<Page>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                               ------------------

                                   FORM 10-K

              /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001
                                       OR
            / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 001-15951

                                   AVAYA INC.

<Table>
<S>                                            <C>
                 A DELAWARE                                   I.R.S. EMPLOYER
                 CORPORATION                                  NO. 22-3713430

                    211 MOUNT AIRY ROAD, BASKING RIDGE, NEW JERSEY 07920
                               TELEPHONE NUMBER 908-953-6000
                SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

             TITLE OF EACH CLASS                       EXCHANGE ON WHICH REGISTERED
   Common Stock, par value $0.01 per share                New York Stock Exchange
Series A Junior Participating Preferred Stock             New York Stock Exchange
               Purchase Rights                            New York Stock Exchange
   Liquid Yield Option-TM- Notes due 2021

                SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                            NONE
</Table>

                            ------------------------

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

    At November 30, 2001, the aggregate market value of the voting common equity
held by non-affiliates was approximately $3.3 billion.

    At November 30, 2001, 287,347,940 common shares were outstanding.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<Page>
                      DOCUMENTS INCORPORATED BY REFERENCE

<Table>
<S>                                                           <C>
Portions of the 2001 Annual Report to Shareholders..........  Parts I, II and IV

Portions of the Proxy Statement for the 2002 Annual Meeting
  of Shareholders...........................................  Part III
</Table>

                                       2
<Page>
                               TABLE OF CONTENTS

<Table>
<Caption>
ITEM                                            DESCRIPTION                             PAGE
----                                            -----------                           --------
<C>                     <S>                                                           <C>
                                            PART I

          1.            Business....................................................      4

          2.            Properties..................................................     24

          3.            Legal Proceedings...........................................     24

          4.            Submission of Matters to a Vote of Security-Holders.........     25

                                           PART II

          5.            Market for Registrant's Common Equity and Related
                        Stockholder Matters.........................................     26

          6.            Selected Financial Data.....................................     26

          7.            Management's Discussion and Analysis of Financial Condition
                        and Results of Operations...................................     26

         7A.            Quantitative and Qualitative Disclosures About Market
                        Risk........................................................     26

          8.            Financial Statements and Supplementary Data.................     26

          9.            Changes in and Disagreements with Accountants on Accounting
                        and Financial Disclosure....................................     26

                                           PART III

         10.            Directors and Executive Officers of the Registrant..........     26

         11.            Executive Compensation......................................     27

         12.            Security Ownership of Certain Beneficial Owners and
                        Management..................................................     27

         13.            Certain Relationships and Related Transactions..............     28

                                           PART IV

         14.            Exhibits, Financial Statement Schedules, and Reports on Form
                        8-K.........................................................     28
</Table>

    This Annual Report on Form 10-K contains trademarks, service marks and
registered marks of Avaya and its subsidiaries and other companies, as
indicated. Unless otherwise provided in this Annual Report on Form 10-K,
trademarks identified by -Registered Trademark- and -TM- are registered
trademarks or trademarks, respectively, of Avaya Inc. or its subsidiaries. All
other trademarks are the properties of their respective owners. Liquid Yield
Option-TM- Notes is a trademark of Merrill, Lynch & Co., Inc.
Microsoft-Registered Trademark- is a registered trademark of Microsoft
Corporation. Lotus Notes-Registered Trademark- is a registered trademark of
Lotus Development Corporation and/or IBM Corporation.

                                       3
<Page>
                                     PART I

ITEM 1. BUSINESS.

OVERVIEW

    Avaya Inc. is a leading provider of communications systems and software for
enterprises, including businesses, government agencies and other organizations.
We offer voice, converged voice and data, customer relationship management,
messaging, multi-service networking and structured cabling products and
services. Multi-service networking products are those products that support
network infrastructures which carry voice, video and data traffic over any of
the protocols, or set of procedures, supported by the Internet on local area and
wide area data networks. A structured cabling system is a flexible cabling
system designed to connect phones, workstations, personal computers, local area
networks and other communications devices through a building or across one or
more campuses. We are a worldwide leader in sales of messaging and structured
cabling systems and a U.S. leader in sales of enterprise voice communications
and call center systems. We are not a leader in multi-service networking
products and our product portfolio in this area is less complete than the
portfolios of some of our competitors. In addition, we are not a leader in sales
of certain converged voice and data products, including server-based Internet
Protocol telephony systems. We are implementing a strategy focused on these and
other advanced communications solutions.

    We support our customers with comprehensive global service offerings,
including remote diagnostics testing of our advanced systems, installation of
our products, on-site repair and maintenance. We believe our global service
organization is an important consideration for customers purchasing our systems
and software and is a source of significant revenue for us, primarily from
maintenance contracts. We also offer professional services for customer
relationship management, converged voice and data networks and unified
communications and value-added services for the outsourcing of messaging and
other portions of an enterprise's communications system.

    The following are the three core components of our strategy:

    - Revenue growth--increase our revenue growth by focusing our sales and
      product development efforts on the higher growth segments of our markets;

    - Restructuring--restructure our business to reduce expenses and improve
      efficiency; and

    - Reinvestment--reinvest in research and development to develop new systems
      and solutions to augment our current product and solution offerings.

    As part of our strategy to increase revenue growth, we intend to use our
leadership positions in enterprise communications systems and software, our
broad portfolio of products and services and strategic alliances with other
technology and consulting services leaders to offer our broad customer base
comprehensive advanced communications solutions. Our advanced communications
solutions include converged voice and data networks, customer relationship
management solutions, unified communication applications and multi-service
networking products. Our strategy to increase revenue growth also includes a
focus on increasing international sales through alliances and our network of
distributors. In addition, we believe strengthening our network of distributors
in the United States and internationally will better serve the needs of our
small- and mid-sized customers, resulting in increased revenue growth.

    In connection with our spin-off from Lucent Technologies Inc., or Lucent, in
September 2000, we engaged in a comprehensive review of our operations with a
view toward improving our profitability and our business performance in the near
term. As a result of this review, we adopted a restructuring plan designed to be
implemented completely by the end of fiscal 2003. During fiscal 2001, we
accelerated the restructuring plan with a goal of completing the implementation
of the plan by the end of fiscal 2002. The primary features of our restructuring
plan include outsourcing the manufacturing of

                                       4
<Page>
substantially all of our products, consolidation of our real estate holdings and
restructuring of our workforce in order to more effectively address the needs of
our business. Some of the highlights of the implementation of our restructuring
plan in fiscal 2001 are as follows:

    - we outsourced the manufacture of substantially all of our communications
      systems and software to Celestica Inc. under a five-year strategic
      manufacturing agreement;

    - we reduced our real estate holdings since September 30, 2000 by
      approximately 1.6 million square feet, or 11.3%, primarily as a result of
      our outsourcing transaction and consolidation of leased properties; and

    - we reduced the size of our workforce from 31,000 employees as of
      September 30, 2000 to 23,000 employees as of September 30, 2001, primarily
      as a result of the outsourcing transaction with Celestica and a
      combination of involuntary and voluntary separations, including an early
      retirement program targeted at U.S. management employees.

    We increased research and development expenses by 14.5% in fiscal 2001, or,
as a percentage of revenue, from 6.1% in fiscal 2000 to 7.9% in fiscal 2001, as
part of our initiative to increase research and development spending. As a part
of Lucent, we were allocated a portion of Lucent's basic research, which did not
necessarily directly benefit our business. Our current and future investments in
research and development will have a greater focus on our products.

    We were incorporated under the laws of the State of Delaware under the name
"Lucent EN Corp." on February 16, 2000, as a wholly owned subsidiary of Lucent.
As of June 27, 2000, our name was changed to "Avaya Inc." On September 30, 2000,
Lucent contributed its enterprise networking business to us and distributed all
of the outstanding shares of our capital stock to its shareowners. We refer to
these transactions respectively in this Annual Report on Form 10-K as the
"contribution" and the "distribution." Prior to the contribution and the
distribution, we had no material assets or activities as a separate corporate
entity. Following the distribution, we became an independent public company, and
Lucent has no continuing stock ownership interest in us.

PRODUCT AND SOLUTION OFFERINGS

    We offer a broad array of communications systems, solutions and services
that enable enterprises to communicate with their customers, suppliers, partners
and employees through voice, Web, electronic mail, facsimile, Web chat sessions
and other forms of communication, across an array of devices. These devices
include telephones, computers, mobile phones and personal digital assistants. We
classify these products and services as Converged Voice and Data Networks,
Customer Relationship Management, Unified Communication, Multi-service
Networking and Connectivity Solutions. Converged Voice and Data Networks,
Customer Relationship Management, Unified Communication and Multi-Service
Networking and product installation services comprise our Communications
Solutions segment. In addition, our Services segment is comprised of our
maintenance, value-added and data services offerings. Please see Note 15 to our
Consolidated Financial Statements for the year ended September 30, 2001, which
is incorporated by reference from our 2001 Annual Report to Shareholders, for
financial information regarding our segments.

    Our broad portfolio of products includes products we have developed
internally, products we have obtained through acquisitions, products we resell
that are manufactured by third parties and products we have developed through
our strategic alliances with other technology leaders. Our products range from
systems designed for multinational enterprises with multiple locations
worldwide, thousands of employees and advanced communications requirements to
systems designed for enterprises with a regional or local presence, a single
location, and less extensive communications requirements.

                                       5
<Page>
COMMUNICATIONS SOLUTIONS SEGMENT

    CONVERGED VOICE AND DATA NETWORKS.  Our Converged Voice and Data Networks
solutions include our traditional enterprise voice communications systems and
our IP telephony offerings. Internet Protocol, or IP, is a type of protocol, or
set of procedures, for the formatting and timing of data transmission between
two pieces of equipment. Converged networks generally provide for the
integration of voice, data, video and other traffic, including wireless, over a
single unified network. Through our converged network offering, we can offer our
customers a new server-based IP telephony system, or IP PBX, or we can
"IP-enable" their existing voice communications system. We are not a leader in
sales of IP PBXs.

    We are a U.S. leader in sales of enterprise voice communications systems,
our core voice communications products. We offer a broad range of systems to
satisfy the communications needs of a diverse group of enterprises. We offer
systems designed for under five users, as well as systems that can be networked
to accommodate an almost unlimited number of users. Our systems are generally
designed to allow an enterprise to add or remove users and have optional
features, including over 450 in our most advanced systems, available to enable
an enterprise to activate additional features as its communications requirements
change.

    Our most advanced enterprise voice communications system is our
DEFINITY-Registered Trademark- Enterprise Communications Server, which is
offered in a variety of configurations in approximately 90 countries. Our
DEFINITY product line is a family of products that provides for a reliable
network for voice communication which offers integration with an enterprise's
data network. Our DEFINITY servers support a variety of voice and data
applications such as call and customer contact centers, messaging and
interactive voice response, or IVR, systems. IVR systems allow an individual to
access information in the enterprise's computer databases or conduct
transactions by voice or using a touch-tone telephone. Our DEFINITY servers
support open and standard interfaces for computer telephony integration
applications, which are advanced applications that assist in the making,
receiving and managing of telephone calls. Our DEFINITY servers facilitate the
ongoing transition at many enterprises from private voice telephone systems to
advanced systems that integrate voice and data traffic and deploy increasingly
sophisticated communications applications.

    Primarily in Europe, Australia and Japan, we offer two other advanced
systems, the Avaya INDeX-TM- and Avaya Alchemy-TM- product lines, which are
targeted to small- to mid-sized enterprises. These systems are price sensitive
offerings and provide a variety of integrated voice and data applications. In
addition to our advanced systems, we offer two primary voice communications
systems, our Merlin Magix-Registered Trademark- and
Partner-Registered Trademark- product lines, targeted at small- and mid-sized
enterprises with less extensive to moderately sophisticated communications
requirements.

