Delaware | 001-38289 | 26-1119726 | ||||
(State or Other Jurisdiction of | (Commission File Number) | (IRS Employer Identification | ||||
Incorporation) | Number) | |||||
4655 Great America Parkway | ||||||
Santa Clara, California | 95054 | |||||
(Address of Principal Executive Office) | (Zip Code) |
Exhibit | Exhibit Name | |
99.1 | ||
99.2 | ||
99.3 |
AVAYA HOLDINGS CORP. | |||
Date: December 4, 2018 | By: | /s/ Patrick J. O’Malley, III | |
Name: | Patrick J. O’Malley, III | ||
Title: | Senior Vice President and Chief Financial Officer |
• | Revenue was $735 million |
• | Non-GAAP revenue was $770 million, of which 82.6% was from Software and Services, a fourth quarter record, and 56.2% was from recurring revenue |
• | Midmarket Public Cloud MRR grew 165% year-over-year |
• | Signed deals with significant Total Contract Value ("TCV"), including 12 deals over $5 million, and 117 deals over $1 million |
• | Revenue for the Combined periods described below was $2.851 billion |
• | Non-GAAP revenue for the Combined periods described below was $3.057 billion, of which 82.2% was from Software and Services and 57.4% was from recurring revenue, both annual records |
• | UCaaS/CCaaS seats grew 312% year-over-year |
• | Added over 6,800 new logos |
• | Signed deals with significant TCV including 15 deals over $10 million, 55 deals over $5 million and over 440 deals over $1 million |
GAAP | Non-GAAP (1) | |||||||||||||||||||||||
(In millions, except percentages) | Q4 2018 | Q3 2018 | Q4 2017 | Q4 2018 | Q3 2018 | Q4 2017 | ||||||||||||||||||
Revenue | $ | 735 | $ | 692 | $ | 790 | $ | 770 | $ | 755 | $ | 790 | ||||||||||||
Gross margin | 53.1 | % | 50.9 | % | 62.8 | % | 63.4 | % | 61.9 | % | 63.3 | % | ||||||||||||
Operating margin | 1.5 | % | (7.1 | )% | 8.7 | % | 20.4 | % | 20.0 | % | 23.2 | % |
• | Grew non-GAAP revenue 2% and bookings 6% quarter-over-quarter (excluding Networking) |
• | Added over 1,600 new logos |
• | Invested in Cogito, a leader in AI for contact center solutions |
• | Recognized for innovation and leadership: |
◦ | Avaya unified communications solutions named Customers’ Choice in 2018 Gartner Peer Insights |
◦ | Avaya VantageTM awarded Best Endpoint Solution of 2018 at UC Today |
◦ | Winner in three categories of the 2018 Conarec Awards |
◦ | Received 2018 Competitive Strategy Innovation and Leadership Award by Frost & Sullivan |
• | Grew product revenue during fiscal 2018 (excluding Networking) |
• | Grew TCV by 7%, year-over-year to over $2.4 billion (excluding Networking) |
• | Increased cloud revenue to approximately 11% of non-GAAP revenue, up from 9% during fiscal 2017. |
• | Invested in innovation and technology: |
◦ | Acquired Spoken Communications, a leading innovator in CCaaS solutions |
◦ | Launched 117 new products |
◦ | Global launch of new Avaya IP Office™, with enterprise-grade capabilities including cloud UCaaS with voice and video, meetings, team collaboration, and content sharing |
◦ | Established an Innovation Incubator, chartered with creating disruptive solutions with a focus on mobility, security and artificial intelligence |
◦ | Obtained first patent and customer implementations for groundbreaking Avaya Mobile Experience technology that optimizes the experience for mobile callers into the contact center |
◦ | Entered a strategic alliance including joint development to incorporate Afiniti International Holding’s AI and analytics into the industry-leading Avaya contact center platform |
• | Launched Cloud Master Agent program to accelerate sales of cloud solutions to small and midmarket businesses |
• | Named to Gartner's Leaders Quadrant for both Contact Center and Unified Communications Magic Quadrants, and received CRN’s prestigious 2018 5-Star Partner Program rating for ninth consecutive year |
• | GAAP revenue of $740-$765 million, non-GAAP revenue of $750-$775 million |
• | GAAP operating income of 4-7% of revenue, non-GAAP operating income of 21.5-22.5% of non-GAAP revenue |
• | GAAP operating income of $30-$50 million, non-GAAP operating income of $162-$173 million |
• | Cash taxes of approximately $8 million |
• | Adjusted EBITDA of $185-$197 million, or adjusted EBITDA margin of 24.5-25.5% of non-GAAP revenue |
• | Approximately 111 million shares outstanding |
• | GAAP revenue of $3.01-$3.12 billion, non-GAAP revenue of $3.05-$3.15 billion |
• | GAAP and non-GAAP R&D of $220-$225 million, or 15-16% of non-GAAP product revenue |
• | Operating income of $200-$280 million, non-GAAP operating income of $675-$730 million or 22-23% of non-GAAP revenue |
• | Adjusted EBITDA $763-$819 million, or 25-26% of non-GAAP revenue |
• | Approximately 113 million shares outstanding |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||
Three months ended September 30, 2018 | Three months ended September 30, 2017 | 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 | $ | 325 | $ | 343 | $ | 989 | $ | 253 | $ | 1,437 | |||||||||||
Services | 410 | 447 | 1,258 | 351 | 1,835 | ||||||||||||||||
735 | 790 | 2,247 | 604 | 3,272 | |||||||||||||||||
COSTS | |||||||||||||||||||||
Products: | |||||||||||||||||||||
Costs | 115 | 105 | 372 | 84 | 499 | ||||||||||||||||
Amortization of technology intangible assets | 43 | 4 | 135 | 3 | 20 | ||||||||||||||||
Services | 187 | 185 | 597 | 155 | 745 | ||||||||||||||||
345 | 294 | 1,104 | 242 | 1,264 | |||||||||||||||||
GROSS PROFIT | 390 | 496 | 1,143 | 362 | 2,008 | ||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||
Selling, general and administrative | 275 | 338 | 888 | 264 | 1,261 | ||||||||||||||||
Research and development | 62 | 47 | 172 | 38 | 225 | ||||||||||||||||
Amortization of intangible assets | 41 | 34 | 127 | 10 | 204 | ||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | 65 | ||||||||||||||||
Goodwill impairment | — | — | — | — | 52 | ||||||||||||||||
Restructuring charges, net | 1 | 8 | 81 | 14 | 30 | ||||||||||||||||
379 | 427 | 1,268 | 326 | 1,837 | |||||||||||||||||
OPERATING INCOME (LOSS) | 11 | 69 | (125 | ) | 36 | 171 | |||||||||||||||
Interest expense | (57 | ) | (17 | ) | (169 | ) | (14 | ) | (246 | ) | |||||||||||
Other income (expense), net | 3 | 2 | 35 | (2 | ) | (25 | ) | ||||||||||||||
