75 5.1 8.0 13.1 12.1

Global Services—Implied Enterprise Value

Black Box $3,098.5 $3,379.4 $2,102.8 $2,767.3 $2,884.3 $2,095.5 $2,864.5 $2,891.1Convergys 2,192.2 2,280.0 1,994.9 2,209.1 2,218.4 2,161.6 2,655.0 2,798.4CGI Group 2,221.5 2,211.0 1,769.5 2,183.4 2,081.2 1,793.4 2,417.9 2,496.6Getronics 1,048.3 2,487.2 2,140.8 1,058.8 2,224.2 1,770.4 2,215.6 2,086.0Unisys 1,255.1 2,290.1 6,008.5 1,292.4 1,845.8 2,630.5 NA 4,556.0



Aviator—Comparable Transaction Multiples and Implied Valuation—Global Services

($ in millions)

Target Enterprise Value/Forward

Acquiror Target Transaction Date Equity Value Enterprise Value Revenue EBITDA EBIT Forward P/E

Nortel PEC Solutions 4/26/2005 $471.1 $448.0 1.65x

11.9x

13.2x

22.5x

IBM Corio 1/25/2005 182.0 174.1 2.94 NA NM NM

Warburg-Providence Telcordia 11/18/2004 1,350.0 1,350.0 1.53 7.7 8.9 NA

Cisco NetSolve 9/9/2004 128.0 89.0 2.21 NA NM NM

Avaya Expanets 11/26/2003 152.0 152.0 0.36 NA NM NA

CGI AMS 3/9/2004 858.0 795.7 0.78 8.9 17.3 31.3

GTCR Syniverse 2/14/2002 770.0 770.0 2.45 6.3 7.4 NA

Services—Implied Valuation

Acquiror Target

Nortel PEC Solutions $3,830.6 $2,623.1 $1,577.2 $2,365.8

IBM Corio 6,817.8 NA NA NA

Warburg-Providence Telcordia 3,548.0 1,697.3 1,063.4 NA

Cisco NetSolve 5,124.9 NA NA NA

Avaya Expanets 829.4 NA NA NA

CGI AMS 1,815.9 1,950.9 2,067.0 3,291.0

GTCR Syniverse 5,681.5 1,388.7 884.2 NA


Note: The P/E multiple is applied to Unlevered Net Income.Note: Based on Global Services segment Forward Revenue of $2319.0 million, Forward EBITDA of $220.4 million, Forward EBIT of $119.5 million, and Forward Net Income of $105.1 million.

Cost of Capital Analysis—Services

Assumptions



Aviator Marginal Tax Rate 12.0

Unlevered Beta CalculationBarra Debt/ Unlevered

Comparable Company Beta Equity(3) Beta(4)

Global ServicesBlack Box 1.24 6.7% 1.17Convergys Corporation 1.14 18.1 0.98CGI Group 1.00 14.7 0.89Getronics 1.99 15.1 1.76Unisys 1.75 45.3 1.25Consolidated Mean 1.43 20.0 1.21Aviator 2.44 4.5 2.35

Do not Delete!

WACC Calculation—Based on Industry Average Unlevered Beta—ServicesDebt/ Debt/ Levered Cost of Pre-Tax Cost of Debt


10.0 % 9.1 % 1.32 13.9% 13.1% 13.2% 13.3% 13.3% 13.4%20.0 16.7 1.42 14.6 13.1 13.2 13.4 13.5 13.730.0 23.1 1.53 15.4 13.1 13.3 13.5 13.7 13.940.0 28.6 1.64 16.2 13.1 13.3 13.6 13.8 14.150.0 33.3 1.74 16.9 13.1 13.4 13.6 13.9 14.2


Note: The P/E multiple is applied to Unlevered Net Income.Note: Based on Enterprise Communications segment Forward Revenue of $2319.0 million, Forward EBITDA of $220.4 million, Forward EBIT of $119.5 million, and Forward Net Income of $105.1 million. (1) Excludes Cisco/Active Voice, Alcatel/Genesys and Cisco/Geotel.

