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) |
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock | AVYA | New York Stock Exchange ("NYSE") |
AVAYA HOLDINGS CORP. | |||
Date: November 20, 2019 | By: | /s/ Kieran J. McGrath | |
Name: | Kieran J. McGrath | ||
Title: | Senior Vice President and Chief Financial Officer |
GAAP | Non-GAAP (1) | |||||||||||||||||||||||
(In millions, except percentages) | Q4 2019 | Q3 2019 | Q4 2018 | Q4 2019 | Q3 2019 | Q4 2018 | ||||||||||||||||||
Revenue | $ | 723 | $ | 717 | $ | 735 | $ | 726 | $ | 720 | $ | 770 | ||||||||||||
Gross margin | 54.2 | % | 54.4 | % | 53.1 | % | 60.6 | % | 60.8 | % | 63.4 | % | ||||||||||||
Operating margin | 7.2 | % | (85.5 | )% | 1.5 | % | 22.7 | % | 20.1 | % | 20.4 | % |
GAAP | Non-GAAP (1) | |||||||||||||||
(In millions, except percentages) | FY19 | FY18 | FY19 | FY18 | ||||||||||||
Revenue | $ | 2,887 | $ | 2,851 | $ | 2,908 | $ | 3,057 | ||||||||
Gross margin | 54.6 | % | 52.8 | % | 61.4 | % | 62.5 | % | ||||||||
Operating margin | (16.4 | )% | (3.1 | )% | 21.6 | % | 20.8 | % |
• | On October 1, 2018, Avaya adopted the new revenue recognition standard, Accounting Standards Codification 606 ("ASC 606"), using the modified retrospective transition method. Accordingly, results for reporting periods beginning after September 30, 2018 are presented under ASC 606 while prior period financial information has not been adjusted and continues to be reported in accordance with GAAP that existed prior to the adoption of ASC 606 ("ASC 605"). |
• | GAAP revenue for the fourth quarter of fiscal 2019 was $723 million, $6 million higher than the third quarter of fiscal 2019, and $12 million lower than the fourth quarter of fiscal 2018 ended September 30, 2018. Non-GAAP revenue for the fourth quarter of fiscal 2019 was $726 million, $6 million higher than the prior quarter, and $44 million lower than the fourth quarter of fiscal 2018. |
• | GAAP gross margin for the fourth quarter of fiscal 2019 was 54.2% compared to 54.4% for the third quarter of fiscal 2019 and 53.1% for the fourth quarter of fiscal 2018. Non-GAAP gross margin was 60.6%, compared to 60.8% for the third quarter of fiscal 2019 and 63.4% for the fourth quarter of fiscal 2018. |
• | GAAP operating income for the fourth quarter of fiscal 2019 was $52 million, compared to an operating loss of $613 million for the third quarter of fiscal 2019, and operating income of $11 million for the fourth quarter of fiscal 2018. Non-GAAP operating income(1) for the fourth quarter of fiscal 2019 was $165 million, compared to $145 million for the prior quarter, and $157 million for the fourth quarter of fiscal 2018. |
• | GAAP net loss for the fourth quarter of fiscal 2019 was $34 million, compared to net loss of $633 million for the third quarter of fiscal 2019, and net income of $268 million for the fourth quarter of fiscal 2018. |
• | Adjusted EBITDA(1) was $184 million or 25.3% of non-GAAP revenue, compared to adjusted EBITDA of $167 million, or 23.2% of non-GAAP revenue, for the third quarter of fiscal 2019 and $178 million, or 23.1% of non-GAAP revenue, for the fourth quarter of fiscal 2018. |
• | Cash provided by operating activities for the fourth quarter of fiscal 2019 was $66 million, compared to $52 million during the third quarter of fiscal 2019 and $25 million during the fourth quarter of fiscal 2018. Cash provided by operating activities for fiscal 2019 was $241 million. |
