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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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26-1119726
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4655 Great America Parkway
Santa Clara, California
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95054
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(Address of Principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Common Stock
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AVYA
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New York Stock Exchange ("NYSE")
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Large accelerated filer x
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Accelerated filer ¨
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Non-accelerated filer ¨
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Smaller Reporting Company ¨
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Emerging growth company ¨
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Item
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Description
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Page
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PART I
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1.
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1A.
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1B.
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2.
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3.
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4.
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PART II
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5.
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6.
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7.
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7A.
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8.
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9.
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9A.
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9B.
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PART III
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10.
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11.
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12.
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13.
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14.
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PART IV
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15.
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16.
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•
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Gartner Forecast: PCs, Ultramobiles and Mobile Phones, Worldwide, 2017-2023, 3Q19 Update, Ranjit Atwal, et al., September 2019.
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•
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Aragon Report: The Aragon Research GlobeTM for Unified Communications and Collaboration, 2019, Jim Lundy, et al., April 2019
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•
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Aragon Report: The Aragon Research GlobeTM for Intelligent Contact Center, 2019, Jim Lundy, May 2019
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Item 1.
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Business
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•
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Unified Communications ("UC"): Avaya's UC solutions enable organizations to reimagine collaborative work environments and help companies increase employee productivity, improve customer service and reduce costs. With Avaya's UC solutions, organizations can provide their workers with a single application, or "app," for all-channel calling, messaging, meetings and team collaboration with the same ease of use as existing consumer apps. Avaya embeds communications directly into the apps, browsers and devices employees use every day giving them a more natural, efficient and flexible way to connect, engage, respond and share - where and how they want.
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•
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Contact Center ("CC"): Avaya’s industry-leading digital contact center solutions enable customers to build a customized portfolio of applications to drive stronger customer engagement and higher customer lifetime value. Our reliable, secure and scalable communications solutions include voice, email, chat, social media, video, performance management and third-party integration that can improve customer service and help companies compete more effectively. Like the UC business, Avaya is evolving the CC solution set for cloud deployment.
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•
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Global Support Services provide offerings that address the risk of system outages and help businesses protect their technology investments. We help our customers maintain their competitiveness through proactive problem prevention, rapid resolution and continual solution optimization. The majority of our revenue in this business is recurring in nature.
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•
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Enterprise Cloud and Managed Services enable customers to take advantage of our technology via the cloud, on-premises, or a hybrid of both, depending on the solution and the needs of the customer. The majority of our revenue in this business is recurring in nature and based on multi-year services contracts.
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•
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Professional Services enable businesses worldwide to take full advantage of their IT and communications solution investments to drive measurable business results. Our experienced consultants and engineers partner with clients along each step of the solution lifecycle to deliver services that drive business transformation and provide continuously increasing value. The majority of our revenue in this business is non-recurring in nature.
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Successor
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Predecessor
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Non-GAAP Combined
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Predecessor
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||||||||||||
(In millions)
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Fiscal year ended September 30, 2019
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Period from December 16, 2017
through September 30, 2018 |
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Period from
October 1, 2017 through December 15, 2017 |
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Fiscal year ended September 30, 2018
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Fiscal year ended September 30, 2017
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Products:
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||||||||||
Unified Communications
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$
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863
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$
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718
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$
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180
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$
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898
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$
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936
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Contact Center
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359
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271
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73
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344
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361
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|||||
Networking(a)
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—
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—
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—
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—
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140
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|||||
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1,222
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989
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253
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1,242
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1,437
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|||||
Services:
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||||||||||
Global Support Services
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1,086
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786
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244
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1,030
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1,267
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|||||
Enterprise Cloud and Managed Services
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297
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245
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57
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302
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296
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|||||
Professional Services
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282
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227
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50
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277
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272
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|||||
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1,665
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1,258
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351
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1,609
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1,835
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|||||
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$
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2,887
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$
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2,247
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$
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604
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$
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2,851
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$
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3,272
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(a)
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The Company's Networking business was sold on July 14, 2017.
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•
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Convergence with UC/collaboration and CC as they are becoming less distinct technologies, and more similar with integrated services and capabilities across devices and channels. Avaya already has more than 10,000 customers that range in size from 10 seats to 250,000 seats on a converged UC and CC platform, and we are in a position of strength to lead in bringing customers the power of this convergence.
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•
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Increasing remote workers and workforce mobility, with greater use of mobile devices by consumers and employees. This is happening as business leaders also shift priorities to digitally transform their companies, taking advantage of disruptive technologies like cloud-based solutions and delivery models, big data, IoT, cybersecurity and AI.
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•
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Increased preference for cloud delivery of applications, and management of multiple and varied devices, all of which must be handled with the security their business demands.
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•
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Omnichannel communication customer service continue to rise and become an increasingly critical element in contact center solutions, as consumers embrace new technologies and devices in creative ways and at an accelerating pace.
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•
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Increased adoption of AI is providing alternative methods for service components for both UC and CC. The market is adopting model-based implementation of AI communication services at an accelerated pace. This can potentially lower adoption cost, increase effectiveness and offer expanded alternatives for functions with traditional methods for rendered services.
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1)
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Manage the reliable and secure integration of an increasing number and variety of devices and endpoints: Today, business users not only use desk-based devices, but also laptops, smartphones and tablets. Gartner reports for September 2019 forecast that these devices are growing at a compound annual growth rate of 1.9% for smartphones, and (2.2)% for tablets (traditional) worldwide from 2019 through 2023(1). To communicate seamlessly and securely across devices, applications and endpoints must be managed as part of an integrated communications infrastructure.
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2)
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Leverage existing technology infrastructure while positioning for the future: The speed at which new enterprise technology enters the market is challenging companies to rapidly adopt and install new technology. We believe this pressure creates strong demand for systems that do not require enterprise-wide overhauls of existing technology. Instead, it favors incremental, flexible, extensible technologies that are easy to adopt and compatible with existing infrastructures.
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3)
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Shift to cloud-based applications: Companies today seek technology that helps them lower Total Cost of Ownership ("TCO") and increase deployment speed and application agility, including a variety of public, private and hybrid cloud solutions. They also seek to shift away from a complex, proprietary capital-intensive model to one that is more open and efficient.
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•
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Disrupt - the more an innovation invalidates the status quo, the better;
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Reduce adoption friction - make the innovation straightforward to select and deploy, embrace the multi-vendor marketplace; and
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•
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Partner intelligently - leverage provocative partner intellectual property and thought leadership to speed market introduction, presenting Avaya as the industry platform.
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◦
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Agent assistance and productivity;
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◦
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Conversational self-service; and
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◦
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Smart routing and behavioral pairing.
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1)
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We have invested in R&D and new technologies to develop and provide more comprehensive contact center and unified communications products and services, continuing our focus on enterprise customers while expanding the value we can provide to midmarket customers.
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2)
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We have evolved our product design philosophy, anticipating demand for applications that are cloud- and mobile-enabled. We design our products to be flexible, extensible, secure and reliable. This approach allows our customers to transition from traditional communications and collaboration technology to newer solutions that are more mobile, manageable and cost-effective.
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3)
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We have increased our focus on delivering integrated solutions including:
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1)
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Innovate in our core business solutions. As a leader in unified communications and the contact center, our extensive experience and expertise are critical factors in customers' decision-making processes. We will continue to invest in enhancing our core solution areas, delivering secure, scalable and reliable solutions that focus on simplifying and integrating the user experience.
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2)
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Bring emerging technologies to market. By innovating in disruptive areas such as AI and mobility, and building an ecosystem with technology partners like Afiniti and others, we will drive new opportunities for our customers.
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3)
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Deliver breadth and depth of cloud. Customers need a partner who can help them unlock the benefits of cloud, in a way that works for their specific needs, whether in the cloud, on-premises or a hybrid of both. Avaya is investing and building a cloud ecosystem, and delivering across all fronts with a cloud-first approach that builds on the power, reliability and security that customers have come to expect from Avaya. Our strategic partnership with RingCentral will further enhance our cloud-based offerings with the introductions of Avaya Cloud Office.
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4)
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Deliver high-value services. We provide world-class global services that help customers maximize the value of their investments and drive business value. We will expand offerings and capabilities in managed and professional services to meet the changing needs of our customers.
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1)
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Enablement Services: Provide access to expertise and resources for planning, defining and deploying Avaya products to maximize technology potential, simplify business processes, improve security and minimize risk. Avaya integrates and tests equipment, trains employees and deploys a plan to help ensure success.
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2)
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Optimization Services: Help drive increased value and improved business results by leveraging customers’ existing technology. Avaya's advanced solution architects analyze a communications environment in the context of customer business priorities, recommend enhancements and implement proven best practices.
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3)
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Innovation Services: Help identify improved methods for using communications and collaboration to increase business productivity, employee efficiency and customer service levels. Our consultative approach, deep industry experience and custom application services-from business planning to execution and product integration-create alignment with a customer’s specific business objectives.
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1)
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Customer Journey Transformation: We are engaging with our key clients in a highly consultative way to help them better leverage their communications investment. This model has led to an increase in large, complex projects for our top enterprise clients. Our extensive knowledge of our customers' journeys, leveraging reference architectures, is a cornerstone of Avaya’s growth strategy going forward.
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2)
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Agile Development Business: The increase in large projects has also led to increases in our agile development business. We help clients develop customized, leading-edge applications that fully integrate into their environment to solve key business problems and take advantage of opportunities.
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3)
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Professional Services: We have a fully integrated, global professional services team that has grown to more than 1,200 professionals today. This team provides the same high level of technical talent and tool support in all regions of the world. To further this team’s effectiveness, Avaya expects to implement a new professional automated tool in fiscal 2020. The tool will improve our ability to deliver the highest level of quality support our customers have come to expect, while increasing the efficiency of their budget. Among a wide range of benefits, the integrated tool streamlines resource assignment allowing for earlier engagement and tighter alignment with our sales group, ultimately improving near term as well as long term productivity and service levels.
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•
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A comprehensive suite of support options both directly and through partners to proactively resolve issues and improve uptime. Global Support Services offers capabilities that include 24/7 remote support, proactive remote monitoring, sophisticated diagnostic tools, parts replacement and on-site response.
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•
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Our Avaya Support website quickly connects customers to advanced Avaya technicians via live chat, voice or video. The website also provides access to "Ava," an interactive virtual chat agent based on Avaya Automated Chat that
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•
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Enhanced automation to enable our clients to get to the right technical expert in a quicker and more effective way, improving overall customer satisfaction.
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•
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Implemented a new Support Services Customer Success team, which we believe has helped enable us to more rapidly onboard and understand our clients' UC and CC strategies, issues and opportunities. We expect this investment to help our clients further view us as a trusted consultative provider that will result in increased adoption, accelerated momentum and transition to our full-service stack, including the cloud.
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•
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Continuing to evolve our real-time, automated evaluation of global clients' solution performance, which gives visibility across many different support criteria to enable proactive deep-dives with clients.
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1)
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A standard set of Avaya OneCloudTM ReadyNow reference architectures that enable quick and effective POC’s and trials, prior to implementing production environments for clients. The cloud platform will be based on Avaya’s industry-leading UC and CC technology that will meet the majority of enterprise client requirements, with the ability to customize.
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2)
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A new set of automation platforms to effectively build and deploy solutions for clients that will enable Avaya to replicate a client’s sophisticated premise-based implementations to our cloud solution in an unprecedented level of speed, accuracy and effectiveness.
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3)
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A client success model to help clients ramp up users on the platform and achieve defined business outcomes.
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4)
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A new Enterprise Communications Cloud Architect team, consisting of some of the best enterprise communications cloud technical talent in the industry, that works with clients in the architecture, design, operations and implementation of their secure virtualized private cloud environment. In addition, the Avaya team
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5)
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A set of managed services offers to effectively operate the private cloud environment at a high level of availability, performance and Quality of Service ("QOS") Service Level Agreements ("SLAs"). These offerings will include full multi-vendor support of their current communications technology environment as they begin their migration to the cloud.
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6)
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A global network of data centers running the same virtualized private cloud architectures, all run with the same industry-leading set of automation, workflow and team.
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1)
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Global Service Provider alliances are partnering arrangements with leading telecommunications service providers, such as AT&T, for enterprise communications and collaboration. We pursue sell-to and sell-through opportunities for Avaya products and services. These alliances are integral in selling and implementing our cloud-based services. We also see them as a principal route to market for our UCaaS and CCaaS solutions.
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2)
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Global Systems Integrator alliances are identical in nature to our Global Service Provider alliances, except that these are forged with systems integrator partners, such as IBM, as well as key channel partners with strong professional services and systems integration capabilities, such as ConvergeOne.
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3)
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Ecosystem alliances are partnering arrangements by Avaya with industry leaders, including Google, IBM Nuance, Salesforce, Verint, Afiniti, Intel and other leading technology companies. These ecosystem alliances expand the already robust set of technology partnerships established through the Avaya DevConnect program with deeper, R&D-led integrations and/or expanded GTM efforts, such as the DevConnect Select Product Program or the Avaya & Friends Program for international markets.
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•
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Enterprise UC: Cisco, Microsoft, NEC, Unify, Alcatel-Lucent Enterprise and Huawei.
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•
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Midmarket UC: Mitel, NEC, Cisco and Microsoft.
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Cloud Products and Services: Cisco, Microsoft, RingCentral, 8x8, Mitel, Google, LogMeIn, Fuze and Twilio.
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•
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Video Products and Solutions: Cisco, Microsoft, Zoom, LogMeIn, Google, Poly, Huawei, ZTE, BlueJeans and LifeSize.
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•
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Enterprise Contact Center Products and Services: Genesys, Cisco, Aspect Software, Huawei, Enghouse Interactive and Mitel.
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•
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Midmarket Contact Center Products and Services: Genesys, Cisco, Five9, NICE InContact, Amazon and Vonage.
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•
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certain provisions of environmental laws governing the cleanup of soil and groundwater contamination;
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various local, federal and international laws and regulations regarding the material content and electrical design of our products that require us to be financially responsible for the collection, treatment, recycling and disposal of those products; and
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•
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various employee safety and health regulations that are imposed in various countries within which we operate.
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Item 1A.
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Risk Factors
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•
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Enterprise UC: Cisco, Microsoft, NEC, Unify, Alcatel-Lucent Enterprise and Huawei.
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•
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Midmarket UC: Mitel, NEC, Cisco and Microsoft.
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Cloud Products and Services: Cisco, Microsoft, RingCentral, 8x8, Mitel, Google, LogMeIn, Fuze and Twilio.
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•
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Video Products and Solutions: Cisco, Microsoft, Zoom, LogMeIn, Google, Poly, Huawei, ZTE, BlueJeans and LifeSize.
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•
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Enterprise Contact Center Products and Services: Genesys, Cisco, Aspect Software, Huawei, Enghouse Interactive and Mitel.
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•
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Midmarket Contact Center Products and Services: Genesys, Cisco, Five9, NICE InContact, Amazon and Vonage.
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•
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economic conditions and geopolitical developments, including trade sanctions, changes to significant trading relationships such as the United Kingdom’s ongoing process of withdrawal from the EU, and the negotiation of new or revised international trade arrangements;
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political or social unrest, economic instability or corruption or sovereign debt risks in a specific country or region;
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legal and regulatory constraints, such as international and local laws and regulations related to trade compliance, anti-corruption, information security, data privacy and protection, labor and other requirements;
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protectionist and local security legislation;
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difficulty in enforcing intellectual property rights, such as protecting against the counterfeiting of our products;
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relationships with employees and works councils, as well as difficulties in finding qualified employees, including skilled design and technical employees, as companies expand their operations offshore;
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•
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unfavorable tax and currency regulations;
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military conflict, terrorist activities and health pandemics or similar issues;
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future government shutdowns or uncertainties which could affect the portion of our revenues which comes from the U.S. federal government sector;
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natural disasters, such as earthquakes, hurricanes or floods, anywhere we and/or our channel partners and distributors have business operations; and
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•
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other matters in any of the countries or regions in which we and our contract manufacturers and business partners currently operate or intend to operate, including in the U.S.
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we could fail to meet our financial reporting obligations;
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our reputation may be adversely affected and our business and operating results could be harmed;
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the market price of our stock could decline; and
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we could be subject to litigation and/or investigations or sanctions by the Securities and Exchange Commission (the "SEC"), the New York Stock Exchange or other regulatory authorities.
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•
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making it more difficult for us to make payments on our indebtedness;
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•
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increasing our vulnerability to general economic and industry conditions;
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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, research and development and future business opportunities;
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exposing us to the risk of increased interest rates under Avaya Inc.’s credit facilities to the extent such facilities have variable rates of interest;
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limiting our ability to make strategic acquisitions and investments;
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limiting our ability to refinance our indebtedness as it becomes due; and
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•
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limiting our ability to adjust quickly or at all to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.
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•
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incur or guarantee additional debt and issue or sell certain preferred stock;
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pay dividends on, redeem or repurchase our capital stock;
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make certain acquisitions or investments;
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incur or assume certain liens;
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enter into transactions with affiliates; and
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sell assets to, or merge or consolidate with, another company.
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•
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general economic conditions;
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political dynamics in the countries we operate in;
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fluctuations in our operating results;
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variances in our financial performance from the expectations of equity and/or debt research analysts;
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conditions and trends in the markets we serve;
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announcements of significant new services or products by us or our competitors;
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additions of or changes to key employees;
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changes in market valuations or earnings of our competitors;
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•
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trading volumes of our common stock and/or Convertible Notes;
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•
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future sales of our equity securities and/or future issuances of indebtedness;
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•
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changes in the estimation of the future sizes and growth rates of our markets;
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•
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legislation or regulatory policies, practices or actions;
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•
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hedging or arbitrage trading activity by third parties, including by the counterparties to the note hedge and warrant transactions that we entered into in connection with the issuance of the Convertible Notes; and
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•
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dilution that may occur upon any conversion of shares of our Series A Preferred Stock or the Convertible Notes or the exercise of the warrants we issued in connection with the issuance of the Convertible Notes.
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•
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receive dividends, in preference and priority to holders of our common stock or other series of Company stock, which will accrue on a daily basis at the rate of 3% per annum of the stated value of the Series A Preferred Stock. The stated value of the Series A Preferred Stock is initially $1,000 per share and it will be increased by the sum of any dividends on such shares not paid in cash. These dividends are cumulative, compound quarterly and are paid quarterly in arrears.
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•
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participate in any dividends we pay on our common stock, equal to the dividend which holders would have received if their Series A Preferred Stock had been converted into common stock on the date such common stock dividend was determined.
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•
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receive, in the event our Company is liquidated or dissolved, before any distribution is made to holders of our common stock, an amount equal to the liquidation preference (which equals the stated value referenced above plus any accrued and unpaid dividends) for each share of Series A Preferred Stock held.
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•
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amending our organizational documents in a manner that would have an adverse effect on the Series A Preferred Stock; and
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•
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issuing securities that are senior to, or equal in priority with, the Series A Preferred Stock.
