Item 2.02. Results of Operations and Financial Condition
On August 9, 2022, Avaya Holdings Corp. (the "Company") issued a press release
announcing selected additional preliminary financial results for the third
quarter of fiscal 2022 ended June 30, 2022. The full text of the press release
is furnished as Exhibit 99.1 and is available on the Company's investor
relations website at https://investors.avaya.com.
This information shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
Item 2.06. Material Impairments
Given (i) a sustained decrease in the market value of the Company's debt and
common stock and (ii) a significant decline in revenues during the third
quarter, which represented substantially lower revenues than the Company's
expectations, the Company performed certain impairment tests in connection with
its review of the financial statements for the third quarter of fiscal 2022
ended June 30, 2022. On August 8, 2022, the Company concluded that its interim
impairment tests as of June 30, 2022 indicated that the carrying amount of the
Company's indefinite-lived intangible asset, the Avaya Trade Name, and its
Services reporting unit exceeded their respective estimated fair values, which
was caused primarily by a slowdown in the pace and trajectory of customer
migration to the Company's subscription hybrid offering, and an increase in the
discount rate to reflect increased risk from higher market uncertainty. As a
result, the Company expects to record impairment charges between $1,272 million
to $1,804 million related to the Company's indefinite-lived intangible asset and
goodwill during the three and nine months ended June 30, 2022. The Company does
not expect the impairment to result in any future cash charges.
These amounts of the non-cash impairments reflect the Company's best estimate of
the impairment charges at this time. The Company continues to evaluate the
amount of the impairments and, until the Company files its Quarterly Report on
Form 10-Q for the quarter ended June 30, 2022 (the "Q3 Form 10-Q"), can make no
assurances these estimates will not change.
The preliminary unaudited estimates of impairment charges disclosed herein were
identified during the Company's impairment testing in connection with the
preparation of the Company's Q3 Form 10-Q. As the Company requires additional
time to complete its review of its financial statements and finalize its
disclosures in the Q3 Form 10-Q, the Company will be unable to file the Q3 Form
10-Q on or prior to the required filing date and has filed a Form 12b-25
Notification of Late Filing.
Item 7.01. Regulation FD Disclosure
On August 9, 2022, the Company posted supplementary slides regarding the
Company's selected additional preliminary financial results for the third
quarter of fiscal 2022 ended June 30, 2022 on the Company's investor relations
website at https://investors.avaya.com. The supplementary slides are furnished
as Exhibit 99.2.
This information shall not be deemed "filed" for purposes of Section 18 of the
Exchange Act, or incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
Cautionary Note Regarding Preliminary Financial Information
All financial results for the third quarter ended June 30, 2022 and related
comparisons to prior periods included in in this Current Report on Form 8-K are
preliminary, have not been reviewed or audited, are based upon the Company's
estimates, and were prepared prior to the completion of the Company's financial
statement close process. These selected preliminary financial results should not
be viewed as a substitute for the Company's full third quarter results and do
not present all information necessary for an understanding of the Company's
financial performance as of June 30, 2022, and should not be considered final
until the Company files its Quarterly Report on Form 10-Q for the quarter ended
June 30, 2022. During the course of the preparation of the Company's financial
statements as of and for the three and nine months ended June 30, 2022, the
Company may identify items that could cause its final reported results to be
materially different from the preliminary financial information set forth in
this report. Accordingly, undue reliance should not be placed on this
preliminary data.
--------------------------------------------------------------------------------
Cautionary Note Regarding Forward-Looking Statements
This report contains certain "forward-looking statements." All statements other
than statements of historical fact are "forward-looking" statements for purposes
of the U.S. federal and state securities laws. These statements may be
identified by the use of forward-looking terminology such as "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intend," "may," "might,"
"our vision," "plan," "potential," "preliminary," "predict," "should," "will,"
or "would" or the negative thereof or other variations thereof or comparable
terminology. The Company has based these forward-looking statements on its
current expectations, assumptions, estimates and projections. These statements,
including the Company's outlook, do not include the potential impact of any
business combinations, asset acquisitions, divestitures, strategic investments
or other strategic transactions completed after the date hereof. While the
Company believes these expectations, assumptions, estimates and projections are
reasonable, such forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond its control.
Risks and uncertainties that may cause these forward-looking statements to be
inaccurate include, among others: the finalization of the Company's third
quarter financial statements; the findings of the Audit Committee's
investigations; the effectiveness of the Company's internal control over
financial reporting and disclosure controls and procedures, and the potential
for a material weaknesses in the Company's internal controls over financial
reporting or other potential weaknesses of which the Company is not currently
aware or which have not been detected; the Company's ability to continue as a
going concern; the impact of litigation and regulatory proceedings; the impact
and timing of any cost-savings measures; the termination or modification of
current contracts which could impair attainment of our OneCloud ARR metric; the
duration, severity and impact of the coronavirus pandemic ("COVID-19"); the
impact of the Russia/Ukraine conflict on the global economy and our business,
including impacts from related sanctions and export controls imposed by the
U.S., UK and the EU on certain industries and Russian parties as a result of the
conflict, as well as responses by the governments of Russia or other
jurisdictions; and other factors discussed in the Company's Annual Report on
Form 10-K and subsequent quarterly reports on Form 10-Q filed with the
Securities and Exchange Commission (the "SEC"). These risks and uncertainties
may cause the Company's actual results, performance, liquidity or achievements
to differ materially from any future results, performance, liquidity or
achievements expressed or implied by these forward-looking statements. For a
further list and description of such risks and uncertainties, please refer to
the Company's filings with the SEC that are available at www.sec.gov. The
Company cautions you that the list of important factors included in the
Company's SEC filings may not contain all of the material factors that are
important to you. In addition, in light of these risks and uncertainties, the
matters referred to in the forward-looking statements contained in this report
may not in fact occur. The Company undertakes no obligation to publicly update
or revise any forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Exhibit Name
99.1 Press Release, dated August 9, 2022, entitled "Avaya Reports
Selected Additional Preliminary Third Quarter Fiscal 2022 Financial
Results and Provides Business Updates"
99.2 Supplementary Slides: Avaya Investor Presentation 3Q FY22 - August
9, 2022
104 Cover Page Interactive Data File (formatted as inline XBRL)
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses