x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 22-3713430 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4655 Great America Parkway Santa Clara, California | 95054 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x | Smaller Reporting Company ¨ | |||
(Do not check if a smaller reporting company) |
Item | Description | Page | |
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4. | |||
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1A. | |||
2. | |||
3. | |||
4. | |||
5. | |||
6. | |||
Item 1. | Financial Statements. |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
REVENUE | |||||||||||||||
Products | $ | 560 | $ | 634 | $ | 1,720 | $ | 2,020 | |||||||
Services | 590 | 616 | 1,788 | 1,874 | |||||||||||
1,150 | 1,250 | 3,508 | 3,894 | ||||||||||||
COSTS | |||||||||||||||
Products: | |||||||||||||||
Costs (exclusive of amortization of technology intangible assets) | 234 | 271 | 731 | 862 | |||||||||||
Amortization of technology intangible assets | 13 | 47 | 49 | 146 | |||||||||||
Services | 276 | 309 | 849 | 946 | |||||||||||
523 | 627 | 1,629 | 1,954 | ||||||||||||
GROSS PROFIT | 627 | 623 | 1,879 | 1,940 | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Selling, general and administrative | 380 | 405 | 1,145 | 1,252 | |||||||||||
Research and development | 112 | 116 | 343 | 344 | |||||||||||
Amortization of intangible assets | 57 | 57 | 171 | 169 | |||||||||||
Goodwill impairment | — | — | 89 | — | |||||||||||
Restructuring and impairment charges, net | 63 | 21 | 165 | 132 | |||||||||||
Acquisition-related costs | 1 | 1 | 1 | 4 | |||||||||||
613 | 600 | 1,914 | 1,901 | ||||||||||||
OPERATING INCOME (LOSS) | 14 | 23 | (35 | ) | 39 | ||||||||||
Interest expense | (122 | ) | (107 | ) | (346 | ) | (324 | ) | |||||||
Loss on extinguishment of debt | — | — | (6 | ) | — | ||||||||||
Other (expense) income, net | (5 | ) | 6 | (9 | ) | (7 | ) | ||||||||
LOSS BEFORE INCOME TAXES | (113 | ) | (78 | ) | (396 | ) | (292 | ) | |||||||
Benefit from (provision for) income taxes | 3 | (88 | ) | 9 | (62 | ) | |||||||||
NET LOSS | $ | (110 | ) | $ | (166 | ) | $ | (387 | ) | $ | (354 | ) |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net loss | $ | (110 | ) | $ | (166 | ) | $ | (387 | ) | $ | (354 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Pension, postretirement and postemployment benefit-related items, net of tax of $29 and $47 for the three and nine months ended June 30, 2013 and tax benefit of $(18) and $0 for the three and nine months ended June 30, 2012, respectively | 43 | (103 | ) | 71 | (75 | ) | |||||||||
Cumulative translation adjustment | (21 | ) | 13 | (40 | ) | 28 | |||||||||
Change in interest rate swaps, net of tax of $1 and $4 for the three and nine months ended June 30, 2013 and tax benefit of $0 and $(4) for the three and nine months ended June 30, 2012, respectively | 1 | 9 | 6 | 15 | |||||||||||
Income tax benefit reclassified into earnings upon the expiration of certain interest rate swaps | — | — | (17 | ) | — | ||||||||||
Unrealized loss on investments reclassified into earnings, net of tax of $0 for the three and nine months ended June 30, 2012, respectively | — | 2 | — | 2 | |||||||||||
Unrealized (loss) gain on investments, net of tax of $0 for the three and nine months ended June 30, 2012, respectively | — | (1 | ) | — | 2 | ||||||||||
Other comprehensive income (loss) | 23 | (80 | ) | 20 | (28 | ) | |||||||||
Comprehensive loss | $ | (87 | ) | $ | (246 | ) | $ | (367 | ) | $ | (382 | ) |
June 30, 2013 | September 30, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 271 | $ | 337 | |||
Accounts receivable, net | 662 | 782 | |||||
Inventory | 256 | 255 | |||||
Deferred income taxes, net | 17 | 18 | |||||
Other current assets | 267 | 252 | |||||
TOTAL CURRENT ASSETS | 1,473 | 1,644 | |||||
Property, plant and equipment, net | 354 | 364 | |||||
Deferred income taxes, net | 48 | 43 | |||||
Intangible assets, net | 1,554 | 1,775 | |||||
Goodwill | 4,092 | 4,188 | |||||
Other assets | 181 | 180 | |||||
TOTAL ASSETS | $ | 7,702 | $ | 8,194 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Debt maturing within one year | $ | 35 | $ | 37 | |||
Accounts payable | 410 | 438 | |||||
Payroll and benefit obligations | 232 | 262 | |||||
Deferred revenue | 663 | 616 | |||||
Business restructuring reserve, current portion | 119 | 84 | |||||
Other current liabilities | 272 | 302 | |||||
TOTAL CURRENT LIABILITIES | 1,731 | 1,739 | |||||
Long-term debt | 6,059 | 6,084 | |||||
Pension obligations | 1,648 | 1,763 | |||||
Other postretirement obligations | 325 | 360 | |||||
Deferred income taxes, net | 218 | 204 | |||||
Business restructuring reserve, non-current portion | 62 | 51 | |||||
Other liabilities | 456 | 429 | |||||
TOTAL NON-CURRENT LIABILITIES | 8,768 | 8,891 | |||||
Commitments and contingencies | |||||||
DEFICIENCY | |||||||
Common stock, par value $.01 per share; 100 shares authorized, issued and outstanding | — | — | |||||
Additional paid-in capital | 2,932 | 2,926 | |||||
Accumulated deficit | (4,623 | ) | (4,236 | ) | |||
Accumulated other comprehensive loss | (1,106 | ) | (1,126 | ) | |||
TOTAL DEFICIENCY | (2,797 | ) | (2,436 | ) | |||
TOTAL LIABILITIES AND DEFICIENCY | $ | 7,702 | $ | 8,194 |
Nine months ended June 30, | |||||||
2013 | 2012 | ||||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (387 | ) | $ | (354 | ) | |
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: | |||||||
Depreciation and amortization | 331 | 426 | |||||
Share-based compensation | 7 | 7 | |||||
Amortization of debt issuance costs | 14 | 16 | |||||
Accretion of debt discount | 2 | 1 | |||||
Non-cash charge for debt issuance costs upon redemption of term loans | 5 | — | |||||
Third-party fees expensed in connection with the debt modification | 18 | — | |||||
Premium on issuance of senior secured term B-5 loans | 3 | — | |||||
Provision for uncollectible receivables | 2 | 4 | |||||
Deferred income taxes, net | (12 | ) | 7 | ||||
(Gain) loss on sale of investments and long-lived assets, net | (1 | ) | 3 | ||||
Write-down of assets held for sale to net realizable value | — | 4 | |||||
Goodwill impairment | 89 | — | |||||
Impairment of long-lived assets | 1 | 2 | |||||
Pension curtailment | (6 | ) | 5 | ||||
Unrealized (gain) loss on foreign currency exchange | (25 | ) | 3 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 120 | 48 | |||||
Inventory | (2 | ) | 3 | ||||
Accounts payable | (27 | ) | (23 | ) | |||
Payroll and benefit obligations | (58 | ) | (87 | ) | |||
Business restructuring reserve | 52 | (16 | ) | ||||
Deferred revenue | 65 | (56 | ) | ||||
Other assets and liabilities | (92 | ) | (53 | ) | |||
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 99 | (60 | ) | ||||
INVESTING ACTIVITIES: | |||||||
Capital expenditures | (78 | ) | (60 | ) | |||
Capitalized software development costs | (12 | ) | (30 | ) | |||
Acquisition of businesses, net of cash acquired | (1 | ) | (212 | ) | |||
Proceeds from sale of long-lived assets | 12 | 2 | |||||
Proceeds from sale of investments | 1 | 73 | |||||
Advance to Parent | (10 | ) | (8 | ) | |||
Other investing activities, net | (1 | ) | (2 | ) | |||
NET CASH USED FOR INVESTING ACTIVITIES | (89 | ) | (237 | ) | |||
FINANCING ACTIVITIES: | |||||||
Proceeds from 9% senior secured notes | 290 | — | |||||
Repayment of term B-5 loans | (284 | ) | — | ||||
Proceeds from term B-5 loans | 589 | — | |||||
Repayment of term B-1 loans | (584 | ) | — | ||||
Debt issuance and third-party debt modification costs | (49 | ) | — | ||||
Repayment of long-term debt | (28 | ) | (28 | ) | |||
Capital contribution from Parent | — | 196 | |||||
Borrowings under revolving credit facility | — | 60 | |||||
Repayments of borrowings under revolving credit facility | — | (60 | ) | ||||
Other financing activities, net | (2 | ) | (1 | ) | |||
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES | (68 | ) | 167 | ||||
Effect of exchange rate changes on cash and cash equivalents | (8 | ) | 1 | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (66 | ) | (129 | ) | |||
Cash and cash equivalents at beginning of period | 337 | 400 | |||||
Cash and cash equivalents at end of period | $ | 271 | $ | 271 |
1. | Background, Merger and Basis of Presentation |
• | Real-Time Collaboration, Video and Unified Communications Software, Infrastructure and Endpoints; |
• | Customer Experience Interaction Management, including Contact Center applications; and |
• | Networking. |
2. | Recent Accounting Pronouncements |
3. | Business Combinations |
4. | Goodwill and Intangible Assets |
5. | Supplementary Financial Information |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
In millions | 2013 | 2012 | 2013 | 2012 | |||||||||||
OTHER (EXPENSE) INCOME, NET | |||||||||||||||
Interest income | $ | 1 | $ | 1 | $ | 2 | $ | 3 | |||||||
(Loss) gain on foreign currency transactions | (5 | ) | 5 | 10 | (7 | ) | |||||||||
Third party fees incurred in connection with debt modifications | — | — | (18 | ) | — | ||||||||||
Venezuela hyperinflationary and devaluation charges | — | — | (1 | ) | — | ||||||||||
Other, net | (1 | ) | — | (2 | ) | (3 | ) | ||||||||
Total other (expense) income, net | $ | (5 | ) | $ | 6 | $ | (9 | ) | $ | (7 | ) |
6. | Business Restructuring Reserve and Programs |
In millions | Employee Separation Costs | Lease Obligations | Total | ||||||||
2013 restructuring charges | $ | 129 | $ | 31 | $ | 160 | |||||
Cash payments | (43 | ) | (3 | ) | (46 | ) | |||||
Impact of foreign currency fluctuations | (1 | ) | — | (1 | ) | ||||||
Balance as of June 30, 2013 | $ | 85 | $ | 28 | $ | 113 |
In millions | Employee Separation Costs | Lease Obligations | Total | ||||||||
Balance as of October 1, 2012 | $ | 58 | $ | 12 | $ | 70 | |||||
Cash payments | (45 | ) | (3 | ) | (48 | ) | |||||
Adjustments (1) | (2 | ) | 2 | — | |||||||
Impact of foreign currency fluctuations | 1 | — | 1 | ||||||||
Balance as of June 30, 2013 | $ | 12 | $ | 11 | $ | 23 |
(1) | Included in adjustments are changes in estimates, whereby all increases and decreases in costs related to the fiscal 2012 restructuring programs are recorded to the restructuring charges line item in operating expenses in the period of the adjustment. |
In millions | Employee Separation Costs | Lease Obligations | Total | ||||||||
Balance as of October 1, 2012 | $ | 13 | $ | 52 | $ | 65 | |||||
Cash payments | (8 | ) | (10 | ) | (18 | ) | |||||
Adjustments (1) | (1 | ) | 1 | — | |||||||
Impact of foreign currency fluctuations | — | (2 | ) | (2 | ) | ||||||
Balance as of June 30, 2013 | $ | 4 | $ | 41 | $ | 45 |
(1) | Included in adjustments are changes in estimates, whereby all increases and decreases in costs related to the fiscal 2009 through 2011 restructuring programs are recorded to the restructuring charges line item in operating expenses in the period of the adjustment. Included in adjustments are changes in estimates whereby all increases in costs related to the fiscal 2008 restructuring reserve are recorded in the restructuring charges line item in operating expenses in the period of the adjustments and decreases in costs are recorded as adjustments to goodwill. |
7. | Financing Arrangements |
In millions | June 30, 2013 | September 30, 2012 | |||||
Senior secured term B-1 loans due October 26, 2014 | $ | — | $ | 1,434 | |||
Senior secured term B-3 loans due October 26, 2017 | 2,133 | 2,152 | |||||
Senior secured term B-4 loans due October 26, 2017 | 1 | — | |||||
Senior secured term B-5 loans due March 31, 2018 | 1,144 | — | |||||
7% senior secured notes due April 1, 2019 | 1,009 | 1,009 | |||||
9% senior secured notes due April 1, 2019 | 290 | — | |||||
10.50% senior secured notes due March 1, 2021 | 1,384 | — | |||||
9.75% senior unsecured cash pay notes due November 1, 2015 | 58 | 700 | |||||
10.125%/10.875% senior unsecured PIK toggle notes due November 1, 2015 | 92 | 834 | |||||
Unaccreted discount | (17 | ) | (8 | ) | |||
6,094 | 6,121 | ||||||
Debt maturing within one year | (35 | ) | (37 | ) | |||
Long-term debt | $ | 6,059 | $ | 6,084 |
In millions | |||
Remainder of fiscal 2013 | $ | 9 | |
2014 | 38 | ||
2015 | 53 | ||
2016 | 174 | ||
2017 | 38 | ||
2018 and thereafter | 5,799 | ||
Total | $ | 6,111 |
8. | Derivatives and Other Financial Instruments |
In millions | Effective Date | Maturity Date | Notional Amount | Floating Rate Received by Avaya | Fixed Rate Paid by Avaya | ||||||||
3-year swap | August 26, 2010 | August 26, 2013 | $ | 750 | 3-month LIBOR | 1.160 | % | ||||||
3-year swap | August 26, 2010 | August 26, 2013 | 750 | 3-month LIBOR | 1.135 | % | |||||||
Notional amount—Total | $ | 1,500 |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
In millions | 2013 | 2012 | 2013 | 2012 | |||||||||||
(Gain) Loss on interest rate swaps | |||||||||||||||
Recognized in other comprehensive loss | $ | (2 | ) | $ | (5 | ) | $ | (10 | ) | $ | (15 | ) | |||
Reclassified from accumulated other comprehensive loss into interest expense | $ | 3 | $ | 6 | $ | 11 | $ | 19 | |||||||
Recognized in operations (ineffective portion) | $ | — | $ | — | $ | — | $ | — |
In millions | June 30, 2013 | September 30, 2012 | |||||||||||||||||||||
Balance Sheet Location | Total | Foreign Currency Forward Contracts | Interest Rate Swaps | Total | Foreign Currency Forward Contracts | Interest Rate Swaps | |||||||||||||||||
Other current assets | $ | — | $ | — | $ | — | $ | 2 | $ | 2 | $ | — | |||||||||||
Other current liabilities | (4 | ) | (1 | ) | (3 | ) | (15 | ) | — | (15 | ) | ||||||||||||
Net Liability | $ | (4 | ) | $ | (1 | ) | $ | (3 | ) | $ | (13 | ) | $ | 2 | $ | (15 | ) |
9. | Fair Value Measures |
June 30, 2013 | |||||||||||||||
Fair Value Measurements Using | |||||||||||||||
In millions | Total | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Other Non-Current Assets: | |||||||||||||||
Investments | $ | 2 | $ | 1 | $ | 1 | $ | — | |||||||
Other Current Liabilities: | |||||||||||||||
Foreign currency forward contracts | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Interest rate swaps | 3 | — | 3 | — | |||||||||||
$ | 4 | $ | — | $ | 4 | $ | — |
September 30, 2012 | |||||||||||||||
Fair Value Measurements Using | |||||||||||||||
In millions | Total | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Other Current Assets: | |||||||||||||||
Foreign currency forward contracts | $ | 2 | $ | — | $ | 2 | $ | — | |||||||
Investments | 1 | 1 | — | — | |||||||||||
$ | 3 | $ | 1 | $ | 2 | $ | — | ||||||||
Other Non-Current Assets: | |||||||||||||||
Investments | $ | 4 | $ | 2 | $ | 2 | $ | — | |||||||
Other Current Liabilities: | |||||||||||||||
Interest rate swaps | $ | 15 | $ | — | $ | 15 | $ | — |
March 31, 2013 | |||||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||||
In millions | Total | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Loss | ||||||||||||||
Goodwill of ITPS reporting unit: | $ | 44 | $ | — | $ | — | $ | 44 | $ | 89 |
June 30, 2013 | September 30, 2012 | ||||||||||||||
In millions | Principal Amount | Fair Value | Principal Amount | Fair Value | |||||||||||
Senior secured term B-1 loans | $ | — | $ | — | $ | 1,434 | $ | 1,392 | |||||||
Senior secured term B-3 loans | 2,133 | 1,868 | 2,152 | 1,960 | |||||||||||
Senior secured term B-4 loans | 1 | 1 | — | — | |||||||||||
Senior secured term B-5 loans | 1,144 | 1,071 | — | — | |||||||||||
7% Senior secured notes | 1,009 | 909 | 1,009 | 938 | |||||||||||
9% Senior secured notes | 290 | 277 | — | — | |||||||||||
10.50% Senior secured notes | 1,384 | 1,041 | — | — | |||||||||||
9.75% senior unsecured cash pay notes due 2015 | 58 | 57 | 700 | 622 | |||||||||||
10.125%/10.875% senior unsecured PIK toggle notes due 2015 | 92 | 91 | 834 | 749 | |||||||||||
Total | $ | 6,111 | $ | 5,315 | $ | 6,129 | $ | 5,661 |
10. | Income Taxes |
11. | Benefit Obligations |
Pension Benefits - U.S. | Pension Benefits - Non-U.S. | Postretirement Benefits - U.S. | |||||||||||||||||||||
Three months ended June 30, | Three months ended June 30, | Three months ended June 30, | |||||||||||||||||||||
In millions | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Components of Net Periodic Benefit Cost | |||||||||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 1 | $ | 2 | $ | 1 | $ | 1 | |||||||||||
Interest cost | 34 | 37 | 5 | 5 | 6 | 8 | |||||||||||||||||
Expected return on plan assets | (41 | ) | (42 | ) | — | — | (3 | ) | (3 | ) | |||||||||||||
Amortization of unrecognized prior service cost | 1 | — | — | — | (4 | ) | 1 | ||||||||||||||||
Amortization of previously unrecognized net actuarial loss | 30 | 25 | 1 | — | 1 | 2 | |||||||||||||||||
Curtailment | 2 | 2 | — | 3 | (8 | ) | — | ||||||||||||||||
Net periodic benefit cost | $ | 27 | $ | 23 | $ | 7 | $ | 10 | $ | (7 | ) | $ | 9 |
