UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q

FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MarchDecember 31, 2021
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-38289
AVAYA HOLDINGS CORP.
(Exact name of registrant as specified in its charter)

Delaware26-1119726
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
2605 Meridian Parkway, Suite 20027713
Durham,North Carolina
(Address of Principal executive offices) (Zip Code)
(908) 953-6000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
Title of Each ClassTrading Symbol(s)Name of each exchange on which registered
Common StockAVYANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒   No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer ☐
Non-accelerated filer☐Smaller Reporting Company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No  ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☒    No  ☐
As of April 30, 2021, 84,573,426January 31, 2022, 84,927,867 shares of common stock, $.01 par value, of the registrant were outstanding.

1

TABLE OF CONTENTS 
ItemItemDescriptionPageItemDescriptionPage
PART I—FINANCIAL INFORMATION
PART I—FINANCIAL INFORMATION
1.1.
1
1.
1
2.2.
30
2.
25
3.3.
44
3.
34
4.4.
45
4.
35
PART II—OTHER INFORMATION
PART II—OTHER INFORMATION
1.1.
46
1.
36
1A.1A.
46
1A.
36
2.2.
46
2.
37
3.3.
46
3.
37
4.4.
46
4.
37
5.5.
46
5.
37
6.6.
47
6.
38
7.7.
48
7.
39
When we use the terms "we," "us," "our," "Avaya" or the "Company," we mean Avaya Holdings Corp., a Delaware corporation, and its consolidated subsidiaries taken as a whole, unless the context otherwise indicates.
This Quarterly Report on Form 10-Q contains the registered and unregistered trademarks or service marks of Avaya and are the property of Avaya Holdings Corp. and/or its affiliates. This Quarterly Report on Form 10-Q also contains additional trade names, trademarks or service marks belonging to us and to other companies. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
 


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PART I—FINANCIAL INFORMATION


Item 1.Financial Statements.

Avaya Holdings Corp.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except per share amounts)
Three months ended
March 31,		Six months ended
March 31,
2021202020212020
REVENUE
Products$226 $245 $492 $543 
Services512 437 989 854 
738 682 1,481 1,397 
COSTS
Products:
Costs92 92 197 196 
Amortization of technology intangible assets43 44 86 87 
Services191 175 370 349 
326 311 653 632 
GROSS PROFIT412 371 828 765 
OPERATING EXPENSES
Selling, general and administrative264 248 519 531 
Research and development57 51 112 103 
Amortization of intangible assets39 41 79 82 
Impairment of goodwill0 624 0 624 
Restructuring charges, net8 4 12 7 
368 968 722 1,347 
OPERATING INCOME (LOSS)44 (597)106 (582)
Interest expense(59)(53)(115)(111)
Other income, net1 15 1 29 
LOSS BEFORE INCOME TAXES(14)(635)(8)(664)
Provision for income taxes(44)(37)(54)(62)
NET LOSS$(58)$(672)$(62)$(726)
LOSS PER SHARE
Basic$(0.70)$(7.24)$(0.76)$(7.24)
Diluted$(0.70)$(7.24)$(0.76)$(7.24)
Weighted average shares outstanding
Basic84.6 93.0 84.2 101.1 
Diluted84.6 93.0 84.2 101.1 
Three months ended
December 31,
20212020
REVENUE
Products$231 $266 
Services482 477 
713 743 
COSTS
Products:
Costs111 105 
Amortization of technology intangible assets42 43 
Services191 179 
344 327 
GROSS PROFIT369 416 
OPERATING EXPENSES
Selling, general and administrative262 255 
Research and development61 55 
Amortization of intangible assets40 40 
Restructuring charges, net7 4 
370 354 
OPERATING (LOSS) INCOME(1)62 
Interest expense(54)(56)
Other income, net7 — 
(LOSS) INCOME BEFORE INCOME TAXES(48)6 
Provision for income taxes(18)(10)
NET LOSS$(66)$(4)
LOSS PER SHARE
Basic$(0.79)$(0.06)
Diluted$(0.79)$(0.06)
Weighted average shares outstanding
Basic84.7 83.8 
Diluted84.7 83.8 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
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Avaya Holdings Corp.
Condensed Consolidated Statements of Comprehensive (Loss) Income (Loss) (Unaudited)
(In millions)
Three months ended
March 31,		Six months ended
March 31,
2021202020212020
Net loss$(58)$(672)$(62)$(726)
Other comprehensive income (loss):
Pension, post-retirement and postemployment benefit-related items, net of income taxes of $(1) for the three and six months ended March 31, 202134 0 46 0 
Cumulative translation adjustment21 (9)15 (6)
Change in interest rate swaps, net of income taxes of $2 for the three months ended March 31, 202030 (46)41 (39)
Other comprehensive income (loss)85 (55)102 (45)
Total comprehensive income (loss)$27 $(727)$40 $(771)
Three months ended
December 31,
20212020
Net loss$(66)$(4)
Other comprehensive income:
Pension, post-retirement and post-employment benefit-related items(1)12 
Cumulative translation adjustment13 (6)
Change in interest rate swaps28 11 
Other comprehensive income40 17 
Total comprehensive (loss) income$(26)$13 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Avaya Holdings Corp.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except per share and share amounts)
March 31, 2021September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents$593 $727 
Accounts receivable, net289 275 
Inventory51 54 
Contract assets, net401 296 
Contract costs115 115 
Other current assets124 112 
TOTAL CURRENT ASSETS1,573 1,579 
Property, plant and equipment, net278 268 
Deferred income taxes, net42 31 
Intangible assets, net2,394 2,556 
Goodwill, net1,481 1,478 
Operating lease right-of-use assets152 160 
Other assets190 159 
TOTAL ASSETS$6,110 $6,231 
LIABILITIES
Current liabilities:
Accounts payable$261 $242 
Payroll and benefit obligations163 198 
Contract liabilities451 446 
Operating lease liabilities49 49 
Business restructuring reserves19 21 
Other current liabilities230 181 
TOTAL CURRENT LIABILITIES1,173 1,137 
Non-current liabilities:
Long-term debt2,800 2,886 
Pension obligations716 749 
Other post-retirement obligations149 215 
Deferred income taxes, net43 38 
Contract liabilities348 373 
Operating lease liabilities123 129 
Business restructuring reserves22 28 
Other liabilities310 312 
TOTAL NON-CURRENT LIABILITIES4,511 4,730 
TOTAL LIABILITIES5,684 5,867 
Commitments and contingencies (Note 20)
Preferred stock, $0.01 par value; 55,000,000 shares authorized at March 31, 2021 and September 30, 2020
Convertible series A preferred stock; 125,000 shares issued and outstanding at March 31, 2021 and September 30, 2020130 128 
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 550,000,000 shares authorized; 84,658,712 shares issued and outstanding at March 31, 2021; and 83,278,383 shares issued and outstanding at September 30, 20201 1 
Additional paid-in capital1,472 1,449 
Accumulated deficit(1,034)(969)
Accumulated other comprehensive loss(143)(245)
TOTAL STOCKHOLDERS' EQUITY296 236 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$6,110 $6,231 
December 31, 2021September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents$354 $498 
Accounts receivable, net350 307 
Inventory49 51 
Contract assets, net548 518 
Contract costs121 117 
Other current assets124 100 
TOTAL CURRENT ASSETS1,546 1,591 
Property, plant and equipment, net296 295 
Deferred income taxes, net38 40 
Intangible assets, net2,154 2,235 
Goodwill1,480 1,480 
Operating lease right-of-use assets126 135 
Other assets247 209 
TOTAL ASSETS$5,887 $5,985 
LIABILITIES
Current liabilities:
Accounts payable$339 $295 
Payroll and benefit obligations131 193 
Contract liabilities332 360 
Operating lease liabilities48 49 
Business restructuring reserves18 19 
Other current liabilities201 181 
TOTAL CURRENT LIABILITIES1,069 1,097 
Non-current liabilities:
Long-term debt2,820 2,813 
Pension obligations630 648 
Other post-retirement obligations154 153 
Deferred income taxes, net48 53 
Contract liabilities304 305 
Operating lease liabilities95 102 
Business restructuring reserves22 25 
Other liabilities235 267 
TOTAL NON-CURRENT LIABILITIES4,308 4,366 
TOTAL LIABILITIES5,377 5,463 
Commitments and contingencies (Note 18)
Preferred stock, $0.01 par value; 55,000,000 shares authorized at December 31, 2021 and September 30, 2021
Convertible series A preferred stock; 125,000 shares issued and outstanding at December 31, 2021 and September 30, 2021130 130 
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 550,000,000 shares authorized; 84,927,867 shares issued and outstanding at December 31, 2021; and 84,115,602 shares issued and outstanding at September 30, 20211 1 
Additional paid-in capital1,481 1,467 
Accumulated deficit(1,051)(985)
Accumulated other comprehensive loss(51)(91)
TOTAL STOCKHOLDERS' EQUITY380 392 
TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY$5,887 $5,985 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
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Avaya Holdings Corp.
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(In millions)
Common StockAdditional
Paid-In
Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Loss		Total
Stockholders'
Equity
SharesPar Value
Balance as of September 30, 202083.3 $1 $1,449 $(969)$(245)$236 
Issuance of common stock under the equity incentive plan0.3 0 
Issuance of common stock under the employee stock purchase plan0.3 3 3 
Shares repurchased and retired for tax withholding on vesting of restricted stock units(0.1)(2)(2)
Share-based compensation expense14 14 
Preferred stock dividends accrued(1)(1)
Adjustment for adoption of new accounting standard (Note 2)(3)(3)
Net loss(4)(4)
Other comprehensive income17 17 
Balance as of December 31, 202083.8 $1 $1,463 $(976)$(228)$260 
Issuance of common stock under the equity incentive plan1.2 8 8 
Issuance of common stock under the employee stock purchase plan0.2 3 3 
Shares repurchased and retired for tax withholding on vesting of restricted stock units(0.3)(7)(7)
Shares repurchased and retired under share repurchase program(0.2)(7)(7)
Share-based compensation expense13 13 
Preferred stock dividends accrued(1)(1)
Net loss(58)(58)
Other comprehensive income85 85 
Balance as of March 31, 202184.7 $1 $1,472 $(1,034)$(143)$296 
Balance as of September 30, 2019111.0 $1 $1,761 $(289)$(173)$1,300 
Issuance of common stock under the equity incentive plan0.3 0 
Shares repurchased and retired for tax withholding on vesting of restricted stock units(0.1)(2)(2)
Shares repurchased and retired under share repurchase program(10.7)(142)(142)
Share-based compensation expense6 6 
Accretion of preferred stock to redemption value(4)(4)
Preferred stock dividends accrued(1)(1)
Net loss(54)(54)
Other comprehensive income10 10 
Balance as of December 31, 2019100.5 $1 $1,618 $(343)$(163)$1,113 
Issuance of common stock under the equity incentive plan0.6 0 
Shares repurchased and retired for tax withholding on vesting of restricted stock units(0.2)(1)(1)
Shares repurchased and retired under share repurchase program(18.2)(188)(188)
Share-based compensation expense8 8 
Preferred stock dividends accrued(1)(1)
Net loss(672)(672)
Other comprehensive loss(55)(55)
Balance as of March 31, 202082.7 $1 $1,436 $(1,015)$(218)$204 
Common StockAdditional
Paid-In
Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Loss		Total
Stockholders'
Equity
SharesPar Value
Balance as of September 30, 202184.1 $1 $1,467 $(985)$(91)$392 
Issuance of common stock under the equity incentive plan and the Stock Bonus Program0.9 5 5 
Issuance of common stock under the employee stock purchase plan0.2 3 3 
Shares repurchased and retired for tax withholding on vesting of restricted stock units and Stock Bonus Program shares(0.3)(7)(7)
Share-based compensation expense14 14 
Preferred stock dividends paid(1)(1)
Net loss(66)(66)
Other comprehensive income40 40 
Balance as of December 31, 202184.9 $1 $1,481 $(1,051)$(51)$380 
Balance as of September 30, 202083.3 $1 $1,449 $(969)$(245)$236 
Issuance of common stock under the equity incentive plan0.3 — 
Issuance of common stock under the employee stock purchase plan0.3 3 3 
Shares repurchased and retired for tax withholding on vesting of restricted stock units(0.1)(2)(2)
Share-based compensation expense14 14 
Preferred stock dividends accrued(1)(1)
Adjustment for adoption of new accounting standard(3)(3)
Net loss(4)(4)
Other comprehensive income17 17 
Balance as of December 31, 202083.8 $1 $1,463 $(976)$(228)$260 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
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Avaya Holdings Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Six months ended
March 31,
20212020
OPERATING ACTIVITIES:
Net loss$(62)$(726)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization209 212 
Share-based compensation27 14 
Amortization of debt discount and issuance costs13 14 
Loss on extinguishment of debt1 0 
Deferred income taxes, net(4)(17)
Impairment of goodwill0 624 
Gain on post-retirement plan settlement(14)0 
Change in fair value of emergence date warrants27 (3)
Unrealized loss on foreign currency transactions12 8 
Impairment of debt securities0 10 
Unrealized gain on equity securities0 (19)
Realized gain on sale of equity securities0 (11)
Other non-cash charges (credits), net1 (6)
Changes in operating assets and liabilities:
Accounts receivable(12)41 
Inventory3 6 
Operating lease right-of-use assets and liabilities2 2 
Contract assets(122)(53)
Contract costs(5)(13)
Accounts payable21 (31)
Payroll and benefit obligations(76)(24)
Business restructuring reserves(8)(13)
Contract liabilities(22)(30)
Other assets and liabilities33 47 
NET CASH PROVIDED BY OPERATING ACTIVITIES24 32 
INVESTING ACTIVITIES:
Capital expenditures(53)(48)
Proceeds from sale of marketable securities0 294 
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES(53)246 
FINANCING ACTIVITIES:
Shares repurchased under share repurchase program(7)(330)
Proceeds from issuance of Series A Preferred Stock, net of issuance costs of $40 121 
Repayment of Term Loan Credit Agreement due to refinancing(743)0 
Proceeds from Term Loan Credit Agreement due to refinancing743 0 
Repayment of Term Loan Credit Agreement(100)(250)
Principal payments for financing leases(8)(5)
Proceeds from other financing arrangements3 0 
Payment of acquisition-related contingent consideration0 (5)
Debt issuance costs(2)0 
Proceeds from Employee Stock Purchase Plan7 0 
Proceeds from exercises of stock options8 0 
Other financing activities, net(9)(3)
NET CASH USED FOR FINANCING ACTIVITIES(108)(472)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3 (5)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(134)(199)
Cash, cash equivalents, and restricted cash at beginning of period731 756 
Cash, cash equivalents, and restricted cash at end of period$597 $557 
Three months ended
December 31,
20212020
OPERATING ACTIVITIES:
Net loss$(66)$(4)
Adjustments to reconcile net loss to net cash (used for) provided by operating activities:
Depreciation and amortization104 103 
Share-based compensation14 14 
Amortization of debt discount and issuance costs7 7 
Deferred income taxes, net(4)2 
Change in fair value of emergence date warrants(1)5 
Unrealized (gain) loss on foreign currency transactions(2)11 
Other non-cash charges, net2 — 
Changes in operating assets and liabilities:
Accounts receivable(44)23 
Inventory1 2 
Contract assets(57)(32)
Contract costs(1)(8)
Accounts payable46 51 
Payroll and benefit obligations(70)(57)
Business restructuring reserves(3)(4)
Contract liabilities(28)(56)
Other assets and liabilities(9)(9)
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES(111)48 
INVESTING ACTIVITIES:
Capital expenditures(27)(27)
NET CASH USED FOR INVESTING ACTIVITIES(27)(27)
FINANCING ACTIVITIES:
Principal payments for financing leases(2)(7)
Proceeds from other financing arrangements— 1 
Debt issuance costs— (2)
Proceeds from Employee Stock Purchase Plan4 4 
Proceeds from exercises of stock options1 — 
Preferred stock dividends paid(1)— 
Shares repurchased for tax withholdings on vesting of restricted stock units and Stock Bonus Program shares(7)(2)
NET CASH USED FOR FINANCING ACTIVITIES(5)(6)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(1)9 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(144)24 
Cash, cash equivalents, and restricted cash at beginning of period502 731 
Cash, cash equivalents, and restricted cash at end of period$358 $755 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.
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Avaya Holdings Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Background and Basis of Presentation
Background
Avaya Holdings Corp. (the "Parent" or "Avaya Holdings"), together with its consolidated subsidiaries (collectively, the "Company" or "Avaya"), is a global leader in digital communications products, solutions and services for businesses of all sizes delivering its technology predominantly through software and services. Avaya builds innovative open, converged and innovativesoftware solutions to enhance and simplify communications and collaboration in the cloud, on-premise or a hybrid of both. The Company's global team of professionals delivers services from initial planning and design, to implementation and integration, to ongoing managed operations, optimization, training and support. The Company manages its business operations in 2 segments, Products & Solutions and Services. The Company sells directly to customers through its worldwide sales force and indirectly through its global network of channel partners, including distributors, service providers, dealers, value-added resellers, system integrators and business partners that provide sales and services support.
Basis of Presentation
Avaya Holdings has no material assets or standalone operations other than its ownership of its direct wholly-owned subsidiary Avaya Inc. and its subsidiaries. The accompanying unaudited interim Condensed Consolidated Financial Statements reflect the operating results of Avaya Holdings and its consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") for interim financial statements. The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and other financial information for the fiscal year ended September 30, 2020,2021, included in the Company's Annual Report on Form 10-K filed with the SEC on November 25, 2020.22, 2021. In management's opinion, these unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary to fairly state the results of operations, financial position and cash flows for the periods indicated. The condensed consolidated results of operations for the interim periods reported are not necessarily indicative of the results for the entire fiscal year.
Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods reported. The Company uses estimates to assess expected credit losses on its financial assets, sales returns and allowances, the use and recoverability of inventory, the realization of deferred tax assets, annual effective tax rate, the recoverability of long-lived assets, useful lives and impairment of tangible and intangible assets including goodwill, business restructuring reserves, pension and post-retirement benefit costs, the fair value of assets and liabilities in business combinations and the amount of exposure from potential loss contingencies, among others. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statementsCondensed Consolidated Financial Statements in the period they are determined to be necessary. Actual results maycould differ from these estimates. During the second quarter of fiscal 2020, the World Health Organization characterized a novel strain of coronavirus ("COVID-19") as a pandemic. The spread of COVID-19, around the globeeffects on the Company's employees and the actions required to mitigate its impact have created substantial disruption to the global economy. The duration of the pandemic and the long-term impacts on the global economy, are uncertain. The pandemicwhich may affect management’s estimates and assumptions, in particular those that require a projection of our financial results, our cash flows or broader economic conditions, such as the collectability of accounts receivable, sales returns and allowances, the use and recoverability of inventory, the realization of deferred tax assets, annual effective tax rate, the fair value of equity compensation, the recoverability of long-lived assets, useful lives and impairment of tangible and intangible assets including goodwill, business restructuring reserves and fair value measurements. During fiscal 2020, the Company recognized a significant goodwill impairment charge which is further described in Note 7, “Goodwill, net” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 filed with the SEC on November 25, 2020.conditions. The COVID-19 pandemic did not have a material impact on the Company's operating results during the secondfirst quarter of fiscal 2021.2022.
2. Recent Accounting Pronouncements
Recently Adopted Accounting PronouncementsRecent Standards Not Yet Effective
In December 2019,August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC 740 by clarifying and amending existing guidance. The Company early adopted this standard as of October 1, 2020. The adoption of this standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.
In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract." This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard as of October 1, 2020 on a prospective basis. The adoption of this standard did
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not have a material impact on the Company's Condensed Consolidated Financial Statements, however, the future impact of the standard will depend on the nature of future transactions within its scope.
In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. This standard removes disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. The Company adopted this standard as of October 1, 2020 using the retrospective transition method. The adoption of this standard did not result in material changes to the Company’s benefit plan disclosures.
In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This standard modifies the disclosure requirements on fair value measurements by removing or modifying certain existing disclosure requirements and adding additional disclosure requirements. The Company adopted this standard as of October 1, 2020. The adoption of this standard did not result in material changes to the Company's fair value disclosures.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This standard, along with other guidance subsequently issued by the FASB, requires entities to estimate expected credit losses for certain types of financial instruments, including trade receivables and contract assets, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard also expands the disclosure requirements to enable users of financial statements to understand the entity's assumptions, models and methods for estimating expected credit losses. The Company adopted the standard on October 1, 2020 using the modified retrospective transition method. On October 1, 2020, the beginning of the Company’s fiscal 2021, the Company recorded a net increase to the opening Accumulated deficit balance of $3 million, net of tax, due to the cumulative impact of adopting the standard. The impact was primarily related to the Company’s accounts receivable and contract asset balances on the adoption date.
Updates to Significant Accounting Policies for Recently Adopted Accounting Pronouncements
The Company's significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 filed with the SEC on November 25, 2020 have been updated to include the following new policies as a result of adopting ASU Nos. 2018-15 and 2016-13:
Cloud Computing Arrangement Implementation Costs
The Company periodically enters into cloud computing arrangements to access and use third-party software in support of its operations. The Company assesses its cloud computing arrangements with vendors to determine whether the contract meets the definition of a service contract or software license. For cloud computing arrangements that meet the definition of a service contract, the Company capitalizes implementation costs incurred during the application development stage as a prepaid expense and amortizes the costs on a straight-line basis over the term of the contract. Costs related to data conversion, training and other maintenance activities are expensed as incurred. Implementation costs for cloud computing arrangements that meet the definition of a software license are accounted for consistent with software developed or obtained for internal use as detailed in the Company’s existing Property, Plant and Equipment accounting policy.
Allowance for Credit Losses
The Company performs ongoing credit evaluations of its customers and generally does not require collateral from its customers. The Company estimates an allowance for credit losses using relevant available information from internal and external sources that consider historical experience, current conditions and reasonable and supportable forecasts. A separate allowance is measured for the Company’s accounts receivable, short-term contract asset and long-term contract asset balances. Each allowance is assessed on a collective basis by pooling assets with similar risk characteristics. The Company pools its accounts receivable and short-term contract assets based on aging status and its long-term contract assets by customer credit rating as published by third-party credit agencies. Historical loss experience provides the basis for the estimation of expected credit losses for accounts receivables and short-term contract assets. The Company uses probability of default rates to estimate expected credit losses for its long-term contract assets based on customer credit ratings. The Company also identifies customer specific credit risks and evaluates each based on the specific facts and circumstances as of the reporting date. The risk of loss is assessed over the contractual life of the assets and the expected loss amounts are adjusted for current and future conditions based on management’s qualitative considerations. Financial assets are written off in whole, or in part, when no reasonable expectation of recovery exists, although collection efforts may continue. Subsequent recoveries of amounts previously written off are recognized as an adjustment to the allowance for credit loss.
Recent Standards Not Yet Effective
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In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity." This standard simplifies the accounting for convertible instruments and the application of the derivatives scope exception for contracts in an entity's own equity. The standard also amends the accounting for convertible instruments in the diluted earnings per share calculation and requires enhanced disclosures of convertible instruments and contracts in an entity's own equity. This standard is effective for the Company in the first quarter of fiscal 2023 with early adoption permitted in the first quarter of fiscal 2022.2023. The adoption may be applied on a modified or fully retrospective basis. An entity may also irrevocably elect the fair value option in accordance with Accounting Standards Codification ("ASC") 825 for any financial instrument that is a convertible security upon adoption of this standard. The Company is currently assessing the impact the new guidance will have on its Condensed Consolidated Financial Statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This standard requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. This
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standard is effective for the Company in the first quarter of fiscal 2024, with early adoption permitted. The Company is currently assessing the impact the new guidance will have on its Condensed Consolidated Financial Statements.
3. Contracts with Customers
Disaggregation of Revenue
The following tables provide the Company's disaggregated revenue for the periods presented:

Three months ended
December 31,
(In millions)20212020
Revenue:
Products & Solutions$231 $266 
Services482 477 
Total revenue$713 $743 
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
Revenue:
Products & Solutions$226 $245 $492 $543 
Services513 438 990 857 
Unallocated Amounts
(1)(1)(1)(3)
Total revenue$738 $682 $1,481 $1,397 

Three months ended March 31, 2021Three months ended March 31, 2020
(In millions)Products & SolutionsServicesUnallocatedTotalProducts & SolutionsServicesUnallocatedTotal
Revenue:
U.S.$102 $311 $0 $413 $119 $266 $(1)$384 
International:
Europe, Middle East and Africa73 115 (1)187 78 94 0 172 
Asia Pacific30 47 0 77 27 43 0 70 
Americas International - Canada and Latin America21 40 0 61 21 35 0 56 
Total International124 202 (1)325 126 172 0 298 
Total revenue$226 $513 $(1)$738 $245 $438 $(1)$682 


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Six months ended March 31, 2021Six months ended March 31, 2020
(In millions)Products & SolutionsServicesUnallocatedTotalProducts & SolutionsServicesUnallocatedTotal
Revenue:
U.S.$228 $599 $0 $827 $268 $512 $(2)$778 
International:
Europe, Middle East and Africa165 218 (1)382 171 188 (1)358 
Asia Pacific59 93 0 152 60 87 0 147 
Americas International - Canada and Latin America40 80 0 120 44 70 0 114 
Total International264 391 (1)654 275 345 (1)619 
Total revenue$492 $990 $(1)$1,481 $543 $857 $(3)$1,397 
Unallocated amounts represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy in December 2017 and excluded from segment revenue.
Three months ended December 31, 2021Three months ended December 31, 2020
(In millions)Products & SolutionsServicesTotalProducts & SolutionsServicesTotal
Revenue:
U.S.$114 $261 $375 $126 $288 $414 
International:
Europe, Middle East and Africa65 127 192 92 103 195 
Asia Pacific32 49 81 29 46 75 
Americas International - Canada and Latin America20 45 65 19 40 59 
Total International117 221 338 140 189 329 
Total revenue$231 $482 $713 $266 $477 $743 
Transaction Price Allocated to the Remaining Performance Obligations
The transaction price allocated to remaining performance obligations that were wholly or partially unsatisfied as of MarchDecember 31, 2021 was $2.4$2.3 billion, of which 56%51% and 26% is expected to be recognized within 12 months and 13-24 months, respectively, with the remaining balance expected to be recognized thereafter. This excludes amounts for remaining performance obligations that are (1) for contracts recognized over time using the "right to invoice" practical expedient, (2) related to sales or usage based royalties promised in exchange for a license of intellectual property and (3) related to variable consideration allocated entirely to a wholly unsatisfied performance obligation.
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Contract Balances
The following table provides information about accounts receivable, contract assets, contract costs and contract liabilities for the periods presented:
(In millions)December 31, 2021September 30, 2021Increase (Decrease)
Accounts receivable, net$350 $307 $43 
Contract assets, net:
Current$548 $518 $30 
Non-current (Other assets)116 88 28 
$664 $606 $58 
Cost of obtaining a contract:
Current (Contract costs)$91 $89 $2 
Non-current (Other assets)50 53 (3)
$141 $142 $(1)
Cost to fulfill a contract:
Current (Contract costs)$30 $28 $2 
Contract liabilities:
Current$332 $360 $(28)
Non-current304 305 (1)
$636 $665 $(29)
(In millions)March 31, 2021September 30, 2020Increase (Decrease)
Accounts receivable, net$289 $275 $14 
Contract assets, net:
Current$401 $296 $105 
Non-current (Other assets)88 71 17 
$489 $367 $122 
Cost of obtaining a contract:
Current (Contract costs)$85 $92 $(7)
Non-current (Other assets)45 40 5 
$130 $132 $(2)
Cost to fulfill a contract:
Current (Contract costs)$30 $23 $7 
Contract liabilities:
Current$451 $446 $5 
Non-current348 373 (25)
$799 $819 $(20)
The increase in Accounts receivable is mainly related to the timing of customer payments. The increase in Contract assets was mainly driven by growth in the Company's subscription offerings.
The decrease in Contract liabilities was mainly driven by anticipated declines in hardware maintenance and software support services as customers continue to transition to the Company's subscription hybrid offering. The decrease was also driven by revenue earned from the consideration advance received in connection with the strategic partnership with RingCentral, Inc. ("RingCentral"). During the three and six months ended MarchDecember 31, 2021 and 2020, the Company did not record any asset impairment charges related to contract assets.
During the sixthree months ended MarchDecember 31, 2021 and 2020, the Company recognized revenue of $402
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$162 million and $405$223 million that had been previously recorded as a Contract liability as of October 1, 20202021 and October 1, 2019,2020, respectively.
During the three months ended MarchDecember 31, 2021 and 2020, the Company recognized a decreasenet (decrease) increase to revenue of $1 million and $0 million, respectively, for performance obligations that were satisfied in prior periods. During the six months ended March 31, 2021 and 2020, the Company recognized a decrease to revenue of $0$(2) million and $1 million, respectively, for performance obligations that were satisfied, or partially satisfied, in prior periods.
Contract Costs
DuringThe following table provides information regarding the three months ended March 31, 2021, the Company recognized $51 millionlocation and amount for amortization of costs to obtain and costs to fulfill customer contracts recognized in the Company's Condensed Consolidated Statements of which $48 million was included within Selling, general and administrative expense andOperations for the remaining $3 million was recognized as a reduction to Revenue. During the six months ended March 31, 2021, the Company recognized $95 million for amortizationperiods presented:
Three months ended
December 31,
(In millions)20212020
Costs to obtain customer contracts:
Selling, general and administrative$44 $43 
Revenue4 1 
Total Amortization$48 $44 
Costs to fulfill customer contracts:
Costs$8 $4 

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Table of costs to obtain customer contracts, of which $91 million was included within Selling, general and administrative expense and the remaining $4 million was recognized as a reduction to Revenue. During the three and six months ended March 31, 2020, the Company recognized $34 million and $66 million, respectively, for amortization of costs to obtain customer contracts which were included within Selling, general and administrative expense.Contents
During the three months ended March 31, 2021 and 2020, the Company recognized $10 million and $6 million of contract fulfillment costs within Costs, respectively. During the six months ended March 31, 2021 and 2020, the Company recognized $14 million and $20 million of contract fulfillment costs within Costs, respectively.
Allowance for Credit Losses
The following table presents the change in the allowance for credit losses by portfolio segment for the period indicated:
Accounts Receivable(1)
Short-term Contract Assets(2)
Long-term Contract Assets(3)
Total
Allowance for credit loss as of September 30, 2020$7 $0 $0 $7 
Adjustment to retained earnings upon adoption1 1 1 3 
Adjustment to credit loss provision(3)0 0 (3)
Allowance for credit loss as of March 31, 2021$5 $1 $1 $7 
Accounts Receivable(1)
Short-term Contract Assets(2)
Long-term Contract Assets(3)
Total
Allowance for credit loss as of September 30, 2021$4 $1 $1 $6 
Adjustment to credit loss provision1 — — 1 
Allowance for credit loss as of December 31, 2021$5 $1 $1 $7 
(1)Recorded within Accounts receivable, net on the Condensed Consolidated Balance Sheets.
(2)Recorded within Contract assets, net on the Condensed Consolidated Balance Sheets.
(3)Recorded within Other assets on the Condensed Consolidated Balance Sheets.
4. Leases
The following table details the components of net lease expense for the periods indicated:
Three months ended
March 31,		Six months ended
March 31,
In millions2021202020212020
Operating lease cost (1)
$14 $16 $30 $34 
Short-term lease cost (1)
2 1 3 3 
Variable lease cost (1)(2)
3 4 7 9 
Finance lease amortization of right-of-use assets (1)
2 1 3 2 
Sublease income (3)
(1)(1)(1)(3)
Total lease cost$20 $21 $42 $45 
(1)Allocated between Cost of products and services, and Operating expenses.
(2)Includes real estate taxes and other charges for non-lease services payable to lessors and recognized in the period incurred.
(3)Included in Other income, net.

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The Company's right-of-use assets and lease liabilities for financing leases are included in the Condensed Consolidated Balance Sheets as follows:
In millionsMarch 31, 2021September 30, 2020
ASSETS
Property, plant and equipment, net$15 $12 
LIABILITIES
Other current liabilities5 8
Other liabilities11 9
The following table summarizes the weighted average remaining lease term and weighted average interest rate for the Company's operating and financing leases for the periods indicated:
March 31, 2021September 30, 2020
Weighted average remaining lease term
Operating Leases4.4 years4.5 years
Financing Leases3.7 years2.7 years
Weighted average interest rate
Operating Leases5.8 %6.1 %
Financing Leases4.6 %5.4 %
The following table presents the maturities of lease payments for the Company's operating and financing leases as of March 31, 2021 (by fiscal year):
In millionsOperating LeasesFinancing Leases
2021 (remaining six months)$30 $3 
202253 5 
202340 4 
202428 3 
202517 2 
202611 0 
2027 and thereafter16 0 
Total lease payments195 17 
Less: imputed interest(23)(1)
Total lease liability$172 $16 

5. Strategic Partnership
On October 3, 2019, the Company entered into certain agreements that establish the framework for the Company's strategic partnership with RingCentral, Inc. ("RingCentral") a leading provider of global enterprise cloud communications, video meetings, collaboration and contact center ("CC") solutions, to accelerate the Company's transition to the cloud. Through this partnership, the Company introduced Avaya Cloud Office by RingCentral ("ACO"), a new global unified communications as a service ("UCaaS") solution. The transaction closed on October 31, 2019 and ACO was launched on March 31, 2020.
As part of the strategic partnership, the Company and RingCentral also entered into an agreement governing the terms of the commercial arrangement between the parties (the "Framework Agreement"). In accordance with the Framework Agreement, RingCentral paid Avaya $375 million, predominantly for future fees, as well as for certain licensing rights. The $375 million payment consisted of $361 million in shares of RingCentral common stock and $14 million in cash. During the six months ended March 31, 2020, the Company sold a significant portion of the RingCentral shares and realized a gain on the sale. The Company also recorded unrealized gains on the RingCentral shares retained by the Company as of March 31, 2020. The Company sold the remaining RingCentral shares by the end of fiscal 2020.
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The following table summarizes the realized and unrealized gains on the shares of RingCentral common stock recorded within Other income, net in the Condensed Consolidated Statements of Operations for the periods presented:
(In millions)Three months ended March 31, 2020Six months ended March 31, 2020
Realized gain$0 $11 
Unrealized gain18 19 
Total gain$18 $30 
In connection with the strategic partnership, the Company and RingCentral entered into an investment agreement, whereby RingCentral purchased 125,000 shares of the Company's Series A 3% Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), for an aggregate purchase price of $125 million. See Note 15, "Capital Stock" for additional information on the Series A Preferred Stock.
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6. Goodwill net and Intangible Assets, net
Goodwill net
Goodwill is not amortized but is subject to periodic testing for impairment in accordance with GAAP at the reporting unit level. The Company's reporting units are subject to impairment testing annually, on July 1st, 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.
Six Months Ended March 31, 2021
The Company determined that no events occurred or circumstances changed during the sixthree months ended MarchDecember 31, 2021 that would indicate that it is more likely than not that its goodwill was impaired. To the extent that business conditions deteriorate or if changes in key assumptions and estimates differ significantly from management's expectations, it may be necessary to record impairment charges in the future.
Six Months Ended March 31, 2020
During the second quarter of fiscal 2020, the Company concluded that a triggering event occurred for both of its reporting units due to (i) the impact of the COVID-19 pandemic on the macroeconomic environment which led to revisions to the Company's long-term forecast during the second quarter of fiscal 2020 and (ii) the sustained decrease in the Company's stock price at the beginning stages of the pandemic which was caused by the resulting volatility in the financial markets. As a result, the Company performed an interim quantitative goodwill impairment test as of March 31, 2020 to compare the fair values of its reporting units to their respective carrying amounts, including the goodwill allocated to each reporting unit.
The results of the Company’s interim goodwill impairment test as of March 31, 2020 indicated that the estimated fair value of the Company’s Services reporting unit exceeded its carrying amount. The carrying amount of the Company's Products & Solutions reporting unit exceeded its estimated fair value primarily due to a reduction in the Company’s long-term forecast to reflect increased risk from higher market uncertainty and the accelerated reduction of product sales related to the Company’s historical on-premises perpetual licenses with a continued shift and acceleration of customers upgrading and acquiring new technology innovation through the utilization of the Company’s subscription offering, which is included in the Services reporting unit. As a result, the Company recorded a goodwill impairment charge of $624 million to write down the full carrying amount of the Products & Solutions goodwill in the Condensed Consolidated Statement of Operations for the six months ended March 31, 2020.
Intangible Assets, net
The Company's intangible assets consist of the following for the periods indicated:
(In millions)
Technology
and Patents		Customer
Relationships
and Other
Intangibles		Trademarks and Trade NamesTotal
Balance as of December 31, 2021
Finite-lived intangible assets:
Cost$972 $2,154 $42 $3,168 
Accumulated amortization(698)(627)(22)(1,347)
Finite-lived intangible assets, net274 1,527 20 1,821 
Indefinite-lived intangible assets— — 333 333 
Intangible assets, net$274 $1,527 $353 $2,154 
Balance as of September 30, 2021
Finite-lived intangible assets:
Cost$971 $2,154 $42 $3,167 
Accumulated amortization(656)(588)(21)(1,265)
Finite-lived intangible assets, net315 1,566 21 1,902 
Indefinite-lived intangible assets— — 333 333 
Intangible assets, net$315 $1,566 $354 $2,235 
(In millions)
Technology
and Patents		Customer
Relationships
and Other
Intangibles		Trademarks and Trade NamesTotal
Balance as of March 31, 2021
Finite-lived intangible assets:
Cost$964 $2,155 $42 $3,161 
Accumulated amortization(570)(511)(19)(1,100)
Finite-lived intangible assets, net394 1,644 23 2,061 
Indefinite-lived intangible assets0 0 333 333 
Intangible assets, net$394 $1,644 $356 $2,394 
Balance as of September 30, 2020
Finite-lived intangible assets:
Cost$961 $2,153 $42 $3,156 
Accumulated amortization(482)(433)(18)(933)
Finite-lived intangible assets, net479 1,720 24 2,223 
Indefinite-lived intangible assets0 0 333 333 
Intangible assets, net$479 $1,720 $357 $2,556 
Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets. 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
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amortized but are tested for impairment annually, on July 1st, or more frequently if events occur or circumstances change that indicate an asset may be impaired.
Six Months Ended March 31, 2021
The Company determined that no events occurred or circumstances changed during the sixthree months ended MarchDecember 31, 2021 that would indicate that its finite-lived intangible assets may not be recoverable or that it is more likely than not that its indefinite-lived intangible assets wereasset, the Avaya Trade Name, was impaired. To the extent that business conditions deteriorate or if changes in key assumptions and estimates differ significantly from management's expectations, it may be necessary to record impairment charges in the future.
Six Months Ended March 31, 2020
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As a result of the goodwill triggering events identified during the second quarter of fiscal 2020, the Company performed a recoverability test on all of its finite-lived asset groups as of March 31, 2020 before proceeding to the goodwill impairment review and concluded that no impairment charge was necessary. The Company also performed an interim quantitative impairment test for its indefinite lived intangible asset, the Avaya Trade Name, as of March 31, 2020 and determined that its estimated fair value exceeded its carrying value and no impairment existed.
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5. Supplementary Financial Information