Reorganization items, net | — | (21 | ) | — | 3,416 | (98 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (43 | ) | 33 | (259 | ) | 3,436 | (198 | ) | |||||||||||||
Benefit from (provision for) income taxes | 311 | (6 | ) | 546 | (459 | ) | 16 | ||||||||||||||
NET INCOME (LOSS) | $ | 268 | $ | 27 | $ | 287 | $ | 2,977 | $ | (182 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||||||
Basic | $ | 2.44 | $ | 0.04 | $ | 2.61 | $ | 5.19 | $ | (0.43 | ) | ||||||||||
Diluted | $ | 2.41 | $ | 0.04 | $ | 2.58 | $ | 5.19 | $ | (0.43 | ) | ||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 110.0 | 497.2 | 109.9 | 497.3 | 497.1 | ||||||||||||||||
Diluted | 111.4 | 502.5 | 111.1 | 497.3 | 497.1 |
Successor | Predecessor | |||||||
September 30, 2018 | September 30, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 700 | $ | 876 | ||||
Accounts receivable, net | 377 | 536 | ||||||
Inventory | 81 | 90 | ||||||
Other current assets | 170 | 275 | ||||||
TOTAL CURRENT ASSETS | 1,328 | 1,777 | ||||||
Property, plant and equipment, net | 250 | 200 | ||||||
Deferred income taxes, net | 29 | — | ||||||
Intangible assets, net | 3,234 | 311 | ||||||
Goodwill | 2,764 | 3,542 | ||||||
Other assets | 74 | 68 | ||||||
TOTAL ASSETS | $ | 7,679 | $ | 5,898 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Debt maturing within one year | $ | — | $ | 725 | ||||
Long-term debt, current portion | 29 | — | ||||||
Accounts payable | 266 | 282 | ||||||
Payroll and benefit obligations | 145 | 127 | ||||||
Deferred revenue | 484 | 614 | ||||||
Business restructuring reserve | 51 | 35 | ||||||
Other current liabilities | 148 | 90 | ||||||
TOTAL CURRENT LIABILITIES | 1,123 | 1,873 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, net of current portion | 3,097 | — | ||||||
Pension obligations | 671 | 513 | ||||||
Other post-retirement obligations | 176 | — | ||||||
Deferred income taxes, net | 140 | 32 | ||||||
Business restructuring reserve | 47 | 34 | ||||||
Other liabilities | 374 | 170 | ||||||
TOTAL NON-CURRENT LIABILITIES | 4,505 | 749 | ||||||
LIABILITIES SUBJECT TO COMPROMISE | — | 7,705 | ||||||
TOTAL LIABILITIES | 5,628 | 10,327 | ||||||
Commitments and contingencies | ||||||||
Predecessor equity awards on redeemable shares | — | 7 | ||||||
Predecessor preferred stock, $0.001 par value, 250,000 shares authorized at September 30, 2017 | ||||||||
Convertible Series B preferred stock; 48,922 shares issued and outstanding at September 30, 2017 | — | 393 | ||||||
Series A preferred stock; 125,000 shares issued and outstanding at September 30, 2017 | — | 184 | ||||||
Successor preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at September 30, 2018 | — | — | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Predecessor common stock, $0.001 par value; 750,000,000 shares authorized, 494,768,243 issued and outstanding at September 30, 2017 | — | — | ||||||
Successor common stock, $0.01 par value; 550,000,000 shares authorized, 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018 | 1 | — | ||||||
Additional paid-in capital | 1,745 | 2,389 | ||||||
Retained earnings (accumulated deficit) | 287 | (5,954 | ) | |||||
Accumulated other comprehensive income (loss) | 18 | (1,448 | ) | |||||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 2,051 | (5,013 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 7,679 | $ | 5,898 |
Successor | Predecessor | Non-GAAP Combined (1) | Predecessor | ||||||||||||||
(In millions) | 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, 2017 | |||||||||||||
Net cash provided by (used for): | |||||||||||||||||
Operating activities | $ | 202 | $ | (414 | ) | $ | (212 | ) | 291 | ||||||||
Investing activities | (134 | ) | 8 | (126 | ) | (70 | ) | ||||||||||
Financing activities | 273 | (102 | ) | 171 | 314 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (7 | ) | (2 | ) | (9 | ) | 5 | ||||||||||
Net increase (decrease) in cash and cash equivalents | 334 | (510 | ) | (176 | ) | 540 | |||||||||||
Cash and cash equivalents at beginning of period | 366 | 876 | 876 | 336 | |||||||||||||
Cash and cash equivalents at end of period | $ | 700 | $ | 366 | $ | 700 | $ | 876 |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
(In millions) | Three months ended September 30, 2018 | Three months ended June 30, 2018 | Three months ended September 30, 2017 | 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 income (loss) | $ | 268 | $ | (88 | ) | $ | 27 | $ | 287 | $ | 2,977 | $ | (182 | ) | |||||||||||
Interest expense | 57 | 56 | 17 | 169 | 14 | 246 | |||||||||||||||||||
Interest income | (3 | ) | (1 | ) | (2 | ) | (5 | ) | (2 | ) | (4 | ) | |||||||||||||
(Benefit from) provision for income taxes | (311 | ) | 20 | 6 | (546 | ) | 459 | (16 | ) | ||||||||||||||||
Depreciation and amortization | 120 | 119 | 63 | 384 | 31 | 326 | |||||||||||||||||||
EBITDA | 131 | 106 | 111 | 289 | 3,479 | 370 | |||||||||||||||||||
Impact of fresh start accounting adjustments | 29 | 54 | — | 196 | — | — | |||||||||||||||||||
Restructuring charges, net | 1 | 30 | 8 | 81 | 14 | 30 | |||||||||||||||||||
Advisory fees | 3 | 3 | 3 | 18 | 3 | 85 | |||||||||||||||||||
Acquisition-related costs | 4 | 4 | — | 15 | — | 1 | |||||||||||||||||||
Reorganization items, net | — | — | 21 | — | (3,416 | ) | 98 | ||||||||||||||||||
Non-cash share-based compensation | 6 | 7 | 1 | 19 | — | 11 | |||||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | — | 65 | |||||||||||||||||||
Goodwill impairment | — | — | — | — | — | 52 | |||||||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | 3 | |||||||||||||||||||
Loss on sale/disposal of long-lived assets, net | — | 2 | — | 4 | 1 | — | |||||||||||||||||||
Gain on sale of Networking business | — | — | (2 | ) | — | — | (2 | ) | |||||||||||||||||
Resolution of certain legal matters | — | — | 64 | — | 37 | 64 | |||||||||||||||||||
Change in fair value of Emergence Date Warrants | 8 | (6 | ) | — | 17 | — | — | ||||||||||||||||||
Gain on foreign currency transactions | (4 | ) | (25 | ) | (1 | ) | (28 | ) | — | (2 | ) | ||||||||||||||
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs | — | — | 20 | — | 17 | 90 | |||||||||||||||||||