Note: Barra Beta as of May 9, 2005.WACC = Kd * D/(D+E) + Ke * E/(D+E).(1) Yield on 20-year Treasury Bond as of May 2, 2005.(2) Long-term horizon expected equity risk premium. Source: Ibbotson Associates.(3) Total debt divided by market value of equity.(4) Unlevered Beta = Predicted Beta/(1+ (1-tax)*D/E).(5) Levered Beta = Unlevered Beta * (1+(1-tax)*D/E)).(6) Cost of Equity = Risk-free Rate + (Levered Beta * Market Risk Premium) + Market Capitalization Premium.

Section 3

Pro Forma Merger Consequences—Nortel Acquires Aviator

Section 3-A

Transaction Considerations

Nortel Merges with Aviator—Strategic Rationale

Dominant Legacy PBX Vendor

Globally

Potential to create the largest PBX vendor globally, with combined enterprise revenue of $8.1 billion and well-entrenched customer relationships

Nortel/Aviator will be the #1 vendor in the North American enterprise voice market, with a combined market share of approximately 47%

Nortel/Aviator will be the #1 vendor in the global contact center market, with market shares of 56%, 54% and 75% in North America, Europe and Asia respectively

Could potentially have the scale and the R&D capabilities to take on Cisco in the enterprise PBX portion of the overall enterprise market as it transforms from circuit to IP

Different Channel and Portfolio

Strategies Create Opportunities for

Cross Selling

Aviator’s channel mix is mostly direct (65%), whereas Nortel’s enterprise channel strategy is almost entirely indirect

Nortel’s enterprise business generates approximately 30% of revenue from sale of data networking equipment; Aviator currently generates no revenue from sale of data networking equipment

Aviator could potentially cross-sell its service offerings into Nortel’s customer base; Nortel could potentially cross-sell its data offerings into Aviator’s customer base

Similar Geographic Footprint Creates Potential for Cost

Synergies

Significant opportunities for cost synergies exist through reductions in cost of sales, overlapping R&D platforms and redundant G&A functions

Geographic proximity of Nortel and Aviator should allow for efficient execution of these synergies.

Pro Forma Revenue Mix Analysis

Nortel Nortel + Aviator

Wireline Infrastructure

25%

Wireless Infrastructure

51%

Enterprise24%

Wireline Infrastructure

16%

Wireless Infrastructure

34%

Enterprise50%

Total 2005E Revenues = $10.6 Billion Total 2005E Revenues = $15.6 Billion

Nortel Lucent Siemens Alcatel Cisco Aviator JuniperNortel+Aviator

Growth Businesses

Carrier IP Routing – – – –

Carrier VoIP Gateways and Softswitches – –

Enterprise Convergence – –

3G Wireless – – –

Broadband Access – – –

Security, Storage, WLAN – – – –

Home Networking/Mobile Phones – – – – – – –

Mature Businesses

Optical Networking – –

ATM Switching – – –

2.0–2.5G Wireless – – –

Enterprise Data Networking – –

Declining Businesses

Digital Cross Connect – – – – –

Circuit Switching – – –

Legacy PBX – – –

Leadership/Strong Position Weak Position

Review of Key Considerations—Merger with Aviator

Insert Portrait Tabloid 6937031 (Doc. # 6966602) Page 48

Shareholder Overlap AnalysisNortel Shareholders Aviator Shareholders

Position % Ownership Position % OwnershipPrimecap Management 118.712 2.8 % Warburg Pincus 47.955 10.0