The following table presents a summary of Other income, net for the periods indicated:
Three months ended
December 31,
(In millions)20212020
OTHER INCOME, NET
Foreign currency losses, net— (2)
Other pension and post-retirement benefit credits, net6 7 
Change in fair value of emergence date warrants1 (5)
Total other income, net$7 $— 
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
OTHER INCOME, NET
Interest income$1 $2 $1 $5 
Foreign currency gains (losses), net1 (7)(1)(11)
Gain on post-retirement plan settlement14 0 14 0 
Gain on investments in equity and debt securities, net0 8 0 20 
Other pension and post-retirement benefit credits, net7 6 14 11 
Change in fair value of emergence date warrants(22)6 (27)3 
Sublease income1 1 1 3 
Other, net(1)(1)(1)(2)
Total other income, net$1 $15 $1 $29 

During the three and six months ended March 31, 2020, the gain on investments in equity and debt securities, net includes realized and unrealized gains on RingCentral common stock as disclosed in Note 5, "Strategic Partnership," partially offset by a $10 million impairment of debt securities mainly driven by a decline in the macroeconomic environment due to the COVID-19 pandemic and a decline in the expected operating results and cash flows for the investment company.
The gain on post-retirement plan settlement for the three and six months ended March 31, 2021 is further described in Note 13, "Benefit Obligations."
The following table presents supplemental cash flow information for the periods presented:
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
OTHER PAYMENTS
Interest payments$59 $46 $92 $104 
Income tax payments6 13 9 25 
NON-CASH INVESTING ACTIVITIES
(Decrease) increase in Accounts payable for capital expenditures$(1)$1 $(2)$(4)
Acquisition of equipment under finance leases4 0 6 0 
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Three months ended
December 31,
(In millions)20212020
OTHER PAYMENTS
Interest payments$33 $33 
Income tax payments7 3 
NON-CASH INVESTING ACTIVITIES
Decrease in Accounts payable for Capital expenditures$(2)$(1)
Acquisition of equipment under finance leases— 2 
During the three months ended MarchDecember 31, 2021 and 2020, the Company made payments for operating lease liabilities of $16$15 million and $19$17 million, respectively, and recorded non-cash additions for operating lease right-of-use assets of $5$7 million and $6 million, respectively. During the six months ended March 31, 2021 and 2020, the Company made payments for operating lease liabilities of $33 million and recorded non-cash additions for operating lease right-of-use assets of $16 million and $15$11 million, respectively.
The following table presents a reconciliation of cash, cash equivalents, and restricted cash that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows for the periods presented:
(In millions)March 31, 2021September 30, 2020March 31, 2020September 30, 2019
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents$593 $727 $553 $752 
Restricted cash included in other assets4 4 4 4 
Total cash, cash equivalents, and restricted cash$597 $731 $557 $756 
(In millions)December 31, 2021September 30, 2021December 31, 2020September 30, 2020
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents$354 $498 $750 $727 
Restricted cash included in other assets4 4 5 4 
Total cash, cash equivalents, and restricted cash$358 $502 $755 $731 

8.6. Business Restructuring Reserves and Programs
The following table summarizes the restructuring charges by activity for the periods presented:
Three months ended
December 31,
(In millions)20212020
Employee separation costs$2 $1 
Facility exit costs5 3 
Total restructuring charges$7 $4 
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
Employee separation costs$1 $0 $2 $1 
Facility exit costs7 4 10 6 
Total restructuring charges$8 $4 $12 $7 
The restructuring charges include changes in estimates for increases and decreases in costs or changes in the timing of payments related to the restructuring programs of prior fiscal years. The Company's employee separation costs generally consist of severance charges which include, but are not limited to, termination payments, pension fund payments, and health care and unemployment insurance costs to be paid to, or on behalf of, the affected employees. Facility exit costs primarily consist of lease obligation charges for exited facilities, including the impact of accelerated lease expense for right-of-use assets and accelerated depreciation expense for leasehold improvements with reductions in their estimated useful lives due to exited facilities. The restructuring charges include changes in estimates for
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increases and decreases in costs or changes in the timing of payments related to the restructuring programs of prior fiscal years. The Company does not allocate restructuring reserves to its operating segments.
The following table summarizes the activity for employee separation costs recognized under the Company's restructuring programs for the sixthree months ended MarchDecember 31, 2021:
(In millions)
Fiscal 2021 Restructuring Program (1)
Fiscal 2020 Restructuring Program (2)
Fiscal 2008 through 2019 Restructuring Programs (2)
Total
Accrual balance as of September 30, 2020$0 $8 $41 $49 
Cash payments(1)(1)(9)(11)
Restructuring charges2 0 0 2 
Impact of foreign currency fluctuations0 0 1 1 
Accrual balance as of March 31, 2021$1 $7 $33 $41 
(In millions)
Fiscal 2022 Restructuring Program(2)
Fiscal 2021 Restructuring Program(3)
Fiscal 2020 and prior Restructuring Programs(3)
Total
Accrual balance as of September 30, 2021$— $14 $30 $44 
Cash payments— (1)(4)(5)
Restructuring charges1 — — 1 
Adjustments(1)
— — 1 1 
Impact of foreign currency fluctuations— — (1)(1)
Accrual balance as of December 31, 2021$1 $13 $26 $40 
(1)Includes changes in estimates for increases and decreases in costs related to the Company's restructuring programs, which are recorded in Restructuring charges, net in the Condensed Consolidated Statements of Operations in the period of the adjustment.
(2) Payments related to the fiscal 20212022 restructuring program are expected to be completed in fiscal 2021.2022.
(2)(3) Payments related to the fiscal 2021 and fiscal 2020 and 2008 through 2019prior restructuring programs are expected to be completed in fiscal 2026.2027.
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9.7. Financing Arrangements
The following table reflects principal amounts of debt and debt net of discounts and issuance costs for the periods presented:

March 31, 2021September 30, 2020December 31, 2021September 30, 2021
(In millions)(In millions)Principal amountNet of discounts and issuance costsPrincipal amountNet of discounts and issuance costs(In millions)Principal amountNet of discounts and issuance costsPrincipal amountNet of discounts and issuance costs
Senior 6.125% Notes due September 15, 2028Senior 6.125% Notes due September 15, 2028$1,000 $985 $1,000 $984 Senior 6.125% Notes due September 15, 2028$1,000 $986 $1,000 $986 
Tranche B Term Loans due December 15, 20240 0 843 835 
Tranche B-1 Term Loans due December 15, 2027Tranche B-1 Term Loans due December 15, 2027800 778 800 776 Tranche B-1 Term Loans due December 15, 2027800 781 800 780 
Tranche B-2 Term Loans due December 15, 2027Tranche B-2 Term Loans due December 15, 2027743 736 0 0 Tranche B-2 Term Loans due December 15, 2027743 737 743 736 
Convertible 2.25% Senior Notes due June 15, 2023Convertible 2.25% Senior Notes due June 15, 2023350 301 350 291 Convertible 2.25% Senior Notes due June 15, 2023350 316 350 311 
Total Long-term debtTotal Long-term debt$2,893 $2,800 $2,993 $2,886 Total Long-term debt$2,893 $2,820 $2,893 $2,813 
Term Loan and ABL Credit Agreements
As of MarchDecember 31, 2021 and September 30, 2020,2021, the Company maintained (i) its Term Loan Credit Agreement among Avaya Inc., as borrower, Avaya Holdings, the lending institutions from time to time party thereto, and Goldman Sachs Bank USA, as administrative agent and collateral agent (the “Term Loan Credit Agreement”), and (ii) its ABL Credit Agreement, among Avaya Inc., as borrower, Avaya Holdings, the several other borrowers party thereto, the several lenders from time to time party thereto, and Citibank, N.A., as administrative agent and collateral agent, which provides a revolving credit facility consisting of a U.S. tranche and a foreign tranche allowing for borrowings of up to an aggregate principal amount of $200 million from time to time, subject to borrowing base availability (the "ABL Credit Agreement"). The ABL Credit Agreement matures on September 25, 2025.
Prior to February 24, 2021, the Term Loan Credit Agreement matured in two tranches, with a principal amount of $843 million maturing on December 15, 2024 (the “Tranche B Term Loans”) and a principal amount of $800 million maturing on December 15, 2027 (the “Tranche B-1 Term Loans”). On February 24, 2021, the Company amended the Term Loan Credit Agreement, (“Amendment No. 3”), pursuant to which the Company prepaid, replaced and refinanced the Tranche B Term Loans outstanding with $100 million in cash and $743 million in principal amount of new first lien term loans due December 2027 (the “Tranche B-2 Term Loans”). The Tranche B-2 Term Loans bear interest at a rate with applicable margin of 3.00% per annum with respect to base rate borrowings and 4.00% per annum with respect to LIBOR borrowings. Amendment No. 3 was primarily accounted for as a loan modification at the syndicated lender level. Based on the application of the loan modification guidance within ASC 470, the Company recorded $3 million of new debt issuance costs within Interest expense in the Consolidated Statements of Operations. Lenders who exited their positions in the Tranche B Term Loans as a result of Amendment No. 3 were accounted for as a loan extinguishment. Accordingly, the Company wrote-off a portion of the original underwriting discount of $1 million within Interest expense.
For the three months ended MarchDecember 31, 2021 and 2020, the Company recognized interest expense of $22$18 million and $40$20 million, respectively, related to the Term Loan Credit Agreement, including the expenses associated with Amendment No. 3 described above and the amortization of the debt discount and issuance costs. For the six months ended March 31, 2021 and 2020, the Company recognized interest expense of $42 million and $86 million, respectively, related to the Term Loan Credit Agreement, including the expenses associated with Amendment No. 3 described above and the amortization of the debt discount and issuance costs.
As of MarchDecember 31, 2021, the Company had no borrowings outstanding under the ABL Credit Agreement. Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At MarchDecember 31, 2021, the Company had issued and outstanding letters of credit and guarantees of $39$35 million under the ABL Credit Agreement. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $39
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$35 million of outstanding letters of credit and guarantees was $128$119 million at MarchDecember 31, 2021. For both the three and six months ended MarchDecember 31, 2021 and 2020, recognized interest expense related to the ABL Credit Agreement was not material.
Senior Notes
The Company’s Senior 6.125% First Lien Notes have an aggregate principal amount outstanding of $1,000 million and mature on September 15, 2028 (the “Senior Notes”). The Senior Notes were issued on September 25, 2020, pursuant to an indenture among the Company, the Company's subsidiaries that are guarantors of the Senior Notes and party thereto and Wilmington Trust, National Association, as trustee and notes collateral agent.
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For both the three and six months ended MarchDecember 31, 2021 and 2020, the Company recognized interest expense of $16 million and $32 million, respectively, related to the Senior Notes, including the amortization of debt issuance costs.
Convertible Notes
The Company's 2.25% Convertible Notes have an aggregate principal amount outstanding ofof $350 million (including(including notes issued in connection with the underwriters' exercise in full of an over-allotment option of $50 million) and mature on June 15, 2023 (the "Convertible Notes"). The Convertible Notes were issued under an indenture, by and between the Company and the Bank of New York Mellon Trust Company N.A., as Trustee.
For both the three months ended MarchDecember 31, 2021 and 2020, the Company recognized interest expense of $7 million related to the Convertible Notes, which includes $5 million of amortization of the debt discount and issuance costs. For the six months ended March 31, 2021 and 2020, the Company recognized interest expense of $14 and $13 million related to the Convertible Notes, respectively, which includes $10 and $9 million of amortization of the debt discount and issuance costs, respectively.
The net carrying amount of the Convertible Notes for the periods indicated was as follows:
(In millions)(In millions)March 31, 2021September 30, 2020(In millions)December 31, 2021September 30, 2021
PrincipalPrincipal$350 $350 Principal$350 $350 
Less:Less:Less:
Unamortized debt discountUnamortized debt discount(45)(55)Unamortized debt discount(31)(36)
Unamortized issuance costsUnamortized issuance costs(4)(4)Unamortized issuance costs(3)(3)
Net carrying amountNet carrying amount$301 $291 Net carrying amount$316 $311 
The weighted average contractual interest rate of the Company's outstanding debt was 6.5% as of both MarchDecember 31, 2021 and September 30, 2020, respectively.2021, including adjustments related to the Company's interest rate swap agreements (see Note 8, "Derivative Instruments and Hedging Activities"). The effective interest rate for the Term Loan Credit Agreement as of MarchDecember 31, 2021 and September 30, 20202021 was not materially different than its contractual interest rate including adjustments related to interest rate swap agreements designated as highly effective cash flow hedges. The effective interest rate for the Senior Notes as of MarchDecember 31, 2021 and September 30, 20202021 was not materially different than its contractual interest rate. The effective interest rate for the Convertible Notes was 9.2% as of Marchboth December 31, 2021 and September 30, 20202021 was 9.2%, reflecting the separation of the conversion feature in equity. The effective interest rates include interest on the debt and amortization of discounts and issuance costs.
As of MarchDecember 31, 2021, the Company was not in default under any of its debt agreements.
10.8. Derivative Instruments and Hedging Activities
The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, "Derivatives and Hedging," ("ASC 815") and does not enter into derivatives for trading or speculative purposes.
Interest Rate Contracts
The Company, from time to time, enters into interest rate swap contracts as a hedge against changes in interest rates on its outstanding variable rate loans.
On May 16, 2018, the Company entered into interest rate swap agreements with 6 counterparties, which fix a portion of the variable interest due under its Term Loan Credit Agreement (the "Original Swap Agreements"). Under the terms of the Original Swap Agreements, which mature on December 15, 2022, the Company pays a fixed rate of 2.935% and receives a variable rate of interest based on one-month LIBOR. Through September 23, 2020, the total $1,800 million notional amount of the Original Swap Agreements were designated as cash flow hedges and deemed highly effective as defined under ASC 815.
On September 23, 2020, the Company entered into an interest rate swap agreement for a notional amount of $257 million (the “Offsetting Swap Agreement”). Under the terms of the Offsetting Swap Agreement, which matures on December 15, 2022, the Company pays a variable rate of interest based on one-month LIBOR and receives a fixed rate of 0.1745%. The Company
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entered into the Offsetting Swap Agreement to maintain a net notional amount less than the amount of the Company’s variable rate loans outstanding. The Offsetting Swap Agreement was not designated for hedge accounting treatment. On September 23, 2020, Original Swap Agreements with a notional amount of $257 million were also de-designated from hedge accounting treatment. As of MarchDecember 31, 2021, Original Swap Agreements with a notional amount of $1,543 million continue to be designated as cash flow hedges and deemed highly effective as defined under ASC 815.
On July 1, 2020, the Company entered into interest rate swap agreements with 4 counterparties, which fix a portion of the variable interest due on its Term Loan Credit Agreement (the "Forward Swap Agreements") from December 15, 2022 (the maturity date of the Original Swap Agreements) through December 15, 2024. Under the terms of the Forward Swap Agreements, the Company will pay a fixed rate of 0.7047% and receive a variable rate of interest based on one-month LIBOR.
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The total notional amount of the Forward Swap Agreements is $1,400 million. Since their execution, the Forward Swap Agreements have been designated as cash flow hedges and deemed highly effective as defined by ASC 815.
The Company records changes in the fair value of interest rate swap agreements designated as cash flow hedges initially within Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets. As interest expense is recognized on the Term Loan Credit Agreement, the corresponding deferred gain or loss on the cash flow hedge is reclassified from Accumulated other comprehensive loss to Interest expense in the Condensed Consolidated Statements of Operations. The Company records changes in the fair value of interest rate swap agreements not designated for hedge accounting within Interest expense. On September 23, 2020, the Company froze a $15 million deferred loss within Accumulated other comprehensive loss for the de-designated Original Swap Agreements, which is reclassified to Interest expense over the term of the Original Swap Agreements.
Based on the amount in Accumulated other comprehensive loss at MarchDecember 31, 2021, approximately $50$43 million would be reclassified to Interest expense in the next twelve months.
It is management's intention that the net notional amount of interest rate swap agreements be less than or equal to the variable rate loans outstanding during the life of the derivatives.
Foreign Currency Forward Contracts
The Company, from time to time, utilizes foreign currency forward contracts primarily to hedge fluctuations associated with certain monetary assets and liabilities including receivables, payables and certain intercompany balances. These foreign currency forward contracts are not designated for hedge accounting treatment. As a result, changes in the fair value of these contracts are recorded as a component of Other income, net to offset the change in the value of the hedged assets and liabilities. As of MarchDecember 31, 2021, the Company maintained open foreign currency forward contracts with a total notional value of $355$190 million, primarily hedging the British Pound Sterling, Euro, Chinese Renminbi,Japanese Yen, Mexican Peso, Czech Koruna, and Indian Rupee. As of September 30, 2020,2021, the Company maintained open foreign currency forward contracts with a total notional value of $375$191 million, primarily hedging the British Pound Sterling, Euro, Chinese RenminbiIndian Rupee, Czech Koruna and Indian Rupee.Mexican Peso.
Emergence Date Warrants
In accordance with the bankruptcy plan of reorganization adopted in connection with the Company's emergence from bankruptcy on December 15, 2017 (the "Plan of Reorganization"), the Company issued warrants to purchase 5,645,200 shares of the Company's common stock to the holders of the second lien obligations extinguished pursuant to the Plan of Reorganization (the "Emergence Date Warrants"). Each Emergence Date Warrant has an exercise price of $25.55 per share and expires on December 15, 2022. The Emergence Date Warrants contain certain derivative features that require them to be classified as a liability and for changes in the fair value of the liability to be recognized in earnings each reporting period. On November 14, 2018, the Company's Board of Directors approved a warrant repurchase program, authorizing the Company to repurchase up to $15 million worth of the Emergence Date Warrants. None of the Emergence Date Warrants have been exercised or repurchased as of MarchDecember 31, 2021.
The fair value of the Emergence Date Warrants was determined using a probability weighted Black-Scholes option pricing model. This model requires certain input assumptions including risk-free interest rates, volatility, expected life and dividend rates. Selection of these inputs involves significant judgment. The fair value of the Emergence Date Warrants as of MarchDecember 31, 2021 and September 30, 20202021 was determined using the input assumptions summarized below:
December 31,
2021		September 30, 2021
Expected volatility52.53 %49.63 %
Risk-free interest rates0.37 %0.13 %
Contractual remaining life (in years)0.961.21
Price per share of common stock$19.80$19.79
March 31,
2021		September 30, 2020
Expected volatility74.76 %68.53 %
Risk-free interest rates0.10 %0.14 %
Contractual remaining life (in years)1.712.21
Price per share of common stock$28.03$15.20
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In determining the fair value of the Emergence Date Warrants, the dividend yield was assumed to be 0zero as the Company does not anticipate paying dividends on its common stock throughout the term of the warrants.

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Financial Statement Information Related to Derivative Instruments
The following table summarizes the fair value of the Company's derivatives on a gross basis, including accrued interest, segregated between those that are designated as hedging instruments and those that are not designated as hedging instruments:
December 31, 2021September 30, 2021
(In millions)Balance Sheet CaptionAssetLiabilityAssetLiability
Derivatives Designated as Hedging Instruments:
Interest rate contractsOther assets$18 $— $6 $— 
Interest rate contractsOther current liabilities— 39 — 43 
Interest rate contractsOther liabilities— — — 10 
18 39 6 53 
Derivatives Not Designated as Hedging Instruments:
Interest rate contractsOther current liabilities— 7 — 7 
Interest rate contractsOther liabilities— — — 2 
Foreign exchange contractsOther current assets1 — — — 
Foreign exchange contractsOther current liabilities— — — 2 
Emergence Date WarrantsOther current liabilities— 8 — — 
Emergence Date WarrantsOther liabilities— — — 9 
1 15 — 20 
Total derivative fair value$19 $54 $6 $73 
March 31, 2021September 30, 2020
(In millions)Balance Sheet CaptionAssetLiabilityAssetLiability
Derivatives Designated as Hedging Instruments:
Interest rate contractsOther assets10 0 0 0 
Interest rate contractsOther current liabilities0 43 0 43 
Interest rate contractsOther liabilities0 31 0 58 
10 74 0 101 
Derivatives Not Designated as Hedging Instruments:
Interest rate contractsOther current liabilities0 7 0 7 
Interest rate contractsOther liabilities0 5 0 9 
Foreign exchange contractsOther current assets1 0 1 0 
Foreign exchange contractsOther current liabilities0 1 0 2 
Emergence Date WarrantsOther liabilities0 35 0 8 
1 48 1 26 
Total derivative fair value$11 $122 $1 $127 
The following tables providetable provides information regarding the location and amount of pre-tax gains (losses) for interest rate swaps designated as cash flow hedges:
Three months ended
March 31,
20212020
(In millions)Interest ExpenseOther Comprehensive Income (Loss)Interest ExpenseOther Comprehensive Income (Loss)
Financial Statement Line Item in which Cash Flow Hedges are Recorded$(59)$85 $(53)$(55)
Impact of cash flow hedging relationships:
Gain (loss) recognized in AOCI on interest rate swaps0 17 $0 $(54)
Interest expense reclassified from AOCI(13)13 $(6)$6 
Three months ended
December 31,
20212020
(In millions)Interest ExpenseOther Comprehensive IncomeInterest ExpenseOther Comprehensive Income
Financial Statement Line Item in which Cash Flow Hedges are Recorded$(54)$40 $(56)$17 
Impact of cash flow hedging relationships:
Gain (loss) recognized in AOCI on interest rate swaps— 15 — (1)
Interest expense reclassified from AOCI(13)13 (12)12 

Six months ended
March 31,
20212020
(In millions)Interest ExpenseOther Comprehensive Income (Loss)Interest ExpenseOther Comprehensive Income (Loss)
Financial Statement Line Item in which Cash Flow Hedges are Recorded$(115)$102 $(111)$(45)
Impact of cash flow hedging relationships:
Gain (loss) recognized in AOCI on interest rate swaps0 16 $0 $(50)
Interest expense reclassified from AOCI(25)25 $(11)$11 
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The following table provides information regarding the pre-tax gains (losses) gains for derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Operations:
Three months ended
March 31,		Six months ended
March 31,
(In millions)Location of Derivative Pre-tax (Loss) Gain2021202020212020
Emergence Date WarrantsOther income, net$(22)$6 $(27)$3 
Foreign exchange contractsOther income, net1 (7)6 (2)
Three months ended
December 31,
(In millions)Location of Derivative Pre-tax Gain (Loss)20212020
Emergence Date WarrantsOther income, net$1 $(5)
Foreign exchange contractsOther income, net— 5 


The Company records its derivatives on a gross basis in the Condensed Consolidated Balance Sheets. The Company has master netting agreements with several of its financial institution counterparties. The following table provides information on the Company's derivative positions as if those subject to master netting arrangements were presented on a net basis, allowing for
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the right to offset by counterparty per the master netting agreements:
March 31, 2021September 30, 2020
(In millions)AssetLiabilityAssetLiability
Gross amounts recognized in the Condensed Consolidated Balance Sheets$11 $122 $1 $127 
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheets(11)(11)(1)(1)
Net amounts$0 $111 $0 $126 
December 31, 2021September 30, 2021
(In millions)AssetLiabilityAssetLiability
Gross amounts recognized in the Condensed Consolidated Balance Sheets$19 $54 $6 $73 
Gross amount subject to offset in master netting arrangements not offset in the Condensed Consolidated Balance Sheets(19)(19)(6)(6)
Net amounts$— $35 $— $67 

11.9. Fair Value Measurements
Pursuant to the accounting guidance for fair value measurements, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Considerable judgment was required in developing certain of the estimates of fair value including the consideration of the COVID-19 pandemic that has caused significant volatility in U.S. and international markets, and accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
Fair Value Hierarchy
The accounting guidance for fair value measurements also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The inputs are prioritized into three levels that may be used to measure fair value:
Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable.
Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date.
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Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of MarchDecember 31, 2021 and September 30, 20202021 were as follows:
 March 31, 2021September 30, 2020
 Fair Value Measurements UsingFair Value Measurements Using
(In millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Interest rate contracts$10 $0 $10 $0 $0 $0 $0 $0 
Foreign exchange contracts1 0 1 0 1 0 1 0 
Total assets$11 $0 $11 $0 $1 $0 $1 $0 
Liabilities:
Interest rate contracts$86 $0 $86 $0 $117 $0 $117 $0 
Foreign exchange contracts1 0 1 0 2 0 2 0 
Emergence Date Warrants35 0 0 35 8 0 0 8 
Total liabilities$122 $0 $87 $35 $127 $0 $119 $8 
 December 31, 2021September 30, 2021
 Fair Value Measurements UsingFair Value Measurements Using
(In millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Interest rate contracts$18 $— $18 $— $6 $— $6 $— 
Foreign exchange contracts1 — 1 — — — — — 
Total assets$19 $— $19 $— $6 $— $6 $— 
Liabilities:
Interest rate contracts$46 $— $46 $— $62 $— $62 $— 
Foreign exchange contracts— — — — 2 — 2 — 
Emergence Date Warrants8 — — 8 9 — — 9 
Total liabilities$54 $— $46 $8 $73 $— $64 $9 
Interest rate and foreign exchange contracts classified as Level 2 assets and liabilities are not actively traded and are valued using pricing models that use observable inputs.
Emergence Date Warrants classified as Level 3 liabilities are valued using a probability weighted Black-Scholes option pricing model which is further described in Note 10,8, "Derivative Instruments and Hedging Activities."
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During the three and six months ended MarchDecember 31, 2021 and 2020, there were no0 transfers into or out of Level 3. The activity related to the Company's Level 3 liability, the Emergence Date Warrants, relatedrelates to a change in fair value which was recorded in Other income, net.
Fair Value of Financial Instruments
The estimated fair values of the Company's Senior Notes, Term Loans and Convertible Notes at Marchas of December 31, 2021 and September 30, 20202021 were as follows:
March 31, 2021September 30, 2020
(In millions)Principal amountFair valuePrincipal amountFair value
Senior 6.125% Notes due September 15, 2028$1,000 $1,064 $1,000 $1,022 
Tranche B Term Loans due December 15, 20240 0 843 838 
Tranche B-1 Term Loans due December 15, 2027800 801 800 786 
Tranche B-2 Term Loans due December 15, 2027743 744 0 0 
Convertible 2.25% Senior Notes due June 15, 2023350 435 350 331 
Total$2,893 $3,044 $2,993 $2,977 
December 31, 2021September 30, 2021
(In millions)Principal amountFair valuePrincipal amountFair value
Senior 6.125% Notes due September 15, 2028$1,000 $1,064 $1,000 $1,053 
Tranche B-1 Term Loans due December 15, 2027800 803 800 802 
Tranche B-2 Term Loans due December 15, 2027743 744 743 745 
Convertible 2.25% Senior Notes due June 15, 2023350 373 350 368 
Total$2,893 $2,984 $2,893 $2,968 
The estimated fair value of the Company's Senior Notes and Term Loans and Senior Notes was determined using Level 2 inputs based on a market approach utilizing market-clearing data on the valuation date in addition to bid/ask prices. The estimated fair value of the Convertible Notes was determined based on the quoted price of the Convertible Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2.
The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to the extent the underlying liability will be settled in cash, approximate their carrying values because of the short-term nature of these instruments.
12.10. Income Taxes
The Company's effective income tax rate for the three and six months ended MarchDecember 31, 2021 and 2020 differed from the U.S. federal tax rate by 335% and 696%,59% or $47$28 million and $56146% or $9 million, respectively, principally related to nondeductible expenses, including expenses related to the change in fair value of the Emergence Date Warrants, and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.
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The Company's effective income tax rate for the threerealized; and six months ended March 31, 2020 differed from the U.S. federal tax rate by 27% and 30%, or $170 million and $201 million, respectively, principally related to the goodwill impairment charge recorded in the second quarter of fiscal 2020 and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.certain nondeductible expenses.
13.11. Benefit Obligations
The Company sponsors non-contributory defined benefit pension plans covering a portion of its U.S. employees and retirees, and post-retirement benefit plans covering a portion of its U.S. employees and 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.
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The components of the pension and post-retirement net periodic benefit (credit) cost for the periods indicated are provided in the table below:
Three months ended
March 31,		Six months ended
March 31,		Three months ended
December 31,
(In millions)(In millions)2021202020212020(In millions)20212020
Pension Benefits - U.S.Pension Benefits - U.S.Pension Benefits - U.S.
Components of net periodic benefit creditComponents of net periodic benefit creditComponents of net periodic benefit credit
Service costService cost$1 $1 $2 $2 Service cost$1 $1 
Interest costInterest cost5 8 10 15 Interest cost5 5 
Expected return on plan assetsExpected return on plan assets(13)(15)(26)(28)Expected return on plan assets(12)(13)
Amortization of actuarial loss1 0 1 0 
Net periodic benefit creditNet periodic benefit credit$(6)$(6)$(13)$(11)Net periodic benefit credit$(6)$(7)
Pension Benefits - Non-U.S.Pension Benefits - Non-U.S.Pension Benefits - Non-U.S.
Components of net periodic benefit costComponents of net periodic benefit costComponents of net periodic benefit cost
Service costService cost$2 $2 $4 $4 Service cost$2 $2 
Interest costInterest cost1 1 2 2 Interest cost1 1 
Net periodic benefit costNet periodic benefit cost$3 $3 $6 $6 Net periodic benefit cost$3 $3 
Post-retirement Benefits - U.S.Post-retirement Benefits - U.S.Post-retirement Benefits - U.S.
Components of net periodic benefit credit
Service cost$1 $0 $1 $0 
Components of net periodic benefit costComponents of net periodic benefit cost
Interest costInterest cost2 3 4 6 Interest cost1 2 
Expected return on plan assetsExpected return on plan assets(2)(2)(4)(5)Expected return on plan assets— (2)
Amortization of prior service creditAmortization of prior service credit(1)(1)(2)(1)Amortization of prior service credit(1)(1)
Amortization of actuarial lossAmortization of actuarial loss0 0 1 0 Amortization of actuarial loss— 1 
Settlement gain(14)0 (14)0 
Net periodic benefit credit$(14)$0 $(14)$0 
Net periodic benefit costNet periodic benefit cost$— $— 
The service components of net periodic benefit (credit) cost were recorded similar to compensation expense, while all other components were recorded in Other income, net.
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 law and regulations, or to directly pay benefits where appropriate. OnIn March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law, providing limited relief for pension funding and retirement plan distributions. Under the CARES Act, employers were permitted to delay contributions for single employer defined benefit pension plans until January 4, 2021. The Company resumed making contributions to its U.S. pension plans during the second quarter of fiscal 2021. Contributions to U.S. pension plans were $11 million for the six months ended March 31, 2021, which represented the amounts required to satisfy the minimum statutory funding requirements in the U.S. On March 11, 2021, the American Rescue Plan Act (the "ARP Act") was signed into law, providing limited interest-rate relief provisions and an extended shortfall amortization period for pension funding and retirement plan distributions. As a result, the Company did not make any contributions to the U.S. pension plans during the three months ended December 31, 2021 and does not expect to make any contributions to the U.S. pension plans during the remainder of fiscal 2021.2022.
Contributions to the non-U.S. pension plans were $15$4 million for the sixthree months ended MarchDecember 31, 2021. For the remainder of fiscal 2021,2022, the Company estimates that it will make contributions totaling $9$21 million for its non-U.S. plans.
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Effective December 1, 2020, the post-retirement medical plan coverage provided through the Company's group plan for retirees who retired after April 30, 2019 and their eligible dependents and future represented retirees and their eligible dependents was replaced with coverage through the private and public insurance marketplace. As a result, the U.S. represented post-retirement plan was remeasured as of November 30, 2020, which resulted in the recognition of a $12 million reduction to the accumulated benefit obligation with an offset to the Accumulated other comprehensive loss within the Condensed Consolidated Balance Sheet. The decrease was mainly driven by the change in medical coverage, partially offset by changes in actuarial assumptions.
In March 2021, the Company entered into an irrevocable buy-out agreement with an insurance company to transfer $209 million of its post-retirement life insurance projected benefit obligations related to certain salaried and represented retirees and their beneficiaries who were retired as of March 26, 2021. The transaction was funded with post-retirement life insurance plan assets with a value of $190 million. As a result of this transaction, a settlement gain of $14 million was recognized within Other income, net in the Condensed Consolidated Statements of Operations.
Most post-retirement medical benefits are not pre-funded. Consequently, the Company makes payments directly to the claims administrator as retiree medical benefit claims are disbursed. These payments are funded by the Company up to the maximum contribution amounts specified in the plan documents and contract with the Communications Workers of America and the International Brotherhood of Electrical Workers, and contributions from the participants, if required. During the sixthree months ended MarchDecember 31, 2021, the Company made payments for retiree medical and dental benefits of $5$2 million and received a $2 million reimbursementreimbursements from the represented employees' post-retirement health trust of $2 million related to payments in prior periods. The Company estimates it will make payments for retiree medical and dental benefits totaling $6$9 million for the remainder of fiscal 2021.2022.
14.12. Share-based Compensation
The Company maintains share-based compensation plans under which non-employee directors, employees of the Company or any of its affiliates, and certain consultants and advisors may be granted stock options, restricted stock, restricted stock units ("RSUs"), performance awards ("PRSUs") and other forms of awards granted or denominated in shares of the Company's common stock, as well as certain cash-based awards. Pre-tax share-based compensation expense for both the three months ended MarchDecember 31, 2021 and 2020 was $13 million and $8 million, respectively, and $27 million and $14 million for the six months ended March 31, 2021 and 2020, respectively.million.
Restricted Stock Units
During the sixthree months ended MarchDecember 31, 2021, the Company granted 1,484,4032,643,376 RSUs with a weighted average grant date fair value of $20.18$19.47 per RSU, and there were 983,143637,550 RSUs that vested with a weighted average grant date fair value of $15.03$17.56 per RSU.
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Performance Restricted Stock Units
During the sixthree months ended MarchDecember 31, 2021, the Company granted 620,924669,228 PRSUs with a weighted average grant date fair value of $22.27$21.89 per PRSU. These PRSUs will vest based uponon the attainment of specified performance metrics for each of the next three separate fiscal years (collectively the "Performance Period"), as well as the achievement of total shareholder return over the Performance Period for the Company as compared to the total shareholder return for a specified index of companies over the same period. During the Performance Period, the Company will adjust compensation expense for the PRSUs based on its best estimate of attainment of the specified annual performance metrics. The cumulative effect on current and prior periods of a change in the estimated number of PRSUs that are expected to be earned during the Performance Period will be recognized as an adjustment to earnings in the period of the revision.
The grant date fair value of the Performance PRSUs was determined using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the total shareholder return market condition and the following assumptions presented on a weighted-average basis:
assumptions:
SixThree months ended MarchDecember 31, 2021
Expected volatility(1)
63.5667.59 %
Risk-free interest rate(2)
0.200.76 %
Dividend yield(3)
0— %
(1)Expected volatility based on the Company's historical data.
(2)Risk-free interest rate based on U.S. Treasury yields with a term equal to the remaining Performance Period as of the grant date.
(3)Dividend yield was assumed to be zero as the Company does not anticipate paying dividends.dividends on its common stock.
Stock Bonus Program
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TableIn November 2021, the Company adopted the Avaya Holdings Corp. Stock Bonus Program ("Stock Bonus Program") under which certain employees can elect to receive a specified percentage of Contents

their annual incentive bonus in the form of fully vested shares of the Company’s common stock in lieu of cash. Annually, the Company's Board of Directors will approve the maximum number of shares that can be issued under the Stock Bonus Program. For fiscal 2022, a maximum of 250,000 shares were approved for issuance under the Stock Bonus Program. The number of shares issuable under the Stock Bonus Program will be determined based on the attainment of specified annual performance targets and the average closing price of the Company's common stock over a specified 5-trading day period. The Stock Bonus Program is classified as a liability. The Company records compensation cost for the expected dollar value of the award and will adjust compensation expense for the awards based on its best estimate of attainment of its performance conditions. The cumulative effect of a change in the estimated value of the award will be recognized as an adjustment to earnings in the period of the revision. Pre-tax share-based compensation expense related to the Stock Bonus Program for the three months ended December 31, 2021 was not material.
Stock Options
During the sixthree months ended MarchDecember 31, 2021, there were 397,27981,832 stock options exercised with a weighted averagean exercise price of $19.53.$11.38. The intrinsic value of a stock option is the difference between the Company's common stock price and the option exercise price. The total pre-tax intrinsic value of stock options exercised during the sixthree months ended MarchDecember 31, 2021 was $5$1 million.
Employee Stock Purchase Plan
During the sixthree months ended MarchDecember 31, 2021, the Company withheld $7$4 million of eligible employee compensation for purchases of common stock and issued 448,168174,199 shares of common stock under its employee stock purchase plan (the "ESPP").
The grant date fair value for shares issued under the ESPP is measured on the date that each offering period commences. The average grant date fair value for the offering periodsperiod that commenced during the sixthree months ended MarchDecember 31, 2021 was $6.39$5.33 per share. The grant date fair value was determined using a Black-Scholes option pricing model with the following average grant date assumptions:
SixThree months ended MarchDecember 31, 2021
Expected volatility(1)
56.9062.43 %
Risk-free interest rate(2)
0.070.06 %
Dividend yield(3)
0— %
(1)Expected volatility based on the Company's historical data.
(2)Risk-free interest rate based on U.S. Treasury yields with a term equal to the length of the offering period.
(3)Dividend yield was assumed to be zero as the Company does not anticipate paying dividends.dividends on its common stock.
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15. Capital Stock
13. Preferred Stock
On October 31, 2019, the Company issuedThere were 125,000 shares of itsthe Company's 3% Series A Convertible Preferred Stock, par value $0.01 per share ("Series A Preferred Stock"), to RingCentral for an aggregate purchase price issued and outstanding as of $125 million.December 31, 2021. The Series A Preferred Stock is convertible into shares of the Company's common stock at an initial conversion price of $16.00 per share, which represents an approximately 9% interest in the Company's common stock on an as-converted basis as of MarchDecember 31, 2021, assuming no holders of options, warrants, convertible notes or similar instruments exercise their exercise or conversion rights.
As of MarchDecember 31, 2021, the carrying value of the Series A Preferred Stock was $130 million, which includes $5 million of accreted dividends paid in kind. During the six months ended March 31, 2021, the carrying value of the Series A Preferred Stock increased $2 million due to accreted dividends paid in kind.
Pursuant to an Investor Rights Agreement, until such time when RingCentral and its affiliates hold or beneficially own less than 4,759,339 shares of the Company's common stock (on an as-converted basis), RingCentral has the right to nominate one person for election to the Company's Board of Directors. The director designated by RingCentral has the option (i) to serve on the Company's Audit and Nominating and Corporate Governance Committees or (ii) to attend (but not vote at) all of the Company's Board of Directors' committee meetings. On November 6, 2020, Robert Theis was elected to join the Company's Board of Directors as RingCentral's designee.
Common Stock
The Company maintains a share repurchase program authorizing the Company to repurchase the Company's common stock for an aggregate expenditure of up to $500 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions. The Company adopted a purchase plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, to implement the share repurchase program. The share repurchase program does not obligate the Company to purchase any common stock and may be terminated, increased or decreased by the Board of Directors in its discretion at any time. All shares that are repurchased under the program are retired by the Company. During the three and six months ended March 31, 2021, the Company repurchased 245,206 shares of its common stock at a weighted average price per share of $29.69, including transaction costs based on the settlement date of the repurchase. There were an additional 7,962 shares repurchased that were pending settlement as of March 31, 2021 which have been accrued for by the Company within Other current liabilities in the Condensed Consolidated Balance Sheet. As of March 31, 2021, the remaining authorized amount for share repurchases under this program was $163 million.
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16.14. Loss Per Common Share
Basic lossearnings (loss) per share is calculated by dividing net lossincome (loss) attributable to common stockholders by the weighted average number of common shares outstanding. Diluted lossearnings (loss) per share reflects the potential dilution that would occur if equity awards granted under the Company's various share-based compensation plans were vested or exercised; if the Company's Series A Preferred Stock were converted into shares of the Company's common stock; if the Company's Convertible Notes or the warrants the Company sold to purchase up to 12.6 million shares of its common stock in connection with the issuance of Convertible Notes ("Call Spread Warrants") were exercised; and/or if the Emergence Date Warrants were exercised, resulting in the issuance of common shares that would participate in the earnings of the Company.
The following table sets forth the calculation of In periods with net loss attributable to common stockholders and the computation of basic and diluted loss per share for the periods indicated:
Three months ended
March 31,		Six months ended
March 31,
(In millions, except per share amounts)2021202020212020
Loss per share:
Numerator
Net loss$(58)$(672)$(62)$(726)
Dividends and accretion to preferred stockholders(1)(1)(2)(6)
Undistributed loss(59)(673)(64)(732)
Percentage allocated to common stockholders(1)
100.0 %100.0 %100.0 %100.0 %
Numerator for basic and diluted loss per common share$(59)$(673)$(64)$(732)
Denominator for basic and diluted loss per weighted average common shares84.6 93.0 84.2 101.1 
 Loss per common share
Basic$(0.70)$(7.24)$(0.76)$(7.24)
Diluted$(0.70)$(7.24)$(0.76)$(7.24)
(1) Basic weighted average common stock outstanding
84.6 93.0 84.2 101.1 
 Basic weighted average common stock and common stock equivalents (preferred shares)84.6 93.0 84.2 101.1 
 Percentage allocated to common stockholders100.0 %100.0 %100.0 %100.0 %

losses, no incremental shares are reflected as their effect would be anti-dilutive.
The Company's preferred stockSeries A Preferred Stock are participating securities, which requires the application of the two-class method to calculate basic and diluted earnings (loss) per share. Under the two-class method, undistributed earnings are allocated to common stock and participating securities according to their respective participating rights in undistributed earnings, as if all the earnings for the period had been distributed. Basic lossearnings (loss) per common share is computed by dividing the net lossincome (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Net lossincome (loss) attributable to common stockholders is reduced for preferred stock dividends earned and accretion recognized during the period. No allocation of undistributed earnings to participating securities was performed for periods with net losses as such securities do not have a contractual obligation to share in the losses of the Company.
The following table sets forth the calculation of net loss attributable to common stockholders and the computation of basic and diluted loss per share for the periods indicated:
Three months ended
December 31,
(In millions, except per share amounts)20212020
Loss per share:
Numerator
Net loss$(66)$(4)
Dividends to preferred stockholders(1)(1)
Undistributed loss(67)(5)
Percentage allocated to common stockholders(1)
100.0 %100.0 %
Numerator for basic and diluted loss per common share$(67)$(5)
Denominator for basic and diluted loss per common share84.7 83.8 
Loss per common share
Basic$(0.79)$(0.06)
Diluted$(0.79)$(0.06)
(1) Basic weighted average common stock outstanding
84.7 83.8 
 Basic weighted average common stock and common stock equivalents (preferred shares)84.7 83.8 
 Percentage allocated to common stockholders100.0 %100.0 %