    We offer a family of our most advanced converged telephony solutions under
the name Enterprise Class Internet Protocol Solutions, or ECLIPS. Products
comprising the ECLIPS family of solutions include the Avaya IP600 Internet
Protocol Communication Server, the Avaya-TM- R300 Remote Office Communicator,
the Avaya-TM-DEFINITY-Registered Trademark- IP Solutions software, our IP
Telephones and IP Softphone. The ECLIPS family of solutions:

    - offers our customers the ability to integrate voice, email and fax
      communications using the full range of Avaya solutions and applications
      and industry solutions over their converged voice and data networks;

    - offers a choice of IP enhancement to a customer's traditional private
      branch exchange, or PBX, giving the customer the choice of upgrading its
      existing equipment for IP communication or installing an IP PBX on local
      and wide area networks and using it for voice as well as data
      communication without sacrificing feature functionality;

                                       6
<Page>
    - offers enhancements to the range of economically possible solutions and
      applications by supporting remote workers with applications such as call
      centers, networked voice mail, and unified messaging;

    - increases reliability and availability by alternatively routing calls over
      the public switched telephone network or the customer's IP wide area
      network based on the availability and the performance of each connection;
      and

    - supports open standard interfaces, facilitating interoperability among
      systems from different vendors.

    CUSTOMER RELATIONSHIP MANAGEMENT.  Avaya CRM offers products that are
essential components of many customer relationship management solutions,
including:

    - call and customer contact center systems;

    - customer self-service applications, including the integration of voice
      communications;

    - Web collaboration;

    - electronic mail response management;

    - Web chat; and

    - workflow and business process automation products.

    Our core customer relationship management, or CRM, product offerings are
software and hardware systems and software applications for customer contact
centers (including call centers) that are the foundation of many CRM solutions.
We use the term contact center to refer to traditional call centers, which
primarily manage an enterprise's interactions with customers via the telephone,
and to contact centers that allow customers to interact with an enterprise using
multiple mediums of communication, including electronic mail, access from a Web
site, chat rooms, IVR systems, telephone calls and facsimiles. We are a U.S.
leader in sales of call center systems. Our strategy is to leverage this
leadership position to market a broader suite of CRM solutions.

    We offer a number of products that can be used either as part of a customer
contact center or on a stand-alone basis. Our customer self-service products
include IVR systems and Web-based self-service applications. We also offer our
workflow and business process automation applications separately from our
customer contact center solutions to perform functions such as order processing,
billing, document processing and accounts payable integration.

    In April 2001, we enhanced our CRM offering through the acquisition of
substantially all the assets of Quintus Corporation. Among the assets acquired
was the eContact-TM- multi-vendor, multi-platform comprehensive software suite
that unites traditional call center technology with Web-based communications. We
also announced at that time that we would be focusing our CRM solutions
portfolio in the following areas:

    - Interaction Management--providing solutions for real time customer
      interactions, self-service options, and outbound contact management with
      customers;

    - Commitment Management--providing solutions for implementing dynamic,
      measurable business processes throughout the enterprise, enabling improved
      customer experience and resource effectiveness; and

    - Business Intelligence--providing customer experience analysis solutions
      for a variety of media channels, customer transactions and enterprise
      decision-making.

    Avaya CRM is supported by a professional services team of consultants who
are dedicated to assisting enterprises in improving their customer relationship
management, technology and execution.

                                       7
<Page>
Our services range from designing and implementing an enterprise's customer
relationship management technology strategy to setting up and integrating
software applications that an enterprise purchases from us as part of its
customer contact center. Our consultants also work with our sales force in
selling our customer relationship management products. Typically, a customer
that purchases our customer relationship management products purchases
consulting services from us. We also provide subject matter advice to systems
integrators as part of an overall customer relationship management strategy, as
well as to provide guidance to achieve the integration of multi-vendor
solutions.

    UNIFIED COMMUNICATION.  We define Unified Communication as a family of
solutions that allow individuals to collaborate and communicate more effectively
and to move more quickly in a networked infrastructure. Our Unified
Communication solutions include our messaging and unified messaging products,
our IP-based personal communications portal and other multimedia collaboration
tools. Unified messaging is an advanced messaging solution that delivers the
convenience and benefits of combining the storage of more than one type of
message, including voice, facsimile and electronic mail.

    We offer a wide variety of voice messaging and unified messaging solutions
designed to serve the telephone call answering, voice, facsimile and unified
messaging communications needs of enterprises. Unified messaging facilitates
access to messages through the most convenient device, including Internet
browsers, LAN-based personal computers and wireline or wireless telephones,
using text-to-speech technology for telephonic e-mail retrieval. These products
are marketed under a number of brands, including our primary brands,
Octel-Registered Trademark- Messaging and INTUITY-TM-
AUDIX-Registered Trademark- Messaging. The ease and speed of our voice and
facsimile messaging can improve an enterprise's efficiency by allowing messages
to be sent instantly to teams, groups or an entire workforce across multiple
locations. All of our messaging servers can be networked, over the Internet or
public or private voice networks, to provide enterprise-wide voice and facsimile
messaging through a single system.

    We are the worldwide leader in sales of voice messaging systems. These
systems are configured either as stand-alone servers or as embedded software or
hardware in communications servers. Many of our messaging systems are compatible
with the voice communications systems of other vendors so that an enterprise may
choose our messaging system as the standard for all its locations.

    Our unified messaging capability, which accommodates voice, facsimile and
electronic mail messages, is available for our Octel Messaging and INTUITY AUDIX
systems and is also provided by our innovative Avaya Unified
Messenger-Registered Trademark- system for Microsoft-Registered Trademark-
Exchange, developed in cooperation with Microsoft Corporation. The Avaya Unified
Messenger system is a unified messaging system software solution that stores
voice and facsimile messages directly in a user's Microsoft Exchange electronic
mailbox and enables user access to this mailbox by telephone or fax machine or a
Microsoft Exchange interface on the user's personal computer. In
September 2001, we announced an agreement with International Business Machines
Corporation to develop jointly a unified messaging solution for their Lotus
Notes-Registered Trademark- platform. This solution will provide Lotus Notes
users with a single user interface and mailbox for both email and voice mail
messages. We anticipate this solution will available by the end of fiscal 2002.

    We offer unified communication solutions that use the advantages of the
Internet Protocol operating on the Internet, wireless networks and telephone
networks. Our suite of unified communication applications enables a personal
communications portal for enterprise employees and is intended to work with new
applications for scheduling meetings with others, filtering incoming calls,
organizing, scheduling and routing incoming calls and messages, scheduling and
conducting voice conferencing with others, and conducting advanced multimedia
business collaboration and content sharing. Our solutions are intended for use
on standard enterprise servers.

    We also provide audio, video and data conferencing systems for enterprises
of varying sizes. These products enable customers to conduct multimedia
communication sessions with a geographically dispersed workforce or across
company boundaries. Through partners and internal development, we

                                       8
<Page>
offer our customers a broad portfolio of multimedia collaboration solutions
backed by the full support capability of our nationwide services organization.

    We provide professional services to ensure successful integration of our
Unified Communication products and applications into our customers' specific
business environments. Typically, a customer that purchases our communications
servers and applications requires assistance with their integration and
implementation. Since enterprises are increasingly looking to outsource their
integration needs, we believe that our ability to provide these services is an
important consideration in selecting our communications applications. In
addition to our geographically deployed services employees, we also have
alliances with systems integrators that are trained to implement our
applications. We provide presales support as well as design and implementation
for our messaging systems solutions. These products include the Octel Messaging
and INTUITY AUDIX systems. In connection with these systems, we implement
messaging-based applications that run on stand-alone servers as well as
applications that are embedded software. These solutions include unified
messaging, Internet access to voice mail, and enhanced business applications.

    MULTI-SERVICE NETWORKING.  We offer a portfolio of products to support
multi-service network infrastructures that carry voice, video and data traffic
over any of the protocols supported by the Internet on local area, wide area and
wireless networks including gigabit Ethernet, which facilitates the integration
of the enterprise network, the service provider network and next generation
switching systems such as optical networking. We are not a leader in
multi-service networking products and our product portfolio in this area is less
complete than the portfolios of some of our competitors. We are implementing a
strategy focused on these and other advanced communications products. Our Multi-
service Networking product offerings include switches, virtual private networks
and policy management software.

    Our Avaya Cajun-TM- family of switches supports voice, video and data
traffic over a local area network, or LAN. Each switch is designed for
interoperability with the hardware of numerous other vendors and is comprised of
hardware and software that enable the switch to perform configuration, fault
management and traffic prioritization functions. Configuration is the adding,
deleting and modifying of connections and supported addresses within a network.
Fault management is the detection and correction of network faults.
Prioritization is the capability to consider the nature of the requirements of
various transmissions to determine the relative order and priority of dealing
with several different types of transmissions.

    Our Avaya Cajun family of switches also supports additional advanced
applications, such as our switch monitoring, known as SMON, the industry
standard network monitoring software for switched network infrastructures, which
was developed by Lucent. SMON is an open standard application that allows
simultaneous real time monitoring of traffic across multiple switches in a
network. As an analytical tool, SMON enables network managers to review global
traffic across an entire network as well as individual connectivity between two
users.

    Our Avaya WirelessLan products provide the ability to operate both indoors
and outdoors, scale from small to large installations, and provide traffic
prioritization. These products enable wireless LAN connectivity across
facilities such as retail stores, warehouses, schools, universities and
hospitals where wiring is costly and difficult to install and clients demand
mobility or flexibility.

    We offer wide area network solutions, including virtual private networks, or
VPNs, and firewall products for enterprises. A virtual private network allows an
enterprise to transport voice, video or data over a public or shared network at
a level of security substantially equivalent to the traffic traveling over that
enterprise's own private network. This increased level of security is
accomplished through encryption and encapsulation of this voice, video or data
traffic into a format that is protected from unauthorized access. Our VPN
offering was enhanced by our acquisition of VPNet Technologies, Inc. in
February 2001. Our wide area network access products are sold to many types of
enterprises and are

                                       9
<Page>
designed to meet varying access needs. Our virtual private network routers are
used primarily by enterprises with remote workers and branch or home offices,
and by enterprises using Internet wide area network service. In addition, we
offer firewall hardware and software that function as a security mechanism to
limit the exposure of a network to unauthorized infiltration. The firewall
regulates internal and external network resources and filters network content.
Our firewall products have been designed to meet the testing standards of the
U.S. federal government and allow for a single administrator to manage multiple
firewalls for an entire network from a single location.

    We offer automated policy management software called CajunRules-TM-.
CajunRules allows network managers to define, manage and enforce policies which
establish priorities and levels of security for network traffic, based on
parameters such as traffic type, application or user identification. Examples
include a policy that gives voice traffic priority over data traffic in a
network, a policy which gives finance applications priority at the end of a
reporting period, a policy that gives bandwidth priorities to designated users,
such as senior management, or policies that restrict access to sensitive
applications, such as human resources applications, to only authorized users.
Our policy management software products are designed to allow a single
administrator to set policies for all users and locations from a central
location.

    AVAYA HOSTED SOLUTIONS.  Avaya Hosted Solutions offer communications
solutions for enterprises that wish to outsource their communications solutions
through specialized service providers. By providing hosted and managed customer
premises and service provider equipment solutions, Avaya offers an alternative
network-based communications solution for enterprises who wish to enhance the
effectiveness of their remote operations and increase their focus on core
competencies. These are flexible solutions that are available on demand and
scalable. Our hosted solutions were introduced in fiscal 2001 and are still in
the early stages of development.