Other | — | — | — | — | — | 1 | |||||||||||||||||||
Adjusted EBITDA | $ | 178 | $ | 175 | $ | 225 | $ | 611 | $ | 135 | $ | 866 |
Successor | Predecessor | Successor | ||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended Sept. 30, 2017 | Change | Three Months Ended | |||||||||||||||||||||||||||||||||||
Sept. 30, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Sept. 30, 2018 | Amount | Pct. | Pct., net of fx impact | June 30, 2018 (1) | Mar. 31, 2018 (2) | Q118 Non-GAAP Combined Results (3) | ||||||||||||||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 336 | $ | — | $ | 336 | $ | 343 | $ | (7 | ) | (2 | )% | (2 | )% | $ | 322 | $ | 317 | $ | 330 | |||||||||||||||||
Services | 434 | — | 434 | 447 | (13 | ) | (3 | )% | (2 | )% | 433 | 440 | 445 | |||||||||||||||||||||||||
Unallocated amounts | (35 | ) | 35 | — | — | — | n/a | n/a | — | — | — | |||||||||||||||||||||||||||
Total revenue | $ | 735 | $ | 35 | $ | 770 | $ | 790 | $ | (20 | ) | (3 | )% | (2 | )% | $ | 755 | $ | 757 | $ | 775 | |||||||||||||||||
Revenue by Geography | ||||||||||||||||||||||||||||||||||||||
U.S. | $ | 393 | $ | 24 | $ | 417 | $ | 447 | $ | (30 | ) | (7 | )% | (7 | )% | $ | 399 | $ | 409 | $ | 425 | |||||||||||||||||
International: | ||||||||||||||||||||||||||||||||||||||
EMEA | 196 | 6 | 202 | 194 | 8 | 4 | % | 5 | % | 202 | 196 | 208 | ||||||||||||||||||||||||||
APAC - Asia Pacific | 78 | 3 | 81 | 79 | 2 | 1 | % | 4 | % | 86 | 83 | 76 | ||||||||||||||||||||||||||
Americas International - Canada and Latin America | 68 | 2 | 70 | 70 | — | — | % | 5 | % | 68 | 69 | 66 | ||||||||||||||||||||||||||
Total International | 342 | 11 | 353 | 343 | 10 | 3 | % | 5 | % | 356 | 348 | 350 | ||||||||||||||||||||||||||
Total revenue | $ | 735 | $ | 35 | $ | 770 | $ | 790 | $ | (20 | ) | (3 | )% | (2 | )% | $ | 755 | $ | 757 | $ | 775 |
(1) Q318 Non-GAAP Results | (2) Q218 Non-GAAP Results | (3) Q118 Non-GAAP Combined Results | |||||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||
June 30, 2018 | Adj. for Fresh Start Accounting | Non-GAAP June 30, 2018 | Mar. 31, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Mar. 31, 2018 | Period from Dec. 16, 2017 through Dec. 31, 2017 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Adj. for Fresh Start Accounting | Q118 Non-GAAP Combined Results | ||||||||||||||||||||||||||||||||
Revenue by Segment | |||||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 322 | $ | — | $ | 322 | $ | 317 | — | $ | 317 | $ | 77 | $ | 253 | — | $ | 330 | |||||||||||||||||||||||
Services | 433 | — | 433 | 440 | — | 440 | 94 | 351 | — | 445 | |||||||||||||||||||||||||||||||
Unallocated amounts | (63 | ) | 63 | — | (85 | ) | 85 | — | (23 | ) | — | 23 | — | ||||||||||||||||||||||||||||
Total revenue | $ | 692 | $ | 63 | $ | 755 | $ | 672 | $ | 85 | $ | 757 | $ | 148 | $ | 604 | $ | 23 | $ | 775 | |||||||||||||||||||||
Revenue by Geography | |||||||||||||||||||||||||||||||||||||||||
U.S. | $ | 356 | $ | 43 | $ | 399 | $ | 354 | $ | 55 | $ | 409 | $ | 71 | $ | 331 | $ | 13 | $ | 425 | |||||||||||||||||||||
International: | |||||||||||||||||||||||||||||||||||||||||
EMEA | 193 | 9 | 202 | 178 | 18 | 196 | 42 | 166 | 7 | 208 | |||||||||||||||||||||||||||||||
APAC - Asia Pacific | 81 | 5 | 86 | 80 | 3 | 83 | 19 | 57 | 2 | 76 | |||||||||||||||||||||||||||||||
Americas International - Canada and Latin America | 62 | 6 | 68 | 60 | 9 | 69 | 16 | 50 | 1 | 66 | |||||||||||||||||||||||||||||||
Total International | 336 | 20 | 356 | 321 | 30 | 348 | 77 | 273 | 10 | 350 | |||||||||||||||||||||||||||||||
Total revenue | $ | 692 | $ | 63 | $ | 755 | $ | 672 | $ | 85 | $ | 757 | $ | 148 | $ | 604 | $ | 23 | $ | 775 |
Successor | Predecessor | Q118 Non-GAAP Combined Results | Predecessor | ||||||||||||||||||||||||||
Three Months Ended | Period from Dec. 16, 2017 through Dec. 31, 2017 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Three months ended Sept. 30, 2017 | ||||||||||||||||||||||||||
(In millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin | |||||||||||||||||||||||||||||
Gross Profit | $ | 390 | $ | 352 | $ | 323 | $ | 78 | $ | 362 | $ | 440 | $ | 496 | |||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 54 | 69 | 106 | 35 | — | ||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 10 | 4 | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 2 | 2 | — | — | ||||||||||||||||||||||||
Share-based compensation | 1 | — | — | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 488 | $ | 467 | $ | 472 | $ | 485 | $ | 500 | |||||||||||||||||||
GAAP Gross Margin | 53.1 | % | 50.9 | % | 48.1 | % | 52.7 | % | 59.9 | % | 58.5 | % | 62.8 | % | |||||||||||||||
Non-GAAP Gross Margin | 63.4 | % | 61.9 | % | 62.4 | % | 62.6 | % | 63.3 | % | |||||||||||||||||||
Reconciliation of Non-GAAP Operating Income | |||||||||||||||||||||||||||||
Operating Income (Loss) | $ | 11 | $ | (49 | ) | $ | (89 | ) | $ | 2 | $ | 36 | $ | 38 | $ | 69 | |||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 48 | 71 | 107 | 33 | — | ||||||||||||||||||||||||
Amortization of intangible assets | 84 | 83 | 81 | 27 | 38 | ||||||||||||||||||||||||
Restructuring charges, net | 1 | 30 | 40 | 24 | 8 | ||||||||||||||||||||||||
Acquisition-related costs | 4 | 4 | 7 | — | — | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 2 | 2 | 1 | — | ||||||||||||||||||||||||
Advisory fees | 3 | 3 | 4 | 11 | 3 | ||||||||||||||||||||||||
Share-based compensation | 6 | 7 | 5 | 1 | 1 | ||||||||||||||||||||||||
Costs in connection with certain legal matters | — | — | — | 37 | 64 | ||||||||||||||||||||||||
Non-GAAP Operating Income | $ | 157 | $ | 151 | $ | 157 | $ | 172 | $ | 183 | |||||||||||||||||||
GAAP Operating Margin | 1.5 | % | -7.1 | % | -13.2 | % | 1.4 | % | 6.0 | % | 5.1 | % | 8.7 | % | |||||||||||||||
Non-GAAP Operating Margin | 20.4 | % | 20.0 | % | 20.7 | % | 22.2 | % | 23.2 | % |
Successor | Predecessor | Q118 Non-GAAP Combined Results | Predecessor | ||||||||||||||||||||||||||
Three months ended | Period from December 16, 2017 through December 31, 2017 | Period from October 1, 2017 through December 15, 2017 | Three months ended Sept. 30, 2017 | ||||||||||||||||||||||||||