%Capital Research & Management 98.550 2.3 Dodge & Cox 24.812 5.2MFS Investment Management 79.074 1.9 Fidelity Management & Research 16.979 3.5Smith Barney Asset Management 78.334 1.8 Lord, Abbett & Co. 16.215 3.4Alliance Capital Management 67.884 1.6 Barclays Global Investors 15.083 3.1McLean Budden 65.775 1.5 Friess Associates 12.913 2.7TD Asset Management 62.288 1.5 SSgA Funds Management 11.961 2.6CDP Capital World Markets 53.573 1.3 Vanguard Group 11.883 2.5Barclays Global Investors 52.422 1.2 Wellington Management 11.104 2.3BC Investment Management 51.264 1.2 AIM Management Group 10.080 2.1Fidelity Management & Research 48.026 1.1 Calamos Advisors 7.283 1.5Canadian Pension Plan Investment Board 42.805 1.0 Artisan Partners 7.013 1.5BMO Nesbitt Burns 37.682 0.9 Franklin Advisers 6.717 1.4Artisan Partners 36.825 0.9 Trusco Capital Management 5.952 1.2RBC Asset Management 36.346 0.9 Victory Capital Management 5.751 1.2Ontario Teachers’ Pension Plan Board 33.866 0.8 Northern Trust Global Investments 4.736 1.0Equinox Capital Management 31.418 0.7 Bessemer Investment Management 4.645 1.0Ontario Municipal Employee Retirement System 29.419 0.7 Pioneer Global Asset Management 4.537 0.9TAL Global Asset Management 24.508 0.6 TIAA-CREF Investment Management 3.838 0.8Phillips, Hager & North Investment Management 23.038 0.5 BNP Paribas Asset Management 3.617 0.8Connor, Clark & Lunn Investment Management 21.856 0.5 Fifth Third Asset Management 3.207 0.7I. G. Investment Management 18.811 0.4 Dreyfus Investment Advisors 2.944 0.6HOOPP Investment Management 16.524 0.4 AXA Rosenberg Investment Management 2.720 0.6Deutsche Bank Investment Management 15.758 0.4 Mellon Bank Asset Management 2.695 0.6Merrill Lynch Investment Managers 15.302 0.4 JPMorgan Investment Management 2.339 0.5Letko, Brosseau & Associates 15.174 0.4 Northern Capital Management 2.153 0.4Jennison Associates 14.037 0.3 Perkins, Wolf, McDonnell & Co. 2.132 0.4UBS Global Asset Management 13.760 0.3 US Bancorp Asset Management 2.100 0.4Goldman Sachs Asset Management 13.554 0.3 Merrill Lynch Investment Managers, Inc. 2.056 0.4Marathon Asset Management 12.867 0.3 American Century Global Investment Management 2.050 0.4TIAA-CREF Investment Management 12.146 0.3 California Public Employees Retirement System 1.998 0.4T. Rowe Price Associates 11.685 0.3 Deutsche Bank Investment Management 1.971 0.4AIM Trimark Investments 11.517 0.3 Northwestern Investment Management 1.931 0.4Morgan Stanley 11.495 0.3 PDR Services 1.874 0.4Natcan Investment Management 11.425 0.3 Akanthos Capital Management 1.872 0.4C. I. Mutual Funds 11.193 0.3 Citadel Investment Group 1.752 0.4Deutsche Bank Securities 9.921 0.2 Fred Alger Management 1.744 0.4Courage Capital Management 9.736 0.2 Teacher Retirement System of Texas 1.699 0.4Norges Bank Kapitalforvaltning 8.994 0.2 HSBC Asset Management 1.696 0.4Goldman Sachs 8.972 0.2 Geode Capital Management 1.668 0.3

Section 3-B

Pro Forma Merger Consequences

Relative Contribution Analysis

($ in millions)

$ %Nortel Aviator Total Nortel Aviator

Revenues FY 2008E $13,305.9 $6,062.8 $19,368.7 68.7% 31.3%FY 2007E 12,672.3 5,719.5 18,391.9 68.9 31.1FY 2006E 12,061.7 5,395.8 17,457.4 69.1 30.9

EBITDA FY 2008E $1,481.0 $874.2 $2,355.2 62.9% 37.1%FY 2007E 1,429.4 788.9 2,218.3 64.4 35.6FY 2006E 1,130.1 686.9 1,817.0 62.2 37.8

EBIT FY 2008E $1,075.3 $591.8 $1,667.1 64.5% 35.5%FY 2007E 1,023.9 513.8 1,537.6 66.6 33.4FY 2006E 738.8 419.0 1,157.8 63.8 36.2

Net Income FY 2008E $933.5 $406.7 $1,340.1 69.7% 30.3%FY 2007E 867.2 396.2 1,263.4 68.6 31.4FY 2006E 571.6 367.3 938.9 60.9 39.1