Pension Benefits - U.S. | Pension Benefits - Non-U.S. | Postretirement Benefits - U.S. | |||||||||||||||||||||
Nine months ended June 30, | Nine months ended June 30, | Nine months ended June 30, | |||||||||||||||||||||
In millions | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Components of Net Periodic Benefit Cost | |||||||||||||||||||||||
Service cost | $ | 4 | $ | 4 | $ | 5 | $ | 5 | $ | 2 | $ | 2 | |||||||||||
Interest cost | 102 | 112 | 15 | 17 | 16 | 23 | |||||||||||||||||
Expected return on plan assets | (121 | ) | (128 | ) | (1 | ) | (1 | ) | (8 | ) | (8 | ) | |||||||||||
Amortization of unrecognized prior service cost | 1 | 1 | — | — | (11 | ) | 2 | ||||||||||||||||
Amortization of previously unrecognized net actuarial loss | 94 | 74 | 3 | — | 5 | 6 | |||||||||||||||||
Curtailment | 2 | 2 | — | 3 | (8 | ) | — | ||||||||||||||||
Net periodic benefit cost | $ | 82 | $ | 65 | $ | 22 | $ | 24 | $ | (4 | ) | $ | 25 |
12. | Share-based Compensation |
13. | Reportable Segments |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
In millions | 2013 | 2012 | 2013 | 2012 | |||||||||||
REVENUE | |||||||||||||||
Global Communications Solutions | $ | 497 | $ | 561 | $ | 1,543 | $ | 1,802 | |||||||
Avaya Networking | 64 | 74 | 178 | 220 | |||||||||||
Enterprise Collaboration Solutions | 561 | 635 | 1,721 | 2,022 | |||||||||||
Avaya Global Services | 590 | 616 | 1,788 | 1,874 | |||||||||||
Unallocated Amounts (1) | (1 | ) | (1 | ) | (1 | ) | (2 | ) | |||||||
$ | 1,150 | $ | 1,250 | $ | 3,508 | $ | 3,894 | ||||||||
GROSS PROFIT | |||||||||||||||
Global Communications Solutions | $ | 298 | $ | 329 | $ | 917 | $ | 1,047 | |||||||
Avaya Networking | 28 | 29 | 73 | 93 | |||||||||||
Enterprise Collaboration Solutions | 326 | 358 | 990 | 1,140 | |||||||||||
Avaya Global Services | 314 | 300 | 940 | 909 | |||||||||||
Unallocated Amounts (1) | (13 | ) | (35 | ) | (51 | ) | (109 | ) | |||||||
627 | 623 | 1,879 | 1,940 | ||||||||||||
OPERATING EXPENSES | |||||||||||||||
Selling, general and administrative | 380 | 405 | 1,145 | 1,252 | |||||||||||
Research and development | 112 | 116 | 343 | 344 | |||||||||||
Amortization of intangible assets | 57 | 57 | 171 | 169 | |||||||||||
Goodwill impairment | — | — | 89 | — | |||||||||||
Restructuring and impairment charges, net | 63 | 21 | 165 | 132 | |||||||||||
Acquisition-related costs | 1 | 1 | 1 | 4 | |||||||||||
613 | 600 | 1,914 | 1,901 | ||||||||||||
OPERATING INCOME (LOSS) | 14 | 23 | (35 | ) | 39 | ||||||||||
INTEREST EXPENSE, LOSS ON EXTINGUISHMENT OF DEBT AND OTHER (EXPENSE) INCOME, NET | (127 | ) | (101 | ) | (361 | ) | (331 | ) | |||||||
LOSS BEFORE INCOME TAXES | $ | (113 | ) | $ | (78 | ) | $ | (396 | ) | $ | (292 | ) |
(1) | Unallocated Amounts in Gross Profit include the effect of the amortization of acquired technology intangibles and costs that are not core to the measurement of segment management’s performance, but rather are controlled at the corporate level. Unallocated Amounts in Revenue and Gross Profit also include the impacts of certain fair value adjustments recorded in purchase accounting in connection with the Merger. |
14. | Commitments and Contingencies |
In millions | |||
Balance as of October 1, 2012 | $ | 16 | |
Reductions for payments and costs to satisfy claims | (12 | ) | |
Accruals for warranties issued during the period | 12 | ||
Balance as of June 30, 2013 | $ | 16 |
15. | Guarantor—Non Guarantor financial information |
Three Months Ended June 30, 2013 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
REVENUE | $ | 646 | $ | 82 | $ | 530 | $ | (108 | ) | $ | 1,150 | ||||||||
COST | 289 | 53 | 289 | (108 | ) | 523 | |||||||||||||
GROSS PROFIT | 357 | 29 | 241 | — | 627 | ||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||
Selling, general and administrative | 152 | 13 | 215 | — | 380 | ||||||||||||||
Research and development | 63 | 2 | 47 | — | 112 | ||||||||||||||
Amortization of intangible assets | 52 | 1 | 4 | — | 57 | ||||||||||||||
Restructuring and impairment charges, net | 28 | — | 35 | — | 63 | ||||||||||||||
Acquisition-related costs | 1 | — | — | — | 1 | ||||||||||||||
296 | 16 | 301 | — | 613 | |||||||||||||||
OPERATING INCOME (LOSS) | 61 | 13 | (60 | ) | — | 14 | |||||||||||||
Interest expense | (122 | ) | — | — | — | (122 | ) | ||||||||||||
Other income (expense), net | 2 | 1 | (8 | ) | — | (5 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (59 | ) | 14 | (68 | ) | — | (113 | ) | |||||||||||
Benefit from (provision for) income taxes | 22 | — | (19 | ) | — | 3 | |||||||||||||
Equity in net income (loss) of consolidated subsidiaries | (73 | ) | — | — | 73 | — | |||||||||||||
NET (LOSS) INCOME | $ | (110 | ) | $ | 14 | $ | (87 | ) | $ | 73 | $ | (110 | ) | ||||||
Comprehensive (loss) income | $ | (87 | ) | $ | 14 | $ | (106 | ) | $ | 92 | $ | (87 | ) |
Three Months Ended June 30, 2012 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
REVENUE | $ | 663 | $ | 96 | $ | 615 | $ | (124 | ) | $ | 1,250 | ||||||||
COST | 358 | 68 | 325 | (124 | ) | 627 | |||||||||||||
GROSS PROFIT | 305 | 28 | 290 | — | 623 | ||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||
Selling, general and administrative | 153 | 22 | 230 | — | 405 | ||||||||||||||
Research and development | 63 | 3 | 50 | — | 116 | ||||||||||||||
Amortization of intangible assets | 52 | 1 | 4 | — | 57 | ||||||||||||||
Restructuring and impairment charges, net | 9 | 1 | 11 | — | 21 | ||||||||||||||
Acquisition-related costs | 1 | — | — | — | 1 | ||||||||||||||
278 | 27 | 295 | — | 600 | |||||||||||||||
OPERATING INCOME (LOSS) | 27 | 1 | (5 | ) | — | 23 | |||||||||||||
Interest expense | (103 | ) | (4 | ) | — | — | (107 | ) | |||||||||||
Other (expense) income, net | (5 | ) | — | 11 | — | 6 | |||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (81 | ) | (3 | ) | 6 | — | (78 | ) | |||||||||||
Provision for income taxes | (13 | ) | — | (75 | ) | — | (88 | ) | |||||||||||
Equity in net loss of consolidated subsidiaries | (72 | ) | — | — | 72 | — | |||||||||||||
NET LOSS | $ | (166 | ) | $ | (3 | ) | $ | (69 | ) | $ | 72 | $ | (166 | ) | |||||
Comprehensive loss | $ | (246 | ) | $ | (3 | ) | $ | (56 | ) | $ | 59 | $ | (246 | ) |
Nine Months Ended June 30, 2013 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
REVENUE | $ | 1,924 | $ | 246 | $ | 1,698 | $ | (360 | ) | $ | 3,508 | ||||||||
COST | 940 | 162 | 887 | (360 | ) | 1,629 | |||||||||||||
GROSS PROFIT | 984 | 84 | 811 | — | 1,879 | ||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||
Selling, general and administrative | 437 | 62 | 646 | — | 1,145 | ||||||||||||||
Research and development | 193 | 5 | 145 | — | 343 | ||||||||||||||
Amortization of intangible assets | 156 | 3 | 12 | — | 171 | ||||||||||||||
Goodwill impairment | 89 | — | — | — | 89 | ||||||||||||||
Restructuring and impairment charges, net | 51 | 3 | 111 | — | 165 | ||||||||||||||
Acquisition-related costs | 1 | — | — | — | 1 | ||||||||||||||
927 | 73 | 914 | — | 1,914 | |||||||||||||||
OPERATING INCOME (LOSS) | 57 | 11 | (103 | ) | — | (35 | ) | ||||||||||||
Interest expense | (337 | ) | (9 | ) | — | — | (346 | ) | |||||||||||
Loss on extinguishment of debt | (6 | ) | — | — | — | (6 | ) | ||||||||||||
Other (expense) income, net | (16 | ) | — | 7 | — | (9 | ) | ||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (302 | ) | 2 | (96 | ) | — | (396 | ) | |||||||||||
Benefit from (provision for) income taxes | 49 | — | (40 | ) | — | 9 | |||||||||||||
Equity in net income (loss) of consolidated subsidiaries | (134 | ) | — | — | 134 | — | |||||||||||||
NET LOSS | $ | (387 | ) | $ | 2 | $ | (136 | ) | $ | 134 | $ | (387 | ) | ||||||
Comprehensive (loss) income | $ | (367 | ) | $ | 2 | $ | (174 | ) | $ | 172 | $ | (367 | ) |
Nine Months Ended June 30, 2012 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
REVENUE | $ | 2,160 | $ | 294 | $ | 1,947 | $ | (507 | ) | $ | 3,894 | ||||||||
COST | 1,184 | 199 | 1,078 | (507 | ) | 1,954 | |||||||||||||
GROSS PROFIT | 976 | 95 | 869 | — | 1,940 | ||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||
Selling, general and administrative | 499 | 71 | 682 | — | 1,252 | ||||||||||||||
Research and development | 189 | 10 | 145 | — | 344 | ||||||||||||||
Amortization of intangible assets | 155 | 3 | 11 | — | 169 | ||||||||||||||
Restructuring charges, net | 25 | 2 | 105 | — | 132 | ||||||||||||||
Acquisition-related costs | 4 | — | — | — | 4 | ||||||||||||||
872 | 86 | 943 | — | 1,901 | |||||||||||||||
OPERATING INCOME (LOSS) | 104 | 9 | (74 | ) | — | 39 | |||||||||||||
Interest expense | (309 | ) | (14 | ) | (1 | ) | — | (324 | ) | ||||||||||
Other expense, net | (5 | ) | — | (2 | ) | — | (7 | ) | |||||||||||
LOSS BEFORE INCOME TAXES | (210 | ) | (5 | ) | (77 | ) | — | (292 | ) | ||||||||||
Provision for income taxes | (11 | ) | — | (51 | ) | — | (62 | ) | |||||||||||
Equity in net loss of consolidated subsidiaries | (133 | ) | — | — | 133 | — | |||||||||||||
NET LOSS | $ | (354 | ) | $ | (5 | ) | $ | (128 | ) | $ | 133 | $ | (354 | ) | |||||
Comprehensive loss | $ | (382 | ) | $ | (5 | ) | $ | (100 | ) | $ | 105 | $ | (382 | ) |
June 30, 2013 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 51 | $ | 16 | $ | 204 | $ | — | $ | 271 | |||||||||
Accounts receivable, net—external | 274 | 32 | 356 | — | 662 | ||||||||||||||
Accounts receivable—internal | 865 | 29 | 121 | (1,015 | ) | — | |||||||||||||
Inventory | 126 | 5 | 125 | — | 256 | ||||||||||||||
Deferred income taxes, net | — | — | 17 | — | 17 | ||||||||||||||
Other current assets | 91 | 33 | 143 | — | 267 | ||||||||||||||
Internal notes receivable, current | 1,498 | 167 | — | (1,665 | ) | — | |||||||||||||
TOTAL CURRENT ASSETS | 2,905 | 282 | 966 | (2,680 | ) | 1,473 | |||||||||||||
Property, plant and equipment, net | 212 | 20 | 122 | — | 354 | ||||||||||||||
Deferred income taxes, net | 1 | — | 47 | — | 48 | ||||||||||||||
Intangible assets, net | 1,354 | 30 | 170 | — | 1,554 | ||||||||||||||
Goodwill | 3,988 | — | 104 | — | 4,092 | ||||||||||||||
Other assets | 155 | 4 | 22 | — | 181 | ||||||||||||||
Investment in consolidated subsidiaries | — | 2 | 30 | (32 | ) | — | |||||||||||||
TOTAL ASSETS | $ | 8,615 | $ | 338 | $ | 1,461 | $ | (2,712 | ) | $ | 7,702 | ||||||||
LIABILITIES | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Debt maturing within one year—external | $ | 35 | $ | — | $ | — | $ | — | $ | 35 | |||||||||
Debt maturing within one year—internal | 175 | 391 | 1,099 | (1,665 | ) | — | |||||||||||||
Accounts payable—external | 227 | 17 | 166 | — | 410 | ||||||||||||||
Accounts payable—internal | 121 | 7 | 887 | (1,015 | ) | — | |||||||||||||
Payroll and benefit obligations | 99 | 8 | 125 | — | 232 | ||||||||||||||
Deferred revenue | 523 | 11 | 129 | — | 663 | ||||||||||||||
Business restructuring reserve, current portion | 29 | 3 | 87 | — | 119 | ||||||||||||||
Other current liabilities | 174 | 4 | 94 | — | 272 | ||||||||||||||
TOTAL CURRENT LIABILITIES | 1,383 | 441 | 2,587 | (2,680 | ) | 1,731 | |||||||||||||
Long-term debt | 6,059 | — | — | — | 6,059 | ||||||||||||||
Pension obligations | 1,146 | — | 502 | — | 1,648 | ||||||||||||||
Other postretirement obligations | 325 | — | — | — | 325 | ||||||||||||||
Deferred income taxes, net | 193 | — | 25 | — | 218 | ||||||||||||||
Business restructuring reserve, non-current portion | 20 | 1 | 41 | — | 62 | ||||||||||||||
Other liabilities | 182 | 19 | 255 | — | 456 | ||||||||||||||
Deficiency in consolidated subsidiaries | 2,104 | — | — | (2,104 | ) | — | |||||||||||||
TOTAL NON-CURRENT LIABILITIES | 10,029 | 20 | 823 | (2,104 | ) | 8,768 | |||||||||||||
TOTAL DEFICIENCY | (2,797 | ) | (123 | ) | (1,949 | ) | 2,072 | (2,797 | ) | ||||||||||
TOTAL LIABILITIES AND DEFICIENCY | $ | 8,615 | $ | 338 | $ | 1,461 | $ | (2,712 | ) | $ | 7,702 |
September 30, 2012 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 101 | $ | 10 | $ | 226 | $ | — | $ | 337 | |||||||||
Accounts receivable, net—external | 326 | 39 | 417 | — | 782 | ||||||||||||||
Accounts receivable—internal | 782 | 66 | 164 | (1,012 | ) | — | |||||||||||||
Inventory | 131 | 6 | 118 | — | 255 | ||||||||||||||
Deferred income taxes, net | — | — | 18 | — | 18 | ||||||||||||||
Other current assets | 150 | 30 | 72 | — | 252 | ||||||||||||||
Internal notes receivable, current | 1,467 | 147 | — | (1,614 | ) | — | |||||||||||||
TOTAL CURRENT ASSETS | 2,957 | 298 | 1,015 | (2,626 | ) | 1,644 | |||||||||||||
Property, plant and equipment, net | 222 | 24 | 118 | — | 364 | ||||||||||||||
Deferred income taxes, net | — | — | 43 | — | 43 | ||||||||||||||
Intangible assets, net | 1,546 | 33 | 196 | — | 1,775 | ||||||||||||||
Goodwill | 4,082 | — | 106 | — | 4,188 | ||||||||||||||
Other assets | 150 | 5 | 25 | — | 180 | ||||||||||||||
Investment in consolidated subsidiaries | — | — | 27 | (27 | ) | — | |||||||||||||
TOTAL ASSETS | $ | 8,957 | $ | 360 | $ | 1,530 | $ | (2,653 | ) | $ | 8,194 | ||||||||
LIABILITIES | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Debt maturing within one year—external | $ | 37 | $ | — | $ | — | $ | — | $ | 37 | |||||||||
Debt maturing within one year—internal | 151 | 368 | 1,095 | (1,614 | ) | — | |||||||||||||
Accounts payable—external | 235 | 18 | 185 | — | 438 | ||||||||||||||
Accounts payable—internal | 123 | 49 | 840 | (1,012 | ) | — | |||||||||||||
Payroll and benefit obligations | 81 | 13 | 168 | — | 262 | ||||||||||||||
Deferred revenue | 523 | 7 | 86 | — | 616 | ||||||||||||||
Business restructuring reserve, current portion | 5 | 4 | 75 | — | 84 | ||||||||||||||
Other current liabilities | 261 | 4 | 37 | — | 302 | ||||||||||||||
TOTAL CURRENT LIABILITIES | 1,416 | 463 | 2,486 | (2,626 | ) | 1,739 | |||||||||||||
Long-term debt | 6,084 | — | — | — | 6,084 | ||||||||||||||
Pension obligations | 1,271 | — | 492 | — | 1,763 | ||||||||||||||
Other postretirement obligations | 360 | — | — | — | 360 | ||||||||||||||
Deferred income taxes, net | 182 | — | 22 | — | 204 | ||||||||||||||
Business restructuring reserve, non-current portion | 22 | 1 | 28 | — | 51 | ||||||||||||||
Other liabilities | 137 | 22 | 270 | — | 429 | ||||||||||||||
Deficiency in consolidated subsidiaries | 1,921 | 3 | — | (1,924 | ) | — | |||||||||||||
TOTAL NON-CURRENT LIABILITIES | 9,977 | 26 | 812 | (1,924 | ) | 8,891 | |||||||||||||
TOTAL DEFICIENCY | (2,436 | ) | (129 | ) | (1,768 | ) | 1,897 | (2,436 | ) | ||||||||||
TOTAL LIABILITIES AND DEFICIENCY | $ | 8,957 | $ | 360 | $ | 1,530 | $ | (2,653 | ) | $ | 8,194 |
Nine Months Ended June 30, 2013 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
OPERATING ACTIVITIES: | |||||||||||||||||||
Net (loss) income | $ | (387 | ) | $ | 2 | $ | (136 | ) | $ | 134 | $ | (387 | ) | ||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities | 381 | 8 | 39 | — | 428 | ||||||||||||||
Changes in operating assets and liabilities | (60 | ) | (3 | ) | 121 | — | 58 | ||||||||||||
Equity in net income (loss) of consolidated subsidiaries | 134 | — | — | (134 | ) | — | |||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 68 | 7 | 24 | — | 99 | ||||||||||||||
INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures | (31 | ) | — | (47 | ) | — | (78 | ) | |||||||||||
Capitalized software development costs | (10 | ) | (2 | ) | — | — | (12 | ) | |||||||||||
Acquisition of businesses, net of cash acquired | (1 | ) | — | — | — | (1 | ) | ||||||||||||
Proceeds from sale of long-lived assets | 8 | — | 4 | — | 12 | ||||||||||||||
Proceeds from sale of investments | — | — | 1 | — | 1 | ||||||||||||||
Advance to Parent | (10 | ) | — | — | — | (10 | ) | ||||||||||||
Other investing activities, net | (1 | ) | — | — | — | (1 | ) | ||||||||||||
NET CASH USED FOR INVESTING ACTIVITIES | (45 | ) | (2 | ) | (42 | ) | — | (89 | ) | ||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||||
Proceeds from 9% senior secured notes | 290 | — | — | — | 290 | ||||||||||||||
Repayment of term B-5 loans | (284 | ) | — | — | — | (284 | ) | ||||||||||||
Proceeds from term B-5 loans | 589 | — | — | — | 589 | ||||||||||||||
Repayment of term B-1 loans | (584 | ) | — | — | — | (584 | ) | ||||||||||||
Debt issuance and third-party debt modification costs | (49 | ) | — | — | — | (49 | ) | ||||||||||||
Repayment of long-term debt | (28 | ) | — | — | — | (28 | ) | ||||||||||||
Net (repayments) borrowings of intercompany debt | (7 | ) | 3 | 4 | — | — | |||||||||||||
Other financing activities, net | — | (2 | ) | — | — | (2 | ) | ||||||||||||
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES | (73 | ) | 1 | 4 | — | (68 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (8 | ) | — | (8 | ) | ||||||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (50 | ) | 6 | (22 | ) | — | (66 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 101 | 10 | 226 | — | 337 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 51 | $ | 16 | $ | 204 | $ | — | $ | 271 |
