SOURCE: Avaya

Avaya

December 22, 2017 17:33 ET

Avaya Reports Fourth Quarter and Fiscal 2017 Financial Results

SANTA CLARA, CA--(Marketwired - December 22, 2017) - Avaya Holdings Corp. (OTCQX: AVYA)

Fourth Quarter Fiscal 2017:

  • Revenue of $790 million
  • Gross margin 62.7%, non-GAAP gross margin 63.2%,
  • Operating income of $64 million, non-GAAP operating income of $178 million or 22.5% of revenue
  • Adjusted EBITDA(1) of $225 million or 28.5% of revenue
  • Net income of $27 million, non-GAAP net income of $162 million or 20.5% of revenue
  • Positive cash flow from operations of $166 million for the fourth quarter

Fiscal Year 2017:

  • Revenue of $3,272 million
  • Gross margin 61.1%, non-GAAP gross margin 61.7%
  • Operating income of $137 million, non-GAAP operating income of $669 million or 20.4% of revenue
  • Adjusted EBITDA(1) of $866 million or 26.5% of revenue,
  • Net loss of $182 million, non-GAAP net income of $448 million or 13.7% of revenue
  • Positive cash flow from operations of $291 million for the year

Avaya Holdings Corp. (OTCQX: AVYA) reported financial results for the fourth quarter and fiscal year ended September 30, 2017.

Total revenue for the fourth quarter was $790 million, down $13 million compared to the prior quarter and down $168 million year-over-year primarily as a result of the sale of the Networking business and lower demand for products and services primarily due to extended procurement cycles resulting from the chapter 11 filing. Fourth quarter 2017 results include $5 million of revenue from the Networking business sold on July 14, 2017. Excluding the impact of the sale of the Networking business, revenue improved approximately 5% from the prior quarter and declined approximately 10% compared to the fourth quarter of fiscal 2016. GAAP gross margin was 62.7% for the fourth quarter. Non-GAAP gross margin was 63.2%, which compares to 61.6% for the prior quarter and 61.8% for the fourth quarter of fiscal 2016. GAAP operating income was $64 million, which compares to a GAAP operating loss of $55 million for the prior quarter, and an operating loss of $425 million for the fourth quarter of fiscal 2016. Non-GAAP operating income was $178 million which compares to $157 million for the prior quarter and $232 million for the fourth quarter of fiscal 2016. GAAP net income was $27 million, which compares to a net loss of $98 million for the prior quarter, and a net loss of $483 million for the fourth quarter of fiscal 2016. Non-GAAP net income was $162 million which compares to $149 million for the prior quarter and $174 million for the fourth quarter of fiscal 2016. For the fourth quarter, adjusted EBITDA(1) was $225 million or 28.5% of revenue, and compares to adjusted EBITDA of $204 million or 25.4% for the prior quarter and $284 million or 29.6% for the fourth quarter of fiscal 2016.

For fiscal 2017, Avaya reported revenue of $3,272 million, down 12% compared to fiscal 2016, or down 11% in constant currency. GAAP gross margin for fiscal 2017 was 61.1%. Non-GAAP gross margin was 61.7%. GAAP operating income was $137 million, reflecting $117 million of impairments of both goodwill and indefinite-lived intangible assets, as well as $30 million of restructuring charges. Non-GAAP operating income was $669 million or 20.4% of revenue in fiscal 2017, which compares to $756 million or 20.4% of revenue in fiscal 2016. GAAP net loss for fiscal 2017 was $182 million which compares to a net loss of $730 million in the prior year. Non-GAAP net income for fiscal 2017 was $448 million, or 13.7% of revenue, which compares to $342 million for fiscal 2016. Fiscal 2017 adjusted EBITDA of $866 million represented 26.5% of revenue, and compares to $940 million for fiscal 2016.