• | At the end of the fourth quarter of fiscal 2019, cash and cash equivalents totaled $752 million, compared to $729 million at the end of the third quarter of fiscal 2019 and $700 million at the end of the fourth quarter of fiscal 2018. |
• | Total Contract Value (TCV) of $2.4 billion* |
• | 83% of non-GAAP revenue was Software & Services |
• | 61% of non-GAAP product revenue was Software |
• | 58% of non-GAAP revenue was Recurring |
• | Added approximately 1,600 new logos |
• | Large deal activity with 109 deals over $1 million, 14 over $5 million, and 3 over $10 million |
• | Generated $66 million in cash flow from operations, $37 million in free cash flow(1) |
• | Avaya will adopt hybrid cloud solutions from IBM to help expand Avaya’s ReadyNow private cloud unified communications and contact center offerings internationally. |
• | Avaya expands ReadyNow into the EMEA and APAC regions. |
• | Avaya launched its new Avaya IX Subscription program targeted at customers looking for flexible consumption-based pricing alternatives to traditional perpetual models when consuming Avaya’s world-class communications and collaboration solutions. The Avaya IX Subscription program will also facilitate customers’ transition to cloud. |
• | Avaya and Tenfold, the world’s leading provider of next generation CTI solutions, announced a strategic partnership to enable joint clients to improve their customer experience, increase productivity of their sales and service teams, and operationalize AI with richer contextual customer data to drive predictive engagement. |
• | TMC, a global, integrated media company, recognized three of Avaya’s offerings for their innovation and leadership in the UC and Contact Center markets. |
• | GAAP revenue: $2.887 billion; Non-GAAP revenue: $2.908 billion |
• | GAAP gross margin: 54.6%; Non-GAAP gross margin: 61.4% |
• | GAAP operating margin: -16.4%; Non-GAAP operating margin: 21.6% |
• | Adjusted EBITDA: $706 million; Adjusted EBITDA margin: 24.3% |
• | Cash flow from operations: $241 million, Free cash flow: $128 million |
• | GAAP revenue of $698 million to $718 million; Non-GAAP revenue of $700 million to $720 million |
◦ | This non-GAAP revenue figure reflects a constant currency decline in September 30th 2019 FX rates of -6% to -3% |
• | GAAP operating income of $2 million to $12 million; GAAP operating margin of 0% to 2% |
• | Non-GAAP operating income of $145 million to $155 million; non-GAAP operating margin of ~21% |
• | Adjusted EBITDA of $165 million to $175 million; Adjusted EBITDA margin of ~24% |
• | GAAP revenue of $2.81 billion to $2.89 billion; Non-GAAP revenue of $2.82 billion to $2.90 billion |
◦ | This non-GAAP revenue figure reflects a constant currency decline in September 30th 2019 FX rates of -2% to 0% |
• | GAAP operating income of $130 million to $180 million; GAAP operating margin of 5% to 6% |
• | Non-GAAP operating income of $560 million to $610 million; non-GAAP operating margin of 20% to 21% |
• | Adjusted EBITDA $650 million to $700 million; Adjusted EBITDA margin of 23% to 24% |
• | Cash flow from operations of ~5% of non-GAAP revenue |
◦ | Excluding Q1 FY20 one time strategic process fees: ~7% |
• | Approximately 95 to 100 million weighted average shares outstanding; ending share count of approximately 80 to 85 million shares |
• | Cash requirements for restructuring pension & OPEB, cash taxes, capital spending and net cash interest payments for fiscal year 2020 are expected to be: |
◦ | Restructuring: $35 million to $40 million |