For the three and six months ended MarchDecember 31, 2021, the Company excluded 3.14.6 million RSUs, 0.50.3 million stock options, 0.2 million shares issuable under the ESPP, 5.6 million Emergence Date Warrants and 0.1 million shares of Series A Preferred Stock from the diluted loss per share calculation as their effect would have been anti-dilutive. The Company also excluded 2.1 million PRSUs and 0.3 million shares authorized under the Company's Stock Bonus Program from the diluted loss per share calculation as either their performance metrics have not yet been attained or their effect would have been anti-dilutive.
For the three months ended December 31, 2020, the Company excluded 3.8 million RSUs, 0.9 million stock options, 0.1 million shares issuable under the ESPP, 5.6 million Emergence Date Warrants and 0.1 million shares of Series A Preferred Stock from the diluted loss per share calculation as their effect would have been anti-dilutive. The Company also excluded 1.6 million PRSUs from the diluted loss per share calculation as either their performance metrics havehad not yet been attained or their effect would have been anti-dilutive.
For the three and six months ended March 31, 2020, the Company excluded 3.2 million RSUs, 1.0 million stock options, 5.6 million Emergence Date Warrants and 0.1 million shares of Series A Preferred Stock from the diluted loss per share calculation
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as their effect would have been anti-dilutive. The Company also excluded 1.0 million PRSUs from the diluted loss per share calculation as their performance metrics had not yet been attained.
The Company's Convertible Notes and Call Spread Warrants were excluded from the diluted loss per share calculation for all periods presented as their effect would have been anti-dilutive.
17.15. Operating Segments
The Products & Solutions segment primarily develops, markets, and sells unified communications and collaboration and contact center solutions, offered on-premise, in the cloud, or as a hybrid solution. These integrate multiple forms of communications, including telephony, email, instant messaging and video. The Services segment develops, markets and sells comprehensive end-to-end global service offerings that enable customers to evaluate, plan, design, implement, monitor, manage and optimize complex enterprise communications networks. Revenue from customers who upgrade and acquire new technology through the Company's subscription offerings is reported within the Services segment.
The Company's chief operating decision maker makes financial decisions and allocates resources based on segment profit information obtained from the Company's internal management systems. Management does not include in its segment measures of profitability selling, general and administrative expenses, research and development expenses, amortization of intangible assets, and certain discrete items, such as fair value adjustments recognized upon emergence from bankruptcy, charges relating to restructuring actions, and impairment charges and merger-related costs as these costs are not core to the measurement of segment performance, but rather are controlled at the corporate level.
Summarized financial information relating to the Company's operating segments is shown in the following table for the periods indicated:
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
REVENUE
Products & Solutions$226 $245 $492 $543 
Services513 438 990 857 
Unallocated Amounts (1)
(1)(1)(1)(3)
$738 $682 $1,481 $1,397 
GROSS PROFIT
Products & Solutions$134 $154 $295 $348 
Services322 263 620 509 
Unallocated Amounts (2)
(44)(46)(87)(92)
412 371 828 765 
OPERATING EXPENSES
Selling, general and administrative264 248 519 531 
Research and development57 51 112 103 
Amortization of intangible assets39 41 79 82 
Impairment of goodwill0 624 0 624 
Restructuring charges, net8 4 12 7 
368 968 722 1,347 
OPERATING INCOME (LOSS)44 (597)106 (582)
INTEREST EXPENSE AND OTHER INCOME, NET(58)(38)(114)(82)
LOSS BEFORE INCOME TAXES$(14)$(635)$(8)$(664)
Three months ended
December 31,
(In millions)20212020
REVENUE
Products & Solutions$231 $266 
Services482 477 
$713 $743 
GROSS PROFIT
Products & Solutions$120 $161 
Services291 298 
Unallocated Amounts (1)
(42)(43)
369 416 
OPERATING EXPENSES
Selling, general and administrative262 255 
Research and development61 55 
Amortization of intangible assets40 40 
Restructuring charges, net7 4 
370 354 
OPERATING (LOSS) INCOME(1)62 
INTEREST EXPENSE AND OTHER INCOME, NET(47)(56)
(LOSS) INCOME BEFORE INCOME TAXES$(48)$6 
(1)Unallocated amounts in Revenue represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy and excluded from segment revenue.
(2)Unallocated amounts in Gross Profit include the fair value adjustments recognized upon emergence from bankruptcy and the effect of the amortization of technology intangibles which are excluded from segment gross profit.intangible assets.
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18.16.     Accumulated Other Comprehensive Loss
The components of Accumulated other comprehensive loss for the periods indicated were as follows:
(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of September 30, 2021$(20)$(37)$(34)$(91)
Other comprehensive income before reclassifications— 13 15 28 
Amounts reclassified to earnings(1)— 13 12 
Balance as of December 31, 2021$(21)$(24)$(6)$(51)
(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of December 31, 2020$(96)$(52)$(80)$(228)
Other comprehensive income before reclassifications50 21 17 88 
Amounts reclassified to earnings(15)0 13 (2)
Provision for income taxes(1)— — (1)
Balance as of March 31, 2021$(62)$(31)$(50)$(143)

(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of September 30, 2020$(108)$(46)$(91)$(245)
Other comprehensive income before reclassifications62 15 16 93 
Amounts reclassified to earnings(15)0 25 10 
Provision for income taxes(1)— — (1)
Balance as of March 31, 2021$(62)$(31)$(50)$(143)

(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of December 31, 2019$(106)$(4)$(53)$(163)
Other comprehensive loss before reclassifications0 (36)(54)(90)
Amounts reclassified to earnings0 27 6 33 
Benefit from income taxes0 0 2 2 
Balance as of March 31, 2020$(106)$(13)$(99)$(218)

(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of September 30, 2019$(106)$(7)$(60)$(173)
Other comprehensive loss before reclassifications0 (33)(50)(83)
Amounts reclassified to earnings0 27 11 38 
Balance as of March 31, 2020$(106)$(13)$(99)$(218)
(In millions)Change in Unamortized Pension, Post-retirement and Postemployment Benefit-related ItemsForeign Currency TranslationUnrealized Loss on Interest Rate SwapsAccumulated Other Comprehensive Loss
Balance as of September 30, 2020$(108)$(46)$(91)$(245)
Other comprehensive income (loss) before reclassifications12 (6)(1)5 
Amounts reclassified to earnings— — 12 12 
Balance as of December 31, 2020$(96)$(52)$(80)$(228)
Reclassifications from Accumulated other comprehensive loss related to changes in unamortized pension, post-retirement and postemployment benefit-related items are recorded in Other income, net. Reclassifications from Accumulated other comprehensive loss related to the unrealized loss on interest rate swap agreements are recorded in Interest expense. Reclassifications from Accumulated other comprehensive loss related to foreign currency translation reflect the impact of certain liquidated entities and are recorded in Other income, net.
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19.17. Related Party Transactions
The Company's Board of Directors is comprised of 8 directors, including the Company's Chief Executive Officer and 7 non-employee directors.
Specific Arrangements Involving the Company's Current Directors and Executive Officers
William D. Watkins is a Director and Chair of the Board of Directors of the Company and serves on the board of directors of Flex Ltd. ("Flex"), an electronics design manufacturer. For the six months ended March 31, 2021 and 2020, the Company purchased goods and services from subsidiaries of Flex of $7 million and $16 million, respectively. For the six months ended March 31, 2021 and 2020, sales of goods and services to subsidiaries of Flex were not material. As of both March 31, 2021 and September 30, 2020, the Company had outstanding accounts payable due to Flex of $3 million. As of March 31, 2021, outstanding accounts receivable due from Flex were not material. As of September 30, 2020, the Company had outstanding accounts receivable due from Flex of $1 million.
Effective April 13, 2020, Stephan Scholl, a Director of the Company, assumedis the role of Chief Executive Officer of Alight Solutions LLC ("Alight"), a provider of integrated benefits, payroll and cloud solutions. Forsolutions, and he also serves on Alight's board of directors. During both the sixthree months ended MarchDecember 31, 2021 and 2020, the Company purchased goods and services from subsidiaries of Alight of $2$1 million. As of Marchboth December 31, 2021 and September 30, 2021, outstanding accounts payable due to Alight were not material. As of September 30, 2020, the Company had outstanding accounts payable due to Alight of $1 million.
20.18. Commitments and Contingencies
Legal Proceedings
In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations and proceedings including, but not limited to, those relating to intellectual property, commercial, employment, environmental indemnity and regulatory matters. The Company records accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, we do not record a liability, but instead disclose the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made.
InOther than as described below, in the opinion of the Company's management, while the outcome of these matters is uncertain, the likely results of these matters are not expected, either individually or in the aggregate, to have a material adverse effect on the Company's financial position, annual results of operations or cash flows. However, an unfavorable resolution could have a material adverse effect on the Company's financial position, results of operations or cash flows in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition.
On January 14, 2020, Solaborate Inc. and Solaborate LLC (collectively, “Solaborate”) filed suit against the Company in California Superior Court in San Bernardino County. The dispute concerns activities related to the Company’s development of the CU360 collaboration unit. Solaborate alleges breach of contract, trade secret misappropriation, and unfair business practices, among other causes of action. The Company has cross-claimed, alleging promissory fraud and negligent misrepresentation by Solaborate. As of December 31, 2021, the suit remains in the discovery phase and a trial is scheduled for
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April 11, 2022. Solaborate has not yet disclosed the amount of damages it seeks, which may include actual and punitive damages and equitable relief. While the Company intends to vigorously defend its interests and pursue the Company’s claims against Solaborate, at this time an outcome cannot be predicted as (i) discovery is not yet complete; (ii) the matter presents legal uncertainties; (iii) there are significant facts in dispute; and (iv) there is a wide range of potential outcomes. As a result, the Company is not able to reasonably estimate the possible loss, or range of loss.
Product Warranties
The Company recognizes a liability for the estimated costs that may be incurred to remedy certain deficiencies of quality or performance of the Company's products. These product warranties extend over a specified period of time, generally ranging up to two years from the date of sale depending upon the product subject to the warranty. The Company accrues a provision for estimated future warranty costs based upon the historical relationship of warranty claims to sales. The Company periodically reviews the adequacy of its product warranties and adjusts, if necessary, the warranty percentage and accrued warranty reserve, which is included in other current and non-current liabilities in the Condensed Consolidated Balance Sheets, for actual experience. As of Marchboth December 31, 2021 and September 30, 2020,2021, the amount reserved for product warranties was $2 million.
Guarantees of Indebtedness and Other Off-Balance Sheet Arrangements
Letters of Credit and Guarantees
The Company provides guarantees, letters of credit and surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company's performance in accordance with contractual or legal obligations. As of MarchDecember 31, 2021, the maximum potential payment obligation with regards to letters of credit, guarantees and surety bonds was $62$68 million. The outstanding letters of credit are collateralized by restricted cash of $4 million, which is included in Other assets on the Condensed Consolidated Balance SheetSheets as of MarchDecember 31, 2021.
Purchase Commitments and Termination Fees
The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products. During the normal course of business, to manage manufacturing lead times and to help assure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that allow them to produce and procure inventory based upon forecasted requirements provided by the Company. If the Company does not meet these specified purchase commitments, it could be required to purchase the inventory, or in the case of certain agreements, pay an early termination fee. Historically, the Company has not been required to pay a charge for not meeting its designated purchase commitments with these suppliers but has been obligated to purchase certain excess inventory levels from its
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outsourced manufacturers due to actual sales of product varying from forecast and due to transition of manufacturing from one vendor to another.
The Company's outsourcing agreements with its most significant contract manufacturers automatically renew in July and September for successive periods of twelve months each, subject to specific termination rights for the Company and the contract manufacturers. All manufacturing of the Company's products is performed in accordance with either detailed requirements or specifications and product designs furnished by the Company and is subject to quality control standards.
Transactions with Nokia
Pursuant to the Contribution and Distribution Agreement effective October 1, 2000 (the "Contribution and Distribution Agreement"), Nokia Corporation ("Nokia", formerly known as Lucent Technologies, Inc. ("Lucent")) contributed to the Company substantially all of the assets, liabilities and operations associated with its enterprise networking businesses (the "Contributed Businesses") and distributed the Company's stock pro-rata to the shareholders of Lucent ("distribution"). The Contribution and Distribution Agreement, among other things, provides that, in general, the Company will indemnify Nokia for all liabilities including certain pre-distribution tax obligations of Nokia relating to the Contributed Businesses and all contingent liabilities primarily relating to the Contributed Businesses or otherwise assigned to the Company. In addition, the Contribution and Distribution Agreement provides that certain contingent liabilities not allocated to one of the parties will be shared by Nokia and the Company in prescribed percentages. The Contribution and Distribution Agreement also provides that each party will share specified portions of contingent liabilities based upon agreed percentages related to the business of the other party that exceed $50 million. The Company is unable to determine the maximum potential amount of other future payments, if any, that it could be required to make under this agreement.
In addition, in connection with the distribution, the Company and Lucent entered into a Tax Sharing Agreement effective October 1, 2000 (the "Tax Sharing Agreement") that governs Nokia's and the Company's respective rights, responsibilities and obligations after the distribution with respect to taxes for the periods ending on or before the distribution. Generally, pre-distribution taxes or benefits that are clearly attributable to the business of one party will be borne solely by that party and other pre-distribution taxes or benefits will be shared by the parties based on a formula set forth in the Tax Sharing Agreement. The
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Company may be subject to additional taxes or benefits pursuant to the Tax Sharing Agreement related to future settlements of audits by state and local and foreign taxing authorities for the periods prior to the Company's separation from Nokia.
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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise indicates, as used in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," the terms "we," "us," "our," "the Company," "Avaya" and similar terms refer to Avaya Holdings Corp. and its consolidated subsidiaries. "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and other financial information for the fiscal year ended September 30, 2020,2021, included in our Annual Report on Form 10-K for the fiscal year ended September 30, 20202021 filed with the Securities and Exchange Commission on November 25, 2020.22, 2021.
Our accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial statements. In our opinion, the unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows for the periods indicated.
The matters discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See "Cautionary Note Regarding Forward-Looking Statements" at the end of this discussion.
Overview
Avaya is a global leader in digital communications products, solutions and services for businesses of all sizes delivering its technology predominantly through software and services. We enable organizations around the globe to succeed by creating intelligent communications experiences for our clients, their employees and their customers. Avaya builds innovative open, converged unified communications and innovativecollaboration ("UCC") and contact center ("CC") solutions to enhance and simplify communications and collaboration in the cloud, on-premise or a hybrid of both. Our global, experienced team of professionals delivers award-winning services from initial planning and design, to seamless implementation and integration, to ongoing managed operations, optimization, training and support.
During fiscal 2020, the CompanyAvaya shifted its entire comprehensive portfolio of capabilities to Avaya OneCloud, which offers significant capabilities across contact center (OneCloud CCaaS), unified communications and collaboration (OneCloud UCaaS), and communications platform as a service.service (OneCloud CPaaS). We believe the Avaya OneCloud providesopen, composable platform approach uniquely positions us to address a customer's needs in creating a digital workplace for their campus-based and remote employees through Unified Communications and Collaboration and the full spectrum of cloud and on-premise deployment options. This enables organizations to deploy the Company’s solutions in the way that best serves theirCustomer Experience Center, our name for contact centers, helping clients deliver tangible business requirements and complements their existing investments, while moving with the speed and agility they require.results.
The CompanyAvaya also offers one of the broadest portfolios of business devices in the industry, including handsets, video conferencing units and headsets to meet the needs of every type of worker across a customer’s organization and help themour customers get the most out of their communications investments. Avaya IP-enabled handsets, multimedia devices and conferencing systems enhance collaboration and productivity, and position organizations to incorporate future technological advancements.
Our business has two operating segments: Products & Solutions and Services.
Products & Solutions
Products & Solutions encompasses our unified communicationsUCC and contact centerCC software platforms, applications and devices.
The Company's unified communications and collaboration ("UCC")Avaya OneCloud UCaaS solutions enable organizations to reimagine collaborative work environments and help companies increase employee productivity, improve customer service and reduce costs. With Avaya's UCC solutions,Avaya OneCloud UCaaS, organizations can provide their workers with a single app for all-channel calling, messaging, meetings and team collaboration with the same ease of use they receive fromas existing consumer apps.applications ("apps"). Avaya embeds communications directly into the apps, browsers and devices employees use every day, giving them a more natural, efficient and flexible way to connect, engage, respond and share - where and how they want. During fiscal 2020, the Company expanded its UCC portfolioWe continue to include cloud-based solutions.integrate Artificial Intelligence ("AI") within our cloud based solutions to create enhanced user experience and improve performance.
The Company'sAvaya's industry-leading digital contact center ("CC") solutions, Avaya OneCloud CCaaS, enable the Company's clients to build a customized portfolio of applications drivingto drive stronger customer engagement and higher customer lifetime value. Our reliable, secure and scalable communications solutions include voice, email, chat, social media, video, performance management and third-party integration that can improve customer service and help companies compete more effectively. Like the UCC business, the CompanyAvaya is evolving CCdelivering OneCloud CCaaS solutions for cloud deployment and in fiscal 2020, the Company expanded its CC portfoliowe continue to include cloud-based solutions.
Avaya also focuses on ensuring an outstanding experience for mobile callers by integrating transformative technologies, including Artificial Intelligence, mobility, big data analyticsaggressively integrate AI, machine learning and leading-edge cybersecurity capabilities into our CC solutions. As organizations use theseportfolio, providing our clients a deeper understanding of their customers' needs with a robust and secure platform.
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solutionsAvaya OneCloud CPaaS combines the cloud with our communications platforms, providing a development platform and the application programming interfaces that enable developers to gain a deeper understanding of theireasily integrate both UCC and CC communications capabilities directly into internal and customer-facing applications and workflows. Organizations can quickly deliver modular, composable apps and experiences that meet ever-changing customer needs, we believe that their teams become more efficient and effective and, as a result, their customer loyalty grows.operational needs.
Services
Services consists ofComplementing our product and solutions portfolio is a global, award-winning services portfolio, of offerings created to help customers achieve better business outcomes, including global supportdelivered by Avaya and our extensive partner ecosystem. Our services enterprise cloudportfolio, which includes solution upgrades and managed services and professional services. We classify customers who upgrade and acquireprovides new technology through the Company'sour Avaya OneCloud subscription offerings, as part of our Services segment.consists of:
The Company's global support services•Global Support Services provide offerings that help businesses protect their technology investments and address the risk of system outages. We help our customers gain a competitive edge through proactive problem prevention, rapid issue resolution and continual solution optimization. Global support services also provide software solutions delivered through a subscription model to provide our customers an improved user experience and solution enhancements. Most of our global support services revenue is recurring in nature.nature and based on multi-year services contracts.
•Enterprise cloudCloud and managed servicesManaged Services enable customers to take advantage of our technology via the cloud, on-premise, or a hybrid of both, depending on the solution and the needs of the customer. Most of our enterprise cloud and managed services revenue is recurring in nature and based on multi-year services contracts.
The Company's professional services•Professional Services enable our customers to take full advantage of their IT and communications solution investments to drive measurable business results. Our experienced consultants and engineers partner with customers atalong each step of the solution lifecycle to deliver services that add value and drive business transformation. Most of our professional services revenue is one-timenon-recurring in nature.
Together,With these comprehensive services, enable clients tocustomers can leverage communications technology to help them maximize their business results. Our global team of professionals delivers services from initial planning and design, to seamless implementation and integration, to ongoing managed operations, optimization, training and support. We help our customers use communications to minimize the risk of outages, enabledrive employee productivity and deliver a differentiated customer experience.
Our services teams also help our customers transition at their desired pace to next generationnext-generation communications technology solutions, either via the cloud, on-premise, or a hybrid of both.solutions. Customers can selectchoose the level of support levels for their communications solutions best suited for their needs, which may include deployment, training, monitoring, solution management, optimization and more. Our systems and service team's performance monitoring can quickly identify and address issues before they arise. Remote diagnostics and resolutions focus on fixing existing problems and avoiding potential issues in order to help our customers save time and reduce the risk of an outage.
OneCloud Business Highlight
During the three months ended December 31, 2021, the Company executed a OneCloud arrangement for a large global financial institution with an estimated total contract value in excess of $400 million over a term of up to 7 years. The contract includes a series of distinct performance obligations that are satisfied over time. Total consideration for the project is allocated to each performance obligation, and revenue will be primarily recognized ratably over the period during which the services are performed.
Factors and Trends Affecting Our Results of Operations
There are several trends and uncertainties affecting our business. Most importantly, we are dependent on general economic conditions, the willingness of our customers to invest in technology and the manner in which our customers procure such technology and services.
Industry Trends
As•UCC, CC and CPaaS are converging to become part of an integrated services offering delivering next-generation communications capabilities across a resulthost of devices and channels.
•Preference for cloud delivery of applications and management of multiple and varied devices continues to grow, all of which must be handled with the security that business demands.
•The experience economy continues to grow. The experience economy is based on the concept that experience is a growing market trend preferring cloud consumption, more customers are exploring subscription and pay-per-use based models, rather than capex models,key source of value — it is a differentiator that creates competitive advantage for procuring technology. The shift to subscription and pay-per-use models enables customers to manage costs and efficiencies by paying a subscription or a per minute or per message fee for business communications services rather than purchasing the underlying products and services, infrastructureservices. As consumers embrace new technologies and personnel, which are owneddevices in creative ways and managed by the equipment vendor or aat an accelerating pace, Avaya is continuing to invest in AI-powered solutions delivered through cloud and managed services provider. We believesubscription models to create “Experiences that Matter” for customers, employees and agents. This increased adoption and deployment of AI is providing significant new opportunities for enhanced UCC and CC solutions that improve the market trend toward these flexible consumption models will continue as we see an increasing number of opportunitiescustomer experience and requests for proposals based on subscription and pay-per-use models. This trend has driven an increase intransform the proportion of total Company revenues attributable to software and services. In addition, we believe customers are moving away from owned and operated infrastructure, preferring cloud offerings and virtualized server defined networks, which reduces our associated maintenance support opportunities. We are evolving into a software and services business and focus our go-to-market efforts by introducing new solutions and innovations, particularly on workflow automation, multi-channel customer engagement and cloud-enabled communications applications. The Company is focused on growing products and services with a recurring revenue stream. Recurring revenue includes products and services that are delivered pursuant to multi-period contracts and include revenue from sales of its software, global support services, enterprise cloud and managed services and other cloud offerings.Digital Workplace.
Coronavirus ("COVID-19") Update
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Coronavirus ("COVID-19") Pandemic
Instability in the geopolitical environment of our customers, instability in the global credit markets and other disruptions, such as the COVID-19 pandemic, have put pressure on the global economy causing uncertainties.
The COVID-19 pandemic has had widespread and the responses of governments worldwide to COVID-19, are having a significant impactunprecedented impacts on regional, national and global economies. The COVID-19 pandemic and its related economic effects have not had a material impact on our business or liquidity. However, the ultimate impact of the COVID-19 pandemic on our business, financial performance and liquidity, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future pandemic related developments, including the duration and severity of the pandemic, the implementation or re-implementation of governmental and employer requirements to limit the spread of the virus, the speed with which vaccines can be distributed globally, the pace of acceptance of vaccines and booster shots by the public and the emergence of new variants, which are uncertain and cannot be predicted. During fiscal 2020,
Our focus throughout the Company recognized a significant goodwill impairment charge as a result of the COVID-19 pandemic which is further described in Note 7, “Goodwill, net” in the Company’s Annual Reporthas been and remains on Form 10-K filed with the SEC on November 25, 2020.
Thepromoting employee health and safety, ofserving our employees has been our highest priority throughout the COVID-19 pandemic,customers and we have implemented several preventative and protective measures, including requiring, to the extent possible, all employees to work remotely, and cancelling conventions and conferences where social distancing would not be possible. We have also implementedensuring business continuity plans and have continued to support our clients primarily by providing our services remotely instead of onsite.
While the pandemic and its effect on the global economy have not materially impacted the Company or its financial condition to date, the Company will continue to evaluate its financial position in light of future developments.continuity.
We believe that the current macroeconomic environment caused by the COVID-19 pandemic has accelerated what was already a developing trend in the way people work, with more employees working remotely, and we believe this could increase demand for certain of the Company's products and services.
The Company has maintained its focus on profitability levels and investing in future results and has implemented programs designed to streamline its operations, generate cost savings and eliminate overlapping processes and resources. The Company continues to evaluate opportunities to streamline its operations and identify cost savings globally in addition to those implemented in response to the COVID-19 pandemic and may take additional restructuring actions in the future. The costs of any future actions could be material.
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Financial Results Summary
The following table displays our consolidated net loss for the three and six months ended MarchDecember 31, 2021 and 2020:
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
REVENUE
Products$226 $245 $492 $543 
Services512 437 989 854 
738 682 1,481 1,397 
COSTS
Products:
Costs92 92 197 196 
Amortization of technology intangible assets43 44 86 87 
Services191 175 370 349 
326 311 653 632 
GROSS PROFIT412 371 828 765 
OPERATING EXPENSES
Selling, general and administrative264 248 519 531 
Research and development57 51 112 103 
Amortization of intangible assets39 41 79 82 
Impairment of goodwill— 624 — 624 
Restructuring charges, net8 4 12 7 
368 968 722 1,347 
OPERATING INCOME (LOSS)44 (597)106 (582)
Interest expense(59)(53)(115)(111)
Other income, net1 15 1 29 
LOSS BEFORE INCOME TAXES(14)(635)(8)(664)
Provision for income taxes(44)(37)(54)(62)
NET LOSS$(58)$(672)$(62)$(726)
Three months ended
December 31,
(In millions)20212020
REVENUE
Products$231 $266 
Services482 477 
713 743 
COSTS
Products:
Costs111 105 
Amortization of technology intangible assets42 43 
Services191 179 
344 327 
GROSS PROFIT369 416 
OPERATING EXPENSES
Selling, general and administrative262 255 
Research and development61 55 
Amortization of intangible assets40 40 
Restructuring charges, net7 4 
370 354 
OPERATING (LOSS) INCOME(1)62 
Interest expense(54)(56)
Other income, net7 — 
(LOSS) INCOME BEFORE INCOME TAXES(48)6 
Provision for income taxes(18)(10)
NET LOSS$(66)$(4)