Cash provided by operating activities was $166 million for the fourth fiscal quarter 2017, which compares to $72 million during the third fiscal quarter 2017, and $83 million during the fourth fiscal quarter 2016. Cash provided by operating activities for the fiscal year 2017 was $291 million compared to $113 million for fiscal 2016. Cash and cash equivalents totaled $876 million as of September 30, 2017, an increase of $147 million from the prior quarter and up $540 million from the fourth fiscal quarter of 2016.

"Our fourth quarter and fiscal year 2017 financial results were outstanding given the backdrop of chapter 11," said Jim Chirico, president and CEO. "The results demonstrate the resilience of our business model, the loyalty of our customers and partners, and the commitment of our employees. They also provide us solid momentum in our emergence as a public company."

"The reduction of our debt and certain other long-term obligations will improve annual cash flow by approximately $300 million compared to fiscal 2016," Chirico added. "These savings will enable Avaya to pursue future growth opportunities with a goal of creating long-term value for our new stockholders. We are excited to enter the New Year as a stronger and more competitive company, with new management, innovative products, and an abundance of opportunities ahead of us."

Fourth Fiscal Quarter Highlights

  • Reached a global resolution in chapter 11 restructuring with emergence as a public company
  • Announced a new management team including Jim Chirico as Chief Executive Officer
  • Signed over 3,600 major customer contracts since filing for chapter 11 through September 30, 2017
  • Closed on the sale of the Networking business to Extreme Networks on July 14, 2017
  • Company book-to-bill was greater than 1. Total bookings for the fourth fiscal quarter increased 7% from the prior quarter and were 17% below the prior year, in constant currency. Excluding the impact of the sale of the Networking business, total bookings increased 13% sequentially and were 10% lower year-over-year, in constant currency
  • Software and services accounted for over 79% of total revenue
  • Recurring revenue represented 57% of total revenue, up from 50% year-over-year, in constant currency
  • Net Promoter Score of 50 for customer satisfaction driven by industry-leading service and support
  • Product revenue of $343 million decreased 1% from the prior quarter and decreased 27% year-over-year, in constant currency. Excluding the impact of the sale of the Networking business, product revenue grew 12% sequentially and was 15% lower year-over-year, in constant currency
  • Service revenue of $447 million was down 3% sequentially and decreased 9% year-over-year, each in constant currency. Excluding the impact of the sale of the Networking business, service revenue decreased less than 1% sequentially and was 7% lower year-over-year, in constant currency
  • For the fourth fiscal quarter, percentage of revenue by geography was:
    - U.S. – 57% - EMEA – 24%
    - Asia-Pacific – 10% - Americas International – 9%

Fiscal Year Highlights

  • Announced post-emergence board of directors
  • Software and services accounted for 78% of total revenue in fiscal 2017, up from 75% for fiscal 2016
  • Recurring revenue represented 56% of total revenue for fiscal 2017, up from 51% of revenue for fiscal 2016, in constant currency
  • Cloud and managed services and professional services each accounted for >8% of total revenue for fiscal 2017
  • Non-GAAP gross margin was 61.7%, compared to 61.5% for fiscal 2016
  • Adjusted EBITDA was $866 million or 26.5% of revenue, compared to $940 million or 25.4% of revenue for fiscal 2016
  • For the fiscal year, percentage of revenue by geography in was:
    - U.S. – 55% - EMEA – 26%
    - Asia-Pacific – 10% - Americas International – 9%

Accompanying slides

Links to this financial results press release and accompanying slides are available on the investor page of Avaya's website (https://investors.avaya.com/).

About Avaya
Avaya is a leading global business communications company, providing an expansive portfolio of software and services for contact center and unified communications -- offered on premises, in the cloud, or as a hybrid solution. Today's digital world requires communications enablement, and no other company is better positioned to do this than Avaya. For more information, please visit www.avaya.com.