(In millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products | |||||||||||||||||||||||||||||
Revenue | $ | 325 | $ | 300 | $ | 293 | $ | 71 | $ | 253 | $ | 324 | $ | 343 | |||||||||||||||
Costs | 115 | 114 | 110 | 33 | 84 | 117 | 105 | ||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 7 | 3 | 10 | 4 | ||||||||||||||||||||||
GAAP Gross Profit | 167 | 142 | 142 | 31 | 166 | 197 | 234 | ||||||||||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 16 | 24 | 33 | 11 | — | ||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 10 | 4 | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 1 | 1 | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 226 | $ | 211 | $ | 217 | $ | 218 | $ | 238 | |||||||||||||||||||
GAAP Gross Margin | 51.4 | % | 47.3 | % | 48.5 | % | 43.7 | % | 65.6 | % | 60.8 | % | 68.2 | % | |||||||||||||||
Non-GAAP Gross Margin | 67.3 | % | 65.5 | % | 68.5 | % | 66.1 | % | 69.4 | % | |||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services | |||||||||||||||||||||||||||||
Revenue | $ | 410 | $ | 392 | $ | 379 | $ | 77 | $ | 351 | $ | 428 | $ | 447 | |||||||||||||||
Costs | 187 | 182 | 198 | 30 | 155 | 185 | 185 | ||||||||||||||||||||||
GAAP Gross Profit | 223 | 210 | 181 | 47 | 196 | 243 | 262 | ||||||||||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 38 | 45 | 73 | 24 | — | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 1 | 1 | — | — | ||||||||||||||||||||||||
Share-based compensation | 1 | — | — | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 262 | $ | 256 | $ | 255 | $ | 267 | $ | 262 | |||||||||||||||||||
GAAP Gross Margin | 54.4 | % | 53.6 | % | 47.8 | % | 61.0 | % | 55.8 | % | 56.8 | % | 58.6 | % | |||||||||||||||
Non-GAAP Gross Margin | 60.4 | % | 59.1 | % | 58.0 | % | 60.0 | % | 58.6 | % |
Q417 | ||||||||||||||||||||||||||||||||||||||||||||
GAAP Results | Adj. for Fresh Start Accounting | Amortization of Intangible Assets | Restructuring Charges, net | Acquisition Costs | Share-based Comp | Advisory Fees | Other Costs, net | Non-GAAP Results | GAAP Results | Non-GAAP Results | ||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 325 | $ | 11 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 336 | $ | 343 | $ | 343 | ||||||||||||||||||||||
Services | 410 | 24 | — | — | — | — | — | — | 434 | 447 | 447 | |||||||||||||||||||||||||||||||||
735 | 35 | — | — | — | — | — | — | 770 | 790 | 790 | ||||||||||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||||||||||||||
Products: | ||||||||||||||||||||||||||||||||||||||||||||
Costs | 115 | (5 | ) | — | — | — | — | — | — | 110 | 105 | 105 | ||||||||||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | — | (43 | ) | — | — | — | — | — | — | 4 | — | ||||||||||||||||||||||||||||||||
Services | 187 | (14 | ) | — | — | — | (1 | ) | — | — | 172 | 185 | 185 | |||||||||||||||||||||||||||||||
345 | (19 | ) | (43 | ) | — | — | (1 | ) | — | — | 282 | 294 | 290 | |||||||||||||||||||||||||||||||
GROSS PROFIT | 390 | 54 | 43 | — | — | 1 | — | — | 488 | 496 | 500 | |||||||||||||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 275 | 17 | — | — | (4 | ) | (5 | ) | (3 | ) | — | 280 | 338 | 270 | ||||||||||||||||||||||||||||||
Research and development | 62 | (11 | ) | — | — | — | — | — | — | 51 | 47 | 47 | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | 41 | — | (41 | ) | — | — | — | — | — | — | 34 | — | ||||||||||||||||||||||||||||||||
Restructuring charges, net | 1 | — | — | (1 | ) | — | — | — | — | — | 8 | — | ||||||||||||||||||||||||||||||||
379 | 6 | (41 | ) | (1 | ) | (4 | ) | (5 | ) | (3 | ) | — | 331 | 427 | 317 | |||||||||||||||||||||||||||||
OPERATING INCOME | 11 | 48 | 84 | 1 | 4 | 6 | 3 | — | 157 | 69 | 183 | |||||||||||||||||||||||||||||||||
Interest expense | (57 | ) | — | — | — | — | — | — | — | (57 | ) | (17 | ) | (17 | ) | |||||||||||||||||||||||||||||
Other income (expense), net | 3 | — | — | — | — | — | — | 1 | 4 | 2 | (1 | ) | ||||||||||||||||||||||||||||||||
Reorganization items, net | — | — | — | — | — | — | — | — | — | (21 | ) | — | ||||||||||||||||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | $ | (43 | ) | $ | 48 | $ | 84 | $ | 1 | $ | 4 | $ | 6 | $ | 3 | $ | 1 | $ | 104 | $ | 33 | $ | 165 |
Successor | Predecessor | FY17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period from Dec. 16, 2017 through Sept. 30, 2018 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Combined Results | Adj. for Fresh Start Acctg. | Amt. of Int. Assets | Restr. Charges, net | Acq. Costs | Loss on Disposal of Long-lived Assets | Reorg items, net | Share-based Comp | Costs of Certain Legal Matters | Adv. Fees | Other Costs, net | Non-GAAP Results | GAAP Results | Non-GAAP Results | |||||||||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 989 | $ | 253 | $ | 1,242 | $ | 63 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,305 | $ | 1,437 | $ | 1,437 | ||||||||||||||||||||||||||||||
Services | 1,258 | 351 | 1,609 | 143 | — | — | — | — | — | — | — | — | — | 1,752 | 1,835 | 1,835 | ||||||||||||||||||||||||||||||||||||||||||||||
2,247 | 604 | 2,851 | 206 | — | — | — | — | — | — | — | — | — | 3,057 | 3,272 | 3,272 | |||||||||||||||||||||||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Products: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Costs | 372 | 84 | 456 | (21 | ) | — | — | — | (2 | ) | — | — | — | — | — | 433 | 499 | 499 | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of technology intangible assets | 135 | 3 | 138 | — | (138 | ) | — | — | — | — | — | — | — | — | — | 20 | — | |||||||||||||||||||||||||||||||||||||||||||||
Services | 597 | 155 | 752 | (37 | ) | — | — | — | (2 | ) | — | (1 | ) | — | — | — | 712 | 745 | 745 | |||||||||||||||||||||||||||||||||||||||||||
1,104 | 242 | 1,346 | (58 | ) | (138 | ) | — | — | (4 | ) | — | (1 | ) | — | — | — | 1,145 | 1,264 | 1,244 | |||||||||||||||||||||||||||||||||||||||||||
GROSS PROFIT | 1,143 | 362 | 1,505 | 264 | 138 | — | — | 4 | — | 1 | — | — | — | 1,912 | 2,008 | 2,028 | ||||||||||||||||||||||||||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 888 | 264 | 1,152 | 16 | — | — | (15 | ) | (1 | ) | — | (17 | ) | (37 | ) | (21 | ) | — | 1,077 | 1,261 | 1,100 | |||||||||||||||||||||||||||||||||||||||||