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•
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authorize our board of directors to create and issue, without stockholder approval, up to 55,000,000 shares of undesignated preferred stock, which could be used to dilute the ownership of a hostile acquirer;
|
•
|
grant the board of directors the exclusive right to fill a vacancy on the board of directors, whether such vacancy is due to an increase in the number of directors or death, resignation or removal of a director, which prevents stockholders from being able to fill such vacancies on the board of directors; and
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•
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require stockholders to follow certain advance notice procedures to bring a proposal before an annual meeting, including proposing nominees for election as directors, which may discourage a potential acquirer from soliciting proxies to elect the acquirer’s own director or slate of directors.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
Issuer Purchases of Equity Securities
|
||||||||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
Period
|
|
Total Number of Shares (or Units) Purchased(1)
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under Plans or Programs(2)(3)
|
||||||
July 1 - 31, 2019
|
|
90,003
|
|
|
$
|
11.9100
|
|
|
—
|
|
|
$
|
15,000,000
|
|
August 1 - 31, 2019
|
|
8,011
|
|
|
$
|
12.1500
|
|
|
—
|
|
|
$
|
15,000,000
|
|
September 1 - 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
15,000,000
|
|
Total
|
|
98,014
|
|
|
|
|
—
|
|
|
|
|
12/19/17
|
|
12/29/17
|
|
03/29/18
|
|
06/29/18
|
|
09/28/18
|
|
12/31/18
|
|
03/29/19
|
|
06/28/19
|
|
09/30/19
|
|
|||||||||
Avaya Holdings Corp.
|
$
|
100.00
|
|
$
|
106.69
|
|
$
|
136.17
|
|
$
|
122.07
|
|
$
|
134.59
|
|
$
|
88.51
|
|
$
|
102.31
|
|
$
|
72.40
|
|
$
|
62.19
|
|
Russell 2000 Index
|
$
|
100.00
|
|
$
|
99.92
|
|
$
|
99.52
|
|
$
|
106.92
|
|
$
|
110.40
|
|
$
|
87.75
|
|
$
|
100.19
|
|
$
|
101.94
|
|
$
|
99.13
|
|
NASDAQ Computer Index
|
$
|
100.00
|
|
$
|
98.21
|
|
$
|
100.68
|
|
$
|
107.76
|
|
$
|
116.13
|
|
$
|
94.59
|
|
$
|
112.28
|
|
$
|
116.62
|
|
$
|
121.79
|
|
Item 6.
|
Selected Financial Data
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
Statement of Operations Data:
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal years ended September 30,
|
||||||||||||||||
(In millions, except per share amounts)
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Revenue
|
|
$
|
2,887
|
|
|
$
|
2,247
|
|
|
|
$
|
604
|
|
|
$
|
3,272
|
|
|
$
|
3,702
|
|
|
$
|
4,081
|
|
Net (loss) income
|
|
(671
|
)
|
|
287
|
|
|
|
2,977
|
|
|
(182
|
)
|
|
(730
|
)
|
|
(168
|
)
|
||||||
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
$
|
(6.06
|
)
|
|
$
|
2.61
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
|
$
|
(1.54
|
)
|
|
$
|
(0.43
|
)
|
Diluted
|
|
$
|
(6.06
|
)
|
|
$
|
2.58
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
|
$
|
(1.54
|
)
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Successor
|
|
|
Predecessor
|
|
|
||||||||||||||||||
Balance Sheet Data:
|
|
As of September 30,
|
|
|
As of September 30,
|
|
|
||||||||||||||||||
(In millions)
|
|
2019
|
|
2018
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
752
|
|
|
$
|
700
|
|
|
|
$
|
876
|
|
|
$
|
336
|
|
|
$
|
323
|
|
|
|
||
Total assets
|
|
6,950
|
|
|
7,679
|
|
|
|
5,898
|
|
|
5,821
|
|
|
6,836
|
|
|
|
|||||||
Total debt (including current and long-term portion)
|
|
3,119
|
|
|
3,126
|
|
|
|
725
|
|
|
6,018
|
|
|
5,967
|
|
|
|
|||||||
Liabilities subject to compromise
|
|
—
|
|
|
—
|
|
|
|
7,705
|
|
|
—
|
|
|
—
|
|
|
|
|||||||
Capital leases
|
|
19
|
|
|
31
|
|
|
|
26
|
|
|
56
|
|
|
61
|
|
|
|
|||||||
Total stockholders' equity (deficit)
|
|
1,300
|
|
|
2,051
|
|
|
|
(5,013
|
)
|
|
(5,023
|
)
|
|
(4,001
|
)
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
Other Financial Data:
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal years ended September 30,
|
||||||||||||||||
(In millions)
|
|
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Cash provided by (used for) operating activities
|
|
$
|
241
|
|
|
$
|
202
|
|
|
|
$
|
(414
|
)
|
|
$
|
301
|
|
|
$
|
113
|
|
|
$
|
215
|
|
EBITDA(a)
|
|
(3
|
)
|
|
289
|
|
|
|
3,479
|
|
|
370
|
|
|
125
|
|
|
724
|
|
||||||
Adjusted EBITDA(a)
|
|
706
|
|
|
611
|
|
|
|
135
|
|
|
866
|
|
|
940
|
|
|
900
|
|
•
|
On December 15, 2017, the Company emerged from bankruptcy and applied fresh start accounting, which required the allocation of its reorganization value to its individual assets based on their estimated fair values. As a result of the application of fresh start accounting and the effects of the implementation of the Plan of Reorganization, the Consolidated Financial Statements after December 15, 2017 are not comparable with the Consolidated Financial
|
•
|
The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" and its related amendments (collectively "ASC 606"), on October 1, 2018, using the modified retrospective method. As a result, the reported results for fiscal 2019 reflect the application of ASC 606, while the reported results for prior fiscal years are not adjusted and continue to be reported under ASC 605.
|
•
|
In fiscal 2019 (Successor), 2017 (Predecessor) and 2016 (Predecessor), the Company recorded pre-tax impairment charges of $659 million, $117 million and $542 million, respectively, related to goodwill and indefinite-lived intangible assets. See Note 8, "Goodwill," and Note 9, "Intangible Assets," to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
|
•
|
During the period from October 1, 2017 through December 15, 2017 (Predecessor) and fiscal 2017 (Predecessor), the Company recorded pre-tax reorganization, net credits (costs) of $3,416 million and $(98) million, respectively. The period from October 1, 2017 through December 15, 2017 (Predecessor) primarily consists of the net gain from the consummation of the Plan of Reorganization and the related settlement of liabilities. The period from October 1, 2017 through December 15, 2017 (Predecessor) and fiscal 2017 (Predecessor) also include amounts incurred subsequent to the Bankruptcy Filing as a direct result of the Bankruptcy Filing and are comprised of professional service fees and contract rejection fees.
|
•
|
The Company acquired Spoken on March 9, 2018. Spoken has been included in the Company's results of operations since the acquisition date. See Note 7, "Business Combinations," to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a more detailed discussion.
|
•
|
The Company sold its Networking business on July 14, 2017 which resulted in a pre-tax gain of $2 million in fiscal 2017 (Predecessor). See Note 4, "Emergence from Voluntary Reorganization under Chapter 11 Proceedings," to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
|
•
|
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law, which lowered the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. During the period from December 16, 2017 through September 30, 2018 (Successor), the Company recorded an income tax benefit of $245 million to adjust deferred tax balances to reflect the new rates. See Note 15, "Income Taxes," to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
|
•
|
Restructuring charges, net were $22 million, $81 million, $14 million, $30 million, $105 million and $62 million on a pre-tax basis for fiscal 2019 (Successor), the period from December 16, 2017 through September 30, 2018 (Successor), the period from October 1, 2017 through December 15, 2017 (Predecessor), and fiscal 2017, 2016 and 2015 (Predecessor), respectively. See Note 11, "Business Restructuring Reserves and Programs," to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
|
•
|
In fiscal 2017 (Predecessor), the Company recorded non-cash interest expense of $61 million related to the accelerated amortization of debt issuance costs and accretion of debt discount related to the Company’s Bankruptcy Filing. In addition, effective January 19, 2017, the Company ceased recording interest expense on outstanding pre-petition debt classified as Liabilities subject to compromise. Contractual interest expense represented amounts due under the contractual terms of outstanding debt, including debt subject to compromise. For the period from October 1, 2017 through December 15, 2017 (Predecessor) and the period from January 19, 2017 through September 30, 2017 (Predecessor), contractual interest expense of $94 million and $316 million was not recorded as interest expense, as it was not an allowed claim under the Bankruptcy Filing.
|
•
|
As of September 30, 2017 (Predecessor), Liabilities subject to compromise included $5,832 million of Predecessor debt and $12 million of Predecessor capital lease obligations.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Global Support Services features offerings that address the risk of system outages and also help businesses protect their technology investments. We help our customers maintain their competitiveness through proactive problem prevention, rapid resolution and continual solution optimization. The majority of our revenue in this business is recurring in nature.
|
•
|
Enterprise Cloud and Managed Services enables customers to take advantage of our technology via the cloud, on-premises, or a hybrid of both, depending on the solution and the needs of the customer. The majority of our revenue in this business is recurring in nature and based on multi-year services contracts.
|
•
|
Professional Services enables businesses worldwide to take full advantage of their solution investments to drive measurable business results. Our expert consultants and experienced engineers work with clients as a strategic partner along each step of the solution lifecycle to deliver services that drive business transformation and expand ongoing value. The majority of our revenue in this business is one-time in nature.
|
|
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
||||||||||
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
||||||||
(In millions)
|
|
|
|
|
|
||||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
$
|
1,222
|
|
|
$
|
989
|
|
|
|
$
|
253
|
|
|
$
|
1,242
|
|
Services
|
|
1,665
|
|
|
1,258
|
|
|
|
351
|
|
|
1,609
|
|
||||
|
|
2,887
|
|
|
2,247
|
|
|
|
604
|
|
|
2,851
|
|
||||
COSTS
|
|
|
|
|
|
|
|
|
|
||||||||
Products:
|
|
|
|
|
|
|
|
|
|
||||||||
Costs
|
|
442
|
|
|
372
|
|
|
|
84
|
|
|
456
|
|
||||
Amortization of technology intangible assets
|
|
174
|
|
|
135
|
|
|
|
3
|
|
|
138
|
|
||||
Services
|
|
696
|
|
|
597
|
|
|
|
155
|
|
|
752
|
|
||||
|
|
1,312
|
|
|
1,104
|
|
|
|
242
|
|
|
1,346
|
|
||||
GROSS PROFIT
|
|
1,575
|
|
|
1,143
|
|
|
|
362
|
|
|
1,505
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
|
1,001
|
|
|
888
|
|
|
|
264
|
|
|
1,152
|
|
||||
Research and development
|
|
204
|
|
|
172
|
|
|
|
38
|
|
|
210
|
|
||||
Amortization of intangible assets
|
|
162
|
|
|
127
|
|
|
|
10
|
|
|
137
|
|
||||
Impairment charges
|
|
659
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Restructuring charges, net
|
|
22
|
|
|
81
|
|
|
|
14
|
|
|
95
|
|
||||
|
|
2,048
|
|
|
1,268
|
|
|
|
326
|
|
|
1,594
|
|
||||
OPERATING (LOSS) INCOME
|
|
(473
|
)
|
|
(125
|
)
|
|
|
36
|
|
|
(89
|
)
|
||||
Interest expense
|
|
(237
|
)
|
|
(169
|
)
|
|
|
(14
|
)
|
|
(183
|
)
|
||||
Other income (expense), net
|
|
41
|
|
|
35
|
|
|
|
(2
|
)
|
|
33
|
|
||||
Reorganization items, net
|
|
—
|
|
|
—
|
|
|
|
3,416
|
|
|
3,416
|
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
|
(669
|
)
|
|
(259
|
)
|
|
|
3,436
|
|
|
3,177
|
|
||||
(Provision for) benefit from income taxes
|
|
(2
|
)
|
|
546
|
|
|
|
(459
|
)
|
|
87
|
|
||||
NET (LOSS) INCOME
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
3,264
|
|
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
||||
REVENUE
|
|
|
|
|
||||
Products
|
|
$
|
(6
|
)
|
|
$
|
(63
|
)
|
Services
|
|
(15
|
)
|
|
(143
|
)
|
||
|
|
(21
|
)
|
|
(206
|
)
|
||
COSTS
|
|
|
|
|
||||
Products
|
|
5
|
|
|
21
|
|
||
Services
|
|
11
|
|
|
37
|
|
||
|
|
16
|
|
|
58
|
|
||
GROSS PROFIT
|
|
(37
|
)
|
|
(264
|
)
|
||
OPERATING EXPENSES
|
|
|
|
|
||||
Selling, general and administrative
|
|
1
|
|
|
16
|
|
||
Research and development
|
|
(4
|
)
|
|
(11
|
)
|
||
|
|
(3
|
)
|
|
5
|
|
||
OPERATING LOSS
|
|
$
|
(40
|
)
|
|
$
|
(259
|
)
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Revenue
|
|
|
|
|
||||||||||||||
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
|
Successor
|
|
Non-GAAP Combined
|
|
|
|
Yr. to Yr. Percentage Change, net of Foreign Currency Impact
|
||||||||||||||
(In millions)
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
|
Fiscal year ended September 30, 2019
|
|
Fiscal year ended September 30, 2018
|
|
Yr. to Yr. Percentage Change
|
|
|||||||||||||
Products & Solutions
|
$
|
1,228
|
|
|
$
|
1,052
|
|
|
|
$
|
253
|
|
|
$
|
1,305
|
|
|
43
|
%
|
|
46
|
%
|
|
(6
|
)%
|
|
(5
|
)%
|
Services
|
1,680
|
|
|
1,401
|
|
|
|
351
|
|
|
1,752
|
|
|
58
|
%
|
|
61
|
%
|
|
(4
|
)%
|
|
(3
|
)%
|
||||
Unallocated amounts
|
(21
|
)
|
|
(206
|
)
|
|
|
—
|
|
|
(206
|
)
|
|
(1
|
)%
|
|
(7
|
)%
|
|
(1)
|
|
|
(1)
|
|
||||
Total revenue
|
$
|
2,887
|
|
|
$
|
2,247
|
|
|
|
$
|
604
|
|
|
$
|
2,851
|
|
|
100
|
%
|
|
100
|
%
|
|
1
|
%
|
|
2
|
%
|
(1)
|
Not meaningful
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Revenue
|
|
|
|
|||||||||||||||
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
|
Successor
|
|
Non-GAAP Combined
|
|
|
|
Yr. to Yr. Percentage Change, net of Foreign Currency Impact
|
||||||||||||||
(In millions)
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
|
Fiscal year ended September 30, 2019
|
|
Fiscal year ended September 30, 2018
|
|
Yr. to Yr. Percentage Change
|
|
|||||||||||||
U.S.
|
$
|
1,553
|
|
|
$
|
1,184
|
|
|
|
$
|
331
|
|
|
$
|
1,515
|
|
|
54
|
%
|
|
53
|
%
|
|
3
|
%
|
|
3
|
%
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Europe, Middle East and Africa
|
753
|
|
|
603
|
|
|
|
166
|
|
|
769
|
|
|
26
|
%
|
|
27
|
%
|
|
(2
|
)%
|
|
—
|
%
|
||||
Asia Pacific
|
327
|
|
|
256
|
|
|
|
57
|
|
|
313
|
|
|
11
|
%
|
|
11
|
%
|
|
4
|
%
|
|
8
|
%
|
||||
Americas International - Canada and Latin America
|
254
|
|
|
204
|
|
|
|
50
|
|
|
254
|
|
|
9
|
%
|
|
9
|
%
|
|
—
|
%
|
|
3
|
%
|
||||
Total International
|
1,334
|
|
|
1,063
|
|
|
|
273
|
|
|
1,336
|
|
|
46
|
%
|
|
47
|
%
|
|
—
|
%
|
|
3
|
%
|
||||
Total revenue
|
$
|
2,887
|
|
|
$
|
2,247
|
|
|
|
$
|
604
|
|
|
$
|
2,851
|
|
|
100
|
%
|
|
100
|
%
|
|
1
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|||||||||||||||
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
|
Successor
|
|
Non-GAAP Combined
|
|
Change
|
|||||||||||||||||
(In millions)
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
|
Fiscal year ended September 30, 2019
|
|
Fiscal year ended September 30, 2018
|
|
Amount
|
|
Percent
|
|||||||||||||
Products & Solutions
|
$
|
791
|
|
|
$
|
696
|
|
|
|
$
|
169
|
|
|
$
|
865
|
|
|
64.4
|
%
|
|
66.3
|
%
|
|
$
|
(74
|
)
|
|
(9
|
)%
|
Services
|
996
|
|
|
843
|
|
|
|
196
|
|
|
1,039
|
|
|
59.3
|
%
|
|
59.3
|
%
|
|
(43
|
)
|
|
(4
|
)%
|
|||||
Unallocated amounts
|
(212
|
)
|
|
(396
|
)
|
|
|
(3
|
)
|
|
(399
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
187
|
|
|
(1)
|
|
|||||
Total
|
$
|
1,575
|
|
|
$
|
1,143
|
|
|
|
$
|
362
|
|
|
$
|
1,505
|
|
|
54.6
|
%
|
|
52.8
|
%
|
|
$
|
70
|
|
|
5
|
%
|
(1)
|
Not meaningful
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total Revenue
|
|
|
|
|
|||||||||||||||
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
|
Successor
|
|
Non-GAAP Combined
|
|
Change
|
|||||||||||||||||
(In millions)
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
|
Fiscal year ended September 30, 2019
|
|
Fiscal year ended September 30, 2018
|
|
Amount
|
|
Percent
|
|
||||||||||||
Selling, general and administrative
|
$
|
1,001
|
|
|
$
|
888
|
|
|
|
$
|
264
|
|
|
$
|
1,152
|
|
|
34.7
|
%
|
|
40.4
|
%
|
|
$
|
(151
|
)
|
|
(13
|
)%
|
Research and development
|
204
|
|
|
172
|
|
|
|
38
|
|
|
210
|
|
|
7.1
|
%
|
|
7.4
|
%
|
|
(6
|
)
|
|
(3
|
)%
|
|||||
Amortization of intangible assets
|
162
|
|
|
127
|
|
|
|
10
|
|
|
137
|
|
|
5.5
|
%
|
|
4.8
|
%
|
|
25
|
|
|
18
|
%
|
|||||
Impairment charges
|
659
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
22.8
|
%
|
|
—
|
%
|
|
659
|
|
|
n/a
|
|
|||||
Restructuring charges, net
|
22
|
|
|
81
|
|
|
|
14
|
|
|
95
|
|
|
0.8
|
%
|
|
3.3
|
%
|
|
(73
|
)
|
|
(77
|
)%
|
|||||
Total operating expenses
|
$
|
2,048
|
|
|
$
|
1,268
|
|
|
|
$
|
326
|
|
|
$
|
1,594
|
|
|
70.9
|
%
|
|
55.9
|
%
|
|
$
|
454
|
|
|
28
|
%
|
•
|
higher revenue and gross profit for fiscal 2019, as described above;
|
•
|
impairment charges of $659 million for fiscal 2019;
|
•
|
costs incurred in connection with certain legal matters of $37 million for fiscal 2018;
|
•
|
lower restructuring charges for fiscal 2019;
|
•
|
lower advisory fees incurred to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure of $10 million;
|
•
|
higher amortization of intangible assets due to the application of fresh start accounting upon emergence from bankruptcy;
|
•
|
the favorable impact of adopting ASC 606 on October 1, 2018; and
|
•
|
lower accrued incentive compensation and sales commissions in fiscal 2019.
|
|
|
Successor
|
|
|
Predecessor
|
|
Non-GAAP Combined
|
||||||||||
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2018
|
||||||||
Net cash provided by (used for):
|
|
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
|
$
|
241
|
|
|
$
|
202
|
|
|
|
$
|
(414
|
)
|
|
$
|
(212
|
)
|
Investing activities
|
|
(124
|
)
|
|
(199
|
)
|
|
|
(13
|
)
|
|
(212
|
)
|
||||
Financing activities
|
|
(61
|
)
|
|
273
|
|
|
|
(102
|
)
|
|
171
|
|
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(4
|
)
|
|
(7
|
)
|
|
|
(2
|
)
|
|
(9
|
)
|
||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
52
|
|
|
269
|
|
|
|
(531
|
)
|
|
(262
|
)
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
704
|
|
|
435
|
|
|
|
966
|
|
|
966
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
756
|
|
|
$
|
704
|
|
|
|
$
|
435
|
|
|
$
|
704
|
|
•
|
scheduled debt repayments under the Term Loan Credit Agreement of $29 million;
|
•
|
repayments in connection with financing the use of equipment for the performance of services under our agreement with HP of $12 million;
|
•
|
payment of contingent consideration related to the Spoken acquisition of $9 million; and
|
•
|
other financing activities, net of $11 million.
|
•
|
proceeds of $2,896 million from the Term Loan Credit Agreement entered into on the Emergence Date;
|
•
|
proceeds of $350 million from the issuance of 2.25% Convertible Notes; and
|
•
|
proceeds from the issuance of call spread warrants (the "Call Spread Warrants") of $58 million;
|
•
|
partially offset by:
|
•
|
repayment of the Company's Term Loan Credit Agreement of $2,918 million as part of its refinancing in the prior year, net of proceeds received under the refinancing of $2,911 million;
|
•
|
repayments to the Predecessor Company first lien debt holders of $2,061 million;
|
•
|
repayment of the Predecessor Company DIP Credit Agreement of $725 million;
|
•
|
adequate protection payments related to the bankruptcy of $111 million;
|
•
|
payment of debt issuance costs of $107 million;
|
•
|
the purchase of a bond hedge of $84 million;
|
•
|
scheduled debt repayments under the Term Loan Credit Agreement of $22 million;
|
•
|
repayments in connection with financing the use of equipment for the performance of services under our agreement with HP of $13 million; and
|
•
|
other financing activities, net of $3 million.
|
|
|
Payments due by period
|
||||||||||||||||||
(In millions)
|
|
Total
|
|
Less than
1 year |
|
1-3
years |
|
3-5
years |
|
More than
5 years |
||||||||||
Total debt(1)
|
|
$
|
3,224
|
|
|
$
|
29
|
|
|
$
|
58
|
|
|
$
|
408
|
|
|
$
|
2,729
|
|
Interest payments due on debt(2)
|
|
971
|
|
|
210
|
|
|
394
|
|
|
328
|
|
|
39
|
|
|||||
Purchase obligations with contract manufacturers and suppliers(3)
|
|
48
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase obligations(4)
|
|
551
|
|
|
433
|
|
|
113
|
|
|
5
|
|
|
—
|
|
|||||
Operating lease obligations(5)
|
|
191
|
|
|
51
|
|
|
72
|
|
|
39
|
|
|
29
|
|
|||||
Capital lease obligations (6)
|
|
20
|
|
|
12
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|||||
Pension benefit obligations(7)
|
|
642
|
|
|
52
|
|
|
113
|
|
|
111
|
|
|
366
|
|
|||||
Total
|
|
$
|
5,647
|
|
|
$
|
835
|
|
|
$
|
758
|
|
|
$
|
891
|
|
|
$
|
3,163
|
|
(1)
|
Represents principal payments only.
|
(2)
|
The interest payments due on debt give effect to the impact of the Company's interest rate swap agreements. The interest payments for the unhedged portion of the Company's Term Loan Credit Agreement were calculated by applying an applicable margin to a projected LIBOR rate. The interest payments for the Company's 2.25% convertible senior notes were based on the contractual 2.25% coupon rate. An estimated unused facility fee was calculated for the ABL Credit Agreement using the contract rate.
|
(3)
|
During the normal course of business, in order to manage manufacturing lead times and to help assure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to produce and procure inventory based upon forecasted requirements. If the Company does not meet the specified minimum purchase commitments under these agreements, it could be required to purchase the inventory.
|
(4)
|
Other purchase obligations represent an estimate of contractual obligations in the ordinary course of business, other than commitments with contract manufacturers and suppliers, for which the Company had not received the goods or services as of September 30, 2019. Although contractual obligations are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule and adjust its requirements based on the Company's business needs prior to the delivery of goods or performance of services.
|
(5)
|
Contractual obligations for operating leases include future minimum lease payments, net of remaining sublease income of $3 million.
|
(6)
|
The payments due for capital lease obligations do not include $1 million in future payments for interest.
|
(7)
|
The Company sponsors non-contributory defined pension and post-retirement plans covering certain employees and retirees. The Company's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations, or to directly pay benefits where appropriate. Most post-retirement medical benefits are not pre-funded. Consequently, the Company makes payments as these retiree medical benefits are disbursed. The amounts presented represent estimated minimum funding requirements through fiscal 2029.
|
•
|
Debt service—We expect to make payments of approximately $447 million during fiscal 2020 in principal and interest associated with the Term Loan Credit Agreement, and interest and fees associated with our ABL Credit Agreement and 2.25% Convertible Notes, inclusive of a debt principal paydown of $250 million made by the Company in November 2019. In the ordinary course of business, we may from time to time borrow and repay amounts under our ABL Credit Agreement.
|
•
|
Share repurchases—On October 1, 2019, the Board of Directors of the Company approved a stock repurchase program authorizing the Company to repurchase the Company’s Common Stock for an aggregate expenditure of up to $500 million.
|
•
|
Restructuring payments—We expect to make payments of approximately $25 million to $30 million during fiscal 2020 for employee separation costs and lease termination obligations associated with restructuring actions we have taken through September 30, 2019. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally.
|
•
|
Capital expenditures—We expect to spend approximately $115 million to $125 million for capital expenditures and capitalized software development costs during fiscal 2020. Environmental costs and accruals are presently not material to our operations, cash flows or financial position, and we do not currently anticipate material capital expenditures for environmental control facilities.
|
•
|
Benefit obligations—We estimate we will make payments under our pension and post-retirement benefit obligations totaling $51 million during fiscal 2020. These payments include $15 million to satisfy the minimum statutory funding requirements of our U.S. qualified pension plans; $23 million for our non-U.S. benefit plans, which are predominantly not pre-funded; and $13 million for represented retiree post-retirement benefits. See discussion in Note 16, "Benefit Obligations," to our Consolidated Financial Statements for further details.
|
•
|
Moody’s Investors Service issued a corporate family rating of "B2" with a stable outlook and a rating of the 7-year $2,925 million Term Loan Credit Agreement of "B2";
|
•
|
Standard and Poor's issued a definitive corporate credit rating of "B" with a stable outlook and a rating of the Term Loan Credit Agreement of "B"; and
|
•
|
Fitch Ratings Inc. issued a Long-Term Issuer Default Rating of "B" with a stable outlook and a rating of the Term Loan Credit Agreement of "BB-".