Cautionary Note Regarding Forward-Looking Statements

This document contains certain "forward-looking statements." All statements other than statements of historical fact are "forward-looking" statements for purposes of the U.S. federal and state securities laws. These statements may be identified by the use of forward looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "our vision," "plan," "potential," "preliminary," "predict," "should," "will," or "would" or the negative thereof or other variations thereof or comparable terminology and include, but are not limited to, statements regarding, expected savings and growth opportunities, projections of future opportunities. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These factors, including, but not limited to timing of effectiveness of our registration statement, and those risks discussed in the Company's Registration Statement on Form 10, as amended, may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a further list and description of such risks and uncertainties, please refer to the Company's filings with the SEC that are available at www.sec.gov. The Company cautions you that the list of important factors included in the Company's SEC filings may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

1 Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and for reconciliation of adjusted EBITDA to net income for the fourth quarter of fiscal 2017.

  
  
Avaya Holdings Corp.  
(Debtor-in-possession)  
Consolidated Statements of Operations  
(Unaudited; in millions, except per share amounts)  
  
   Three months ended
September 30,
  Fiscal year ended
September 30,
 
   
   2017   2016   2017   2016  
REVENUE                     
 Products  $343   $469   $1,437   $1,755  
 Services   447    489    1,835    1,947  
    790    958    3,272    3,702  
COSTS                     
 Products:                     
  Costs   105    169    500    630  
  Amortization of acquired technology intangible assets   4    8    20    30  
 Services   186    198    753    797  
    295    375    1,273    1,457  
GROSS PROFIT   495    583    1,999    2,245  
OPERATING EXPENSES                     
 Selling, general and administrative   341    329    1,282    1,413  
 Research and development   48    64    229    275  
 Amortization of acquired intangible assets   34    100    204    100  
 Impairment of indefinite-lived intangible assets   -    442    65    442  
 Goodwill impairment   -    56    52    226  
 Restructuring charges, net   8    17    30    105  
    431    1,008    1,862    2,561  
OPERATING INCOME (LOSS)   64    (425 )  137    (316 )
 Interest expense   (17 )  (118 )  (246 )  (471 )
 Other income, net   7    5    9    68  
 Reorganization costs, net   (21 )  -    (98 )  -  
INCOME (LOSS) BEFORE INCOME TAXES   33    (538 )  (198 )  (719 )
(Provision for) benefit from income taxes   (6 )  55    16    (11 )
NET INCOME (LOSS)   27    (483 )  (182 )  (730 )
Less: Accretion and accrued dividends on Series A and Series B Preferred Stock   (8 )  (7 )  (31 )  (41 )
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS  $19   $(490 ) $(213 ) $(771 )
Basic and diluted earnings per share attributable to common stockholders:                     
 Net income (loss) per share:                     
  Basic  $0.04   $(0.98 ) $(0.43 ) $(1.54 )
  Diluted  $0.04   $(0.98 ) $(0.43 ) $(1.54 )
 Weighted average shares outstanding:                     
  Basic   497.2    498.6    497.1    500.7  
  Diluted   502.5    498.6    497.1    500.7  
  
  
Avaya Holdings Corp.  
(Debtor-in-possession)  
Consolidated Balance Sheets  
(Unaudited; in millions, except share amounts)  
          