    Please see "--Services Segment--Customer Service, Installation and
Maintenance" for a description of the installation services we provide for our
Communications Solutions products.

CONNECTIVITY SOLUTIONS SEGMENT

    We market our SYSTIMAX-Registered Trademark- SCS product line of structured
cabling systems primarily to enterprises of various sizes for wiring phones,
workstations, personal computers, local area networks and other communications
devices through their buildings or across their campuses and our
ExchangeMAX-Registered Trademark- product line primarily to central offices of
service providers, such as telephone companies or Internet service providers. We
also offer electronic cabinets to enclose an enterprise's electronic devices and
equipment.

    SYSTIMAX STRUCTURED CABLING SYSTEMS.  We are the worldwide leader in sales
of structured cabling systems to enterprises. We primarily market these products
under the brand name SYSTIMAX. Our SYSTIMAX cabling systems provide high-speed
multifunctional local area network interconnections within a single building or
a campus through an infrastructure of copper or fiber cabling and associated
connecting apparatus. The SYSTIMAX copper and fiber apparatus portfolio includes
a broad line of distribution boxes, interconnects, shelves, racks, connectors
and outlets necessary to connect and manage large building infrastructure
networks.

    EXCHANGEMAX STRUCTURED CABLING SYSTEM.  We sell our ExchangeMAX structured
cabling systems primarily to central offices of service providers such as
telephone companies or Internet service providers. Central offices are locations
that house switches to serve the subscribers of a service provider. Our
ExchangeMAX system combines our family of high quality central office
connectivity products with an overall system architecture to support the copper
and fiber cable distribution networks of a central office. Our products include
copper distributing frames, copper cable, connectors, patchcords and cable
management software. The ExchangeMAX product line is engineered to meet the
site-specific needs of our customers, and may be utilized either to address the
discreet maintenance and upgrading needs of a central office or to serve as the
foundation of a central office's comprehensive wire center modernization.

                                       10
<Page>
    ELECTRONIC CABINETS.  An electronic cabinet is a sturdy environmental
enclosure designed to house electronics devices and passive equipment, both in
the outside plant and inside buildings. The product line consists of enclosures
designed for traditional telecommunication access applications, digital
subscriber line, or DSL, applications and wireless applications.

SERVICES SEGMENT

    CUSTOMER SERVICE, INSTALLATION AND MAINTENANCE.  We have customer service,
installation and maintenance organizations in the United States and
internationally. Our service organization is designed to provide a comprehensive
set of services in support of direct sales and indirect sales through
distributors. The purchase prices of our products typically include installation
costs, which are included in the Communications Solutions segment. Most of our
products, other than our Connectivity Solutions products, have a one-year
warranty. For additional service, our customers can elect to enter into
maintenance contracts with us or, if they do not choose to enter into such
contracts, may have us provide service for them on a time and materials basis.

    Our U.S. service organization is comprised of our Field Services
Organization, our National Customer Care Centers and our Technical Services
Organization. Some of these employees are now working on an on-call basis as
described under "Employees." Installation and repair of our products are
performed primarily by our Field Services Organization. Account support in the
United States is conducted primarily through our National Customer Care Centers.
Our Technical Services and Field Services Organizations provide technical
support and maintenance under contracts for our voice communications products.

    Our international service organization is comprised of our Field Services
Organizations, a Global Support Organization and a Customer Support Center which
collectively provide installation, maintenance and customer service support. We
have our own Field Services Organizations in 21 countries. Our Field Services
Organizations currently provide installation, on-site and remote maintenance,
and some training for our voice and data products. These organizations primarily
support customers that have purchased from us directly. In those countries in
which we have no direct services presence, customers of our products rely on
local distributors that have been trained and certified by us. Our Field
Services Organizations supplement their engineer and technician resource
requirements via the use of sub-contractors on an as needed basis for responsive
service levels and broad geographic coverage. Similar to our U.S. Technical
Services Organization, our Global Support Organization is a network of support
centers that provide remote technical and engineering support to the Field
Services Organizations, distributors and resellers and select multi-national
customers with multi-national maintenance agreements.

    We have established international Customer Care Centers in our Europe,
Middle East, Asia Pacific and Africa regions. The level of customer service
provided at our Customer Care Centers includes servicing requests received via
telephone, facsimile and electronic mail, receipt of product orders, order
fulfillment and tracking, contract management and administration, contract
entitlement verification, invoicing, billing and collection.

    VALUE-ADDED SERVICES.  Our value-added services are outsourcing services we
provide to both enterprises and to communications service providers, such as
local exchange carriers, or telephone companies, or Internet service providers,
worldwide to operate and maintain a portion of their communications systems.

    Our enterprise customers that use our value-added services are generally
large and mid-sized businesses. For enterprise customers, we provide outsourcing
of messaging systems, portions of voice communications systems and contact
centers. We offer these customers a full range of maintenance, management and
support services. We provide either managed services where the customer owns the
communications system or outsourcing services where we both manage and own the
communications

                                       11
<Page>
system. Our services include fault management, including maintenance and help
desk support; remote provisioning and administration, such as establishment of
voice mail boxes; remote monitoring; and recording, reporting and billing. For
service providers, we primarily outsource the operation of their messaging
systems. We outsource messaging systems for established service providers,
emerging service providers and other competitive local exchange carriers.
Currently, we derive the majority of our revenue in value-added services from
customers in the U.S.

    We contract with our clients to provide these services, in varying levels,
under agreements that require us to meet service level requirements that vary
from agreement to agreement. Fee arrangements vary by contract, but are
generally made on a per unit or per subscriber basis. These agreements typically
have terms ranging from five to seven years with varying termination provisions.

    DATA SERVICES.  Our data services solutions include implementation,
installation, maintenance and management of an enterprise's data network. From
our network management center we can remotely manage and monitor an enterprise's
network to limit network downtime and maximize network efficiency. Our staff is
certified to maintain products from a wide variety of industry vendors, allowing
us to extend our expertise beyond Avaya products to offer a complete solution.
Similar to our value-added services, these services also include monitoring and
fault management, configuration management, and performance management. If a
problem cannot be resolved remotely, we dispatch a field service technician to
the customer site for on-site resolution.

    In addition, in fiscal 2001 we established, and are continuing to build the
capabilities of, our professional services team for Converged Voice & Data
Networks, which will offer a focused portfolio of consulting and engineering
offers addressing the planning and design phases of a converged network life
cycle. These services are designed to facilitate the integration of an
enterprise's existing network with new converged voice and data systems that
enable the rapid deployment of IP-based communications applications. We have
begun to offer these services only recently and the revenues generated from
these services represent only a small portion of the revenues from our Services
segment.

CUSTOMERS, SALES AND DISTRIBUTION

CUSTOMERS

    Our customers include a broad set of enterprises ranging from large,
multinational enterprises to small-and mid-sized enterprises to governments and
schools. They include both established enterprises and start-up ventures, as
well as service providers, including application service providers and Internet
service providers. We have thousands of customers, and no single end user
customer represented more than 10% of our revenue for fiscal 2001 although sales
to our largest distributor were approximately 10% of revenue for fiscal 2001.

SALES AND DISTRIBUTION

    In fiscal 2001, we derived 75.9%, or approximately $5.2 billion, of our
total revenue from sales in the U.S. and 24.1%, or approximately $1.6 billion,
from international sales. Our products other than our SYSTIMAX structured
cabling systems are sold both directly and through our worldwide network of
distributors. Our SYSTIMAX structured cabling systems are sold only indirectly
through a worldwide network of distributors. Our ExchangeMAX structured cabling
systems are sold to service providers and our value-added messaging services are
sold to service providers and enterprises worldwide.

    DIRECT SALES.  Our worldwide direct sales organization markets and sells our
voice, data, messaging and customer relationship management products and
services, as well as our value-added services. Within the U.S., the majority of
our large, end-user customers are served directly through direct sales account
managers. Outside the U.S., we conduct direct sales focused on large enterprises
in major

                                       12
<Page>
areas, including Western Europe, South America, Mexico, Australia, Central
America and Russia with other customers and geographic areas served by our
network of distributors.

    INDIRECT SALES.  We sell our products indirectly through our global network
of approximately 4,000 distributors, dealers, value-added resellers, and system
integrators. Our relationships with distributors, dealers value-added resellers
and systems integrators for our voice and data products and our structural
cabling systems are generally not exclusive. We typically enter into agreements
with our distributors, dealers and value-added resellers that generally set
forth sales quotas and service levels, with terms of one to two years and rights
to terminate by either party upon 120 days notice. Specific terms vary from
agreement to agreement. We are in the process of developing formal global
alliance agreements with our systems integrator partners. We intend that these
agreements will be structured as joint-development, joint-marketing and/or
joint-sales-and-delivery agreements. We expect these agreements will vary by
alliance.

RESEARCH AND DEVELOPMENT

    We invested an amount equal to approximately 8% of our total revenue in
fiscal 2001 in research and development. These investments represent a
significant increase over our investments in research and development for the
fiscal years prior to the distribution, which was approximately 6% of total
revenue. As a part of Lucent, we were allocated a portion of Lucent's basic
research, which did not necessarily directly benefit our business. Our current
and future investments in research and development will have a greater focus on
our products.

    Our research and development organization consists of over 3,100 research
and development professionals, most of whom were formerly part of Lucent's Bell
Laboratories, one of the world's leading research and development institutions.
In addition, in October 2000 we formed Avaya Labs, a world-class basic research
organization of 100 professionals focused on technologies that will result in
innovative products and services.

    We plan on using our substantial investment in research and development to
develop new systems and software related to business communications
applications, customer relationship management innovations, messaging solutions,
personalized information portals, business infrastructure and architectures, Web
centers, hosted solutions, data networks and services for Avaya's customers.
These new systems and software will augment our current product offerings so
that, together with our strategic alliances and services, we can offer our
customers comprehensive advanced communications solutions. Avaya Labs will
continue to seek opportunities to work with technology leaders from other
companies and educational and research institutions to develop uniform
technological standards as the building blocks for future communications and
related enterprise systems.

MANUFACTURING AND SUPPLIES

    In fiscal 2001, we outsourced substantially all of our manufacturing,
including assembly and testing, other than the manufacturing of our Connectivity
Solutions product offerings, to Celestica. Currently, approximately 1,900
employees are engaged in the manufacturing of our Connectivity Solutions product
offerings in five facilities located in China, the United States, Australia,
Venezuela and Ireland.

    The successful implementation of our manufacturing initiative will depend on
the willingness and ability of contract manufacturers to produce our products.
We may experience significant disruption to our operations by outsourcing so
much of our manufacturing. If our contract manufacturers terminate their
relationships with us or are unable to fill our orders on a timely basis, we may
be unable to deliver our products to meet our customers' orders, which could
delay or decrease our revenue or otherwise have an adverse effect on our
operations.

                                       13
<Page>
COMPETITION

    The market for communications systems and software is quickly evolving,
highly competitive and subject to rapid technological change. Because we offer a
wide range of systems and software for several types of enterprises, we have a
broad range of competitors. Many of our competitors are substantially larger
than we are and have significantly greater financial, sales, marketing,
distribution, technical, manufacturing and other resources. Competition for one
or more of our communications systems and software, other than our structured
cabling systems, includes products manufactured or marketed by a number of large
communications equipment suppliers, including Nortel Networks Corporation, Cisco
Systems, Inc., Siemens Aktiengesellschaft, Alcatel S.A. and LM EricssonAB, as
well as by a number of other companies, some of which focus on particular
segments of the market such as customer relationship management. Some of our
other competitors include Aspect Communication Corporation, Active Voice, Inc.
and NEC Corporation. Our structured cabling systems' primary competitors are ADC
Telecommunications, Inc., Telect Corporation, Siecor Corporation, Marconi plc,
Nordx/CDT, Commscope, Inc. and Belden Inc. Our value-added services compete with
Cisco Systems, Inc., NextiraOne, LLC, Norstan, Inc., Nortel Networks
Corporation, Siemens Aktengesellschaft, Ericsson, Ameritech Corporation and
Verizon Communications Inc. We expect to face increasing competitive pressures
from both current and future competitors in the markets we serve.