Research and development | 172 | 38 | 210 | (11 | ) | — | — | — | — | — | (1 | ) | — | — | — | 198 | 225 | 225 | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 127 | 10 | 137 | — | (137 | ) | — | — | — | — | — | — | — | — | — | 204 | — | |||||||||||||||||||||||||||||||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 65 | — | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill impairment | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 52 | — | ||||||||||||||||||||||||||||||||||||||||||||||
Restructuring charges, net | 81 | 14 | 95 | — | — | (95 | ) | — | — | — | — | — | — | — | — | 30 | — | |||||||||||||||||||||||||||||||||||||||||||||
1,268 | 326 | 1,594 | 5 | (137 | ) | (95 | ) | (15 | ) | (1 | ) | — | (18 | ) | (37 | ) | (21 | ) | — | 1,275 | 1,837 | 1,325 | ||||||||||||||||||||||||||||||||||||||||
OPERATING (LOSS) INCOME | (125 | ) | 36 | (89 | ) | 259 | 275 | 95 | 15 | 5 | — | 19 | 37 | 21 | — | 637 | 171 | 703 | ||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (169 | ) | (14 | ) | (183 | ) | — | — | — | — | — | — | — | — | — | — | (183 | ) | (246 | ) | (246 | ) | ||||||||||||||||||||||||||||||||||||||||
Other income (expense), net | 35 | (2 | ) | 33 | — | — | — | — | — | — | — | — | — | (18 | ) | 15 | (25 | ) | (31 | ) | ||||||||||||||||||||||||||||||||||||||||||
Reorganization items, net | — | 3,416 | 3,416 | — | — | — | — | — | (3,416 | ) | — | — | — | — | — | (98 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | $ | (259 | ) | $ | 3,436 | $ | 3,177 | $ | 259 | $ | 275 | $ | 95 | $ | 15 | $ | 5 | $ | (3,416 | ) | $ | 19 | $ | 37 | $ | 21 | $ | (18 | ) | $ | 469 | $ | (198 | ) | $ | 426 |
• | GAAP revenue of $740-$765 million, non-GAAP revenue of $750-$775 million |
• | GAAP operating income of 4-7% of revenue, non-GAAP operating income of 21.5-22.5% of non-GAAP revenue |
• | GAAP operating income of $30-$50 million, non-GAAP operating income $162-$173 million |
• | Cash taxes of approximately $8 million |
• | Adjusted EBITDA of $185-$197 million or adjusted EBITDA margin of 24.5-25.5% of non-GAAP revenue |
• | Approximately 111 million shares outstanding |
• | GAAP revenue of $3.01-$3.12 billion, non-GAAP revenue of $3.05-$3.15 billion |
• | GAAP and non-GAAP R&D of $220-$225 million, or 15-16% of product revenue |
• | Operating income of $200-$280 million, non-GAAP operating income of $675-$730 million or 22-23% of non-GAAP revenue |
• | Adjusted EBITDA $763-$819 million, or 25-26% of non-GAAP revenue |
• | Approximately 113 million shares outstanding |
• | Cloud and innovation 12-14% of non-GAAP revenue |
• | Recurring revenue 58-59% of non-GAAP revenue |
• | Software and Services 83-85% of non-GAAP revenue |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||
Three months ended September 30, 2018 | Three months ended September 30, 2017 | 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 | $ | 325 | $ | 343 | $ | 989 | $ | 253 | $ | 1,437 | |||||||||||
Services | 410 | 447 | 1,258 | 351 | 1,835 | ||||||||||||||||
735 | 790 | 2,247 | 604 | 3,272 | |||||||||||||||||
COSTS | |||||||||||||||||||||
Products: | |||||||||||||||||||||
Costs | 115 | 105 | 372 | 84 | 499 | ||||||||||||||||
Amortization of technology intangible assets | 43 | 4 | 135 | 3 | 20 | ||||||||||||||||
Services | 187 | 185 | 597 | 155 | 745 | ||||||||||||||||
345 | 294 | 1,104 | 242 | 1,264 | |||||||||||||||||
GROSS PROFIT | 390 | 496 | 1,143 | 362 | 2,008 | ||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||
Selling, general and administrative | 275 | 338 | 888 | 264 | 1,261 | ||||||||||||||||
Research and development | 62 | 47 | 172 | 38 | 225 | ||||||||||||||||
Amortization of intangible assets | 41 | 34 | 127 | 10 | 204 | ||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | 65 | ||||||||||||||||
Goodwill impairment | — | — | — | — | 52 | ||||||||||||||||
Restructuring charges, net | 1 | 8 | 81 | 14 | 30 | ||||||||||||||||
379 | 427 | 1,268 | 326 | 1,837 | |||||||||||||||||
OPERATING INCOME (LOSS) | 11 | 69 | (125 | ) | 36 | 171 | |||||||||||||||
Interest expense | (57 | ) | (17 | ) | (169 | ) | (14 | ) | (246 | ) | |||||||||||
Other income (expense), net | 3 | 2 | 35 | (2 | ) | (25 | ) | ||||||||||||||
Reorganization items, net | — | (21 | ) | — | 3,416 | (98 | ) | ||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (43 | ) | 33 | (259 | ) | 3,436 | (198 | ) | |||||||||||||
Benefit from (provision for) income taxes | 311 | (6 | ) | 546 | (459 | ) | 16 | ||||||||||||||
NET INCOME (LOSS) | $ | 268 | $ | 27 | $ | 287 | $ | 2,977 | $ | (182 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||||||
Basic | $ | 2.44 | $ | 0.04 | $ | 2.61 | $ | 5.19 | $ | (0.43 | ) | ||||||||||
Diluted | $ | 2.41 | $ | 0.04 | $ | 2.58 | $ | 5.19 | $ | (0.43 | ) | ||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 110.0 | 497.2 | 109.9 | 497.3 | 497.1 | ||||||||||||||||
Diluted | 111.4 | 502.5 | 111.1 | 497.3 | 497.1 |
Successor | Predecessor | |||||||
September 30, 2018 | September 30, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 700 | $ | 876 | ||||
Accounts receivable, net | 377 | 536 | ||||||
Inventory | 81 | 90 | ||||||
Other current assets | 170 | 275 | ||||||
TOTAL CURRENT ASSETS | 1,328 | 1,777 | ||||||
Property, plant and equipment, net | 250 | 200 | ||||||
Deferred income taxes, net | 29 | — | ||||||
Intangible assets, net | 3,234 | 311 | ||||||
Goodwill | 2,764 | 3,542 | ||||||
Other assets | 74 | 68 | ||||||
TOTAL ASSETS | $ | 7,679 | $ | 5,898 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Debt maturing within one year | $ | — | $ | 725 | ||||
Long-term debt, current portion | 29 | — | ||||||
Accounts payable | 266 | 282 | ||||||
Payroll and benefit obligations | 145 | 127 | ||||||
Deferred revenue | 484 | 614 | ||||||
Business restructuring reserve | 51 | 35 | ||||||
Other current liabilities | 148 | 90 | ||||||
TOTAL CURRENT LIABILITIES | 1,123 | 1,873 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, net of current portion | 3,097 | — | ||||||
Pension obligations | 671 | 513 | ||||||
Other post-retirement obligations | 176 | — | ||||||
Deferred income taxes, net | 140 | 32 | ||||||
Business restructuring reserve | 47 | 34 | ||||||