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
(In millions)
|
|
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
||||||
Net (loss) income
|
|
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
Interest expense
|
|
(a)
|
|
237
|
|
|
169
|
|
|
|
14
|
|
|||
Interest income
|
|
|
|
(14
|
)
|
|
(5
|
)
|
|
|
(2
|
)
|
|||
Provision for (benefit from) income taxes
|
|
|
|
2
|
|
|
(546
|
)
|
|
|
459
|
|
|||
Depreciation and amortization
|
|
|
|
443
|
|
|
384
|
|
|
|
31
|
|
|||
EBITDA
|
|
|
|
(3
|
)
|
|
289
|
|
|
|
3,479
|
|
|||
Impact of fresh start accounting adjustments
|
|
(b)
|
|
5
|
|
|
196
|
|
|
|
—
|
|
|||
Restructuring charges, net
|
|
|
|
22
|
|
|
81
|
|
|
|
14
|
|
|||
Advisory fees
|
|
(c)
|
|
11
|
|
|
18
|
|
|
|
3
|
|
|||
Acquisition-related costs
|
|
|
|
9
|
|
|
15
|
|
|
|
—
|
|
|||
Reorganization items, net
|
|
|
|
—
|
|
|
—
|
|
|
|
(3,416
|
)
|
|||
Non-cash share-based compensation
|
|
|
|
25
|
|
|
19
|
|
|
|
—
|
|
|||
Impairment charges
|
|
|
|
659
|
|
|
—
|
|
|
|
—
|
|
|||
Loss on sale/disposal of long-lived assets, net
|
|
|
|
—
|
|
|
4
|
|
|
|
1
|
|
|||
Resolution of certain legal matters
|
|
(d)
|
|
—
|
|
|
—
|
|
|
|
37
|
|
|||
Change in fair value of Emergence Date Warrants
|
|
|
|
(29
|
)
|
|
17
|
|
|
|
—
|
|
|||
Loss (gain) on foreign currency transactions
|
|
|
|
8
|
|
|
(28
|
)
|
|
|
—
|
|
|||
Pension/OPEB/nonretirement postemployment retirement benefits and long-term disability costs
|
|
(e)
|
|
—
|
|
|
—
|
|
|
|
17
|
|
|||
Gain on investments
|
|
|
|
(1
|
)
|
|
—
|
|
|
|
—
|
|
|||
Adjusted EBITDA
|
|
|
|
$
|
706
|
|
|
$
|
611
|
|
|
|
$
|
135
|
|
(a)
|
Effective January 19, 2017, the Company ceased recording interest expense on outstanding pre-petition debt classified as liabilities subject to compromise. Contractual interest expense represents amounts due under the contractual terms of outstanding debt, including debt subject to compromise. For the periods from October 1, 2017 through December 15, 2017 and January 19, 2017 through September 30, 2017, contractual interest expense related to debt subject to compromise of $94 million and $316 million, respectively, had not been recorded as interest expense, as it was not an allowed claim under the Bankruptcy Filing.
|
(b)
|
Reflects the impact of fresh start accounting adjustments in connection with the Company's emergence from bankruptcy.
|
(c)
|
Advisory fees primarily represent costs incurred to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure.
|
(d)
|
Costs in connection with the resolution of certain legal matters include reserves and settlements, as well as associated legal costs.
|
(e)
|
Represents that portion of our pension and post-retirement benefit costs which represent the amortization of prior service costs and net actuarial gain (loss) associated with these benefits.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
|
|
|
|||||||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
||||||||
Products
|
|
$
|
1,222
|
|
|
$
|
989
|
|
|
|
$
|
253
|
|
|
$
|
1,437
|
|
Services
|
|
1,665
|
|
|
1,258
|
|
|
|
351
|
|
|
1,835
|
|
||||
|
|
2,887
|
|
|
2,247
|
|
|
|
604
|
|
|
3,272
|
|
||||
COSTS
|
|
|
|
|
|
|
|
|
|
||||||||
Products:
|
|
|
|
|
|
|
|
|
|
||||||||
Costs
|
|
442
|
|
|
372
|
|
|
|
84
|
|
|
499
|
|
||||
Amortization of technology intangible assets
|
|
174
|
|
|
135
|
|
|
|
3
|
|
|
20
|
|
||||
Services
|
|
696
|
|
|
597
|
|
|
|
155
|
|
|
745
|
|
||||
|
|
1,312
|
|
|
1,104
|
|
|
|
242
|
|
|
1,264
|
|
||||
GROSS PROFIT
|
|
1,575
|
|
|
1,143
|
|
|
|
362
|
|
|
2,008
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
|
1,001
|
|
|
888
|
|
|
|
264
|
|
|
1,261
|
|
||||
Research and development
|
|
204
|
|
|
172
|
|
|
|
38
|
|
|
225
|
|
||||
Amortization of intangible assets
|
|
162
|
|
|
127
|
|
|
|
10
|
|
|
204
|
|
||||
Impairment charges
|
|
659
|
|
|
—
|
|
|
|
—
|
|
|
117
|
|
||||
Restructuring charges, net
|
|
22
|
|
|
81
|
|
|
|
14
|
|
|
30
|
|
||||
|
|
2,048
|
|
|
1,268
|
|
|
|
326
|
|
|
1,837
|
|
||||
OPERATING (LOSS) INCOME
|
|
(473
|
)
|
|
(125
|
)
|
|
|
36
|
|
|
171
|
|
||||
Interest expense
|
|
(237
|
)
|
|
(169
|
)
|
|
|
(14
|
)
|
|
(246
|
)
|
||||
Other income (expense), net
|
|
41
|
|
|
35
|
|
|
|
(2
|
)
|
|
(25
|
)
|
||||
Reorganization items, net
|
|
—
|
|
|
—
|
|
|
|
3,416
|
|
|
(98
|
)
|
||||
(LOSS) INCOME BEFORE INCOME TAXES
|
|
(669
|
)
|
|
(259
|
)
|
|
|
3,436
|
|
|
(198
|
)
|
||||
(Provision for) benefit from income taxes
|
|
(2
|
)
|
|
546
|
|
|
|
(459
|
)
|
|
16
|
|
||||
NET (LOSS) INCOME
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
(LOSS) EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(6.06
|
)
|
|
$
|
2.61
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
Diluted
|
|
$
|
(6.06
|
)
|
|
$
|
2.58
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
110.8
|
|
|
109.9
|
|
|
|
497.3
|
|
|
497.1
|
|
||||
Diluted
|
|
110.8
|
|
|
111.1
|
|
|
|
497.3
|
|
|
497.1
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Net (loss) income
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||
Pension, post-retirement and postemployment benefit-related items, net of income taxes of $29 for fiscal 2019; $(19) for the period from December 16, 2017 through September 30, 2018; $(58) for the period from October 1, 2017 through December 15, 2017; and $(19) for fiscal 2017
|
|
(157
|
)
|
|
51
|
|
|
|
655
|
|
|
252
|
|
||||
Cumulative translation adjustment
|
|
24
|
|
|
(31
|
)
|
|
|
3
|
|
|
(39
|
)
|
||||
Change in interest rate swaps, net of income taxes of $19 for fiscal 2019 and $1 for the period from December 16, 2017 through September 30, 2018
|
|
(58
|
)
|
|
(2
|
)
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive (loss) income
|
|
(191
|
)
|
|
18
|
|
|
|
658
|
|
|
213
|
|
||||
Elimination of Predecessor Company accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
|
790
|
|
|
—
|
|
||||
Total comprehensive (loss) income
|
|
$
|
(862
|
)
|
|
$
|
305
|
|
|
|
$
|
4,425
|
|
|
$
|
31
|
|
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
752
|
|
|
$
|
700
|
|
Accounts receivable, net
|
|
314
|
|
|
377
|
|
||
Inventory
|
|
63
|
|
|
81
|
|
||
Contract assets
|
|
187
|
|
|
—
|
|
||
Contract costs
|
|
114
|
|
|
—
|
|
||
Other current assets
|
|
115
|
|
|
170
|
|
||
TOTAL CURRENT ASSETS
|
|
1,545
|
|
|
1,328
|
|
||
Property, plant and equipment, net
|
|
255
|
|
|
250
|
|
||
Deferred income taxes, net
|
|
35
|
|
|
29
|
|
||
Intangible assets, net
|
|
2,891
|
|
|
3,234
|
|
||
Goodwill, net
|
|
2,103
|
|
|
2,764
|
|
||
Other assets
|
|
121
|
|
|
74
|
|
||
TOTAL ASSETS
|
|
$
|
6,950
|
|
|
$
|
7,679
|
|
LIABILITIES
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Debt maturing within one year
|
|
$
|
29
|
|
|
$
|
29
|
|
Accounts payable
|
|
291
|
|
|
266
|
|
||
Payroll and benefit obligations
|
|
116
|
|
|
145
|
|
||
Contract liabilities
|
|
472
|
|
|
484
|
|
||
Business restructuring reserves
|
|
33
|
|
|
51
|
|
||
Other current liabilities
|
|
158
|
|
|
148
|
|
||
TOTAL CURRENT LIABILITIES
|
|
1,099
|
|
|
1,123
|
|
||
Non-current liabilities:
|
|
|
|
|
||||
Long-term debt, net of current portion
|
|
3,090
|
|
|
3,097
|
|
||
Pension obligations
|
|
759
|
|
|
671
|
|
||
Other post-retirement obligations
|
|
200
|
|
|
176
|
|
||
Deferred income taxes, net
|
|
72
|
|
|
140
|
|
||
Business restructuring reserves
|
|
36
|
|
|
47
|
|
||
Other liabilities
|
|
394
|
|
|
374
|
|
||
TOTAL NON-CURRENT LIABILITIES
|
|
4,551
|
|
|
4,505
|
|
||
TOTAL LIABILITIES
|
|
5,650
|
|
|
5,628
|
|
||
Commitments and contingencies (Note 23)
|
|
|
|
|
||||
STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at September 30, 2019 and 2018
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 550,000,000 shares authorized; 111,046,085 shares issued and 111,033,405 outstanding at September 30, 2019; 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018
|
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
|
1,761
|
|
|
1,745
|
|
||
(Accumulated deficit) retained earnings
|
|
(289
|
)
|
|
287
|
|
||
Accumulated other comprehensive (loss) income
|
|
(173
|
)
|
|
18
|
|
||
TOTAL STOCKHOLDERS' EQUITY
|
|
1,300
|
|
|
2,051
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
6,950
|
|
|
$
|
7,679
|
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
(Accumulated
Deficit) Retained Earnings |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Total
Stockholders' Deficit |
|||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
|
|||||||||||||||
Balance as of September 30, 2016 (Predecessor)
|
|
494.6
|
|
|
$
|
—
|
|
|
$
|
2,410
|
|
|
$
|
(5,772
|
)
|
|
$
|
(1,661
|
)
|
|
$
|
(5,023
|
)
|
Issuance of common stock, net of shares redeemed and canceled, under employee stock option plan
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||
Share-based compensation expense
|
|
|
|
|
|
11
|
|
|
|
|
|
|
11
|
|
|||||||||
Accrued dividends on Series A preferred stock
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
(9
|
)
|
|||||||||
Accrued dividends on Series B preferred stock
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
|
(22
|
)
|
|||||||||
Reclassifications to equity awards on redeemable shares
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
(1
|
)
|
|||||||||
Net loss
|
|
|
|
|
|
|
|
(182
|
)
|
|
|
|
(182
|
)
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
213
|
|
|
213
|
|
|||||||||
Balance as of September 30, 2017 (Predecessor)
|
|
494.8
|
|
|
$
|
—
|
|
|
$
|
2,389
|
|
|
$
|
(5,954
|
)
|
|
$
|
(1,448
|
)
|
|
$
|
(5,013
|
)
|
Share-based compensation expense
|
|
|
|
|
|
3
|
|
|
|
|
|
|
3
|
|
|||||||||
Accrued dividends on Series A preferred stock
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
(2
|
)
|
|||||||||
Accrued dividends on Series B preferred stock
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
(4
|
)
|
|||||||||
Reclassifications to equity awards on redeemable shares
|
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
2,977
|
|
|
|
|
2,977
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
658
|
|
|
658
|
|
|||||||||
Balance as of December 15, 2017 (Predecessor)
|
|
494.8
|
|
|
$
|
—
|
|
|
$
|
2,387
|
|
|
$
|
(2,977
|
)
|
|
$
|
(790
|
)
|
|
$
|
(1,380
|
)
|
Cancellation of Predecessor equity
|
|
(494.8
|
)
|
|
—
|
|
|
(2,387
|
)
|
|
2,977
|
|
|
790
|
|
|
1,380
|
|
|||||
Balance as of December 15, 2017 (Predecessor)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of Successor common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stock issued for Predecessor debt
|
|
103.9
|
|
|
1
|
|
|
1,575
|
|
|
|
|
|
|
1,576
|
|
|||||||
Common stock issued for Pension Benefit Guaranty Corporation
|
|
6.1
|
|
|
—
|
|
|
92
|
|
|
|
|
|
|
92
|
|
|||||||
Balance as of December 15, 2017 (Predecessor)
|
|
110.0
|
|
|
$
|
1
|
|
|
$
|
1,667
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 16, 2017 (Successor)
|
|
110.0
|
|
|
$
|
1
|
|
|
$
|
1,667
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,668
|
|
Issuance of common stock under the equity incentive plan
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||
Shares repurchased and retired for tax withholding on vesting of restricted stock units
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
(2
|
)
|
|||||||||
Equity component of convertible notes, net of issuance costs and income taxes
|
|
|
|
|
|
67
|
|
|
|
|
|
|
67
|
|
|||||||||
Purchase of convertible note bond hedge, net of income taxes
|
|
|
|
|
|
(64
|
)
|
|
|
|
|
|
(64
|
)
|
|||||||||
Issuance of call spread warrants
|
|
|
|
|
|
58
|
|
|
|
|
|
|
58
|
|
|||||||||
Share-based compensation expense
|
|
|
|
|
|
19
|
|
|
|
|
|
|
19
|
|
|||||||||
Net income
|
|
|
|
|
|
|
|
287
|
|
|
|
|
287
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
18
|
|
|
18
|
|
|||||||||
Balance as of September 30, 2018 (Successor)
|
|
110.2
|
|
|
$
|
1
|
|
|
$
|
1,745
|
|
|
$
|
287
|
|
|
$
|
18
|
|
|
$
|
2,051
|
|
Issuance of common stock under the equity incentive plan
|
|
1.3
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||
Shares repurchased and retired for tax withholding on vesting of restricted stock units
|
|
(0.5
|
)
|
|
|
|
(9
|
)
|
|
|
|
|
|
(9
|
)
|
||||||||
Share-based compensation expense
|
|
|
|
|
|
25
|
|
|
|
|
|
|
25
|
|
|||||||||
Adjustment for adoption of new accounting standard (Note 3)
|
|
|
|
|
|
|
|
95
|
|
|
|
|
95
|
|
|||||||||
Net loss
|
|
|
|
|
|
|
|
(671
|
)
|
|
|
|
(671
|
)
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(191
|
)
|
|
(191
|
)
|
|||||||||
Balance as of September 30, 2019 (Successor)
|
|
111.0
|
|
|
$
|
1
|
|
|
$
|
1,761
|
|
|
$
|
(289
|
)
|
|
$
|
(173
|
)
|
|
$
|
1,300
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
443
|
|
|
384
|
|
|
|
31
|
|
|
326
|
|
||||
Share-based compensation
|
|
25
|
|
|
19
|
|
|
|
—
|
|
|
11
|
|
||||
Amortization of debt issuance costs
|
|
17
|
|
|
4
|
|
|
|
—
|
|
|
36
|
|
||||
Accretion of debt discount
|
|
5
|
|
|
4
|
|
|
|
—
|
|
|
25
|
|
||||
Deferred income taxes, net
|
|
(54
|
)
|
|
(588
|
)
|
|
|
455
|
|
|
(39
|
)
|
||||
Gain on sale of Networking business
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(2
|
)
|
||||
Impairment charges
|
|
659
|
|
|
—
|
|
|
|
—
|
|
|
117
|
|
||||
Post-retirement and pension curtailments
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(8
|
)
|
||||
Change in fair value of emergence date warrants
|
|
(29
|
)
|
|
17
|
|
|
|
—
|
|
|
—
|
|
||||
Unrealized loss (gain) on foreign currency transactions
|
|
9
|
|
|
(36
|
)
|
|
|
—
|
|
|
(4
|
)
|
||||
Other non-cash charges, net
|
|
7
|
|
|
3
|
|
|
|
—
|
|
|
4
|
|
||||
Reorganization items:
|
|
|
|
|
|
|
|
|
|
||||||||
Net gain on settlement of Liabilities subject to compromise
|
|
—
|
|
|
—
|
|
|
|
(1,778
|
)
|
|
—
|
|
||||
Payment to PBGC
|
|
—
|
|
|
—
|
|
|
|
(340
|
)
|
|
—
|
|
||||
Payment to pension trust
|
|
—
|
|
|
—
|
|
|
|
(49
|
)
|
|
—
|
|
||||
Payment of unsecured claims
|
|
—
|
|
|
—
|
|
|
|
(58
|
)
|
|
—
|
|
||||
Fresh start adjustments, net
|
|
—
|
|
|
—
|
|
|
|
(1,697
|
)
|
|
—
|
|
||||
Non-cash and financing related reorganization items, net
|
|
—
|
|
|
—
|
|
|
|
26
|
|
|
52
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
|
58
|
|
|
13
|
|
|
|
40
|
|
|
24
|
|
||||
Inventory
|
|
(7
|
)
|
|
36
|
|
|
|
—
|
|
|
24
|
|
||||
Contract assets
|
|
(122
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Contract costs
|
|
(13
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Accounts payable
|
|
24
|
|
|
(16
|
)
|
|
|
(40
|
)
|
|
(27
|
)
|
||||
Payroll and benefit obligations
|
|
(73
|
)
|
|
(71
|
)
|
|
|
16
|
|
|
(34
|
)
|
||||
Business restructuring reserves
|
|
(25
|
)
|
|
29
|
|
|
|
(7
|
)
|
|
(51
|
)
|
||||
Contract liabilities
|
|
35
|
|
|
160
|
|
|
|
28
|
|
|
(44
|
)
|
||||
Other assets and liabilities
|
|
(47
|
)
|
|
(43
|
)
|
|
|
(18
|
)
|
|
73
|
|
||||
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
|
|
241
|
|
|
202
|
|
|
|
(414
|
)
|
|
301
|
|
||||
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||
Capital expenditures
|
|
(113
|
)
|
|
(61
|
)
|
|
|
(13
|
)
|
|
(57
|
)
|
||||
Capitalized software development costs
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(2
|
)
|
||||
Acquisition of businesses, net of cash acquired
|
|
—
|
|
|
(157
|
)
|
|
|
—
|
|
|
(4
|
)
|
||||
Strategic investments
|
|
(10
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from sale of Networking business
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
70
|
|
||||
Proceeds from sale-leaseback transactions
|
|
—
|
|
|
17
|
|
|
|
—
|
|
|
—
|
|
||||
Other investing activities, net
|
|
(1
|
)
|
|
2
|
|
|
|
—
|
|
|
3
|
|
||||
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES
|
|
(124
|
)
|
|
(199
|
)
|
|
|
(13
|
)
|
|
10
|
|
||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from Term Loan Credit Agreement
|
|
—
|
|
|
—
|
|
|
|
2,896
|
|
|
—
|
|
||||
Repayment of debtor-in-possession financing
|
|
—
|
|
|
—
|
|
|
|
(725
|
)
|
|
—
|
|
||||
Repayment of first lien debt
|
|
—
|
|
|
—
|
|
|
|
(2,061
|
)
|
|
—
|
|
||||
Proceeds from debtor-in-possession financing
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
712
|
|
||||
Repayment of Term Loan Credit Agreement due to refinancing
|
|
—
|
|
|
(2,918
|
)
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from Term Loan Credit Agreement due to refinancing
|
|
—
|
|
|
2,911
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from issuance of convertible notes
|
|
—
|
|
|
350
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from issuance of call spread warrants
|
|
—
|
|
|
58
|
|
|
|
—
|
|
|
—
|
|
||||
Purchase of convertible note bond hedge
|
|
—
|
|
|
(84
|
)
|
|
|
—
|
|
|
—
|
|
||||
Repayment of foreign asset-based revolving credit facility
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(55
|
)
|
||||
Repayment of domestic asset-based revolving credit facility
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(77
|
)
|
||||
Repayment of long-term debt, including adequate protection payments
|
|
(29
|
)
|
|
(22
|
)
|
|
|
(111
|
)
|
|
(223
|
)
|
||||
Debt issuance costs
|
|
—
|
|
|
(10
|
)
|
|
|
(97
|
)
|
|
(1
|
)
|
||||
Payment of acquisition-related contingent consideration
|
|
(9
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Repayments of borrowings on revolving loans under the senior secured credit agreement
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(18
|
)
|
||||
Payments related to sale-leaseback transactions
|
|
(12
|
)
|
|
(9
|
)
|
|
|
(4
|
)
|
|
(19
|
)
|
||||
Other financing activities, net
|
|
(11
|
)
|
|
(3
|
)
|
|
|
—
|
|
|
(5
|
)
|
||||
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES
|
|
(61
|
)
|
|
273
|
|
|
|
(102
|
)
|
|
314
|
|
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(4
|
)
|
|
(7
|
)
|
|
|
(2
|
)
|
|
5
|
|
||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
|
52
|
|
|
269
|
|
|
|
(531
|
)
|
|
630
|
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
704
|
|
|
435
|
|
|
|
966
|
|
|
336
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
756
|
|
|
$
|
704
|
|
|
|
$
|
435
|
|
|
$
|
966
|
|
•
|
Debtor-in-Possession Credit Agreement. The Company paid in full the debtor-in-possession credit agreement (the "DIP Credit Agreement") in the amount of $725 million;
|
•
|
Predecessor Equity and Indebtedness. The Debtors' obligations under stock certificates, equity interests and/or any other instrument or document directly or indirectly evidencing or creating any indebtedness or obligation of, or ownership interest in, the Debtors or giving rise to any claim or equity interest were canceled, except as provided under the Plan of Reorganization;
|
•
|
Successor Equity. The Company's certificate of incorporation was amended and restated to authorize the issuance of 605.0 million shares of Successor Company stock, consisting of 55.0 million shares of preferred stock, par value $0.01 per share, and 550.0 million shares of common stock, par value $0.01 per share, of which 110.0 million shares of common stock were issued (as discussed below);
|
•
|
Exit Financing. The Successor Company entered into (1) a term loan credit agreement (the "Term Loan Credit Agreement") with a principal amount of $2,925 million maturing on December 15, 2024, and (2) a $300 million asset-based revolving credit facility (the "ABL Credit Agreement") maturing on December 15, 2022;
|
•
|
First Lien Debt Claims. All of the Predecessor Company's outstanding obligations under the variable rate term B-3, B-4, B-6, and B-7 loans and the 7% and 9% senior secured notes (collectively, the "Predecessor first lien obligations") were canceled, and the holders of claims under the Predecessor first lien obligations received 99.3 million shares of Successor Company common stock. In addition, the holders of the Predecessor first lien obligations received cash in the amount of $2,061 million;
|
•
|
Second Lien Debt Claims. All the Predecessor Company's outstanding obligations under the 10.50% senior secured notes (the "Predecessor second lien obligations") were canceled, and the holders of claims under the Predecessor second lien obligations received 4.4 million shares of Successor Company common stock. In addition, holders of the Predecessor second lien obligations received warrants to purchase 5.6 million shares of Successor Company common stock at an exercise price of $25.55 per warrant (the "Emergence Date Warrants");
|
•
|
Claims of Pension Benefit Guaranty Corporation ("PBGC"). The Predecessor Company's outstanding obligations under the Avaya Inc. Pension Plan for Salaried Employees ("APPSE") were terminated and transferred to the PBGC. The PBGC received 6.1 million shares of Successor Company common stock and $340 million in cash; and
|
•
|
General Unsecured Claims. Holders of the Predecessor Company's general unsecured claims were to receive their pro rata share of the general unsecured recovery pool. A liquidating trust was established in the amount of $58 million (comprised of cash and stock) for the benefit of the general unsecured claims. Included in the 110.0 million Successor Company common stock issued upon emergence were 0.2 million additional shares of common stock that were issued (but were not outstanding) for the benefit of the general unsecured creditors. Any excess cash and/or common stock not distributed to the general unsecured creditors was to be distributed to the holders of the Predecessor first lien obligations.
|
(1)
|
The fair value of the Term Loan Credit Agreement was determined based on a market approach utilizing market-clearing data on the valuation date in addition to bid/ask prices and was estimated to be 99% of par value.
|
(2)
|
The following assumptions were used when measuring the fair value of the U.S. pension, non-U.S. pension, and post-retirement benefit plans: weighted-average return on assets of 7.75%, 3.80% and 5.90%, and weighted-average discount rate to measure plan obligations of 3.70%, 1.52% and 3.77%, respectively.
|
(3)
|
The fair value of the Emergence Date Warrants was estimated using the Black-Scholes pricing model.
|
(In millions)
|
|
|
||
Enterprise value
|
|
$
|
5,721
|
|
Plus:
|
|
|
||
Non-debt current liabilities
|
|
955
|
|
|
Non-debt non-current liabilities
|
|
2,090
|
|
|
Excess cash and cash equivalents
|
|
246
|
|
|
Less:
|
|
|
||
Pension and other post-retirement obligations, net of deferred taxes
|
|
(856
|
)
|
|
Capital lease obligations
|
|
(20
|
)
|
|
Change in net deferred tax liabilities from reorganization
|
|
(510
|
)
|
|
Emergence Date Warrants issued
|
|
(17
|
)
|
|
Reorganization value of Successor assets
|
|
$
|
7,609
|
|
(In millions)
|
Predecessor Company
December 15,
2017
|
|
Reorganization Adjustments
|
|
|
|
Fresh Start Adjustments
|
|
|
|
Successor Company
December 16,
2017
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
770
|
|
|
$
|
(404
|
)
|
|
(1)
|
|
$
|
—
|
|
|
|
|
$
|
366
|
|
Accounts receivable, net
|
497
|
|
|
—
|
|
|
|
|
(106
|
)
|
|
(21)
|
|
391
|
|
||||
Inventory
|
90
|
|
|
—
|
|
|
|
|
29
|
|
|
(22)
|
|
119
|
|
||||
Other current assets
|
374
|
|
|
(58
|
)
|
|
(2)
|
|
(66
|
)
|
|
(23)
|
|
250
|
|
||||
TOTAL CURRENT ASSETS
|
1,731
|
|
|
(462
|
)
|
|
|
|
(143
|
)
|
|
|
|
1,126
|
|
||||
Property, plant and equipment, net
|
194
|
|
|
—
|
|
|
|
|
116
|
|
|
(24)
|
|
310
|
|
||||
Deferred income taxes, net
|
—
|
|
|
48
|
|
|
(3)
|
|
(17
|
)
|
|
(25)
|
|
31
|
|
||||
Intangible assets, net
|
298
|
|
|
—
|
|
|
|
|
3,137
|
|
|
(26)
|
|
3,435
|
|
||||
Goodwill
|
3,541
|
|
|
—
|
|
|
|
|
(883
|
)
|
|
(27)
|
|
2,658
|
|
||||
Other assets
|
70
|
|
|
6
|
|
|
(4)
|
|
(27
|
)
|
|
(28)
|
|
49
|
|
||||
TOTAL ASSETS
|
$
|
5,834
|
|
|
$
|
(408
|
)
|
|
|
|
$
|
2,183
|
|
|
|
|
$
|
7,609
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debt maturing within one year
|
$
|
725
|
|
|
$
|
(696
|
)
|
|
(5)
|
|
$
|
—
|
|
|
|
|
$
|
29
|
|
Accounts payable
|
325
|
|
|
(49
|
)
|
|
(6)
|
|
—
|
|
|
|
|
276
|
|
||||
Payroll and benefit obligations
|
123
|
|
|
23
|
|
|
(7)
|
|
—
|
|
|
|
|
146
|
|
||||
Deferred revenue
|
627
|
|
|
50
|
|
|
(8)
|
|
(341
|
)
|
|
(29)
|
|
336
|
|
||||
Business restructuring reserve
|
35
|
|
|
3
|
|
|
(9)
|
|
—
|
|
|
|
|
38
|
|
||||
Other current liabilities
|
97
|
|
|
65
|
|
|
(6,10)
|
|
(3
|
)
|
|
(30)
|
|
159
|
|
||||
TOTAL CURRENT LIABILITIES
|
1,932
|
|
|
(604
|
)
|
|
|
|
(344
|
)
|
|
|
|
984
|
|
||||
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt, net of current portion
|
—
|
|
|
2,771
|
|
|
(11)
|
|
96
|
|
|
(31)
|
|
2,867
|
|
||||
Pension obligations
|
539
|
|
|
246
|
|
|
(12)
|
|
—
|
|
|
|
|
785
|
|
||||
Other post-retirement obligations
|
—
|
|
|
212
|
|
|
(13)
|
|
—
|
|
|
|
|
212
|
|
||||
Deferred income taxes, net
|
28
|
|
|
113
|
|
|
(14)
|
|
548
|
|
|
(32)
|
|
689
|
|
||||
Business restructuring reserve
|
26
|
|
|
4
|
|
|
(9)
|
|
4
|
|
|
(33)
|
|
34
|
|
||||
Other liabilities
|
180
|
|
|
233
|
|
|
(8,15)
|
|
(43
|
)
|
|
(29,34)
|
|
370
|
|
||||
TOTAL NON-CURRENT LIABILITIES
|
773
|
|
|
3,579
|
|
|
|
|
605
|
|
|
|
|
4,957
|
|
||||
LIABILITIES SUBJECT TO COMPROMISE
|
7,585
|
|
|
(7,585
|
)
|
|
(16)
|
|
—
|
|
|
|
|
—
|
|
||||
TOTAL LIABILITIES
|
10,290
|
|
|
(4,610
|
)
|
|
|
|
261
|
|
|
|
|
5,941
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity awards on redeemable shares
|
6
|
|
|
(6
|
)
|
|
(17)
|
|
—
|
|
|
|
|
—
|
|
||||
Preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Series B
|
397
|
|
|
(397
|
)
|
|
(17)
|
|
—
|
|
|
|
|
—
|
|
||||
Series A
|
186
|
|
|
(186
|
)
|
|
(17)
|
|
—
|
|
|
|
|
—
|
|
||||
STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common stock (Successor)
|
—
|
|
|
1
|
|
|
(18)
|
|
—
|
|
|
|
|
1
|
|
||||
Additional paid-in capital (Successor)
|
—
|
|
|
1,667
|
|
|
(18)
|
|
—
|
|
|
|
|
1,667
|
|
||||
Common stock (Predecessor)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||
Additional paid-in capital (Predecessor)
|
2,387
|
|
|
(2,387
|
)
|
|
(17)
|
|
—
|
|
|
|
|
—
|
|
||||
(Accumulated deficit) retained earnings
|
(5,978
|
)
|
|
4,846
|
|
|
(19)
|
|
1,132
|
|
|
(36)
|
|
—
|
|
||||
Accumulated other comprehensive (loss) income
|
(1,454
|
)
|
|
664
|
|
|
(20)
|
|
790
|
|
|
(35)
|
|
—
|
|
||||
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY
|
(5,045
|
)
|
|
4,791
|
|
|
|
|
1,922
|
|
|
|
|
1,668
|
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
$
|
5,834
|
|
|
$
|
(408
|
)
|
|
|
|
$
|
2,183
|
|
|
|
|
$
|
7,609
|
|
(In millions)
|
|
||
Sources:
|
|
||
Proceeds from Term Loan Credit Agreement, net of original issue discount
|
$
|
2,896
|
|
Release of restricted cash
|
76
|
|
|
Total sources of cash
|
2,972
|
|
|
Uses:
|
|
||
Repayment of DIP Credit Agreement
|
(725
|
)
|
|
Payment of DIP Credit Agreement accrued interest
|
(1
|
)
|
|
Cash paid to Predecessor first lien debt-holders
|
(2,061
|
)
|
|
Cash paid to PBGC
|
(340
|
)
|
|
Payment for professional fees escrow account
|
(56
|
)
|
|
Funding payment for Avaya represented employee pension plan
|
(49
|
)
|
|
Payment of accrued professional and administrative fees
|
(27
|
)
|
|
Costs incurred for Term Loan Credit Agreement and ABL Credit Agreement
|
(59
|
)
|
|
Payment for general unsecured claims
|
(58
|
)
|
|
Total uses of cash
|
(3,376
|
)
|
|
Net uses of cash
|
$
|
(404
|
)
|
2.
|
Other Current Assets.
|
(In millions)
|
|
||
Release of restricted cash
|
$
|
(76
|
)
|
Reclassification of prepaid debt issuance costs related to the Term Loan Credit Agreement
|
(42
|
)
|
|
Payment of fees related to the ABL Credit Agreement
|
5
|
|
|
Restricted cash for bankruptcy related professional fees
|
55
|
|
|
Total other current assets
|
$
|
(58
|
)
|
3.
|
Deferred Income Taxes. The adjustment represents the release of the valuation allowance on deferred tax assets for certain non-U.S. subsidiaries which management believes more likely than not will be realized as a result of the bankruptcy reorganization.
|
4.
|
Other Assets. The adjustment represents the re-establishment of foreign prepaid taxes.
|
5.
|
Debt Maturing Within One Year. The adjustment represents the net effect of the Company’s repayment of $725 million for the DIP Credit Agreement and Term Loan Credit Agreement principal payments of $29 million due over the next year.
|
6.
|
Accounts Payable. The net decrease of $49 million includes $50 million for professional fees that were reclassified to Other current liabilities for accrued bankruptcy related professional fees that will be paid from an escrow account and a payment of $3 million of bankruptcy related professional fees, partially offset by reinstatement of $4 million contract cure costs from liabilities subject to compromise.
|
7.
|
Payroll and Benefit Obligations. The Company reinstated $23 million of liabilities subject to compromise related to the post-employment and post-retirement benefit obligations.
|
8.
|
Deferred Revenue. The reinstatement of liabilities subject to compromise was $79 million of which $50 million is included in deferred revenue and $29 million in other liabilities.
|
9.
|
Business Restructuring Reserve. The reinstatement of liabilities subject to compromise was $7 million, of which $3 million is current and $4 million is non-current.
|
(In millions)
|
|
|
||
Reclassification of accrued bankruptcy related professional fees
|
|
$
|
50
|
|
Reinstatement of other current liabilities
|
|
16
|
|
|
Payment of accrued interest on the DIP Credit Agreement
|
|
(1
|
)
|
|
Total other current liabilities
|
|
$
|
65
|
|
12.
|
Pension Obligations. In accordance with the Plan of Reorganization, the Company reinstated from liabilities subject to compromise $295 million related to the Avaya Pension Plan for represented employees and also contributed $49 million to the related pension trust.
|
13.
|
Other Post-retirement Obligations. Other post-retirement benefit obligations of $212 million were reinstated from liabilities subject to compromise.
|
14.
|
Deferred Income Taxes. The adjustment represents the reinstatement of the deferred tax liability that was included in liabilities subject to compromise.
|
15.
|
Other Liabilities. The increase of $233 million primarily relates to the reinstatement of employee benefits, tax liabilities and deferred revenue from liabilities subject to compromise. Also included is the value of the Emergence Date Warrants issued to the holders of the Predecessor second lien obligations.
|
17.
|
Cancellation of Predecessor Preferred and Common Stock. All common stock, Series A and B preferred stock and all other equity awards of the Predecessor Company were canceled on the Emergence Date without any recovery on account thereof.
|
18.
|
Issuance of Successor Common Stock and Emergence Date Warrants. In settlement of the Company's $5,721 million Predecessor first lien obligations and Predecessor second lien obligations, the holders of the Predecessor first lien obligations received a total of 99.3 million shares of common stock (fair value of $1,509 million) and $2,061 million in cash and the holders of the Predecessor second lien obligations received a total of 4.4 million shares of common stock (fair value of $67 million) and 5.6 million Emergence Date Warrants to purchase a like amount of common shares (fair value of $17 million). In addition, as part of the Plan of Reorganization, the Company completed a distressed termination of the APPSE in accordance with a stipulation settlement with the PBGC, the PBGC received $340 million in cash and 6.1 million shares of common stock (fair value of $92 million).
|
19.
|
Accumulated Deficit.
|
(In millions)
|
|
|
||
Accumulated deficit:
|
|
|
||
Net gain on settlement of liabilities subject to compromise
|
|
$
|
1,778
|
|
Expense for certain professional fees
|
|
(26
|
)
|
|
Benefit from income taxes
|
|
118
|
|
|
Cancellation of Predecessor equity awards
|
|
6
|
|
|
Cancellation of Predecessor Preferred stock Series B
|
|
397
|
|
|
Cancellation of Predecessor Preferred stock Series A
|
|
186
|
|
|
Cancellation of Predecessor Common stock
|
|
2,387
|
|
|
Total
|
|
$
|
4,846
|
|
20.
|
Accumulated Comprehensive Loss. The changes to Accumulated comprehensive loss relate to the settlement of the APPSE and the Avaya Supplemental Pension Plan ("ASPP") and the associated taxes.
|
21.
|
Accounts Receivable. This adjustment relates to a change in accounting policy for the way the Company will present uncollected deferred revenue upon emergence from bankruptcy. The Company will offset such deferred revenue against the related account receivable.
|
22.
|
Inventory. This adjustment relates to the write-up of inventory to fair value based on estimated selling prices, less costs of disposal.
|
23.
|
Other Current Assets. This adjustment reflects the write-off of certain prepaid commissions, deferred installation costs and debt issuance costs that do not meet the definition of an asset upon emergence.
|
24.
|
Property, Plant and Equipment. An adjustment of $116 million was recorded to increase the net book value of property, plant and equipment to its estimated fair value based on estimated current acquisition price, plus costs to make the property fully operational.
|
25.
|
Deferred Income Tax. The adjustment represents the release of the valuation allowance on deferred tax assets for certain non-U.S. subsidiaries which management believes more likely than not will be realized as a result of future taxable income from the reversal of deferred tax liabilities that were established as part of fresh start accounting.
|
26.
|
Intangible Assets. The Company recorded an adjustment to intangible assets for $3,137 million as follows:
|
|
|
Successor
|
|
|
Predecessor
|
|
|
||||||
(In millions)
|
|
December 15, 2017 Post-emergence
|
|
|
December 15, 2017 Pre-emergence
|
|
Difference
|
||||||
Customer relationships and other intangible assets
|
|
$
|
2,155
|
|
|
|
$
|
96
|
|
|
$
|
2,059
|
|
Technology and patents
|
|
905
|
|
|
|
12
|
|
|
893
|
|
|||
Trademarks and trade names
|
|
375
|
|
|
|
190
|
|
|
185
|
|
|||
Total
|
|
$
|
3,435
|
|
|
|
$
|
298
|
|
|
$
|
3,137
|
|
28.
|
Other Assets. The $27 million decrease to other assets is related to prepaid commissions that do not meet the definition of an asset upon emergence as there is no future benefit to the Successor Company.
|
29.
|
Deferred Revenue. The fair value of deferred revenue, which principally relates to payments on annual maintenance contracts, was determined by deducting selling costs and associated profit from the Predecessor Company deferred revenue balance to arrive at the costs and profit associated with fulfilling the liability. Additionally, the decrease includes the impact of an accounting policy change whereby the Successor Company no longer recognizes deferred revenue relating to sales transactions that have been billed, but for which the related account receivable has not yet been collected.
|
30.
|
Other Current Liabilities. The decrease of $3 million to other current liabilities is related to the fair value of real estate leases determined to be above or below market using the income approach based on the difference between the contractual rental rate and the estimated market rental rate, discounted utilizing a risk-related discount rate.
|
31.
|
Long-term Debt. The fair value of the Term Loan Credit Agreement was determined based on a market approach utilizing market-clearing data on the valuation date in addition to bid/ask prices.
|
32.