Nine Months Ended June 30, 2012 | |||||||||||||||||||
In millions | Avaya Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||||
OPERATING ACTIVITIES: | |||||||||||||||||||
Net loss | $ | (354 | ) | $ | (5 | ) | $ | (128 | ) | $ | 133 | $ | (354 | ) | |||||
Adjustments to reconcile net loss to net cash (used for) provided by operating activities | 391 | 9 | 78 | — | 478 | ||||||||||||||
Changes in operating assets and liabilities | (202 | ) | 8 | 10 | — | (184 | ) | ||||||||||||
Equity in net loss of consolidated subsidiaries | 133 | — | — | (133 | ) | — | |||||||||||||
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES | (32 | ) | 12 | (40 | ) | — | (60 | ) | |||||||||||
INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures | (27 | ) | (1 | ) | (32 | ) | — | (60 | ) | ||||||||||
Capitalized software development costs | (30 | ) | — | — | — | (30 | ) | ||||||||||||
Acquisition of businesses, net of cash acquired | (1 | ) | — | (211 | ) | — | (212 | ) | |||||||||||
Proceeds from sale of long-lived assets | 2 | — | — | — | 2 | ||||||||||||||
Proceeds from sale of investments | 7 | — | 66 | — | 73 | ||||||||||||||
Restricted cash | (1 | ) | — | 1 | — | — | |||||||||||||
Advance to Parent | (8 | ) | — | — | — | (8 | ) | ||||||||||||
Investment in subsidiary | (218 | ) | — | — | 218 | — | |||||||||||||
Other investing activities, net | (2 | ) | — | — | — | (2 | ) | ||||||||||||
NET CASH USED FOR INVESTING ACTIVITIES | (278 | ) | (1 | ) | (176 | ) | 218 | (237 | ) | ||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||||
Repayment of long-term debt | (28 | ) | — | — | — | (28 | ) | ||||||||||||
Capital contribution from Parent | 196 | — | — | — | 196 | ||||||||||||||
Capital contribution from Avaya Inc. | — | — | 218 | (218 | ) | — | |||||||||||||
Borrowings under revolving credit facility | 60 | — | — | — | 60 | ||||||||||||||
Repayments of borrowings under revolving credit facility | (60 | ) | — | — | — | (60 | ) | ||||||||||||
Net borrowings (repayments) of intercompany debt | 30 | (10 | ) | (20 | ) | — | — | ||||||||||||
Other financing activities, net | — | (1 | ) | — | — | (1 | ) | ||||||||||||
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 198 | (11 | ) | 198 | (218 | ) | 167 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 1 | — | 1 | ||||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (112 | ) | — | (17 | ) | — | (129 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 149 | 12 | 239 | — | 400 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 37 | $ | 12 | $ | 222 | $ | — | $ | 271 |
• | Real-Time Collaboration, Video and Unified Communications Software, Infrastructure and Endpoints for an increasingly mobile workforce; |
• | Customer Experience Interaction Management, including Contact Center applications; and |
• | Networking for data center, campus, branch, and wireless access to complement our business collaboration, unified communications and contact center portfolios. |
In millions | June 30, 2013 | September 30, 2012 | |||||
Variable rate senior secured term B-1 loans due October 26, 2014 | $ | — | $ | 1,434 | |||
Variable rate senior secured term B-3 loans due October 26, 2017 | 2,133 | 2,152 | |||||
Variable rate senior secured term B-4 loans due October 26, 2017 | 1 | — | |||||
Variable rate senior secured term B-5 loans due March 31, 2018 | 1,144 | — | |||||
7% senior secured notes due April 1, 2019 | 1,009 | 1,009 | |||||
9% senior secured notes due April 1, 2019 | 290 | — | |||||
10.50% senior secured notes due March 1, 2021 | 1,384 | — | |||||
9.75% senior unsecured cash pay notes due November 1, 2015 | 58 | 700 | |||||
10.125%/10.875% senior unsecured PIK toggle notes due November 1, 2015 | 92 | 834 | |||||
Unaccreted discount | (17 | ) | (8 | ) | |||
6,094 | 6,121 | ||||||
Debt maturing within one year | (35 | ) | (37 | ) | |||
Long-term debt | $ | 6,059 | $ | 6,084 |
In millions | June 30, 2013 | September 30, 2012 | |||||
2013 | $ | 9 | $ | 38 | |||
2014 | 38 | 38 | |||||
2015 | 53 | 1,442 | |||||
2016 | 174 | 1,542 | |||||
2017 | 38 | 23 | |||||
2018 and thereafter | 5,799 | 3,046 | |||||
Total | $ | 6,111 | $ | 6,129 |
• | Real-Time Collaboration, Video and Unified Communications Software, Infrastructure and Endpoints for an increasingly mobile workforce; |
• | Customer Experience Management, including Contact Center applications; and |
• | Networking for data center, campus, branch, and wireless access to complement our business collaboration, unified communications and contact center portfolios. |
• | Radvision Scopia is a standards-based portfolio of hardware and software products that includes conference room systems, desktop and mobile video conferencing and infrastructure and management (see “—Platforms, Infrastructure and Phones below for more information). |
• | Avaya Aura Conferencing gives users one-touch control over collaboration. With it they can drag and drop contacts to start a conference, without dialing, switch between IM, email, voice, and video in one window and in one application, scroll and click on contacts with the ability to send invitations that automatically contain conference information and links, share content and desktops with a click of the “collaborate” button, and see who is in the conference, who just arrived and who is presenting. |
• | The Avaya Flare Experience is an easy-to-use interface with one-click access to real-time, enterprise-wide audio, video, and web collaboration. The intuitive drag-and-drop experience integrates directories, contextual history, and more. During a conference, a user can manage everything with built-in controls, including the ability to click an icon to escalate from an audio call to point-to-point, or multi-party video, or start web collaboration, access contacts, enterprise directories, and preferences via the contact fan, share desktops, applications, or the whiteboard and take notes and minutes. The Avaya Flare Experience can be downloaded onto many consumer devices including Apple iPad, Apple iPhone and Windows-based PCs. |
• | Avaya one-X Communicator is ideal for users who communicate frequently, manage multiple calls, set up ad-hoc conferencing and need to be highly reachable. Avaya one-X Communicator provides users with access to unified communications capabilities including voice calling, audio conferencing, instant messaging and presence, corporate directories and communication logs. This software client can be deployed on desktop or laptop computers running either Microsoft Windows or Apple Mac operating systems, and is supported over Virtual Desktop Infrastructure (VDI) connections. |
• | Avaya one-X Mobile enables users to access enterprise communications from a wide selection of mobile devices, including high-end smart phones and tablets. A choice of one-X Mobile clients is available for popular platforms including Apple iPhone, Google Android and RIM BlackBerry. Through integration with Avaya one-X Client Enablement Services, Avaya one-X Mobile users have access to a broad range of unified communications capabilities such as visual voicemail, corporate directory, aggregated presence, VIP lists and synchronized call logs and contacts. Avaya one-X Mobile gives users single number/single identity for both inbound and outbound calls, even when using personal devices. |
• | Avaya Client Applications provide access to Avaya voice and video services from business applications such as Microsoft Lync, Microsoft Office Communications Server, Microsoft Outlook, Microsoft Office, IBM Sametime, and customer relationship management (CRM) applications such as Salesforce.com and Microsoft Dynamics. |
• | The Avaya Aura platform is at the core of many of our next-generation collaboration and communications products. Using this architecture, organizations can rapidly and cost-effectively deploy applications from a centralized data center to users on nearly any device or network. The Avaya Aura platform provides a simple means of connecting legacy, multi-vendor systems to new open standards SIP-based applications, helping enterprises to reduce costs and increase user productivity and choice simultaneously. We believe our Avaya Aura platform is one of the most reliable, secure and comprehensive offerings in the industry and that our commitment to open, standards-based products helps provide customers with the flexibility to be more efficient and successful. |
• | Avaya IP Office is our award-winning, flagship product for Small and Medium Enterprises, or SME, communications. Avaya IP Office simplifies processes and streamlines information exchange within systems. Communications capabilities can be added as needed. Avaya IP Office connects to both traditional and the latest IP lines to give growing companies flexibility and the ability to retain and leverage their existing investment. The latest version of Avaya IP Office (8.1) adds innovative capabilities to tap the full potential of next-generation collaboration, including new mobility, management and security features, as well increased scalability, which help SMEs efficiently and securely take advantage of BYOD environments and advanced mobility. |
• | Avaya Aura Messaging gives users a rich set of features that increase their reachability, add new message notification options, and provide more ways to access and receive messages--all controlled using an intuitive web portal. Avaya Aura Messaging adapts to enterprise environments with flexible per-user message storage options, resiliency options and deployment options for consolidation, centralization and scale. Avaya Aura Messaging helps to enable smooth migrations from legacy voicemail systems, with choice of telephone user interface (TUI), and tools for migrations. |
• | Avaya Agile Communication Environment (ACE) offers a rich set of web application programming interfaces, or APIs, that enable developers to integrate communications into other business applications (such as CRM, enterprise resource planning (ERP), business process management (BPM) and social application frameworks) and business processes (such as dynamic team formation, business continuity planning and customer engagements). For more policy-based style customization on enterprise communications, the Avaya ACE Foundation Toolkit offers Java application programming interfaces (APIs) to allow customers to build Java feature sets to influence the treatment of incoming and/or outbound communications leveraging the SIP architecture. These capabilities enable rapid development of custom applications, which helps reduce costs and increases flexibility for enterprises. Programmers with limited communications expertise can readily embed real-time communications in business applications and workflows, |
• | Avaya Session Border Controller (SBC) for Enterprise provides enhanced security for mobile collaboration allowing remote users to securely connect to the enterprise without the need of a virtual private network (VPN) connection, and protects SIP trunks from multiple threats. |
• | Radvision Video Conferencing infrastructure includes Radvision Scopia Elite Multipoint Conferencing Units (MCUs), which are reliable and highly scalable multi-party video conferencing platforms for enterprise and service provider environments. They offer advanced and easy-to-use multi-party infrastructure for video conferencing and are at the core of a high definition deployment. In addition, gateways for Microsoft Lync and SIP provide connectivity and interoperability with unified communications products to standards-based video conferencing systems and infrastructure. Radvision Scopia Gateways are ideal for connecting IP video networks with ISDN and public switched telephone networks (PSTN) providing connectivity to ISDN endpoints and telephones. |
• | Endpoints are sold in a range of models that suit employees at every level, including IP and digital deskphones, digital enhanced cordless telecommunications (DECT) handsets, wireless phones, conference phones and the Avaya Desktop Video Device (ADVD). |
• | Awareness, which is the application of relevant available contextual information for each customer; and |
• | Persistent conversation, which connects all interactions with a customer into a seamless experience. |
• | Interaction, which involves connecting an enterprise with its end customers over their preferred media and modes such as web, social, mobile, voice and video. This also includes the desktop element that provides relevant information to agents and knowledge workers and facilitates collaboration across all the resources involved in delivering the customer experience. It includes products such as Customer Connections Mobile, Customer Connections Web, Social Media Manager, Automated Chat, One Touch Video, Avaya one-X Agent and Avaya Aura Agent Desktop. |
• | Experience includes leveraging real-time awareness of customer needs, business policies and resource availability to determine the next best action and best resource to address the customer needs at the right time based on the target customer experience the organization wants to deliver. It also integrates inbound and outbound self service, agent selection and workflows with back-office processes and operations to enable this holistic customer experience. It includes products such as Intelligent Customer Routing, Dynamic Routing, Avaya Aura Call Center Elite Multichannel, Avaya Aura Contact Center, Avaya Interaction Center, Avaya Aura Experience Portal, Media Processing Server, Proactive Contact, Proactive Outreach Manager and Callback Assist. |
• | Performance encompasses the collection, consolidation and analysis of data and information in order to gain insight into the customer experience and business performance. It includes reporting and analytics tools for improving overall workforce management, skills, efficiency and effectiveness. It includes products such as Avaya Call Management System, Avaya IQ, Avaya Operational Analyst, Speech Analytics, Call Recording, Quality Monitoring, Workforce Management, e-Learning and e-Coaching, Customer Feedback and Avaya Aura Performance Center. |
• | Design includes open, standards-based tools for creating and managing applications and workflows that are integrated into back office processes, third party applications and customer databases. It includes products such as Avaya Aura Orchestration Designer and Application Enablement Services. |
• | Management means enabling centralized management and administration for all the above systems, applications and resources within the framework as well as the ability to identify potential issues and perform root-cause analysis to |
• | Ethernet Switching-a range of Ethernet Switches for data center, core, edge and branch applications; |
• | Unified Branch-a range of routers and virtual private network appliances that provide a secure connection for branches; |
• | Wireless Networking-cost-effective and scalable products that enable enterprises to support wireless connectivity and services; |
• | Access Control-products that enforce role- and policy-based access control to the network; and |
• | Unified Management-providing support for data and voice networks by simplifying the requirements associated across functional areas. |
• | Avaya Professional Services (APS) helps organizations leverage technologies effectively to meet their business objectives. Our strategic and technical consulting, as well as deployment and customization services, help customers accelerate business performance and deliver an improved customer experience. Whether deploying new products or optimizing existing capabilities, Avaya leverages 1,500 Avaya specialists in 37 countries, with over 1,000 industry certifications and an average of 15 to 20 years of experience. Avaya Professional Services executes more than 2,000 projects per month, in three core areas: |
• | Enablement Services, providing access to expertise and resources for defining and deploying Avaya products that maximize technology potential and help assure they work as designed. Avaya Professional Services strives to exceed customers’ expectations by providing the greatest possible benefit for their investment. |
• | Optimization Services, to help drive increased value and greater business results from customers’ existing technology. Leveraging best practices, Avaya consultants and solution architects analyze a communications environment in the context of customer business priorities and strategies, helping develop a communications business case, expected results and technical considerations. |