◦ | Pension/OPEB: ~$55 million |
◦ | Cash Taxes: $65 million to $75 million |
◦ | Capital Expenditures: ~$120 million |
◦ | Net Cash Interest Payments: $190 million to $195 million |
Successor | Predecessor | Non-GAAP Combined(1) | ||||||||||||||||||||||
Three months ended September 30, 2019 | Three months ended September 30, 2018 | 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 | |||||||||||||||||||
REVENUE | ||||||||||||||||||||||||
Products | $ | 314 | $ | 325 | $ | 1,222 | $ | 989 | $ | 253 | $ | 1,242 | ||||||||||||
Services | 409 | 410 | 1,665 | 1,258 | 351 | 1,609 | ||||||||||||||||||
723 | 735 | 2,887 | 2,247 | 604 | 2,851 | |||||||||||||||||||
COSTS | ||||||||||||||||||||||||
Products: | ||||||||||||||||||||||||
Costs | 113 | 115 | 442 | 372 | 84 | 456 | ||||||||||||||||||
Amortization of technology intangible assets | 44 | 43 | 174 | 135 | 3 | 138 | ||||||||||||||||||
Services | 174 | 187 | 696 | 597 | 155 | 752 | ||||||||||||||||||
331 | 345 | 1,312 | 1,104 | 242 | 1,346 | |||||||||||||||||||
GROSS PROFIT | 392 | 390 | 1,575 | 1,143 | 362 | 1,505 | ||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
Selling, general and administrative | 240 | 275 | 1,001 | 888 | 264 | 1,152 | ||||||||||||||||||
Research and development | 50 | 62 | 204 | 172 | 38 | 210 | ||||||||||||||||||
Amortization of intangible assets | 40 | 41 | 162 | 127 | 10 | 137 | ||||||||||||||||||
Impairment charges | — | — | 659 | — | — | — | ||||||||||||||||||
Restructuring charges, net | 10 | 1 | 22 | 81 | 14 | 95 | ||||||||||||||||||
340 | 379 | 2,048 | 1,268 | 326 | 1,594 | |||||||||||||||||||
OPERATING INCOME (LOSS) | 52 | 11 | (473 | ) | (125 | ) | 36 | (89 | ) | |||||||||||||||
Interest expense | (60 | ) | (57 | ) | (237 | ) | (169 | ) | (14 | ) | (183 | ) | ||||||||||||
Other income (expense), net | 6 | 3 | 41 | 35 | (2 | ) | 33 | |||||||||||||||||
Reorganization items, net | — | — | — | — | 3,416 | 3,416 | ||||||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (2 | ) | (43 | ) | (669 | ) | (259 | ) | 3,436 | 3,177 | ||||||||||||||
(Provision for) benefit from income taxes | (32 | ) | 311 | (2 | ) | 546 | (459 | ) | 87 | |||||||||||||||
NET (LOSS) INCOME | $ | (34 | ) | $ | 268 | $ | (671 | ) | $ | 287 | $ | 2,977 | $ | 3,264 | ||||||||||
(LOSS) EARNINGS PER SHARE | ||||||||||||||||||||||||
Basic | $ | (0.31 | ) | $ | 2.44 | $ | (6.06 | ) | $ | 2.61 | $ | 5.19 | ||||||||||||
Diluted | $ | (0.31 | ) | $ | 2.41 | $ | (6.06 | ) | $ | 2.58 | $ | 5.19 | ||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||||||
Basic | 111.2 | 110.0 | 110.8 | 109.9 | 497.3 | |||||||||||||||||||
Diluted | 111.2 | 111.4 | 110.8 | 111.1 | 497.3 |
September 30, 2019 | September 30, 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 | — | — | |||||
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 |
Successor | Predecessor | Non-GAAP Combined(1) | |||||||||||||||
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 | |||||||||
(1) See "Use of non-GAAP (Adjusted) Financial Measures" below. |
Successor | Predecessor | Non-GAAP Combined (1) | ||||||||||||||||||||||
Three months ended September 30, 2019 | Three months ended September 30, 2018 | 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 (loss) income | $ | (34 | ) | $ | 268 | $ | (671 | ) | $ | 287 | $ | 2,977 | $ | 3,264 | ||||||||||
Interest expense | 60 | 57 | 237 | 169 | 14 | 183 | ||||||||||||||||||
Interest income | (3 | ) | (3 | ) | (14 | ) | (5 | ) | (2 | ) | (7 | ) | ||||||||||||