    Our competitive position varies depending on the segment of our market. We
are a leader worldwide in messaging and structured cabling systems and the U.S.
leader in call center and enterprise communications systems. With respect to
multi-service networking products, we are relatively new and our product
portfolio is less complete than that of many of our competitors. Our
professional services and value-added service groups primarily serve customers
that purchase our systems and software and are relatively small as compared to
our competitors.

    Technological developments and consolidation within the communications
industry result in frequent changes to our group of competitors. The principal
competitive factors applicable to our products and solutions include:

    - product features and reliability;

    - customer service and technical support;

    - relationships with distributors, value-added resellers and systems
      integrators;

    - an installed base of similar or related products;

    - relationships with buyers and decision makers;

    - price;

    - brand recognition;

    - the ability to integrate various products into a customer's existing
      network; and

    - the ability to be among the first to introduce new products.

PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY

    In connection with the contribution and the distribution, Lucent assigned to
us its rights to a number of patents, trademarks, copyrights, trade secrets and
other intellectual property directly related to and important to our business.
In addition, Lucent and its subsidiaries have also granted rights and licenses
to those of their patents, trademarks, copyrights, trade secrets and other
intellectual property that enable us to manufacture, market and sell all our
products. Further, Lucent has conveyed to us numerous sublicenses under patents
of third parties.

                                       14
<Page>
    We currently hold more than 1,600 U.S. patents and patent applications as a
result of patents and patent applications assigned to us by Lucent in connection
with the contribution and the distribution, together with patents and patent
applications we have filed or have obtained through acquisitions. In addition,
we hold corresponding foreign patents and patent applications, as well as
numerous trademarks, both in the United States and in foreign countries. There
are no time restrictions applicable to the patents assigned to us by Lucent. We
have entered into a cross license with Lucent in connection with these patents.

    Avaya's intellectual property policy is to protect our products and
processes by asserting our intellectual property rights where appropriate and
prudent. We will also obtain patents, copyrights, and other intellectual
property rights used in connection with our business when practicable and
appropriate.

EMPLOYEES

    As of September 30, 2001, we employed approximately 23,000 full-time
employees, of which approximately 15,000 are management and
non-union-represented employees and approximately 8,000 are U.S.
union-represented employees covered by collective bargaining agreements. On
May 31, 1998, Lucent entered into collective bargaining agreements with the
Communications Workers of America and the International Brotherhood of
Electrical Workers. In connection with the distribution, we assumed the
obligations under the agreements with respect to our union-represented
employees. The agreements are effective until May 31, 2003 unless the parties
reach a mutual agreement to amend their terms. We believe that we generally have
a good relationship with our employees and the unions that represent them.

    In October 2000, we entered into an agreement with the unions representing
our U.S. Services employees to offer eligible employees the ability to retire
from Lucent as of September 30, 2000 and continue working as on-call support
service technicians at Avaya. The agreement was intended to give us the
flexibility to match our workforce needs with our customers' cyclical service
demands for the design, installation and maintenance of their communications
systems. This agreement is effective until May 31, 2003.

BACKLOG

    Our backlog, which represents the aggregate of the sales price of orders
received from customers, but not yet recognized as revenue, was approximately
$320 million and $495 million on September 30, 2001 and September 30, 2000,
respectively. The majority of these orders are fulfilled within two months.
However, all orders are subject to possible rescheduling by customers. Although
we believe that the orders included in the backlog are firm, some orders may be
cancelled by the customer without penalty, and we may elect to permit
cancellation of orders without penalty where management believes it is in our
best interests to do so.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

    We are subject to a wide range of governmental requirements relating to
employee safety and health and to the handling and emission into the environment
of various substances used in our operations. We are subject to certain
provisions of environmental laws, particularly in the U.S., governing the
cleanup of soil and groundwater contamination. Such provisions impose liability
for the costs of investigating and remediating releases of hazardous materials
at our currently or formerly owned or operated sites. In certain circumstances,
this liability may also include the cost of cleaning up historical
contamination, whether or not caused by us. We are currently conducting
investigation and/or cleanup of known contamination at approximately five of our
facilities either voluntarily or pursuant to government directives.

                                       15
<Page>
    It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. We have established financial reserves
to cover environmental liabilities where they are probable and reasonably
estimable. Reserves for estimated losses from environmental matters are,
depending on the site, based primarily upon internal or third-party
environmental studies and the extent of contamination and the type of required
cleanup. Although we believe that our reserves are adequate to cover known
environmental liabilities, we cannot assure you that the actual amount of
environmental liabilities will not exceed the amount of reserves for such
matters or will not have a material adverse effect on our consolidated financial
position, results of operations or cash flows.

RELATIONSHIP BETWEEN LUCENT AND OUR COMPANY AFTER THE CONTRIBUTION AND THE
  DISTRIBUTION

    In connection with the contribution and the distribution, we entered into a
Contribution and Distribution Agreement and a number of ancillary agreements
with Lucent for the purpose of accomplishing the contribution and the
distribution. These agreements govern the relationship between Lucent and us
subsequent to the contribution and the distribution and provide for the
allocation of employee benefit, tax and other liabilities and obligations
attributable to periods prior to the distribution.

    In addition, the current Federal Tax Allocation Agreement and the current
State and Local Income Tax Allocation Agreement by and among Lucent and its
subsidiaries governing the allocation of income taxes among Lucent and its
subsidiaries continue to apply to us for taxable periods prior to and including
the distribution. The material agreements related to the contribution and the
distribution are incorporated by reference as exhibits to this Annual Report on
Form 10-K and the summaries of any such agreements set forth below are qualified
in their entirety by reference to the full text of such agreements.

CONTRIBUTION AND DISTRIBUTION AGREEMENT

    The Contribution and Distribution Agreement sets forth the agreements
between us and Lucent with respect to the principal corporate transactions
required to effect the contribution and the distribution, and other agreements
governing the relationship between Lucent and us.

    THE CONTRIBUTION AND THE DISTRIBUTION.  To effect the contribution, Lucent
transferred, or agreed to transfer, or to cause its subsidiaries to transfer,
the assets of its enterprise networking businesses. In general, we assumed, or
agreed to assume, and perform and fulfill all of the liabilities of the
contributed businesses in accordance with their respective terms. Pursuant to
the Contribution and Distribution Agreement, the contribution and the
distribution were effected as of 11:59 p.m. on September 30, 2000.

    We have resolved all of the contribution and distribution issues with Lucent
related to the settlement of certain employee obligations and the transfer of
certain assets. Accordingly, we recorded a $42 million net reduction to
additional paid-in capital in fiscal 2001. Following the distribution, we
identified approximately $15 million recorded in our Consolidated Balance Sheets
that was primarily related to certain accounts receivable balances due from
Lucent and certain fixed assets which we have agreed will remain with Lucent.
Also in connection with the distribution, we had recorded estimates in our
Consolidated Balance Sheets at September 30, 2000 in prepaid benefit costs and
benefit obligations of various existing Lucent benefit plans related to
employees for whom we assumed responsibility. Following an actuarial review, we
received a valuation, agreed upon by us and Lucent, that provides for a
reduction of approximately $44 million in prepaid benefit costs and $17 million
in pension and postretirement benefit obligations. We recorded the net effect of
these adjustments as a reduction to additional paid-in capital in fiscal 2001
because the transactions relate to the original capital contribution from
Lucent.

                                       16
<Page>
    RELEASES AND INDEMNIFICATION.  The Contribution and Distribution Agreement
provides for a full and complete release and discharge of all liabilities
existing or arising from all acts and events occurring or failing to occur or
alleged to have occurred or to have failed to occur and all conditions existing
or alleged to have existed on or before the date of the agreement, between or
among us or any of our subsidiaries or affiliates, on the one hand, and Lucent
or any of its subsidiaries or affiliates other than us, on the other hand,
except as expressly set forth in the agreement.

    We have agreed to indemnify, hold harmless and defend Lucent, each of its
affiliates and each of their respective directors, officers and employees, from
and against certain liabilities relating to, arising out of or resulting from
the contributed businesses, liabilities or contracts, or any material breach by
us of the agreement or any of the ancillary agreements. Lucent has agreed to
indemnify, hold harmless and defend us, each of our affiliates and each of our
respective directors, officers and employees from and against all liabilities
related to Lucent's businesses other than the contributed businesses and any
material breach by Lucent of the agreement or any of the ancillary agreements.
Also, Lucent has indemnified us and our affiliates, subject to limited
exceptions, against any claims of patent, copyright or trademark infringement or
trade secret misappropriation with respect to any product, software or other
material provided by or ordered from Lucent's retained businesses prior to the
distribution.

    CONTINGENT LIABILITIES AND CONTINGENT GAINS.  The Contribution and
Distribution Agreement provides for indemnification by us and Lucent with
respect to contingent liabilities primarily relating to our respective
businesses or otherwise assigned to each of us, subject to the sharing
provisions described below. In the event the aggregate value of all amounts paid
by us or Lucent, in each case, together with any affiliates in respect of any
single contingent liability or any set or group of related contingent
liabilities is in excess of $50 million, we and Lucent will share portions in
excess of the threshold amount based on agreed upon percentages.

    The Contribution and Distribution Agreement also provides for the sharing of
some contingent liabilities, which are defined as:

    - any contingent liabilities that are not primarily contingent liabilities
      of Lucent or contingent liabilities associated with the contributed
      businesses;

    - some specifically identified liabilities, including liabilities relating
      to terminated, divested or discontinued businesses or operations; and

    - shared contingent liabilities within the meaning of the 1996 separation
      and distribution agreement among Lucent, AT&T Corp. and NCR Corporation.

    Lucent will assume the defense of, and may seek to settle or compromise, any
third party claim that is a shared contingent liability, and those costs and
expenses will be included in the amount to be shared by us and Lucent.

    The Contribution and Distribution Agreement provides that we and Lucent will
have the exclusive right to any benefit received with respect to any contingent
gain that primarily relates to the business of, or that is expressly assigned
to, us or Lucent, respectively.

    Please see "Legal Proceedings" for a description of certain matters
involving Lucent for which have assumed responsibility under the Contribution
and Distribution Agreement.

                                       17
<Page>
    RESTRICTIONS ON BUSINESS TRANSACTIONS.  Subject to Lucent's ability to
terminate some of the rights, including important intellectual property rights
granted to us and our affiliates under the ancillary agreements, the
Contribution and Distribution Agreement provides that none of Lucent, us, or our
respective subsidiaries or affiliates will have any duty to refrain from
engaging in similar activities or lines of business, or from doing business with
any potential or actual supplier or customer of any other person.

    PROVISIONS RELATING TO THIRD-PARTY INTELLECTUAL PROPERTY LICENSE
AGREEMENTS.  The Contribution and Distribution Agreement provides, generally,
for the grant by Lucent to us of a sublicense under numerous third-party
intellectual property license agreements. The Patent and Technology License
agreement provides similar grants to us from Lucent's subsidiary, Lucent
Technologies GRL Corporation, with respect to third party patent license
agreements executed by that subsidiary.

    CHANGE OF CONTROL.  In the event that, at any time prior to the third
anniversary of the distribution, there is a change of control of us as defined
in the Contribution and Distribution Agreement, then Lucent could terminate or
cause us to reconvey some of the rights, including important intellectual
property rights granted to us under the Intellectual Property Agreements.