Three months ended MarchDecember 31, 2021 compared with the Three months ended MarchDecember 31, 2020
Revenue
Revenue for the three months ended MarchDecember 31, 2021 was $738$713 million compared to $682$743 million for the three months ended MarchDecember 31, 2020. The increasedecrease was primarily driven by the continuing shift away from on-premise product solutions and associated hardware maintenance and software support services to the Company's OneCloud portfolio (including OneCloud subscription hybrid). The decrease was partially offset by higher revenue from the Company's OneCloud subscription offerings; revenue from the fulfillmenthybrid offering, devices and other hardware during three months ended December 31, 2021.
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Table of certain obligations related to a new government contract; revenue growth from the Company's Avaya Cloud Office offering which launched on March 31, 2020; and the favorable impact of foreign currency exchange rates. The increase was partially offset by lower demand for the Company's on-premise product solutions.Contents


The following table displays revenue and the percentage of revenue to total sales by operating segment for the periods indicated:
Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Three months ended
March 31,		Three months ended
March 31,
(In millions)2021202020212020
Products & Solutions$226 $245 31 %36 %(8)%(9)%
Services513 438 69 %64 %17 %15 %
Unallocated amounts(1)(1)— %— %(1)(1)
Total revenue$738 $682 100 %100 %8 %7 %
(1)Not meaningful.

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Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Three months ended
December 31,		Three months ended
December 31,
(In millions)2021202020212020
Products & Solutions$231 $266 32 %36 %(13)%(13)%
Services482 477 68 %64 %1 %1 %
Total revenue$713 $743 100 %100 %(4)%(4)%
Products & Solutions revenue for the three months ended MarchDecember 31, 2021 was $226$231 million compared to $245$266 million for the three months ended MarchDecember 31, 2020. The decrease was primarily attributable to lower demand for the Company'scontinuing shift away from on-premise product solutions, partially offset by an increase in the revenue from the Company's Avaya Cloud Office offering which launched on March 31, 2020; revenue from the fulfillment of certain obligations related to a new government contract;devices and the favorable impact of foreign currency exchange rates.other hardware products.
Services revenue for the three months ended MarchDecember 31, 2021 was $513$482 million compared to $438$477 million for the three months ended MarchDecember 31, 2020. The increase was primarily driven by higher revenue from the Company's OneCloud subscription and OneCloud Private offerings; revenue from the fulfillment of certain obligations related to a new government contract; and the favorable impact of foreign currency exchange rates,hybrid offering, partially offset by the plannedanticipated declines in hardware maintenance and software support services which continue to face headwinds driven by lower newthe continuing shift away from on-premise product sales over the past several years.solutions.
Unallocated amounts for the three months ended March 31, 2021 and 2020 represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy in December 2017 which is excluded from segment revenue.
The following table displays revenue and the percentage of revenue to total sales by location for the periods indicated:
Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Three months ended
March 31,		Three months ended
March 31,
(In millions)2021202020212020
U.S.$413 $384 56 %56 %8 %8 %
International:
EMEA187 172 25 %26 %9 %5 %
APAC - Asia Pacific77 70 11 %10 %10 %4 %
Americas International - Canada and Latin America61 56 8 %8 %9 %8 %
Total International325 298 44 %44 %9 %6 %
Total revenue$738 $682 100 %100 %8 %7 %
Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Three months ended
December 31,		Three months ended
December 31,
(In millions)2021202020212020
U.S.$375 $414 53 %56 %(9)%(9)%
International:
Europe, Middle East and Africa192 195 27 %26 %(2)%— %
Asia Pacific81 75 11 %10 %8 %8 %
Americas International - Canada and Latin America65 59 9 %8 %10 %10 %
Total international338 329 47 %44 %3 %4 %
Total revenue$713 $743 100 %100 %(4)%(4)%
Revenue in the U.S. was $413$375 million for the three months ended MarchDecember 31, 2021 compared to $384$414 million for the three months ended MarchDecember 31, 2020. The increasedecrease in the U.S. revenue was mainly driven by the continuing shift away from on-premise product solutions and associated hardware maintenance and software support services, partially offset by higher revenue from the Company's OneCloud subscription offerings; revenue from the fulfillment of certain obligations related to a new government contract; and revenue growth from the Company's Avaya Cloud Office offering which launched on March 31, 2020, partially offset by lower demand for the Company's on-premise product solutions. hybrid offering.
Revenue in Europe, Middle East and Africa ("EMEA") for the three months ended MarchDecember 31, 2021 was $187$192 million compared to $172$195 million for the three months ended MarchDecember 31, 2020. The increasedecrease in EMEA revenue was mainly driven by the continuing shift away from on-premise product solutions and associated hardware maintenance and software support services; and the unfavorable impact of foreign currency exchange rates, partially offset by higher revenue from the Company's OneCloud subscription offerings; revenue growth from the Company's Avaya Cloud Office offering; and the favorable impact of foreign currency exchange rates. hybrid offering.
Revenue in Asia Pacific ("APAC") for the three months ended MarchDecember 31, 2021 was $77$81 million compared to $70$75 million for the three months ended MarchDecember 31, 2020. The increase in APAC revenue was primarily attributable to higher revenue from the Company's OneCloud subscription offerings and the favorable impact of foreign currency exchange rates, partially offset by lower demand for the Company's on-premise product solutions. hybrid offering.
Revenue in Americas International for the three months ended MarchDecember 31, 2021 was $61$65 million compared to $56$59 million for the three months ended MarchDecember 31, 2020. The increase in Americas International revenue was primarily driven by higher revenue from the Company's OneCloud subscription hybrid offering; and higher revenue from the Company's professional services, partially offset by the continuing shift away from on-premise product solutions and the favorable impactassociated hardware maintenance and software support services.
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Table of foreign currency exchange rates.Contents