Provision for (benefit from) income taxes | 32 | (311 | ) | 2 | (546 | ) | 459 | (87 | ) | |||||||||||||||
Depreciation and amortization | 108 | 120 | 443 | 384 | 31 | 415 | ||||||||||||||||||
EBITDA | 163 | 131 | (3 | ) | 289 | 3,479 | 3,768 | |||||||||||||||||
Impact of fresh start accounting adjustments | (2 | ) | 29 | 5 | 196 | — | 196 | |||||||||||||||||
Restructuring charges, net | 10 | 1 | 22 | 81 | 14 | 95 | ||||||||||||||||||
Advisory fees | 8 | 3 | 11 | 18 | 3 | 21 | ||||||||||||||||||
Acquisition-related costs | 1 | 4 | 9 | 15 | — | 15 | ||||||||||||||||||
Reorganization items, net | — | — | — | — | (3,416 | ) | (3,416 | ) | ||||||||||||||||
Non-cash share-based compensation | 6 | 6 | 25 | 19 | — | 19 | ||||||||||||||||||
Impairment charges | — | — | 659 | — | — | — | ||||||||||||||||||
Loss on sale/disposal of long-lived assets, net | — | — | — | 4 | 1 | 5 | ||||||||||||||||||
Resolution of certain legal matters | — | — | — | — | 37 | 37 | ||||||||||||||||||
Change in fair value of Emergence Date Warrants | (1 | ) | 8 | (29 | ) | 17 | — | 17 | ||||||||||||||||
(Gain) loss on foreign currency transactions | — | (4 | ) | 8 | (28 | ) | — | (28 | ) | |||||||||||||||
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs | — | — | — | — | 17 | 17 | ||||||||||||||||||
Gain on investments | (1 | ) | — | (1 | ) | — | — | — | ||||||||||||||||
Adjusted EBITDA | $ | 184 | $ | 178 | $ | 706 | $ | 611 | $ | 135 | $ | 746 |
Three Months Ended | Three Months Ended Sept. 30, 2018 (4) | Change | Three Months Ended | |||||||||||||||||||||||||||||||||||
Sept. 30, 2019 | Adj. for Fresh Start Accounting | Non-GAAP Sept. 30, 2019 | Amount | Pct. | Pct., net of fx impact | June 30, 2019 (1) | Mar. 31, 2019 (2) | Dec. 31, 2018 (3) | ||||||||||||||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||||||||||||||||
Products & Solutions | $ | 315 | $ | — | $ | 315 | $ | 336 | $ | (21 | ) | (6 | )% | (5 | )% | $ | 298 | $ | 289 | $ | 326 | |||||||||||||||||
Services | 411 | — | 411 | 434 | (23 | ) | (5 | )% | (5 | )% | 422 | 425 | 422 | |||||||||||||||||||||||||
Unallocated amounts | (3 | ) | 3 | — | — | — | n/a | n/a | — | — | — | |||||||||||||||||||||||||||
Total revenue | $ | 723 | $ | 3 | $ | 726 | $ | 770 | $ | (44 | ) | (6 | )% | (5 | )% | $ | 720 | $ | 714 | $ | 748 | |||||||||||||||||
Revenue by Geography | ||||||||||||||||||||||||||||||||||||||
U.S. | $ | 392 | $ | 1 | $ | 393 | $ | 417 | $ | (24 | ) | (6 | )% | (6 | )% | $ | 394 | $ | 378 | $ | 401 | |||||||||||||||||
International: | ||||||||||||||||||||||||||||||||||||||
EMEA | 183 | 1 | 184 | 202 | (18 | ) | (9 | )% | (7 | )% | 183 | 189 | 200 | |||||||||||||||||||||||||
APAC - Asia Pacific | 85 | 1 | 86 | 81 | 5 | 6 | % | 9 | % | 85 | 80 | 79 | ||||||||||||||||||||||||||
Americas International | 63 | — | 63 | 70 | (7 | ) | (10 | )% | (9 | )% | 58 | 67 | 68 | |||||||||||||||||||||||||
Total International | 331 | 2 | 333 | 353 | (20 | ) | (6 | )% | (4 | )% | 326 | 336 | 347 | |||||||||||||||||||||||||
Total revenue | $ | 723 | $ | 3 | $ | 726 | $ | 770 | $ | (44 | ) | (6 | )% | (5 | )% | $ | 720 | $ | 714 | $ | 748 |
(1) - (4) Reconciliation of Non-GAAP measures above: | ||||||||||||||||||||||||
(1) Q319 Non-GAAP Results | (2) Q219 Non-GAAP Results | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
June 30, 2019 | Adj. for Fresh Start Accounting | Non-GAAP June 30, 2019 | Mar. 31, 2019 | Adj. for Fresh Start Accounting | Non-GAAP Mar. 31, 2019 | |||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||