|
Deferred Income Taxes. The adjustment represents the establishment of deferred tax liabilities related to book/tax differences created by fresh start accounting adjustments. The amount is net of the release of the valuation allowance on
|
33.
|
Business Restructuring Reserve. The Company recorded an increase to its non-current business restructuring reserves based on estimated future cash flows applied to a current discount rate at emergence.
|
34.
|
Other Liabilities. A decrease in other liabilities of $43 million relates to deferred revenue and real estate leases as previously discussed.
|
35.
|
Accumulated Other Comprehensive Loss. The remaining balance in Accumulated comprehensive loss was reversed to Reorganization expenses, net.
|
36.
|
Fresh Start Adjustments. The following table reflects the cumulative impact of the fresh start adjustments as discussed above, the elimination of the Predecessor Company's accumulated other comprehensive loss and the adjustments required to eliminate accumulated deficit:
|
(In millions)
|
|
|
||
Eliminate Predecessor Intangible assets
|
|
$
|
(298
|
)
|
Eliminate Predecessor Goodwill
|
|
(3,541
|
)
|
|
Establish Successor Intangible assets
|
|
3,435
|
|
|
Establish Successor Goodwill
|
|
2,658
|
|
|
Fair value adjustment to Inventory
|
|
29
|
|
|
Fair value adjustment to Other current assets
|
|
(66
|
)
|
|
Fair value adjustment to Property, plant and equipment
|
|
116
|
|
|
Fair value adjustment to Other assets
|
|
(27
|
)
|
|
Fair value adjustment to Deferred revenue
|
|
235
|
|
|
Fair value adjustment to Business restructuring reserves
|
|
(4
|
)
|
|
Fair value adjustment to Other current liabilities
|
|
3
|
|
|
Fair value adjustment to Long-term debt
|
|
(96
|
)
|
|
Fair value adjustment to Other liabilities
|
|
43
|
|
|
Release Predecessor Accumulated comprehensive loss
|
|
(790
|
)
|
|
Fresh start adjustments included in Reorganization items, net
|
|
1,697
|
|
|
Tax impact of fresh start adjustments
|
|
(565
|
)
|
|
Gain on fresh start accounting, net
|
|
$
|
1,132
|
|
(In millions)
|
|
September 30, 2018
As Reported
|
|
Adjustments
|
|
Upon Adoption of ASC 606
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
377
|
|
|
$
|
(1
|
)
|
|
$
|
376
|
|
Inventory
|
|
81
|
|
|
(24
|
)
|
|
57
|
|
|||
Contract assets
|
|
—
|
|
|
78
|
|
|
78
|
|
|||
Contract costs
|
|
—
|
|
|
109
|
|
|
109
|
|
|||
Other current assets
|
|
170
|
|
|
(66
|
)
|
|
104
|
|
|||
Property, plant and equipment, net
|
|
250
|
|
|
(1
|
)
|
|
249
|
|
|||
Deferred income taxes, net
|
|
29
|
|
|
(2
|
)
|
|
27
|
|
|||
Other assets
|
|
74
|
|
|
16
|
|
|
90
|
|
|||
|
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
|
||||||
Contract liabilities
|
|
484
|
|
|
(17
|
)
|
|
467
|
|
|||
Other current liabilities
|
|
148
|
|
|
4
|
|
|
152
|
|
|||
Deferred income taxes, net
|
|
140
|
|
|
29
|
|
|
169
|
|
|||
Other liabilities
|
|
374
|
|
|
(2
|
)
|
|
372
|
|
|||
|
|
|
|
|
|
|
||||||
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
287
|
|
|
95
|
|
|
382
|
|
|
|
September 30, 2019
|
||||||||||
(In millions)
|
|
As Reported
|
|
Adjustments
|
|
Without Adoption of ASC 606
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
314
|
|
|
$
|
(13
|
)
|
|
$
|
301
|
|
Inventory
|
|
63
|
|
|
36
|
|
|
99
|
|
|||
Contract assets
|
|
187
|
|
|
(187
|
)
|
|
—
|
|
|||
Contract costs
|
|
114
|
|
|
(114
|
)
|
|
—
|
|
|||
Other current assets
|
|
115
|
|
|
109
|
|
|
224
|
|
|||
Property, plant and equipment, net
|
|
255
|
|
|
1
|
|
|
256
|
|
|||
Deferred income taxes, net
|
|
35
|
|
|
2
|
|
|
37
|
|
|||
Other assets
|
|
121
|
|
|
(25
|
)
|
|
96
|
|
|||
|
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
291
|
|
|
(3
|
)
|
|
288
|
|
|||
Contract liabilities
|
|
472
|
|
|
56
|
|
|
528
|
|
|||
Other current liabilities
|
|
158
|
|
|
(8
|
)
|
|
150
|
|
|||
Deferred income taxes, net
|
|
72
|
|
|
(22
|
)
|
|
50
|
|
|||
Other liabilities
|
|
394
|
|
|
5
|
|
|
399
|
|
|||
|
|
|
|
|
|
|
||||||
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||||||
Accumulated deficit
|
|
(289
|
)
|
|
(219
|
)
|
|
(508
|
)
|
|
|
Fiscal year ended September 30, 2019
|
||||||||||
(In millions)
|
|
As Reported
|
|
Adjustments
|
|
Without adoption of ASC 606
|
||||||
REVENUE
|
|
|
|
|
|
|
||||||
Products
|
|
$
|
1,222
|
|
|
$
|
(97
|
)
|
|
$
|
1,125
|
|
Services
|
|
1,665
|
|
|
(76
|
)
|
|
1,589
|
|
|||
|
|
2,887
|
|
|
(173
|
)
|
|
2,714
|
|
|||
COSTS
|
|
|
|
|
|
|
||||||
Products:
|
|
|
|
|
|
|
||||||
Costs
|
|
442
|
|
|
(19
|
)
|
|
423
|
|
|||
Amortization of technology intangible assets
|
|
174
|
|
|
—
|
|
|
174
|
|
|||
Services
|
|
696
|
|
|
(25
|
)
|
|
671
|
|
|||
|
|
1,312
|
|
|
(44
|
)
|
|
1,268
|
|
|||
GROSS PROFIT
|
|
1,575
|
|
|
(129
|
)
|
|
1,446
|
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
|
1,001
|
|
|
2
|
|
|
1,003
|
|
|||
Research and development
|
|
204
|
|
|
—
|
|
|
204
|
|
|||
Amortization of intangible assets
|
|
162
|
|
|
—
|
|
|
162
|
|
|||
Impairment charges
|
|
659
|
|
|
—
|
|
|
659
|
|
|||
Restructuring charges, net
|
|
22
|
|
|
—
|
|
|
22
|
|
|||
|
|
2,048
|
|
|
2
|
|
|
2,050
|
|
|||
OPERATING LOSS
|
|
(473
|
)
|
|
(131
|
)
|
|
(604
|
)
|
|||
Interest expense
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|||
Other income, net
|
|
41
|
|
|
—
|
|
|
41
|
|
|||
LOSS BEFORE INCOME TAXES
|
|
(669
|
)
|
|
(131
|
)
|
|
(800
|
)
|
|||
(Provision for) benefit from income taxes
|
|
(2
|
)
|
|
7
|
|
|
5
|
|
|||
NET LOSS
|
|
$
|
(671
|
)
|
|
$
|
(124
|
)
|
|
$
|
(795
|
)
|
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
||
REVENUE
|
|
|
||
Products & Solutions
|
|
$
|
1,228
|
|
Services
|
|
1,680
|
|
|
Unallocated Amounts
|
|
(21
|
)
|
|
|
|
$
|
2,887
|
|
|
|
Fiscal year ended September 30, 2019
|
||||||||||||||
(In millions)
|
|
Products & Solutions
|
|
Services
|
|
Unallocated
|
|
Total
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
U.S.
|
|
$
|
585
|
|
|
$
|
981
|
|
|
$
|
(13
|
)
|
|
$
|
1,553
|
|
International:
|
|
|
|
|
|
|
|
|
||||||||
Europe, Middle East and Africa
|
|
381
|
|
|
375
|
|
|
(3
|
)
|
|
753
|
|
||||
Asia Pacific
|
|
155
|
|
|
175
|
|
|
(3
|
)
|
|
327
|
|
||||
Americas International - Canada and Latin America
|
|
107
|
|
|
149
|
|
|
(2
|
)
|
|
254
|
|
||||
Total International
|
|
643
|
|
|
699
|
|
|
(8
|
)
|
|
1,334
|
|
||||
Total revenue
|
|
$
|
1,228
|
|
|
$
|
1,680
|
|
|
$
|
(21
|
)
|
|
$
|
2,887
|
|
(In millions)
|
|
Products & Solutions
|
|
Services
|
|
Total
|
||||||
Balance as of September 30, 2017 (Predecessor)
|
|
|
|
|
|
|
||||||
Cost
|
|
$
|
2,669
|
|
|
$
|
2,501
|
|
|
$
|
5,170
|
|
Accumulated impairment charges
|
|
(1,576
|
)
|
|
(52
|
)
|
|
(1,628
|
)
|
|||
|
|
1,093
|
|
|
2,449
|
|
|
3,542
|
|
|||
|
|
|
|
|
|
|
||||||
Impact of fresh start accounting
|
|
79
|
|
|
(962
|
)
|
|
(883
|
)
|
|||
Adjustments
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Balance as of December 15, 2017 (Predecessor)
|
|
|
|
|
|
|
||||||
Cost
|
|
2,747
|
|
|
1,539
|
|
|
4,286
|
|
|||
Accumulated impairment charges
|
|
(1,576
|
)
|
|
(52
|
)
|
|
(1,628
|
)
|
|||
|
|
$
|
1,171
|
|
|
$
|
1,487
|
|
|
$
|
2,658
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Balance as of December 16, 2017 (Successor)
|
|
|
|
|
|
|
||||||
Cost
|
|
$
|
1,171
|
|
|
$
|
1,487
|
|
|
$
|
2,658
|
|
Accumulated impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
1,171
|
|
|
1,487
|
|
|
2,658
|
|
|||
|
|
|
|
|
|
|
||||||
Spoken acquisition
|
|
116
|
|
|
—
|
|
|
116
|
|
|||
Foreign currency fluctuations
|
|
(4
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|||
Balance as of September 30, 2018 (Successor)
|
|
|
|
|
|
|
||||||
Cost
|
|
1,283
|
|
|
1,481
|
|
|
2,764
|
|
|||
Accumulated impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
1,283
|
|
|
1,481
|
|
|
2,764
|
|
|||
|
|
|
|
|
|
|
||||||
Impairment charges
|
|
(657
|
)
|
|
—
|
|
|
(657
|
)
|
|||
Foreign currency fluctuations
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Other
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Balance as of September 30, 2019 (Successor)
|
|
|
|
|
|
|
||||||
Cost
|
|
1,282
|
|
|
1,478
|
|
|
2,760
|
|
|||
Accumulated impairment charges
|
|
(657
|
)
|
|
—
|
|
|
(657
|
)
|
|||
|
|
$
|
625
|
|
|
$
|
1,478
|
|
|
$
|
2,103
|
|
(In millions)
|
|
Technology and Patents |
|
Customer
Relationships and Other Intangibles |
|
Trademarks
and Trade Names |
|
Total
|
||||||||
Balance as of September 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Cost
|
|
$
|
960
|
|
|
$
|
2,154
|
|
|
$
|
42
|
|
|
$
|
3,156
|
|
Accumulated amortization
|
|
(308
|
)
|
|
(279
|
)
|
|
(11
|
)
|
|
(598
|
)
|
||||
Finite-lived intangible assets, net
|
|
652
|
|
|
1,875
|
|
|
31
|
|
|
2,558
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Cost
|
|
2
|
|
|
—
|
|
|
333
|
|
|
335
|
|
||||
Accumulated impairment
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Indefinite-lived intangible assets, net
|
|
—
|
|
|
—
|
|
|
333
|
|
|
$
|
333
|
|
|||
Intangible assets, net
|
|
$
|
652
|
|
|
$
|
1,875
|
|
|
$
|
364
|
|
|
$
|
2,891
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of September 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Cost
|
|
$
|
959
|
|
|
$
|
2,157
|
|
|
$
|
43
|
|
|
$
|
3,159
|
|
Accumulated amortization
|
|
(135
|
)
|
|
(124
|
)
|
|
(3
|
)
|
|
(262
|
)
|
||||
Finite-lived intangible assets, net
|
|
824
|
|
|
2,033
|
|
|
40
|
|
|
2,897
|
|
||||
Indefinite-lived intangible assets
|
|
5
|
|
|
—
|
|
|
332
|
|
|
337
|
|
||||
Intangible assets, net
|
|
$
|
829
|
|
|
$
|
2,033
|
|
|
$
|
372
|
|
|
$
|
3,234
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
DEPRECIATION AND AMORTIZATION
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of software development costs (included in Costs)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Amortization of intangible assets (included in Costs and Operating expenses)
|
|
336
|
|
|
262
|
|
|
|
13
|
|
|
224
|
|
||||
Depreciation and amortization of property, plant and equipment and internal use software (included in Costs and Operating expenses)
|
|
107
|
|
|
122
|
|
|
|
18
|
|
|
101
|
|
||||
Total depreciation and amortization
|
|
$
|
443
|
|
|
$
|
384
|
|
|
|
$
|
31
|
|
|
$
|
326
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
$
|
14
|
|
|
$
|
5
|
|
|
|
$
|
2
|
|
|
$
|
4
|
|
Foreign currency (losses) gains, net
|
|
(8
|
)
|
|
28
|
|
|
|
—
|
|
|
2
|
|
||||
Income from transition services agreement, net
|
|
—
|
|
|
5
|
|
|
|
3
|
|
|
3
|
|
||||
Gain on sale of Networking business
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
2
|
|
||||
Other pension and post-retirement benefit credits (costs), net
|
|
7
|
|
|
13
|
|
|
|
(8
|
)
|
|
(34
|
)
|
||||
Change in fair value of Emergence Date Warrants
|
|
29
|
|
|
(17
|
)
|
|
|
—
|
|
|
—
|
|
||||
Gain on sale of long-lived assets
|
|
—
|
|
|
1
|
|
|
|
—
|
|
|
—
|
|
||||
Other, net
|
|
(1
|
)
|
|
—
|
|
|
|
1
|
|
|
(2
|
)
|
||||
Total other income (expense), net
|
|
$
|
41
|
|
|
$
|
35
|
|
|
|
$
|
(2
|
)
|
|
$
|
(25
|
)
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal Year Ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal Year Ended September 30, 2017
|
||||||||
REORGANIZATION ITEMS, NET
|
|
|
|
|
|
|
|
|
|
||||||||
Net gain on settlement of Liabilities subject to compromise
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
1,778
|
|
|
$
|
—
|
|
Net gain on fresh start adjustments
|
|
—
|
|
|
—
|
|
|
|
1,697
|
|
|
—
|
|
||||
Bankruptcy-related professional fees
|
|
—
|
|
|
—
|
|
|
|
(56
|
)
|
|
(66
|
)
|
||||
Contract rejection fees / lease terminations
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(18
|
)
|
||||
DIP Credit Agreement financing costs
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(14
|
)
|
||||
Other items, net
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
|
—
|
|
||||
Reorganization items, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
3,416
|
|
|
$
|
(98
|
)
|
Cash payments for reorganization items
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
$
|
2,524
|
|
|
$
|
47
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal Year Ended September 30, 2017
|
||||||||
VALUATION AND QUALIFYING ACCOUNTS
|
|
|
|
|
|
|
|
|
|
||||||||
Allowance for Doubtful Accounts Receivable:
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
|
$
|
2
|
|
|
$
|
—
|
|
|
|
$
|
13
|
|
|
$
|
16
|
|
Increase (decrease) in expense
|
|
2
|
|
|
2
|
|
|
|
1
|
|
|
(3
|
)
|
||||
Reductions
|
|
—
|
|
|
—
|
|
|
|
(1
|
)
|
|
—
|
|
||||
Impact of fresh start accounting
|
|
—
|
|
|
—
|
|
|
|
(13
|
)
|
|
—
|
|
||||
Balance at end of period
|
|
$
|
4
|
|
|
$
|
2
|
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Deferred Tax Asset Valuation Allowance:
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
|
$
|
919
|
|
|
$
|
836
|
|
|
|
$
|
2,152
|
|
|
$
|
2,256
|
|
Increase (decrease) in expense
|
|
43
|
|
|
105
|
|
|
|
(452
|
)
|
|
(65
|
)
|
||||
Reductions
|
|
(34
|
)
|
|
(22
|
)
|
|
|
(393
|
)
|
|
(39
|
)
|
||||
Impact of fresh start accounting
|
|
—
|
|
|
—
|
|
|
|
(471
|
)
|
|
—
|
|
||||
Balance at end of period
|
|
$
|
928
|
|
|
$
|
919
|
|
|
|
$
|
836
|
|
|
$
|
2,152
|
|
|
|
As of September 30,
|
||||||
(In millions)
|
|
2019
|
|
2018
|
||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
|
|
||||
Leasehold improvements
|
|
$
|
101
|
|
|
$
|
105
|
|
Machinery and equipment
|
|
221
|
|
|
190
|
|
||
Assets under construction
|
|
30
|
|
|
14
|
|
||
Internal use software
|
|
154
|
|
|
112
|
|
||
Total property, plant and equipment
|
|
506
|
|
|
421
|
|
||
Less: Accumulated depreciation and amortization
|
|
(251
|
)
|
|
(171
|
)
|
||
Property, plant and equipment, net
|
|
$
|
255
|
|
|
$
|
250
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
OTHER PAYMENTS
|
|
|
|
|
|
|
|
|
|
||||||||
Interest payments
|
|
$
|
206
|
|
|
$
|
149
|
|
|
|
$
|
15
|
|
|
$
|
138
|
|
Income tax payments
|
|
56
|
|
|
22
|
|
|
|
7
|
|
|
33
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
NON-CASH INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||
Acquisition of equipment under capital lease
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increase (decrease) in Accounts payable, Other current liabilities and Other liabilities for Capital expenditures
|
|
6
|
|
|
1
|
|
|
|
—
|
|
|
(1
|
)
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
|
|
December 15, 2017
|
|
September 30, 2017
|
||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
752
|
|
|
$
|
700
|
|
|
|
$
|
366
|
|
|
$
|
876
|
|
Restricted cash included in other current assets
|
|
—
|
|
|
—
|
|
|
|
65
|
|
|
85
|
|
||||
Restricted cash included in other assets
|
|
4
|
|
|
4
|
|
|
|
4
|
|
|
5
|
|
||||
Total cash, cash equivalents, and restricted cash
|
|
$
|
756
|
|
|
$
|
704
|
|
|
|
$
|
435
|
|
|
$
|
966
|
|
(In millions)
|
|
Employee Separation Costs
|
|
Lease Obligations
|
|
Total
|
||||||
Restructuring charges
|
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
22
|
|
Cash payments
|
|
(8
|
)
|
|
(1
|
)
|
|
(9
|
)
|
|||
Impact of foreign currency fluctuations
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Accrual balance as of September 30, 2019 (Successor)
|
|
$
|
11
|
|
|
$
|
1
|
|
|
$
|
12
|
|
(In millions)
|
|
Employee Separation Costs
|
|
Lease Obligations
|
|
Total
|
||||||
Restructuring charges
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Cash payments
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Accrual balance as of December 15, 2017 (Predecessor)
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Accrual balance as of December 16, 2017 (Successor)
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Restructuring charges
|
|
70
|
|
|
10
|
|
|
80
|
|
|||
Cash payments
|
|
(23
|
)
|
|
(10
|
)
|
|
(33
|
)
|
|||
Impact of foreign currency fluctuations
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Accrual balance as of September 30, 2018 (Successor)
|
|
54
|
|
|
—
|
|
|
54
|
|
|||
Adjustments(1)
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Cash payments
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||
Impact of foreign currency fluctuations
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Accrual balance as of September 30, 2019 (Successor)
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
31
|
|
(In millions)
|
|
Employee Separation Costs
|
|
Lease Obligations
|
|
Total
|
||||||
Restructuring charges
|
|
$
|
18
|
|
|
$
|
1
|
|
|
$
|
19
|
|
Cash payments
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|||
Accrual balance as of September 30, 2017 (Predecessor)
|
|
4
|
|
|
1
|
|
|
5
|
|
|||
Cash payments
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Accrual balance as of December 15, 2017 (Predecessor)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Accrual balance as of December 16, 2017 (Successor)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Cash payments
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Impact of foreign currency fluctuations
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Accrual balance as of September 30, 2018 (Successor)
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Accrual balance as of September 30, 2019 (Successor)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
(In millions)
|
|
Employee Separation Costs
|
|
Lease Obligations
|
|
Total
|
||||||
Accrual balance as of September 30, 2016 (Predecessor)
|
|
93
|
|
|
41
|
|
|
134
|
|
|||
Cash payments
|
|
(47
|
)
|
|
(16
|
)
|
|
(63
|
)
|
|||
Adjustments(1)(2)
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
|||
Impact of foreign currency fluctuations
|
|
2
|
|
|
—
|
|
|
2
|
|
|||
Accrual balance as of September 30, 2017 (Predecessor)
|
|
51
|
|
|
24
|
|
|
75
|
|
|||
Restructuring charges
|
|
1
|
|
|
1
|
|
|
2
|
|
|||
Cash payments
|
|
(3
|
)
|
|
(17
|
)
|
|
(20
|
)
|
|||
Adjustments - reorganization items
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
|||
Accrual balance as of December 15, 2017 (Predecessor)
|
|
$
|
53
|
|
|
$
|
7
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Accrual balance as of December 16, 2017 (Successor)
|
|
$
|
53
|
|
|
$
|
7
|
|
|
$
|
60
|
|
Restructuring charges
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Cash payments
|
|
(16
|
)
|
|
(2
|
)
|
|
(18
|
)
|
|||
Accrual balance as of September 30, 2018 (Successor)
|
|
37
|
|
|
6
|
|
|
43
|
|
|||
Adjustments(1)
|
|
1
|
|
|
1
|
|
|
2
|
|
|||
Cash payments
|
|
(16
|
)
|
|
(3
|
)
|
|
(19
|
)
|
|||
Impact of foreign currency fluctuations
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Accrual balance as of September 30, 2019 (Successor)
|
|
$
|
21
|
|
|
$
|
4
|
|
|
$
|
25
|
|
(1)
|
Includes changes in estimates for increases and decreases in costs related to the fiscal 2008 through 2016 restructuring programs, which are recorded in Restructuring charges, net in the Consolidated Statements of Operations in the period of the adjustment.
|
(2)
|
Includes a reserve transfer of $6 million associated with the sale of the Networking business in July 2017 related to lease obligations.