Other liabilities | 374 | 170 | ||||||
TOTAL NON-CURRENT LIABILITIES | 4,505 | 749 | ||||||
LIABILITIES SUBJECT TO COMPROMISE | — | 7,705 | ||||||
TOTAL LIABILTIES | 5,628 | 10,327 | ||||||
Commitments and contingencies | ||||||||
Predecessor equity awards on redeemable shares | — | 7 | ||||||
Predecessor preferred stock, $0.001 par value, 250,000 shares authorized at September 30, 2017 | ||||||||
Convertible Series B preferred stock; 48,922 shares issued and outstanding at September 30, 2017 | — | 393 | ||||||
Series A preferred stock; 125,000 shares issued and outstanding at September 30, 2017 | — | 184 | ||||||
Successor preferred stock, $0.01 par value; 55,000,000 shares authorized, no shares issued or outstanding at September 30, 2018 | — | — | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Predecessor common stock, $0.001 par value; 750,000,000 shares authorized, 494,768,243 shares issued and outstanding at September 30, 2017 | — | — | ||||||
Successor common stock, $0.01 par value; 550,000,000 shares authorized, 110,218,653 shares issued and 110,012,790 shares outstanding at September 30, 2018 | 1 | — | ||||||
Additional paid-in capital | 1,745 | 2,389 | ||||||
Retained earnings (Accumulated deficit) | 287 | (5,954 | ) | |||||
Accumulated other comprehensive income (loss) | 18 | (1,448 | ) | |||||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 2,051 | (5,013 | ) | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 7,679 | $ | 5,898 |
Successor | Predecessor | Non-GAAP Combined (1) | Predecessor | ||||||||||||||
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, 2018 | ||||||||||||||
(In millions) | |||||||||||||||||
Net cash provided by (used for): | |||||||||||||||||
Operating activities | $ | 202 | $ | (414 | ) | $ | (212 | ) | $ | 291 | |||||||
Investing activities | (134 | ) | 8 | (126 | ) | (70 | ) | ||||||||||
Financing activities | 273 | (102 | ) | 171 | 314 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (7 | ) | (2 | ) | (9 | ) | 5 | ||||||||||
Net increase (decrease) in cash and cash equivalents | 334 | (510 | ) | (176 | ) | 540 | |||||||||||
Cash and cash equivalents at beginning of period | 366 | 876 | 876 | 336 | |||||||||||||
Cash and cash equivalents at end of period | $ | 700 | $ | 366 | $ | 700 | $ | 876 |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
(In millions) | Three months ended September 30, 2018 | Three months ended June 30, 2018 | Three months ended September 30, 2017 | 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 income (loss) | $ | 268 | $ | (88 | ) | $ | 27 | $ | 287 | $ | 2,977 | $ | (182 | ) | |||||||||||
Interest expense | 57 | 56 | 17 | 169 | 14 | 246 | |||||||||||||||||||
Interest income | (3 | ) | (1 | ) | (2 | ) | (5 | ) | (2 | ) | (4 | ) | |||||||||||||
(Benefit from) provision for income taxes | (311 | ) | 20 | 6 | (546 | ) | 459 | (16 | ) | ||||||||||||||||
Depreciation and amortization | 120 | 119 | 63 | 384 | 31 | 326 | |||||||||||||||||||
EBITDA | 131 | 106 | 111 | 289 | 3,479 | 370 | |||||||||||||||||||
Impact of fresh start accounting adjustments | 29 | 54 | — | 196 | — | — | |||||||||||||||||||
Restructuring charges, net | 1 | 30 | 8 | 81 | 14 | 30 | |||||||||||||||||||
Advisory fees | 3 | 3 | 3 | 18 | 3 | 85 | |||||||||||||||||||
Acquisition-related costs | 4 | 4 | — | 15 | — | 1 | |||||||||||||||||||
Reorganization items, net | — | — | 21 | — | (3,416 | ) | 98 | ||||||||||||||||||
Non-cash share-based compensation | 6 | 7 | 1 | 19 | — | 11 | |||||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | — | 65 | |||||||||||||||||||
Goodwill impairment | — | — | — | — | — | 52 | |||||||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | 3 | |||||||||||||||||||
Loss on sale/disposal of long-lived assets, net | — | 2 | — | 4 | 1 | — | |||||||||||||||||||
Gain on sale of Networking business | — | — | (2 | ) | — | — | (2 | ) | |||||||||||||||||
Resolution of certain legal matters | — | — | 64 | — | 37 | 64 | |||||||||||||||||||
Change in fair value of Emergence Date Warrants | 8 | (6 | ) | — | 17 | — | — | ||||||||||||||||||
Gain on foreign currency transactions | (4 | ) | (25 | ) | (1 | ) | (28 | ) | — | (2 | ) | ||||||||||||||
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs | — | — | 20 | — | 17 | 90 | |||||||||||||||||||
Other | — | — | — | — | — | 1 | |||||||||||||||||||
Adjusted EBITDA | $ | 178 | $ | 175 | $ | 225 | $ | 611 | $ | 135 | $ | 866 |
Successor | Predecessor | Successor | ||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended Sept. 30, 2017 | Change | Three Months Ended | |||||||||||||||||||||||||||||||||||
Sept. 30, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Sept. 30, 2018 | Amount | Pct. | Pct., net of fx impact | June 30, 2018 (1) | Mar. 31, 2018 (2) | Q118 Non-GAAP Combined Results (3) | ||||||||||||||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 336 | $ | — | $ | 336 | $ | 343 | $ | (7 | ) | (2 | )% | (2 | )% | $ | 322 | $ | 317 | $ | 330 | |||||||||||||||||
Services | 434 | — | 434 | 447 | (13 | ) | (3 | )% | (2 | )% | 433 | 440 | 445 | |||||||||||||||||||||||||
Unallocated amounts | (35 | ) | 35 | — | — | — | n/a | n/a | — | — | — | |||||||||||||||||||||||||||
Total revenue | $ | 735 | $ | 35 | $ | 770 | $ | 790 | $ | (20 | ) | (3 | )% | (2 | )% | $ | 755 | $ | 757 | $ | 775 | |||||||||||||||||
Revenue by Geography | ||||||||||||||||||||||||||||||||||||||
U.S. | $ | 393 | $ | 24 | $ | 417 | $ | 447 | $ | (30 | ) | (7 | )% | (7 | )% | $ | 399 | $ | 409 | $ | 425 | |||||||||||||||||
International: | ||||||||||||||||||||||||||||||||||||||
EMEA | 196 | 6 | 202 | 194 | 8 | 4 | % | 5 | % | 202 | 196 | 208 | ||||||||||||||||||||||||||
APAC - Asia Pacific | 78 | 3 | 81 | 79 | 2 | 1 | % | 4 | % | 86 | 83 | 76 | ||||||||||||||||||||||||||
Americas International - Canada and Latin America | 68 | 2 | 70 | 70 | — | — | % | 5 | % | 68 | 69 | 66 | ||||||||||||||||||||||||||
Total International | 342 | 11 | 353 | 343 | 10 | 3 | % | 5 | % | 356 | 348 | 350 | ||||||||||||||||||||||||||
Total revenue | $ | 735 | $ | 35 | $ | 770 | $ | 790 | $ | (20 | ) | (3 | )% | (2 | )% | $ | 755 | $ | 757 | $ | 775 |