• | Innovation Services, to help an organization leverage communications to reach new levels of business potential and market competiveness. Focused on leading technology and advanced services delivery, we offer a forward-thinking perspective to drive new business productivity, employee efficiency and superior levels of service. Our consultative approach and custom application services, from business planning through to execution and product integration, creates alignment with the customer’s specific business objectives. |
• | Avaya Client Services (ACS) is a market-leading organization that supports, manages and optimizes enterprise communications networks to help customers mitigate risk, reduce total cost of ownership, and optimize product performance. ACS is supported by patented tools and by network operations and technical support centers around the world. The contracts for these services range from one to multiple-years, with three year terms being the most common. Custom or complex services contracts are typically five years in length. The portfolio of ACS services includes: |
• | Global Support Services provides a comprehensive suite of support options both directly and through partners to proactively resolve issues and improve uptime. Support offers and capabilities include, but are not limited to, 24x7 remote support, proactive remote monitoring, parts replacement and onsite response. Recent innovations include our new Avaya Support Web Site that quickly connects customers to advanced Avaya technicians via live chat, voice or video. The web site also provides access to “Ava”, an interactive virtual chat agent that quickly searches our knowledge base and a wide range of “how-to” videos to answer customer support questions. Ava learns with each customer interaction and can make the decision to transition the chat to an Avaya technician—often without the customer realizing the change is taking place. All new support solutions are published to the web by our engineers, generally within 90 minutes of finding a resolution, adding value for customers by providing known solutions for potential issues rapidly. Most of our customers also benefit from real-time monitoring of diagnostic and system status to proactively identify potential issues to improves reliability, uptime and faster issue resolution. |
• | Avaya Cloud and Managed Services, which provides IT Infrastructure Library (ITIL)-aligned, multivendor managed and outsourcing services for customers’ communications environments. Avaya can globally manage complex multi-vendor, multi-technology and aging networks with Service Level Agreements (SLAs) to help optimize network performance. With Avaya Managed services, Avaya can manage a customer’s mixed environment and gain the opportunity to upgrade it over time to the latest technology, at the pace and in an operational expense model that makes sense for the customer. Managed services can be procured in standard packages or in fully custom arrangements that include tailored SLAs, billing, and reporting and includes on-premises and other private cloud options. |
• | SIP/SIMPLE and XMPP: the Avaya Aura Presence Services collects, publishes, aggregates and federates rich presence and enables instant messaging using SIP/SIMPLE and XMPP standards, providing interoperability with systems from other vendors, including but not limited to Microsoft, IBM and Google; |
• | Platform Services: Avaya’s products are designed for extensibility, allowing customers, systems integrators, and independent software vendors (ISVs) using industry standard protocols and interfaces to develop new applications and to seamlessly integrate with the underlying capabilities of the communication and collaboration infrastructure; |
• | Operating System, or OS, Support: our software applications run on a broad range of operating systems including, but not limited to, Microsoft Windows, Apple MAC OS, Google Android and RIM Blackberry; |
• | High Quality/Low Bandwidth Video: Avaya’s Video solutions are able to deliver high quality video while minimizing bandwidth consumption and responding to adverse network conditions through the use of dual 1080p/60fps video channels, H.264 High Profile for bandwidth efficiency and cascading media to optimize bandwidth between sites and H.264 Scalable Video Coding (SVC) technology to maintain quality video during times of intermittent network congestion; |
• | Virtualization Technology is used in our core Avaya Aura portfolio to reduce the physical server footprint using hypervisor technology to run multiple applications concurrently on a single physical platform; |
• | Resilient data networking: our data portfolio provides highly resilient IPv4 and IPv6 routing services, with redundant hardware components, forwarding and restart capabilities that minimize interruptions, including one of the industry’s few sub second failover capabilities; and |
• | Avaya believes that as WebRTC (web based real-time communication) standards continue to mature, WebRTC will be a key component of both unified communications and contact center solutions enabling broader access and simpler deployment models. Avaya has dedicated resources developing extensions to existing products and exploring new uses of this emerging technology. |
Three months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
GCS | $ | 497 | $ | 561 | 43 | % | 45 | % | -11 | % | -11 | % | |||||||
Purchase accounting adjustments | (1 | ) | (1 | ) | 0 | % | 0 | % | (1) | (1) | |||||||||
Networking | 64 | 74 | 6 | % | 6 | % | -14 | % | -14 | % | |||||||||
Total ECS product revenue | 560 | 634 | 49 | % | 51 | % | -12 | % | -12 | % | |||||||||
AGS | 590 | 616 | 51 | % | 49 | % | -4 | % | -4 | % | |||||||||
Total revenue | $ | 1,150 | $ | 1,250 | 100 | % | 100 | % | -8 | % | -8 | % |
Three months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
U.S. | $ | 639 | $ | 666 | 56 | % | 53 | % | -4 | % | -4 | % | |||||||
International: | |||||||||||||||||||
EMEA | 297 | 330 | 26 | % | 27 | % | -10 | % | -11 | % | |||||||||
APAC - Asia Pacific | 105 | 128 | 9 | % | 10 | % | -18 | % | -17 | % | |||||||||
Americas International - Canada and Latin America | 109 | 126 | 9 | % | 10 | % | -13 | % | -13 | % | |||||||||
Total International | 511 | 584 | 44 | % | 47 | % | -13 | % | -13 | % | |||||||||
Total revenue | $ | 1,150 | $ | 1,250 | 100 | % | 100 | % | -8 | % | -8 | % |
Three months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total ECS Product Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
Direct | $ | 139 | $ | 165 | 25 | % | 26 | % | -16 | % | -16 | % | |||||||
Indirect | 421 | 469 | 75 | % | 74 | % | -10 | % | -10 | % | |||||||||
Total ECS product revenue | $ | 560 | $ | 634 | 100 | % | 100 | % | -12 | % | -12 | % |
Three months ended June 30, | ||||||||||||||||||||
Gross Profit | Gross Margin | Change | ||||||||||||||||||
Dollars in millions | 2013 | 2012 | 2013 | 2012 | Amount | Pct. | ||||||||||||||
GCS | $ | 298 | $ | 329 | 60.0 | % | 58.6 | % | $ | (31 | ) | (9 | )% | |||||||
Networking | 28 | 29 | 43.8 | % | 39.2 | % | (1 | ) | (3 | )% | ||||||||||
ECS | 326 | 358 | 58.2 | % | 56.5 | % | (32 | ) | (9 | )% | ||||||||||
AGS | 314 | 300 | 53.2 | % | 48.7 | % | 14 | 5 | % | |||||||||||
Unallocated amounts | (13 | ) | (35 | ) | (1 | ) | (1 | ) | 22 | (1 | ) | |||||||||
Total | $ | 627 | $ | 623 | 54.5 | % | 49.8 | % | $ | 4 | 1 | % |
(1) | Not meaningful |
Three months ended June 30, | ||||||||||||||||||||
2013 | 2012 | Percentage of Revenue | Change | |||||||||||||||||
Dollars in millions | 2013 | 2012 | Amount | Pct. | ||||||||||||||||
Selling, general and administrative | $ | 380 | $ | 405 | 33.0 | % | 32.3 | % | $ | (25 | ) | (6 | )% | |||||||
Research and development | 112 | 116 | 9.7 | % | 9.3 | % | (4 | ) | (3 | )% | ||||||||||
Amortization of intangible assets | 57 | 57 | 5.0 | % | 4.6 | % | — | — | % | |||||||||||
Restructuring and impairment charges, net | 63 | 21 | 5.5 | % | 1.7 | % | 42 | 200 | % | |||||||||||
Acquisition-related costs | 1 | 1 | 0.1 | % | 0.1 | % | — | — | % | |||||||||||
Total operating expenses | $ | 613 | $ | 600 | 53.3 | % | 48.0 | % | $ | 13 | 2 | % |
Nine months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
GCS | $ | 1,543 | $ | 1,802 | 44 | % | 46 | % | -14 | % | -14 | % | |||||||
Purchase accounting adjustments | (1 | ) | (2 | ) | 0 | % | 0 | % | (1) | (1) | |||||||||
Networking | 178 | 220 | 5 | % | 6 | % | -19 | % | -19 | % | |||||||||
Total ECS product revenue | 1,720 | 2,020 | 49 | % | 52 | % | -15 | % | -15 | % | |||||||||
AGS | 1,788 | 1,874 | 51 | % | 48 | % | -5 | % | -4 | % | |||||||||
Total revenue | $ | 3,508 | $ | 3,894 | 100 | % | 100 | % | -10 | % | -10 | % |
(1) | Not meaningful |
Nine months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
U.S. | $ | 1,901 | $ | 2,092 | 54 | % | 54 | % | (9 | )% | (9 | )% | |||||||
International: | |||||||||||||||||||
EMEA | 926 | 1,022 | 26 | % | 26 | % | (9 | )% | (9 | )% | |||||||||
APAC - Asia Pacific | 344 | 371 | 10 | % | 9 | % | (7 | )% | (7 | )% | |||||||||
Americas International - Canada and Latin America | 337 | 409 | 10 | % | 11 | % | (18 | )% | (17 | )% | |||||||||
Total International | 1,607 | 1,802 | 46 | % | 46 | % | (11 | )% | (10 | )% | |||||||||
Total revenue | $ | 3,508 | $ | 3,894 | 100 | % | 100 | % | (10 | )% | (10 | )% |
Nine months ended June 30, | |||||||||||||||||||
2013 | 2012 | Percentage of Total ECS Product Revenue | Yr. to Yr. Percentage Change | Yr. to Yr. Percentage Change, net of Foreign Currency Impact | |||||||||||||||
Dollars in millions | 2013 | 2012 | |||||||||||||||||
Direct | $ | 405 | $ | 498 | 24 | % | 25 | % | (19 | )% | (18 | )% | |||||||
Indirect | 1,315 | 1,522 | 76 | % | 75 | % | (14 | )% | (14 | )% | |||||||||
Total ECS product revenue | $ | 1,720 | $ | 2,020 | 100 | % | 100 | % | (15 | )% | (15 | )% |
Nine months ended June 30, | |||||||||||||||||||
Gross Profit | Gross Margin | Change | |||||||||||||||||
Dollars in millions | 2013 | 2012 | 2013 | 2012 | Amount | Pct. | |||||||||||||
GCS | $ | 917 | $ | 1,047 | 59.4 | % | 58.1 | % | (130 | ) | (12 | )% | |||||||
Networking | 73 | 93 | 41.0 | % | 42.3 | % | (20 | ) | (22 | )% | |||||||||
ECS | 990 | 1,140 | 57.6 | % | 56.4 | % | (150 | ) | (13 | )% | |||||||||
AGS | 940 | 909 | 52.6 | % | 48.5 | % | 31 | 3 | % | ||||||||||
Unallocated amounts | (51 | ) | (109 | ) | (1) | (1) | 58 | (1) | |||||||||||
Total | $ | 1,879 | $ | 1,940 | 53.6 | % | 49.8 | % | (61 | ) | (3 | )% |
(1) | Not meaningful |
Nine months ended June 30, | ||||||||||||||||||||
2013 | 2012 | Percentage of Revenue | Change | |||||||||||||||||
Dollars in millions | 2013 | 2012 | Amount | Pct. | ||||||||||||||||
Selling, general and administrative | $ | 1,145 | $ | 1,252 | 32.6 | % | 32.2 | % | $ | (107 | ) | (9 | )% | |||||||
Research and development | 343 | 344 | 9.8 | % | 8.8 | % | (1 | ) | 0 | % | ||||||||||
Amortization of intangible assets | 171 | 169 | 4.9 | % | 4.3 | % | 2 | 1 | % | |||||||||||
Goodwill impairment | 89 | — | 2.5 | % | — | % | 89 | - | ||||||||||||
Restructuring and impairment charges, net | 165 | 132 | 4.7 | % | 3.4 | % | 33 | 25 | % | |||||||||||
Acquisition-related costs | 1 | 4 | 0.0 | % | 0.1 | % | (3 | ) | (75 | )% | ||||||||||
Total operating expenses | $ | 1,914 | $ | 1,901 | 54.5 | % | 48.8 | % | $ | 13 | 1 | % |
Nine months ended June 30, | |||||||
In millions | 2013 | 2012 | |||||
Net cash (used for) provided by: | |||||||
Net loss | $ | (387 | ) | $ | (354 | ) | |
Adjustments to net loss for non-cash items | 428 | 478 | |||||
Changes in operating assets and liabilities | 58 | (184 | ) | ||||
Operating activities | 99 | (60 | ) | ||||
Investing activities | (89 | ) | (237 | ) | |||
Financing activities | (68 | ) | 167 | ||||
Effect of exchange rate changes on cash and cash equivalents | (8 | ) | 1 | ||||
Net decrease in cash and cash equivalents | (66 | ) | (129 | ) | |||
Cash and cash equivalents at beginning of period | 337 | 400 | |||||
Cash and cash equivalents at end of period | $ | 271 | $ | 271 |
• | Benefit obligations—We estimate we will make payments under our pension and postretirement obligations totaling $65 million during the remainder of fiscal 2013. These payments include: $45 million to satisfy the minimum statutory funding requirements of our U.S. qualified plans, $2 million of payments under our U.S. benefit plans which are not pre-funded, $5 million under our non-U.S. benefit plans which are predominately not pre-funded, $2 million under our U.S. retiree medical benefit plan which is not pre-funded and $11 million under the agreements for represented retirees to post-retirement health trusts. See discussion in Note 11, “Benefit Obligations” to our unaudited interim consolidated financial statements for further details of our benefit obligations. |
• | Debt service—As discussed above and in Note 7, "Financing Arrangements" to our unaudited interim consolidated financial statements, the Company entered into certain refinancing transactions during the nine months ended June 30, 2013. We expect to make payments of $133 million during the remainder of fiscal 2013 for principal and interest associated with our long-term debt, as refinanced. We will also make payments associated with our interest rate swaps used to reduce the Company’s exposure to variable-rate interest payments. |
• | Capital expenditures—We expect to spend approximately $32 million for capital expenditures and capitalized software development costs during the remainder of fiscal 2013. |
• | Restructuring payments—We expect to make payments of approximately $53 million during the remainder of fiscal 2013 for employee separation costs and lease termination obligations associated with restructuring actions we have implemented through June 30, 2013. |
In millions | June 30, 2013 | September 30, 2012 | |||||
2013 | $ | 9 | $ | 38 | |||
2014 | 38 | 38 | |||||
2015 | 53 | 1,442 | |||||
2016 | 174 | 1,542 | |||||
2017 | 38 | 23 | |||||
2018 and thereafter | 5,799 | 3,046 | |||||
Total | $ | 6,111 | $ | 6,129 |
• | our ability to develop and sell advanced communications products and services, including unified communications, data networking solutions and contact center applications; |
• | the market for our products and services, including unified communications solutions; |
• | our ability to remain competitive in the markets we serve; |
• | economic conditions and the willingness of enterprises to make capital investments; |
• | our reliance on our indirect sales channel; |
• | the ability to protect our intellectual property and avoid claims of infringement; |
• | the ability to retain and attract key employees; |
• | our degree of leverage and its effect on our ability to raise additional capital and to react to changes in the economy or our industry; |
• | our ability to manage our supply chain and logistics functions; |
• | liquidity and our access to capital markets; |
• | risks relating to the transaction of business internationally; |
• | our ability to effectively integrate acquired businesses into ours, including Radvision; |
• | an adverse result in any significant litigation, including antitrust, intellectual property or employment litigation; |
• | our ability to maintain adequate security over our information systems; |
• | environmental, health and safety laws, regulations, costs and other liabilities; |
• | climate change; and |
• | pension and post-retirement healthcare and life insurance liabilities. |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net loss | $ | (110 | ) | $ | (166 | ) | $ | (387 | ) | $ | (354 | ) | |||
Interest expense | 122 | 107 | 346 | 324 | |||||||||||
Interest income | (1 | ) | (1 | ) | (2 | ) | (3 | ) | |||||||
(Benefit from) provision for income taxes | (3 | ) | 88 | (9 | ) | 62 | |||||||||
Depreciation and amortization | 110 | 140 | 331 | 426 | |||||||||||
EBITDA | 118 | 168 | 279 | 455 | |||||||||||
Impact of purchase accounting adjustments | 1 | 1 | 1 | 2 | |||||||||||
Restructuring charges, net | 63 | 17 | 165 | 128 | |||||||||||
Sponsors’ fees (a) | 1 | 1 | 5 | 5 | |||||||||||
Acquisition-related costs (b) | 1 | 1 | 1 | 4 | |||||||||||
Integration-related costs (c) | 3 | 6 | 12 | 14 | |||||||||||
Loss on extinguishment of debt (d) | — | — | 6 | — | |||||||||||
Third-party fees expensed in connection with the debt modification (e) | — | — | 18 | — | |||||||||||
Non-cash share-based compensation | 4 | 2 | 7 | 7 | |||||||||||
Write-down of assets held for sale to net realizable value | — | 4 | — | 4 | |||||||||||
(Gain) loss on investments and sale of long-lived assets, net | (1 | ) | — | (1 | ) | 3 | |||||||||
Goodwill impairment | — | — | 89 | — | |||||||||||