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||
(In millions)
|
|
Principal amount
|
|
Net of discounts and issuance costs
|
|
Principal amount
|
|
Net of discounts and issuance costs
|
||||||||
Term Loan Credit Agreement due December 15, 2024
|
|
$
|
2,874
|
|
|
$
|
2,846
|
|
|
$
|
2,903
|
|
|
$
|
2,870
|
|
Convertible 2.25% senior notes due June 15, 2023
|
|
350
|
|
|
273
|
|
|
350
|
|
|
256
|
|
||||
Total debt
|
|
$
|
3,224
|
|
|
3,119
|
|
|
$
|
3,253
|
|
|
3,126
|
|
||
Debt maturing within one year
|
|
|
|
(29
|
)
|
|
|
|
(29
|
)
|
||||||
Long-term debt, net of current portion
|
|
|
|
$
|
3,090
|
|
|
|
|
$
|
3,097
|
|
1.
|
In the case of Base Rate Loans denominated in U.S. dollars, at a rate per annum equal to 0.75% (subject to a 0.25% step-up or step-down based on availability) plus the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the U.S. prime rate as publicly announced by Citibank, N.A. and (iii) the LIBOR Rate for an interest period of one month;
|
2.
|
In the case of LIBOR Rate Loans denominated in U.S. dollars, at a rate per annum equal to 1.75% (subject to a 0.25% step-up or step-down based on availability) plus the applicable LIBOR Rate;
|
3.
|
In the case of Canadian Prime Rate Loans denominated in Canadian dollars, at a rate per annum equal to 0.75% (subject to a 0.25% step-up or step-down based on availability) plus the highest of (i) the "Base Rate" as publicly announced by Citibank, N.A., Canadian branch and (ii) the rate of interest per annum equal to the average rate applicable to Canadian Dollar Bankers Rate ("CDOR Rate") for an interest period of 30 days;
|
4.
|
In the case of CDOR Rate Loans denominated in Canadian dollars, at a rate per annum equal to 1.75% (subject to a 0.25% step-up or step-down based on availability) plus the applicable CDOR Rate;
|
5.
|
In the case of LIBOR Rate Loans denominated in Sterling, at a rate per annum equal to 1.75% (subject to a 0.25% step-up or step-down based on availability) plus the applicable LIBOR Rate;
|
6.
|
In the case of Euro Interbank Offered Rate ("EURIBOR Rate") Loans denominated in Euro, at a rate per annum equal to 1.75% (subject to a 0.25% step-up or step-down based on availability) plus the applicable LIBOR Rate; and
|
7.
|
In the case of Overnight LIBOR Rate Loans, at a rate per annum equal to 1.75% (subject to a 0.25% step-up or step-down based on availability) plus the applicable Overnight LIBOR Rate.
|
•
|
during any calendar quarter, if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
|
•
|
during the five business day period after any five consecutive trading day period (the "Measurement Period") in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sales price of the Company's common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
||||
Principal
|
|
$
|
350
|
|
|
$
|
350
|
|
Less:
|
|
|
|
|
||||
Unamortized debt discount
|
|
(72
|
)
|
|
(87
|
)
|
||
Unamortized issuance costs
|
|
(5
|
)
|
|
(7
|
)
|
||
Net carrying amount
|
|
$
|
273
|
|
|
$
|
256
|
|
(In millions)
|
|
|
||
2020
|
|
$
|
29
|
|
2021
|
|
29
|
|
|
2022
|
|
29
|
|
|
2023
|
|
379
|
|
|
2024 and thereafter
|
|
2,758
|
|
|
Total
|
|
$
|
3,224
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||
Expected volatility
|
|
56.89
|
%
|
|
50.14
|
%
|
Risk-free interest rates
|
|
1.55
|
%
|
|
2.90
|
%
|
Contractual remaining life (in years)
|
|
3.21
|
|
|
4.21
|
|
Price per share of common stock
|
|
$10.23
|
|
$22.14
|
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||
(In millions)
|
|
Balance Sheet Caption
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
Derivatives Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Interest rate contracts
|
|
Other current liabilities
|
|
—
|
|
|
23
|
|
|
—
|
|
|
7
|
|
||||
Interest rate contracts
|
|
Other liabilities
|
|
—
|
|
|
58
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
—
|
|
|
81
|
|
|
3
|
|
|
7
|
|
||||
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Other current assets
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Emergence Date Warrants
|
|
Other liabilities
|
|
—
|
|
|
5
|
|
|
—
|
|
|
34
|
|
||||
|
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
34
|
|
||||
Total derivative fair value
|
|
|
|
$
|
1
|
|
|
$
|
86
|
|
|
$
|
3
|
|
|
$
|
41
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||||||
|
|
Fiscal year ended
September 30, 2019 |
|
Period from
December 16, 2017 through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
||||||||||||||||||
(In millions)
|
|
Interest Expense
|
|
Other Comprehensive (Loss) Income
|
|
Interest Expense
|
|
Other Comprehensive (Loss) Income
|
|
|
Interest Expense
|
|
Other Comprehensive (Loss) Income
|
||||||||||||
Financial Statement Line Item in which Cash Flow Hedges are Recorded
|
|
$
|
(237
|
)
|
|
$
|
(191
|
)
|
|
$
|
(169
|
)
|
|
$
|
18
|
|
|
|
$
|
(14
|
)
|
|
$
|
658
|
|
Impact of cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss recognized in AOCI - on interest rate swaps
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(9
|
)
|
|
|
—
|
|
|
—
|
|
||||||
Interest expense reclassified from AOCI
|
|
(10
|
)
|
|
10
|
|
|
(6
|
)
|
|
6
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Location of Derivative Pre-tax Gain (Loss)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Emergence Date Warrants
|
|
Other income (expense), net
|
|
$
|
29
|
|
|
$
|
(17
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
Other income (expense), net
|
|
(5
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||
(In millions)
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
Gross amounts recognized in the Consolidated Balance Sheet
|
|
$
|
1
|
|
|
$
|
86
|
|
|
$
|
3
|
|
|
$
|
41
|
|
Gross amount subject to offset in master netting arrangements not offset in the Consolidated Balance Sheet
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Net amounts
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||||||||||||||||||
|
|
Fair Value Measurements Using
|
|
Fair Value Measurements Using
|
||||||||||||||||||||||||||||
(In millions)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1 |
|
Level 2
|
|
Level 3
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Strategic investments
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||||
Interest rate contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||||
Foreign exchange contracts
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total assets
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate contracts
|
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Spoken acquisition Earn-outs
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||||
Emergence Date Warrants
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||||
Total liabilities
|
|
$
|
91
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
10
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
49
|
|
(In millions)
|
|
Emergence Date Warrants
|
|
Spoken Acquisition Earn-outs
|
|
Strategic Investments
|
||||||
Balance as of September 30, 2017 (Predecessor)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of Emergence Date Warrants
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
Balance as of December 15, 2017 (Predecessor)
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Balance as of December 16, 2017 (Successor)
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contingent consideration
|
|
—
|
|
|
14
|
|
|
—
|
|
|||
Accretion of interest(1)
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
Change in fair value(1)
|
|
17
|
|
|
—
|
|
|
—
|
|
|||
Balance as of September 30, 2018 (Successor)
|
|
$
|
34
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Strategic investments
|
|
—
|
|
|
—
|
|
|
10
|
|
|||
Change in fair value(1)
|
|
(29
|
)
|
|
1
|
|
|
—
|
|
|||
Settlement
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|||
Balance as of September 30, 2019 (Successor)
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
10
|
|
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||||||
(In millions)
|
|
Principal amount
|
|
Fair value
|
|
Principal amount
|
|
Fair value
|
||||||||
Term Loan Credit Agreement due December 15, 2024
|
|
$
|
2,874
|
|
|
$
|
2,739
|
|
|
$
|
2,903
|
|
|
$
|
2,932
|
|
Convertible 2.25% senior notes due June 15, 2023
|
|
350
|
|
|
298
|
|
|
350
|
|
|
357
|
|
||||
Total debt
|
|
$
|
3,224
|
|
|
$
|
3,037
|
|
|
$
|
3,253
|
|
|
$
|
3,289
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
(LOSS) INCOME BEFORE INCOME TAXES:
|
|
|
|
|
|
|
|
|
|
||||||||
U.S.
|
|
$
|
(510
|
)
|
|
$
|
(165
|
)
|
|
|
$
|
3,353
|
|
|
$
|
(275
|
)
|
Foreign
|
|
(159
|
)
|
|
(94
|
)
|
|
|
83
|
|
|
77
|
|
||||
(Loss) income before income taxes
|
|
$
|
(669
|
)
|
|
$
|
(259
|
)
|
|
|
$
|
3,436
|
|
|
$
|
(198
|
)
|
(PROVISION FOR) BENEFIT FROM INCOME TAXES:
|
|
|
|
|
|
|
|
|
|
||||||||
CURRENT
|
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
2
|
|
State and local
|
|
(7
|
)
|
|
4
|
|
|
|
—
|
|
|
1
|
|
||||
Foreign
|
|
(29
|
)
|
|
(40
|
)
|
|
|
(4
|
)
|
|
(27
|
)
|
||||
|
|
(56
|
)
|
|
(36
|
)
|
|
|
(4
|
)
|
|
(24
|
)
|
||||
DEFERRED
|
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
|
47
|
|
|
530
|
|
|
|
(453
|
)
|
|
34
|
|
||||
State and local
|
|
10
|
|
|
34
|
|
|
|
(19
|
)
|
|
5
|
|
||||
Foreign
|
|
(3
|
)
|
|
18
|
|
|
|
17
|
|
|
1
|
|
||||
|
|
54
|
|
|
582
|
|
|
|
(455
|
)
|
|
40
|
|
||||
(Provision for) benefit from income taxes
|
|
$
|
(2
|
)
|
|
$
|
546
|
|
|
|
$
|
(459
|
)
|
|
$
|
16
|
|
|
|
As of September 30,
|
||||||
(In millions)
|
|
2019
|
|
2018
|
||||
DEFERRED INCOME TAX ASSETS:
|
|
|
|
|
||||
Benefit obligations
|
|
$
|
225
|
|
|
$
|
205
|
|
Net operating losses/credit carryforwards
|
|
918
|
|
|
951
|
|
||
Property, plant and equipment
|
|
15
|
|
|
21
|
|
||
Valuation allowance
|
|
(928
|
)
|
|
(919
|
)
|
||
Gross deferred income tax assets
|
|
230
|
|
|
258
|
|
||
DEFERRED INCOME TAX LIABILITIES:
|
|
|
|
|
||||
Goodwill and intangible assets
|
|
(213
|
)
|
|
(290
|
)
|
||
Other/accrued liabilities
|
|
(54
|
)
|
|
(79
|
)
|
||
Gross deferred income tax liabilities
|
|
(267
|
)
|
|
(369
|
)
|
||
Net deferred income tax liabilities
|
|
$
|
(37
|
)
|
|
$
|
(111
|
)
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Income tax benefit (provision) computed at the U.S. Federal statutory rate
|
|
$
|
140
|
|
|
$
|
64
|
|
|
|
$
|
(1,203
|
)
|
|
$
|
69
|
|
State and local income taxes, net of federal income tax effect
|
|
11
|
|
|
(12
|
)
|
|
|
10
|
|
|
6
|
|
||||
Tax differentials on foreign earnings
|
|
(11
|
)
|
|
(12
|
)
|
|
|
182
|
|
|
12
|
|
||||
Loss on foreign subsidiaries
|
|
29
|
|
|
43
|
|
|
|
—
|
|
|
7
|
|
||||
Taxes on unremitted foreign earnings and profits
|
|
(4
|
)
|
|
4
|
|
|
|
7
|
|
|
7
|
|
||||
Non-deductible portion of goodwill
|
|
(123
|
)
|
|
—
|
|
|
|
—
|
|
|
(17
|
)
|
||||
Non-deductible loss on sale of Networking business
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(12
|
)
|
||||
Non-deductible reorganization items
|
|
—
|
|
|
—
|
|
|
|
(11
|
)
|
|
(18
|
)
|
||||
Adjustment to deferred taxes
|
|
16
|
|
|
4
|
|
|
|
(1
|
)
|
|
5
|
|
||||
Audit settlements and accruals
|
|
5
|
|
|
(48
|
)
|
|
|
(6
|
)
|
|
(5
|
)
|
||||
Credits and other taxes
|
|
4
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
(11
|
)
|
||||
Impact of Tax Cuts and Jobs Act
|
|
1
|
|
|
245
|
|
|
|
—
|
|
|
—
|
|
||||
NOL recognition / intellectual property
|
|
—
|
|
|
366
|
|
|
|
—
|
|
|
—
|
|
||||
Warrants
|
|
6
|
|
|
(4
|
)
|
|
|
—
|
|
|
—
|
|
||||
Debt refinancing
|
|
—
|
|
|
(8
|
)
|
|
|
—
|
|
|
—
|
|
||||
Non-deductible impact of fresh start accounting
|
|
—
|
|
|
—
|
|
|
|
(555
|
)
|
|
—
|
|
||||
Non-taxable cancellation of debt income
|
|
—
|
|
|
—
|
|
|
|
313
|
|
|
—
|
|
||||
Attribute reduction
|
|
—
|
|
|
—
|
|
|
|
(452
|
)
|
|
—
|
|
||||
Rate changes
|
|
(19
|
)
|
|
(3
|
)
|
|
|
—
|
|
|
(68
|
)
|
||||
U.S. tax on foreign source income
|
|
—
|
|
|
(10
|
)
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Valuation allowance
|
|
(43
|
)
|
|
(85
|
)
|
|
|
1,199
|
|
|
45
|
|
||||
Other differences—net
|
|
(14
|
)
|
|
7
|
|
|
|
61
|
|
|
(2
|
)
|
||||
(Provision for) benefit from income taxes
|
|
$
|
(2
|
)
|
|
$
|
546
|
|
|
|
$
|
(459
|
)
|
|
$
|
16
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
||||||
Pension Benefits - U.S.
|
|
|
|
|
|
|
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||
Projected benefit obligation at beginning of period
|
|
$
|
1,050
|
|
|
$
|
1,136
|
|
|
|
$
|
3,415
|
|
Service cost
|
|
3
|
|
|
3
|
|
|
|
1
|
|
|||
Interest cost
|
|
40
|
|
|
28
|
|
|
|
22
|
|
|||
Actuarial loss (gain)
|
|
131
|
|
|
(56
|
)
|
|
|
19
|
|
|||
Benefits paid
|
|
(90
|
)
|
|
(61
|
)
|
|
|
(39
|
)
|
|||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(2,282
|
)
|
|||
Projected benefit obligation at end of period
|
|
$
|
1,134
|
|
|
$
|
1,050
|
|
|
|
$
|
1,136
|
|
Change in plan assets
|
|
|
|
|
|
|
|
||||||
Fair value of plan assets at beginning of period
|
|
$
|
881
|
|
|
$
|
889
|
|
|
|
$
|
2,395
|
|
Actual return on plan assets
|
|
97
|
|
|
10
|
|
|
|
57
|
|
|||
Employer contributions
|
|
27
|
|
|
43
|
|
|
|
49
|
|
|||
Benefits paid
|
|
(90
|
)
|
|
(61
|
)
|
|
|
(39
|
)
|
|||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(1,573
|
)
|
|||
Fair value of plan assets at end of period
|
|
$
|
915
|
|
|
$
|
881
|
|
|
|
$
|
889
|
|
Underfunded status at end of period
|
|
$
|
(219
|
)
|
|
$
|
(169
|
)
|
|
|
$
|
(247
|
)
|
Amount recognized in the Consolidated Balance Sheets consists of:
|
|
|
|
|
|
|
|
||||||
Accrued benefit liability, current
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
(9
|
)
|
Accrued benefit liability, noncurrent
|
|
(219
|
)
|
|
(169
|
)
|
|
|
(238
|
)
|
|||
Net amount recognized
|
|
$
|
(219
|
)
|
|
$
|
(169
|
)
|
|
|
$
|
(247
|
)
|
Amount recognized in Accumulated other comprehensive loss (pre-tax) consists of:
|
|
|
|
|
|
|
|
||||||
Net actuarial loss (gain)
|
|
79
|
|
|
(15
|
)
|
|
|
—
|
|
|||
Net amount recognized
|
|
$
|
79
|
|
|
$
|
(15
|
)
|
|
|
$
|
—
|
|
Weighted average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
3.09
|
%
|
|
4.22
|
%
|
|
|
3.70
|
%
|
|||
Rate of compensation increase
|
|
3.00
|
%
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
||||||
Pension Benefits - Non-U.S.
|
|
|
|
|
|
|
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||
Projected benefit obligation at beginning of period
|
|
$
|
536
|
|
|
$
|
575
|
|
|
|
$
|
551
|
|
Service cost
|
|
6
|
|
|
5
|
|
|
|
2
|
|
|||
Interest cost
|
|
10
|
|
|
7
|
|
|
|
3
|
|
|||
Actuarial loss (gain)
|
|
76
|
|
|
(19
|
)
|
|
|
(2
|
)
|
|||
Benefits paid
|
|
(22
|
)
|
|
(22
|
)
|
|
|
(3
|
)
|
|||
Foreign currency exchange rate changes
|
|
(32
|
)
|
|
(10
|
)
|
|
|
—
|
|
|||
Curtailments, settlements and other
|
|
(1
|
)
|
|
—
|
|
|
|
—
|
|
|||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
24
|
|
|||
Projected benefit obligation at end of period
|
|
$
|
573
|
|
|
$
|
536
|
|
|
|
$
|
575
|
|
|
|
|
|
|
|
|
|
||||||
Change in plan assets
|
|
|
|
|
|
|
|
||||||
Fair value of plan assets at beginning of period
|
|
$
|
15
|
|
|
$
|
15
|
|
|
|
$
|
15
|
|
Actual return on plan assets
|
|
1
|
|
|
—
|
|
|
|
—
|
|
|||
Employer contributions
|
|
23
|
|
|
22
|
|
|
|
3
|
|
|||
Benefits paid
|
|
(22
|
)
|
|
(22
|
)
|
|
|
(3
|
)
|
|||
Foreign currency exchange rate changes
|
|
(1
|
)
|
|
—
|
|
|
|
—
|
|
|||
Settlements
|
|
(1
|
)
|
|
—
|
|
|
|
—
|
|
|||
Fair value of plan assets at end of period
|
|
$
|
15
|
|
|
$
|
15
|
|
|
|
$
|
15
|
|
Underfunded status at end of period
|
|
$
|
(558
|
)
|
|
$
|
(521
|
)
|
|
|
$
|
(560
|
)
|
|
|
|
|
|
|
|
|
||||||
Amount recognized in the Consolidated Balance Sheets consists of:
|
|
|
|
|
|
|
|
||||||
Noncurrent assets
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
Accrued benefit liability, current
|
|
(19
|
)
|
|
(20
|
)
|
|
|
(23
|
)
|
|||
Accrued benefit liability, noncurrent
|
|
(540
|
)
|
|
(502
|
)
|
|
|
(538
|
)
|
|||
Net amount recognized
|
|
$
|
(558
|
)
|
|
$
|
(521
|
)
|
|
|
$
|
(560
|
)
|
|
|
|
|
|
|
|
|
||||||
Amount recognized in Accumulated other comprehensive loss (pre-tax) consists of:
|
|
|
|
|
|
|
|
||||||
Net actuarial loss (gain)
|
|
$
|
55
|
|
|
$
|
(19
|
)
|
|
|
$
|
—
|
|
Net amount recognized
|
|
$
|
55
|
|
|
$
|
(19
|
)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
0.87
|
%
|
|
1.92
|
%
|
|
|
1.92
|
%
|
|||
Rate of compensation increase
|
|
2.59
|
%
|
|
4.46
|
%
|
|
|
3.66
|
%
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
||||||
Post-retirement Benefits - U.S.