(1) Q318 Non-GAAP Results | (2) Q218 Non-GAAP Results | (3) Q118 Non-GAAP Combined Results | |||||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||
June 30, 2018 | Adj. for Fresh Start Accounting | Non-GAAP June 30, 2018 | Mar. 31, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Mar. 31, 2018 | Period from Dec. 16, 2017 through Dec. 31, 2017 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Adj. for Fresh Start Accounting | Q118 Non-GAAP Combined Results | ||||||||||||||||||||||||||||||||
Revenue by Segment | |||||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 322 | $ | — | $ | 322 | $ | 317 | — | $ | 317 | $ | 77 | $ | 253 | — | $ | 330 | |||||||||||||||||||||||
Services | 433 | — | 433 | 440 | — | 440 | 94 | 351 | — | 445 | |||||||||||||||||||||||||||||||
Unallocated amounts | (63 | ) | 63 | — | (85 | ) | 85 | — | (23 | ) | — | 23 | — | ||||||||||||||||||||||||||||
Total revenue | $ | 692 | $ | 63 | $ | 755 | $ | 672 | $ | 85 | $ | 757 | $ | 148 | $ | 604 | $ | 23 | $ | 775 | |||||||||||||||||||||
Revenue by Geography | |||||||||||||||||||||||||||||||||||||||||
U.S. | $ | 356 | $ | 43 | $ | 399 | $ | 354 | $ | 55 | $ | 409 | $ | 71 | $ | 331 | $ | 13 | $ | 425 | |||||||||||||||||||||
International: | |||||||||||||||||||||||||||||||||||||||||
EMEA | 193 | 9 | 202 | 178 | 18 | 196 | 42 | 166 | 7 | 208 | |||||||||||||||||||||||||||||||
APAC - Asia Pacific | 81 | 5 | 86 | 80 | 3 | 83 | 19 | 57 | 2 | 76 | |||||||||||||||||||||||||||||||
Americas International - Canada and Latin America | 62 | 6 | 68 | 60 | 9 | 69 | 16 | 50 | 1 | 66 | |||||||||||||||||||||||||||||||
Total International | 336 | 20 | 356 | 321 | 30 | 348 | 77 | 273 | 10 | 350 | |||||||||||||||||||||||||||||||
Total revenue | $ | 692 | $ | 63 | $ | 755 | $ | 672 | $ | 85 | $ | 757 | $ | 148 | $ | 604 | $ | 23 | $ | 775 |
Successor | Predecessor | Q118 Non-GAAP Combined Results | Predecessor | ||||||||||||||||||||||||||
Three Months Ended | Period from Dec. 16, 2017 through Dec. 31, 2017 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Three months ended Sept. 30, 2017 | ||||||||||||||||||||||||||
(In millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin | |||||||||||||||||||||||||||||
Gross Profit | $ | 390 | $ | 352 | $ | 323 | $ | 78 | $ | 362 | $ | 440 | $ | 496 | |||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 54 | 69 | 106 | 35 | — | ||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 10 | 4 | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 2 | 2 | — | — | ||||||||||||||||||||||||
Share-based compensation | 1 | — | — | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 488 | $ | 467 | $ | 472 | $ | 485 | $ | 500 | |||||||||||||||||||
GAAP Gross Margin | 53.1 | % | 50.9 | % | 48.1 | % | 52.7 | % | 59.9 | % | 58.5 | % | 62.8 | % | |||||||||||||||
Non-GAAP Gross Margin | 63.4 | % | 61.9 | % | 62.4 | % | 62.6 | % | 63.3 | % | |||||||||||||||||||
Reconciliation of Non-GAAP Operating Income | |||||||||||||||||||||||||||||
Operating Income (Loss) | $ | 11 | $ | (49 | ) | $ | (89 | ) | $ | 2 | $ | 36 | $ | 38 | $ | 69 | |||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 48 | 71 | 107 | 33 | — | ||||||||||||||||||||||||
Amortization of intangible assets | 84 | 83 | 81 | 27 | 38 | ||||||||||||||||||||||||
Restructuring charges, net | 1 | 30 | 40 | 24 | 8 | ||||||||||||||||||||||||
Acquisition-related costs | 4 | 4 | 7 | — | — | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 2 | 2 | 1 | — | ||||||||||||||||||||||||
Advisory fees | 3 | 3 | 4 | 11 | 3 | ||||||||||||||||||||||||
Share-based compensation | 6 | 7 | 5 | 1 | 1 | ||||||||||||||||||||||||
Costs in connection with certain legal matters | — | — | — | 37 | 64 | ||||||||||||||||||||||||
Non-GAAP Operating Income | $ | 157 | $ | 151 | $ | 157 | $ | 172 | $ | 183 | |||||||||||||||||||
GAAP Operating Margin | 1.5 | % | -7.1 | % | -13.2 | % | 1.4 | % | 6.0 | % | 5.1 | % | 8.7 | % | |||||||||||||||
Non-GAAP Operating Margin | 20.4 | % | 20.0 | % | 20.7 | % | 22.2 | % | 23.2 | % |
Successor | Predecessor | Q118 Non-GAAP Combined Results | Predecessor | ||||||||||||||||||||||||||
Three months ended | Period from Dec. 16, 2017 through Dec. 31, 2017 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Three months ended Sept. 30, 2017 | ||||||||||||||||||||||||||
(In millions) | Sept. 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products | |||||||||||||||||||||||||||||
Revenue | $ | 325 | $ | 300 | $ | 293 | $ | 71 | $ | 253 | $ | 324 | $ | 343 | |||||||||||||||
Costs | 115 | 114 | 110 | 33 | 84 | 117 | 105 | ||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 7 | 3 | 10 | 4 | ||||||||||||||||||||||
GAAP Gross Profit | 167 | 142 | 142 | 31 | 166 | 197 | 234 | ||||||||||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 16 | 24 | 33 | 11 | — | ||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | 44 | 41 | 10 | 4 | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 1 | 1 | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 226 | $ | 211 | $ | 217 | $ | 218 | $ | 238 | |||||||||||||||||||
GAAP Gross Margin | 51.4 | % | 47.3 | % | 48.5 | % | 43.7 | % | 65.6 | % | 60.8 | % | 68.2 | % | |||||||||||||||
Non-GAAP Gross Margin | 67.3 | % | 65.5 | % | 68.5 | % | 66.1 | % | 69.4 | % | |||||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services | |||||||||||||||||||||||||||||
Revenue | $ | 410 | $ | 392 | $ | 379 | $ | 77 | $ | 351 | $ | 428 | $ | 447 | |||||||||||||||
Costs | 187 | 182 | 198 | 30 | 155 | 185 | 185 | ||||||||||||||||||||||
GAAP Gross Profit | 223 | 210 | 181 | 47 | 196 | 243 | 262 | ||||||||||||||||||||||
Items excluded: | |||||||||||||||||||||||||||||
Adj. for fresh start accounting | 38 | 45 | 73 | 24 | — | ||||||||||||||||||||||||
Loss on disposal of long-lived assets | — | 1 | 1 | — | — | ||||||||||||||||||||||||
Share-based compensation | 1 | — | — | — | — | ||||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 262 | $ | 256 | $ | 255 | $ | 267 | $ | 262 | |||||||||||||||||||
GAAP Gross Margin | 54.4 | % | 53.6 | % | 47.8 | % | 61.0 | % | 55.8 | % | 56.8 | % | 58.6 | % | |||||||||||||||
Non-GAAP Gross Margin | 60.4 | % | 59.1 | % | 58.0 | % | 60.0 | % | 58.6 | % |
Q417 | ||||||||||||||||||||||||||||||||||||||||||||