Impairment of long-lived assets | 1 | 2 | 1 | 2 | |||||||||||
Venezuela hyperinflationary and devaluation charges | — | — | 1 | — | |||||||||||
Resolution of legal matters | 10 | — | 10 | — | |||||||||||
Loss (gain) on foreign currency transactions | 5 | (5 | ) | (10 | ) | 7 | |||||||||
Pension/OPEB/nonretirement postemployment benefits and long-term disability costs (f) | 19 | 28 | 64 | 73 | |||||||||||
Adjusted EBITDA | $ | 225 | $ | 225 | $ | 648 | $ | 704 |
(a) | Sponsors’ fees represent monitoring fees payable to affiliates of the Sponsors pursuant to a management services agreement entered into at the time of the Merger. |
(b) | Acquisition-related costs include legal and other costs related to Radvision, the acquisition of NES and other acquisitions. |
(c) | Integration-related costs primarily represent third-party consulting fees and other administrative costs associated with consolidating and coordinating the operations of Avaya with Radvision, NES and other acquisitions. In fiscal 2013, the costs primarily relate to developing compatible IT systems and internal processes with NES and consolidating and coordinating the operations of Avaya with Radvision and other acquisitions. In fiscal 2012, the costs primarily relate to developing compatible IT systems and internal processes with NES. |
(d) | Loss on extinguishment of debt represents the loss recognized in connection with the repayment of $284 million of term B-5 loans and $584 million of term B-1 loans. The loss is based on the difference between the reacquisition price and the carrying value (including unamortized debt issue costs) of the debt. See Note 7, “Financing Arrangements,” to our unaudited interim consolidated financial statements located elsewhere in this Form 10-Q. |
(e) | The third-party fees expensed in connection with debt modification represent fees paid to third parties in connection with modifications of the senior secured credit facility and the exchange of $1,384 million of senior unsecured notes for senior secured notes. See Note 7, “Financing Arrangements,” to our unaudited interim consolidated financial statements located elsewhere in this Form 10-Q. |
(f) | Represents that portion of our pension costs, other post-employment benefit costs and non-retirement post-employment benefit costs representing the amortization of prior service costs and net actuarial gains/losses associated with these employment benefits. For the three and nine months ended June 30, 2013, the amounts include a net curtailment gain of $6 million associated with the U.S. pension and postretirement plans. For the three and nine months ended June 30, 2012, the amounts include a curtailment charge of $5 million associated with workforce reductions in Germany and the U.S. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
a) | Evaluation of Disclosure Controls and Procedures. |
b) | Changes in Internal Control Over Financial Reporting. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Item 3. | Defaults Upon Senior Securities. |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information. |
Item 6. | Exhibits. |
Exhibit Number | ||
10.1 | Form of Segment Transformation Growth Incentive cash award agreement dated July 2013. | |
10.2 | Form of Segment Transformation Growth Incentive restricted stock unit award agreement dated July 2013. | |
31.1 | Certification of Kevin J. Kennedy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of David Vellequette pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of Kevin J. Kennedy pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of David Vellequette pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | The following materials from Avaya Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets at June 30, 2013 and September 30, 2012, (ii) Consolidated Statement of Operations for the three and nine months ended June 30, 2013 and 2012(iii) the Consolidated Statement of Comprehensive Income for the three and nine months ended June 30, 2013 and 2012 (iv) Consolidated Statements of Cash Flows for the nine months ended June 30, 2013 and 2012, and (v) Notes to Consolidated Financial Statements (Unaudited)* |
* | Pursuant to Rule 406 T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those Sections. |
AVAYA INC. | ||
By: | /S/ KEVIN J. MACKAY | |
Kevin J. MacKay Vice President, Controller & Chief Accounting Officer (Principal Accounting Officer) |
Indicate Election (Check Box) | Award Mix | Cash $ | RSU $ | Actual Number of RSUs to be Granted #* |
Cash/RSUs (50%/50%) | XXX | XXX | XXX | |
Cash/RSUs (75%/25%) | XXX | XXX | XXX |
1. | Preliminary Matters. Not later than upon the execution of this Agreement and effective as of the date hereof, the undersigned has executed and become a party to the Management Stockholders' Agreement, dated October 26, 2007 by and among the Company and certain stockholders of the Company (the “Stockholders' Agreement”). |
2. | Effective Date. Subject to the undersigned's execution of the documents referenced in Section 1 above, the grant date for the Award is as set forth in the table above (the “Grant Date”). |
3. | Shares Subject to Award. The Award consists of the right to receive, on the terms set forth herein and in the Plan and except as otherwise provided in Section 5 below, one share (a “Share”) of common stock, par value $.001 per share, of the Company (“Stock”) with respect to each Unit forming part of the Award. Subject to adjustment pursuant to Section 7 of the Plan, the Award covers the number of RSU units as set forth in the table above. |
4. | Meaning of Certain Terms. Except as otherwise expressly provided, all terms used herein shall have the same meaning as in the Plan. |
5. | Delivery of Shares. |
a. | Vesting. The Award shall vest and become non-forfeitable monthly on the last day of each month for twelve consecutive months beginning July 31, 2013; provided, however, that vesting for any Units awarded shall accelerate upon the earlier occurrence of one of the events described in Section 5.b.i or ii below. In the event the undersigned ceases to be employed by Avaya Inc., then any Units that are unvested as of the date of termination of employment shall be forfeited and cancelled, except that in the event of an involuntary termination of employment other than for Cause, monthly vesting credit will be given for the month in which the termination becomes effective. |
a. | Distribution. With respect to each vested Unit and subject to adjustment pursuant to Section 7 of the Plan, the Company shall deliver one Share on, or within thirty (30) days before or after, the |
6. | Effect of Covered Transaction. In the event a Covered Transaction that is not a Change in Control occurs prior to the Five Year Date, the Units, unless previously paid pursuant to Section 5 above, and unless assumed in the transaction, shall automatically be converted into the right to receive from the surviving or acquiring entity (or, if so arranged by the Administrator, from an affiliate thereof), on the same payment schedule as is specified in Section 5 above and otherwise subject to the terms and conditions of this Award, cash (or, in the Administrator's discretion, securities or other property, including Stock) on a basis that in the Administrator's judgment as closely as possible under the circumstances, and on a basis that complies with the requirements of Section 409A, effectuates the intent of the Award, adjusted in such manner as the Administrator shall have prescribed prior to the Covered Transaction for notional interest or other notional investment experience for the period between the Covered Transaction and payment. |
7. | Dividends, etc. If while the undersigned still holds the Award and prior to delivery of any Shares under the Award, the Company makes a dividend or other distribution with respect to the Stock, the undersigned shall be entitled, subject to withholding of tax by the Company pursuant to Section 8 below, to a payment in lieu of such dividend or other distribution (which in-lieu-of payment shall be in cash to the extent the dividend or other distribution was in cash, and otherwise in such form as the Administrator shall determine) equal on a per-Share amount to the per-Share amount of the dividend or other distribution paid by the Company with respect to one Share of outstanding Stock. |
8. | Certain Tax Matters. The undersigned expressly acknowledges that because the Award consists of an unfunded and unsecured promise by the Company to deliver Shares in the future, subject to the terms hereof, it is not possible to make a so-called “83(b) election” with respect to the Award. The undersigned also expressly acknowledges that the undersigned (i) is subject to FICA tax upon the vesting of the Units underlying the Award and will promptly pay to the Company, upon demand, the full amount of such tax unless the Company determines instead that it will (a) hold back Shares from an award or permit a Participant to tender previously owned Shares in satisfaction of tax withholding requirements (but not in excess of the applicable minimum statutory withholding rate) or (b) withhold such tax from other payments owed to the undersigned, and (ii) will be subject to income tax and related withholding requirements with respect to the Award at such time as cash or property is delivered with respect to the Award (unless required to include amounts in income prior thereto by reason of Section 409A or otherwise). The undersigned agrees that the undersigned's rights hereunder are subject to the undersigned promptly paying to the Company in cash (or by such other means as may be acceptable to the Company in its discretion, including, as the Administrator so determines) all taxes required to be withheld in connection with the Award. |
9. | Governing Law. This Agreement and all claims arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. |
10. | Acceptance of Agreement. The undersigned confirms that he or she has been provided adequate opportunity to review the terms and conditions of the RSU grant awarded to him or her, including those set out in this Agreement. The undersigned understands that clicking the appropriate box, “Accept” for acceptance or “Reject” for rejection, indicates his or her irrevocable election to accept or reject, as applicable, the terms of the grant as set forth in this Agreement. |
1. | Loyalty and Conflicts of Interest |
1. | Exclusive Duty. During his or her employment, the Award Recipient will not engage in any other business activity except as permitted by the Company's Code of Conduct. |
2. | Compliance with Company Policy. The Award Recipient will comply with all policies, practices and procedures of the Company which the Company conveys to the Award Recipient, as these may be implemented and/or changed by the Company from time to time. Without limiting the generality of the foregoing, the Award Recipient acknowledges that the Company may from time to time have agreements with other Persons which impose obligations or restrictions on the Company regarding Intellectual Property, as defined below, created during the course of work under such agreements and/or regarding the confidential nature of such work. The Award Recipient will comply with and be bound by all such obligations and restrictions which the Company conveys to him or her and will take all actions necessary (to the extent within his or her power and authority) to discharge the obligations of the Company under such agreements. |
2. | Confidentiality |
1. | Nondisclosure and Nonuse of Confidential Information. All Confidential Information, as defined below, which the Award Recipient creates or has access to as a result of his or her employment and other associations with the Company is and shall remain the sole and exclusive property of the Company. The Award Recipient will never, directly or indirectly, use or disclose any Confidential Information, except (a) as required for the proper performance of his or her regular duties for the Company, (b) as expressly authorized in writing in advance by the Company, (c) as required by applicable law or regulation, (d) to his or her attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring his or her investment in the Company (provided they agree not to disclose such Confidential Information to others, except as authorized by this Section 2.1), (e) to any prospective purchaser of any shares from him or her (at a time when such transfer is permissible under the terms of the Management Stockholders' Agreement dated as of October 26, 2007 and other applicable agreements), so long as such prospective purchaser agrees to be bound by the provisions of this Section 2.1 and to use such Confidential Information solely for purposes of evaluating a possible investment in the Company, or (f) as may be reasonably determined by the Award Recipient to be |
2. | Use and Return of Documents. All documents, records and files, in any media of whatever kind and description, relating to the business, present or otherwise, of the Company and any copies (including without limitation electronic), in whole or in part, thereof (the “Documents” and each individually, a “Document”), whether or not prepared by the Award Recipient, shall be the sole and exclusive property of the Company. Except as required for the proper performance of the Award Recipient's regular duties for the Company or as expressly authorized in writing in advance by the Company, the Award Recipient will not copy any Documents or remove any Documents or copies or derivatives thereof from the premises of the Company. The Award Recipient will safeguard, and return to the Company immediately upon termination of employment, and at such other times as may be specified by the Company, all Documents and other property of the Company, and all documents, records and files of its customers, subcontractors, vendors and suppliers (“Third-Party Documents” and each individually a “Third-Party Document”), as well as all other property of such customers, subcontractors, vendors and suppliers, then in the Award Recipient's possession or control. Provided, however, if a Document or Third-Party Document is on electronic media, the Award Recipient may, in lieu of surrender of the Document or Third-Party Document, provide a copy on electronic media (e.g., a properly formatted diskette) to the Company and delete and overwrite all other electronic media copies thereof. Upon request of any duly authorized officer of the Company, the Award Recipient will disclose all passwords necessary or desirable to enable the Company to obtain access to the Documents and Third-Party Documents. Notwithstanding any provision of this Section 2.2 to the contrary, the Award Recipient shall be permitted to retain copies of all Documents evidencing his or her hire, equity and other compensation rate and benefits, this Appendix I, and any other agreements between the Award Recipient and the Company that the Award Recipient has signed. |
3. | Non-Solicitation and Other Restricted Activity |
1. | Non-Competition. This paragraph is applicable to Vice President and higher positions as of the date of this agreement. During his or her employment the Award Recipient will not, directly or indirectly, compete with the Company, anywhere in the world, whether as an owner, partner, investor, consultant, employee or otherwise. Further, during the 12-month period immediately following the termination of the Award Recipient's employment for any reason, the Award Recipient will not work for or provide services to, in any capacity, whether as an employee, independent contractor or otherwise, whether with or without compensation, to any Material Competitor (as defined below). The foregoing shall not prevent: (i) passive ownership by the Award Recipient of no more than two percent (2%) of the equity securities of any publicly traded company; or (ii) the Award Recipient's providing services to a division or subsidiary of a multi-division entity or holding company, so long as no division or subsidiary to which the Award Recipient provides services is a Material Competitor, and the Award Recipient does not otherwise engage in competition on behalf of the multi-division entity or any competing division or subsidiary thereof. |
2. | Good Will. Any and all good will which the Award Recipient develops during his or her employment with any of the customers, prospective customers, subcontractors or suppliers of the |