   September 30,
2017
  September 30,
2016
 
ASSETS           
Current assets:           
 Cash and cash equivalents  $876   $336  
 Accounts receivable, net   536    584  
 Inventory   96    153  
 Other current assets   269    187  
TOTAL CURRENT ASSETS   1,777    1,260  
 Property, plant and equipment, net   200    253  
 Acquired intangible assets, net   311    617  
 Goodwill   3,542    3,629  
 Other assets   68    62  
TOTAL ASSETS  $5,898   $5,821  
LIABILITIES           
Current liabilities:           
 Debt maturing within one year  $725   $6,018  
 Accounts payable   282    338  
 Payroll and benefit obligations   127    183  
 Deferred revenue   614    705  
 Business restructuring reserve, current portion   35    69  
 Other current liabilities   90    267  
TOTAL CURRENT LIABILITIES   1,873    7,580  
 Pension obligations   513    1,743  
 Other postretirement obligations   -    245  
 Deferred income taxes, net   32    167  
 Business restructuring reserve, non-current portion   34    65  
 Other liabilities   170    492  
TOTAL NON-CURRENT LIABILITIES   749    2,712  
LIABILITIES SUBJECT TO COMPROMISE   7,705    -  
Commitments and contingencies           
Equity awards on redeemable shares   7    6  
Preferred stock, par value $.001 per share, 250,000 shares authorized at September 30, 2017 and 2016           
 Convertible Series B, 48,922 shares issued and outstanding at September 30, 2017 and 2016   393    371  
 Series A, 125,000 shares issued and outstanding at September 30, 2017 and 2016   184    175  
STOCKHOLDER'S DEFICIENCY           
 Common stock   -    -  
 Additional paid-in capital   2,389    2,410  
 Accumulated deficit   (5,954 )  (5,772 )
 Accumulated other comprehensive loss   (1,448 )  (1,661 )
TOTAL STOCKHOLDER'S DEFICIENCY   (5,013 )  (5,023 )
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY  $5,898   $5,821  
  
  
Avaya Holdings Corp.  
(Debtor-in-possession)  
Condensed Statements of Cash Flows  
(Unaudited; in millions)  
   Fiscal year ended
September 30,
 
   2017   2016  
Net cash (used for) provided by:           
 Net loss Net loss  $(182 ) $(730 )
  Adjustments to net loss for non-cash items   518    829  
  Changes in operating assets and liabilities   (45 )  14  
 Operating activities   291    113  
 Investing activities   (70 )  (100 )
 Financing activities   314    9  
 Effect of exchange rate changes on cash and cash equivalents   5    (9 )
Net increase in cash and cash equivalents   540    13  
Cash and cash equivalents at beginning of period   336    323  
Cash and cash equivalents at end of period  $876   $336  
 
 
 Avaya Holdings Corp.
 (Debtor-in-possession)
 Supplemental Schedules of Revenue
 (Unaudited; in millions)
                                 
Three Months Ended       Three Months Ended September 30,
        Revenues  Mix  Change
Dec. 31, 2016  Mar. 31, 2017  June 30, 2017     2017  2016  2017  2016  Amount  Pct.  Pct., net of FX impact
                                    
           Revenue by Segment                        
$ 346  $309  $302  GCS  $340  $392  43%  41%  $(52)  -13%  -15%
55   39   43  Networking (1)   3   77  0%  8%   (74)  -96%  -96%
401   348   345  Total ECS product revenue   343   469  43%  49%   (126)  -27%  -27%
474   456   458  AGS   447   489  57%  51%   (42)  -9%  -9%
$ 875  $804  $803  Total revenue  $790  $958  100%  100%  $(168)  -18%  -18%
                                    
                                    
           Revenue by Geography                        
$ 466  $450  $435  U.S.  $447  $552  57%  58%  $(105)  -19%  -19%
           International:                        
234   202   204   EMEA   194   217  24%  22%   (23)  -11%  -13%
90   77   88   APAC - Asia Pacific   79   104  10%  11%   (25)  -24%  -24%
85   75   76   Americas International - Canada and Latin America   70   85  9%  9%   (15)  -18%  -19%
409   354   368  Total International   343   406  43%  42%   (63)  -16%  -17%
$ 875  $804  $803  Total revenue  $790  $958  100%  100%  $(168)  -18%  -18%
                                    
(1) Networking business was sold on July 14, 2017, therefore, the Company recognized no revenue after the date of sale             

Use of non-GAAP (Adjusted) Financial Measures

The information furnished in this release includes non-GAAP financial measures that differ from measures calculated in accordance with generally accepted accounting principles in the United States of America ("GAAP"), including adjusted EBITDA.