Products & Solutions | $ | 298 | $ | — | $ | 298 | $ | 289 | — | $ | 289 | |||||||||||||
Services | 422 | — | 422 | 425 | — | 425 | ||||||||||||||||||
Unallocated amounts | (3 | ) | 3 | — | (5 | ) | 5 | — | ||||||||||||||||
Total revenue | $ | 717 | $ | 3 | $ | 720 | $ | 709 | $ | 5 | $ | 714 | ||||||||||||
Revenue by Geography | ||||||||||||||||||||||||
U.S. | $ | 392 | $ | 2 | $ | 394 | $ | 375 | $ | 3 | $ | 378 | ||||||||||||
International: | ||||||||||||||||||||||||
EMEA | 183 | — | 183 | 188 | 1 | 189 | ||||||||||||||||||
APAC - Asia Pacific | 85 | — | 85 | 79 | 1 | 80 | ||||||||||||||||||
Americas International | 57 | 1 | 58 | 67 | — | 67 | ||||||||||||||||||
Total International | 325 | 1 | 326 | 334 | 2 | 336 | ||||||||||||||||||
Total revenue | $ | 717 | $ | 3 | $ | 720 | $ | 709 | $ | 5 | $ | 714 |
(3) Q119 Non-GAAP Results | (4) Q418 Non-GAAP Results | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
Dec. 31, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Dec. 31, 2018 | Sept. 30, 2018 | Adj. for Fresh Start Accounting | Non-GAAP Sept. 30, 2018 | |||||||||||||||||||
Revenue by Segment | ||||||||||||||||||||||||
Products & Solutions | $ | 326 | $ | — | $ | 326 | $ | 336 | $ | — | $ | 336 | ||||||||||||
Services | 422 | — | 422 | 434 | — | 434 | ||||||||||||||||||
Unallocated amounts | (10 | ) | 10 | — | (35 | ) | 35 | — | ||||||||||||||||
Total revenue | $ | 738 | $ | 10 | $ | 748 | $ | 735 | $ | 35 | $ | 770 | ||||||||||||
Revenue by Geography | ||||||||||||||||||||||||
U.S. | $ | 394 | $ | 7 | $ | 401 | $ | 393 | $ | 24 | $ | 417 | ||||||||||||
International: | ||||||||||||||||||||||||
EMEA | 199 | 1 | 200 | 196 | 6 | 202 | ||||||||||||||||||
APAC - Asia Pacific | 78 | 1 | 79 | 78 | 3 | 81 | ||||||||||||||||||
Americas International | 67 | 1 | 68 | 68 | 2 | 70 | ||||||||||||||||||
Total International | 344 | 3 | 347 | 342 | 11 | 353 | ||||||||||||||||||
Total revenue | $ | 738 | $ | 10 | $ | 748 | $ | 735 | $ | 35 | $ | 770 |
Three Months Ended | ||||||||||||||||||||
Sept. 30, 2019 | June 30, 2019 | March 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | ||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin | ||||||||||||||||||||
Gross Profit | $ | 392 | $ | 390 | $ | 386 | $ | 407 | $ | 390 | ||||||||||
Items excluded: | ||||||||||||||||||||
Amortization of technology intangible assets | 44 | 43 | 44 | 43 | 43 | |||||||||||||||
Adj. for fresh start accounting | 4 | 5 | 9 | 19 | 54 | |||||||||||||||
Non-cash share-based compensation | — | — | — | — | 1 | |||||||||||||||
Non-GAAP Gross Profit | $ | 440 | $ | 438 | $ | 439 | $ | 469 | $ | 488 | ||||||||||
GAAP Gross Margin | 54.2 | % | 54.4 | % | 54.4 | % | 55.1 | % | 53.1 | % | ||||||||||
Non-GAAP Gross Margin | 60.6 | % | 60.8 | % | 61.5 | % | 62.7 | % | 63.4 | % | ||||||||||
Reconciliation of Non-GAAP Operating Income | ||||||||||||||||||||
Operating Income (Loss) | $ | 52 | $ | (613 | ) | $ | 38 | $ | 50 | $ | 11 | |||||||||
Items excluded: | ||||||||||||||||||||
Amortization of intangible assets | 84 | 84 | 85 | 83 | 84 | |||||||||||||||
Adj. for fresh start accounting | 4 | 4 | 12 | 20 | 48 | |||||||||||||||
Restructuring charges, net | 10 | 1 | 4 | 7 | 1 | |||||||||||||||
Advisory fees | 8 | 1 | 1 | 1 | 3 | |||||||||||||||
Acquisition-related costs | 1 | 1 | 4 | 3 | 4 | |||||||||||||||
Non-cash share-based compensation | 6 | 8 | 5 | 6 | 6 | |||||||||||||||
Impairment charges | — | 659 | — | — | — | |||||||||||||||