3. | Non-Solicitation of Customers. During his or her employment and during the 12-month period immediately following the termination of such employment for any reason, the Award Recipient will not, directly or indirectly, (a) solicit, encourage or induce any customer of the Company to terminate or diminish in any substantial respect its relationship with the Company; or (b) seek to persuade or induce any such customer or prospective customer of the Company to conduct with anyone else any substantial business or activity which such customer or prospective customer conducts or could conduct with the Company; provided that the restrictions in (a) and (b) shall apply (i) only with respect to those Persons who are or have been a customer of the Company at any time within the immediately preceding one-year period or whose business has been solicited on behalf of the Company by any of its officers, employees or agents within said one-year period, other than by form letter, blanket mailing or published advertisement, and (ii) only if the Award Recipient has performed work for such Person during his or her employment with the Company or has been introduced to, or otherwise had contact with, such Person as a result of his or her employment or other associations with the Company or has had access to Confidential Information which would assist in the solicitation of such Person. The foregoing restrictions shall not apply to general solicitation or advertising, including through media and trade publications. |
4. | Non-Solicitation/Non-Hiring of Employees and Independent Contractors. During his or her employment and for the 12-month period immediately following the termination of such employment for any reason, the Award Recipient will not, and will not assist anyone else to, (a) hire or solicit for hiring any employee of the Company or seek to persuade or induce any employee of the Company to discontinue employment with the Company, or (b) hire or engage any independent contractor providing services to the Company, or solicit, encourage or induce any independent contractor providing services to the Company to terminate or diminish in any substantial respect its relationship with the Company. For the purposes of this Appendix I, an “employee” or “independent contractor” of the Company is any person who is or was such at any time within the preceding six-month period. The foregoing restrictions shall not apply to general solicitation or advertising, including through media, trade publications and general job postings. |
5. | Notice of New Address and Employment. During the 12-month period immediately following the termination of his or her employment for any reason, the Award Recipient will provide the Company with pertinent information concerning each new job or other business activity in which the Award Recipient engages or plans to engage during such 12-month period as the Company may reasonably request in order to determine the Award Recipient's continued compliance with his or her obligations under this Appendix I. The Award Recipient shall notify his or her new employer(s) of the Award Recipient's obligations under this Appendix I, and hereby consents to notification by the Company to such employer(s) concerning his or her obligations under this Appendix I. The Company shall treat any such notice and information as confidential, and will not use or disclose the information contained therein except to enforce its rights hereunder. |
6. | Acknowledgement of Reasonableness; Remedies. In signing this letter agreement, the Award Recipient gives the Company assurance that the Award Recipient has carefully read and considered all the terms and conditions hereof. The Award Recipient acknowledges without reservation that each of the restraints contained herein is necessary for the reasonable and proper protection of the good will, Confidential Information and other legitimate business interests of the Company, that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints will not prevent the Award Recipient from obtaining other suitable employment during the period in which he or she is bound by them. |
7. | In the event that any provision of this Appendix I shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. The 12-month period of restriction set forth in Sections 3.2 and 3.3 hereof shall be tolled, and shall not run, during any period of time in which the Award Recipient is in violation of the terms thereof, in order that the Company shall have the agreed-upon temporal protection recited herein. |
8. | Consent to Jurisdiction. In the event of any alleged breach of this Appendix I, the Award Recipient consents and submits to the jurisdiction of the federal and state courts in and of the State of New Jersey, and of the federal and state courts in and of the state in which the Award Recipient is then employed. The Award Recipient will accept service of process by registered or certified mail or the equivalent directed to his or her last known address on the books of the Company, or by whatever other means are permitted by such court. |
9. | Limited Exception for Attorneys. Insofar as the restrictions set forth in this Section 3 prohibit the solicitation, inducement or attempt to hire a licensed attorney who is employed at the Company, they shall not apply if the Award Recipient is a licensed attorney and the restrictions contained herein are illegal, unethical or unenforceable under the laws, rules and regulations of the jurisdiction in which the Award Recipient is licensed as an attorney. |
4. | Intellectual Property |
1. | In signing this letter agreement, the Award Recipient hereby assigns and shall assign to the Company all of his or her right, title and interest in and to all inventions, discoveries, improvements, ideas, mask works, computer or other apparatus programs and related documentation, and other works of authorship (hereinafter each designated “Intellectual Property”), whether or not patentable, copyrightable or subject to other forms of protection, made, created, developed, written or conceived by the Award Recipient during the period of his or her employment, whether during or outside of regular working hours, either solely or jointly with another, in whole or in part, either: (a) in the course of such employment, (b) relating to the actual or anticipated business or research development of the Company, or (c) with the use of company time, material, private or proprietary information, or facilities. |
2. | The Award Recipient will, without charge to the Company, but at its expense, execute a specific assignment of title to the Company and do anything else reasonably necessary to enable the Company to secure a patent, copyright or other form of protection for said Intellectual Property anywhere in the world. |
3. | The Award Recipient acknowledges that the copyrights in Intellectual Property created with the scope of his or her employment belong to the Company by operation of law. |
4. | The Award Recipient has provided to the Company a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by the Award Recipient prior to his or her employment with the Company, which belong to the Award Recipient and which are not assigned to the Company hereunder (collectively referred to as “Prior Inventions”); and, if no such list is provided, the Award Recipient represents and warrants that there are no such Prior Inventions. |
5. | Definitions |
6. | Compliance with Other Agreements and Obligations |
7. | Entire Agreement; Severability; Modification |
8. | Assignment |
9. | At-Will Employment |
10. | Successors |
11. | Acknowledgement of Understanding |
TITLE | DATE | IDENTIFYING NUMBER OR BRIEF DESCRIPTION |
/s/ KEVIN J. KENNEDY | |
Kevin J. Kennedy President and Chief Executive Officer (Principal Executive Officer) |
/s/ DAVID VELLEQUETTE | |
David Vellequette Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ KEVIN J. KENNEDY | |
Kevin J. Kennedy President and Chief Executive Officer (Principal Executive Officer) |
/s/ DAVID VELLEQUETTE | |
David Vellequette Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
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Benefit Obligations
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Obligations |
The Company sponsors non-contributory defined benefit pension plans covering a portion of its U.S. employees and retirees, and postretirement benefit plans covering a portion of its U.S. retirees that include healthcare benefits and life insurance coverage. Certain non-U.S. operations have various retirement benefit programs covering substantially all of their employees. Some of these programs are considered to be defined benefit pension plans for accounting purposes. The Company froze benefit accruals and additional participation in the pension and postretirement plans for its U.S. management employees effective December 31, 2003. In addition, the Company amended the postretirement plan for its U.S. management employees effective January 1, 2013, to terminate retiree dental coverage, and to cease providing medical and prescription drug coverage to a retiree, dependent, or lawful spouse who has attained age 65. Effective October 12, 2011 and November 18, 2011, the Company entered into a two-year contract extension with the Communications Workers of America (“CWA”) and the International Brotherhood of Electrical Workers (“IBEW”), respectively. With the contract extension, the contracts with the CWA and IBEW now terminate on June 7, 2014. The contract extension did not affect the level of pension and postretirement benefits available to U.S. employees of the Company who are represented by the CWA or IBEW (“represented employees”). The components of the pension and postretirement net periodic benefit cost for the three and nine months ended June 30, 2013 and 2012 are provided in the table below:
As a result of business restructuring initiatives, certain U.S. pension and postretirement plans experienced a curtailment during the quarter ended June 30, 2013. The curtailment of the U.S. pension plan resulted in a curtailment loss of $2 million, which was recognized immediately. The curtailment of the U.S. postretirement plan resulted in an estimated curtailment gain of $12 million, $8 million of which was recognized during the quarter ended June 30, 2013 associated with the terminations that occurred as of that date. The remaining curtailment gain will be recognized in the fourth quarter of fiscal 2013 when the remaining terminations occur. As a result of business restructuring initiatives, certain U.S. pension and postretirement plans and certain non-U.S. pension plans experienced a curtailment during the quarter ended June 30, 2012, which resulted in curtailment charges of $2 million and $3 million, respectively. The Company's general funding policy with respect to its U.S. qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable laws and regulations. For the nine month period ended June 30, 2013, the Company made contributions of $57 million to satisfy minimum statutory funding requirements. Estimated payments to satisfy minimum statutory funding requirements for the remainder of fiscal 2013 are $45 million. The Company provides certain pension benefits for U.S. employees, which are not pre-funded, and certain pension benefits for non-U.S. employees, the majority of which are not pre-funded. Consequently, the Company makes payments as these benefits are disbursed or premiums are paid. For the nine month period ended June 30, 2013, the Company made payments for these U.S. and non-U.S. pension benefits totaling $5 million and $22 million, respectively. Estimated payments for these U.S. and non-U.S. pension benefits for the remainder of fiscal 2013 are $2 million and $5 million, respectively. During the nine months ended June 30, 2013, the Company contributed $32 million to the represented employees’ post-retirement health trust to fund current benefit claims and costs of administration in compliance with the terms of the 2009 agreements between the Company and the CWA and IBEW, as extended through June 7, 2014. Estimated contributions under the terms of the 2009 agreements are $11 million for the remainder of fiscal 2013. The Company also provides certain retiree medical benefits for U.S. employees, which are not pre-funded. Consequently, the Company makes payments as these benefits are disbursed. For the nine month period ended June 30, 2013, the Company made payments totaling $7 million for these retiree medical benefits. Estimated payments for these retiree medical benefits for the remainder of fiscal 2013 are $2 million. |
Goodwill And Intangible Assets
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9 Months Ended |
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill Goodwill is not amortized but is subject to periodic testing for impairment in accordance with GAAP at the reporting unit level which is one level below the Company’s operating segments. The test for impairment is conducted annually each September 30th or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. March 31, 2013 During the three months ended March 31, 2013 the Company's IT professional services ("ITPS") reporting unit, which provides specialized information technology services exclusively to government customers in the U.S., experienced a decline in revenues as a result of reduced government spending in anticipation of sequestration and budget cuts. Additionally, there is uncertainty regarding how the sequestration cuts will be implemented and the impact they will have on contractors supporting the government. As a result of these events, the Company determined that an interim impairment test of the reporting unit's goodwill should be performed. The impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of the reporting unit with its carrying amount, including the goodwill allocated to that reporting unit. The Company estimated the fair value of the ITPS reporting unit using an income approach which values the unit based on the future cash flows expected from that reporting unit. Future cash flows are based on forward-looking information regarding market share and costs for the reporting unit and are discounted using an appropriate discount rate. Future discounted cash flows can be affected by changes in industry or market conditions or the rate and extent to which cost savings are realized. In step one of the test, a market approach was considered but was not used in the final determination of fair value. The discounted cash flows model used in the Company’s income approach relies on assumptions regarding revenue growth rates, gross margin, projected working capital needs, selling, general and administrative expenses, research and development expenses, business restructuring costs, capital expenditures, income tax rates, discount rates and terminal growth rates. To estimate fair value, the Company discounts the expected cash flows of the reporting unit. The discount rate Avaya uses represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in the reporting unit's operations and the rate of return an outside investor would expect to earn. To estimate cash flows beyond the final year of its model, Avaya uses a terminal value approach. Under this approach, Avaya uses the estimated cash flows in the final year of its model, applies a perpetuity growth assumption and discounts by a perpetuity discount factor to determine the terminal value. Avaya incorporates the present value of the resulting terminal value into its estimate of fair value. The Company forecasted cash flows for the ITPS reporting unit and took into consideration current economic conditions and trends, estimated future operating results, Avaya’s view of growth rates and anticipated future economic conditions applicable to the ITPS reporting unit. Revenue growth rates inherent in this forecast are based on input from internal and external market intelligence research sources. Macro economic factors such as changes in economies, product evolutions, industry consolidations and other changes beyond Avaya’s control could have a positive or negative impact on ITPS achieving its targets. The results of step one of the goodwill impairment test indicated that the estimated fair value of the ITPS reporting unit was less than the respective carrying value of its net assets (including goodwill) and as such, the Company performed step two of the impairment test. The second step of the impairment test compares the implied fair value of the reporting unit's goodwill with the carrying value of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. This allocation is performed only for purposes of assessing goodwill for impairment; accordingly Avaya did not adjust the net book value of the assets and liabilities on its Consolidated Balance Sheets other than goodwill as a result of this process. As a result of the application of step two of the goodwill impairment test, the Company estimated the implied fair value of the goodwill to be $44 million as compared with a carrying value of $133 million and recorded an impairment to goodwill of $89 million associated with the ITPS reporting unit within the Avaya Global Services segment. The impairment was primarily the result of the continued budgetary constraints, sequestration and uncertainty regarding spending on the part of the U.S. government. The reduced valuation of the reporting unit reflects additional market risks and lower sales forecasts for the reporting unit, which is consistent with economic trends at that time. The Company determined that no events occurred or circumstances changed during the six months ended March 31, 2013 that would more likely than not reduce the fair value of its other reporting units below their respective carrying amounts. March 31, 2012 During the three months ended March 31, 2012, the Company experienced a decline in revenue as compared to the same period of the prior year and sequential quarters. This revenue decline impacted the Company's forecasts for the remainder of fiscal 2012. As a result of these events, the Company determined that an interim impairment test of its long-lived assets and goodwill should be performed. The estimated fair value of each reporting unit at March 31, 2012 reflected the additional market risks, lower discount rates and the updated sales forecasts for the Company’s reporting units based off recent results. Using the revised valuations at March 31, 2012 the results of step one of the goodwill impairment test indicated that although the estimated fair values of each reporting unit were lower at March 31, 2012 when compared to September 30, 2011, their respective book values did not exceed their estimated fair values and therefore no impairment existed. June 30, 2013 and 2012 The Company determined that no events occurred or circumstances changed during the three months ended June 30, 2013 and 2012 that would more likely than not reduce the fair value of any of the Company's reporting units below their respective carrying amounts. However, if market conditions deteriorate, it may be necessary to record impairment charges in the future. Intangible Assets Intangible assets include acquired technology, customer relationships, trademarks and trade-names and other intangibles. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from five years to fifteen years. Acquired technology and patents do not include capitalized software development costs. Unamortized capitalized software developments costs of $38 million at June 30, 2013 and $51 million at September 30, 2012 are included in other assets in the Company's Consolidated Balance Sheets. Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Certain of the Company’s trademarks and trade names are expected to generate cash flow indefinitely. Consequently, these assets are classified as indefinite-lived intangibles. March 31, 2013 Prior to the goodwill testing discussed above, the Company tested the intangible assets and other long-lived assets of the ITPS reporting unit for impairment during the six months ended March 31, 2013 and no impairment was identified. The Company determined that no events had occurred or circumstances changed during the six months ended March 31, 2013 that would indicate that the intangible assets and long-lived assets of its other reporting units may not be recoverable. March 31, 2012 Prior to the goodwill testing discussed above, the Company tested its intangible assets with indefinite lives and other long-lived assets as of March 31, 2012. Using the revised forecasts as of March 31, 2012, the Company performed step one of the impairment test of long-lived assets with finite lives and determined that the carrying amount of these assets was recoverable and, therefore, no impairment was identified. GAAP requires that the fair value of intangible assets with indefinite lives be compared to the carrying value of those assets. In situations where the carrying value exceeds the fair value of the intangible asset, an impairment loss equal to the difference is recognized. The Company estimates the fair value of its indefinite-lived intangible assets using an income approach; specifically, based on discounted cash flows. Although the estimated fair values of the Company’s tradenames and trademarks were lower at March 31, 2012 when compared to September 30, 2011, their respective book values did not exceed their estimated fair values and therefore no impairment existed. June 30, 2013 and 2012 The Company determined that no events had occurred or circumstances changed during the three months ended June 30, 2013 and 2012 that would indicate that its long-lived assets, including intangible assets with finite lives, may not be recoverable or that it is more likely than not that its intangible assets with indefinite lives are impaired. However, if market conditions deteriorate, it may be necessary to record impairment charges in the future. |
Financing Arrangements (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consists of the following:
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Schedule of Maturities of Long-term Debt | Annual maturities of long-term debt for the next five years ending September 30 and thereafter consist of:
|
Share-Based Compensation
|
9 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2013
|
|||||
Share-based Compensation [Abstract] | |||||
Share-Based Compensation |
Parent’s Amended and Restated 2007 Equity Incentive Plan (“2007 Plan”) governs the issuance of equity awards, including restricted stock units (“RSUs”) and stock options, to eligible plan participants. Key employees, directors, and consultants of the Company may be eligible to receive awards under the 2007 Plan. Each stock option, when vested and exercised, and each RSU, when vested, entitles the holder to receive one share of Parent’s common stock, subject to certain restrictions on their transfer and sale as defined in the 2007 Plan and related award agreements. As of June 30, 2013, Parent had authorized the issuance of up to 49,848,157 shares of its common stock under the 2007 Plan, in addition to 2,924,125 shares of common stock underlying certain continuation awards that were permitted to be issued at the time of the Merger. There remained 17,730,799 shares available for grant under the 2007 Plan as of June 30, 2013. On February 25, 2013, the Compensation Committee of Parent's board of directors approved a stock option exchange program through which individuals holding market-based "multiple-of-money" and performance-based "EBITDA" stock options could exchange them on a three-for-one basis for RSUs. The replacement RSUs will vest in full in December 2013. The tender offer was closed on April 30, 2013 and 45,500 EBITDA and 10,159,189 multiple-of-money options were tendered for exchange. In connection with the exchange offer, 3,401,654 replacement RSUs were granted which have an effective grant date of May 6, 2013. Option Awards During the nine months ended June 30, 2013, 2,405,000 time-based and 185,500 multiple-of-money options were granted in the ordinary course of business. All of the options expire ten years from the date of grant or upon cessation of employment, in which event there are limited exercise provisions allowed for vested options. Options granted between October 1, 2012 and November 30, 2012 have an exercise price of $4.00 per share, between December 1, 2012 and March 31, 2013 have an exercise price of $3.00 per share, and between April 1, 2013 and June 30, 2013 have an exercise price of $2.25 per share. Time-based options granted during the nine months ended June 30, 2013 vest over their performance periods, generally four years. Compensation expense equal to the fair value of the option measured on the grant date is recognized utilizing graded attribution over the requisite service period. Multiple-of-money options granted during the nine months ended June 30, 2013 vest upon the achievement of defined returns on the Sponsors’ initial investment in Parent. Because vesting of the multiple-of-money market-based options is outside the control of the Company and the award recipients, compensation expense relative to the multiple-of-money options must be recognized upon the occurrence of a triggering event (e.g., sale or initial public offering of Parent). The fair value of option awards is determined at the date of grant utilizing the Cox-Ross Rubinstein (“CRR”) binomial option pricing model which is affected by the fair value of Parent’s common stock as well as a number of complex and subjective assumptions. Expected volatility is based primarily on a combination of the Company’s peer group’s historical volatility and estimates of implied volatility of the Company’s peer group. The risk-free interest rate assumption was derived from reference to the U.S. Treasury Spot rates for the expected term of the stock options. The dividend yield assumption is based on Parent’s current intent not to issue a dividend under its dividend policy. The expected holding period assumption was estimated based on the Company’s historical experience. For the three months ended June 30, 2013 and 2012, the Company recognized share-based compensation associated with options issued under the 2007 Plan of $1 million and less than $1 million, respectively, which is included in costs and operating expenses. For the nine months ended June 30, 2013 and 2012, the Company recognized share-based compensation associated with options issued under the 2007 Plan of $3 million and $4 million, respectively, which is included in costs and operating expenses. Restricted Stock Units The Company has issued RSUs each of which represents the right to receive one share of Parent’s common stock when fully vested. The fair value of the RSUs is estimated by the Board of Directors on the respective dates of grant. During the nine months ended June 30, 2013, 793,896 RSUs were awarded. The fair market value (as defined in the 2007 Plan) of these awards at the date of grant was $4.00 per share for RSUs awarded between October 1, 2012 and November 30, 2012, $3.00 per share for RSUs awarded between December 1, 2012 and March 31, 2013, and $2.25 per share for RSUs awarded between April 1, 2013 and June 30, 2013. At June 30, 2013, there were 6,217,189 awarded RSUs outstanding under the 2007 Plan, of which 1,415,016 were fully vested. For the three months ended June 30, 2013 and 2012, the Company recognized share-based compensation associated with RSUs granted under the 2007 Plan of $3 million and $1 million, respectively. For the nine months ended June 30, 2013 and 2012, the Company recognized share-based compensation associated with RSUs granted under the 2007 Plan of $4 million and $3 million, respectively. |
Financing Arrangements (Maturity profile) (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of fiscal 2013 | $ 9 |
2014 | 38 |
2015 | 53 |
2016 | 174 |
2017 | 38 |
2018 and thereafter | 5,799 |
Long-term debt, current and noncurrent portions | $ 6,111 |
Benefit Obligations (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of the pension and postretirement net periodic benefit cost for the three and nine months ended June 30, 2013 and 2012 are provided in the table below:
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Fair Value Measures (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | Assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and September 30, 2012 were as follows:
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Fair Value, by Balance Sheet Grouping | The estimated fair values of the amounts borrowed under the Company’s credit agreements at June 30, 2013 and September 30, 2012 are as follows:
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Fair Value Measures (Fair Value, Other Disclosures) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | ||||||||||||||||||||||||||||
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Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Oct. 31, 2011
|
Jun. 30, 2013
9.75% senior unsecured cash pay notes due 2015
|
Sep. 30, 2012
9.75% senior unsecured cash pay notes due 2015
|
Dec. 30, 2011
9.75% senior unsecured cash pay notes due 2015
|
Jun. 30, 2013
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Minimum
|
Sep. 30, 2012
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Minimum
|
Dec. 30, 2011
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Minimum
|
Jun. 30, 2013
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Maximum
|
Sep. 30, 2012
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Maximum
|
Dec. 30, 2011
10.125%/10.875% senior unsecured PIK toggle notes due 2015
Maximum
|
Jun. 30, 2013
Senior secured notes
Secured Debt
|
Sep. 30, 2012
Senior secured notes
Secured Debt
|
Feb. 11, 2011
Senior secured notes
Secured Debt
|
Jun. 30, 2013
9% Senior secured notes
Secured Debt
|
Dec. 21, 2012
9% Senior secured notes
Secured Debt
|
Sep. 30, 2012
9% Senior secured notes
Secured Debt
|
Jun. 30, 2013
Unified Communications Solutions Provider
|
Oct. 03, 2012
Unified Communications Solutions Provider
|
Oct. 03, 2012
Unified Communications Solutions Provider
Advance to Parent due October 3, 2015
|
Jun. 30, 2013
Other Assets
Fair Value
|
Sep. 30, 2012
Other Assets
Fair Value
|
Oct. 31, 2011
Other Assets
Fair Value
|
Mar. 31, 2013
Quoted prices in active markets for identical instruments (Level 1)
Foreign currency forward contracts
Recurring
Derivative assets
Other current assets
|
Mar. 31, 2013
Significant other observable inputs (Level 2)
Foreign currency forward contracts
Recurring
Derivative assets
Other current assets
|
Mar. 31, 2013
Significant unobservable inputs (Level 3)
Foreign currency forward contracts
Recurring
Derivative assets
Other current assets
|
Mar. 31, 2013
Fair Value
Foreign currency forward contracts
Recurring
Derivative assets
|
Mar. 31, 2013
ITPS [Member]
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||||||||||||||||||||||||||
Assets, Fair Value Disclosure | $ 0 | $ 0 | $ 44 | $ 44 | |||||||||||||||||||||||||||
Notes Receivable, Related Parties, Noncurrent | 8 | 10 | 7 | 6 | 8 | ||||||||||||||||||||||||||
Notes Receivable, Related Parties, Stated Interest Rate Percentage | 1.63% | 0.93% | |||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 9.75% | 9.75% | 9.75% | 10.125% | 10.125% | 10.125% | 10.875% | 10.875% | 10.875% | 7.00% | 7.00% | 7.00% | 9.00% | 9.00% | 9.00% | ||||||||||||||||
Goodwill impairment | $ 0 | $ 0 | $ 89 | $ 0 | $ 89 |
Supplementary Financial Information (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
OTHER (EXPENSE) INCOME, NET | ||||
Interest income | $ 1 | $ 1 | $ 2 | $ 3 |
(Loss) gain on foreign currency transactions | (5) | 5 | 10 | (7) |
Third party fees incurred in connection with debt modifications | 0 | 0 | (18) | 0 |
Venezuela hyperinflationary and devaluation charges | 0 | 0 | (1) | 0 |
Other, net | (1) | 0 | (2) | (3) |
Total other (expense) income, net | $ (5) | $ 6 | $ (9) | $ (7) |
Derivatives And Other Financial Instruments (Interest rate swaps) (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
Derivative [Line Items] | |
Notional Amount | $ 1,500 |
3-year swap
|
|
Derivative [Line Items] | |
Notional Amount | 750 |
Floating Rate Received by Avaya | 3-month LIBOR |
Fixed Rate Paid by Avaya | 1.16% |
Term | 3 years |
3-year swap
|
|
Derivative [Line Items] | |
Notional Amount | $ 750 |
Floating Rate Received by Avaya | 3-month LIBOR |
Fixed Rate Paid by Avaya | 1.135% |
Term | 3 years |
Share-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
9 Months Ended | 2 Months Ended | 3 Months Ended | 7 Months Ended | 3 Months Ended | 9 Months Ended | 2 Months Ended | 3 Months Ended | 7 Months Ended | 9 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2013
Time-based option awards
|
May 06, 2013
RSUs
|
Jun. 30, 2013
2007 Plan
|
Jun. 30, 2013
2007 Plan
Options
|
Jun. 30, 2013
2007 Plan
Time-based option awards
|
Jun. 30, 2013
2007 Plan
Multiple-Of-Money Stock Option Awards
|
Nov. 30, 2012
2007 Plan
Stock Options
|
Jun. 30, 2013
2007 Plan
Stock Options
|
Apr. 30, 2012
2007 Plan
Stock Options
|
Jun. 30, 2013
2007 Plan
Stock Options
Costs and operating expenses
|
Jun. 30, 2012
2007 Plan
Stock Options
Costs and operating expenses
|
Dec. 31, 2011
2007 Plan
Stock Options
Costs and operating expenses
|
Jun. 30, 2013
2007 Plan
Stock Options
Costs and operating expenses
|
Nov. 30, 2012
2007 Plan
RSUs
|
Jun. 30, 2013
2007 Plan
RSUs
|
Jun. 30, 2012
2007 Plan
RSUs
|
Apr. 30, 2012
2007 Plan
RSUs
|
Jun. 30, 2013
2007 Plan
RSUs
|
Jun. 30, 2012
2007 Plan
RSUs
|
Jun. 30, 2013
2007 Plan