COMMERCIAL AGREEMENTS

    We and Lucent entered into a Global Purchase and Service Agreement, a
General Sales Agreement, a Microelectronics Product Purchase Agreement, two
Reseller Agreements, a Master Subcontracting Agreement, a Master Services
Agreement and an Original Equipment Manufacturing and Value Added Reseller
Agreement. The pricing terms for the products and services covered by the Global
Purchase and Service Agreement and all other ancillary commercial agreements
reflected current market prices at the time of the transaction. Each of these
agreements commenced October 1, 2000 and has a three-year term, subject to
extension.

    Under the Global Purchase and Service Agreement we will provide to Lucent
communications and other related products for Lucent's internal operational use.
These products include some of our enterprise voice communications products and
our multi-service networking products. Under the agreement, we will also provide
warranty and post-warranty maintenance support services for products that are
already installed in Lucent's offices as well as for new products installed
thereafter. The General Sales Agreement and the Microelectronics Product
Purchase Agreement govern transactions pursuant to which Lucent will provide
goods and services that are part of the businesses not transferred to us.

    The Reseller Agreements govern transactions in which either we or Lucent
furnish items to the other for resale. Each agreement covers specified products
and licensed materials of both Lucent and ours, respectively. Either party may
add to or delete products upon ninety days notice.

    The Master Subcontracting Agreement sets forth the terms by which we and
Lucent may subcontract for services and related deliverables from each other to
support our respective customers.

    The Master Services Agreement covers any order for services not addressed in
any other commercial agreement between us and Lucent. Under this agreement
either we or Lucent or our affiliates or Lucent's affiliates may place orders
for services from the other party including maintenance service, professional
services, changes in services, and extension of services.

    The Original Equipment Manufacturing and Value Added Reseller Agreement
governs transactions pursuant to which we and Lucent will buy, on an ordered
basis, products from each other for integration into finished products for sale
or resale or for resale in combination with enhancements added by the other
party.

                                       18
<Page>
INTELLECTUAL PROPERTY AGREEMENTS

    We entered into a series of agreements with Lucent pursuant to which Lucent
transferred to us the primary trademarks used in the sale of our products and
services, except for Lucent's name and logo and the Bell Laboratories name; we
and Lucent divided ownership of technology, patents, patent applications and
foreign counterparts between us and Lucent; and we and Lucent granted
cross-licenses to each other with respect to patents and technology.

TAX SHARING AGREEMENT

    We and Lucent entered into a Tax Sharing Agreement that governs Lucent's and
our respective rights, responsibilities and obligations after the distribution
with respect to taxes for the periods ending on or before the distribution.
Generally, pre-distribution taxes that are clearly attributable to the business
of one party will be borne solely by that party, and other pre-distribution
taxes will be shared by the parties based on a formula set forth in the Tax
Sharing Agreement. In addition, the Tax Sharing Agreement addresses the
allocation of liability for taxes that are incurred as a result of restructuring
activities undertaken to implement the distribution. If the distribution fails
to qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code because of an acquisition of our stock or assets, or some other actions of
ours, then we will be solely liable for any resulting corporate taxes.

FORWARD LOOKING STATEMENTS

    (Cautionary Statements Under the Private Securities Litigation Reform Act of
1995)

    Our disclosure and analysis in this report and in our 2001 Annual Report to
Shareholders contain some forward-looking statements. Forward-looking statements
give our current expectations or forecasts of future events. You can identify
these statements by the fact that they do not relate strictly to historical or
current facts. They use words such as "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe," and other words and terms of similar
meaning in connection with any discussion of future operating or financial
performance. From time to time, we also may provide oral or written
forward-looking statements in other materials we release to the public.

    Any or all of our forward-looking statements in this report, in the 2001
Annual Report to Shareholders and in any other public statements we make MAY
TURN OUT TO BE WRONG. They can be affected by inaccurate assumptions we might
make or by known or unknown risks and uncertainties. Many factors mentioned in
the discussion below will be important in determining future results.
Consequently, no forward-looking statement can be guaranteed. Actual future
results may vary materially.

    Except as may be required under the federal securities laws, we undertake no
obligation to publicly update forward-looking statements, whether as a result of
new information, future events or otherwise. You are advised, however, to
consult any further disclosures we make on related subjects in our Form 10-Q and
Form 8-K reports filed with the Securities and Exchange Commission. Also note
that we provide the following cautionary discussion of risks, uncertainties and
possibly inaccurate assumptions relevant to our businesses. These are factors
that we think could cause our actual results to differ materially from expected
and historical results. Other factors besides those listed here could also
adversely affect us. This discussion is provided as permitted by the Private
Securities Litigation Reform Act of 1995.

    The risks and uncertainties referred to above include, but are not limited
to, price and product competition, rapid technological development, dependence
on new product development, the mix of our products and services, customer
demand for our products and services, the ability to successfully integrate
acquired companies, control of costs and expenses, the ability to form and
implement alliances, the ability to implement in a timely manner our
restructuring plan, the economic, political and other risks associated with
international sales and operations, U.S. and foreign government regulation,
general industry and market conditions and growth rates and general domestic and

                                       19
<Page>
international economic conditions including interest rate and currency exchange
rate fluctuations. In addition, set forth below is a more detailed discussion of
the risks and uncertainties we face.

OUR PRODUCT REVENUE HAS BEEN DECLINING, AND IF WE DO NOT SUCCESSFULLY IMPLEMENT
OUR STRATEGY TO EXPAND OUR SALES IN MARKET SEGMENTS WITH HIGHER GROWTH RATES,
OUR REVENUE MAY CONTINUE TO DECLINE AND WE MAY NOT BE PROFITABLE.

    We have been experiencing declines in revenue from our traditional business,
enterprise voice communications products. We expect, based on various industry
reports, the growth rate of the market segments for these traditional products
to be extremely low. We are implementing a strategy to capitalize on the higher
growth opportunities in certain market segments, such as advanced communications
solutions, which includes converged voice and data products. The success of this
strategy, however, is subject to many risks, including risks that:

    - we do not develop new products or enhancements to our current products on
      a timely basis to meet the changing needs of our customers;

    - customers do not accept our products or new technology or industry
      standards develop that make our products obsolete; or

    - our competitors introduce new products before we do and achieve a
      competitive advantage by being among the first to market.

    Our traditional business and our advanced communications solutions are a
part of our Communications Solutions segment. If we are unsuccessful in
implementing our strategy, the contribution to our results from Communications
Solutions may decline, reducing our overall profitability and requiring a
greater need for capital resources.

WE ARE SIGNIFICANTLY CHANGING THE FOCUS OF OUR COMPANY IN ORDER TO CONCENTRATE
ON THE DEVELOPMENT AND MARKETING OF ADVANCED COMMUNICATIONS SOLUTIONS, INCLUDING
CONVERGED VOICE AND DATA PRODUCTS, AND THE UNCERTAINTY SURROUNDING THIS NEW
MARKET OPPORTUNITY MAY RESULT IN A DECREASE IN OUR REVENUE AND PROFITABILITY.

    We are making a significant change in the direction and strategy of our
company to focus on the development and sales of advanced communications
solutions, including products that facilitate the convergence of voice and data
networks.

    This change in direction may involve substantial increased costs and may not
be implemented successfully. If we are not successful, our revenue and
profitability may decline. However, even if we are successful in making these
changes, our revenue may still decrease if the market opportunity for advanced
communications solutions, including converged voice and data products, does not
develop in the ways we anticipate.

WE PLAN TO EXPAND OUR INTERNATIONAL SALES, WHICH WILL SUBJECT US TO ADDITIONAL
BUSINESS RISKS AND MAY CAUSE OUR PROFITABILITY TO DECLINE DUE TO INCREASED
COSTS.

    We intend to continue to pursue growth opportunities internationally. In
many countries outside the U.S., long-standing relationships between our
potential customers and their local providers and protective regulations,
including local content requirements and type approvals, create barriers to
entry. In addition, pursuit of such international growth opportunities may
require significant investments for an extended period before returns on such
investments, if any, are realized. For example, to execute our strategy to
expand internationally we are incurring additional costs to enter into strategic
alliances focused on international sales and expanding our presence in high
growth countries. International operations are subject to a number of other
risks and potential costs, including unexpected changes in regulatory
requirements, inadequate protection of intellectual property in foreign
countries, adverse tax consequences and political and economic stability.

                                       20
<Page>
    We may not be able to overcome some of these barriers and may incur
significant costs in addressing others.

THE RECENT TERRORIST ATTACKS ON THE UNITED STATES COULD NEGATIVELY AFFECT OUR
BUSINESS PROSPECTS.

    Although the September 11, 2001 terrorist attacks against the United States
and the national and global response to these terrorist attacks have not had a
direct material effect on our business, the attacks and related response may
continue to create widespread business uncertainty and adversely affect the
global economy, which may continue to result in delays in purchasing decisions
and/or may adversely affect our business generally.

IF WE SUCCESSFULLY IMPLEMENT OUR MANUFACTURING INITIATIVE, WE WILL DEPEND ON
CONTRACT MANUFACTURERS TO PRODUCE MOST OF OUR PRODUCTS AND IF THESE
MANUFACTURERS ARE UNABLE TO FILL OUR ORDERS ON A TIMELY AND RELIABLE BASIS, WE
WILL LIKELY BE UNABLE TO DELIVER OUR PRODUCTS TO MEET CUSTOMER ORDERS OR SATISFY
THEIR REQUIREMENTS.

    We have entered into an agreement to outsource substantially all of our
manufacturing other than manufacturing of structured cabling systems. The first
phase of this transaction closed on May 4, 2001, with the remaining phases
expected to be completed by the end of the first quarter of fiscal 2002. The
successful implementation of our manufacturing initiative will depend on the
willingness and ability of contract manufacturers to produce our products. We
may experience significant disruption to our operations by outsourcing so much
of our manufacturing. If our contract manufacturers terminate their
relationships with us or are unable to fill our orders on a timely basis, we may
be unable to deliver our products to meet our customers' orders, which could
delay or decrease our revenue or otherwise have an adverse effect on our
operations.

WE MAY NOT BE ABLE TO HIRE AND RETAIN HIGHLY SKILLED EMPLOYEES, WHICH COULD
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY AND MAY CAUSE OUR REVENUE AND
PROFITABILITY TO DECLINE.

    We depend on highly skilled technical personnel to research and develop,
market and service new products. To succeed, we must hire and retain employees
who are highly skilled in the rapidly changing communications and Internet
technologies.

    Individuals who have the skills and can perform the services we need to
provide our products and services are scarce. Because the competition for
qualified employees in our industry is intense, hiring and retaining employees
with the skills we need is both time-consuming and expensive. We might not be
able to hire enough of them or retain the employees we do hire. Our inability to
hire and retain the individuals we seek could hinder our ability to sell our
existing products, systems, software or services or to develop new products,
systems, software or services. If we do not improve our hiring in these areas,
we will not be able to successfully implement many of our strategies and our
revenue and profitability may decline.

THE TERMINATION OF STRATEGIC ALLIANCES OR THE FAILURE TO FORM ADDITIONAL
STRATEGIC ALLIANCES COULD LIMIT OUR ACCESS TO CUSTOMERS AND HARM OUR REPUTATION
WITH INVESTORS.

    Our strategic alliances are important to our success because they are
necessary in order for us to offer comprehensive advanced communications
solutions, reach a broader customer base and strengthen brand awareness. We may
not be successful in creating new strategic alliances on acceptable terms or at
all. In addition, most of our current strategic alliances can be terminated
under various circumstances, some of which may be beyond our control. Further,
our alliances are generally non-exclusive, which means our partners may develop
alliances with some of our competitors. We may become more reliant on strategic
alliances in the future, which would increase the risk to our business of losing
these alliances. Because we have announced publicly our strategy to form
alliances, as well as announced the alliances we have entered into, early
termination of our alliances may harm our reputation with our customers and
cause our revenue to decline to the extent we are unable to deliver new products
or our customer base is reduced.