Cash(1) $3,386.4 $1,040.1 $4,426.5 76.5% 23.5%Total Debt(1) 3,870.0 20.5 3,890.5 99.5 0.5Minority Interest(1) 630.0 0.0 630.0 100.0 0.0Shareholders Equity(1) 3,766.7 1,535.3 5,302.0 71.0 29.0

Equity Value(2) $11,315.9 $4,663.0 $15,978.9 70.8% 29.2%Enterprise Value 12,361.9 3,996.7 16,358.6 75.6 24.4

Equity Value at $10.00 per Share $11,315.9 $4,896.9 $16,212.9 69.8% 30.2%Equity Value at $12.00 per Share 11,315.9 5,892.4 17,208.4 65.8 34.2Equity Value at $14.00 per Share 11,315.9 6,902.4 18,218.3 62.1 37.9

Pro Forma Merger Consequences Summary—Nortel Acquires Aviator

($ in millions, except for per share data)

$10.00 per Share $12.00 per Share $14.00 per Share

100% Stock25% Cash/75% Stock

50% Stock/50% Cash 100% Stock

25% Cash/75% Stock

50% Stock/50% Cash 100% Stock

25% Cash/75% Stock

50% Stock/50% Cash

Implied Exchange Ratio 3.779 x 2.834 x 1.889 x 4.534 x 3.401 x 2.267 x 5.290 x 3.968 x 2.645 x

Premium to Market 4.9 % 4.9 % 4.9 % 25.9 % 25.9 % 25.9 % 46.9 % 46.9 % 46.9 %

Earnings (Dilution)/Accretion Per Share ($)FY 2006E $0.01 $0.02 $0.02 ($0.00 ) $0.01 $0.00 ($0.01 ) ($0.01 ) ($0.01 )FY 2007E (0.01 ) 0.01 0.01 (0.02 ) (0.01 ) (0.00 ) (0.03 ) (0.02 ) (0.02 )FY 2008E (0.01 ) 0.01 0.01 (0.02 ) (0.01 ) (0.00 ) (0.04 ) (0.03 ) (0.02 )

Earnings (Dilution)/Accretion Per Share (%)FY 2006E 7.7 % 13.6 % 11.9 % (0.6

%)4.3 % 0.5 % (8.1

%)(5.5%)

(10.4%)

FY 2007E (2.7 ) 3.4 7.0 (9.6 ) (3.6 ) (0.4 ) (15.9 ) (11.6 ) (8.0 )FY 2008E (3.7 ) 2.4 6.5 (10.5 ) (4.3 ) (0.6 ) (16.6 ) (11.9 ) (7.7 )

Additional Pre-Tax Earnings for 0% DilutionFY 2006E NA NA NA $5.4 NA NA $81.8 $50.2 $85.5FY 2007E 38.3 NA NA 145.9 49.7 5.6 255.0 168.5 104.6FY 2008E 60.2 NA NA 178.8 66.9 8.0 299.1 194.6 113.1

Closing Balance SheetCash $4,306.0 $3,081.7 $3,001.2 $4,306.0 $3,000.0 $3,011.6 $4,306.0 $3,021.4 $3,023.3Incremental Identifiable Intangible Assets 692.3 692.3 692.3 891.4 891.4 891.4 1,093.4 1,093.4 1,093.4Total Debt 3,870.0 3,870.0 5,030.0 3,870.0 4,038.7 5,545.0 3,870.0 4,320.0 6,070.0Equity 8,663.6 7,439.4 6,215.1 9,659.1 8,186.0 6,712.9 10,669.1 8,943.5 7,217.9

FFO/DebtFY 2006E 41.5 % 41.0 % 33.6 % 41.6 % 40.1 % 31.2 % 41.6 % 35.9 % 28.4 %FY 2007E 50.5 50.0 41.9 50.6 49.2 39.4 50.6 44.1 36.1FY 2008E 52.7 52.2 43.9 52.8 51.4 41.3 52.9 46.1 37.9

Total Debt/CapitalizationClosing 29.4 % 32.4 % 42.4 % 27.3 % 31.4 % 43.0 % 25.5 % 31.1 % 43.6 %FY 2006E 27.6 30.2 37.0 25.8 28.9 36.9 24.2 29.4 37.3FY 2007E 25.4 27.7 33.9 23.9 26.6 34.0 22.5 27.3 34.7FY 2008E 23.4 25.4 31.0 22.1 24.5 31.4 21.0 25.4 32.2