Gross Profit
The following table sets forth gross profit and gross margin by operating segment for the periods indicated:
Gross MarginChange
Three months ended
March 31,		Three months ended
March 31,
(In millions)2021202020212020AmountPercent
Products & Solutions$134 $154 59.3 %62.9 %$(20)(13)%
Services322 263 62.8 %60.0 %59 22 %
Unallocated amounts(44)(46)(1)(1)2 (1)
Total$412 $371 55.8 %54.4 %$41 11 %
Gross MarginChange
Three months ended
December 31,		Three months ended
December 31,
(In millions)2021202020212020AmountPercent
Products & Solutions$120 $161 51.9 %60.5 %$(41)(25)%
Services291 298 60.4 %62.5 %(7)(2)%
Unallocated amounts(42)(43)(1)(1)1 (1)
Total$369 $416 51.8 %56.0 %$(47)(11)%
(1)Not meaningful.
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Products & Solutions gross profit for the three months ended MarchDecember 31, 2021 was $134$120 million compared to $154$161 million for the three months ended MarchDecember 31, 2020. The2020, which results in a decrease was mainly attributable to the decline in revenue described above. Products & Solutionsof gross margin decreased from 62.9% to 59.3%60.5% for the three months ended MarchDecember 31, 2021 mainly driven by2020 to 51.9% for the three months ended December 31, 2021. The decrease was attributable to the decrease in revenue described above; an increase in hardware costs as a result of supply chain costs, the continued shift to cloud offerings where the Company incurs higher cloud delivery costs; and a less favorable product mix.mix due to the continued shift in consumption of higher margin on-premise software from a perpetual license model to a subscription model, which is reflected within our Services segment.
Services gross profit for the three months ended MarchDecember 31, 2021 was $322$291 million compared to $263$298 million for the three months ended MarchDecember 31, 2020. The increase was mainly driven by the growth in revenue described above. Services gross margin increaseddecreased from 60.0% to 62.8%62.5% for the three months ended MarchDecember 31, 2021 due2020 to 60.4% for the favorable impactthree months ended December 31, 2021. The decrease was mainly driven by an increase in costs associated with a higher mix of highercloud and partner offerings, partially offset by the increase in revenue from the Company's OneCloud subscription offerings.hybrid offering.
Unallocated amounts for the three months ended MarchDecember 31, 2021 and 2020 includerepresent the amortization of technology intangibles and the fair value adjustments recognized upon emergence from bankruptcy which are excluded from segment gross profit.intangible assets.
Operating Expenses
The following table sets forth operating expenses and the percentage of operating expenses to total revenue for the periods indicated:
Percentage of Total RevenueChange
Three months ended
March 31,		Three months ended
March 31,
(In millions)2021202020212020AmountPercent
Selling, general and administrative$264 $248 35.8 %36.3 %$16 6 %
Research and development57 51 7.7 %7.5 %6 12 %
Amortization of intangible assets39 41 5.3 %6.0 %(2)(5)%
Impairment of goodwill— 624 — %91.5 %(624)(100)%
Restructuring charges, net8 4 1.1 %0.6 %4 100 %
Total operating expenses$368 $968 49.9 %141.9 %$(600)(62)%
Percentage of Total RevenueChange
Three months ended
December 31,		Three months ended
December 31,
(In millions)2021202020212020AmountPercent
Selling, general and administrative$262 $255 36.7 %34.3 %$7 3 %
Research and development61 55 8.6 %7.4 %6 11 %
Amortization of intangible assets40 40 5.6 %5.4 %— — %
Restructuring charges, net7 4 1.0 %0.5 %3 75 %
Total operating expenses$370 $354 51.9 %47.6 %$16 5 %
Selling, general and administrative expenses for the three months ended MarchDecember 31, 2021 were $264$262 million compared to $248$255 million for the three months ended MarchDecember 31, 2020. The increase was primarily attributable to higher channel compensation driven by the increaseinvestment in revenue;cloud go-to-market, marketing and travel expenses associated with conferences, mainly Avaya Engage and Gitex; and higher accrued incentive compensation; and the unfavorable impact of foreign currency exchange rates,employee benefit costs, partially offset by lower bad debt expenseaccrued incentive compensation and lower travel costs as a result of the COVID-19 pandemic.facility related costs.
Research and development expenses for the three months ended MarchDecember 31, 2021 were $57$61 million compared to $51$55 million for the three months ended MarchDecember 31, 2020. The increase was primarily attributable to investments in cloud technology development.development, partially offset by lower accrued incentive compensation.
Amortization of intangible assets were $40 million for both the three months ended MarchDecember 31, 2021 and 2020.
Restructuring charges, net were $39 million compared to $41$7 million for the three months ended March 31, 2020.
Impairment of goodwill for the three months ended March 31, 2020 was $624 million. During the three months ended March 31, 2020, the Company performed an interim impairment test of its goodwill and indefinite-lived intangible assets due to (i) the impact of the COVID-19 pandemic on the macroeconomic environment which led to revisions to the Company's long-term forecast during the second quarter of fiscal 2020 and (ii) the sustained decrease in the Company's stock price at the beginning stages of the pandemic which was caused by the resulting volatility in the financial markets. The results of the Company’s interim goodwill impairment test as of March 31, 2020 indicated that the estimated fair value of the Company’s Services reporting unit exceeded its carrying amount. The carrying amount of the Company's Products & Solutions reporting unit exceeded its estimated fair value primarily due to a reduction in the Company’s long-term forecast to reflect increased risk from higher market uncertainty and the accelerated reduction of product sales related to the Company’s historical on-premises perpetual licenses with a continued shift and acceleration of customers upgrading and acquiring new technology innovation through the utilization of the Company’s subscription offering, which is included in the Services reporting unit. As a result, the Company recorded a goodwill impairment charge of $624 million to write down the full carrying amount of the Products & Solutions goodwill. The results of the indefinite-lived intangible asset impairment test indicated that no impairment existed. To the extent business conditions deteriorate or if changes in key assumptions and estimates differ significantly from management's expectations included in the long-term forecast, it may be necessary to record additional impairment charges in the future.
Restructuring charges, net were $8 million for the three months ended MarchDecember 31, 2021 compared to $4 million for the three months ended MarchDecember 31, 2020. Restructuring charges during the three months ended MarchDecember 31, 2021 consisted of $7$5 million for facility exit costs and $2 million for employee separation actions primarily in the U.S. and EMEA. Restructuring charges for the three months ended December 31, 2020 consisted of $3 million for facility exit costs primarily in the U.S. and $1 million for employee separation actions in the U.S. Restructuring charges for the three months ended March 31, 2020 primarily related to exited leased facilities.EMEA.
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Operating (Loss) Income (loss)
Operating incomeloss for the three months ended MarchDecember 31, 2021 was $44$1 million compared to an operating lossincome of $597$62 million for the three months ended MarchDecember 31, 2020. Our operating results for the three months ended MarchDecember 31, 2021 as compared to the three months ended MarchDecember 31, 2020 reflect, among other things:things, the following items which are described in more detail above:
•higherlower revenue and gross profit for the three months ended MarchDecember 31, 2021;
•higher selling, general and administrative costs for the three months ended MarchDecember 31, 2021;
•higher research and development costs for the three months ended December 31, 2021; and
•a $624 million goodwill impairment charge duringhigher net restructuring charges for the three months ended March 31, 2020 with no comparable charge during the three months ended MarchDecember 31, 2021.
Interest Expense
Interest expense for the three months ended MarchDecember 31, 2021 was $59$54 million compared to $53$56 million for the three months ended MarchDecember 31, 2020. The increasedecrease was mainly driven by higherlower average principal amounts outstanding and lower average interest rates primarily attributable to the changes in the Company'sCompany’s debt portfolio which occurred in September 2020 and new debt issuance costs incurred as a result of the Company's Term Loan amendment described in the "Liquidity and Capital Resources" section below, partially offset by the impact of lower average principal amounts outstanding during the three months ended March 31, 2021.Note 7 “Financing Arrangements” to our unaudited interim Condensed Consolidated Financial Statements.
Other Income, Net
Other income, net for the three months ended MarchDecember 31, 2021 was $1$7 million compared to $15$0 million for the three months ended MarchDecember 31, 2020. The decreaseincrease was mainly driven by the change in fair value of the warrants issued in accordance with the Company's bankruptcy plan (the "EmergenceEmergence Date Warrants") and unrealized gains on RingCentral shares received by the Company under the strategic partnership during the three months ended March 31, 2020 which were sold by the end of fiscal 2020, partially offset by a non-cash settlement gain recorded during the three months ended March 31, 2021 related to the Company's other post-retirement plan and the net impact of foreign currency gains (losses).Warrants.
Provision for Income Taxes
The provision for income taxes was $44$18 million for the three months ended MarchDecember 31, 2021 compared to a provision for income taxes of $37$10 million for the three months ended MarchDecember 31, 2020.
The Company's effective income tax rate for the three months ended MarchDecember 31, 2021 differed from the U.S. federal tax rate by 335%59% or $47$28 million principally related to nondeductible expenses, including expenses related to the change in fair value of the Emergence Date Warrants, and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.realized; and nondeductible expenses.
The Company's effective income tax rate for the three months ended MarchDecember 31, 2020 differed from the U.S. federal tax rate by 27%146% or $170$9 million principally related to the goodwill impairment charge recorded in the second quarter of fiscal 2020 and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.realized; and nondeductible expenses.
Net Loss
Net loss was $58$66 million for the three months ended MarchDecember 31, 2021 compared to a net loss of $672$4 million for the three months ended March 31, 2020, as a result of the items discussed above.
Six months ended March 31, 2021 compared with the Six months ended March 31, 2020
Revenue
Revenue for the six months ended March 31, 2021 was $1,481 million compared to $1,397 million for the six months ended March 31, 2020. The increase was primarily driven by higher revenue from the Company's subscription offerings; revenue from the fulfillment of certain obligations related to a new government contract; revenue growth from the Company's Avaya Cloud Office offering which launched on March 31, 2020; and the favorable impact of foreign currency exchange rates. The increase was partially offset by lower demand for the Company's on-premise product solutions.
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The following table displays revenue and the percentage of revenue to total sales by operating segment for the periods indicated:
Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Six months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
Products & Solutions$492 $543 33 %39 %(9)%(11)%
Services990 857 67 %61 %16 %14 %
Unallocated amounts(1)(3)— %— %(1)(1)
Total revenue$1,481 $1,397 100 %100 %6 %5 %
(1)Not meaningful.

Products & Solutions revenue for the six months ended March 31, 2021 was $492 million compared to $543 million for the six months ended March 31, 2020. The decrease was primarily attributable to lower demand for the Company's on-premise product solutions, partially offset by revenue from the Company's Avaya Cloud Office offering which launched on March 31, 2020; revenue from the fulfillment of certain obligations related to a new government contract; and the favorable impact of foreign currency exchange rates.
Services revenue for the six months ended March 31, 2021 was $990 million compared to $857 million for the six months ended March 31, 2020. The increase was primarily driven by higher revenue from the Company's subscription and OneCloud Private offerings; revenue from the fulfillment of certain obligations related to a new government contract; and the favorable impact of foreign currency exchange rates, partially offset by the planned declines in hardware maintenance and software support services which continue to face headwinds driven by lower new product sales over the past several years.
Unallocated amounts for the six months ended March 31, 2021 and 2020 represent the fair value adjustment to deferred revenue recognized upon emergence from bankruptcy in December 2017 which is excluded from segment revenue.
The following table displays revenue and the percentage of revenue to total sales by location for the periods indicated:
Percentage of Total RevenueYr. to Yr. Percentage ChangeYr. to Yr. Percentage Change, net of Foreign Currency Impact
Six months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
U.S.$827 $778 56 %56 %6 %6 %
International:
EMEA382 358 26 %26 %7 %3 %
APAC - Asia Pacific152 147 10 %10 %3 %— %
Americas International - Canada and Latin America120 114 8 %8 %5 %5 %
Total International654 619 44 %44 %6 %3 %
Total revenue$1,481 $1,397 100 %100 %6 %5 %
Revenue in the U.S. was $827 million for the six months ended March 31, 2021 compared to $778 million for six months ended March 31, 2020. The increase in U.S. revenue was mainly driven by higher revenue from the Company's subscription offerings; revenue from the fulfillment of certain obligations related to a new government contract; and revenue growth from the Company's Avaya Cloud Office offering which launched on March 31, 2020, partially offset by lower demand for the Company's on-premise product solutions. Revenue in EMEA for the six months ended March 31, 2021 was $382 million compared to $358 million for the six months ended March 31, 2020. The increase in EMEA revenue was mainly driven by higher revenue from the Company's subscription offerings; revenue growth from the Company's Avaya Cloud Office offering; and the favorable impact of foreign currency exchange rates. Revenue in APAC for the six months ended March 31, 2021 was $152 million compared to $147 million for the six months ended March 31, 2020. The increase in APAC revenue was primarily attributable to higher revenue from the Company's subscription offerings; revenue growth from the Company's Avaya Cloud Office offering; and the favorable impact of foreign currency exchange rates, partially offset by lower demand for the Company's on-premise product solutions. Revenue in Americas International for the six months ended March 31, 2021 was $120 million compared to $114 million for the six months ended March 31, 2020. The increase in Americas International revenue was primarily driven by higher revenue from the Company's subscription offerings.
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Gross Profit
The following table sets forth gross profit and gross margin by operating segment for the periods indicated:
Gross MarginChange
Six months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020AmountPercent
Products & Solutions$295 $348 60.0 %64.1 %$(53)(15)%
Services620 509 62.6 %59.4 %111 22 %
Unallocated amounts(87)(92)(1)(1)5 (1)
Total$828 $765 55.9 %54.8 %$63 8 %
(1)Not meaningful.
Products & Solutions gross profit for the six months ended March 31, 2021 was $295 million compared to $348 million for the six months ended March 31, 2020. The decrease was mainly attributable to the decline in revenue described above. Products & Solutions gross margin decreased from 64.1% to 60.0% for the six months ended March 31, 2021 mainly driven by less favorable product mix.
Services gross profit for the six months ended March 31, 2021 was $620 million compared to $509 million for the six months ended March 31, 2020. The increase was mainly driven by the growth in revenue described above. Services gross margin increased from 59.4% to 62.6% for the six months ended March 31, 2021 due to the favorable impact of higher revenue from the Company's subscription offerings.
Unallocated amounts for the six months ended March 31, 2021 and 2020 include the amortization of technology intangibles and the fair value adjustments recognized upon emergence from bankruptcy which are excluded from segment gross profit.
Operating Expenses
The following table sets forth operating expenses and the percentage of operating expenses to total revenue for the periods indicated:
Percentage of Total RevenueChange
Six months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020AmountPercent
Selling, general and administrative$519 $531 35.0 %38.0 %$(12)(2)%
Research and development112 103 7.6 %7.4 %9 9 %
Amortization of intangible assets79 82 5.3 %5.9 %(3)(4)%
Impairment of goodwill0 624 — %44.6 %(624)(100)%
Restructuring charges, net12 7 0.8 %0.5 %5 71 %
Total operating expenses$722 $1,347 48.7 %96.4 %$(625)(46)%
Selling, general and administrative expenses for the six months ended March 31, 2021 were $519 million compared to $531 million for the six months ended March 31, 2020. The decrease was primarily attributable to higher advisory fees incurred in the prior period associated with executing the strategic partnership with RingCentral; lower bad debt expense; and lower travel costs as a result of the COVID-19 pandemic, partially offset by higher channel compensation driven by the increase in revenue; higher accrued incentive compensation; and the unfavorable impact of foreign currency exchange rates.
Research and development expenses for the six months ended March 31, 2021 were $112 million compared to $103 million for the six months ended March 31, 2020. The increase was primarily attributable to investments in cloud technology development.
Amortization of intangible assets for the six months ended March 31, 2021 were $79 million compared to $82 million for the six months ended March 31, 2020.
Impairment of goodwill for the six months ended March 31, 2020 was $624 million. During the six months ended March 31, 2020, the Company performed an interim impairment test of its goodwill and indefinite-lived intangible assets due to (i) the impact of the COVID-19 pandemic on the macroeconomic environment which led to revisions to the Company's long-term forecast during the second quarter of fiscal 2020 and (ii) the sustained decrease in the Company's stock price at the beginning stages of the pandemic which was caused by the resulting volatility in the financial markets. The results of the Company’s interim goodwill impairment test as of March 31, 2020 indicated that the estimated fair value of the Company’s Services reporting unit exceeded its carrying amount. The carrying amount of the Company's Products & Solutions reporting unit
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exceeded its estimated fair value primarily due to a reduction in the Company’s long-term forecast to reflect increased risk from higher market uncertainty and the accelerated reduction of product sales related to the Company’s historical on-premises perpetual licenses with a continued shift and acceleration of customers upgrading and acquiring new technology innovation through the utilization of the Company’s subscription offering, which is included in the Services reporting unit. As a result, the Company recorded a goodwill impairment charge of $624 million to write down the full carrying amount of the Products & Solutions goodwill. The results of the indefinite-lived intangible asset impairment test indicated that no impairment existed. To the extent business conditions deteriorate or if changes in key assumptions and estimates differ significantly from management's expectations included in the long-term forecast, it may be necessary to record additional impairment charges in the future.
Restructuring charges, net were $12 million for the six months ended March 31, 2021 compared to $7 million for the six months ended March 31, 2020. Restructuring charges during the six months ended March 31, 2021 consisted of $10 million for facility exit costs and $2 million for employee separation actions in the U.S. and EMEA. Restructuring charges for the six months ended March 31, 2020 primarily related to exited leased facilities.
Operating Income (loss)
Operating income for the six months ended March 31, 2021 was $106 million compared to an operating loss of $582 million for the six months ended March 31, 2020. Our operating results for the six months ended March 31, 2021 as compared to the six months ended March 31, 2020 reflect, among other things:
•higher revenue and gross profit for the six months ended March 31, 2021;
•lower selling, general and administrative costs for the six months ended March 31, 2021; and
•a $624 million goodwill impairment charge during the six months ended March 31, 2020, with no comparable charge for the six months ended March 31, 2021.
Interest Expense
Interest expense for the six months ended March 31, 2021 was $115 million compared to $111 million for the six months ended March 31, 2020. The increase was mainly driven by higher average interest rates primarily attributable to changes in the Company's debt portfolio which occurred in September 2020 and new debt issuance costs incurred as a result of the Company's Term Loan amendment described in the "Liquidity and Capital Resources" section below, partially offset by the impact of lower average principal amounts outstanding during the six months ended March 31, 2021.
Other Income, Net
Other income, net for the six months ended March 31, 2021 was $1 million compared to $29 million for the six months ended March 31, 2020. The decrease was mainly driven by the change in fair value of the Emergence Date Warrants and realized and unrealized gains on RingCentral shares received by the Company under the strategic partnership during the six months ended March 31, 2020, all of which were sold by the end of fiscal 2020, partially offset by a non-cash settlement gain recorded during the six months ended March 31, 2021 related to the Company's other post-retirement plan and the net impact of foreign currency gains (losses).
Provision for Income Taxes
The provision for income taxes was $54 million for the six months ended March 31, 2021 compared to $62 million for the six months ended March 31, 2020.
The Company's effective income tax rate for the six months ended March 31, 2021 differed from the U.S. federal tax rate by 696% or $56 million principally related to nondeductible expenses, including expenses related to the change in fair value of the Emergence Date Warrants, and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.
The Company's effective income tax rate for the six months ended March 31, 2020 differed from the U.S. federal tax rate by 30% or $201 million principally related to the goodwill impairment charge recorded in the second quarter of fiscal 2020 and deferred taxes (including losses) generated for which no benefit was recorded because it is more likely than not that the tax benefits would not be realized.
Net loss
Net loss was $62 million for the six months ended March 31, 2021 compared to $726 million for the six months ended March 31, 2020 as a result of the items discussed above.
Liquidity and Capital Resources
We expect our existing cash balance, cash generated by operations and borrowings available under our ABL Credit Agreement to be our primary sources of short-term liquidity. Our ability to meet our cash requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors
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that are beyond our control. Based on our current level of operations, as well as our current estimates of the impact that the COVID-19 pandemic will have on our business and cash flow, we believe these sources will be adequate to meet our liquidity needs for at least the next twelve months.
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Cash Flow Activity
The following table provides a summary of the statements of cash flows for the periods indicated:
Six months ended
March 31,
(In millions)20212020
Net cash provided by (used for):
Operating activities$24 $32 
Investing activities(53)246 
Financing activities(108)(472)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3 (5)
Net decrease in cash, cash equivalents, and restricted cash(134)(199)
Cash, cash equivalents, and restricted cash at beginning of period731 756 
Cash, cash equivalents, and restricted cash at end of period$597 $557 
Three months ended
December 31,
(In millions)20212020
Net cash (used for) provided by:
Operating activities$(111)$48 
Investing activities(27)(27)
Financing activities(5)(6)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(1)9 
Net (decrease) increase in cash, cash equivalents, and restricted cash(144)24 
Cash, cash equivalents, and restricted cash at beginning of period502 731 
Cash, cash equivalents, and restricted cash at end of period$358 $755 
Operating Activities
Cash provided byused for operating activities for the sixthree months ended March 31, 2021 and 2020 was $24 million and $32 million, respectively. The decrease was primarily due to higher incentive compensation payments; the timing of customer and vendor payments; and higher contributions to the Company's pension and post-retirement benefit plans, partially offset by higher advisory fees incurred in the prior year period associated with executing the strategic partnership with RingCentral; higher cash earnings; lower income tax payments; and lower interest payments.
Investing Activities
Cash used for investing activities for the six months ended MarchDecember 31, 2021 was $53$111 million compared to cash provided by investingoperating activities of $246$48 million for the sixthree months ended MarchDecember 31, 2020. The change was primarily due to proceeds in the prior year period from the saletiming of shares of RingCentral common stock, which were received bycustomer cash payments as the Company upon entry into the strategic partnership in October 2019,continues its transition to a cloud and subscription model; lower cash earnings; and higher income tax payments, partially offset by an increaselower incentive compensation payments.
Investing Activities
For both the three months ended December 31, 2021 and 2020, cash used for investing activities was $27 million, as a result of capital expenditures in capital expenditures.each period.
Financing Activities
Cash used for financing activities for the sixthree months ended MarchDecember 31, 2021 and 2020 was $108$5 million and $472compared to $6 million respectively.
for the three months ended December 31, 2020. Cash used for financing activities for the six months ended March 31, 2021 included:
•a principal prepayment under the Term Loan Credit Agreementin each period primarily consisted of $100 million;
•repurchases of shares underfor tax withholding on the Company's share repurchase programvesting of $7 million;
•restricted stock units and principal payments in connection withfor financing leases, of $8 million;
•debt issuance costs of $2 million related to the Company's Senior Notes issuance in the fourth quarter of fiscal 2020; and
•other financing activities, net of $9 million; partially offset by
•proceeds from exercises of stock options of $8 million;
•proceeds from the Company's Employee Stock Purchase Plan of $7 million; and
•proceeds from other financing arrangements of $3 million.
Cash used for financing activities for the six months ended March 31, 2020 included:
•repurchases of shares of common stock under the Company's share repurchase program of $330 million;
•a principal prepayment under the Term Loan Credit Agreement of $250 million;
•payment of acquisition-related contingent consideration of $5 million;
•payments in connection with financing leases of $5 million; and
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•other financing activities, net of $3 million; partially offset by
•proceeds from the issuance of Series A Preferred Stock to RingCentral upon entry into the strategic partnership in October 2019, net of issuance costs, of $121 million.
Term Loan Credit Agreement
On February 24, 2021, the Company amended the Term Loan Credit Agreement, pursuant to which the Company prepaid, replaced and refinanced all first lien term loans due December 2024 outstanding under the Term Loan Credit Agreement with $100 million in cash and $743 million in principal amount of new first lien term loans due December 2027. See Note 9, “Financing Arrangements,” to our unaudited interim Condensed Consolidated Financial Statements for additional information regarding the Company’s Term Loan Credit Agreement refinancing.Plan.
As of MarchDecember 31, 2021, the Company was in compliance with all covenants and other requirements under its debt agreements.
Future Cash Requirements
Our primary future cash requirements will be to fund operations, debt service, capital expenditures, benefit obligations and restructuring payments. In addition, we may use cash in the future to make strategic acquisitions.acquisitions or investments.
Specifically, we expect our primary cash requirements for the remainder of fiscal 20212022 to be as follows:
•Debt service—We expect to make payments of approximately $95$150 million to $155 million during the remainder of fiscal 20212022 in interest associated with the Term Loan Credit Agreement, Senior Notes and Convertible Notes, and interest and fees associated with our ABL Credit Agreement. In the ordinary course of business, we may from time to time borrow and repay amounts under our ABL Credit Agreement.
•Capital expenditures—We expect to spend approximately $50 million to $60$85 million for capital expenditures during the remainder of fiscal 2021.2022.
•Benefit obligations—We estimate we will make payments under our pension and post-retirement benefit obligations of approximately $15$30 million during the remainder of fiscal 2021.2022. These payments include $9$21 million for our non-U.S. benefit plans, which are predominantly not pre-funded;pre-funded, and $6$9 million for salaried and represented retiree post-retirement benefits. As a result of the American Rescue Plan Act, we do not expect to make any contributions to satisfy the minimum statutory funding requirements of our U.S. qualified pension plans during the remainder of fiscal 2021.2022. See discussion in Note 13,11, "Benefit Obligations," to our unaudited interim Condensed Consolidated Financial Statements for further details.
•Restructuring payments—We expect to make payments of approximately $15 million to $20 million during the remainder of fiscal 20212022 for employee separation costs and lease termination obligations associated with restructuring actions. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally.
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In addition to the matters identified above, in the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations and proceedings, relating to intellectual property, commercial, employment, environmental and regulatory matters, which may require usincluding but not limited to make cash payments. In the opinion of the Company's management, while the outcome of thesea suit filed by Solaborate Inc. and Solaborate LLC described in Note 18, "Commitments and Contingencies," to our unaudited interim Condensed Consolidated Financial Statements. An unfavorable resolution in this or other matters is uncertain, the likely results of these matters are not expected, either individually or in the aggregate, tocould have a material adverse effect on the Company's financial position, results of operations orfuture cash flows.requirements.
We and our subsidiaries and affiliates may from time to time seek to repurchase or prepay our outstanding equity (common stock and warrants) and/or debt (including our Term Loans, Senior Notes and Convertible Notes) through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, tender offers, redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. 
As part of the Company's strategic partnership with RingCentral, Inc. ("RingCentral"), the Company received certain consideration for future fees ("the Consideration Advance"). Beginning in fiscal 2024, RingCentral shall have the right, but not the obligation, to convert a portion of the outstanding Consideration Advance, if any, into shares of either the Company’s Series A 3% Convertible Preferred Stock or the Company’s common stock. The Company has the intent and ability to repay outstanding amounts, if any, in cash prior to its conversion.
Future Sources of Liquidity
We expect our cash balance, cash generated by operations and borrowings available under our ABL Credit Agreement to be our primary sources of short-term liquidity.
As of MarchDecember 31, 2021 and September 30, 2020,2021, our cash and cash equivalent balances held outside the U.S. were $305$174 million and $227$195 million, respectively. As of MarchDecember 31, 2021, the Company's cash and cash equivalents held outside the U.S. are not expected to be needed to be repatriated to fund the Company's operations in the U.S. based on our expected future sources of liquidity.
Under the terms of the ABL Credit Agreement, the Company can issue letters of credit up to $150 million. At MarchDecember 31, 2021, the Company had issued and outstanding letters of credit and guarantees of $39$35 million under the ABL Credit Agreement and
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had no borrowings outstanding. The aggregate additional principal amount that may be borrowed under the ABL Credit Agreement, based on the borrowing base less $39$35 million of outstanding letters of credit and guarantees, was $128$119 million at MarchDecember 31, 2021.
We believe that our existing cash and cash equivalents of $593$354 million as of MarchDecember 31, 2021, expected future cash provided by operating activities and borrowings available under the ABL Credit Agreement will be sufficient to meet our future cash requirements for at least the next twelve months from the filing of this quarterly report on Form 10-Q. Our ability to meet these requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We also believe that our financial resources, along with appropriate management of discretionary expenses, will allow us to manage the anticipated impact of COVID-19 on our business operations, and specifically our liquidity, for the foreseeable future. However, the challenges posed by COVID-19 on our business constantly and rapidly evolve and could result in the need for additional liquidity. Consequently, we will continue to evaluate our financial position in light of future developments.
Off-Balance Sheet Arrangements
See discussion in Note 20,18, "Commitments and Contingencies," to our unaudited interim Condensed Consolidated Financial Statements for further details.
Debt Ratings
Our ability to obtain additional external financing and the related cost of borrowing may be affected by our ratings, which are periodically reviewed by the major credit rating agencies. The ratings are subject to change or withdrawal at any time by the respective credit rating agencies.
As of MarchDecember 31, 2021, the Company'sCompany’s debt ratings were as follows:
•Standard and Poor's issued a definitive corporate credit rating and a rating applicable to the Company's Senior Notes and the Term Loan Credit Agreement of "B+" with a stable outlook.
•Fitch Ratings Inc. (“Fitch”) issued a definitive corporate credit rating of “B” with a positive outlook and a rating of “BB” applicable to the Senior Notes and the Term Loan Credit Agreement.
•Moody's Investors Service issued a corporate family rating of "B2" with a stable outlook and a rating of "B2" applicable to the Senior Notes and the Term Loan Credit Agreement;Agreement.
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•Standard and Poor's issued a definitive corporate credit rating of "B" with a stable outlook and a rating of "B" applicable to the Senior Notes and the Term Loan Credit Agreement; and
•Fitch Ratings Inc. issued a Long-Term Issuer Default Rating of "B" with a stable outlook and a rating of "BB-" applicable to the Senior Notes and the Term Loan Credit Agreement.
Critical Accounting Policies and Estimates
Management has reassessed the critical accounting policies and estimates disclosed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 25, 202022, 2021 and determined that there were no significant changes to our critical accounting policies and estimates during the sixthree months ended MarchDecember 31, 2021, except for the recently adopted accounting policy changes discussed in Note 2, "Recent Accounting Pronouncements," to our unaudited interim Condensed Consolidated Financial Statements.2021.
New Accounting Pronouncements
See discussion in Note 2, "Recent Accounting Pronouncements," to our unaudited interim Condensed Consolidated Financial Statements for further details.
EBITDA and Adjusted EBITDA
We present below the Company's EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure.
EBITDA is defined as net lossincome (loss) before income taxes, interest expense, interest income and depreciation and amortization and excludes the results of discontinued operations. EBITDA provides us with a measure of operating performance that excludes certain non-operating and/or non-cash expenses, which can differ significantly from company to company depending on capital structure, the tax jurisdictions in which companies operate and capital investments.
Adjusted EBITDA is EBITDA as further adjusted by the items noted in the reconciliation table below. We believe Adjusted EBITDA provides a measure of our financial performance based on operational factors that management can impact in the short-term, such as our pricing strategies, volume, costs and expenses of the organization, and therefore presents our financial performance in a way that can be more easily compared to prior quarters or fiscal years. In addition, Adjusted EBITDA serves as a basis for determining certain management and employee compensation. We also present EBITDA and Adjusted EBITDA because we believe analysts and investors utilize these measures in analyzing our results. Under the Company's debt agreements, the ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied in part to ratios based on a measure of Adjusted EBITDA.
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EBITDA and Adjusted EBITDA have limitations as analytical tools. EBITDA measures do not represent net lossincome (loss) or cash flow from operations as those terms are defined by GAAP and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. While EBITDA measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Further, Adjusted EBITDA excludes the impact of earnings or charges resulting from matters that we consider not to be indicative of our ongoing operations that still affect our net loss.income (loss). In particular, our formulation of Adjusted EBITDA adjusts for certain amounts that are included in calculating net lossincome (loss) as set forth in the following table including, but not limited to, restructuring charges, impairment charges, resolution of certain legal matters and a portion of our pension costs and post-retirement benefits costs, which represents the amortization of prior service costs (credits) and actuarial (gain) loss(gains) losses associated with these benefits. However, these are expenses that may recur, may vary and/or may be difficult to predict.
The reconciliation of net loss, which is a GAAP measure, to EBITDA and Adjusted EBITDA, which are non-GAAP measures, is presented below for the periods indicated:
Three months ended
March 31,		Six months ended
March 31,
(In millions)2021202020212020
Net loss$(58)$(672)$(62)$(726)
Interest expense59 53 115 111 
Interest income(1)(2)(1)(5)
Provision for income taxes44 37 54 62 
Depreciation and amortization106 105 209 212 
EBITDA150 (479)315 (346)
Impact of fresh start accounting adjustments(a)
1 (1)1 (1)
Restructuring charges(b)
6 3 10 4 
Advisory fees(c)
— 1 — 40 
Share-based compensation13 8 27 14 
Impairment of goodwill— 624 — 624 
Gain on post-retirement plan settlement(14)— (14)— 
 Change in fair value of Emergence Date Warrants22 (6)27 (3)
(Gain) loss on foreign currency transactions(1)7 1 11 
Gain on investments in equity and debt securities, net(d)
— (8)— (20)
Adjusted EBITDA$177 $149 $367 $323 
Three months ended
December 31,
(In millions)20212020
Net loss$(66)$(4)
Interest expense54 56 
Provision for income taxes18 10 
Depreciation and amortization104 103 
EBITDA110 165 
Restructuring charges(a)
7 4 
Share-based compensation14 14 
Pension and post-retirement benefit costs(1)— 
 Change in fair value of Emergence Date Warrants(1)5 
Loss on foreign currency transactions— 2 
Adjusted EBITDA$129 $190 
(a)The impact of fresh start accounting adjustments in connection with the Company's emergence from bankruptcy.
(b)Restructuring charges represent employee separation costs and facility exit costs (excluding the impact of accelerated depreciation expense) related to the Company's restructuring programs, net of sublease income.
(c)Advisory fees represent costs incurred to assist in the assessment of strategic and financial alternatives to improve the Company's capital structure.
(d)Realized and unrealized gains on investments in equity securities, net of impairment of investments in debt securities.programs.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q, including statements containing words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "model," "can," "could," "may," "should," "will," "would" or similar words or the negative thereof, constitute "forward-looking statements." These forward-looking statements, which are based on our current plans, expectations, estimates and projections about future events, should not be unduly relied upon. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward-looking statements. We caution you therefore against relying on any of these forward-looking statements.
The forward-looking statements included herein are based upon our assumptions, estimates and beliefs and involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and may be affected by a variety of risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Risks, uncertainties and other factors that may cause these forward-looking statements to be inaccurate include, among others: the risks and factors discussed in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q and our Quarterly Report filed with the SEC on February 9, 2021, as well as Part I, Item 1A "Risk Factors" and Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on November 25, 2020.22, 2021.
All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report will be achieved.