EBITDA is defined as net income (loss) before income taxes, interest expense, interest income and depreciation and amortization. Adjusted EBITDA is EBITDA further adjusted to exclude certain charges and other adjustments described in our SEC filings.

We believe that including supplementary information concerning adjusted EBITDA is appropriate because it serves as a basis for determining management and employee compensation. In addition, we believe adjusted EBITDA provides more comparability between our historical results and results that reflect purchase accounting and our current capital structure. Accordingly, adjusted EBITDA measures our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization and it presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years.

EBITDA and adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net income (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations. In particular, our formulation of adjusted EBITDA allows adjustment for certain amounts that are included in calculating net income (loss) including, but not limited to reorganization, restructuring and impairment charges, certain fees payable to our private equity sponsors and other advisors, resolution of certain legal matters and a portion of our pension costs and post-employment benefits costs which represents the amortization of pension service costs and actuarial gain (loss) associated with these benefits. However, these are expenses that may recur, may vary and are difficult to predict.

The estimate of adjusted EBITDA provided in this press release has been determined consistent with the methodology for calculating adjusted EBITDA as set forth in Avaya Holdings Corp. Form 10 for the fiscal year end September 30, 2017.

These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and have limitations as analytical tools in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures.

The following tables reconcile GAAP measures to non-GAAP measures:

  
  
Avaya Holdings Corp. 
(Debtor-in-possession) 
Supplemental Schedule of Non-GAAP Adjusted EBITDA 
(Unaudited; in millions) 
  
  Three months ended
September 30,
  Fiscal year ended
September 30,
 
  
  2017  2016  2017  2016 
Net income (loss) $27  $(483) $(182) $(730)
 Interest expense  17   118   246   471 
 Interest income  (2)  -   (4)  (1)
 Provision for (benefit from) income taxes  6   (55)  (16)  11 
 Depreciation and amortization  63   97   326   374 
EBITDA  111   (323)  370   125 
  Restructuring charges, net  8   17   30   105 
  Sponsor and other advisory fees  3   28   85   43 
  Integration-related costs  -   -   1   2 
  Third-party sales transformation costs  -   -   -   5 
  Reorganization items, net  21   -   98   - 
  Share-based and other compensation  1   7   11   19 
  Loss on disposal of long-lived assets, net  -   1   -   1 
  Gain on sale of Networking business  (2)  -   (2)  - 
  Impairment of indefinite-lived intangible assets  -   100   65   100 
  Goodwill impairment  -   442   52   442 
  Impairment of long-lived asset  -   -   3   - 
  Loss on equity investment  -   11   -   11 
  Change in fair value of Preferred B embedded derivative  -   (17)  -   (73)
  Securities registration fees  -   -   -   1 
  Costs in connection with certain legal matters  64   -   64   106 
  Foreign currency gains, net  (1)  -   (2)  (10)
  Pension/OPEB/nonretirement postemployment benefits and long-term disability costs  20   18   90   63 
  Other  -   -   1   - 
Adjusted EBITDA $225  $284  $866  $940 
  
  
Avaya Holdings Corp. 
(Debtor-in-possession) 
Supplemental Schedules of Non-GAAP Reconciliations 
(Unaudited; in millions) 
  
  Three Months Ended 
  Sept. 30,  Dec. 31,  Mar. 31  June 30  Sept. 30 
  2016  2016  2017  2017  2017 
                     
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin                    
 Gross Profit $583  $533  $481  $490  $495 
 Gross Margin  60.9%  60.9%  59.8%  61.0%  62.7%
                      
 Items excluded:                    
  Amortization of acquired technology intangible assets  8   5   6   5   4 
  Share-based compensation  1   -   -   -   - 
 Non-GAAP Gross Profit $592  $538  $487  $495  $499 
                     