                                       21
<Page>
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, OUR BUSINESS AND FUTURE
PROSPECTS MAY BE HARMED.

    Although we attempt to protect our intellectual property through patents,
trademarks, trade secrets, copyrights, confidentiality and nondisclosure
agreements and other measures, intellectual property is difficult to evaluate
and these measures may not provide adequate protection for our proprietary
rights. Patent filings by third parties, whether made before or after the date
of our filings, could render our intellectual property less valuable.
Competitors may misappropriate our intellectual property, disputes as to
ownership of intellectual property may arise and our intellectual property may
otherwise become known or independently developed by competitors. The failure to
protect our intellectual property could seriously harm our business and future
prospects because we believe that developing new products and technology that
are unique to us is critical to our success. If we do not obtain sufficient
international protection for our intellectual property, our competitiveness in
international markets could be significantly impaired, which would limit our
growth and future revenue.

WE MAY BE SUBJECT TO LITIGATION AND INFRINGEMENT CLAIMS, WHICH COULD CAUSE US TO
INCUR SIGNIFICANT EXPENSES OR PREVENT US FROM SELLING OUR PRODUCTS OR SERVICES.

    We cannot assure you that others will not claim that our proprietary or
licensed products, systems and software are infringing their intellectual
property rights or that we do not in fact infringe those intellectual property
rights. We may be unaware of intellectual property rights of others that may
cover some of our technology. If someone claimed that our proprietary or
licensed systems or software infringed their intellectual property rights, any
resulting litigation could be costly and time consuming and could divert the
attention of management and key personnel from other business issues. The
complexity of the technology involved and the uncertainty of intellectual
property litigation increase these risks. Claims of intellectual property
infringement also might require us to enter into costly royalty or license
agreements. However, we may be unable to obtain royalty or license agreements on
terms acceptable to us or at all. We also may be subject to significant damages
or an injunction against use of our proprietary or licensed systems. A
successful claim of patent or other intellectual property infringement against
us could materially adversely affect our business and profitability.

    We have historically indemnified our customers for some of the costs and
damages of patent infringement in circumstances where our product is the factor
creating the customer's infringement exposure, although we generally exclude
coverage where infringement arises out of the combination of our products with
products of others. This policy could have a material adverse effect on our
business and our profitability.

IF WE DO NOT SUCCESSFULLY IMPLEMENT OUR RESTRUCTURING PLAN, WE MAY EXPERIENCE
DISRUPTIONS IN OUR OPERATIONS AND INCUR HIGHER ONGOING COSTS, WHICH MAY CAUSE
OUR PROFITABILITY TO DECLINE.

    We are in the process of implementing a restructuring plan on an accelerated
basis as described under "--Overview." If we are unsuccessful in implementing
this plan, we may experience disruptions in our operations and incur higher
ongoing costs, which may cause our profitability to decline. In addition, the
implementation of the restructuring plan and its acceleration may also disrupt
our operations and cause our profitability to decline.

WE MAY ACQUIRE OTHER BUSINESSES OR FORM JOINT VENTURES THAT COULD NEGATIVELY
AFFECT OUR PROFITABILITY.

    The pursuit of additional technology, services or distribution channels
through acquisitions or joint ventures is an aspect of our business strategy. We
may not identify or complete these transactions in a timely manner, on a cost
effective basis or at all. Even if we do identify and complete these
transactions, we may not be able to successfully integrate such technology,
services or distribution channels into our existing operations and we may not
realize the benefits of such acquisition or joint venture. In addition, if we
were to make any acquisitions, we could incur debt, which could involve
restrictive covenants, or we could assume unknown or contingent liabilities.

WE MAY NOT HAVE FINANCING FOR FUTURE STRATEGIC ACQUISITIONS AND INVESTMENTS AND
ANY FINANCING WE DO RECEIVE MAY INCREASE OUR DEBT. IN ADDITION, WE ASSUMED A
SIGNIFICANT AMOUNT OF DEBT IN CONNECTION WITH THE

                                       22
<Page>
DISTRIBUTION AND WE MAY SUBSTANTIALLY INCREASE OUR DEBT IN THE FUTURE, WHICH
COULD SUBJECT US TO VARIOUS RESTRICTIONS AND HIGHER INTEREST COSTS, AND DECREASE
OUR PROFITABILITY.

    We may need to incur additional debt in order to make any strategic
acquisition or investment. Such financing may not be available to us on
acceptable terms or at all. Our ability to make payments on and to refinance our
indebtedness, including indebtedness outstanding under our commercial paper
program, our Liquid Yield Option Notes due 2021, or LYONs, and future
indebtedness, and to fund working capital, capital expenditures and strategic
acquisitions and investments will depend on our ability to generate cash in the
future. Our ability to generate cash is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control. In addition, our ability to issue equity to fund acquisitions or
investments is constrained because our issuance of additional stock may cause
Lucent's distribution of our stock to its shareowners to be taxable to Lucent
under Section 355(e) of the Internal Revenue Code.

    In addition, at the distribution date, we assumed $780 million of debt under
a commercial paper program. We also have two unsecured revolving credit
facilities with third-party financial institutions, a 364-day credit facility
and a five-year credit facility, that enable us to borrow up to $1.25 billion in
the aggregate. We are able to borrow funds under these facilities for general
corporate purposes, to backstop commercial paper and for acquisitions. In
addition, we recently issued approximately $944 million aggregate principal
amount at maturity of LYONs.

    We may substantially increase our debt in the future. We may from time to
time issue additional commercial paper under our commercial paper program, if
the market permits such borrowings, make borrowings under our revolving credit
facilities or issue other long or short-term debt, if available. Our credit
facilities and the indenture governing the LYONs impose, and future indebtedness
may impose, various restrictions and covenants on us, which could limit our
ability to respond to market conditions, to provide for unanticipated capital
investments or to take advantage of business opportunities. We also may incur
higher than expected interest expense in servicing our debt, which would
decrease our profitability.

OUR INDUSTRY IS HIGHLY COMPETITIVE AND IF WE CANNOT EFFECTIVELY COMPETE, OUR
REVENUES MAY DECLINE.

    The market for our products and services is very competitive and subject to
rapid technological advances. We expect the intensity of competition to continue
to increase in the future as existing competitors enhance and expand their
product and service offerings and as new participants enter the market.
Increased competition also may result in price reductions, reduced gross margins
and loss of market share. Our failure to maintain and enhance our competitive
position would adversely affect our business and prospects. See "--Competition."

OUR HISTORICAL FINANCIAL INFORMATION RELATED TO PERIODS PRIOR TO THE
DISTRIBUTION MAY NOT BE REPRESENTATIVE OF OUR RESULTS AS A SEPARATE COMPANY AND,
THEREFORE, MAY NOT BE RELIABLE AS AN INDICATOR OF OUR HISTORICAL OR FUTURE
RESULTS.

    The historical financial information incorporated by reference in this
Annual Report on Form 10-K for periods prior to the distribution may not reflect
what our results of operations, financial position and cash flows would have
been had we been a stand-alone company during the periods presented or what our
results of operations, financial position and cash flows will be in the future.
For information about our past financial performance and the basis of
presentation of our consolidated financial statements, including our estimates
of interest expense, please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements and the related notes incorporated by reference from our 2001 Annual
Report to Shareholders.

                                       23
<Page>
IF THE DISTRIBUTION DOES NOT QUALIFY FOR TAX-FREE TREATMENT, WE COULD BE
REQUIRED TO PAY LUCENT OR THE INTERNAL REVENUE SERVICE A SUBSTANTIAL AMOUNT OF
MONEY.

    Lucent has received a private letter ruling from the Internal Revenue
Service stating, based on certain assumptions and representations, that the
distribution described in this Annual Report on Form 10-K would not be taxable
to Lucent. Nevertheless, Lucent could incur significant tax liability if the
distribution did not qualify for tax-free treatment because any of those
assumptions or representations was not correct.

    Although any U.S. federal income taxes imposed in connection with the
distribution generally would be imposed on Lucent, we could be liable for all or
a portion of any taxes owed under the terms of the Tax Sharing Agreement between
Lucent and us or under the U.S. federal income tax laws if Lucent fails to pay
such taxes. In addition, if the distribution fails to qualify as a tax-free
distribution because of an acquisition of our stock or assets, or some other
actions of ours, we will be solely liable for any resulting corporate taxes.

ITEM 2. PROPERTIES.

    As of September 30, 2001, we operated three manufacturing facilities, 37
warehouse locations and one repair site in the United States and five other
countries. We also have 512 offices located in 51 countries and ten research and
development facilities located in Australia, India, Israel, France, Singapore,
the United Kingdom and the United States. Our manufacturing facilities are
located in Australia, Ireland and the United States. We also have a 25.5%
interest in a joint venture located in Gandhinagar, India and 51% interests in
joint ventures in each of China and Venezuela. All of these joint ventures are
predominantly used as manufacturing sites and are mostly on owned property. Our
facilities have aggregate floor space of approximately 12.5 million square feet,
of which approximately 4 million square feet is owned and approximately
8.5 million square feet is leased. Our lease terms range from monthly leases to
18 years. We believe that all of our facilities and equipment are in good
condition and are well maintained and able to operate at present levels.

ITEM 3. LEGAL PROCEEDINGS.

    From time to time we are involved in legal proceedings arising in the
ordinary course of business. Other than as described below, we believe there is
no litigation pending that could have, individually or in the aggregate, a
material adverse effect on our financial position, results of operations or cash
flows.

YEAR 2000 ACTIONS

    Three separate purported class action lawsuits are pending against Lucent,
one in state court in West Virginia, one in federal court in the Southern
District of New York and another in federal court in the Southern District of
California. The case in New York was filed in January 1999 and, after being
dismissed, was re-filed in September 2000. The case in West Virginia was filed
in April 1999 and the case in California was filed in June 1999, and amended in
2000, to include Avaya as a defendant. We may also be named a party to the other
actions and, in any event, have assumed the obligations of Lucent for all of
these cases under the Contribution and Distribution Agreement. All three actions
are based upon claims that Lucent sold products that were not Year 2000
compliant, meaning that the products were designed and developed without
considering the possible impact of the change in the calendar from December 31,
1999 to January 1, 2000. The complaints allege that the sale of these products
violated statutory consumer protection laws and constituted breaches of implied
warranties. A class has not been certified in any of the three cases, and to the
extent a class is certified in any of the cases, we expect that class to
constitute those enterprises that purchased the products in question. The
complaints seek, among other remedies, compensatory damages, punitive damages
and counsel fees in amounts that have not yet been specified. Although we
believe that the outcome of these actions will not adversely affect our
financial position, results of operations or cash flows, if these cases are not
resolved in a timely manner, they will require expenditure of significant legal
costs related to their defense.

                                       24
<Page>
COUPON PROGRAM CLASS ACTION

    In April 1998, a class action was filed against Lucent in state court in New
Jersey, alleging that Lucent improperly administered a coupon program resulting
from the settlement of a prior class action. The plaintiffs allege that Lucent
improperly limited the redemption of the coupons from dealers by not allowing
them to be combined with other volume discount offers, thus limiting the market
for the coupons. We have assumed the obligations of Lucent for these cases under
the Contribution and Distribution Agreement. The complaint alleges breach of
contract, fraud and other claims and the plaintiffs seek compensatory and
consequential damages, interest and attorneys' fees. The parties have entered
into a proposed settlement agreement, pending final approval by the court.