RSUs
Other Than Director
|
Jun. 30, 2013
Continuation awards issued at the time of the Merger
|
Jun. 30, 2013
Avaya Holdings Corporation [Member]
2007 Plan
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 2,924,125 | 49,848,157 | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 17,730,799 | |||||||||||||||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options | 45,500 | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 3,401,654 | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 2,405,000 | 185,500 | ||||||||||||||||||||
Share Based Compensation Options Expected Life | 10 years | |||||||||||||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 4.00 | $ 2.25 | $ 3.00 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | |||||||||||||||||||||
Allocated Share-based Compensation Expense | $ 1 | $ 1 | $ 4 | $ 3 | $ 3 | $ 1 | $ 4 | $ 3 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 793,896 | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 4.00 | $ 2.25 | $ 3.00 | |||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 6,217,189 | 6,217,189 | ||||||||||||||||||||
Share-Based Compensation Arrangement Other Than Options, Vested, Number | 1,415,016 | 1,415,016 |
Background, Merger And Basis Of Presentation (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | 0 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013
Private_equity_firm
Partner
Product_Service_Category
|
Jun. 04, 2007
Merger Agreement
|
Dec. 18, 2009
Nortel Networks
|
Dec. 31, 2011
Nortel Networks
|
Jun. 05, 2012
RADVISION Ltd
Parent
|
|
General Disclosures [Line Items] | |||||
Number of product and service categories | 3 | ||||
Number of channel partners worldwide | 10,400 | ||||
Number of investor private equity firms | 2 | ||||
Purchase price | $ 8,400 | $ 933 | $ 230 | ||
Business acquisition preliminary purchase price | $ 943 |
Derivatives And Other Financial Instruments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Interest rate swaps
|
||||
Derivative [Line Items] | ||||
Amounts expected to be reclassified from other comprehensive loss into expense in the next twelve months | $ 2 | |||
Other Income [Member] | Foreign currency forward contracts
|
||||
Derivative [Line Items] | ||||
Gain (loss) on foreign currency contracts included in other income (expense) | $ (3) | $ (2) | $ (10) | $ (7) |
Derivatives And Other Financial Instruments (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The details of these swaps are as follows:
|
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following table summarizes the (gains) and losses of the interest rate contracts qualifying and designated as cash flow hedging instruments:
|
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table summarizes the estimated fair value of derivatives:
|
Recent Accounting Pronouncements
|
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Guidance Recently Adopted Presentation of Comprehensive Income In the first quarter of fiscal 2013, the Company adopted new guidance on the presentation of comprehensive income and its components in the financial statements. This guidance eliminated the option to report other comprehensive income and its components in the statement of changes in equity and instead requires presentation either in a single continuous statement or in two separate, but consecutive statements. The relevant presentation and disclosures have been applied retrospectively for all periods presented. Goodwill Impairment Test In September 2011, the Financial Accounting Standards Board ("FASB") issued revised guidance intended to simplify how an entity tests goodwill for impairment. As a result of the guidance, an entity will be allowed to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity will not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The accounting guidance became effective for the Company beginning in fiscal year 2013 and did not have an impact on the consolidated financial statements or financial statement disclosures. Indefinite-lived Intangible Asset Impairment Test In July 2012, the FASB issued revised guidance intended to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment. As a result of the guidance, an entity will be allowed to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An entity will not be required to perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the indefinite-lived asset is impaired. The accounting guidance became effective for the Company beginning in fiscal year 2013 and did not have an impact on the consolidated financial statements or financial statement disclosures. Recent Accounting Guidance Not Yet Effective In February 2013, the FASB issued Accounting Standards Update No. 2013-02 "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income". The standard requires that companies present, either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2014 and is only expected to impact the presentation of the Company's consolidated financial statements and related financial statement disclosures. In July 2013, the FASB issued Accounting Standards Update No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists". The standard requires the netting of unrecognized tax benefits (“UTBs”) against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. UTBs are required to be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the UTBs. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2015. The Company is currently evaluating the impact the adoption of this accounting guidance may have on its consolidated financial statements. |
Supplementary Financial Information
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Supplementary Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Financial Information | Supplementary Financial Information Consolidated Statements of Operations Information
|
Business Combinations
|
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
Business Combinations [Abstract] | |
Business Combinations | Business Combinations RADVISION Ltd. On June 5, 2012, Avaya acquired Radvision for $230 million in cash. The purchase price was funded with (i) a capital contribution to Avaya from Parent in the amount of $196 million from the Parent's issuance of Series B preferred stock and warrants to purchase common stock of Parent, and (ii) approximately $34 million of Avaya's cash. The acquisition of Radvision has been accounted for under the acquisition method, which requires an allocation of the purchase price of the acquired entity to the assets acquired and liabilities assumed based on their estimated fair values from a market-participant perspective at the date of acquisition. Other Acquisitions During the nine months ended June 30, 2013 and 2012, the Company completed other acquisitions primarily to enhance the Company’s technology portfolio. The aggregate purchase price of acquisitions completed by the Company and Parent was $1 million and $36 million during the nine months ended June 30, 2013 and 2012, respectively. The other acquisitions have been accounted for under the acquisition method. The acquired technologies and other intangible assets associated with these acquisitions were not material. These unaudited consolidated financial statements include the operating results of the acquired entities since their respective acquisition dates. The revenues and expenses specific to these businesses and their pro forma results are not material to these unaudited consolidated financial statements. |
Derivatives And Other Financial Instruments (Gains & losses on interest rate contracts qualifying and designated as cash flow hedging instruments) (Details) (Designated as hedging instrument, Cash flow hedging instruments, Interest rate swaps, USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Recognized in other comprehensive loss | $ (2) | $ (5) | $ (15) | $ (10) |
Reclassified from accumulated other comprehensive loss into interest expense | 3 | 6 | 19 | 11 |
Recognized in operations (ineffective portion) | $ 0 | $ 0 | $ 0 | $ 0 |
Reportable Segments (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Summarized financial information relating to the Company’s reportable segments is shown in the following table:
|
Business Combinations (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
Series of Individually Immaterial Business Acquisitions
|
Jun. 30, 2012
Series of Individually Immaterial Business Acquisitions
|
Jun. 05, 2012
Parent
RADVISION Ltd
|
---|---|---|---|
Business Acquisition [Line Items] | |||
Purchase price | $ 1 | $ 36 | $ 230 |
Business Acquisition, Cost of Acquired Entity, Stockholders' Equity, Contributed Capital | 196 | ||
Cash considerations | $ 34 |
Financing Arrangements (Schedule of long term debt) (Details) (USD $)
|
Jun. 30, 2013
|
Sep. 30, 2012
|
Jun. 30, 2013
Secured Debt
Senior secured term B-1 loans
|
Sep. 30, 2012
Secured Debt
Senior secured term B-1 loans
|
Jun. 30, 2013
Secured Debt
Senior secured term B-3 loans
|
Sep. 30, 2012
Secured Debt
Senior secured term B-3 loans
|
Jun. 30, 2013
Secured Debt
Senior secured term B-4 loans
|
Sep. 30, 2012
Secured Debt
Senior secured term B-4 loans
|
Jun. 30, 2013
Secured Debt
Senior secured term B-5 loans
|
Sep. 30, 2012
Secured Debt
Senior secured term B-5 loans
|
Jun. 30, 2013
Secured Debt
Senior secured notes
|
Sep. 30, 2012
Secured Debt
Senior secured notes
|
Feb. 11, 2011
Secured Debt
Senior secured notes
|
Jun. 30, 2013
Secured Debt
9% Senior secured notes
|
Dec. 21, 2012
Secured Debt
9% Senior secured notes
|
Sep. 30, 2012
Secured Debt
9% Senior secured notes
|
Jun. 30, 2013
Secured Debt
10.50% Senior secured notes
|
Sep. 30, 2012
Secured Debt
10.50% Senior secured notes
|
Jun. 30, 2013
Unsecured Debt
Senior Unsecured Cash Pay Notes and Senior Unsecured PIK Notes [Member]
|
Mar. 07, 2013
Unsecured Debt
Senior Unsecured Cash Pay Notes and Senior Unsecured PIK Notes [Member]
|
Jun. 30, 2013
Unsecured Debt
9.75% senior unsecured cash pay notes due 2015
|
Mar. 07, 2013
Unsecured Debt
9.75% senior unsecured cash pay notes due 2015
|
Sep. 30, 2012
Unsecured Debt
9.75% senior unsecured cash pay notes due 2015
|
Mar. 07, 2013
Unsecured Debt
Senior Unsecured Pik Toggle Notes [Member]
|
Jun. 30, 2013
Unsecured Debt
10.125%/10.875% senior unsecured PIK toggle notes due 2015
|
Sep. 30, 2012
Unsecured Debt
10.125%/10.875% senior unsecured PIK toggle notes due 2015
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | ||||||||||||||||||||||||||
Debt Instrument, Face Amount | $ 1,434,000,000 | $ 2,152,000,000 | $ 1,009,000,000 | $ 290,000,000 | $ 1,384,000,000 | $ 1,384,000,000 | $ 700,000,000 | $ 642,000,000 | $ 742,000,000 | $ 750,000,000 | ||||||||||||||||
Long-term debt, current and noncurrent portions | 6,094,000,000 | 6,121,000,000 | 0 | 1,434,000,000 | 2,133,000,000 | 2,152,000,000 | 1,000,000 | 0 | 1,144,000,000 | 0 | 1,009,000,000 | 1,009,000,000 | 290,000,000 | 0 | 1,384,000,000 | 0 | 58,000,000 | 700,000,000 | 92,000,000 | 834,000,000 | ||||||
Debt Instrument, Unamortized Discount | (17,000,000) | (8,000,000) | ||||||||||||||||||||||||
Debt maturing within one year | (35,000,000) | (37,000,000) | ||||||||||||||||||||||||
Long-term debt | $ 6,059,000,000 | $ 6,084,000,000 |
Guarantor-Non Guarantor Financial Information (Supplemental Condensed Consolidating Cash Flows) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
Avaya Inc.
|
Jun. 30, 2012
Avaya Inc.
|
Jun. 30, 2013
Avaya Inc.
|
Jun. 30, 2012
Avaya Inc.
|
Jun. 30, 2013
Guarantor Subsidiaries
|
Jun. 30, 2012
Guarantor Subsidiaries
|
Jun. 30, 2013
Guarantor Subsidiaries
|
Jun. 30, 2012
Guarantor Subsidiaries
|
Jun. 30, 2013
Non-Guarantor Subsidiaries
|
Jun. 30, 2012
Non-Guarantor Subsidiaries
|
Jun. 30, 2013
Non-Guarantor Subsidiaries
|
Jun. 30, 2012
Non-Guarantor Subsidiaries
|
Jun. 30, 2013
Intercompany Eliminations
|
Jun. 30, 2012
Intercompany Eliminations
|
Jun. 30, 2013
Intercompany Eliminations
|
Jun. 30, 2012
Intercompany Eliminations
|
Jun. 30, 2013
Senior secured term B-1 loans
|
Mar. 31, 2013
Senior secured term B-1 loans
|
Jun. 30, 2013
Senior secured term B-1 loans
|
Jun. 30, 2012
Senior secured term B-1 loans
|
Jun. 30, 2013
Senior secured term B-1 loans
Avaya Inc.
|
Jun. 30, 2013
Senior secured term B-1 loans
Guarantor Subsidiaries
|
Jun. 30, 2013
Senior secured term B-1 loans
Non-Guarantor Subsidiaries
|
Jun. 30, 2013
Senior secured term B-1 loans
Intercompany Eliminations
|
Mar. 31, 2013
Senior secured term B-5 loans
|
Jun. 30, 2013
Senior secured term B-5 loans
|
Jun. 30, 2012
Senior secured term B-5 loans
|
Jun. 30, 2013
Senior secured term B-5 loans
Avaya Inc.
|
Jun. 30, 2013
Senior secured term B-5 loans
Guarantor Subsidiaries
|
Jun. 30, 2013
Senior secured term B-5 loans
Non-Guarantor Subsidiaries
|
Jun. 30, 2013
Senior secured term B-5 loans
Intercompany Eliminations
|
|
OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||||||
Net loss | $ (110) | $ (166) | $ (387) | $ (354) | $ (110) | $ (166) | $ (387) | $ (354) | $ 14 | $ (3) | $ 2 | $ (5) | $ (87) | $ (69) | $ (136) | $ (128) | $ 73 | $ 72 | $ 134 | $ 133 | |||||||||||||||
Adjustments to reconcile net loss to net cash (used for) provided by operating activities | 428 | 478 | 381 | 391 | 8 | 9 | 39 | 78 | 0 | 0 | |||||||||||||||||||||||||
Changes in operating assets and liabilities | 58 | (184) | (60) | (202) | (3) | 8 | 121 | 10 | 0 | 0 | |||||||||||||||||||||||||
Equity in net loss of consolidated subsidiaries | 0 | 0 | 0 | 0 | 73 | 72 | 134 | 133 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (73) | (72) | (134) | (133) | |||||||||||||||
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 99 | (60) | 68 | (32) | 7 | 12 | 24 | (40) | 0 | 0 | |||||||||||||||||||||||||
INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||||||
Capital expenditures | (78) | (60) | (31) | (27) | 0 | (1) | (47) | (32) | 0 | 0 | |||||||||||||||||||||||||
Capitalized software development costs | (12) | (30) | (10) | (30) | (2) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Acquisition of businesses, net of cash acquired | (1) | (212) | (1) | (1) | 0 | 0 | 0 | (211) | 0 | 0 | |||||||||||||||||||||||||
Proceeds from sale of investments | 12 | 2 | 8 | 2 | 0 | 0 | 4 | 0 | 0 | 0 | |||||||||||||||||||||||||
Proceeds from Sale, Maturity and Collection of Investments | 1 | 73 | 0 | 7 | 0 | 0 | 1 | 66 | 0 | 0 | |||||||||||||||||||||||||
Restricted cash | 0 | (1) | 0 | 1 | 0 | ||||||||||||||||||||||||||||||
Advance to Parent | (10) | (8) | (10) | (8) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Investment in subsidiary | 0 | (218) | 0 | 0 | 218 | ||||||||||||||||||||||||||||||
Other investing activities, net | (1) | (2) | (1) | (2) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
NET CASH USED FOR INVESTING ACTIVITIES | (89) | (237) | (45) | (278) | (2) | (1) | (42) | (176) | 0 | 218 | |||||||||||||||||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||||||
Proceeds from 9% senior secured notes | 290 | 0 | 290 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Repayment of term B loans | (584) | (584) | (584) | 0 | (584) | 0 | 0 | 0 | (284) | 0 | (284) | 0 | 0 | 0 | |||||||||||||||||||||
Proceeds from Issuance of Long-term Debt | 589 | 589 | 0 | 589 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Debt issuance and third-party debt modification costs | (49) | 0 | (49) | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Repayment of long-term debt | (28) | (28) | (28) | (28) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Capital contribution from Parent | 0 | 196 | 196 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Proceeds from Contributed Capital | 0 | 0 | 0 | 218 | (218) | ||||||||||||||||||||||||||||||
Proceeds from Lines of Credit | 60 | 60 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Repayments of Lines of Credit | (60) | (60) | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Net borrowings (repayments) of intercompany debt | 0 | 0 | (7) | 30 | 3 | (10) | 4 | (20) | 0 | 0 | |||||||||||||||||||||||||
Other financing activities, net | (2) | (1) | 0 | 0 | (2) | (1) | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES | (68) | 167 | (73) | 198 | 1 | (11) | 4 | 198 | 0 | (218) | |||||||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (8) | 1 | 0 | 0 | 0 | 0 | (8) | 1 | 0 | 0 | |||||||||||||||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (66) | (129) | (50) | (112) | 6 | 0 | (22) | (17) | 0 | 0 | |||||||||||||||||||||||||
Cash and cash equivalents at beginning of period | 337 | 400 | 101 | 149 | 10 | 12 | 226 | 239 | 0 | 0 | |||||||||||||||||||||||||
Cash and cash equivalents at end of period | $ 271 | $ 271 | $ 271 | $ 271 | $ 51 | $ 37 | $ 51 | $ 37 | $ 16 | $ 12 | $ 16 | $ 12 | $ 204 | $ 222 | $ 204 | $ 222 | $ 0 | $ 0 | $ 0 | $ 0 |