|
|
|
|
|
|
|
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||
Benefit obligation at beginning of period
|
|
$
|
368
|
|
|
$
|
407
|
|
|
|
$
|
404
|
|
Service cost
|
|
1
|
|
|
1
|
|
|
|
—
|
|
|||
Interest cost
|
|
14
|
|
|
11
|
|
|
|
3
|
|
|||
Actuarial loss (gain)
|
|
44
|
|
|
(40
|
)
|
|
|
4
|
|
|||
Benefits paid
|
|
(16
|
)
|
|
(11
|
)
|
|
|
(3
|
)
|
|||
Plan amendments
|
|
(7
|
)
|
|
—
|
|
|
|
—
|
|
|||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(1
|
)
|
|||
Projected benefit obligation at end of period
|
|
$
|
404
|
|
|
$
|
368
|
|
|
|
$
|
407
|
|
|
|
|
|
|
|
|
|
||||||
Change in plan assets
|
|
|
|
|
|
|
|
||||||
Fair value of plan assets at beginning of period
|
|
$
|
178
|
|
|
$
|
180
|
|
|
|
$
|
178
|
|
Actual return on plan assets
|
|
17
|
|
|
2
|
|
|
|
3
|
|
|||
Employer contributions
|
|
12
|
|
|
7
|
|
|
|
2
|
|
|||
Benefits paid
|
|
(16
|
)
|
|
(11
|
)
|
|
|
(3
|
)
|
|||
Fair value of plan assets at end of period
|
|
$
|
191
|
|
|
$
|
178
|
|
|
|
$
|
180
|
|
Underfunded status at end of period
|
|
$
|
(213
|
)
|
|
$
|
(190
|
)
|
|
|
$
|
(227
|
)
|
|
|
|
|
|
|
|
|
||||||
Amount recognized in the Consolidated Balance Sheets consists of:
|
|
|
|
|
|
|
|
||||||
Accrued benefit liability, current
|
|
$
|
(13
|
)
|
|
$
|
(14
|
)
|
|
|
$
|
(12
|
)
|
Accrued benefit liability, noncurrent
|
|
(200
|
)
|
|
(176
|
)
|
|
|
(215
|
)
|
|||
Net amount recognized
|
|
$
|
(213
|
)
|
|
$
|
(190
|
)
|
|
|
$
|
(227
|
)
|
|
|
|
|
|
|
|
|
||||||
Amount recognized in Accumulated other comprehensive loss (pre-tax) consists of:
|
|
|
|
|
|
|
|
||||||
Net prior service credit
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Net actuarial loss (gain)
|
|
$
|
3
|
|
|
$
|
(34
|
)
|
|
|
$
|
—
|
|
Net amount recognized
|
|
$
|
(4
|
)
|
|
$
|
(34
|
)
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
||||||
Discount rate
|
|
3.17
|
%
|
|
4.26
|
%
|
|
|
3.77
|
%
|
|||
Rate of compensation increase
|
|
3.00
|
%
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
|
Pension Benefits - U.S.
|
|
Pension Benefits - Non-U.S.
|
||||||||||||
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
|
September 30, 2019
|
|
September 30, 2018
|
||||||||
Accumulated benefit obligation for all plans
|
|
$
|
1,134
|
|
|
$
|
1,050
|
|
|
$
|
555
|
|
|
$
|
521
|
|
Plans with accumulated benefit obligation in excess of plan assets
|
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
|
$
|
1,134
|
|
|
$
|
1,050
|
|
|
$
|
568
|
|
|
$
|
531
|
|
Accumulated benefit obligation
|
|
$
|
1,134
|
|
|
$
|
1,050
|
|
|
$
|
550
|
|
|
$
|
516
|
|
Fair value of plan assets
|
|
$
|
915
|
|
|
$
|
881
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
|
Pension Benefits
|
|
Post-retirement
Benefits
|
||||||||
(In millions)
|
|
U.S.
|
|
Non-U.S.
|
|
|||||||
2020
|
|
$
|
74
|
|
|
$
|
23
|
|
|
$
|
19
|
|
2021
|
|
73
|
|
|
22
|
|
|
20
|
|
|||
2022
|
|
72
|
|
|
25
|
|
|
20
|
|
|||
2023
|
|
72
|
|
|
23
|
|
|
20
|
|
|||
2024
|
|
71
|
|
|
23
|
|
|
21
|
|
|||
2025 - 2029
|
|
340
|
|
|
132
|
|
|
107
|
|
|||
Total
|
|
$
|
702
|
|
|
$
|
248
|
|
|
$
|
207
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Pension Benefits - U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Components of net periodic benefit (credit) cost
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
3
|
|
|
$
|
3
|
|
|
|
$
|
1
|
|
|
$
|
4
|
|
Interest cost
|
|
40
|
|
|
28
|
|
|
|
22
|
|
|
98
|
|
||||
Expected return on plan assets
|
|
(60
|
)
|
|
(51
|
)
|
|
|
(38
|
)
|
|
(179
|
)
|
||||
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
1
|
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
—
|
|
|
|
20
|
|
|
102
|
|
||||
Net periodic benefit (credit) cost
|
|
$
|
(17
|
)
|
|
$
|
(20
|
)
|
|
|
$
|
5
|
|
|
$
|
26
|
|
Weighted average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
3.94
|
%
|
|
3.29
|
%
|
|
|
3.19
|
%
|
|
2.86
|
%
|
||||
Expected return on plan assets
|
|
7.00
|
%
|
|
7.65
|
%
|
|
|
7.75
|
%
|
|
7.75
|
%
|
||||
Rate of compensation increase
|
|
4.00
|
%
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
4.00
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Pension Benefits - Non-U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Components of net periodic benefit cost (credit)
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
6
|
|
|
$
|
5
|
|
|
|
$
|
2
|
|
|
$
|
7
|
|
Interest cost
|
|
10
|
|
|
7
|
|
|
|
3
|
|
|
8
|
|
||||
Expected return on plan assets
|
|
(1
|
)
|
|
—
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
—
|
|
|
|
2
|
|
|
16
|
|
||||
Curtailment, settlement gain
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(4
|
)
|
||||
Net periodic benefit cost
|
|
$
|
15
|
|
|
$
|
12
|
|
|
|
$
|
6
|
|
|
$
|
26
|
|
Weighted average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
1.92
|
%
|
|
1.92
|
%
|
|
|
1.22
|
%
|
|
1.22
|
%
|
||||
Expected return on plan assets
|
|
3.67
|
%
|
|
3.68
|
%
|
|
|
1.82
|
%
|
|
1.82
|
%
|
||||
Rate of compensation increase
|
|
2.58
|
%
|
|
3.62
|
%
|
|
|
3.45
|
%
|
|
3.45
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Post-retirement Benefits - U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Components of net periodic benefit cost (credit)
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Interest cost
|
|
14
|
|
|
11
|
|
|
|
3
|
|
|
13
|
|
||||
Expected return on plan assets
|
|
(9
|
)
|
|
(8
|
)
|
|
|
(2
|
)
|
|
(10
|
)
|
||||
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
|
(18
|
)
|
||||
Amortization of actuarial (gain) loss
|
|
(1
|
)
|
|
—
|
|
|
|
2
|
|
|
12
|
|
||||
Curtailment, settlement gain(1)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(4
|
)
|
||||
Net periodic benefit cost (credit)
|
|
$
|
5
|
|
|
$
|
4
|
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
Weighted average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
|
4.02
|
%
|
|
3.39
|
%
|
|
|
3.37
|
%
|
|
3.11
|
%
|
||||
Expected return on plan assets
|
|
5.50
|
%
|
|
5.50
|
%
|
|
|
5.90
|
%
|
|
5.90
|
%
|
||||
Rate of compensation increase
|
|
4.00
|
%
|
|
4.00
|
%
|
|
|
4.00
|
%
|
|
4.00
|
%
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended
September 30, 2019 |
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Pension Benefits - U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss (gain)
|
|
$
|
94
|
|
|
$
|
(15
|
)
|
|
|
$
|
—
|
|
|
$
|
(68
|
)
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1
|
)
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
—
|
|
|
|
(20
|
)
|
|
(102
|
)
|
||||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(1,147
|
)
|
|
—
|
|
||||
Total recognized in Other comprehensive (loss) income
|
|
$
|
94
|
|
|
$
|
(15
|
)
|
|
|
$
|
(1,167
|
)
|
|
$
|
(171
|
)
|
Total recognized in net periodic benefit cost and Other comprehensive (loss) income(1)
|
|
$
|
77
|
|
|
$
|
(35
|
)
|
|
|
$
|
(722
|
)
|
|
$
|
(145
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pension Benefits - Non-U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss (gain)
|
|
$
|
76
|
|
|
$
|
(19
|
)
|
|
|
$
|
22
|
|
|
$
|
(68
|
)
|
Foreign exchange rate loss
|
|
(2
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
—
|
|
|
|
(2
|
)
|
|
(16
|
)
|
||||
Net gain recognition due to settlement
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
4
|
|
||||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(163
|
)
|
|
—
|
|
||||
Total recognized in Other comprehensive (loss) income
|
|
$
|
74
|
|
|
$
|
(19
|
)
|
|
|
$
|
(143
|
)
|
|
$
|
(80
|
)
|
Total recognized in net periodic benefit cost and Other comprehensive (loss) income(1)
|
|
$
|
89
|
|
|
$
|
(7
|
)
|
|
|
$
|
(137
|
)
|
|
$
|
(54
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Post-retirement Benefits - U.S.
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss (gain)
|
|
$
|
36
|
|
|
$
|
(34
|
)
|
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
Prior service credit
|
|
(7
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
|
3
|
|
|
18
|
|
||||
Amortization of actuarial gain (loss)
|
|
1
|
|
|
—
|
|
|
|
(2
|
)
|
|
(12
|
)
|
||||
Net gain recognition due to curtailment
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
4
|
|
||||
Reorganization adjustments
|
|
—
|
|
|
—
|
|
|
|
(40
|
)
|
|
—
|
|
||||
Total recognized in Other comprehensive (loss) income
|
|
$
|
30
|
|
|
$
|
(34
|
)
|
|
|
$
|
(39
|
)
|
|
$
|
(18
|
)
|
Total recognized in net periodic benefit cost and Other comprehensive (loss) income(1)
|
|
$
|
35
|
|
|
$
|
(30
|
)
|
|
|
$
|
2
|
|
|
$
|
(23
|
)
|
Asset Category
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
|
Long-term Target
|
|
Pension Benefits - U.S.
|
|
|
|
|
|
|
|||
Equity Securities
|
|
29
|
%
|
|
37
|
%
|
|
34
|
%
|
Debt Securities
|
|
52
|
%
|
|
39
|
%
|
|
50
|
%
|
Hedge Funds
|
|
7
|
%
|
|
8
|
%
|
|
6
|
%
|
Private Equity
|
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
Real Estate
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
Commodities
|
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
Other(1)
|
|
4
|
%
|
|
7
|
%
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|||
Pension Benefits - Non-U.S.
|
|
|
|
|
|
|
|||
Debt Securities
|
|
27
|
%
|
|
27
|
%
|
|
|
|
Asset Allocation Fund
|
|
13
|
%
|
|
13
|
%
|
|
|
|
Insurance Contracts
|
|
60
|
%
|
|
60
|
%
|
|
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|||
Post-retirement Benefits - U.S.
|
|
|
|
|
|
|
|||
Equity Securities
|
|
40
|
%
|
|
40
|
%
|
|
40
|
%
|
Debt Securities
|
|
60
|
%
|
|
60
|
%
|
|
60
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(1)
|
Other includes cash/cash equivalents, derivative financial instruments and payables/receivables for pending transactions.
|
|
|
As of September 30, 2019
|
|
As of September 30, 2018
|
||||||||||||||||||||||||||||
(In millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
U.S. Government debt securities (a)
|
|
$
|
—
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
93
|
|
|
$
|
—
|
|
|
$
|
93
|
|
Derivative instruments (b)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||||
Total assets in the fair value hierarchy
|
|
(2
|
)
|
|
125
|
|
|
—
|
|
|
123
|
|
|
(2
|
)
|
|
93
|
|
|
—
|
|
|
91
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments measured at net asset value: (c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Real estate (d)
|
|
|
|
|
|
|
|
55
|
|
|
|
|
|
|
|
|
49
|
|
||||||||||||||
Private equity (e)
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
7
|
|
||||||||||||||
Multi-strategy hedge funds (f)
|
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
73
|
|
||||||||||||||
Investment funds: (g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
62
|
|
||||||||||||||
Long duration fixed income
|
|
|
|
|
|
|
|
328
|
|
|
|
|
|
|
|
|
231
|
|
||||||||||||||
High-yield debt
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
26
|
|
||||||||||||||
U.S. equity
|
|
|
|
|
|
|
|
144
|
|
|
|
|
|
|
|
|
179
|
|
||||||||||||||
Non-U.S. equity
|
|
|
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
112
|
|
||||||||||||||
Emerging market equity
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
35
|
|
||||||||||||||
Commodities
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
15
|
|
||||||||||||||
Total investments measured at net asset value
|
|
|
|
|
|
|
|
787
|
|
|
|
|
|
|
|
|
789
|
|
||||||||||||||
Other plan assets, net
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
1
|
|
||||||||||||||
Total plan assets at fair value
|
|
$
|
(2
|
)
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
915
|
|
|
$
|
(2
|
)
|
|
$
|
93
|
|
|
$
|
—
|
|
|
$
|
881
|
|
(a)
|
Includes U.S. Treasury STRIPS, which are generally valued using institutional bid evaluations from various contracted pricing vendors. Institutional bid evaluations are estimated prices that represent the price a dealer would pay for a security. Pricing inputs to the institutional bid evaluation vary by security and include benchmark yields, reported trades, unadjusted broker/dealer quotes, issuer spreads, bids, offers or other observable market data.
|
(b)
|
Includes future contracts that are generally valued using the last trade price at which a specific contract/security was last traded on the primary exchange, which is provided by a contracted vendor. If pricing is not available from the contracted vendor, then pricing is obtained from other sources such as Bloomberg, broker bid, ask/offer quotes or the investment manager.
|
(c)
|
These investments are measured at fair value using the net asset value per share or its equivalent ("NAV") and have therefore not been classified in the fair value hierarchy.
|
(d)
|
Includes open ended real estate commingled funds, close ended real estate limited partnerships, and insurance company separate accounts that invest primarily in U.S. office, lodging, retail and residential real estate. The insurance company separate accounts and the commingled funds account for their portfolio of assets at fair value and calculate the NAV on either a monthly or quarterly basis. Shares can be redeemed at the NAV on a quarterly basis, provided a written redemption request is received in advance (generally 45-91 days) of the redemption date. Therefore, the undiscounted NAV is used as the fair value measurement. For limited partnerships, the fair value of the underlying assets and the capital account for each investor is determined by the General Partner ("GP"). The valuation techniques used by the GP generally consist of unobservable inputs such as discounted cash flow analysis, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. The partnerships are typically funded over time as capital is needed to fund asset purchases, and distributions from the partnerships are received as the partnerships liquidate their underlying asset holdings. Therefore, the life cycle for a typical investment in a real estate limited partnership is expected to be approximately 10 years from initial funding.
|
(e)
|
Includes limited partner interests in various limited partnerships ("LPs") that invest primarily in U.S. and non-U.S. investments either directly, or through other partnerships or funds with a focus on venture capital, buyouts, expansion
|
(f)
|
Includes hedge funds and funds of funds that pursue multiple strategies to diversify risks and reduce volatility. The funds account for their portfolio of assets at fair value and calculate the NAV of their fund on a monthly basis. The funds limit the frequency of redemptions to manage liquidity and protect the interests of the funds and its shareholders.
|
(g)
|
Includes open-end funds and unit investment trusts that invest in various asset classes including: U.S. and non-U.S. corporate debt, U.S. government debt, municipal bonds, U.S. equity, non-U.S. developed and emerging markets equity, and commodities. The funds account for their portfolio of assets at fair value and calculate the NAV of the funds on a daily basis, and shares can be redeemed at the NAV. Therefore, the undiscounted NAV as reported by the funds is used as the fair value measurement.
|
(In millions)
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
||
Investments measured at net asset value: (a)
|
|
|
|
|
||||
Investment funds: (b)
|
|
|
|
|
||||
Debt securities
|
|
$
|
4
|
|
|
$
|
4
|
|
Asset allocation
|
|
2
|
|
|
2
|
|
||
Insurance contracts (c)
|
|
9
|
|
|
9
|
|
||
Total plan assets at fair value
|
|
$
|
15
|
|
|
$
|
15
|
|
(a)
|
These investments are measured at fair value using the NAV and have therefore not been classified in the fair value hierarchy.
|
(b)
|
Includes collective investment funds that invest in various asset classes including U.S. and non-U.S. corporate debt and equity, and derivatives. The funds account for their portfolio of assets at fair value and calculate the NAV of the funds on a daily basis, and shares can be redeemed at the NAV. Therefore, the undiscounted NAV as reported by the funds is used as the fair value measurement.
|
(c)
|
Most non-U.S. pension plans are funded through insurance contracts, which provide for a guaranteed interest credit and a profit-sharing adjustment based on the actual performance of the underlying investment assets of the insurer. The fair value of the contract is determined by the insurer based on the premiums paid by the Company plus interest credits plus the profit-sharing adjustment less benefit payments. The underlying assets of the insurer are invested in compliance with local rules or law, which tend to require a high allocation to fixed income securities.
|
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
||||
Investments measured at net asset value: (a)
|
|
|
|
|
||||
Group life insurance contract measured at net asset value (b)
|
|
$
|
191
|
|
|
$
|
178
|
|
Total plan assets at fair value
|
|
$
|
191
|
|
|
$
|
178
|
|
(a)
|
These investments are measured at fair value using the NAV and have therefore not been classified in the fair value hierarchy.
|
(b)
|
The group life insurance contracts are held in a reserve of an insurance company that provides for investment of pre-funding amounts in a family of pooled separate accounts. The fair value of each group life insurance contract is primarily determined by the value of the units it owns in the pooled separate accounts that back the policy. Each of the pooled separate accounts provides a unit NAV on a daily basis, which is based on the fair value of the underlying assets owned by the account. The post-retirement benefit plans can transact daily at the unit NAV without restriction. As of September 30, 2019, the asset allocation of the pooled separate accounts in which the contracts invest was approximately 60% fixed income securities, 22% U.S. equity securities and 18% non-U.S. equity securities.
|
|
|
Period from December 16, 2017
through September 30, 2018 |
|
Emergence Date Grants
|
||||
Exercise price
|
|
$
|
21.66
|
|
|
$
|
19.46
|
|
Expected volatility(1)
|
|
49.67
|
%
|
|
56.59
|
%
|
||
Expected life (in years)(2)
|
|
5.86
|
|
|
6.65
|
|
||
Risk-free interest rate(3)
|
|
2.72
|
%
|
|
2.35
|
%
|
||
Dividend yield(4)
|
|
—
|
%
|
|
—
|
%
|
|
|
Options (In thousands)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value (In thousands)
|
|||||
Outstanding at September 30, 2018
|
|
1,118
|
|
|
$
|
19.64
|
|
|
|
|
|
||
Forfeited or expired
|
|
(193
|
)
|
|
$
|
19.89
|
|
|
|
|
|
||
Outstanding at September 30, 2019
|
|
925
|
|
|
$
|
19.59
|
|
|
8.1
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at September 30, 2019
|
|
541
|
|
|
$
|
19.58
|
|
|
8.0
|
|
$
|
—
|
|
|
|
Restricted Stock Units (In thousands)
|
Weighted Average Grant-Date Fair Value
|
|||
Non-vested at September 30, 2018
|
|
3,243
|
|
$
|
16.08
|
|
Granted
|
|
1,833
|
|
15.29
|
|
|
Vested
|
|
(1,737
|
)
|
15.60
|
|
|
Forfeited
|
|
(542
|
)
|
17.42
|
|
|
Non-vested at September 30, 2019
|
|
2,797
|
|
$
|
15.60
|
|
|
|
Performance Restricted Stock Units (In thousands)
|
Weighted Average Grant-Date Fair Value
|
|||
Granted
|
|
456
|
|
$
|
13.67
|
|
Change in shares due to performance
|
|
(177
|
)
|
17.42
|
|
|
Vested
|
|
—
|
|
—
|
|
|
Forfeited
|
|
(5
|
)
|
17.42
|
|
|
Non-vested at September 30, 2019
|
|
274
|
|
$
|
11.18
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions, except per share amounts)
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
(Loss) Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
Dividends and accretion to preferred stockholders
|
|
—
|
|
|
—
|
|
|
|
(6
|
)
|
|
(31
|
)
|
||||
Undistributed (loss) income
|
|
(671
|
)
|
|
287
|
|
|
|
2,971
|
|
|
(213
|
)
|
||||
Percentage allocated to common stockholders(1)
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
86.9
|
%
|
|
100.0
|
%
|
||||
Numerator for basic and diluted (loss) earnings per common share
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,582
|
|
|
$
|
(213
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic (loss) earnings per weighted average common shares
|
|
110.8
|
|
|
109.9
|
|
|
|
497.3
|
|
|
497.1
|
|
||||
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
||||||||
Restricted stock units
|
|
—
|
|
|
1.2
|
|
|
|
—
|
|
|
—
|
|
||||
Denominator for diluted (loss) earnings per weighted average common shares
|
|
110.8
|
|
|
111.1
|
|
|
|
497.3
|
|
|
497.1
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per common share
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(6.06
|
)
|
|
$
|
2.61
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
Diluted
|
|
$
|
(6.06
|
)
|
|
$
|
2.58
|
|
|
|
$
|
5.19
|
|
|
$
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1) Basic weighted average common stock outstanding
|
|
110.8
|
|
|
109.9
|
|
|
|
497.3
|
|
|
497.1
|
|
||||
Basic weighted average common stock and common stock equivalents (preferred shares)
|
|
110.8
|
|
|
109.9
|
|
|
|
572.4
|
|
|
497.1
|
|
||||
Percentage allocated to common stockholders
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
86.9
|
%
|
|
100.0
|
%
|
(1)
|
The Networking business was sold on July 14, 2017.