 Non-GAAP Gross Margin  61.8%  61.5%  60.6%  61.6%  63.2%
                     
                     
Reconciliation of Non-GAAP Operating Income                    
 Operating (Loss) Income $(425) $64  $64  $(55) $64 
  Percentage of Revenue  -44.4%  7.3%  8.0%  -6.8%  8.1%
                     
 Items excluded:                    
  Amortization of acquired intangible assets  64   62   62   62   38 
  Restructuring charges, net  17   10   4   8   8 
  Impairment charges  542   -   -   120   - 
  Advisory fees  27   48   14   18   3 
  Share-based compensation  7   2   4   4   1 
  Costs in connection with certain legal matters  -   -   -   -   64 
                     
 Non-GAAP Operating Income $232  $186  $148  $157  $178 
                     
 Non-GAAP Operating Margin  24.2%  21.3%  18.4%  19.6%  22.5%
                     
  
Avaya Holdings Corp. 
(Debtor-in-possession) 
Supplemental Schedules of Non-GAAP Reconciliation of Gross Profit and Gross Margin by Portfolio 
(Unaudited; in millions) 
  
  Three Months Ended 
  Sept. 30,  Dec. 31,  Mar. 31,  June 30,  Sept. 30, 
  2016  2016  2017  2017  2017 
                     
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products                    
  Revenue $469  $401  $348  $345  $343 
  Costs (exclusive of amortization of technology intangible assets) Costs  169   146   127   122   105 
  Amortization of technology intangible assets Amortization of acquired technology intangible assets  8   5   6   5   4 
 GAAP Gross Profit  292   250   215   218   234 
 GAAP Gross Margin  62.3%  62.3%  61.8%  63.2%  68.2%
                     
 Items excluded:                    
  Amortization of acquired technology intangible assets  8   5   6   5   4 
 Non-GAAP Gross Profit $300  $255  $221  $223  $238 
                     
 Non-GAAP Gross Margin  64.0%  63.6%  63.5%  64.6%  69.4%
                     
                     
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services                    
  Revenue $489  $474  $456  $458  $447 
  Costs  198   191   190   186   186 
 GAAP Gross Profit  291   283   266   272   261 
 GAAP Gross Margin  59.5%  59.7%  58.3%  59.4%  58.4%
                     
Items excluded:                    
 Share-based and other compensation  1   -   -   -   - 
Non-GAAP Gross Profit $292  $283  $266  $272  $261 
                     
Non-GAAP Gross Margin  59.7%  59.7%  58.3%  59.4%  58.4%
                     
                     
Avaya Holdings Corp.
(Debtor-in-possession)
Reconciliation of GAAP to Non-GAAP results
Three months ended September 30, 2017
(Unaudited; in millions)
     
            Costs in
Connection
with Certain
Legal Matters
      
    Amortization
of Intangible
Assets
 
Restructuring
Charges, net
 
Reorganization
Items
 Share-based
and Other
Comp
     Q416
  GAAP
Results
 Advisory
Fees
 Non-GAAP
Results
 GAAP
Results
 Non-GAAP
Results
  