Item 3.Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company has exposure to changing interest rates primarily under the Term Loan Credit Agreement and ABL Credit Agreement, each of which bears interest at variable rates based on LIBOR. As of MarchDecember 31, 2021, the Company had interest rate swap agreements, which mature on December 15, 2022, to pay a fixed rate of 2.935% on its $1,543 million of variable rate loans outstanding (the "Swap Agreements").
The Company maintains additional interest rate swap agreements to fix a portion of the variable rate interest due on its Term Loan Credit Agreement (the "Forward Swap Agreements") from December 15, 2022 (the maturity date of the Swap Agreements) through December 15, 2024. Under the terms of the Forward Swap Agreements, the Company will pay a fixed rate of 0.7047% and receive a variable rate of interest based on one-month LIBOR. The Forward Swap Agreements have a total notional amount of $1,400 million.
It is management's intention that the net notional amount of interest rate swap agreements be less than or equal to the variable rate loans outstanding during the life of the derivatives. For the three months ended MarchDecember 31, 2021 and 2020, the Company recognizedrecognized a loss on the Swap Agreements and Forward Swap Agreements of $13 million and $6$12 million, respectively, which is reflected in Interest expense in the Condensed Consolidated Statements of Operations. For the six months ended March 31, 2021 and 2020, the Company recognized a loss on the Swap Agreements of $25 million and $11 million, respectively, which is also reflected in Interest expense. At MarchDecember 31, 2021, the Company maintained a $50$6 million deferreddeferred loss on its interest rate swap agreements designated as highly effective cash flow hedges within Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheets.
See Note 10,8, “Derivative Instruments and Hedging Activities,” to our Condensed Consolidated Financial Statements included in Part I, Item I of this quarterly report on Form 10-Q for additional information related to the Company’s interest rate swap agreements.
Foreign Currency Risk
Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S. ("foreign") operations maintains capital in the currency of the country of its geographic
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location consistent with local regulatory guidelines. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are
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Euros, Canadian Dollars, British Pound Sterling, Chinese Renminbi,Renminbis, Indian Rupees, Australian Dollars, United Arab Emirates Dirhams, and Indian Rupee.Brazilian Reals.
Non-U.S. denominated revenue was $167 million and $343$160 million for the three and six months ended MarchDecember 31, 2021, respectively.2021. We estimate a 10% change in the value of the U.S. dollar relative to all foreign currencies would have affected our revenue for the three and six months ended MarchDecember 31, 2021 by $17 million and $34 million, respectively.$16 million.
The Company, from time-to-time, utilizes foreign currency forward contracts primarily to hedge fluctuations associated with certain monetary assets and liabilities including receivables, payables and certain intercompany balances. These foreign currency forward contracts are not designated for hedge accounting treatment. As a result, changes in the fair value of these contracts are recorded as a component of Other income, net to offset the change in the value of the underlying assets and liabilities. As of MarchDecember 31, 2021, the Company maintained open foreign exchange contracts with a total notional value of $355$190 million, primarily hedging the British Pound Sterling, Euro, Chinese Renminbi,Japanese Yen, Mexican Peso, Czech Koruna, and Indian Rupee. At MarchDecember 31, 2021, the Company heldfair value of open foreign exchange contracts was an unrealized gain of $1 million in bothwhich was recorded within Other current assets and Other current liabilities in the Condensed Consolidated Balance Sheet to reflect the fair value of the open foreign exchange contracts.Sheet. For the three months ended MarchDecember 31, 2021, and 2020, the Company's gain (loss)loss on foreign exchange contracts was $1not material. For the three months ended December 31, 2020, the Company's gain on foreign exchange contracts was $5 million and $(7) million, respectively, and was recorded within Other income, net in the Condensed Consolidated Statement of Operations. For the six months ended March 31, 2021 and 2020, the Company's gain (loss) on foreign exchange contracts was $6 million and $(2) million, respectively, which was also recorded within Other income, net.

Item 4.Controls and Procedures
Disclosure Controls and Procedures
As of MarchDecember 31, 2021, the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Chief Financial Officer, that evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of MarchDecember 31, 2021 to provide reasonable assurance that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
ThereDuring the first quarter of fiscal 2022, the Company was in the process of implementing a new enterprise resource planning accounting module designed to simplify and streamline the accounting process for certain contracts with customers and to provide enhanced operational information to management. The Company will utilize the new module during the second quarter of fiscal 2022. As updated processes were rolled out in connection with the transition to the new accounting module, the Company considered whether these process changes necessitated changes in the design and operation of its internal controls over financial reporting. Certain controls that were previously determined to be effective as of September 30, 2021 were replaced with new or modified controls. Other than those controls impacted by the implementation of the new accounting module, there have been no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended MarchDecember 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II. OTHER INFORMATION

Item 1.Legal Proceedings
The information set forth under Note 20,18, "Commitments and Contingencies," to the unaudited interim Condensed Consolidated Financial Statements is incorporated herein by reference.

Item 1A.Risk Factors
There have been no material changes during the quarterly period ended MarchDecember 31, 2021 to the risk factors previously disclosed in the Company's Form 10-K for the year ended September 30, 2020 and Form 10-Q for the quarter ended December 31, 20202021 filed with the Securities and Exchange Commission on November 25, 202022, 2021 other than as shown below:
A breach of the security of our information systems, products or services or of the information systems of our third-party providers could adversely affect our business, operating results and February 9,financial condition.
We rely on the security of our information systems and, in certain circumstances, those of our third-party providers, such as channel partners, vendors, consultants and contract manufacturers, to protect our proprietary information and information of our customers. In addition, the growth of bring your own device ("BYOD") programs has increased the need for enhanced security measures. IT security system failures, including a breach of our or our third-party providers' data security systems, could disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer orders, disruptions in the manufacture or shipment of products or delivery of services or an unintentional disclosure of customer, employee or our information. Additionally, despite our security procedures or those of our third-party providers, information systems and our products and services may be vulnerable to threats such as computer hacking, cyber-terrorism or other unauthorized attempts by third parties to access, modify or delete our or our customers' proprietary information.
We take cybersecurity seriously and devote significant resources and tools to protect our systems, products and data and the data of our customers from intrusions and to ensure compliance with our contractual and regulatory obligations. However, these security efforts are costly to implement and may not be successful. Cyberattacks and similar threats are constantly evolving, increasing the difficulty of detecting and successfully defending against them. Computer malware, viruses, scraping and general hacking have become more prevalent in our industry, have occurred on our systems in the past, and may occur on our systems in the future. There can be no assurance that we will be able to prevent, detect and adequately insure against and address or mitigate cyberattacks or security breaches. We investigate potential data breach issues identified through our security procedures and terminate, mitigate and remediate such issues as appropriate. Past incidents have involved outside actors and issues stemming from certain internal configuration, vulnerabilities in third-party software which may impact our systems, applications, products and offerings and migration issues of our applications to other platforms. A breach of our systems could have a material adverse effect on our reputation as a provider of business communications products and services and could cause irreparable damage to us or our systems regardless of whether we or our third-party providers are able to adequately recover critical systems following a systems failure, either or both of which could, in turn, have a material adverse effect on our operating results and financial conditions.
In addition, regulatory or legislative action related to cybersecurity, privacy and data protection worldwide, such as the EU GDPR, which went into effect in May 2018, and the UK GDPR, which went into effect in January 2021, respectively.
may increase the costs to develop, implement or secure our products and services. We expect cybersecurity regulations to continue to evolve and be costly to implement. Furthermore, we may need to increase or change our cybersecurity systems and expenditures to support expansion of sales into new industry segments or new geographic markets. If we violate or fail to comply with such regulatory or legislative requirements, we could be fined, which fines could be substantial, or otherwise sanctioned. Any such fines or penalties could have a material adverse effect on our business and operations.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer
The following table provides information with respect to purchases by the Company of shares of common stock during the three months ended MarchDecember 31, 2021:
Period
Total Number of Shares (or Units) Purchased(1)
Average Price Paid per Share (or Unit) (4)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under Plans or Programs(2)(3)
January 1 - 31, 202174,616 $19.0000 — $185,000,003 
February 1 - 28, 2021201,544 $31.5200 — $185,000,003 
March 1 - 31, 2021245,206 $29.6902 245,206 $177,719,788 
Total521,366 $28.8676 245,206 
Period
Total Number of Shares (or Units) Purchased(1)
Average Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under Plans or Programs(2)(3)
October 1 - 31, 2021— $— — $147,473,425 
November 1 - 30, 202177,764 $21.0000 — $147,473,425 
December 1 - 31, 2021253,537 $18.9338 — $147,473,425 
Total331,301 $19.4188 — 
(1)January and February 2021 include 74,616 and 201,544All purchases represent shares of common stock withheld for taxes on restricted stock units that vested, respectively.vested.
(2)The Company maintains a warrant repurchase program authorizing it to repurchase the Company's outstanding warrants to purchase shares of the Company's common stock for an aggregate expenditure of up to $15 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions.
(3)The Company maintains a share repurchase program authorizing it to repurchase the Company's common stock for an aggregate expenditure of up to $500 million. The repurchases may be made from time to time in the open market, through block trades or in privately negotiated transactions. Share repurchases presented in the table above are based on the transaction settlement date. There were an additional 7,962 shares repurchased and pending settlement as of March 31, 2021 that are not reflected in the table.
(4)Average price paid per share includes transaction costs associated with the repurchases.


Item 3.Defaults Upon Senior Securities
None.

Item 4.Mine Safety Disclosures
Not applicable. 

Item 5.Other Information
None.
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Item 6.Exhibits

Exhibit NumberExhibit Description
10.1
10.2*
10.3*
31.1  
31.2  
32.1  
32.2  
101.INSXBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.DEFXBRL Taxonomy Extension Definition Linkbase
101.LABXBRL Taxonomy Extension Labels Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as Inline XBRL in Exhibit 101)

* Indicates management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AVAYA HOLDINGS CORP.
By:
/s/ KEVIN SPEED
Name:Kevin Speed
Title:Global Vice President, Controller and Chief Accounting Officer
May 10, 2021February 9, 2022

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