|
(2)
|
Unallocated amounts in Revenue represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.
|
(3)
|
Unallocated amounts in Gross Profit include the fair value adjustments recognized upon emergence from bankruptcy and excluded from segment gross profit; the effect of the amortization of technology intangibles; and costs that are not core to the measurement of segment management’s performance, but rather are controlled at the corporate level.
|
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
||||
ASSETS:
|
|
|
|
|
||||
Products & Solutions
|
|
$
|
662
|
|
|
$
|
1,336
|
|
Services
|
|
1,504
|
|
|
1,509
|
|
||
Unallocated Assets (1)
|
|
4,784
|
|
|
4,834
|
|
||
Total
|
|
$
|
6,950
|
|
|
$
|
7,679
|
|
(1)
|
Unallocated Assets consist of cash and cash equivalents, accounts receivable, contract assets, contract costs, deferred income tax assets, property, plant and equipment, acquired intangible assets and other assets. Unallocated Assets are managed at the corporate level and are not identified with a specific segment.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(In millions)
|
|
Fiscal year ended September 30, 2019
|
|
Period from
December 16, 2017 through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
REVENUE(1):
|
|
|
|
|
|
|
|
|
|
||||||||
U.S.
|
|
$
|
1,553
|
|
|
$
|
1,184
|
|
|
|
$
|
331
|
|
|
$
|
1,798
|
|
International:
|
|
|
|
|
|
|
|
|
|
||||||||
EMEA
|
|
753
|
|
|
603
|
|
|
|
166
|
|
|
834
|
|
||||
APAC—Asia Pacific
|
|
327
|
|
|
256
|
|
|
|
57
|
|
|
334
|
|
||||
Americas International—Canada and Latin America
|
|
254
|
|
|
204
|
|
|
|
50
|
|
|
306
|
|
||||
Total International
|
|
1,334
|
|
|
1,063
|
|
|
|
273
|
|
|
1,474
|
|
||||
Total
|
|
$
|
2,887
|
|
|
$
|
2,247
|
|
|
|
$
|
604
|
|
|
$
|
3,272
|
|
(In millions)
|
|
September 30, 2019
|
|
September 30, 2018
|
||||
LONG-LIVED ASSETS(2)
|
|
|
|
|
||||
U.S.
|
|
$
|
184
|
|
|
$
|
169
|
|
International:
|
|
|
|
|
||||
EMEA
|
|
54
|
|
|
61
|
|
||
APAC—Asia Pacific
|
|
10
|
|
|
12
|
|
||
Americas International—Canada and Latin America
|
|
7
|
|
|
8
|
|
||
Total International
|
|
71
|
|
|
81
|
|
||
Total
|
|
$
|
255
|
|
|
$
|
250
|
|
(1)
|
Revenue is attributed to geographic areas based on the location of customers.
|
(2)
|
Represents property, plant and equipment, net.
|
21.
|
Accumulated Other Comprehensive (Loss) Income
|
(In millions)
|
Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related Items
|
|
Foreign Currency Translation
|
|
Unrealized Loss on Term Loan Interest Rate Swap
|
|
Other
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||
Balance as of September 30, 2016 (Predecessor)
|
$
|
(1,627
|
)
|
|
$
|
(33
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1,661
|
)
|
Other comprehensive income (loss) before reclassifications
|
181
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
142
|
|
|||||
Amounts reclassified to earnings
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|||||
Provision for income taxes
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|||||
Balance as of September 30, 2017 (Predecessor)
|
(1,375
|
)
|
|
(72
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1,448
|
)
|
|||||
Other comprehensive (loss) income before reclassifications
|
(24
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|||||
Amounts reclassified to earnings
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Pension settlement
|
721
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
721
|
|
|||||
Provision for income taxes
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|||||
Balance as of December 15, 2017 (Predecessor)
|
(720
|
)
|
|
(69
|
)
|
|
—
|
|
|
(1
|
)
|
|
(790
|
)
|
|||||
Elimination of Predecessor Company Accumulated other comprehensive loss
|
720
|
|
|
69
|
|
|
—
|
|
|
1
|
|
|
790
|
|
|||||
Balance as of December 15, 2017 (Predecessor)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance as of December 16, 2017 (Successor)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive income (loss) before reclassifications
|
70
|
|
|
(31
|
)
|
|
(3
|
)
|
|
—
|
|
|
36
|
|
|||||
(Provision for) benefit from income taxes
|
(19
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(18
|
)
|
|||||
Balance as of September 30, 2018 (Successor)
|
51
|
|
|
(31
|
)
|
|
(2
|
)
|
|
—
|
|
|
18
|
|
|||||
Other comprehensive (loss) income before reclassifications
|
(186
|
)
|
|
24
|
|
|
(87
|
)
|
|
—
|
|
|
(249
|
)
|
|||||
Amounts reclassified to earnings
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Benefit from income taxes
|
29
|
|
|
—
|
|
|
19
|
|
|
|
|
48
|
|
||||||
Balance as of September 30, 2019 (Successor)
|
$
|
(106
|
)
|
|
$
|
(7
|
)
|
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
(173
|
)
|
|
|
Successor
|
||||||||||||||
(In millions, except per share amounts)
|
|
Fourth
Quarter |
|
Third
Quarter |
|
Second
Quarter |
|
First
Quarter |
||||||||
Fiscal year ended September 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
723
|
|
|
$
|
717
|
|
|
$
|
709
|
|
|
$
|
738
|
|
Gross profit
|
|
392
|
|
|
390
|
|
|
386
|
|
|
407
|
|
||||
Operating income (loss)
|
|
52
|
|
|
(613
|
)
|
|
38
|
|
|
50
|
|
||||
(Provision for) benefit from income taxes
|
|
(32
|
)
|
|
27
|
|
|
6
|
|
|
(3
|
)
|
||||
Net (loss) income
|
|
(34
|
)
|
|
(633
|
)
|
|
(13
|
)
|
|
9
|
|
||||
Net (loss) income attributable to common stockholders
|
|
(34
|
)
|
|
(633
|
)
|
|
(13
|
)
|
|
9
|
|
||||
Earnings (loss) per common share - basic
|
|
$
|
(0.31
|
)
|
|
$
|
(5.70
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.08
|
|
Earnings (loss) per common share - diluted
|
|
$
|
(0.31
|
)
|
|
$
|
(5.70
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.08
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||||||
(In millions, except per share amounts)
|
|
Fourth
Quarter |
|
Third
Quarter |
|
Second
Quarter |
|
Period from December 16, 2017 through December 31, 2017
|
|
|
Period from October 1, 2017 through December 15, 2017
|
||||||||||
Fiscal year ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
|
$
|
735
|
|
|
$
|
692
|
|
|
$
|
672
|
|
|
$
|
148
|
|
|
|
$
|
604
|
|
Gross profit
|
|
390
|
|
|
352
|
|
|
323
|
|
|
78
|
|
|
|
362
|
|
|||||
Operating income (loss)
|
|
11
|
|
|
(49
|
)
|
|
(89
|
)
|
|
2
|
|
|
|
36
|
|
|||||
Benefit from (provision for) income taxes
|
|
311
|
|
|
(20
|
)
|
|
9
|
|
|
246
|
|
|
|
(459
|
)
|
|||||
Net income (loss)
|
|
268
|
|
|
(88
|
)
|
|
(130
|
)
|
|
237
|
|
|
|
2,977
|
|
|||||
Net income (loss) attributable to common stockholders
|
|
268
|
|
|
(88
|
)
|
|
(130
|
)
|
|
237
|
|
|
|
2,582
|
|
|||||
Earnings (loss) per common share - basic
|
|
$
|
2.44
|
|
|
$
|
(0.80
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
2.16
|
|
|
|
$
|
5.19
|
|
Earnings (loss) per common share - diluted
|
|
$
|
2.41
|
|
|
$
|
(0.80
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
2.15
|
|
|
|
$
|
5.19
|
|
(1)
|
the Successor Company, Parent Company only, statements of financial position as of September 30, 2019 and 2018, the statements of operations, comprehensive (loss) income and cash flows for the fiscal year ended September 30, 2019 and the period from December 16, 2017 through September 30, 2018, and;
|
(2)
|
the Predecessor Company, Parent Company only, statements of operations, comprehensive (loss) income and cash flows for the period from October 1, 2017 through December 15, 2017 and for the fiscal year ended September 30, 2017.
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Net (loss) income
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
Equity in other comprehensive (loss) income of Avaya Inc.
|
|
(191
|
)
|
|
18
|
|
|
|
658
|
|
|
213
|
|
||||
Elimination of Predecessor Company accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
|
790
|
|
|
—
|
|
||||
Comprehensive (loss) income
|
|
$
|
(862
|
)
|
|
$
|
305
|
|
|
|
$
|
4,425
|
|
|
$
|
31
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal year ended September 30, 2019
|
|
Period from December 16, 2017
through September 30, 2018 |
|
|
Period from
October 1, 2017 through December 15, 2017 |
|
Fiscal year ended September 30, 2017
|
||||||||
Net (loss) income
|
|
$
|
(671
|
)
|
|
$
|
287
|
|
|
|
$
|
2,977
|
|
|
$
|
(182
|
)
|
Adjustments to reconcile net (loss) income to net cash used for operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Equity in net loss (income) of Avaya Inc.
|
|
672
|
|
|
(311
|
)
|
|
|
(2,977
|
)
|
|
182
|
|
||||
Share-based compensation
|
|
2
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Amortization of debt issuance costs
|
|
17
|
|
|
4
|
|
|
|
—
|
|
|
—
|
|
||||
Change in fair value of emergence date warrants
|
|
(29
|
)
|
|
17
|
|
|
|
—
|
|
|
—
|
|
||||
Changes in operating assets and liabilities
|
|
9
|
|
|
3
|
|
|
|
—
|
|
|
—
|
|
||||
Net cash used for operating activities
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Net cash used for investing activities
|
|
—
|
|
|
(314
|
)
|
|
|
—
|
|
|
—
|
|
||||
Net cash provided by financing activities
|
|
—
|
|
|
314
|
|
|
|
—
|
|
|
—
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
Provided additional training for employees involved in the cash and accounts receivable reconciliation processes, as well as certain other reconciliation processes, and supplemented existing reviewers with higher skilled resources.
|
•
|
Implemented a new system solution that automates and standardizes the account reconciliation process, including the use of standardized account reconciliation templates and workflows for the preparation, approval and review of account reconciliations with appropriate segregation of duties.
|
•
|
Implemented changes to posting rights and responsibilities to eliminate segregation of duties conflicts.
|
•
|
Provided additional training so that appropriate segregation of duties related to recording journal entries is achieved and performed on a timely basis as designed.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
(a) (1)
|
Financial Statements - The information required by this item is included in Part II Item 8 of this Annual Report on Form 10-K.
|
(2)
|
Financial Statement Schedules - The information required by this item is included in Note 10, "Supplementary Financial Information," to our Consolidated Financial Statements included in Part II Item 8 of this Annual Report on Form 10-K.
|
(3)
|
Exhibits - See Index to Exhibits, which is incorporated by reference in this Item. The Exhibits listed in the accompanying Index to Exhibits are filed herewith or incorporated by reference as part of this Annual Report on Form 10-K.
|
Exhibit Number
|
|
Exhibit Description
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
10.4
|
|
|
10.5
|
|
|
10.6*
|
|
|
10.7*
|
|
|
10.8*
|
|
|
10.9*
|
|
|
10.10*
|
|
|
10.11*
|
|
|
10.12*
|
|
|
10.13*
|
|
|
10.14*
|
|
|
10.15*
|
|
|
10.16*
|
|
|
10.17*
|
|
|
10.18*
|
|
|
10.19*
|
|
|
10.20*
|
|
|
10.21*
|
|
|
10.22*
|
|
|
10.23*
|
|
10.24*
|
|
|
10.25
|
|
|
10.26
|
|
|
10.27
|
|
|
10.28
|
|
|
10.29
|
|
|
10.30
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34
|
|
|
10.35
|
|
|
10.36
|
|
|
10.37*
|
|
|
10.38*
|
|
|
10.39*
|
|
|
10.40*
|
|
|
10.41*
|
|
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
Item 16.
|
Form 10-K Summary
|
|
AVAYA HOLDINGS CORP.
|
|
|
|
|
|
By:
|
/s/ KEVIN SPEED
|
|
Name:
|
Kevin Speed
|
|
Title:
|
Vice President, Controller and Chief Accounting Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JAMES M. CHIRICO, JR.
|
|
Director, President and Chief Executive Officer
(Principal Executive Officer) |
|
November 29, 2019
|
James M. Chirico, Jr.
|
|
|
|
|
/s/ KIERAN J. MCGRATH
|
|
Senior Vice President, Chief Financial Officer
(Principal Financial Officer)
|
|
November 29, 2019
|
Kieran J. McGrath
|
|
|
|
|
/s/ KEVIN SPEED
|
|
Vice President, Corporate Controller and Chief Accounting Officer
|
|
November 29, 2019
|
Kevin Speed
|
|
|
|
|
/s/ WILLIAM D. WATKINS
|
|
Chairman of the Board of
Directors
|
|
November 29, 2019
|
William D. Watkins
|
|
|
|
|
/s/ STEPHAN SCHOLL
|
|
Director
|
|
November 29, 2019
|
Stephan Scholl
|
|
|
|
|
/s/ SUSAN L. SPRADLEY
|
|
Director
|
|
November 29, 2019
|
Susan L. Spradley
|
|
|
|
|
/s/ STANLEY J. SUTULA, III
|
|
Director
|
|
November 29, 2019
|
Stanley J. Sutula, III
|
|
|
|
|
/s/ SCOTT D. VOGEL
|
|
Director
|
|
November 29, 2019
|
Scott D. Vogel
|
|
|
|
|
/s/ JACQUELINE E. YEANEY
|
|
Director
|
|
November 29, 2019
|
Jacqueline E. Yeaney
|
|
|
|
•
|
$300,000 the first half of FY18 under the AIP (or comparable Avaya incentive plan), to be paid on or about June 30, 2018.
|
•
|
$300,000 the second half of FY18 under the AIP (or comparable Avaya incentive plan), to be paid on or about December 31, 2018.
|
Subsidiaries of Avaya Holdings Corp.
|
||
Company Name
|
|
State or Other Jurisdiction of Incorporation or Organization
|
3102455 Nova Scotia Company
|
|
Nova Scotia
|
Aurix Limited
|
|
United Kingdom
|
Avaya (China) Communication Co. Ltd.
|
|
China
|
Avaya (Dalian) Intelligent Communications Co., Ltd.
|
|
China
|
Avaya (Gibraltar) Investments Limited
|
|
Gibraltar
|
Avaya (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Avaya (Shanghai) Enterprise Management Co., Ltd.
|
|
China
|
Avaya Argentina S.R.L.
|
|
Argentina
|
Avaya Australia Pty Ltd
|
|
Australia
|
Avaya Austria GmbH
|
|
Austria
|
Avaya Belgium SPRL
|
|
Belgium
|
Avaya Beteiligungs GmbH
|
|
Germany
|
Avaya Brasil LTDA.
|
|
Brazil
|
Avaya CALA Inc.
|
|
Delaware
|
Avaya Canada Corp.
|
|
Nova Scotia
|
Avaya Capital Ireland
|
|
England & Wales
|
Avaya Capital Ireland Unlimited Company
|
|
Ireland
|
Avaya Chile Limitada
|
|
Chile
|
Avaya CIS LLC
|
|
Russian Federation
|
Avaya Cloud Canada Inc.
|
|
Ontario
|
Avaya Cloud Inc.
|
|
Delaware
|
Avaya Cloud Limited
|
|
Ireland
|
Avaya Communication de Colombia S.A.
|
|
Colombia
|
Avaya Communication de Mexico, S.A. de C.V.
|
|
Mexico
|
Avaya Communication Israel Ltd.
|
|
Israel
|
Avaya Comunicación España S.L.U.
|
|
Spain
|
Avaya Cyprus Investments Limited
|
|
Cyprus
|
Avaya Czech Republic s.r.o.
|
|
Czech Republic
|
Avaya d.o.o.
|
|
Croatia
|
Avaya Denmark ApS
|
|
Denmark
|
Avaya Deutschland GmbH
|
|
Germany
|
Avaya Dutch Holdco B.V.
|
|
Netherlands
|
Avaya ECS Limited
|
|
England & Wales
|
Avaya Egypt LLC
|
|
Egypt
|
Avaya EMEA Ltd.
|
|
Delaware
|
Avaya Enterprises S.R.L.
|
|
Romania
|
Avaya Federal Solutions, Inc.
|
|
Delaware
|
Avaya Finland Oy
|
|
Finland
|
Avaya France SAS
|
|
France
|
Avaya GCM Sales Limited
|
|
Ireland
|
Avaya German Holdco GmbH
|
|
Germany
|
Avaya Germany GmbH
|
|
Germany
|
Avaya GmbH & Co. KG
|
|
Germany
|
Avaya Holding EMEA BV
|
|
Netherlands
|
Avaya Holdings Limited
|
|
Ireland
|
Avaya Holdings LLC
|
|
Delaware
|
Avaya Hong Kong Company Limited
|
|
Hong Kong
|
Avaya Hungary Ltd./Avaya Hungary Communication Limited Liability Company
|
|
Hungary
|
Avaya Iletisim Sistemleri Ticaret Anonim Sirketi (Turkey JSC)
|
|
Turkey
|
Avaya Inc.
|
|
Delaware
|
Avaya India (SEZ) Private Limited
|
|
India
|
Avaya India Private Limited
|
|
India
|
Avaya Integrated Cabinet Solutions LLC
|
|
Delaware
|
Avaya International Enterprises Ltd.
|
|
Ireland
|
Avaya International Holdings Limited
|
|
England & Wales
|
Avaya International Sales Limited
|
|
Ireland
|
Avaya Ireland Limited
|
|
Ireland
|
Avaya Italia S.p.A.
|
|
Italy
|
Avaya Japan Ltd.
|
|
Japan
|
Avaya Korea Ltd.
|
|
Korea, Republic Of
|
Avaya Limited
|
|
England & Wales
|
Avaya Luxembourg Investments S.a.r.l.
|
|
Luxembourg
|
Avaya Luxembourg Sarl
|
|
Luxembourg
|
Avaya Macau Limitada
|
|
China
|
Avaya Management L.P.
|
|
Delaware
|
Avaya Management Services Inc.
|
|
Delaware
|
Avaya Mauritius Ltd
|
|
Mauritius
|
Avaya Nederland B.V.
|
|
Netherlands
|
Avaya New Zealand Limited
|
|
New Zealand
|
Avaya Nigeria Limited
|
|
Nigeria
|
Avaya Norway AS
|
|
Norway
|
Avaya Panama Ltda.
|
|
Panama
|
Avaya Peru S.R.L.
|
|
Peru
|
Avaya Philippines, Inc.
|
|
Philippines
|
Avaya Poland Sp. z.o.o.
|
|
Poland
|
Avaya Puerto Rico, Inc.
|
|
Puerto Rico
|
Avaya Singapore Pte Ltd
|
|
Singapore
|
Avaya Sweden AB
|
|
Sweden
|
Avaya Switzerland GmbH
|
|
Switzerland
|
Avaya Training and Service Centre FZE
|
|
United Arab Emirates
|
Avaya UK
|
|
England & Wales
|
Avaya UK Holdings Limited
|
|
England & Wales
|
Avaya Venezuela S.R.L.
|
|
Venezuela
|
Avaya Verwaltungs GmbH
|
|
Germany
|
Avaya World Services Inc.
|
|
Delaware
|
CAAS Technologies, LLC
|
|
Nevada
|
Esna Technologies Ltd
|
|
United Kingdom
|
Global Horizon Holdings Ltd
|
|
Israel
|
Harmatis Ltd.
|
|
Israel
|
Hyper Quality (India) Private Limited
|
|
India
|
HyperQuality II, LLC
|
|
Washington
|
HyperQuality, Inc.
|
|
Delaware
|
Intellisist, Inc.
|
|
Washington
|
KnoahSoft Technologies Private Limited
|
|
India
|
KnoahSoft, Inc.
|
|
Delaware
|
Konftel AB
|
|
Sweden
|
Nimcat Networks General Partnership
|
|
Ontario
|
PT Sierra Communication Indonesia
|
|
Indonesia
|
Radvision Communication Development Beijing Co. Ltd. (RCD)
|
|
Bejing
|
Sierra Asia Pacific Inc.
|
|
Delaware
|
Sierra Communication International LLC
|
|
Delaware
|
Sipera Systems Private Limited
|
|
India
|
Spectel Operations Limited
|
|
Ireland
|
Spectel Research Limited
|
|
Ireland
|
Spectel Unlimited Company
|
|
Ireland
|
Tenovis Telecom Frankfurt GmbH & Co. KG
|
|
Germany
|
Ubiquity Software Corporation
|
|
Delaware
|
Ubiquity Software Corporation Limited
|
|
England & Wales
|
VPNet Technologies, Inc.
|
|
Delaware
|
|
|
|
/s/ JAMES M. CHIRICO, JR.
|
|
James M. Chirico, Jr.
Director, President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ KIERAN J. MCGRATH
|
|
Kieran J. McGrath
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
/s/ JAMES M. CHIRICO, JR.
|
|
James M. Chirico, Jr.
Director, President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ KIERAN J. MCGRATH
|
|
Kieran J. McGrath
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|