LUCENT SECURITIES LITIGATION

    In November 2000, three purported class actions were filed against Lucent in
the Federal District Court for the District of New Jersey alleging violations of
the federal securities laws as a result of the facts disclosed in Lucent's
announcement on November 21, 2000 that it had identified a revenue recognition
issue affecting its financial results for the fourth quarter of fiscal 2000. The
actions purport to be filed on behalf of purchasers of Lucent common stock
during the period from October 10, 2000 (the date Lucent originally reported
these financial results) through November 21, 2000.

    The above actions have been consolidated with other purported class actions
filed against Lucent on behalf of its stockholders in January 2000 and are
pending in the Federal District Court for the District of New Jersey. We
understand that Lucent has filed its Answer to the Fifth Consolidated Amended
and Supplemental Class Action Complaint in the consolidated action. The
plaintiffs allege that they were injured by reason of certain alleged false and
misleading statements made by Lucent in violation of the federal securities
laws. The consolidated cases were initially filed on behalf of stockholders of
Lucent who bought Lucent common stock between October 26, 1999 and January 6,
2000, but the consolidated complaint was amended to include purported class
members who purchased Lucent common stock up to November 21, 2000. A class has
not yet been certified in the consolidated actions. The plaintiffs in all these
stockholder class actions seek compensatory damages plus interest and attorneys'
fees.

    Any liability incurred by Lucent in connection with these stockholder class
action lawsuits may be deemed a shared contingent liability under the
Contribution and Distribution Agreement and, as a result, we would be
responsible for 10% of any such liability in excess of $50 million. All of these
actions are in the early stages of litigation and an outcome cannot be
predicted, and as a result, we cannot assure you that these cases will not have
a material adverse effect on our financial position, results of operations or
cash flows.

LICENSING MEDIATION

    In March 2001, a third party licensor made formal demand for alleged royalty
payments which it claims we owe as a result of a contract between the licensor
and our predecessors, initially entered into in 1995, and renewed in 1997. The
contract provides for mediation of disputes followed by binding arbitration if
the mediation does not resolve the dispute. The licensor claims that we owe
royalty payments for software integrated into certain of our products. The
licensor also alleges that we have breached the governing contract by not
honoring a right of first refusal related to development of fax software for
next generation products. We engaged in mediation with the licensor, but did not
resolve this matter. At this point, an outcome in any future proceeding cannot
be predicted, and as a result, there can be no assurance that this case will not
have a material adverse effect on our financial position, results of operations
or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

    During the fourth quarter of the fiscal year covered by this Annual Report
on Form 10-K, no matter was submitted to a vote of security-holders.

                                       25
<Page>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    Information required by this item is incorporated by reference from Note 18
to the Consolidated Financial Statements on page 52 of our 2001 Annual Report to
Shareholders.

ITEM 6. SELECTED FINANCIAL DATA.

    Information required by this item is incorporated by reference from SELECTED
FINANCIAL DATA on page 12 of our 2001 Annual Report to Shareholders.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.

    Information required by this item is incorporated by reference from
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS on pages 13 through 26 of our 2001 Annual Report to Shareholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    Information required by this item is incorporated by reference from the
discussion under the heading "FINANCIAL INSTRUMENTS" in MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS on pages 25 and 26
of our 2001 Annual Report to Shareholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    Information required by this item is incorporated by reference from the
REPORT OF INDEPENDENT ACCOUNTANTS on page 27 of our 2001 Annual Report and from
our consolidated financial statements and related notes on pages 28 through 52
of our 2001 Annual Report to Shareholders.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.

    None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The following table sets forth information as to persons who serve as our
executive officers.

<Table>
<Caption>
NAME                                    AGE        POSITION
----                                    ---        --------
<S>                                     <C>        <C>
Donald K. Peterson....................  52         Vice Chairman, President and Chief
                                                   Executive Officer

Pamela F. Craven......................  48         Vice President, General Counsel and
                                                   Secretary

Michael A. Dennis.....................  43         Vice President of Worldwide Operations
                                                   and Services

David P. Johnson......................  41         Vice President of Worldwide Sales

Steven Markman........................  56         Chief Product Officer

Karyn Mashima.........................  48         Vice President of Global Strategy and
                                                   Technology

Garry K. McGuire, Sr..................  55         Chief Financial Officer
</Table>

    Information about our Directors, including Mr. Peterson, is incorporated by
reference from the discussion under Proposal 1 set forth in our Proxy Statement
for the 2002 Annual Meeting of Shareholders.

                                       26
<Page>
    PAMELA F. CRAVEN has been our Vice President, General Counsel and Secretary
since September 30, 2000. Mrs. Craven was a director of Avaya from its inception
until September 30, 2000 and was Vice President, General Counsel and Secretary
of Lucent Technologies Inc.'s ("Lucent") Enterprise Networks Group from
March 2000 until September 30, 2000. Mrs. Craven served as Vice President, Law
for Lucent from November 1995 to April 2000 and was also Secretary of Lucent
from February 1, 1999 until April 2000.

    MICHAEL A. DENNIS has been our Vice President of Worldwide Operations and
Services since September 30, 2000. Mr. Dennis was Vice President of U.S.
Services for Lucent Technologies Inc.'s ("Lucent") Enterprise Networks Group
from April 2000 until September 30, 2000. He joined AT&T Corp. in July 1981 and
moved to Lucent following its spin-off in 1996. Mr. Dennis has held various
positions at Lucent including Sales Vice President and Field Services Vice
President.

    DAVID P. JOHNSON has been our Vice President of Worldwide Sales since
September 30, 2000. Mr. Johnson was Vice President of Worldwide Sales for Lucent
Technologies Inc.'s ("Lucent") Enterprise Networks Group from April 2000 until
September 30, 2000. He joined AT&T Corp. in 1982 and moved to Lucent following
its spin-off in 1996. Mr. Johnson has held various positions at Lucent,
including International President of Enterprise Networks and Regional President
of Asia/Pacific Region.

    STEVEN MARKMAN has been our Chief Product Officer since May 10, 2001.
Dr. Markman was Chairman of General Magic, Inc. from January 2001 to May 2001
and Chief Executive Officer and President from 1996 to 2001. Prior to that,
Dr. Markman was Executive Vice President and General Manager, Products Group, of
Novell, Inc. from 1994 to 1996.

    KARYN MASHIMA has been our Vice President of Global Strategy and Technology
since September 30, 2000. Ms. Mashima was Vice President of Strategy and
Technology for Lucent Technologies Inc.'s ("Lucent") Enterprise Networks Group
from March 2000 until September 30, 2000. She joined AT&T Corp. in 1994 and
moved to Lucent following its spin-off in 1996. Ms. Mashima has held various
positions at Lucent, including Vice President of Advanced Multi-Media
Communications Systems, Vice President of the Enterprise Systems Group and Vice
President and Chief Technical Officer of the Business Communications Systems
Group.

    GARRY K. MCGUIRE, SR. has been our Chief Financial Officer since
September 30, 2000. Mr. McGuire was Chief Financial Officer for Lucent
Technologies Inc.'s ("Lucent") Enterprise Networks Group from May 2000 until
September 30, 2000. Mr. McGuire was a consultant to Kleiner, Perkins, Caufield
and Byers/Broadband Office from August 1999 to December 1999. He was President
and Chief Executive Officer of Williams Communications Solutions, LLC, from
April 1997 to July 1999, and was President of Nortel Communications Systems, LLC
("Nortel"), from September 1995 until April 1997.

ITEM 11. EXECUTIVE COMPENSATION

    Information required by this item is incorporated by reference from the
discussion under the heading EXECUTIVE COMPENSATION AND OTHER INFORMATION in our
Proxy Statement for the 2002 Annual Meeting of Shareholders, except for the
discussions under the headings "Report on Executive Compensation" and
"Performance Graph."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    Information required by this item is incorporated by reference from the
discussion under the heading SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT in our Proxy Statement for the 2002 Annual Meeting of Shareholders.

                                       27
<Page>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    Information required by this item is incorporated by reference from the
discussion under the heading CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS in our Proxy Statement for the 2002 Annual Meeting of Shareholders.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

    (a) Documents filed as a part of this Annual Report on Form 10-K:

(1) Financial Statements:

<Table>
<Caption>
                                                                                             PAGE(S) IN OUR 2001
                                                                                                ANNUAL REPORT
                                                                                             -------------------
       <S>                     <C>                                                           <C>
       (i)                     Consolidated Statements of Operations.......................            28

       (ii)                    Consolidated Balance Sheets.................................            29

       (iii)                   Consolidated Statements of Changes in Stockholders' Equity              30
                               and of Comprehensive Income (Loss)..........................

       (iv)                    Consolidated Statements of Cash Flows.......................            31

       (v)                     Notes to Consolidated Financial Statements..................         32-52
</Table>

(2) Financial Statement Schedules:

<Table>
       <S>                     <C>                                                           <C>
       (i)                     Schedule II--Valuation and Qualifying Accounts..............        S-1
</Table>

                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of Avaya Inc.:

    Our audits of the consolidated financial statements referred to in our
report dated October 24, 2001 appearing in the 2001 Annual Report to
Stockholders of Avaya Inc. (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, New York
October 24, 2001

    Separate financial statements of subsidiaries not consolidated and
50 percent or less owned persons are omitted since no such entity constitutes a
"significant subsidiary" pursuant to the provisions of Regulation S-X,
Article 3-09.

                                       28
<Page>
(3) Exhibits:

    The following documents are filed as Exhibits to this Annual Report on
Form 10-K or incorporated by reference herein:

<Table>
<Caption>
       EXHIBIT
       NUMBER
---------------------
<S>                     <C>
 2                      Contribution and Distribution Agreement+

 3.1                    Restated Certificate of Incorporation of Avaya Inc.+

 3.2                    Amended and Restated By-laws of Avaya Inc.*

 4.1                    Specimen Common Stock certificate+

 4.2                    Restated Certificate of Incorporation of Avaya Inc.
                        (incorporated by reference as Exhibit 3.1 hereto)+

 4.3                    Amended and Restated By-laws of Avaya Inc. (filed as Exhibit
                        3.2 hereto)*

 4.4                    Rights Agreement between Avaya Inc. and The Bank of New
                        York, as Rights Agent+

 4.5                    Form of Certificate of Designations of Series A Junior
                        Participating Preferred Stock (attached as Exhibit A to the
                        Rights Agreement filed as Exhibit 4.4hereto)+

 4.6                    Form of Right Certificate (attached as Exhibit B to the
                        Rights Agreement incorporated by reference as Exhibit 4.4
                        hereto)+

 4.7                    Preferred Stock Certificate**

 4.8                    Series A Warrant**

 4.9                    Series B Warrant**

 4.10                   Form of Indenture between Avaya Inc. and The Bank of New
                        York, as Trustee**

 4.11                   Form of Supplemental Indenture between the Company and The
                        Bank of New York, as Trustee, relating to the Liquid Yield
                        Options Notes due 2021 (ZeroCoupon-Senior)****

 10.1                   Contribution and Distribution Agreement (incorporated by
                        reference as Exhibit 2 hereto)+

 10.2                   Interim Services and Systems Replication Agreement+

 10.3                   Employee Benefits Agreement+

 10.4                   Tax Sharing Agreement+

 10.5                   Avaya Inc. Short Term Incentive Plan+

 10.6                   Avaya Inc. 2000 Long Term Incentive Plan+

 10.7                   Avaya Inc. 2000 Long Term Incentive Plan Restricted Stock
                        Unit Award Agreement+

 10.8                   Avaya Inc. 2000 Long Term Incentive Plan Nonstatutory Stock
                        Option Agreement+