Revenue                              
 Products $343 $- $- $- $- $- $- $343 $469 $469
 Services  447                    447  489  489
   790  -  -  -  -  -  -  790  958  958
Costs                              
 Products:                              
  Costs  105              -     105  169  169
  Amortization of acquired technology intangible assets  4  (4)                 -  8  -
 Services  186        -  -  -  -  186  198  197
   295  (4)  -  -  -  -  -  291  375  366
GROSS PROFIT  495  4  -  -  -  -  -  499  583  592
OPERATING EXPENSES                              
 Selling, general and administrative  341           (1)  (64)  (3)  273  329  296
 Research and development  48                    48  64  64
 Amortization of acquired intangible assets  34  (34)                 -  56  -
 Impairment of indefinite-lived intangible assets  -                    -  100  -
 Goodwill impairment  -                    -  442  -
 Restructuring charges, net  8     (8)              -  17  -
   431  (34)  (8)  -  (1)  (64)  (3)  321  1,008  360
OPERATING INCOME (LOSS)  64  38  8  -  1  64  3  178  (425)  232
 Interest expense  (17)                    (17)  (118)  (118)
 Other income, net  7                    7  5  5
 Reorganization items, net  (21)        21           -  -  -
INCOME (LOSS) BEFORE INCOME TAXES  33  38  8  21  1  64  3  168  (538)  119
(Provision for) benefit from income taxes  (6)                    (6)  55  55
NET INCOME (LOSS)  27  38  8  21  1  64  3  162  (483)  174
Less: Accretion and accrued dividends on Series A and Series B Preferred Stock  (8)  -  -  -  -  -  -  (8)  (7)  (7)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS $19 $38 $8 $21 $1 $64 $3 $154 $(490) $
167
 
 
Avaya Holdings Corp.
(Debtor-in-possession)
Reconciliation of GAAP to Non-GAAP results
Fiscal year ended September 30, 2017
(Unaudited; in millions)
     
              Costs in
Connection
with Certain
Legal Matters
      
    Amortization
of Intangible
Assets
       Share-based
and Other
Comp
     Q416 YTD
  GAAP
Results
 Restructuring
Charges, net
 Impairment
Charges
 Reorganization
Items
 Advisory
Fees
 Non-GAAP
Results
 GAAP
Results
 Non-GAAP
Results
  
Revenue                                 
 Products $1,437 $- $- $- $- $- $- $- $1,437 $1,755 $1,755
 Services  1,835  -  -  -  -  -  -  -  1,835  1,947  1,947
   3,272  -  -  -  -  -  -  -  3,272  3,702  3,702
Costs                                 
 Products:                                 
  Costs  500  -  -  -  -  -  -  -  500  630  629
  Amortization of acquired technology intangible assets  20  (20)  -  -  -  -  -  -  -  30  -
 Services  753  -  -  -  -  -  -  -  753  797  795
   1,273  (20)  -  -  -  -  -  -  1,253  1,457  1,424
GROSS PROFIT  1,999  20  -  -  -  -  -  -  2,019  2,245  2,278
OPERATING EXPENSES                                 
 Selling, general and administrative  1,282  -  -  (3)  -  (11)  (64)  (83)  1,121  1,413  1,249
 Research and development  229  -  -  -  -  -  -  -  229  275  273
 Amortization of acquired intangible assets  204  (204)  -  -  -  -  -  -  -  226  -
 Impairment of indefinite-lived intangible assets  65  -  -  (65)  -  -  -  -  -  100  -
 Goodwill impairment  52  -  -  (52)  -  -  -  -  -  442  -
 Restructuring charges, net  30  -  (30)  -  -  -  -  -  -  105  -
   1,862  (204)  (30)  (120)  -  (11)  (64)  (83)  1,350  2,561  1,522
OPERATING INCOME (LOSS)  137  224  30  120  -  11  64  83  669  (316)  756
 Interest expense  (246)  -  -  -  -  -  -  -  (246)  (471)  (471)
 Other income, net  9  -  -  -  -  -  -  -  9  68  68
 Reorganization items, net  (98)  -  -  -  98  -  -  -  -  -  -
(LOSS) INCOME BEFORE INCOME TAXES  (198)  224  30  120  98  11  64  83  432  (719)  353
Benefit from (provision for) income taxes  16  -  -  -  -  -  -  -  16  (11)  (11)
NET (LOSS) INCOME  (182)  224  30  120  98  11  64  83  448  (730)  342
Less: Accretion and accrued dividends on Series A and Series B Preferred Stock  (31)  -  -  -  -  -  -  -  (31)  (41)  (41)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $(213) $224 $30 $120 $98 $11 $64 $83 $417 $(771) $
301

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Source: Avaya Newsroom