Total Debt/EBITDAClosing 2.9 x 2.9 x 3.8 x 2.9 x 3.1 x 4.2 x 2.9 x 3.3 x 4.6 xFY 2006E 2.1 2.1 2.5 2.1 2.2 2.6 2.1 2.4 2.8FY 2007E 1.7 1.7 2.0 1.7 1.8 2.1 1.7 1.9 2.3FY 2008E 1.6 1.6 1.9 1.6 1.7 2.0 1.6 1.8 2.2

Pro Forma Ownership—Aviator 30.2 % 24.5 % 17.8 % 34.2 % 28.1 % 20.7 % 37.9 % 31.4 % 23.4 %

Note: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.Note: Fiscal year ending December 31.(1) As of December 31, 2005.(2) As of May 27, 2005.

Nortel Acquires Aviator—Synergy Sensitivity AnalysisAssuming 50% Stock/50% Cash ($ in millions, except per share data)

Pretax Synergies$250 $300 $350 $400 $450 $500

$10/share

Earnings (Dilution)/Accretion Per Share ($)FY 2006E $0.06 $0.07 $0.08 $0.09 $0.09 $0.10FY 2007E 0.06 0.07 0.07 0.08 0.09 0.10FY 2008E 0.06 0.06 0.07 0.08 0.09 0.10

Earnings (Dilution)/Accretion Per Share (%)FY 2006E 44.5

%51.1

%57.6

%64.1

%70.7

%77.2

%FY 2007E 28.0 32.2 36.4 40.6 44.8 49.0FY 2008E 10.0 13.5 17.0 20.6 24.1 27.7

$12/share



%38.4

%44.7

%51.0

%57.3

%63.6

%FY 2007E 19.8 23.9 27.9 32.0 36.0 40.1FY 2008E 17.7 21.4 25.1 28.7 32.4 36.1

$14/share



%26.1

%32.2

%38.3

%44.4

%50.5

%FY 2007E 11.5 15.4 19.4 23.3 27.2 31.1

Note: Financial projections based on Wall Street equity research and Bear Stearns Investment Banking estimates.Assumes December 31, 2005 closing date.Assumes Nortel stock price of $2.65 and Aviator stock price of $9.53 (as of May 27, 2005).Assumes 20% of Excess of Purchase Price over Book Value is allocated to Incremental Identifiable Intangible Assets and is amortized (straight-line) over 10 years for book purposes.Assumes purchase funded with balance sheet cash subject to a $3.0 billion minimum cash balance; excess, if any, funded with a combination of bank debt at L+350 and senior notes at 8.19% for 50/50 and 25/75 scenarios.

FY 2008E 10.0 13.5 17.0 20.6 24.1 27.7

Nortel Acquires Aviator—Synergy Sensitivity AnalysisAssuming 100% Stock ($ in millions, except per share data)

Pretax Synergies$250 $300 $350 $400 $450 $500

$10/share



%41.0

%46.6

%52.1

%57.7

%63.2

%FY 2007E 15.1 18.7 22.3 25.8 29.4 33.0FY 2008E (2.2

)0.6 3.5 6.4 9.2 12.1

$12/share



%30.8

%36.0

%41.3

%46.5

%51.7

%FY 2007E 7.2 10.5 13.9 17.2 20.6 24.0FY 2008E 4.7 7.7 10.8 13.8 16.8 19.9

$14/share

Earnings (Dilution)/Accretion Per Share ($)FY 2006E $0.02 $0.03 $0.04 $0.04 $0.05 $0.06FY 2007E (0.00

)0.01 0.01 0.02 0.03 0.03

FY 2008E (0.00)

0.00 0.01 0.01 0.02 0.03

Earnings (Dilution)/Accretion Per Share (%)

FY 2006E 16.6%

21.6%

26.5%

31.4%

36.4%

41.3%

FY 2007E (0.0)

3.1 6.3 9.5 12.7 15.8

FY 2008E (2.2)

0.6 3.5 6.4 9.2 12.1

Documents

Bear Stearns Nortel