 10.9                   Avaya Inc. Deferred Compensation Plan+

 10.10                  Employment Agreement of Mr. Peterson, dated August 8, 1995+

 10.11                  Avaya Inc. Supplemental Pension Plan+

 10.12                  Avaya Inc. 2000 Stock Compensation Plan for Non-Employee
                        Directors+

 10.13                  Trademark License Agreement+
</Table>

                                       29
<Page>

<Table>
<Caption>
       EXHIBIT
       NUMBER
---------------------
<S>                     <C>
 10.14                  Patent and Technology License Agreement+

 10.15                  Technology Assignment and Joint Ownership Agreement+

 10.16                  Development Project Agreement+

 10.17                  Preferred Stock and Warrant Purchase Agreement+

 10.18                  Certificate of Designations, Preferences and Rights of
                        Series B Convertible Participating Preferred Stock of Avaya
                        Inc. (attached as Exhibit A to the Preferred Stock and
                        Warrant Purchase Agreement incorporated by reference as
                        Exhibit 10.17 hereto)+

 10.20                  364-Day Competitive Advance and Revolving Credit Facility
                        Agreement, dated as of August 28, 2001 among Avaya Inc.,
                        Citibank, N.A., as Agent, Salomon Smith Barney, as Lead
                        Arranger, The Chase Manhattan Bank and Deutsche Bank AG New
                        York Branch and Credit Suisse First Boston, as
                        Co-Syndication Agents, and the Lenders party thereto*****

 10.21                  Five Year Competitive Advance and Revolving Credit Facility
                        Agreement, dated as of September 25, 2000 among Lucent
                        Technologies Inc., Avaya Inc., Citibank, N.A., as Agent,
                        Salomon Smith Barney, as Lead Arranger, Bank One, NA, The
                        Chase Manhattan Bank and Deutsche Bank AG New York and/or
                        Cayman Islands Branches, as Co-Syndication Agents and
                        Co-Arrangers, Commerzbank AG, as Co-Arranger and the Lenders
                        party thereto*

 10.22                  Letter Amendment No. 1, dated as of August 10, 2001, to the
                        Five Year Credit Agreement by and among Avaya Inc.,
                        Citibank, N.A., as Agent and the Lenders party thereto***

 12                     Computation of Earnings to Fixed Charges and Earnings to
                        Combined Fixed Charges and Preferred Stock Accretion*****

 13                     The 2001 Annual Report to Shareholders, which, except for
                        those portions incorporated by reference, is furnished
                        solely for the information of the Commission and is not
                        deemed "filed."*****

 21                     List of Subsidiaries of Avaya Inc.*****

 23                     Consent of PricewaterhouseCoopers LLP*****

 24                     Power of Attorney*****
</Table>

------------------------

+   Incorporated by reference from Avaya's Registration Statement on Form 10
    (Reg. No. 1-15951), declared effective by the Securities and Exchange
    Commission on September 15, 2000.

*   Incorporated by reference from Avaya's Annual Report on Form 10-K for the
    year ended September 30, 2000.

**  Incorporated by reference from Avaya's Registration Statement on Form S-3
    (Reg. No. 333-57962), declared effective by the Commission on May 24, 2001.

*** Incorporated by reference from Avaya's Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.

****Incorporated by reference from Avaya's Registration Statement on Form 8-A
    dated October 30, 2001.

*****Filed herewith.

    (b) Reports on Form 8-K during the last quarter of the fiscal year covered
       by this Report: None.

                                       30
<Page>
                          AVAYA INC. AND SUBSIDIARIES
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                             (DOLLARS IN MILLIONS)

<Table>
<Caption>
                                          COLUMN B      COLUMN C    COLUMN D    COLUMN E
                                        ------------   ----------   --------   ----------
                                                       ADDITIONS
                                         BALANCE AT     CHARGED     CHARGED
                                        BEGINNING OF   TO COSTS &   TO OTHER                 BALANCE AT
COLUMN A                                   PERIOD       EXPENSES    ACCOUNTS   DEDUCTIONS   END OF PERIOD
--------                                ------------   ----------   --------   ----------   -------------
<S>                                     <C>            <C>          <C>        <C>          <C>
YEAR 2001
Allowance for doubtful accounts.......       $62          $53         $--          $47           $68
Deferred tax asset valuation
  allowance...........................        49           --          --           --            49

YEAR 2000
Allowance for doubtful accounts.......        58           36          --           32            62
Deferred tax asset valuation
  allowance...........................        73           --          --           24            49

YEAR 1999
Allowance for doubtful accounts.......        82           25           1           50            58
Deferred tax asset valuation
  allowance...........................        48           14          11           --            73
</Table>

                                      S-1
<Page>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<Table>
<S>                                                    <C>  <C>
                                                       AVAYA INC.

                                                       By:            /s/ CHARLES D. PEIFFER
                                                            -----------------------------------------
                                                                        Charles D. Peiffer
                                                                            Controller
</Table>

December 26, 2001

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the date indicated.

<Table>
<Caption>
                      SIGNATURE                                   TITLE                   DATE
                      ---------                                   -----                   ----
<C>                                                    <S>                          <C>
Principal Executive Officer:

                          *                            Vice Chairman, President
     -------------------------------------------         and Chief Executive        December 26, 2001
                 Donald K. Peterson                      Officer

Principal Financial Officer:

              /s/ GARRY K. MCGUIRE, SR.
     -------------------------------------------       Chief Financial Officer      December 26, 2001
                Garry K. McGuire, Sr.

Principal Accounting Officer:

               /s/ CHARLES D. PEIFFER
     -------------------------------------------       Controller                   December 26, 2001
                 Charles D. Peiffer

Directors:

                          *
     -------------------------------------------       Chairman of the Board of     December 26, 2001
                  Patricia F. Russo                      Directors

                          *
     -------------------------------------------       Director                     December 26, 2001
                  Jeffrey A. Harris

                          *
     -------------------------------------------       Director                     December 26, 2001
                     Mark Leslie

                          *
     -------------------------------------------       Director                     December 26, 2001
                  Henry B. Schacht

                          *
     -------------------------------------------       Director                     December 26, 2001
                 Daniel C. Stanzione

                          *
     -------------------------------------------       Director                     December 26, 2001
                 Franklin A. Thomas
</Table>

*   by Charles D. Peiffer, Attorney-In-Fact
<Page>
                                 EXHIBIT INDEX

<Table>
<Caption>
       EXHIBIT                                                                          PAGE
       NUMBER                                                                          NUMBER
---------------------                                                                 --------
<C>                     <S>                                                           <C>
            2           Contribution and Distribution Agreement+

          3.1           Restated Certificate of Incorporation of Avaya Inc.+

          3.2           Amended and Restated By-laws of Avaya Inc.*

          4.1           Specimen Common Stock certificate+

          4.2           Restated Certificate of Incorporation of Avaya Inc.
                        (incorporated by reference as Exhibit 3.1 hereto)+

          4.3           Amended and Restated By-laws of Avaya Inc. (filed as Exhibit
                        3.2 hereto)*

          4.4           Rights Agreement between Avaya Inc. and The Bank of New
                        York, as Rights Agent+

          4.5           Form of Certificate of Designations of Series A Junior
                        Participating Preferred Stock (attached as Exhibit A to the
                        Rights Agreement filed as Exhibit 4.4 hereto)+

          4.6           Form of Right Certificate (attached as Exhibit B to the
                        Rights Agreement incorporated by reference as Exhibit 4.4
                        hereto)+

          4.7           Preferred Stock Certificate**

          4.8           Series A Warrant**

          4.9           Series B. Warrant**

         4.10           Form of Indenture between Avaya Inc. and The Bank of New
                        York, as Trustee**

         4.11           Form of Supplemental Indenture between the Company and the
                        Bank of New York, as Trustee, relating to the Liquid Yield
                        Options Notes due 2021 (Zero Coupon-Senior)****

         10.1           Contribution and Distribution Agreement (incorporated by
                        reference as Exhibit 2 hereto)+

         10.2           Interim Services and Systems Replication Agreement+

         10.3           Employee Benefits Agreement+

         10.4           Tax Sharing Agreement+

         10.5           Avaya Inc. Short Term Incentive Plan+10.6 Avaya Inc. 2000
                        Long Term Incentive Plan+

         10.7           Avaya Inc. 2000 Long Term Incentive Plan Restricted Stock
                        Unit Award Agreement+

         10.8           Avaya Inc. 2000 Long Term Incentive Plan Nonstatutory Stock
                        Option Agreement+

         10.9           Avaya Inc. Deferred Compensation Plan+

        10.10           Employment Agreement of Mr. Peterson, dated August 8, 1995+

        10.11           Avaya Inc. Supplemental Pension Plan+

        10.12           Avaya Inc. 2000 Stock Compensation Plan for Non-Employee
                        Directors+

        10.13           Trademark License Agreement+

        10.14           Patent and Technology License Agreement+

        10.15           Technology Assignment and Joint Ownership Agreement+

        10.16           Development Project Agreement+
</Table>

<Page>

<Table>
<Caption>
       EXHIBIT                                                                          PAGE
       NUMBER                                                                          NUMBER
---------------------                                                                 --------
<C>                     <S>                                                           <C>
        10.17           Preferred Stock and Warrant Purchase Agreement+

        10.18           Certificate of Designations, Preferences and Rights of
                        Series B Convertible Participating Preferred Stock of Avaya
                        Inc. (attached as Exhibit A to the Preferred Stock and
                        Warrant Purchase Agreement incorporated by reference as
                        Exhibit 10.17 hereto)+

        10.20           364-Day Competitive Advance and Revolving Credit Facility
                        Agreement, dated as of August 28, 2001 among Avaya Inc.,
                        Citibank, N.A., as Agent, Salomon Smith Barney, as Lead
                        Arranger, The Chase Manhattan Bank and Deutsche Bank AG New
                        York Branch and Credit Suisse First Boston, as
                        Co-Syndication Agents, and the Lenders party thereto*****

        10.21           Five Year Competitive Advance and Revolving Credit Facility
                        Agreement, dated as of September 25, 2000 among Lucent
                        Technologies Inc., Avaya Inc., Citibank, N.A., as Agent,
                        Salomon Smith Barney, as Lead Arranger, Bank One, NA, The
                        Chase Manhattan Bank and Deutsche Bank AG New York and/or
                        Cayman Islands Branches, as Co-Syndication Agents and
                        Co-Arrangers, Commerzbank AG, as Co-Arranger and the Lenders
                        party thereto*

        10.22           Letter Amendment No. 1, dated as of August 10, 2001, to the
                        Five Year Credit Agreement by and among Avaya Inc.,
                        Citibank, N.A., as Agent and the Lenders party thereto***

           12           Computation of Earnings to Fixed Charges and Earnings to
                        Combined Fixed Charges and Preferred Stock Accretion*****

           13           The 2001 Annual Report to Shareholders, which, except for
                        those portions incorporated by reference, is furnished
                        solely for the information of the Commission and is not
                        deemed "filed."*****

           21           List of Subsidiaries of Avaya Inc.*****

           23           Consent of PricewaterhouseCoopers LLP*****

           24           Power of Attorney*****
</Table>

*   Filed herewith.

------------------------

+   Incorporated by reference from Avaya's Registration Statement on Form 10
    (Reg. No. 1-15951), declared effective by the Securities and Exchange
    Commission on September 15, 2000.

*   Incorporated by reference from Avaya's Annual Report on Form 10-K for the
    year ended September 30, 2000.

**  Incorporated by reference from Avaya's Registration Statement on Form S-3
    (Reg. No. 333-57962), declared effective by the Commission on May 24, 2001.

*** Incorporated by reference from Avaya's Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2001.

****Incorporated by reference from Avaya's Registration Statement on Form 8-A
    dated
    October 30, 2001.