GAAP Results | Adj. for Fresh Start Accounting | Amortization of Intangible Assets | Restructuring Charges, net | Acquisition Costs | Share-based Comp | Advisory Fees | Other Costs, net | Non-GAAP Results | GAAP Results | Non-GAAP Results | ||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 325 | $ | 11 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 336 | $ | 343 | $ | 343 | ||||||||||||||||||||||
Services | 410 | 24 | — | — | — | — | — | — | 434 | 447 | 447 | |||||||||||||||||||||||||||||||||
735 | 35 | — | — | — | — | — | — | 770 | 790 | 790 | ||||||||||||||||||||||||||||||||||
Costs | ||||||||||||||||||||||||||||||||||||||||||||
Products: | ||||||||||||||||||||||||||||||||||||||||||||
Costs | 115 | (5 | ) | — | — | — | — | — | — | 110 | 105 | 105 | ||||||||||||||||||||||||||||||||
Amortization of technology intangible assets | 43 | — | (43 | ) | — | — | — | — | — | — | 4 | — | ||||||||||||||||||||||||||||||||
Services | 187 | (14 | ) | — | — | — | (1 | ) | — | — | 172 | 185 | 185 | |||||||||||||||||||||||||||||||
345 | (19 | ) | (43 | ) | — | — | (1 | ) | — | — | 282 | 294 | 290 | |||||||||||||||||||||||||||||||
GROSS PROFIT | 390 | 54 | 43 | — | — | 1 | — | — | 488 | 496 | 500 | |||||||||||||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 275 | 17 | — | — | (4 | ) | (5 | ) | (3 | ) | — | 280 | 338 | 270 | ||||||||||||||||||||||||||||||
Research and development | 62 | (11 | ) | — | — | — | — | — | — | 51 | 47 | 47 | ||||||||||||||||||||||||||||||||
Amortization of intangible assets | 41 | — | (41 | ) | — | — | — | — | — | — | 34 | — | ||||||||||||||||||||||||||||||||
Restructuring charges, net | 1 | — | — | (1 | ) | — | — | — | — | — | 8 | — | ||||||||||||||||||||||||||||||||
379 | 6 | (41 | ) | (1 | ) | (4 | ) | (5 | ) | (3 | ) | — | 331 | 427 | 317 | |||||||||||||||||||||||||||||
OPERATING INCOME | 11 | 48 | 84 | 1 | 4 | 6 | 3 | — | 157 | 69 | 183 | |||||||||||||||||||||||||||||||||
Interest expense | (57 | ) | — | — | — | — | — | — | — | (57 | ) | (17 | ) | (17 | ) | |||||||||||||||||||||||||||||
Other income (expense), net | 3 | — | — | — | — | — | — | 1 | 4 | 2 | (1 | ) | ||||||||||||||||||||||||||||||||
Reorganization items, net | — | — | — | — | — | — | — | — | — | (21 | ) | — | ||||||||||||||||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | $ | (43 | ) | $ | 48 | $ | 84 | $ | 1 | $ | 4 | $ | 6 | $ | 3 | $ | 1 | $ | 104 | $ | 33 | $ | 165 |
Successor | Predecessor | FY17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period from Dec. 16, 2017 through Sept. 30, 2018 | Period from Oct. 1, 2017 through Dec. 15, 2017 | Combined Results | Adj. for Fresh Start Acctg. | Amt. of Int. Assets | Restr. Charges, net | Acq. Costs | Loss on Disposal of Long-lived Assets | Reorg items, net | Share-based Comp | Costs of Certain Legal Matters | Adv. Fees | Other Costs, net | Non-GAAP Results | GAAP Results | Non-GAAP Results | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 989 | $ | 253 | $ | 1,242 | $ | 63 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,305 | $ | 1,437 | $ | 1,437 | |||||||||||||||||||||||||||||||||
Services | 1,258 | 351 | 1,609 | 143 | — | — | — | — | — | — | — | — | — | 1,752 | 1,835 | 1,835 | |||||||||||||||||||||||||||||||||||||||||||||||||
2,247 | 604 | 2,851 | 206 | — | — | — | — | — | — | — | — | — | 3,057 | 3,272 | 3,272 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Costs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Products: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Costs | 372 | 84 | 456 | (21 | ) | — | — | — | (2 | ) | — | — | — | — | — | 433 | 499 | 499 | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of technology intangible assets | 135 | 3 | 138 | — | (138 | ) | — | — | — | — | — | — | — | — | — | 20 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Services | 597 | 155 | 752 | (37 | ) | — | — | — | (2 | ) | — | (1 | ) | — | — | — | 712 | 745 | 745 | ||||||||||||||||||||||||||||||||||||||||||||||
1,104 | 242 | 1,346 | (58 | ) | (138 | ) | — | — | (4 | ) | — | (1 | ) | — | — | — | 1,145 | 1,264 | 1,244 | ||||||||||||||||||||||||||||||||||||||||||||||
GROSS PROFIT | 1,143 | 362 | 1,505 | 264 | 138 | — | — | 4 | — | 1 | — | — | — | 1,912 | 2,008 | 2,028 | |||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 888 | 264 | 1,152 | 16 | — | — | (15 | ) | (1 | ) | — | (17 | ) | (37 | ) | (21 | ) | — | 1,077 | 1,261 | 1,100 | ||||||||||||||||||||||||||||||||||||||||||||
Research and development | 172 | 38 | 210 | (11 | ) | — | — | — | — | — | (1 | ) | — | — | — | 198 | 225 | 225 | |||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 127 | 10 | 137 | — | (137 | ) | — | — | — | — | — | — | — | — | — | 204 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of indefinite-lived intangible assets | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 65 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill impairment | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 52 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring charges, net | 81 | 14 | 95 | — | — | (95 | ) | — | — | — | — | — | — | — | — | 30 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
1,268 | 326 | 1,594 | 5 | (137 | ) | (95 | ) | (15 | ) | (1 | ) | — | (18 | ) | (37 | ) | (21 | ) | — | 1,275 | 1,837 | 1,325 | |||||||||||||||||||||||||||||||||||||||||||
OPERATING (LOSS) INCOME | (125 | ) | 36 | (89 | ) | 259 | 275 | 95 | 15 | 5 | — | 19 | 37 | 21 | — | 637 | 171 | 703 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (169 | ) | (14 | ) | (183 | ) | — | — | — | — | — | — | — | — | — | — | (183 | ) | (246 | ) | (246 | ) | |||||||||||||||||||||||||||||||||||||||||||
Other income (expense), net | 35 | (2 | ) | 33 | — | — | — | — | — | — | — | — | — | (18 | ) | 15 | (25 | ) | (31 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Reorganization items, net | — | 3,416 | 3,416 | — | — | — | — | — | (3,416 | ) | — | — | — | — | — | (98 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | $ | (259 | ) | $ | 3,436 | $ | 3,177 | $ | 259 | $ | 275 | $ | 95 | $ | 15 | $ | 5 | $ | (3,416 | ) | $ | 19 | $ | 37 | $ | 21 | $ | (18 | ) | $ | 469 | $ | (198 | ) | $ | 426 |
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