Non-GAAP Operating Income | $ | 165 | $ | 145 | $ | 149 | $ | 170 | $ | 157 | ||||||||||
GAAP Operating Margin | 7.2 | % | -85.5 | % | 5.4 | % | 6.8 | % | 1.5 | % | ||||||||||
Non-GAAP Operating Margin | 22.7 | % | 20.1 | % | 20.9 | % | 22.7 | % | 20.4 | % |
Three months ended | ||||||||||||||||||||
Sept. 30, 2019 | June 30, 2019 | March 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | ||||||||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Products | ||||||||||||||||||||
Revenue | $ | 314 | $ | 297 | $ | 287 | $ | 324 | $ | 325 | ||||||||||
Costs | 113 | 109 | 105 | 115 | 115 | |||||||||||||||
Amortization of technology intangible assets | 44 | 43 | 44 | 43 | 43 | |||||||||||||||
GAAP Gross Profit | 157 | 145 | 138 | 166 | 167 | |||||||||||||||
Items excluded: | ||||||||||||||||||||
Amortization of technology intangible assets | 44 | 43 | 44 | 43 | 43 | |||||||||||||||
Adj. for fresh start accounting | 2 | 2 | 2 | 5 | 16 | |||||||||||||||
Non-GAAP Gross Profit | $ | 203 | $ | 190 | $ | 184 | $ | 214 | $ | 226 | ||||||||||
GAAP Gross Margin | 50.0 | % | 48.8 | % | 48.1 | % | 51.2 | % | 51.4 | % | ||||||||||
Non-GAAP Gross Margin | 64.4 | % | 63.8 | % | 63.7 | % | 65.6 | % | 67.3 | % | ||||||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin - Services | ||||||||||||||||||||
Revenue | $ | 409 | $ | 420 | $ | 422 | $ | 414 | $ | 410 | ||||||||||
Costs | 174 | 175 | 174 | 173 | 187 | |||||||||||||||
GAAP Gross Profit | 235 | 245 | 248 | 241 | 223 | |||||||||||||||
Items excluded: | ||||||||||||||||||||
Adj. for fresh start accounting | 2 | 3 | 7 | 14 | 38 | |||||||||||||||
Non-cash share-based compensation | — | — | — | — | 1 | |||||||||||||||
Non-GAAP Gross Profit | $ | 237 | $ | 248 | $ | 255 | $ | 255 | $ | 262 | ||||||||||
GAAP Gross Margin | 57.5 | % | 58.3 | % | 58.8 | % | 58.2 | % | 54.4 | % | ||||||||||
Non-GAAP Gross Margin | 57.7 | % | 58.8 | % | 60.0 | % | 60.4 | % | 60.4 | % |
Q4 FY19 results under ASC 606 | ASC 606 Impact | Q4 FY19 results under ASC 605 | ||||||||||
REVENUE | ||||||||||||
Products | $ | 314 | $ | (26 | ) | $ | 288 | |||||
Services | 409 | (16 | ) | 393 | ||||||||
723 | (42 | ) | 681 | |||||||||
COSTS | ||||||||||||
Products: | ||||||||||||
Costs | 113 | (6 | ) | 107 | ||||||||
Amortization of technology intangible assets | 44 | — | 44 | |||||||||
Services | 174 | (5 | ) | 169 | ||||||||
331 | (11 | ) | 320 | |||||||||
GROSS PROFIT | 392 | (31 | ) | 361 | ||||||||
OPERATING EXPENSES | ||||||||||||
Selling, general and administrative | 240 | (1 | ) | 239 | ||||||||
Research and development | 50 | — | 50 | |||||||||
Amortization of intangible assets | 40 | — | 40 | |||||||||
Restructuring charges, net | 10 | — | 10 | |||||||||
340 | (1 | ) | 339 | |||||||||
OPERATING INCOME | 52 | (30 | ) | 22 | ||||||||
Interest expense | (60 | ) | — | (60 | ) | |||||||
Other income, net | 6 | — | 6 | |||||||||
LOSS BEFORE INCOME TAXES | (2 | ) | (30 | ) | (32 | ) | ||||||
Provision for income taxes | (32 | ) | 15 | (17 | ) | |||||||
NET LOSS | $ | (34 | ) | $ | (15 | ) | $ | (49 | ) |
Three months ended | ||||||||||||||||||||
Sept. 30, 2019 | June 30, 2019 | March 31, 2019 | Dec. 31, 2018 | Sept. 30, 2018 | ||||||||||||||||
Net cash provided by operating activities | $ | 66 | $ | 52 | $ | 37 | $ | 86 | $ | 25 | ||||||||||
Less: | ||||||||||||||||||||
Capital expenditures | 29 | 37 | 26 | 21 | 25 | |||||||||||||||
Free cash flow | $ | 37 | $ | 15 | $ | 11 | $ | 65 | $ | — |
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